EX-99.1 2 q22013earningsreleaseexhib.htm EXHIBIT Q2 2013 Earnings Release Exhibit 99.1

Exhibit 99.1

 
 
 
 
 
 
Media Contact
 
 
  
Investor Contact
Bob Guenther, 203-578-2391
 
 
  
Terry Mangan, 203-578-2318
rguenther@websterbank.com
 
 
  
tmangan@websterbank.com

WEBSTER REPORTS 2013 SECOND QUARTER EARNINGS
Diluted Earnings per Share of $0.48 for the Quarter - an Increase of 9 Percent over Prior Year

WATERBURY, Conn., July 12, 2013 - Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today announced net income available to common shareholders of $43.7 million, or $0.48 per diluted share, for the quarter ended June 30, 2013 compared to $40.6 million, or $0.44 per diluted share, for the quarter ended June 30, 2012.

Highlights for the quarter or at June 30 include:
Combined growth in commercial and commercial real estate loans of $837.3 million, or 15.1 percent, from a year ago.
Deposit growth of $861.6 million, or 6.2 percent, from a year ago.
Positive operating leverage of 6.6 percent compared to a year ago as core revenue grew by 5.2 percent and core expenses declined by 1.4 percent; as a result, the efficiency ratio improved by 377 basis points to 59.98% from a year ago.
Continued improvement in asset quality as evidenced by a reduction of $155 million, or 34.8 percent, in commercial classified loans from a year ago, while past due loans declined $16.0 million, or 24.4 percent, from a year ago. Nonperforming assets increased $16.9 million, or 9.7 percent, from a year ago and otherwise would have decreased by $26.0 million, or 14.9%, had $42.9 million of residential and consumer loans not been required to be classified as nonaccrual under regulatory guidance that took effect in the fourth quarter of 2012.
Return on average assets and return on average tangible common equity were 0.92 percent and 12.26 percent, respectively, in the quarter compared to 0.86 percent and 12.38 percent, respectively, in the year ago quarter.
“Webster delivered another solid quarterly performance, marked by higher loan originations, strong revenue growth, further gains in operating efficiency and improved asset quality,” James C. Smith, Chairman and Chief Executive Officer, said.  “Core revenue growth exceeded 5% as net interest income reached its highest level ever, and expenses declined year over year. Looking ahead, our loan pipeline remains strong and is a positive indicator for the region's economic prospects.”







Net interest income

Net interest income was $147.1 million in the second quarter of 2013 compared to $144.4 million a year ago.

Net interest margin was 3.23 percent compared to 3.32 percent a year ago. The yield on interest-earning assets declined 27 basis points, and the cost of funds declined 19 basis points from the year ago quarter.

Average interest-earning assets totaled $18.6 billion in the quarter and grew by $769 million, or 4.3 percent, from the year ago quarter.

Average loans grew by $640.8 million, or 5.6 percent, from the year ago quarter.

Provision for loan losses

The Company recorded a provision for loan losses of $8.5 million in the second quarter of 2013 compared to $7.5 million in the first quarter of 2013 and $5.0 million in the year ago period.

Net charge-offs were $12.9 million in the quarter compared to $16.8 in the first quarter of 2013 and $16.5 million in the year ago period. The ratio of net charge-offs to average loans on an annualized basis was 0.43 percent in the quarter compared to 0.58 percent a year ago.

The allowance for loan losses represented 1.33 percent of total loans at June 30, 2013 compared to 1.40 percent at March 31, 2013 and 1.72 percent at June 30, 2012.

Noninterest income

Total noninterest income of $52.3 million in the second quarter of 2013 increased $4.9 million compared to a year ago; there were $0.3 million of securities gains in the quarter compared to the year ago quarter which had $2.5 million of securities gains.

Excluding securities gains, the $7.1 million increase in core noninterest income compared to a year ago reflects increases of $2.3 million in mortgage banking activities, $1.9 million in loan related fees, $1.7 million from wealth and investment services, $0.9 million in deposit service fees, and $0.9 million from an increase in the cash surrender value of life insurance policies. Other income was $0.6 million lower than in the year ago quarter.






Webster President and Chief Operating Officer Jerry Plush noted, “Stronger core non interest income this quarter included record results from our Webster Investment Services division, which posted $6.4 million in fee income. Higher revenue, along with lower non interest expense, contributed to a positive operating leverage of 6.6% versus prior year.”

Noninterest expense

Total noninterest expense of $123.6 million in the second quarter of 2013 decreased $3.6 million compared to the year ago period. Included in noninterest expense in the second quarter of 2013 are $0.9 million of net one-time costs that amounted to $0.01 per diluted share on an after-tax basis. These costs consisted primarily of stock registration costs, contract termination, and severance expenses. There were $3.2 million of net one-time costs in the year ago quarter that amounted to $0.02 per diluted share.

Total noninterest expense excluding one-time costs decreased $1.3 million from the second quarter of 2012. The decrease reflects declines of $1.9 million in professional and outside services, $1.3 million in marketing, $0.7 million in occupancy expenses, $0.6 million in loan workout expense, and $0.5 million in technology and equipment expense. These decreases were partially offset by increases of $2.2 million in compensation and benefits and $1.4 million in other expenses.

Foreclosed and repossessed asset expenses were $0.3 million in the quarter compared to $0.2 million a year ago, while gains on foreclosed and repossessed assets were $0.3 million and $0.7 million in the respective periods.

Income taxes

The Company recorded $20.8 million of income tax expense in the second quarter of 2013 on the $67.2 million of pre-tax income in the period. The effective tax rate was 31.0 percent compared to 30.8 percent a year ago.


Investment securities

Total investment securities were $6.4 billion at June 30, 2013 and $6.2 billion a year ago. The carrying value of the available for sale portfolio included $4.4 million in net unrealized gains compared to net unrealized gains of $46.7 million a year ago, while the carrying value of the held to maturity portfolio does not reflect $44.3 million in net unrealized gains compared to net unrealized gains of $158.4 million a year ago.






Loans

Total loans were $12.2 billion at June 30, 2013 compared to $12.0 billion at March 31, 2013 and $11.5 billion at June 30, 2012. In the quarter, commercial, commercial real estate, and residential mortgage loans increased by $161.4 million, $75.9 million, and $26.8 million, respectively. Consumer loans decreased by $19.8 million.

