A Webster Bank branch in downtown Boston in 2019. Banker & Tradesman file photo.
Connecticut-based Webster Bank saw first quarter earnings increase almost 200 percent compared to the same quarter last year, when banks were responding to the start of the pandemic.
Webster, which this week announced plans to merge with New York-based Sterling National Bank, had first quarter earnings applicable to common shareholders of $105.5 million, or $1.17 per diluted share, compared to $36 million, or $0.39 per diluted share, in the first quarter of 2020. Webster’s earnings include the performance of both the bank and the HSA Bank division.
Webster’s first quarter results reflected pre-tax charges of $9.4 million related to the bank’s strategic initiatives. Adjusting for those charges, the earnings per diluted share would have been $1.25 for the first quarter. The bank had taken a $42 million pre-tax charge in the fourth quarter related to the initiatives, when earnings applicable to common shareholders were $57.7 million, or $0.64 per diluted share.
“We continued to make meaningful progress on our strategic initiatives during a solid first quarter,” John R. Ciulla, Webster’s chairman and CEO, said in a statement announcing the first quarter earnings. “Our focus remains on delivering for our customers, communities, bankers and shareholders.”
Webster was able to reduce its provision for loan losses under the current expected credit loss (CECL) accounting method by $25.8 million. The bank’s allowance for credit losses is now 1.54 percent of total loans, or 1.64 percent excluding $1.3 billion of Paycheck Protection Program loans. Because PPP loans are guaranteed by the U.S. Small Business Administration, banks are not required to make an allowance for losses on these loans.
Webster’s total loans were $21.3 billion compared to $21.6 billion at the end of 2020 and $20.9 billion in the first quarter of 2020. Commercial real estate loans increased by $15.4 million since Dec. 31, while commercial loans decreased by $140.4 million, residential mortgages decreased by $113.1 million and consumer loans decreased by $101.8 million.
Compared to a year ago, Webster’s commercial real estate loans increased by $215.6 million, while commercial loans, not including PPP loans, decreased by $436.6 million, consumer loans decreased by $354.7 million and residential mortgages decreased by $322.6 million. Webster’s PPP loans totaled $1.3 billion at the end of the first quarter, and the bank has originated $533 million in the current round of PPP lending.
Loans receiving COVID-19-related payment deferrals continued to decline. The bank in the first quarter had 1.3 percent of its total loans receiving payment deferrals, according to the bank’s investor presentation, including $239 million of its commercial loan portfolio and $15 million for consumers. At the end of 2020, 1.6 percent of the total portfolio had payment deferrals.
Webster had $28.5 billion in deposits in the first quarter compared to $27.3 billion in the fourth quarter and $24.5 billion in the first quarter of 2020. Deposits grew 16.2 percent from a year ago, including growth of $1.8 billion in demand deposits and $719 million in HSA deposits.
The HSA Bank division had $10.6 billion in total footings in the first quarter compared to $8.6 billion a year ago.
