J.P. Morgan Comments On 1Q11 Results For People's United Financial

According to J.P. Morgan, People's United Financial PBCT saw a good first quarter but elevated payout ratio remains a risk. J.P. Morgan said that People's reported 1Q11 EPS of $0.15, or $0.14 excluding one-timers, which was a penny above its $0.13 estimate and beat the Street at $0.12. “The company reported a relatively good first quarter, with the NIM showing strong expansion, loans showing modest growth, credit quality remaining pristine, and the bank announcing the annual dividend was being increased by a penny, to $0.63 per share. Following a good quarter, however, we find no real change to our earnings estimates, given in part some of the NIM giveback expected in 2Q. While the dividend increase announced in the quarter was very modest, it seemed to signal to the markets that management feels confident in the long-term earnings prospects of the bank. The risk we see, however, to the dividend is that with the company's primary regulator, the OTS, scheduled to be rolled into the OCC in July 2011 (part of Dodd-Frank), that the OCC may take a stricter view on such a high dividend payout ratio. Even in the most recent quarter, which included a reported NIM of 4.16% expected to decline in 2Q, the announced $0.1575 dividend would represent just over 100% of the $0.15 EPS reported in 1Q11.” People's United Financial closed yesterday at $12.84.