Webster Financial Corp.
) reported its fourth quarter 2012 earnings of 52 cents per
share, marginally surpassing the Zacks Consensus Estimate of 49
cents. The results also compared favorably with the prior-quarter
earnings of 48 cents.
CENTER BANCORP (CNBC): Free Stock Analysis
HORIZON BNCP-IN (HBNC): Free Stock Analysis
MB FINANCL INC (MBFI): Free Stock Analysis
WEBSTER FINL CP (WBS): Free Stock Analysis
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The improvement in the quarterly results came on the back of
increased top line and reduced operating expenses. Moreover, loan
and deposit balances witnessed growth in the quarter. However, a
rise in total nonperforming assets was the dampener.
Net income available to shareholders for the reported quarter
came in at $47.9 million, up from $44.4 million in the prior
For the year 2012, Webster reported net income available to
common shareholders of $171.24 billion or $1.86 per share up from
$148.09 billion or $1.61 per share recorded in 2011. Net income
also compared favorably with the Zacks Consensus Estimate of
Performance in Detail
Webster's total revenue inched up 2.2% from $220.7 million in the
prior quarter to $225.5 million. Moreover, revenue surpassed the
Zacks Consensus Estimate of $196.0 million by 12.6%.
Net interest income edged up 1.0% sequentially to $146.3 million.
The rise was mainly attributable to lower interest expenses.
However, net interest margin dipped 1 basis point from the
prior-year quarter to 3.27%. The decline was attributable to a
drop in yield on interest-earning assets and the reduction in the
cost of funds.
Non-interest income stood at $52.9 million, rising 9.2% from
$48.5 million in the prior quarter. The increase was primarily
due to higher loan related fees, higher income from mortgage
banking activities, increased wealth and investment services,
higher deposit service fees as well as other income.
Non-interest expense was $122.9 million, marginally down by 0.8%
from $123.9 million in the prior quarter. The marginal decline
was attributable to lower compensation and benefits as well as
marketing expenditure, partly offset by increase in loan workout
expenses and other expenses.
The efficiency ratio improved to 59.68% from 62.25% in the prior
quarter. The reduction in efficiency ratio indicates rise in
Asset quality was a mixed bag in the quarter. The ratio of
nonperforming loans to total loans rose to 1.62% from 1.39% in
the prior quarter.
Further, ratio of net charge offs to annualized average loans
came in at 0.56% in the reported quarter, down from 0.61% in the
previous quarter. Total nonperforming assets stood at $198.2
million, increasing 18.3% from the last quarter.
Loans and Deposits
Webster's total loans in the reported quarter were $12.0 billion,
rising 2.6% from the previous quarter. The improvement was mainly
driven by increases in commercial loans and commercial real
Total deposits, for the quarter, marginally climbed 0.8%
sequentially to $14.5 billion. The increase was primarily due to
the higher levels of demand deposits including interest-bearing
checking and savings deposits.
Profitability and Capital Ratios
Webster's profitability and capital ratios exhibited a modestly
cautious approach. As of Dec 31, 2012, tier 1 risk-based capital
ratio was 12.48% compared with 11.90% as of Sep 30, 2012 and
13.05% as of Dec 31, 2011.
Total risk-based capital ratio came in at 13.73% as against
13.16% in the prior quarter and 14.61% in the prior-year quarter.
Tangible common equity ratio stood at 7.17%, down from 7.39% as
of Sep 30, 2012 but up from 7.03% as of Dec 31, 2011.
The return on average assets was 0.99% in the reported quarter
compared with 0.92% as of Sep 30, 2012 and 0.88% as of Dec 31,
2011. As of Dec 31, 2012, return on average stockholders' equity
came in at 9.54%, up from 9.18% from Sep 30, 2012 and 8.67% as of
Dec 31, 2011. Book value per common share was recorded at $22.75,
up from $22.24 in the prior quarter and $20.74 in the year-ago
We are quite impressed with Webster's decent top-line growth as
well as reducing operating expenses. Moreover, the company's
constantly improving credit quality and strong balance sheet are
expected to be beneficial to its overall expansion in the near
future. Nevertheless, we are concerned about the impacts of the
prevailing low interest rate environment, sluggish economic
growth and stringent regulatory landscape on the company's
financials in the subsequent quarters.
Webster currently retains a Zacks Rank #3 (Hold). Among other
Center Bancorp Inc.
) retains a Zacks Rank #1 (Strong Buy), while
MB Financial Inc.
) carries a Zacks Rank #2 (Buy).