5. Peoples United Financial
Shares of Peoples United Financial ( PBCT) of Bridgeport, Conn., closed at $13.10 Thursday, returning 10% this year, following a 1% decline during 2012. The shares trade for 1.5 times tangible book value and for 14.7 times the consensus 2014 EPS estimate of $0.89. The consensus 2013 EPS estimate is $0.80. Based on a quarterly payout of $0.16, the shares have a dividend yield of 4.89%. Peoples United is rated an A-minus (Excellent) by TheStreet Ratings. The company had $30.3 billion in total assets as of Dec. 31 and reported 2012 net income of $245.3 million, or $0.72 a share, increasing from $192.4 million, or $0.55 a share, during 2011. People's United also reported operating earnings, because the company incurred $12.7 million in merger-related expenses and one-time charges during 2012, and $56.8 million in similar items during 2011. 2012 operating earnings were $253.9 million, or $0.75 a share, increasing from $230.7 million, or $0.66 share, the previous year. Peoples United reported a 2012 operating ROA of 0.90%, up slightly from 0.89% in 2011. During 2012, Peoples United purchased 57 branches from RBS Citizens, NA (a unit of Royal Bank of Scotland Group PLC ( RBS)). The company consolidated 15 branches and also opened three new branches, including one in New York City. The company's net interest income in 2012 increased to $927.8 million from $913.4 million the previous year, despite a narrowing of the operating net interest margin to 3.82% from 4.03%. Peoples United at the KBW Banking Conference on Feb. 27 outlined some pretty ambitious goals for 2013, including loan growth in the "high single digits to mid-teens," along with net interest income in a range of $900 million to $940. The company expects the 2013 net interest margin to fall to the "3.30% to 3.40% range." KBW analyst Collyn Gilbert rates Peoples United "outperform," with a price target of $14.00, estimating the company will earn $0.80 a share this year, with EPS rising to $0.92 in 2014. Following the conference on Feb. 27, the analyst said in a report that investors "renewed 'risk off' trade could disproportionately benefit PBCT shares given the bank's credit strength, capital protection, and attractive dividend yield." While KBW's price target "provides limited upside from current levels,
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