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Connecticut-based Webster Bank recorded a notable year-over-year jump in net income in its second-quarter earnings call Thursday morning.
Net income hit $230.8 million, with $1.32 diluted per-share – nearly 30 percent up from the $178.1 million net income, or $1.00 per diluted share, in the same quarter in 2022.
The second quarter results include the $40.8 million pre-tax ($29.9 million after tax) of charges related to the merger with Sterling Bancorp. on Jan. 31 last year. Excluding these charges, the company’s adjusted earnings per diluted share would have been $1.501 for the second quarter.
“We are proud to deliver consistent earnings during a challenging period for the banking industry,” John R. Ciulla, Webster president and chief executive officer, said in a statement. “Our unique and resilient funding profile, robust capital position, and talented colleagues enabled our performance in the quarter and position us well for the future.
Net interest income for the quarter ended at $583.8 million, up from $486.66 million in the same quarter last year, while first half net interest income was at $1.179 billion, a jump from $880.9 million in the same six months the previous year.
“Consistent with our conservative risk-management approach, we increased on balance sheet liquidity during the quarter given the events of March. This had a temporary 12 basis point impact on the net interest margin, but was neutral to net interest income,” he added, referring to the March bank failures, resulting in a net interest margin of 3.35 percent for Webster versus the 3.66 percent the previous quarter and 3.74 percent from the second quarter of 2022.
The company stated that its total non-interest income for the quarter was $89.4 million, a decrease of $31.5 million from the $120.9 million in the same quarter last year, mainly due to lower client hedging activity, lower prepayment and other loan related servicing fees, lower client deposit fees, and the outsourcing of the consumer investment services platform.
Total deposits in the second quarter reached $58.7 billion which was higher than $55.3 billion in the first quarter and $53.1 billion in the second quarter of 2022.
Second quarter loans and leases amounted to $51.6 billion, which was higher than the $50.9 billion during January to March of 2023 and the $45.6 billion in the second quarter of last year.
The company reported during their earnings call on Thursday that office commercial real estate amounts to 2.5 percent share in their total loans, and that they have reduced their non-medical related office exposure, divesting around $80 million in office loans.
The bank’s total asset dipped to $74 billion by the end of June from the $74.81 billion in the first quarter of 2023.
For the rest of 2023, the company is expecting loan growth to be around 4 to 6 percent, while core deposit growth will be around 8 to 10 percent with their newly acquired interLINK further diversifying their funding sources.
The company said its net interest income might reach $2.35 to $2.37 billion by year’s end, with its net interest margin improving 10 to 15 basis points from second quarter’s 3.35 percent. Net interest income is forecasted to land at around $355 to $365 million by the end of 2023.
