DOW JONES NEWSWIRES
People's United Financial Inc. (PBCT) has agreed to acquire
Smithtown Bancorp Inc. (SMTB) for $60 million in cash and stock and
LSB Corp. (LSBX) for $96 million as the Connecticut-based bank
looks to beef up its presence on Long Island and in the Boston
area.
Smithtown holders will get $4 a share, equally in cash and
stock, a 5.5% premium to Thursday's closing price. The company has
30 branches on Long Island and Manhattan. LSB holders would be paid
$21, a 49% premium. It has seven branches, five in greater
Boston.
The news came as Smithtown reported a second-quarter loss of
$29.2 million, or $1.95 a share, including a $15.7 million
write-down of credits the bank could have used to offset future
income-tax bills. Loan-loss provisions surged to $27.5 million from
$1.8 million. The company has been cutting its exposure to
commercial real estate.
Meanwhile, People's United reported a 37% drop in second-quarter
earnings on lower noninterest income.
Earnings were $16 million, or 4 cents a share, down from $25.3
million, or 8 cents a share, a year earlier. The latest quarter
included 5 cents of merger charges. Revenue rose 11% to $250.6
million.
Analysts estimated earnings of 9 cents on revenue of $247.4
million, according to a poll by Thomson Reuters.
Loan-loss provisions rose to $17.8 million from $14 million a
year ago and $9.5 million in the first quarter.
Connecticut-based People's, which has about 300 branches in the
Northeast, has seen increases in bad loans with higher unemployment
along with the rest of the industry. But unlike many banks its
size, People's has a strong balance sheet and has been seen as a
bank acquirer in the current climate.
Annualized net charge-offs--loans the bank thinks are no longer
collectible--increased to 0.46% of average loans from 0.16% a year
earlier and 0.26% in the first quarter. Nonperforming assets--those
in danger of default--grew to 2.01% from 1.25% and 1.74%,
respectively.
People's shares were down 0.7% after-hours to $14.05. They hit a
5-year low earlier this month. Smithtown and LSB's shares were
halted after-hours for the announcement. The stocks closed at $3.79
and $14.12, respectively.
-By Kevin Kingsbury, Dow Jones Newswires; 212-416-2354;
kevin.kingsbury@dowjones.com