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People's United (PBCT) Acquires LEAF Commercial Capital

Zacks Equity Research

People's United Bank, N.A., a subsidiary of People's United Financial, Inc. PBCT, announced the completion of the acquisition of LEAF Commercial Capital, Inc. The transaction is likely to be immediately accretive to the company’s earnings.

The acquisition was announced in Jul 2017 under the terms that People's United would acquire about $730 million of net investment in leases and loans and retain almost $250 million of securitizations.

On completion of the deal, total assets of People's United amount to about $4 billion, making it the 16th largest bank-owned equipment finance entity.

Since 2002, the Philadelphia, PA based LEAF Commercial Capital has provided finance of about $5.8 billion to more than 243,000 customers. Also, it provides expertise and equipment finance solutions to a large number of vendors and end users. Further, LEAF Commercial Capital employs about 250 people with offices in Orange County, CA and Moberly, MO.

Lately, People's United has been taking initiatives to expand its business and bolster fee income. In Apr 2017, the company acquired Suffolk Bancorp in a $391 million all-stock deal, with a view to fortify its footprint in the New York Metro region. Earlier, in Nov 2016, People's United had acquired Gerstein Fisher, a $3 billion investment management firm.

The company’s progress on the acquisition front reflects its capital and liquidity strength. Further, People’s United’s organic growth remains impressive. However, persistent pressure on margins despite rising rates and escalating expenses might restrict its bottom-line growth in the near term.

Shares of People’s United have gained 17.5% over the last one year, underperforming the 25.3% rally of the industry.

Currently, People’s United carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the financial space include The Bank of New York Mellon Corporation BK, Fifth Third Bancorp FITB and Trustmark Corporation TRMK. All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bank of New York Mellon’s Zacks Consensus Estimate witnessed an upward revision of 1.4% for current-year earnings, over the past 60 days. Also, its shares have gained 36.7%, over the last one year.

Fifth Third’s Zacks Consensus Estimates for the current-year earnings moved 2.3% upward, over the past 60 days. Its share price has increased 43.7%, over the last one year.

Trustmark’s current-year earnings estimates were revised 1.1% upward, over the past 60 days. Over the last one year, its share price has jumped 24.4%.  

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