Compared to a year ago, commercial, commercial real estate, and residential mortgage loans increased by $521.9 million, $315.4 million, and $13.2 million, respectively. Consumer loans decreased by $144.2 million.

Loan originations for portfolio in the second quarter were $1,204 million compared to $690 million in the first quarter and $973 million a year ago. In addition, $206 million of residential loans were originated and sold with servicing retained in the quarter compared to $229 million in the first quarter and $198 million a year ago.

Asset quality

Past due loans were $49.8 million at June 30, 2013 compared to $40.0 million at March 31, 2013 and $65.9 million at June 30, 2012. Compared to March 31, 2013, past due commercial non-mortgage and consumer loans increased by $7.1 million and $1.4 million, respectively. Compared to June 30, 2012, all loan categories contributed to the decline except commercial non-mortgage and residential development, which totaled $11.6 million compared to $6.5 million a year ago.

Past due loans represented 0.41 percent of total loans at June 30, 2013, 0.33 percent at March 31, 2013, and 0.57 percent at June 30, 2012. Past due loans for the continuing portfolios were $46.4 million at June 30 compared to $37.2 million at March 31 and $60.4 million a year ago. Past due loans for the liquidating portfolio were $1.9 million at June 30 compared to $2.8 million at March 31 and $4.4 million a year ago.

Total nonperforming loans decreased to $186.7 million, or 1.52 percent of total loans, at June 30, 2013 compared to $198.8 million, or 1.66 percent, at March 31, 2013 and $169.2 million, or 1.47 percent, at June 30, 2012. Included in nonperforming loans at June 30 and March 31 are $42.9 million and $44.0 million, respectively, of residential and consumer loans classified as nonaccrual under regulatory guidance that took effect in the fourth quarter of 2012. Total paying nonperforming loans at June 30 were $61.9 million compared to $55.3 million at March 31 and $17.0 million a year ago, with the increase consisting primarily of the loans classified as such due to the regulatory guidance.







Deposits and borrowings

Total deposits were $14.8 billion at June 30, 2013 compared to $14.6 billion at March 31, 2013 and $14.0 billion at June 30, 2012. Compared to March 31, increases of $107.0 million in demand deposits, $102.0 million in interest-bearing checking deposits, and $101.7 million in money market deposits were offset by a decline of $101.3 million in certificates of deposit. Compared to a year ago, increases of $525.4 million in interest-bearing checking, $345.0 in demand deposits, and $333.3 million in money market deposits were offset by a decline of $404.6 million in certificates of deposit.

Core to total deposits and loans to deposits were 84.2 percent and 82.6 percent, respectively, compared to 83.3 percent and 82.1 percent at March 31, and 80.6 percent and 82.6 percent a year ago.

Total borrowings were $3.1 billion at June 30 compared to $3.2 billion at both March 31 and a year ago.

Capital

The tangible equity and tangible common equity ratios were 8.03 percent and 7.27 percent, respectively, at June 30, 2013 compared to 7.35 percent and 7.20 percent, respectively, a year ago. The Tier 1 common equity to risk-weighted assets ratio was 11.22 percent at June 30 compared to 10.97 percent a year ago.

Book value and tangible book value per common share were $21.88 and $15.93, respectively, at June 30, 2013 compared to $21.65 and $15.47, respectively a year ago.

Return on average tangible common shareholders' equity and return on average common shareholders' equity were 12.26 percent and 8.78 percent, respectively, in the second quarter compared to 12.38 percent and 8.62 percent, respectively, a year ago.

***

Webster Financial Corporation is the holding company for Webster Bank, National Association. With $20 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust and investment services through 168 banking centers, 296 ATMs, telephone banking, mobile banking, and the Internet. Webster Bank owns the asset-based lending firm Webster Business Credit Corporation; the equipment finance firm Webster Capital Finance Corporation; and HSA Bank, a division of Webster Bank, which provides health savings account trustee and administrative services. Webster Bank is a member of the FDIC and an equal housing lender. For more information about Webster, including past press releases and the latest annual report, visit the Webster website at www.websterbank.com.

***









Conference Call

A conference call covering Webster's 2013 second quarter earnings announcement will be held today, Friday, July 12, 2013 at 9:00 a.m. (Eastern) and may be heard through Webster's Investor Relations website at www.wbst.com, or in listen-only mode by calling 1-877-407-8289 or 201-689-8341 internationally. The call will be archived on the website and available for future retrieval.


Forward-Looking Statements

This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”). Forward-looking statements can be identified by words such as “believes,” “anticipates,” “expects,” “intends,” “targeted,” “continue,” “remain,” “will,” “should,” “may,” “plans,” “estimates,” and similar references to future periods; however, such words are not the exclusive means of identifying such statements. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, and other financial items; (ii) statements of plans, objectives, and expectations of Webster or its management or Board of Directors; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Forward-looking statements are based on Webster's current expectations and assumptions regarding its business, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Webster's actual results may differ materially from those contemplated by the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to: (1) local, regional, national, and international economic conditions and the impact they may have on us and our customers and our assessment of that impact; (2) volatility and disruption in national and international financial markets; (3) government intervention in the U.S. financial system; (4) changes in the level of non-performing assets and charge-offs; (5) changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (6) adverse conditions in the securities markets that lead to impairment in the value of securities in our investment portfolio; (7) inflation, interest rate, securities market, and monetary fluctuations; (8) the timely development and acceptance of new products and services and perceived overall value of these products and services by customers; (9) changes in consumer spending, borrowings, and savings habits; (10) technological changes; (11) the ability to increase market share and control expenses; (12) changes in the competitive environment among banks, financial holding companies, and other financial service providers; (13) the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities, and insurance) with which we and our subsidiaries must comply, including those under the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III update to the Basel Accords that is under development; (14) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters; (15) the costs and effects of legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews; and (16) our success at managing the risks involved in the foregoing items and (17) the other factors that are described in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q under the heading Risk Factors. Any forward-looking statement made by the Company in this release speaks only as of the date on which it is made. Factors or events that could cause the Company's actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.








