Waterbury-based Webster Bank is still on track to close its merger with New York’s Sterling Bancorp next month, according to company officials, a contrast to other, similar banking deals, which appear to be held up at the federal level.
Speaking with analysts last week during a quarterly earnings call, Webster President and CEO John R. Ciulla said the two lenders are still expected to officially combine on Feb. 1. All legacy Sterling customers will be converted to the Webster brand, Ciulla said, and the partnering firms will consolidate their operations over the coming 18 months.
Webster and Sterling announced plans to unite in a $10.3 billion “merger of equals” last April, and the Board of Governors of the Federal Reserve System signed off on the deal on Dec. 17. That same board has still yet to render a decision on People’s United Bank’s acquisition by Buffalo-based M&T Bank, which has been in the works since February 2021 and was supposed to close by the end of last year.
M&T officials have told analysts that similar mergers and acquisitions are also being held up, leading to speculation that the Biden administration is cracking down on industry consolidation. Last summer, Biden issued an executive order instructing federal regulators to strengthen oversight of bank mergers, which the White House believes are reducing competition at the expense of consumers.
The governors apparently harbored no reservations about the Webster and Sterling linkup, however, and cleared it a month and a half ahead of the closing date.
Webster reported fourth-quarter earnings of $108.4 million, or $1.20 per diluted share, up from $57.7 million, or 64 cents per diluted share, in the fourth quarter of 2020. Full-year income rose from $211.5 million, or $2.35 per diluted share, in 2020 to $398.7 million, or $4.42 per diluted share, in 2021.
Company officials attributed gains to loan growth in the residential and commercial sectors, as well as deposit balance growth in the retail banking side of the business.
Webster reported $34.9 billion in assets for the fourth quarter, up from $32.59 billion in the fourth quarter of 2021. Its stock price closed at $59.61 Wednesday.
Webster continues to shrink its physical footprint and operating costs as it prepares to complete its merger.
Over the past year, it has reduced its square footage by more than 15% and “materially and permanently” reduced overall operating costs,” Ciulla said.
Ciulla reported “significant” progress in reducing core compensation and occupancy expenses, savings which were offset partially by performance incentives due to strong production by Webster bankers.
“We are so excited to be putting these two great banks together — really great people on both sides — and we look forward to the future,” Ciulla said.
