People's United Financial (NASDAQ:PBCT)Q2 earnings reflect stronger capital ratios, higher fee revenues, and a negative provision for credit losses, supported by positive economic guidance, David Rosato, senior executive vice president and CFO said in the report.
The efficiency ratio, which divides noninterest expenses by revenue to determine the banks' profitability, rose to 57.4% in Q2 compared with 56.6% for Q1 and 53.5% for Q2 2020.
Q2 operating EPS of $0.41 beats consensus of $0.33/share and increases from $0.37 in Q1.
Total revenues were $487.7M in Q2, down from $488.1M in Q1; below the average analyst estimate of $497.6M.
Net income of $170.8M, increases 18.2% from $144.5M in Q1.
In Q2, net interest income fell to $380.9M, which includes $24.9M associated with PPP loans, from $385.9M in Q1.
"The $1.4B decline in period-end loans was driven by the forgiveness of $970M in PPP balances, $530M in lower retail balances, and a $130M reduction in mortgage warehouse," said Rosato.
Commercial loans fell by $874M to $31.9B in Q2; residential mortgage loans fell by $441M to $7.6B in Q2.
Q2 net interest margin of 2.70% fell from 2.74% in Q1, below expectations of 2.83% - margin fell slightly due to falling interest rates, an additional calendar day in Q2, and excess liquidity from deposits at the Fed.
Provision for credit losses on loans resulted in a net benefit of $40.7M, while allowance for credit losses on loans decreased $51M.
Net interest income decreases 1.29% to $380.9M in Q2 compared compared with $385.9M in Q1.
Noninterest income increased to $99M in Q2 vs. $94.6M in Q1; non-interest expense decreased to $305M in Q2 from $311.9M in Q1.