Updated with early market action and comments from Jefferies analyst Casey Haire.
The bank -- headquartered in Waterbury, Conn. -- reported second-quarter net income available to common shareholders of $40.6, or 44 cents a share, meeting the consensus estimate of a 44 cents, among analysts polled by Thomson Reuters. In comparison, the company reported net income to common shareholders of $38.3 million, or 42 cents a share, during the first quarter and $33.4 million, or 36 cents a share, during the second quarter of 2011.
The company's shares were up 2.5% in the first few minutes of trading, to $21.97.Webster Financial had $18.4 billion in total assets as of June 30. The company's combined commercial and commercial real estate loans increased 4.2% sequentially and 9.2% year-over-year, to $5.5 billion. Total loans grew 2% during the second quarter and 5% year-over-year, to $11.5 billion, as of June 30. Webster president and chief operating officer Jerry Plush said that second-quarter loan originations "were 69 percent higher than a year ago and totaled over $1 billion in the quarter," and that a strong pipeline at the end of the quarter "should bode well for the balance of the year." Nonperforming assets -- including nonaccrual loans and repossessed real estate -- totaled $$173.6 million as of June 30 or 0.89% of total loans, improving from 0.96% the previous quarter, and 1.40% a year earlier. An $11.5 million release of loan loss reserves during the second quarter directly boosted earnings. Reserves covered 1.72% of total loans and 117.44% of nonperforming loans, as of June 30. Following the trend for most large regional banks, Webster saw its net interest margin -- the difference between a bank's average yield on loans and investments and its average cost for deposits and wholesale borrowings -- decline to 3.32% during the second quarter, from 3.36% the previous quarter, and 3.48% a year earlier. Coveted transaction account deposits grew 3.3% during the second quarter and 14% from a year earlier to $673.5 million as of June 30, "which represent 39.2 percent of total deposits compared to 38.0 percent at March 31 and 35.0 percent a year ago," according to the company, mitigating some of the margin pressure.