Non-GAAP Financial Measures

In addition to results presented in accordance with GAAP, this press release contains certain non-GAAP financial measures. A reconciliation of net income and other performance ratios, as adjusted, is included in the accompanying selected financial highlights table.
We believe that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, our performance trends and financial position. Specifically, we provide measures based on what we believe are our operating earnings on a consistent basis and exclude non-core operating items which affect the GAAP reporting of results of operations. We utilize these measures for internal planning and forecasting purposes. We, as well as securities analysts, investors, and other interested parties, also use these measures to compare peer company operating performance. We believe that our presentation and discussion, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting our business and allows investors to view performance in a manner similar to management. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results, and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.
---30---





WEBSTER FINANCIAL CORPORATION
Selected Financial Highlights (unaudited)
 
 
 
 
 
 
 
At or for the Three Months Ended
(In thousands, except per share data)
June 30,
2013
 
March 31,
2013
 
December 31,
2012
 
September 30,
2012
 
June 30,
2012

 
 
 
 
 
 
 
 
 
Income and performance ratios (annualized):
 
 
 
 
 
 
 
 
 
Net income attributable to Webster Financial Corp.
$
46,373

 
$
42,117

 
$
48,526

 
$
44,993

 
$
41,240

Net income available to common shareholders
43,734

 
39,231

 
47,911

 
44,378

 
40,625

Net income per diluted common share
0.48

 
0.44

 
0.52

 
0.48

 
0.44

Return on average assets
0.92
%
 
0.84
%
 
0.98
%
 
0.92
%
 
0.86
%
Return on average tangible common shareholders' equity
12.26

 
11.28

 
13.66

 
13.03

 
12.38

Return on average common shareholders’ equity
8.78

 
8.01

 
9.74

 
9.19

 
8.62

Noninterest income as a percentage of total revenue
26.22

 
24.88

 
26.57

 
25.07

 
24.70

Efficiency ratio
59.98

 
62.16

 
59.68

 
62.25

 
63.75

 
 
 
 
 
 
 
 
 
 
Asset quality:
 
 
 
 
 
 
 
 
 
Allowance for loan losses
$
163,442

 
$
167,840

 
$
177,129

 
$
186,089

 
$
198,757

Nonperforming assets
190,539

 
203,355

 
198,181

 
167,524

 
173,621

Allowance for loan losses / total loans
1.33
%
 
1.40
%
 
1.47
%
 
1.59
%
 
1.72
%
Net charge-offs / average loans (annualized)
0.43

 
0.56

 
0.56

 
0.61

 
0.58

Nonperforming loans / total loans
1.52

 
1.66

 
1.62

 
1.39

 
1.47

Nonperforming assets / total loans plus OREO
1.56

 
1.69

 
1.65

 
1.43

 
1.50

Allowance for loan losses / nonperforming loans
87.55

 
84.42

 
90.93

 
114.44

 
117.44

 
 
 
 
 
 
 
 
 
 
Other ratios (annualized):
 
 
 
 
 
 
 
 
 
Tangible equity ratio
8.03
%
 
8.12
%
 
7.92
%
 
7.52
%
 
7.35
%
Tangible common equity ratio
7.27

 
7.35

 
7.15

 
7.37

 
7.20

Tier 1 risk-based capital ratio (a)
12.90

 
12.75

 
12.47

 
11.90

 
12.82

Total risk-based capital (a)
14.15

 
14.01

 
13.73

 
13.16

 
14.08

Tier 1 common equity / risk-weighted assets (a)
11.22

 
11.06

 
10.78

 
11.10

 
10.97

Shareholders’ equity / total assets
10.47

 
10.58

 
10.39

 
10.05

 
9.94

Net interest margin
3.23

 
3.23

 
3.27

 
3.28

 
3.32

 
 
 
 
 
 
 
 
 
 
Share and equity related:
 
 
 
 
 
 
 
 
 
Common equity
$
1,975,826

 
$
1,976,482

 
$
1,941,881

 
$
1,954,739

 
$
1,902,609

Book value per common share
21.88

 
21.90

 
22.75

 
22.24

 
21.65

Tangible book value per common share
15.93

 
15.93

 
16.42

 
16.08

 
15.47

Common stock closing price
25.68

 
24.26

 
20.55

 
23.70

 
21.66

Dividends declared per common share
0.15

 
0.10

 
0.10

 
0.10

 
0.10

 
 
 
 
 
 
 
 
 
 
Common shares issued and outstanding
90,289

 
90,237

 
85,341

 
87,899

 
87,885

Basic shares (weighted average)
89,645

 
85,501

 
86,949

 
87,394

 
87,291

Diluted shares (weighted average)
90,087

 
89,662

 
91,315

 
91,884

 
91,543


(a)
The ratios presented are projected for June 30, 2013 and actual for the remaining periods presented.


 




WEBSTER FINANCIAL CORPORATION
Consolidated Balance Sheets (unaudited)
 
 
 
(In thousands)
June 30,
2013
 
March 31,
2013
 
June 30,
2012
Assets:

 

 

Cash and due from banks
$
179,068

 
$
118,657

 
$
197,229

Interest-bearing deposits
32,601

 
51,352

 
73,598

Investment securities:

 

 

Available for sale, at fair value
3,257,360

 
3,318,238

 
3,153,580

Held to maturity
3,129,864

 
3,111,169

 
3,076,226

Total securities
6,387,224

 
6,429,407

 
6,229,806

Loans held for sale
81,161

 
96,706

 
89,228

Loans:
 
 
 
 
 
Commercial
3,507,927

 
3,346,483

 
2,985,993

Commercial real estate
2,866,814

 
2,790,954

 
2,551,427

Residential mortgages
3,313,833

 
3,287,072

 
3,300,617

Consumer
2,557,719

 
2,577,523

 
2,701,960

Total loans
12,246,293

 
12,002,032

 
11,539,997

Allowance for loan losses
(163,442
)
 
(167,840
)
 
(198,757
)
Loans, net
12,082,851

 
11,834,192

 
11,341,240

Prepaid FDIC premiums

 
16,644

 
27,062

Federal Home Loan Bank and Federal Reserve Bank stock
158,878

 
158,878

 
142,595

Premises and equipment, net
122,704

 
127,609

 
137,420

Goodwill and other intangible assets, net
537,673

 
538,915

 
542,783

Cash surrender value of life insurance policies
423,598

 
420,562

 
312,117

Deferred tax asset, net
73,166

 
55,656

 
79,011

Accrued interest receivable and other assets
250,314

 
261,960

 
257,660

Total Assets
$
20,329,238

 
$
20,110,538

 
$
19,429,749

 
 
 
 
 
 
Liabilities and Equity:
 
