Safe and Sound

People's United Bank, National Association

Bridgeport, CT
4
Star Rating
Started in 1988, People's United Bank, National Association is an FDIC-insured bank headquartered in Bridgeport, CT. The bank has equity of $5.65 billion on $42,705,802,000 in assets, according to June 30, 2017, regulatory filings.

Thanks to the efforts of 5,233 full-time employees in 407 offices in multiple states, the bank has amassed loans and leases worth $31.45 billion, including real estate loans of $22.54 billion. The bank currently holds $32.06 billion in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, People's United Bank, National Association exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's an analysis of how the bank faired on the three important criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and provides protection for accountholders during times of financial trouble for the bank. It follows then that a bank's level of capital is a crucial measurement of an institution's financial fortitude. When it comes to safety and soundness, the more capital, the better.
People's United Bank, National Association fell below the national average of 13.38 on our test to measure capital adequacy, scoring 8 out of a possible 30 points.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. People's United Bank, National Association's Tier 1 capital ratio was 11.31 percent, exceeding the 6 percent level regulators consider adequate, but under the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to economic difficulties.

Overall, People's United Bank, National Association held equity amounting to 13.22 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

Bankrate uses this test to estimate the impact of problem assets, such as unpaid loans, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having extensive holdings of these types of assets could eventually force a bank to use capital to absorb losses, diminishing its buffer of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning money, decreasing earnings and elevating the risk of a failure in the future.

People's United Bank, National Association scored 40 out of a possible 40 points on Bankrate's test of asset quality, beating the national average of 37.62.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of June 30, 2017, 0.65 percent of People's United Bank, National Association's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.04 percent.

Banks maintain a reserve to deal with troubled assets known as an "allowance for loan and lease losses." Comparing the the size of that reserve to the total amount of problem loans can be a widely used indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on People's United Bank, National Association's loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its long-term survivability. Earnings can be retained by the bank, boosting its capital cushion, or be used to deal with problematic loans, likely making the bank more resilient in tough times. Conversely, losses diminish a bank's ability to do those things.

On Bankrate's earnings test, People's United Bank, National Association scored 12 out of a possible 30, coming in below the national average of 16.52.

One key way to measure a bank's earnings is return on equity, calculated by dividing net income (profit, essentially) by total equity. People's United Bank, National Association's most recent annualized quarterly return on equity was 5.36 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank earned net income of $142.1 million on total equity of $5.65 billion. The bank experienced an annualized return on average assets, or ROA, of 0.69 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 percent.

WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.