As the Dodd-Frank financial reform act nears implementation this summer, People”™s United Financial Inc. and other banks are already taking into account the stiffer oversight from regulators on the actions they are taking today ”“ including the dividends they issue to their own investors.
People”™s United increased its dividend in the first quarter, even as it reported a significant profit increase to $51.7 million, up from $32 million in the fourth quarter and $13.6 million a year ago.
Bridgeport, Conn.-based People”™s United recently opened its sixth branch in Westchester, at 111 Kraft Ave. in Bronxville.
On an annualized basis, both loans and deposits increased more than 4 percent in the first quarter, and People”™s net interest margin reached its highest level since the end of 2007. The bank”™s nonperforming assets ratio, meanwhile, declined to under 2 percent.
People”™s United pushed through the dividend increase even as it readies to come under the regulatory apparatus of the federal Office of the Comptroller of Currency, which is assuming oversight of People”™s United from the bank”™s current regulator, the Office of Thrift Supervision (OTS).
CEO Jack Barnes said People”™s United consulted with regulators before issuing the dividend increase, among a range of topics discussed in the bank”™s conference call.
“OTS is our regulator today, right?” Barnes said. “We, like others, are going through a discussion with our regulators regarding integration of the OTS into the OCC. The OTS is our regulator. I am not in a position ”¦ to speak for (OCC). Obviously, our step would indicate our confidence in being able to support the dividend.”
People”™s United”™s improved earnings arrive even as the bank continues to winnow out bad loans it assumed in its 2010 acquisition of Bank of Smithtown on Long Island. In Massachusetts, where the bank has expanded significantly in the past year through deals to acquire North Andover-based LSB Corp. and Danvers Bancorp, People”™s piled up $29 million in deposits in a single quarter at a branch in downtown Boston.
The bank”™s rapid-fire expansion and consolidations have come under a new CFO with Kirk Walters replacing Paul Burner earlier this year. Walters hinted that the current regulatory environment could make additional acquisition opportunities available for People”™s United ”“ as one outlet for deploying its capital alongside dividends.
