WATERBURY, Conn. – Webster Financial Corp. on Friday posted a third-quarter profit of $22.69 million, an improvement on its $19.25 million loss in the same period a year ago, thanks in part to much smaller provision for anticipated bad loans.
Webster, New England’s largest independent bank and the parent of Webster Bank N.A., recorded $223.57 million in interest and non-interest revenue for quarter that ended Sept. 30, down 2.4 percent from the $229.12 million in the year-earlier period.
But the bank benefited from reducing its third-quarter loan-loss set aside to $25 million, down from $85 million in the 2009 third quarter, and down from $32 million a quarter earlier.
The smaller provision signals that the bank believes its credit portfolio – which like other financial institutions has been riddled with troubled loans – is improving. That improvement allowed the bank
Meanwhile, Webster’s involvement in the government’s Troubled Asset Relief Program led to a payment of $4.91 million of preferred dividends to the U.S. Treasury, reducing net income available to common shareholders to $17.78 million.
The company’s earnings per diluted share totaled 22 cents, higher than the 17 cents per share profit forecast by a consensus of 11 analysts who cover the bank, according to Yahoo!Finance.
“Our operating fundamentals remained strong and credit trends showed further improvement,” James C. Smith, chairman and CEO, said in a statement. “Expansion in the net interest margin was a key contributor to our performance, and we continued to build core deposit balances. The origination of $644 million in loans during the third quarter, which was up 11 percent from last quarter, shows our success in helping finance the economic recovery in our markets.”
The bank said nonperforming loans – loans that are more than 90 days overdue – continued to decline in the third quarter to $331.12 million as of Sept. 30, down from $372.98 million at the end of 2009.
And charge-offs – loans the bank has deemed uncollectible – dropped to $34.45 million from $35.98 million in the second quarter and $66.96 million in the 2009 third quarter.
“Given improvement in key asset quality indicators in the quarter, including the level of non-performing loans, charge-offs and delinquencies, we were able to report a lower provision for loan losses compared to the second quarter,” said Jerry Plush, Webster’s senior executive vice president and chief financial officer. “If a continuation of such positive trends occurs in coming quarters, reduced provisioning is a likely outcome.”
The bank’s net interest margin widened in the third quarter to 3.36 percent, up nine basis points from three months earlier and up 18 basis points from a year ago.
Total deposits increased to $13.57 billion on Sept. 30, a gain from the second-quarter total of $13.48 billion, but a decline from the Sept. 30, 2009, total of $13.6 billion.
Additional information is available at www.websteronline.com.
