Increases in commercial and residential lending, funded by low-cost deposit growth, boosted first-quarter profits at Webster Financial in Waterbury, Conn.
Net income at the $26 billion-asset company rose 27.6% year over year to $57.3 million at March 31. Earnings per share increased to 62 cents, beating by a nickel the average estimates of analysts compiled by FactSet Research Systems.
Higher demand for commercial, commercial real estate and residential mortgage loans offset declines in consumer lending. Year-over-year deposit growth of 8.1%, largely in its health savings account business, helped to keep Webster’s cost of funds low and boost yields on interest-earning assets.
“Record net income was driven by $1.1 billion in commercial loan growth year over year, fully funded by HSA and transactional account deposit growth,” Chairman and CEO James C. Smith said in a news release. “Our 30th consecutive quarter of year-over-year revenue growth benefited from rising interest rates. The solid results reflect sustained progress in executing sound growth strategies that maximize value for customers and shareholders.”
Net interest income increased 9.4% to $192.7 million. The net interest margin expanded by 11 basis points year over year to 3.22%.
Noninterest income increased slightly to $63.1 million. That reflected increases in loan and lease fees and deposit fees and was offset by declines in client swap activity and "HSA other income" related to an adjustment of an acquisition receivable.
Noninterest expenses rose 7.4% to $163.7 million, driven largely by higher compensation and benefits.