Fueled by acquisitions and strong organic loan growth, People's United Financial (PBCT) in Bridgeport, Conn., said Thursday that it earned $58.8 million in the first quarter, up 36% from the same quarter in 2011.
Earnings per share climbed 42%, to 17 cents, but fell a penny shy of consensus estimates, according to Thomson Reuters.
Total loans rose 17% year over year, to $20.5 billion, aided in part by its acquisition last summer of Danversbank in Massachusetts, which had $2.6 billion of assets. The $27.8 billion-asset People's United also reported strong organic growth, particularly in its mortgage portfolio. Residential mortgages increased by $156 million, or 20%, from the prior quarter, while commercial loans rose 6%, or $187 million, from three months earlier.
Persistently low interest rates have tamped down net interest income, however, despite the surge in loan activity. Year over year net interest income before provisions for loan losses climbed 6.8%, to $235 million, but from the prior quarter net interest income declined nearly 3%.
Non interest income fell slightly year over year, due primarily due to new caps on interchange fees that reduced fee income from deposit accounts.
Meanwhile its efficiency ratio rose for the first time in five quarters, to 63.2%, due primarily to slightly higher compensation expenses and increased income tax expenses. Chief Executive Jack Barnes told investors in September that the company is aiming to lower its efficiency ratio to 55% by mid-2013.
People's United's shares were trading at $12.57 midday Thursday, down 1.8% from Wednesday's close.