Webster Financial (NYSE:WBS), the holding company of Webster Bank, based in Connecticut, saw its profits decline by nearly 62% on an annualized basis in the first quarter.
The bank reported net income of roughly $36 million, or $0.39 per diluted share, compared to net income of roughly $97.5 million in the first quarter of 2019.
Webster reported a credit provision in the quarter (cash banks set aside for expected loan losses) of $76 million to reflect expected losses that could result from the coronavirus pandemic, up from $8.6 million in the prior year period.
The bank's total reserves set aside for loan losses jumped 60% because the bank adopted the new current expected credit losses (CECL) accounting method, which requires banks to reserve for losses over the life of a loan as soon as it is originated.
CECL added $58 million to the bank's total reserves upon impact, and then the impact of coronavirus added another $64 million. However, the bank still has a ton of capital built up.
"Webster's strong capital and liquidity positions enable us to support our customers and communities during this trying time," Glenn MacInnes, the bank's executive vice president and CFO, said in a statement.
He added, "Our Common Equity Tier 1 capital ratio of 11 percent exceeds the regulatory well-capitalized level by $1 billion, and our loan-to-deposit ratio of 85 percent reflects our funding strength."
Pre-provision net interest income at Webster, money the bank makes on interest from loans and from other investments, declined by about 4.5% year-over-year, while non-interest income grew about 7% on an annual basis.