 
 
 
 
Deposits:
 
 
 
 
 
Demand
$
2,956,320

 
$
2,849,355

 
$
2,611,297

Interest-bearing checking
3,388,505

 
3,286,540

 
2,863,076

Money market
2,267,463

 
2,165,744

 
1,934,137

Savings
3,882,691

 
3,885,394

 
3,850,549

Certificates of deposit
2,191,188

 
2,292,441

 
2,595,816

Brokered certificates of deposit
149,408

 
144,408

 
119,052

Total deposits
14,835,575

 
14,623,882

 
13,973,927

Securities sold under agreements to repurchase and other short-term borrowings
1,213,349

 
1,033,767

 
1,203,378

Federal Home Loan Bank advances
1,627,517

 
1,902,563

 
1,529,102

Long-term debt
229,928

 
230,709

 
472,928

Accrued expenses and other liabilities
295,394

 
191,486

 
318,866

Total liabilities
18,201,763

 
17,982,407

 
17,498,201

 
 
 
 
 
 
Preferred stock
151,649

 
151,649

 
28,939

Common shareholders' equity
1,975,826

 
1,976,482

 
1,902,609

Webster Financial Corporation shareholders’ equity
2,127,475

 
2,128,131

 
1,931,548

Total Liabilities and Equity
$
20,329,238

 
$
20,110,538

 
$
19,429,749






WEBSTER FINANCIAL CORPORATION
Consolidated Statements of Income (unaudited)
 
 
 
 
(In thousands, except per share data)
Three Months Ended June 30,

Six Months Ended June 30,
 
2013
 
2012
 
2013
 
2012
Interest income:
 
 
 
 
 
 
 
Interest and fees on loans and leases
$
121,720

 
$
121,379

 
$
242,781

 
$
242,120

Interest and dividends on securities
47,822

 
52,597

 
96,207

 
105,465

Loans held for sale
551

 
657

 
1,188

 
1,155

Total interest income
170,093

 
174,633

 
340,176

 
348,740

Interest expense:
 
 
 
 
 
 
 
Deposits
12,024

 
15,102

 
24,874

 
31,158

Borrowings
11,008

 
15,153

 
22,445

 
29,836

Total interest expense
23,032

 
30,255

 
47,319

 
60,994

Net interest income
147,061

 
144,378

 
292,857

 
287,746

Provision for loan losses
8,500

 
5,000

 
16,000

 
9,000

Net interest income after provision for loan losses
138,561

 
139,378

 
276,857

 
278,746

Noninterest income:
 
 
 
 
 
 
 
Deposit service fees
24,622

 
23,719

 
48,616

 
47,082

Loan related fees
5,505

 
3,565

 
10,090

 
8,434

Wealth and investment services
8,920

 
7,249

 
16,686

 
14,470

Mortgage banking activities
5,888

 
3,624

 
12,919

 
8,007

Increase in cash surrender value of life insurance policies
3,448

 
2,561

 
6,832

 
5,078

Net gain on investment securities
333

 
2,537

 
439

 
2,537

Other income
3,535

 
4,098

 
4,947

 
5,731

Total noninterest income
52,251

 
47,353

 
100,529

 
91,339

Noninterest expense:
 
 
 
 
 
 
 
Compensation and benefits
65,768

 
63,587

 
131,818

 
132,206

Occupancy
11,837

 
12,578

 
24,716

 
25,460

Technology and equipment expense
15,495

 
16,021

 
30,848

 
31,603

Marketing
3,817

 
5,094

 
8,628

 
9,194

Professional and outside services
1,527

 
3,387

 
3,677

 
6,079

Intangible assets amortization
1,242

 
1,397

 
2,484

 
2,794

Foreclosed and repossessed asset expenses
331

 
176

 
506

 
643

Foreclosed and repossessed asset gains
(250
)
 
(670
)
 
(534
)
 
(1,334
)
Loan workout expenses
1,576

 
2,201

 
3,550

 
4,025

Deposit insurance
5,524

 
5,723

 
10,698

 
11,432

Other expenses
15,800

 
14,443

 
30,175

 
28,433

 
122,667

 
123,937

 
246,566

 
250,535

Debt prepayment penalties

 
2,515

 
43

 
3,649

Severance, contract, and other
937

 
727

 
2,530

 
808

Total noninterest expense
123,604

 
127,179

 
249,139

 
254,992

Income before income taxes
67,208

 
59,552

 
128,247

 
115,093

Income tax expense
20,835

 
18,312

 
39,757

 
34,915

Net income attributable to Webster Financial Corp.
46,373

 
41,240

 
88,490

 
80,178

Preferred stock dividends
(2,639
)
 
(615
)
 
(5,525
)
 
(1,230
)
Net income available to common shareholders
$
43,734

 
$
40,625

 
$
82,965

 
$
78,948

 
 
 
 
 
 
 
 
Diluted shares (average)
90,087

 
91,543

 
89,953

 
91,669

 
 
 
 
 
 
 
 
Net income per common share available to common shareholders:
 
 
 
 
 
 
 
Basic
$
0.49

 
$
0.46

 
$
0.94

 
$
0.90

Diluted
0.48

 
0.44

 
0.92

 
0.86





WEBSTER FINANCIAL CORPORATION
Five Quarter Consolidated Statements of Income (unaudited)
 
 
 
 
 
 
 
Three Months Ended
(In thousands, except per share data)
June 30,
2013
 
March 31,
2013
 
December 31,
2012
 
September 30,
2012
 
June 30,
2012
Interest income:
 
 
 
 
 
 
 
 
 
Interest and fees on loans and leases
$
121,720

 
$
121,061

 
$
122,179

 
$
121,367

 
$
121,379

Interest and dividends on securities
47,822

 
48,385

 
49,752

 
50,194

 
52,597

Loans held for sale
551

 
637

 
615

 
655

 
657

Total interest income
170,093

 
170,083

 
172,546

 
172,216

 
174,633

Interest expense:

 
 
 
 
 
 
 
 
Deposits
12,024

 
12,850

 
13,885

 
14,543

 
15,102

Borrowings
11,008

 
11,437

 
12,389

 
12,783

 
15,153

Total interest expense
23,032

 
24,287

 
26,274

 
27,326

 
30,255

Net interest income
147,061

 
145,796

 
146,272

 
144,890

 
144,378

Provision for loan losses
8,500

 
7,500

 
7,500

 
5,000

 
5,000

Net interest income after provision for loan losses
138,561

 
138,296

 
138,772

 
139,890

 
139,378

Noninterest income:
 
