Webster Financial Corp. (NYSE:WBS) Q4 2014 Earnings Conference Call - Final Transcript
Jan 22, 2015 • 09:00 am ET
Good morning and welcome to Webster Financial Corporation's Fourth Quarter 2014 Results Conference Call.
(Forward-Looking Cautionary Statement)
I would now introduce your host, Jim Smith, Chairman and CEO of Webster. Please go ahead, sir.
Thank you, Kevin. Good morning, everyone. Welcome to Webster's fourth quarter earnings call and webcast. CFO, Glenn MacInnes, and I will review business and financial performance, after which President Joe Savage, Glenn and I will take questions. Webster moved further along the path to high performance in the fourth quarter and for the full year 2014 with our sustained growth and progress driven by a succession of solid strategic choices. We've invested our capital and resources and energy and growth strategies that are adding value for customers and shareholders.
Beginning on Slide 2, record quarterly net income of $51 million increased 6% year-over-year excluding Volcker Rule OTTI Q4 2013. Well, earnings per share also increased 6% on this basis. Full year net income reached the milestone of $200 million. Return on average common equity in the quarter was 8.8% and return on average tangible common equity was 11.8% holding steady due to higher capital levels resulting
from earnings growth. All my further comments will be based on core operating earnings. Looking at Slides 3 and 4, year-over-year results were driven by solid Q4 loan growth. Overall loan balances grew 3% linked quarter and over 9% year-over-year with originations across the bank in near record levels. Once again, strength in commercial and commercial real-estate loans up 5% linked quarter and 15% year-over-year accounted for most of the growth.
Quite notably, the net interest margin was unchanged at 3.17% which speaks to our rigorous pricing discipline predicated on relationship profitability and validated by independent outside sources. The strong loan growth and stable NIM produced record quarterly net interest income. Non-interest income grew 5% linked quarter and 4% year-over-year with particular strength in loan fees. Apart from the $1.8 million year-over-year decline in mortgage banking revenue, growth was almost 8%.
Core Pre-Provision Net Revenue or PPNR grew nearly 3% linked quarter and over 4% year-over-year to another record, we've now reported 21 consecutive quarters of year-over-year revenue growth dating back to 2009. Expenses again grew at a lower rate than revenues, both linked quarter and year-over-year even as we continually invest in our chosen strategies and in a risk infrastructure. The net result once again is an efficiency ratio below 60% pushing PPNR up 8% linked quarter to another record.
The quarterly loan loss provision remained at $9.5 million as loan growth was accompanied by continuing improvement and asset quality. Key credit quality metrics are at levels not seen since 2007 reflecting the improving economy and vigilant risk management. We've now built reserves in four straight quarters totaling about $7 million net ad to reserves for the year 2014 versus the prior year net release from reserves of $24 million.
Turning to Slide 5, to put performance into full-year context, sustained revenue growth and expense discipline have resulted in record