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Despite pressure from low rates, Webster still targeting efficiency ratio improvement

executivessaid July 20 that the company continues to work toward lowering its efficiency ratioto 60% by year-end 2016, even though it expects the profitability measure to remainabove that level in the near term.

Websterreported early July 20 that its efficiency ratio in the second quarter was 61.5%,compared to 62.0% in the prior quarter and 60.1% a year earlier. Webster said ona conference call to discuss second-quarter results that, excluding its Boston expansionefforts, the company's efficiency ratio would have been 59.2% in the second quarter.Webster announced in mid-Januarythat it had opened 14 banking centers in the Greater Boston area and said it plannedto open three more by the end of the month.

WebsterCFO Glenn MacInnes said on the second-quarter call that the company expects itsefficiency ratio in the third quarter to be about 62%, including its Boston expansion.He said the company is still working to bring the efficiency ratio down to 60% byyear-end.

"Itis a challenging rate environment. We're still targeting to do what we can by theend of the fourth quarter, and there's pressure on that," MacInnes said, accordingto the transcript. "But we're pulling all the [levers] we can, whether it'sloan growth, whether our focus on fees, whether it's bringing Boston up to speed."

The executivesaid the company expects average loan growth to be approximately 2% to 3% in thethird quarter. He further said the company expects pressure on its net interestmargin to persist, projecting that the margin will be flat to down 2 basis pointsin the third quarter. He clarified that the company does not expect any changesin short-term or long-term interest rates until the first quarter of 2017.

Webster'snet interest margin compressed to 3.08% in the second quarter from 3.11% in thelinked quarter, but expanded from 3.05% a year earlier.

In thesecond quarter, Webster reported net income available to common shareholders of$48.4 million, or 53 cents per share, compared to $49.8 million, or 55 cents pershare, a year earlier.