Webster's Earnings Rise on Increased Loans

A surge in commercial and commercial real estate loans helped boost profits at Webster Financial (WBS) by 7% in third-quarter, to $44.4 million, from a year earlier.

The $19.7 billion-asset company said Friday that third-quarter earnings per share totaled 48 cents, beating analysts polled by Bloomberg by a penny. For the first nine months of the year, the Waterbury, Conn., company earned $123.3 million, up almost 14% from the same period a year ago.

Total loans rose 5%, to $11.7 billion, year over year as commercial and commercial real estate loans climbed almost 13%, to $5.8 billion. Loan originations were $835.6 million, up nearly 17% from a year earlier.

"Webster's momentum continued to build in the third quarter. Loans and deposits grew, revenues increased while expenses declined, asset quality trends remain favorable and earnings regained pre-recession levels," James C. Smith, Webster's chairman and chief executive, said in a news release. "Our investments in business banking, mortgage banking and other relationship development initiatives are positively influencing operating results."

Noninterest income rose more than 8%, to $48.5 million, from a year ago as fees from mortgage banking activities and wealth and investment services increased. The third quarter also included $810,000 in gains on investment securities.

Noninterest expense was $123.3 million, up almost 3% from a year earlier but down slightly from the second quarter. The quarter-over-quarter decline came from a reduction in technology, marketing, professional services and loan workout expenses. This was partially offset by a $2.5 million increase in compensation and benefits.

Nonperforming assets fell about 30%, to $167.5 million, while net chargeoffs dropped 39%, to $17.7 million, from a year ago. Webster's provision for loan loss remained flat at $5 million.

In a separate announcement on Friday, Webster named Daniel FitzPatrick to lead its private banking unit. FitzPatrick has 20 years of experience in the private client business and has held leadership roles at J.P. Morgan Private Bank, Citigroup Private Bank and Goldman Sachs Private Wealth Management. Most recently he worked at BNY Mellon Wealth Management.

Webster's shares were down nearly 4% at midday Friday, to $22.22.