UPDATE 2-People's United CEO resigns; capital use back in focus

Mon Apr 26, 2010 3:16pm EDT

* Replaces CEO Philip Sherringham

* Names John Barnes as interim CEO

* Says move discussed "for a few weeks"

* Looking at both internal/external candidates

* Stock up 1 pct (Adds conference call details, analyst comments; stock movement)

April 26 (Reuters) - Cash rich U.S. bank People's United Financial Inc (PBCT.O) said its Chief Executive Philip Sherringham resigned from the company, and it named John Barnes as interim CEO.

"The board believes that new leadership is necessary to take the company to the next level," the company said in a statement.

Sitting on a cash pile of $2.82 billion, the company did not participate in any significant regulator-assisted deal or acquire any bank for more than a year now.

Outgoing CEO Sherringham was the architect of the company's acquisition of Chittenden Bank about three years ago, which was widely viewed as highly overpriced, Sandler O'Neill analyst Mark Fitzgibbon said.

The company has also failed to win large FDIC-backed deals, and has been too slow in deploying excess cash, which may have led to the CEO's ouster, the analyst noted.

Though the company has been planning the management change for "a few weeks," there was no "one single catalyst" for the move, Chairman George Carter said in a conference call with analysts.

The outgoing CEO could not be immediately reached for comment.

People's United said it will continue to pursue its strategy of deploying the bank's excess capital through open bank acquisitions as well as opportunistic FDIC-assisted transactions.

"It sends a message to investors that the board is serious about leveraging excess capital," analyst Fitzgibbon said.

Sherringham has been at the helm of the company for the last two-and-a-half years. Barnes has been working as the chief administrative officer since early 2008, the company said.

People's United, which is looking for a permanent CEO, said it will evaluate internal and external candidates and has retained executive search firm Russell Reynolds.

On April 15, People's United reported a 44 percent fall in quarterly profit, as merger-related and system conversion expenses weighed heavily in the bank's financial performance, but hiked its quarterly dividend by a cent. [ID:nSGE63E0KE]

Shares of the Bridgeport, Connecticut-based company were up about a percent at $16.08 Monday on Nasdaq. (Reporting by Archana Shankar and Anurag Kotoky in Bangalore; Editing by Anne Pallivathuckal, Jarshad Kakkrakandy)