Commercial loan growth drives ’13 profit gain at Webster

Webster Financial Corp., parent company of Webster Bank, posted a profit increase in 2013 over the previous year, with growth in commercial lending highlighting the increase, according to the bank’s fourth-quarter and year-end earnings report released Friday. More

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Commercial loan growth drives ’13 profit gain at Webster

A GROWING COMMERCIAL LOAN portfolio highlighted Webster Bank's 2013 performance, which resulted in a 3.4 percent increase in net income for the year.
Posted 1/17/14

WATERBURY, Conn. – Webster Financial Corp., parent company of Webster Bank, posted a profit increase in 2013 over the previous year, with growth in commercial lending highlighting the increase, while income from residential mortgage activity showed a substantial decline, according to the bank’s fourth-quarter and year-end earnings report released Friday.

Year over year the bank showed 3.4 percent net income growth, posting $179.5 million in profit, or $1.86 per diluted share.

Quarter over quarter, however, Webster posted a 9.8 percent decline in profit, falling to $43.8 million from $48.5 million in the 2012 fourth quarter. Earnings per diluted share totaled 45 cents in 2013, compared with 52 cents per diluted share in the last three months of 2012.

“Strong overall performance was driven by multiple factors – in a nutshell, record core revenues, positive operating leverage once again, strong commercial loan growth, improving asset quality and a steeper yield curve produced a record level of quarterly core pre-taxed, pre-provision earnings of over $80 million,” said Chairman and CEO James C. Smith in releasing the earnings report. “Net interest income increased 2.6 percent linked quarter and over 5 percent year-over-year to another quarterly record driven by a 4 basis point increase in the net interest margin and ongoing strength in commercial lending.”

The bank’s strongest performance was in commercial lending, with combined growth in commercial and commercial real estate loans of $695.6 million, or 11.4, percent from a year ago.

Wealth management was a strong segment for the bank in the fourth quarter of 2013, with revenue at nearly $10 million, compared with $7.9 million in the fourth quarter of 2012. During 2013, wealth management services delivered $34.8 million in revenue, an increase of 18 percent over $29.5 million in that category for 2012.

Residential mortgage banking activity revenue of $2.8 million for the fourth quarter represented a decline of 677.4 percent from the $8.5 million in revenue a year earlier. Mortgage banking activity revenue totaled $16.4 million for 2013 compared with $23 million in 2012, a decline of just under 29 percent.

“Total originations were just under $1.2 billion in the quarter, which was 21 percent lower than a year ago,” said Smith. “More than half the decline was in residential mortgages, given the still high level of refinancing activity a year ago.”

Asset quality improved as well, total charge-offs in the fourth quarter declining 19.3 percent to $18.9 million, total past-due loans falling 28.8 percent to $52.9 million and total nonperforming assets falling 13.4 percent to $171.6.

The increase in loan activity did, however, bring an increase in the provision for loan losses, with an increase of 20 percent in the fourth quarter and 55.8 percent on the year. The bank pointed out that at year end, the total allowance for loan losses represented 1.2 percent of all loans, compared with 1.47 percent at the end of 2012.

Webster Bank has 13 branches and 108 employees in Rhode Island.

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