8. Peoples United Financial
Based on a quarterly payout of 15.75 cents, the shares have a dividend yield of 4.95%.The company had $27.6 billion in total assets as of Dec. 30, and its quarterly ROA ranged from 0.63% to 0.82% during 2011, according to HighlineFI. The company last Tuesday announced a deal to acquire 56 branches from Citizens Financial Group, including 52 branches located in Stop & Shop supermarkets, on Long Island, New York City and in Westchester County, as well as other Upstate New York counties. People's United already operates 87 Stop & Shop branches in Connecticut. The Citizens branch deal is expected to be completed late in the second quarter, with People's United paying $3.25 million in cash and assuming $325 million in deposits. The shares trade for 1.5 times tangible book value and 16 the consensus 2012 EPS estimate of 80 cents. The consensus 2013 EPS estimate is 94 cents. Morgan Stanley analyst Ken Zerbe said after the branch deal was announced that "while the net impact is fairly small, it shows PBCT is still actively looking at deals." The analyst added that "the value add will be in 2014 or beyond as PBCT: 1) redeploys the cash into loans, and 2) increases the deposits per branch from the $4 mil under Citizens to its own average of $29 mil, and redeploys that cash into loans as well." Zerbe has an "Equal Weight" rating on Peoples United. Sterne Agee analyst Damon Delmonte rates the shares "Outperform," with a $14 price target, and said last Thursday after a presentation at the KBW Boston Bank Conference by Peoples United CEO Jack Barnes and CFO Kirk Walters, that "management has set aggressive profitability and operating goals for the banks as it aims to lower the efficiency ratio to 55% by middle of 2013, which would help drive the ROA to 1.25% in 2014." With a strong capital base, Delmonte said that "PBCT remains well positioned to further expand its current scale. Despite having a solid presence through much of New England, the bank's recent shift into New York provides it with significant revenue potential." Interested in more on Peoples United Financial? See TheStreet Ratings' report card for this stock.
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