Philip R. Sherringham is out as president and CEO of regional bank operator People’s United Financial Inc., with the bank’s board effectively blaming him for moving too slowly to build up the Bridgeport lender through acquisitions.
The chairman of People’s United’s board of directors said Monday the bank needed new leadership to reach the next level.
In late morning trading, People’s was up 32 cents, or 2 percent, at $16.22.
Sherringham, 56, mutually agreed with the board to resign and will be replaced on an interim basis by John P. “Jack” Barnes, 54, who is also the company’s senior executive vice president.
The board will search inside and outside the bank for a permanent CEO.
“Today, the company is in a very strong strategic and financial position with an enviable footprint, fortress balance sheet, solid asset quality, and many growth opportunities,” Board Chairman George Carter said. “However, the board believes that new leadership is necessary to take the company to the next level.”
Sherringham’s departure comes two weeks after the bank posted a 44 percent drop in quarterly profit, as merger-related expenses weighed heavily on the bank’s financial performance. But the bank hiked its annual dividend a penny, to 62 cents a share.
Mark Fitzgibbon, an analyst with Sandler O’Neill & Partners in New York, wrote in a note to investors this morning that he wasn’t surprised with the move.
He said that under Sherringham’s watch, People’s United has been too slow in deploying more than $2 billion in excess capital and has missed out on several large Federal Deposit Insurance Corp.-assisted acquisitions.
Sherringham was also the architect of the company’s acquisition of Chittenden Bank about three years ago, which was widely viewed as overpriced, Fitzgibbon said.
People’s, with $20.6 billion in assets and 300 branches, recently acquired a failed Lowell, Mass., lender, Â Butler Bank, yet only added about $237 million in assets and four bank branches.
In February, People’s also completed a $738 million purchase of New York equipment lender Financial Federal Corp.
Sherringham joined the company in 2003 and became CEO in February 2008, though he had served as acting president and CEO since November 2007, when then CEO John A. Klein took a medical leave. Klein succumbed to cancer in January 2008.
Fitzgibbon also said he was puzzled by Sherringham’s interim replacement; Barnes is a former Chittenden executive.
“Over the years that we have followed People’s United, we have been to the company’s offices many times and met virtually all of the senior executives. However, we have never met Mr. Barnes,” Fitzgibbon wrote. “To the best of our knowledge, he has never been exposed to investors. Therefore, his choice as interim CEO is a bit surprising.”
Fitzgibbon said he would have expected Bob D’Amore, who is head of People’s retail and small business banking or Brian Dreyer, head of commercial banking, to be Sherringham’s most likely successors.
“In our view, the board of directors at People’s will probably look to bring on a new CEO who could quickly lever the $2 billion of excess capital to improve both the earnings power of the organization and its franchise value, before contemplating a sale,” Fitzgibbon wrote.
While it’s unlikely, Fitzgibbon said there is about a 5 percent chance People’s United could also sell itself to help fill its CEO void.
