Health savings account business lags at Webster
Quarterly profits fell at Webster Financial in Waterbury, Conn., on a $40 million loan-loss provision and weakness in its health savings accounts niche.
The $32.7 billion-asset company's earnings, including dividends paid on preferred stock, fell 47% in the second quarter from a year earlier to $50.7 million, or 57 cents a share. Its revenue fell 10.4% to $284.5 million.
Analysts raised concerns about the $32.7 billion-asset Webster’s HSA business as deposit fees fell $3.3 million from March 31. Most of the decline came from a $2.4 million decrease in interchange fees as consumers spent less on health care.
Webster has long touted its HSA business line as an area of growth.
"COVID-19 has had a mixed impact on the overall HSA business" in the second quarter, President and CEO John Ciulla said during a Thursday conference call to discuss quarterly results.
Because of the coronavirus pandemic, many hospitals suspended elective surgeries as they braced for a shortage of beds, and that curtailed consumer spending from the accounts. Now that sector is beginning to pick up again as elective medical procedures resume, Ciulla said.
Ciulla assured analysts that though the pandemic hurt the performance of Webster's HSA Bank division, contribution levels have remained steady and added to second-quarter deposit growth. Deposits grew 16.6% from a year earlier, with HSA deposits increasing by $622 million, or 10%.
It's hard to predict how the HSA business will fare in the second half of the year since new enrollments "remain a little bit depressed,” Charles Wilkins, the head of HSA Bank, said during Thursday's call. New enrollments declined in March and April but ticked up in June and July, Wilkins said. HSA Bank opened 97,000 new accounts in the second quarter, down 25% from a year earlier.