Webster Financial in Waterbury, Conn., announced plans to significantly cut annual expenses.
The $33 billion-asset company said on Thursday that it will reduce operating expenses by 8% to 10% by the end of next year. That would be roughly equal to $66 million in annual expenses, executives said during a conference call to discuss quarterly results.
Webster began a companywide assessment of revenue opportunities and its expense structure in January, but the effort gained momentum when the coronavirus pandemic hit, John Ciulla, the company’s chairman, president and CEO, said during the call.
Changing dynamics tied to the pandemic “not only made our commitment to this process that much stronger, but it also expanded the opportunities we have to rationalize and align our expenses with our business line execution,” he said.
The company provided very few details, though branch closings and reduced office space are part of the plan. Executives said they would provide an update in January that would include financial details and a schedule for achieving cost savings.
Ciulla also said the initiative would focus on efficiency and organizational alignment, simplifying Webster’s organizational structure, improving back-office operations and automating “critical processes.” Webster also plans to enhance its digital capabilities and reduce the cost of delivering services as part of the effort.
“As we work through our final analytics and make final decisions, we'll be able to provide … perspective,” Ciulla said. “We're not kicking the can forward, but we wanted to put a stake in the ground of what we expect to do from sort of a structural realignment of the way we operate into 2022.”
Webster’s third-quarter earnings rose by 31% from a quarter earlier to $69.3 million. Its loan-loss provision fell by 43% to $22.8 million, while noninterest income increased by 25% to $75.1 million.
Net interest income decreased by 2.3% to $219.3 million, and noninterest expenses rose by 4% to $184 million.
