A Webster Bank branch in downtown Boston. Photo by James Sanna | Banker & Tradesman Staff
Webster Bank’s fourth-quarter net income declined due to the one-time charges from the FDIC special assessment restocking the nation’s deposit insurance fund, expenses on the merger with Sterling National Bank and securities repositioning.
Net income dropped to $185.39 million in the fourth quarter compared to $226.47 million in the third quarter and $244.75 million in the fourth quarter of 2022. If not for the one-time costs, Webster Bank would have a profit of $254.69 million.
The bank recorded higher loans and deposits quarter-on-quarter, but suffered from higher interest paid on liabilities, causing net interest income to decline to $571.02 million from $602.37 million last quarter.
Total loans ticked up slightly $50.7 billion from $50.1 billion last quarter due to the growth of commercial loans, while deposits also had a modest growth to $60.7 billion from $60.2 billion the prior quarter.
Webster’s Chief Financial Officer Glenn MacInnes said during the bank’s earnings call Tuesday that loan originations in the fourth quarter are more on the “low-risk, lower-yielding portfolios” composed of C&I lending in fund banking, public sector and business banking sectors, and commercial real estate lending in stronger risk-rated portfolios including multifamily assets.
Webster reported it actively reduced its office lending portfolio, slashing $615 million in office loans in the fourth quarter, a 35 percent decrease versus the fourth quarter of 2022. As of the end of 2023, the bank has $1.04 billion in office loans, taking up a 2.1 percent share of its total loans.
It said it had no delinquencies in office loans and recorded a $276 million office portfolio maturing this year.
The bank is projecting 5 percent to 7 percent growth in both loans and deposits for 2024, positive that its closing of its Ametros acquisition by the end of January this year as well as its newly-acquired interLINK deposit administration business will contribute to new funding sources for deposits, while looking to mature some high yield certificates of deposit. It is expecting loan growth to come from renewed demand from a projected four interest rate cuts by the Federal Reserve this year.
It is also projecting full-year expenses to be around the $1.30 billion to $1.325 billion range, half of which will comprise of expenses relating to the Ametros acquisition.
Webster Bank has branches in the Greater Boston area and the south of Boston.
