That's a well-known financial firm; Connecticut's People's United Financial (PBCT), however, is anything but. "They were misunderstood by the market. They were a mutually owned savings and loan that has opted to go at least partially public," he explains. Having done so, it is sitting on a lot of capital. He's waiting patiently for People's to make what he thinks will be "a transformative acquisition."

Like NewAlliance, People’s United Financial operates out of Connecticut, and these two banks will share the spoils of the FDIC’s bad-bank auctions. People’s holds $20 billion in assets, or loans, $14 billion in deposits, and it’s among the top five in market share in Connecticut, New Hampshire and Vermont. Some of the company’s 300 branches are located in Maine, Massachusetts and Westchester County, New York, as well. And management plans to double or triple its assets over the next two to five years. There is a “problem,” though. People’s United just has too much money on its hands, as seen in that 19.5% tangible-capital-to-assets ratio. No wonder this bank scoffed at the government’s TARP money. The company’s been putting some of that money to work, last year buying Chittenden, Vermont’s largest full-service bank, at a discount. There are plans to buy a Northeast commercial bank as well, and, of course, People’s is ready to take on whatever the FDIC has to offer. Soon enough, this midsized regional bank, Cramer says, could be a regional banking titan.

Excess cash

These include First Niagara (FNFG), People's United Financial (PBCT), NewAlliance (NAL) and Glacier (GBCI). Increasingly I believe the FDIC will call on these banks to acquire others with bad commercial real estate precisely because they are brimming with capital. The objections to entities buying collapsing banks has to do with weak capitalization structure, particularly when it comes to private equity.

Hold -- Price 15.12 on July 6
by Maxim Group

PBCT is expected to report 2Q09 earnings July 16, and we're not anticipating a material change in recent earnings trends; we expect 2Q09 EPS ... of 7 cents, in line with consensus mean estimates for PBCT [of] 5 cents to 8 cents ... . Last quarter, PBCT reported EPS of 8 cents, below the 10-cent consensus, [on] slower top-line growth, due to margin compression. While provision costs were elevated, overall credit quality was solid, with a net charge-off ratio of only 18 basis points. Market cap: $5.3 billion.

Little guy gets big?

growth

POTENTIAL

No dept, lots of cash.

Q: What is an example of that?

A: For the most part, we don't invest in banks, but we have a stake in People's United Financial (PBCT), based in Connecticut. It has become the 11th-largest bank in the country by market capitalization.