Webster Bank Sees Gradual Recovery later In Year Once Worst Of Pandemic Passes
Hartford Courant, April 23, 2020
By Kenneth Gosselin
The parent of Waterbury-based Webster Bank said Tuesday it doesn’t envision a quick bounce back in the economy once the worst of the COVID-19 pandemic is past, but it does expect improvement later in 2020.
“I’m not sure we’re thinking of a ‘V-shaped’ recovery,” Glenn I. MacInnes, Webster’s chief financial officer, said on a conference call with Wall Street analysts. “We’re thinking of a more gradual recovery toward the second half of the year.”
On Tuesday, Webster Financial Corp., parent of one of Connecticut’s largest banks, posted first quarter earnings that included setting aside $64 million to cover loans and other assets that could be affected by the pandemic.
On the call, Webster executives said 750 small business borrowers across its four-state footprint — with Connecticut its largest market — with $300 million in loans sought changes in their loan terms, or a modification, in the quarter. That represents about 17% of the $1.7 billion small business banking loan portfolio.
Across Webster’s broader commercial lending business, industry sectors such as retail, travel and leisure, construction and transportation and aerospace were hit the hardest.
Webster chief executive John R. Ciulla said Webster, and banks in general, are in a better position to make modifications because they came into the sudden, economic downturn in a far stronger financial position than the last recession in 2007. Regulators also have eased requirements over allowing payment deferrals and approving loan modifications, Ciulla said.
“We haven’t seen a lot of our borrowers say, ‘If I don’t get out of this in the next two months, I’m done,' ” Ciulla said.
Jason Soto, Webster’s chief credit officer, said there have been less requests for loan modifications in the past two weeks, especially the past week.
“It’s hard to peg exactly where we think we might end up,” Soto said. “So, we do think we are going to see more than what we have seen so far. It may slow down for now. We may see another wave when some of these initial modification requests that we granted sort of come back for more discussion.”
Soto said some borrowers have withdrawn requests for loan modifications since the federal Payment Protection Program, known as PPP, went into effect.
Federal rescue helping back to top
Ciulla said federal programs such as the PPP — part of the $2.2 trillion federal economic rescue package — have helped provide other options for business owners.
“We’re seeing evidence of that support,” Soto said.
The $349 billion PPP ran out of money last week, but Congress may authorize another $250 billion later this week. The program, overseen by the U.S. Small Business Administration with applications going through banks and credit unions, got off to a rocky start amid online systems going down and final guidelines not worked out until after the program got underway.
Nationally, PPP was marred by disclosures that large commercial borrowers sometimes edged out small businesses.
As of Friday, the SBA said Connecticut had 18,435 loans approved through PPP, amounting to $4.1 billion.
At Webster, Ciulla said the company processed 2,000 PPP applications, totaling $650 million, with 90% of the applications coming from existing customers.
Webster Financial reported earnings applicable to common shareholders for the quarter that ended March 31 of $36 million, or $0.39 per diluted share. That compared to $97.5 million, or $1.06 per diluted share, for the quarter ended March 31, 2019, reflecting a provision that includes covering the impact of COVID-19.
In early afternoon trading, Webster shares were off 63 cents, at $22.93, on the New York Stock Exchange.