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Webster Financial (WBS) Q1 Earnings & Revenues Miss Estimates
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Webster Financial (WBS - Free Report) reported first-quarter 2023 adjusted earnings per share of $1.49, which missed the Zacks Consensus Estimate of $1.56. The reported figure excluded items such as charges related to merger and balance sheet repositioning.
Results were significantly affected by lower non-interest income. However due to higher rates net interest income grew. Also, rising loan balance and lower expenses were major tailwinds.
WBS reported net income applicable to common shareholders of $216.8 million against the prior-year quarter’s loss of $20.2 million.
Revenues Increase & Expenses Decline
Webster Financial’s total revenues in the quarter climbed 33.7% year over year to $666 million. However, the top line lagged the Zacks Consensus Estimate of $704.2 million.
The NII increased 51% year over year to $595.3 million. Net interest margin was 3.66%, up 45 basis points.
Non-interest income was $70.8 million, down 32% year over year. The primary reason for this fall was a decrease in wealth and investment services as well as other income along with a loss on the sale of investment securities.
Non-interest expenses were $332.5 million, down 7.6% from the year-ago quarter. A decrease in compensation and benefits, technology and equipment, professional and outside services drove the fall.
The efficiency ratio (on a non-GAAP basis) came in at 41.64% compared with 48.73% as of Mar 31, 2022. A lower ratio indicates higher profitability.
Webster Financial’s total loans and leases as of Mar 31, 2023, were $50.9 billion, up 2.3%, sequentially. Also, total deposits were up 2.3% from the previous quarter to $55.3 billion.
Return on average assets was 1.22% in the reported quarter. As of Mar 31, 2023, return on average common stockholders' equity was 10.94%, However, the tangible common equity ratio was 7.15%, down from 8.26%.
Credit Quality Improves
Total non-performing assets were $186.6 million as of Mar 31, 2023, down 25.7% from the year-ago quarter’s level. In addition, allowance for loan losses represented 1.21% of total loans, having shrunk 10 bps from the level as of Mar 31, 2022.
The company recorded provision for credit losses of $46.7 million compared with $188.8 million seen in the prior-year quarter. However, the ratio of net charge-offs to annualized average loans came in at 0.20% compared with 0.10% reported in the year-ago quarter.
Capital Ratios Decrease
As of Mar 31, 2023, Tier 1 risk-based capital ratio was 10.91% compared with 12.05% as of Mar 31, 2022. Additionally, the total risk-based capital ratio was 12.94% compared with the prior-year quarter’s 14.41%.
Our Viewpoint
Webster Financial’s results reflect strong growth in NII backed by higher rates. The strong profitability ratio was another positive factor.
Webster Financial Corporation Price, Consensus and EPS Surprise
U.S. Bancorp’s (USB - Free Report) first-quarter 2023 earnings per share (excluding merger and integration-related charges) of $1.16 handily beat the Zacks Consensus Estimate of $1.13 per share. It grew 17.2% from the prior-year quarter.
Results benefited from an increase in NII, supported by higher interest rates. However, a decline in non-interest income (largely on lower mortgage banking income) and higher expenses were the headwinds. Also, USB’s credit quality deteriorated in the reported quarter.
Citizens Financial Group (CFG - Free Report) reported first-quarter 2023 earnings per share of $1, missing the Zacks Consensus Estimate of $1.11. Nonetheless, the bottom line rose from 93 cents in the year-ago quarter.
CFG's results reflect NII growth on a rise in interest-earning assets. However, an escalation in expenses, lower non-interest income and a rise in provisions were the undermining factors.
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Webster Financial (WBS) Q1 Earnings & Revenues Miss Estimates
Webster Financial (WBS - Free Report) reported first-quarter 2023 adjusted earnings per share of $1.49, which missed the Zacks Consensus Estimate of $1.56. The reported figure excluded items such as charges related to merger and balance sheet repositioning.
Results were significantly affected by lower non-interest income. However due to higher rates net interest income grew. Also, rising loan balance and lower expenses were major tailwinds.
WBS reported net income applicable to common shareholders of $216.8 million against the prior-year quarter’s loss of $20.2 million.
Revenues Increase & Expenses Decline
Webster Financial’s total revenues in the quarter climbed 33.7% year over year to $666 million. However, the top line lagged the Zacks Consensus Estimate of $704.2 million.
The NII increased 51% year over year to $595.3 million. Net interest margin was 3.66%, up 45 basis points.
Non-interest income was $70.8 million, down 32% year over year. The primary reason for this fall was a decrease in wealth and investment services as well as other income along with a loss on the sale of investment securities.
Non-interest expenses were $332.5 million, down 7.6% from the year-ago quarter. A decrease in compensation and benefits, technology and equipment, professional and outside services drove the fall.
The efficiency ratio (on a non-GAAP basis) came in at 41.64% compared with 48.73% as of Mar 31, 2022. A lower ratio indicates higher profitability.
Webster Financial’s total loans and leases as of Mar 31, 2023, were $50.9 billion, up 2.3%, sequentially. Also, total deposits were up 2.3% from the previous quarter to $55.3 billion.
Return on average assets was 1.22% in the reported quarter. As of Mar 31, 2023, return on average common stockholders' equity was 10.94%, However, the tangible common equity ratio was 7.15%, down from 8.26%.
Credit Quality Improves
Total non-performing assets were $186.6 million as of Mar 31, 2023, down 25.7% from the year-ago quarter’s level. In addition, allowance for loan losses represented 1.21% of total loans, having shrunk 10 bps from the level as of Mar 31, 2022.
The company recorded provision for credit losses of $46.7 million compared with $188.8 million seen in the prior-year quarter. However, the ratio of net charge-offs to annualized average loans came in at 0.20% compared with 0.10% reported in the year-ago quarter.
Capital Ratios Decrease
As of Mar 31, 2023, Tier 1 risk-based capital ratio was 10.91% compared with 12.05% as of Mar 31, 2022. Additionally, the total risk-based capital ratio was 12.94% compared with the prior-year quarter’s 14.41%.
Our Viewpoint
Webster Financial’s results reflect strong growth in NII backed by higher rates. The strong profitability ratio was another positive factor.
Webster Financial Corporation Price, Consensus and EPS Surprise
Webster Financial Corporation price-consensus-eps-surprise-chart | Webster Financial Corporation Quote
Webster Financial currently carries a Zacks Rank #3 (Hold). You can the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
U.S. Bancorp’s (USB - Free Report) first-quarter 2023 earnings per share (excluding merger and integration-related charges) of $1.16 handily beat the Zacks Consensus Estimate of $1.13 per share. It grew 17.2% from the prior-year quarter.
Results benefited from an increase in NII, supported by higher interest rates. However, a decline in non-interest income (largely on lower mortgage banking income) and higher expenses were the headwinds. Also, USB’s credit quality deteriorated in the reported quarter.
Citizens Financial Group (CFG - Free Report) reported first-quarter 2023 earnings per share of $1, missing the Zacks Consensus Estimate of $1.11. Nonetheless, the bottom line rose from 93 cents in the year-ago quarter.
CFG's results reflect NII growth on a rise in interest-earning assets. However, an escalation in expenses, lower non-interest income and a rise in provisions were the undermining factors.