Leslie Norton, Barron’s analyst/journaist recommended People’s United Financial, as a winner in the credit crunch:

Track her picks at:

http://trackthepros.com/categories.php?category_id=641

a.  The cash-rich Bridgeport, Conn.-based regional stands out for the strength of its balance sheet, lack of subprime-mortgage exposure and prospects for still-stronger returns. People’s is so well-capitalized that it’s hunting for acquisitions, as other lenders are watching their share prices and franchises shrink.

b. The stock slid as low as 14.58 after the company bought a Vermont bank, Chittenden, for $1.9 billion. That purchase made it the largest New England regional, with $21 billion in assets and 300-plus branches.

c. People’s has one of the highest capital ratios around; Tier One capital (equity and unredeemable preference shares) was a whopping 16.5% of assets — 2.75 times what the Federal Deposit Insurance Corp. deems “well-capitalized. This puts the bank’s total cash holdings at $2.5 billion, or 44% of its stock-market value of $5.7 billion.

d. It yields 3.6%, having raised dividends for 16 years running.

e. Because so much of its money is in cash, People’s earnings are dramatically understated. That will change, with an acquisition.

f. CEO Sherringham, a veteran banker who joined People’s in 2003: “We have no exposure to subprime or Alt-A, we have a huge amount of capital, and frankly, there is nothing the credit cycle can throw at us that we can’t absorb.” As he puts it: “We’re in a great position to be a consolidator in the ongoing consolidation of the banking environment.”

g. An acquisition seems necessary. In the second quarter, People’s had earnings of $43 million, or 13 cents a share, up from $13.5 million, or 5 cents a share, a year ago — the gain missed analysts’ forecasts because of the huge slug of low-yielding cash. “It’s not impossible” that a deal will be done this year, Sherringham adds. Until then, People’s will keep its pristine balance sheet and wait for the right opportunity.