People”™s United Financial Inc. continues to scout acquisition opportunities in the tristate area, including northern New Jersey.
For $493 million in cash and stock, the Bridgeport-based bank is acquiring Danvers Bancorp Inc., which is among the dozen largest banks doing business in Massachusetts with more than 25 branches and $2 billion in deposits.
If approved by regulators and shareholders, the deal makes Bridgeport-based People”™s United the seventh largest bank in Massachusetts. Danversbank adds about 400 employees to People”™s United work force. That number does not include Boston Red Sox star pitcher Jon Lester, which People”™s United signed to an endorsement deal.
Shares of People”™s United were down 5 percent in Nasdaq trading after the acquisition announcement.
Excluding acquired loans, the company”™s commercial banking portfolio increased by $175 million between the third and fourth quarters, while residential mortgages outstanding were up $148 million over the three-month interval.
In the fourth quarter, People”™s United net income totaled $32 million, up from $24.1 million in the third quarter as loan charge-offs dropped by half to $10.9 million. Nonperforming loans were down on a sequential quarter basis for the first time since the third quarter of 2009.
For all of 2010, People”™s United recorded $86 million in net income, down from $101 million in 2009.
In a conference call with investment analysts, CEO Jack Barnes said while People”™s United is obviously undertaking a major expansion in Massachusetts, that is not happening at the expense of its historic base outside New York City, as shown by its acquisition last year of Long Island-based Smithtown Bancorp Inc. and LSB Corp. People”™s United has since been adding staff to its commercial lending unit at Bank of Smithtown on Long Island, adding a warehouse lending team there among other moves. It has also been looking to reduce unfavorable loans on the books, both through normal amortization where possible and one instance through the outright sale of a nonperforming loan. Barnes said the bank is in discussions to rid itself of divesting at least four more problem loans at amounts ranging between $2 million and $5 million ”“ if successful putting a “significant dent in the problem portfolio,” in his words.
“Long Island was a great opportunity, contiguous to our franchise, and ”¦ there are more opportunities in Long Island,” Barnes said. “And then we look at where we are in Westchester County and you start working your way west to northern New Jersey and around the New York metropolitan area, and we find all of those markets very attractive for us. So while we”™re very, very positive on Boston and very focused on (capitalizing) on the opportunities that we”™ve created for ourselves there, we also are very optimistic about Long Island and the New York area.”
Asked if People”™s United has any interest in buying classic thrift institutions, which are coming under increased regulatory scrutiny, Barnes said yes.
“We remained interested in some of the traditional thrifts,” he said. “There are certainly many in our stated market area that would offer us very attractive increases in deposit franchise and footprint, and we would basically build off of that type of opportunity, expanding the various business lines that we have. I think we’ve said in the past, we can compare that to the history of People”™s United, and the fact that we did that here.”
