Buoyed by improved asset quality and a surge in commercial loan originations, Webster Financial Corp. in Waterbury, Conn., said Thursday that its fourth-quarter net income jumped 63% from the same period in 2010, to $39.6 million.
Earnings per share rose 48%, to 43 cents, topping by one cent the estimates of analysts polled by Thomson Reuters.
The key contributor to the improved results was the decline in problem assets. Total nonperforming assets fell 36% year over year, which allowed $19 billion-asset Webster to reduce provision for loan losses from $15 million in the fourth quarter of 2010 to $2.5 million in the most recent fourth quarter.
While total loans remained relatively flat when compared with the prior quarter, Webster said that originations increased nearly 36% from three months earlier, to $972 million. The bulk of that growth was on the commercial side and was funded largely by an increase in transaction account deposits.
In a news release, Webster Chairman and Chief Executive James C. Smith said that the fourth-quarter results capped a year of "meaningful, across-the-board-progress" for New England's second-largest bank.
"Among our strategic priorities, higher transaction balances are funding business loan growth, and our emphasis on relationship banking over account acquisition is producing more value for our clients," Smith said. Still, he added, "we have much to do to sustain our progress and improve financial performance in 2012, with special emphasis on improving the ratio of expenses to revenue."
On the revenue side, the company said that noninterest income declined by $2.4 million from the prior quarter due largely to a drop in interchange income resulting from new caps on debit card transaction fees. Meanwhile, Webster's noninterest expense ticked up $3.4 million primarily due to higher compensation costs.
Smith has
