Merger expenses cut into profits at People’s United

Merger expenses dampened second-quarter profits at People’s United Financial in Bridgeport, Conn.

Net income for the $43 billion-asset People’s United was $69.3 million, up about 1.2% from the year-earlier period. Earnings per share were 19 cents and missed the average analyst estimate of 23 cents, according to FactSet Research Systems.

The quarter included $24.8 million in expenses related to its acquisition of Suffolk Bancorp, which was completed in April.

“The integration of Suffolk has progressed extremely well,” President and CEO Jack Barnes said in a news release Thursday. “The outstanding efforts of our experienced teams provided a seamless transition for clients. We successfully completed the core system conversion in early May and are on track to realize projected year one cost saves.”

Net interest income increased 14.5% to $274.9 million. The net interest margin expanded 17 basis points to 2.96%.

Total loans increased 8.9% to $31.4 billion. The commercial loan portfolio grew 8.1% to $21.1 billion, while retail loans rose 10.1% to $8.8 billion.

Noninterest income increased 7.3% to $91.6 million, driven by increases in commercial banking lending fees (25%) and investment management fees (42.9%).

Meanwhile, People’s had announced Wednesday that it agreed to purchase Leaf Commercial Capital, a Philadelphia commercial equipment finance company. The all-cash deal would bring with it $730 million of net investment in loans and leases and about $250 million of securitizations. People’s did not divulge the price but said the acquisition would be immediately accretive to earnings.

On an earnings call Thursday with analysts, Barnes said that Leaf would continue to operate as its own stand-alone brand. Leaf’s funding had been constrained and that was a factor in its decision to sell, he said.