Webster Bank 1Q13 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

$WBS Earnings Call Notes

“Underlying asset quality trends remain favorable.”

“Return on tangible common shareholders’ equity was 11.3% compared to 12.04% a year ago due to a 9% increase in tangible common equity.”

“Commercial banking continues to surge as commercial loans grew 16% year-over-year and commercial real estate loans grew 15%.”

“Central to becoming a high-performing bank is identifying ways to be more efficient in everything we do.”

“We’re also very focused on growing our noninterest income.”

“The Commercial Bank pipeline was really depleted at year-end from all those record fourth quarter closings, in part that borrowers were motivated to close ahead of anticipated tax changes in 2013. It’s really important to note we’ve rebuilt pipeline up to $320 million as of March 31, and we expect it to continue to grow from there.”

“deposit trends…The top chart highlights the 5% growth from a year ago while we reduced expenses by 11 basis points.”

“Net interest margin pressure continues, although we think we’re nearing the bottom given the continuing loan rate environment and an MBS CPR in the mid-20s, we expect further compression in the range of 5 basis points in Q2, driven primarily by anticipated decline in the investment portfolio yields.”

“we think that most of [weak industry loan growth] was the pull forward into the fourth quarter, and we haven’t seen a material shift in attitude from our clients.”

[analyst comment] “do you guys feel that you’re giving up anything in terms of growth initiatives? [by focusing on cost cutting]”

[answer] “I think that, though your point is well taken, that you don’t want to deny future revenue growth because of what you’re doing in a particular period. But I think there’s got to be a balance here, and that’s what we’re keeping in mind. I think the beauty of what we’ve done so far is that we’ve been adding revenue-producing people while becoming more efficient in terms of how we deliver the services, which has allowed us to actually have core reduction in expenses over comparable periods. Once we get under 60% [efficiency ratio] sustainably, I think the answer is, yes, we will be able to invest more aggressively even than we are now in adding bankers that will produce more revenue that will help to drive the positive operating leverage that we see in the future periods.”