Citing improved asset quality and a widening net interest margin, Webster Financial Corp. in Waterbury, Conn., reported a $33.4 million profit in the second quarter, an increase of more than 162% from the same period in 2011.
The $17.8 billion-asset company said it earned 36 cents per diluted share, beating consensus analysts' estimates by a penny, according to Thomson Reuters.
In a news release Friday, Vice Chairman and Chief Operating Officer Jerry Plush said that "significant" reductions in past due loans, classified assets and nonperforming loans allowed the company to lower its loan-loss provision compared to prior periods. For the quarter, Webster set aside $5 million for loan losses, compared to $32 million in last year's second quarter.
Reductions in both its interest and noninterest expense helped boost the net interest margin, despite only modest loan growth. Its interest expense declined 23% year-over-year, to $35.2 million, while its noninterest expense fell 11%, to $132 million. The result was a 19-basis-point increase in its net interest margin, to 3.46%.
James C. Smith, Webster's chairman and chief executive officer, said that tighter expense control would be key to maintaining earnings growth.
"Given the relatively slow economic recovery, our plans for improving operating efficiency will be essential to sustaining positive earnings momentum."