 
 
 
 
 
 
 
 
Deposit service fees
24,622

 
23,994

 
24,823

 
24,728

 
23,719

Loan related fees
5,505

 
4,585

 
5,570

 
4,039

 
3,565

Wealth and investment services
8,920

 
7,766

 
7,859

 
7,186

 
7,249

Mortgage banking activities
5,888

 
7,031

 
8,515

 
6,515

 
3,624

Increase in cash surrender value of life insurance policies
3,448

 
3,384

 
3,496

 
2,680

 
2,561

Net gain on investment securities
333

 
106

 

 
810

 
2,537

Other income
3,535

 
1,412

 
2,677

 
2,521

 
4,098

Total noninterest income
52,251

 
48,278

 
52,940

 
48,479

 
47,353

Noninterest expense:
 
 
 
 
 
 
 
 
 
Compensation and benefits
65,768

 
66,050

 
65,769

 
66,126

 
63,587

Occupancy
11,837

 
12,879

 
12,209

 
12,462

 
12,578

Technology and equipment expense
15,495

 
15,353

 
15,489

 
15,118

 
16,021

Marketing
3,817

 
4,811

 
3,104

 
4,529

 
5,094

Professional and outside services
1,527

 
2,150

 
2,479

 
2,790

 
3,387

Intangible assets amortization
1,242

 
1,242

 
1,242

 
1,384

 
1,397

Foreclosed and repossessed asset expenses
331

 
175

 
267

 
118

 
176

Foreclosed and repossessed asset gains
(250
)
 
(284
)
 
(383
)
 
(409
)
 
(670
)
Loan workout expenses
1,576

 
1,974

 
2,338

 
1,693

 
2,201

Deposit insurance
5,524

 
5,174

 
5,642

 
5,675

 
5,723

Other expenses
15,800

 
14,375

 
13,934

 
13,805

 
14,443

 
122,667

 
123,899

 
122,090

 
123,291

 
123,937

Debt prepayment penalties

 
43

 

 
391

 
2,515

Severance, contract, and other
937

 
1,593

 
835

 
205

 
727

Total noninterest expense
123,604

 
125,535

 
122,925

 
123,887

 
127,179

Income before income taxes
67,208

 
61,039

 
68,787

 
64,482

 
59,552

Income tax expense
20,835

 
18,922

 
20,261

 
19,489

 
18,312

Net income attributable to Webster Financial Corp.
46,373

 
42,117

 
48,526

 
44,993

 
41,240

Preferred stock dividends
(2,639
)
 
(2,886
)
 
(615
)
 
(615
)
 
(615
)
Net income available to common shareholders
$
43,734

 
$
39,231

 
$
47,911

 
$
44,378


$
40,625

 
 
 
 
 
 
 
 
 
 
Diluted shares (average)
90,087

 
89,662

 
91,315

 
91,884


91,543

 
 
 
 
 
 
 
 
 
 
Net income per common share available to common shareholders:
 
 
 
 
 
 
 
 
 
Basic
$
0.49

 
$
0.46

 
$
0.55

 
$
0.51


$
0.46

Diluted
0.48

 
0.44

 
0.52

 
0.48


0.44






WEBSTER FINANCIAL CORPORATION
Consolidated Average Balances, Yields, and Rates Paid (unaudited)
 
 
 
 
 
Three Months Ended June 30,
 
 
2013
 
 
 
 
 
2012
 
 
(Dollars in thousands)
Average
balance
 
Interest
 
Fully tax-
equivalent
yield/rate
 
Average
balance
 
Interest
 
Fully tax-
equivalent
yield/rate
Assets:
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
Loans
$
12,061,551

 
$
121,720

 
4.02
%
 
$
11,420,721

 
$
121,379

 
4.23
%
Investment securities (a)
6,257,923

 
50,277

 
3.24

 
6,122,745

 
55,497

 
3.65

Loans held for sale
70,922

 
551

 
3.10

 
68,362

 
657

 
3.85

Federal Home Loan and Federal Reserve Bank stock
158,878

 
865

 
2.18

 
142,595

 
881

 
2.48

Interest-bearing deposits
41,499

 
17

 
0.16

 
67,480

 
32

 
0.19

Total interest-earning assets
18,590,773

 
173,430

 
3.73

 
17,821,903

 
178,446

 
4.00

Noninterest-earning assets
1,483,394

 
 
 
 
 
1,383,932

 
 
 
 
Total assets
$
20,074,167

 
 
 
 
 
$
19,205,835

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Shareholders' Equity:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
Demand
$
2,879,745

 
$

 
%
 
$
2,554,873

 
$

 
%
Savings, interest checking, and money market
9,413,301

 
4,506

 
0.19

 
8,676,206

 
5,285

 
0.24

Certificates of deposit
2,397,519

 
7,518

 
1.26

 
2,732,024

 
9,817

 
1.45

Total deposits
14,690,565

 
12,024

 
0.33

 
13,963,103

 
15,102

 
0.43

 
 
 
 
 
 
 
 
 
 
 
 
Securities sold under agreements to repurchase and other short-term borrowings
1,203,442

 
5,184

 
1.70

 
1,210,234

 
5,360

 
1.75

Federal Home Loan Bank advances
1,623,489

 
4,007

 
0.98

 
1,447,347

 
4,426

 
1.21

Long-term debt
230,305

 
1,817

 
3.16

 
473,602

 
5,367

 
4.53

Total borrowings
3,057,236

 
11,008

 
1.43

 
3,131,183

 
15,153

 
1.92

Total interest-bearing liabilities
17,747,801

 
23,032

 
0.52

 
17,094,286

 
30,255

 
0.71

Noninterest-bearing liabilities
183,117

 
 
 
 
 
197,224

 
 
 
 
Total liabilities
17,930,918

 
 
 
 
 
17,291,510

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
151,649

 
 
 
 
 
28,939

 
 
 
 
Common shareholders' equity
1,991,600

 
 
 
 
 
1,885,386

 
 
 
 
Webster Financial Corp. shareholders' equity
2,143,249

 
 
 
 
 
1,914,325

 
 
 
 
Total liabilities and equity
$
20,074,167

 
 
 
 
 
$
19,205,835

 
 
 
 
Tax-equivalent net interest income
 
 
150,398

 
 
 
 
 
148,191

 
 
Less: tax-equivalent adjustment
 
 
(3,337
)
 
 
 
 
 
(3,813
)
 
 
Net interest income
 
 
$
147,061

 
 
 
 
 
$
144,378

 
 
Net interest margin
 
 
 
 
3.23
%
 
 
 
 
 
3.32
%

(a)
For purposes of the yield computation, unrealized gains (losses) on securities available for sale are excluded from the average balance.


