STAMFORD, Conn. - Webster Financial Corporation (NYSE: NYSE:WBS), the parent company for Webster Bank, N.A., disclosed its financial results for the first quarter ended March 31, 2024.
The company reported adjusted earnings per diluted share of $1.35, falling short of the analyst consensus of $1.41 by $0.06. 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 performance, highlighting the adjusted return on assets of 1.26% and an adjusted return on tangible common equity of 17.85%. Ciulla also noted the expansion of the bank's deposit franchise with the close of the Ametros acquisition, which broadens Webster's expertise in healthcare financial services.
The bank's loan and lease balance saw a modest increase of 0.7% from the previous quarter, reaching $51.1 billion, with a composition of 80.9% commercial loans and leases and 19.1% consumer loans. Despite a slight decrease in period-end deposit balance by 0.1% from the prior quarter, Webster reported core deposit growth of $1.5 billion. The bank's provision for credit losses was $45.5 million for the quarter.
Webster's net interest margin declined by 7 basis points from the previous quarter to 3.35%. The common equity tier 1 ratio stood at 10.51%, and the efficiency ratio was 45.25%. The tangible common equity ratio was recorded at 7.15%.
Commercial Banking experienced a decrease in pre-tax, pre-provision net revenue by $25.2 million compared to the previous year, mainly due to lower deposit balances and higher rates paid on deposits. However, the Healthcare Financial Services segment, which now includes HSA Bank and the newly acquired Ametros, saw a significant increase in pre-tax net revenue by $13.0 million from the prior year, attributable to the acquisition of Ametros and growth at HSA Bank.
Consumer Banking's pre-tax, pre-provision net revenue decreased by $26.1 million compared to the previous year, with a notable decrease in net interest income driven by higher rates paid on deposits, though partially offset by loan and deposit growth.
Overall, Webster's consolidated financial performance showed a decrease in net interest income compared to the first quarter of the previous year, with a provision for credit losses contributing to an increase in the allowance for credit losses on loans and leases from the prior quarter. Non-interest income increased by $28.6 million, primarily due to the addition of Ametros and Bank-Owned Life Insurance (BOLI) events, while non-interest expense saw a slight increase of $3.4 million.
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