Webster Bank's wealth management business continues to lose steam.
Revenue from wealth and investment services dropped for the fifth consecutive quarter, swooning 10.7% to $7.9 million from $8.8 million a year ago, according to the bank's parent company's financial results released Thursday.
The $7.9 million represents a 7.37% decline from the previous quarter.
The drop from the previous quarter was due to lower unanticipated volume in Webster Investment Services, the bank's brokerage business, in the latter part of the quarter, Glenn MacInnes, Webster's chief financial officer, said during the earnings call.
Jim Smith, the bank's chairman and CEO, noted that while the bank was "a little perplexed" the brokerage unit didn't have a higher growth rate, it had a strong back log of appointments, which he said will have a positive impact in the second quarter.
He also noted that the brokerage unit is in the process of converting a significant portion of its revenue to recurring revenue. "That creates a bit of a drag over the near term on overall revenue growth but is very positive for stable revenue growth over the longer term," he said.
Smith was enthusiastic about Webster Private Bank, which launched in March 2012. He noted that the private bank had gone through many changes over the last couple of years and was "pretty well through" with what he called "the model shift."
Smith commended Yves Cochez, the bank's chief investment strategist, crediting him for the strength of the private bank's AUM pipeline.
"The AUM pipeline is strong and growing, propelled by more sophisticated investment strategies, a broad asset allocation, and a new sales incentive plan aligned more closely with the private bank's strategic priority of growing AUM," Smith said.
"The chassis is in good shape," added Joe Savage, Webster's president, in reference to the private bank. "The thing that's really going to get this thing going is continuing to add to our sales folks."
Still, the numbers overall for wealth and investment services were weak. In March 2014, Webster lost a team of five wealth management professionals, who defected to People's United Bank. The team was led by David Dixon, the former director of Webster Private Bank and former director of wealth management for Webster Financial Corp. The other team members included the director of business development for the wealth management arm of Webster Bank and three portfolio managers, one of which has since returned to Webster Bank, according to Sarah Barr, a spokeswoman for the bank.
"The March 2014 departures were an anomaly, directly related to the model shift," she said in an email. "We have made significant investments in new talent as part of our strategic transformation, bringing energy, enthusiasm, technical expertise and practical experience necessary to compete successfully in the modern private banking market," she said.
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