 







WEBSTER FINANCIAL CORPORATION
Consolidated Average Balances, Yields, and Rates Paid (unaudited)
 
 
 
 
 
Six Months Ended June 30,
 
 
2013
 
 
 
 
 
2012
 
 
(Dollars in thousands)
Average
balance
 
Interest
 
Fully tax-
equivalent
yield/rate
 
Average
balance
 
Interest
 
Fully tax-
equivalent
yield/rate
Assets:
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
Loans
$
12,043,172

 
$
242,781

 
4.03
%
 
$
11,348,027

 
$
242,120

 
4.25
%
Investment securities (a)
6,226,578

 
101,292

 
3.28

 
6,042,040

 
111,177

 
3.71

Loans held for sale
80,077

 
1,188

 
2.97

 
60,034

 
1,155

 
3.85

Federal Home Loan and Federal Reserve Bank stock
157,577

 
1,712

 
2.19

 
143,073

 
1,757

 
2.47

Interest-bearing deposits
61,744

 
63

 
0.20

 
72,457

 
62

 
0.17

Total interest-earning assets
18,569,148

 
347,036

 
3.75

 
17,665,631

 
356,271

 
4.03

Noninterest-earning assets
1,493,738

 
 
 
 
 
1,389,005

 
 
 
 
Total assets
$
20,062,886

 
 
 
 
 
$
19,054,636

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Shareholders' Equity:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
Demand
$
2,858,018

 
$

 
%
 
$
2,495,035

 
$

 
%
Savings, interest checking, and money market
9,366,063

 
9,128

 
0.20

 
8,652,127

 
11,079

 
0.26

Certificates of deposit
2,448,700

 
15,746

 
1.30

 
2,771,113

 
20,079

 
1.46

Total deposits
14,672,781

 
24,874

 
0.34

 
13,918,275

 
31,158

 
0.45

 
 
 
 
 
 
 
 
 
 
 
 
Securities sold under agreements to repurchase and other short-term borrowings
1,147,749

 
10,239

 
1.77

 
1,188,392

 
9,794

 
1.63

Federal Home Loan Bank advances
1,685,330

 
8,546

 
1.01

 
1,353,782

 
8,990

 
1.31

Long-term debt
238,645

 
3,660

 
3.07

 
490,359

 
11,052

 
4.51

Total borrowings
3,071,724

 
22,445

 
1.45

 
3,032,533

 
29,836

 
1.95

Total interest-bearing liabilities
17,744,505

 
47,319

 
0.53

 
16,950,808

 
60,994

 
0.72

Noninterest-bearing liabilities
191,198

 
 
 
 
 
208,279

 
 
 
 
Total liabilities
17,935,703

 
 
 
 
 
17,159,087

 
 
 
 



 
 
 
 
 
 
 
 
 
 
Preferred stock
151,649

 
 
 
 
 
28,939

 
 
 
 
Common shareholders' equity
1,975,534

 
 
 
 
 
1,866,610

 
 
 
 
Webster Financial Corp. shareholders' equity
2,127,183

 
 
 
 
 
1,895,549

 
 
 
 
Total liabilities and equity
$
20,062,886

 
 
 
 
 
$
19,054,636

 
 
 
 
Tax-equivalent net interest income
 
 
299,717

 
 
 
 
 
295,277

 
 
Less: tax-equivalent adjustment
 
 
(6,860
)
 
 
 
 
 
(7,531
)
 
 
Net interest income
 
 
$
292,857

 
 
 
 
 
$
287,746

 
 
Net interest margin
 
 
 
 
3.23
%
 
 
 
 
 
3.34
%

(a) For purposes of the yield computation, unrealized gains (losses) on securities available for sale are excluded from the average balance.
 




WEBSTER FINANCIAL CORPORATION Five Quarter Loan Balances (unaudited)
 
 
 
 
 
 
(Dollars in thousands)
June 30,
2013
 
March 31,
2013
 
December 31,
2012
 
September 30,
2012
 
June 30,
2012
Loan Balances (actuals):
 
 
 
 
 
 
 
 
 
Continuing Portfolio:
 
 
 
 
 
 
 
 
 
Commercial non-mortgage
$
2,515,288

 
$
2,397,774

 
$
2,399,500

 
$
2,201,732

 
$
2,069,127

Equipment financing
400,658

 
404,597

 
419,311

 
401,748

 
417,654

Asset based lending
591,981

 
544,112

 
504,233

 
535,327

 
499,212

Commercial real estate
2,840,064

 
2,763,262

 
2,755,320

 
2,597,835

 
2,518,392

Residential development
26,750

 
27,692

 
27,741

 
30,058

 
33,035

Residential mortgages
3,313,832

 
3,287,071

 
3,291,723

 
3,292,947

 
3,300,616

Consumer
2,445,792

 
2,461,595

 
2,508,992

 
2,537,039

 
2,565,654

Total continuing portfolio
12,134,365

 
11,886,103

 
11,906,820

 
11,596,686

 
11,403,690

Allowance for loan losses
(142,402
)
 
(146,020
)
 
(152,495
)
 
(156,214
)
 
(168,882
)
Total continuing portfolio, net
11,991,963

 
11,740,083

 
11,754,325

 
11,440,472

 
11,234,808

Liquidating Portfolio:
 
 
 
 
 
 
 
 
 
National Construction Lending Center (NCLC)
1

 
1

 
1

 
1

 
1

Consumer
111,927

 
115,928

 
121,875

 
130,965

 
136,306

Total liquidating portfolio
111,928

 
115,929

 
121,876

 
130,966

 
136,307

Allowance for loan losses
(21,040
)
 
(21,820
)
 
(24,634
)
 
(29,875
)
 
(29,875
)
Total liquidating portfolio, net
90,888

 
94,109

 
97,242

 
101,091

 
106,432

Total Loan Balances (actuals)
12,246,293

 
12,002,032

 
12,028,696

 
11,727,652

 
11,539,997

Allowance for loan losses
(163,442
)
 
