STAMFORD, Conn. – Webster Financial Corporation (NYSE: NYSE:), the parent company of Webster Bank, North Carolina, disclosed its financial results for the first quarter ended March 31, 2024.
The company reported adjusted earnings per diluted share of $1.35, $0.06 below analysts’ consensus estimates of $1.41. Revenue for the quarter was $667.1 million, also below the consensus estimate of $680.8 million.
Chairman and CEO John R. Ciulla commented on the quarter’s results, noting an adjusted return on assets of 1.26% and an adjusted return on common equity of 17.85%. Ciulla also noted the expansion of the bank’s deposit franchise following the completion of the Ametros acquisition, which expands Webster’s experience in healthcare financial services.
The bank’s loan and leasing balance increased 0.7% from the previous quarter to $51.1 billion, with 80.9% coming from commercial loans and leasing and 19.1% from consumer loans. Despite a slight decrease in the closing deposit balance of 0.1% from the previous quarter, Webster reported a $1.5 billion increase in core deposits. The bank’s reserve for credit losses for the quarter amounted to $45.5 million.
Webster’s net interest margin decreased 7 basis points from the prior quarter to 3.35%. The Tier 1 common equity ratio was 10.51% and the efficiency ratio was 45.25%. The share of tangible capital was 7.15%.
The commercial banking sector experienced a $25.2 million decrease in net revenue before taxes and provisions compared to the prior year, primarily due to lower deposit balances and higher rates paid on deposits. However, the Healthcare Financial Services segment, which now includes HSA Bank and the recently acquired Ametros, saw significant growth in net pre-tax revenues of $13.0 million compared to the prior year, driven by the acquisition of Ametros and the growth of HSA Bank.
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Consumer banking net revenue before taxes and before provisions decreased $26.1 million compared to the prior year, with a notable decline in net interest income driven by higher deposit rates, although partially offset by growth in loans and deposits.
Overall, Webster’s consolidated financial results showed a decrease in net interest income compared to the prior year’s first quarter, with the provision for credit losses contributing to an increase in the provision for credit losses on loans and leases compared to the prior quarter. Non-interest income increased by $28.6 million, primarily due to the addition of Ametros and Bank Life Insurance (BOLI) events, while non-interest expense increased slightly by $3.4 million.
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