WATERBURY, Conn. – Webster Financial Corp., parent company of Webster Bank, reported a 20.2 percent gain in fourth-quarter profit to $48.5 million.
The gains were driven by strong growth in commercial lending and declining expenses, as earnings per diluted share hit 52 cents for the three months ended Dec. 31, an increase of 9 cents year over year, according to the Bank.
The Connecticut lender pointed to growth of its commercial loan portfolio of $339.4 million, or 5.9 percent, in the quarter as well as deposit growth of $117.4 million, or 0.8 percent, along with improvement of asset quality, as key to its performance. In addition, as total interest and non-interest income increased 4.8 percent in the fourth quarter to $225.5 million, the company was able to cut its total interest and non-interest expenses by 5.8 percent to $149.2 million.
Webster Chairman and CEO James C. Smith highlighted the bank’s loan growth, saying that “originations rose 40 percent in the fourth quarter from a year ago and 46 percent for the full year to set a new record, and our loans to businesses now comprise more than half of our total loan portfolio,” which reached $12 billion by the end of the year, an increase of 7.2 percent over 2011.
Webster’s fourth-quarter activity powered improved full-year results as well, with the bank posting consolidated net income for 2012 of $173.7 million, an increase of 14.7 percent over 2011, on total interest and non-interest income of $886.3 million. Earnings per diluted share on the year hit $1.86 versus $1.61 during the same quarter 2011.
Many of the standard metrics for the bank improved on the year. For instance, return on average assets came in at 0.98 percent for 2012, compared with 0.88 percent in 2011, on total assets of $20.1 billion. Return on average equity totaled 9.54 percent versus 8.67 percent in 2011. However, the net interest margin declined to 3.27 percent from 3.39 percent at the end of 2011.
Asset quality improvement was validated by improved metrics as well. For instance, the allowance for loan losses in the fourth quarter totaled $177.1 million, compared with $231.5 million, despite the growth in loans made, which was reflected with the ratio of allowance for loan losses versus total loans of 1.47 percent by the end of 2012, compared with 2.08 percent a year earlier. On the year, the amount that Webster made in commercial and commercial real estate loans increased $860.6 million, or 16.4 percent year over year.