(167,840
)
 
(177,129
)
 
(186,089
)
 
(198,757
)
Loans, net
$
12,082,851

 
$
11,834,192

 
$
11,851,567

 
$
11,541,563

 
$
11,341,240

 
 
 
 
 
 
 
 
 
 
Loan Balances (average):
 
 
 
 
 
 
 
 
 
Continuing Portfolio:
 
 
 
 
 
 
 
 
 
Commercial non-mortgage
$
2,422,156

 
$
2,422,372

 
$
2,238,557

 
$
2,137,882

 
$
2,008,778

Equipment financing
398,084

 
407,849

 
405,702

 
404,180

 
430,882

Asset based lending
566,623

 
528,797

 
516,749

 
520,100

 
480,574

Commercial real estate
2,784,859

 
2,744,101

 
2,653,749

 
2,528,394

 
2,453,430

Residential development
26,724

 
27,507

 
29,322

 
31,484

 
35,422

Residential mortgages
3,295,192

 
3,286,946

 
3,294,254

 
3,300,067

 
3,296,306

Consumer
2,454,041

 
2,488,154

 
2,526,656

 
2,552,660

 
2,576,521

Total continuing portfolio
11,947,679

 
11,905,726

 
11,664,989

 
11,474,767

 
11,281,913

Allowance for loan losses
(148,037
)
 
(153,710
)
 
(161,239
)
 
(167,469
)
 
(179,139
)
Total continuing portfolio, net
11,799,642

 
11,752,016

 
11,503,750

 
11,307,298

 
11,102,774

Liquidating Portfolio:
 
 
 
 
 
 
 
 
 
NCLC
1

 
1

 
1

 
1

 
1

Consumer
113,871

 
118,861

 
127,701

 
133,566

 
138,807

Total liquidating portfolio
113,872

 
118,862

 
127,702

 
133,567

 
138,808

Allowance for loan losses
(21,040
)
 
(21,820
)
 
(24,634
)
 
(29,875
)
 
(29,875
)
Total liquidating portfolio, net
92,832

 
97,042

 
103,068

 
103,692

 
108,933

Total Loan Balances (average)
12,061,551

 
12,024,588

 
11,792,691

 
11,608,334

 
11,420,721

Allowance for loan losses
(169,077
)
 
(175,530
)
 
(185,873
)
 
(197,344
)
 
(209,014
)
Loans, net
$
11,892,474

 
$
11,849,058

 
$
11,606,818

 
$
11,410,990

 
$
11,211,707








  
WEBSTER FINANCIAL CORPORATION
Five Quarter Nonperforming Assets (unaudited)
 
 
 
 
 
 
(Dollars in thousands)
June 30,
2013
 
March 31,
2013
 
December 31, 2012 (a)
 
September 30,
2012
 
June 30,
2012
Nonperforming loans:
 
 
 
 
 
 
 
 
 
Continuing Portfolio:
 
 
 
 
 
 
 
 
 
Commercial non-mortgage
$
17,285

 
$
16,328

 
$
17,538

 
$
30,315

 
$
29,271

Equipment financing
1,852

 
2,801

 
3,325

 
3,052

 
5,862

Asset based lending

 

 

 
92

 
262

Commercial real estate
16,591

 
24,484

 
15,683

 
15,768

 
23,457

Residential development
4,444

 
4,793

 
5,043

 
5,431

 
5,982

Residential mortgages
94,208

 
94,711

 
95,540

 
79,736

 
77,336

Consumer
44,717

 
48,370

 
49,537

 
23,602

 
22,616

Nonperforming loans - continuing portfolio
179,097

 
191,487

 
186,666

 
157,996

 
164,786

Liquidating Portfolio:
 
 
 
 
 
 
 
 
 
Consumer
7,594

 
7,323

 
8,133

 
4,616

 
4,460

Nonperforming loans - liquidating portfolio
7,594

 
7,323

 
8,133

 
4,616

 
4,460

Total nonperforming loans
$
186,691

 
$
198,810

 
$
194,799

 
$
162,612

 
$
169,246

 
 
 
 
 
 
 
 
 
 
Other real estate owned and repossessed assets:
 
 
 
 
 
 
 
 
 
Continuing Portfolio:
 
 
 
 
 
 
 
 
 
Commercial
$
404

 
$
404

 
$
541

 
$
917

 
$
917

Repossessed equipment
505

 
995

 
182

 
1,840

 
721

Residential
2,485

 
2,629

 
2,369

 
1,705

 
2,271

Consumer
454

 
517

 
290

 
450

 
466

Total continuing portfolio
3,848

 
4,545

 
3,382

 
4,912

 
4,375

Liquidating Portfolio:
 
 
 
 
 
 
 
 
 
Total liquidating portfolio

 

 

 

 

Total other real estate owned and repossessed assets
$
3,848

 
$
4,545

 
$
3,382

 
$
4,912

 
$
4,375

Total nonperforming assets
$
190,539

 
$
203,355

 
$
198,181

 
$
167,524

 
$
173,621


(a)
The increases in the residential and consumer categories during 4Q12 are related to an OCC requirement to reflect Chapter 7 bankruptcies as nonaccruing loans.







 
 
WEBSTER FINANCIAL CORPORATION
Five Quarter Past Due Loans (unaudited)
 
 
 
 
 
 
(Dollars in thousands)
June 30,
2013
 
March 31,
2013
 
December 31,
2012
 
September 30,
2012
 
June 30,
2012
Past due 30-89 days:
 
 
 
 
 
 
 
 
 
Accruing loans:
 
 
 
 
 
 
 
 
 
Continuing Portfolio:
 
 
 
 
 
 
 
 
 
Commercial non-mortgage
$
10,891

 
$
3,788

 
$
2,769

 
$
4,424

 
$
6,479

Equipment financing
783

 
1,000

 
1,926

 
3,524

 
1,665

Asset based lending

 

 

 

 

Commercial real estate
1,985

 
1,328

 
14,710

 
7,136

 
3,152

Residential development
737

 

 

 
317

 

Residential mortgages
16,056

 
16,571

 
25,182

 
22,230

 
26,966

Consumer
15,976

 
14,538

 
24,860

 
24,664

 
22,163

Past Due 30-89 days - continuing portfolio
46,428

 
37,225

 
69,447

 
62,295

 
60,425

Liquidating Portfolio:
 
