The dividend payout ratio is my biggest concern for PBCT. Otherwise, the business seems to be run fairly conservatively. In any case, I'm inclined to totally ignore anything that Jim Cramer says about anything. Beware of people who talk loud and fast!!!! He may be good for entertainment, but - personally - he gives me an huge headache.
People’s United Financial (PBCT) has a solid capital position with clear strategies in mind. It has been given an equal-weight rating by Morgan Stanley. Its return-on-assets is likely to exceed its peers by 2013. The company has a target efficiency ratio of 55% by mid-2013 and it currently has a high dividend payout ratio of 104%. Net interest margin, 4.11%, is higher than its peers but is expected to decline slightly. People’s United Financial recently repurchased 15.8 million shares and is expected to repurchase another 18 million shares. Shares of the company are currently trading at $12.7 and are expected to rise to $15 by the end of next year.
This is a regional saving bank not an international commercial bank.
They have only about 700,000 worth of foreign exchange contracts on their books.
They have been using the cash on their books to expand their footprint during the economic downturn, they have moved into all of New England and the wealthiest regions of New York.
They run the bank relatively conservatively and the biggest risk they probably take is carrying and managing many of their loans on their own books.This is what banks used to do in the old days before many companies started providing the loans and bundling the debt and before Freddie, Fannie and Sallie got so big..
They have moved onto the list of the 50 biggest savings banks in the US with the acquisitions in the last few years and are very conservative in the way they run the bank. At this time they appear to being a good job with commercial,industrial,equipment,home and home equity loans and appear to be running the retail service end well with high safety deposit box utilization rate and increasing deposits despite low interest rates on the accounts. On the negative side they sold their credit card business years ago and the insurance and investment sales part of the business have not been shining stars.
If the bank ends up having trouble with toxic debt it will have to be US debt and considering these guys survived the great depression and the last 2 real estate bubbles in 88 and 08 I am not that worried.If on the other hand the economy continues to turn around slowly the new branches that they have acquired should help send the stock higher.