 
 
 
 
 
 
 
 
Consumer
1,902

 
2,794

 
3,588

 
4,909

 
4,377

Past Due 30-89 days - liquidating portfolio
1,902

 
2,794

 
3,588

 
4,909

 
4,377

Accruing loans past due 90 days or more
1,498

 

 
1,237

 
205

 
1,074

Total past due loans
$
49,828

 
$
40,019

 
$
74,272

 
$
67,409

 
$
65,876








 
WEBSTER FINANCIAL CORPORATION
Five Quarter Changes in the Allowance for Loan Losses (unaudited)
 
 
 
 
 
 
 
For the Three Months Ended
(Dollars in thousands)
June 30,
2013
 
March 31,
2013
 
December 31, 2012 (a)
 
September 30,
2012
 
June 30,
2012
Beginning balance
$
167,840

 
$
177,129

 
$
186,089

 
$
198,757

 
$
210,288

Provision
8,500

 
7,500

 
7,500

 
5,000

 
5,000

Charge-offs continuing portfolio:

 

 

 

 

Commercial non-mortgage
6,156

 
4,339

 
6,411

 
8,642

 
5,164

Equipment financing
4

 
87

 
682

 
187

 
165

Asset based lending

 

 
69

 

 
512

Commercial real estate
2,510

 
3,617

 
170

 
2,655

 
1,066

Residential development

 
143

 
156

 

 

Residential mortgages
2,112

 
2,936

 
2,597

 
3,234

 
3,948

Consumer
5,374

 
7,358

 
8,149

 
6,752

 
8,122

Charge-offs continuing portfolio
16,156

 
18,480

 
18,234

 
21,470

 
18,977

Charge-offs liquidating portfolio:
 
 
 
 
 
 
 
 
 
NCLC

 

 

 
28

 
4

Consumer
1,957

 
3,049

 
5,137

 
2,482

 
3,227

Charge-offs liquidating portfolio
1,957

 
3,049

 
5,137

 
2,510

 
3,231

Total charge-offs
18,113

 
21,529

 
23,371

 
23,980

 
22,208

Recoveries continuing portfolio:
 
 
 
 
 
 
 
 
 
Commercial non-mortgage
998

 
901

 
1,045

 
779

 
957

Equipment financing
904

 
828

 
2,899

 
3,111

 
1,115

Asset based lending
60

 
698

 
996

 
518

 
721

Commercial real estate
322

 
91

 
43

 
121

 
34

Residential development
229

 
150

 
721

 
181

 
12

Residential mortgages
435

 
205

 
99

 
318

 
126

Consumer
1,572

 
1,437

 
674

 
933

 
2,453

Recoveries continuing portfolio
4,520

 
4,310

 
6,477

 
5,961

 
5,418

Recoveries liquidating portfolio:
 
 
 
 
 
 
 
 
 
NCLC
5

 
45

 
74

 
35

 
10

Consumer
690

 
385

 
360

 
316

 
249

Recoveries liquidating portfolio
695

 
430

 
434

 
351

 
259

Total recoveries
5,215

 
4,740

 
6,911

 
6,312

 
5,677

Total net charge-offs
12,898

 
16,789

 
16,460

 
17,668

 
16,531

Ending balance
$
163,442

 
$
167,840

 
$
177,129

 
$
186,089

 
$
198,757

(a) Note: $5.3 million of net charge-offs in 4Q12 relate to an OCC requirement to reduce Chapter 7 bankruptcies to collateral value.





WEBSTER FINANCIAL CORPORATION
Reconciliations to GAAP Financial Measures
 
The Company evaluates its business based on the following ratios that utilize tangible equity, a non-GAAP financial measure. Return on average tangible common shareholders' equity measures the Company’s net income available to common shareholders, adjusted for the tax-affected amortization of intangible assets, as a percentage of average common shareholders’ equity less goodwill and intangible assets (excluding mortgage servicing rights). The tangible equity ratio represents total ending shareholders’ equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by total assets less goodwill and intangible assets (excluding mortgage servicing rights). The tangible common equity ratio represents ending common shareholders’ equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by total assets less goodwill and intangible assets (excluding mortgage servicing rights). Tangible book value per common share represents ending common shareholders’ equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by ending common shares outstanding.

The efficiency ratio, which measures the costs expended to generate a dollar of revenue, is calculated excluding foreclosed property expense, amortization of intangibles, gain or loss on securities, and other non-recurring items. Accordingly, this is also a non-GAAP financial measure.

See the tables below for reconciliations of these non-GAAP financial measures with financial measures defined by GAAP for the three months ended June 30, 2013, March 31, 2013, December 31, 2012, September 30, 2012, and June 30, 2012. The Company believes the use of these non-GAAP financial measures provides additional clarity in assessing the results of the Company. Other companies may define or calculate supplemental financial data differently.




















 




 
At or for the Three Months Ended
(Dollars in thousands)
June 30,
2013
 
March 31,
2013
 
December 31,
2012
 
September 30,
2012
 
June 30,
2012
Reconciliation of net income available to common shareholders to net income used for computing the return on average tangible common shareholders' equity ratio
 
 
 
 
 
 
 
 
 
Net income available to common shareholders
$
43,734

 
$
39,231

 
$
47,911

 
$
44,378

 
$
40,625

Amortization of intangibles (tax-affected @ 35%)
807

 
807

 
807

 
900

 
908

Quarterly net income adjusted for amortization of intangibles
44,541

 
40,038

 
48,718

 
45,278

 
41,533

Annualized net income used in the return on average tangible common shareholders' equity ratio
$
178,164

 
$
160,152

 
$
194,872

 
$
181,112

 
$
166,132

 
 
 
 
 
 
 
 
 
 
Reconciliation of average common shareholders' equity to average tangible common shareholders' equity
 
 
 
 
 
 
 
 
 
Average common shareholders' equity
$
1,991,600

 
$
1,959,288

 
$
1,967,312

 
$
1,931,544

 
$
1,885,386

Average goodwill
(529,887
)
 
(529,887
)
 
(529,887
)
 
(529,887
)
 
(529,887
)
Average intangible assets (excluding mortgage servicing rights)
(8,391
)
 
(9,635
)
 
(10,873
)
 
(12,188
)
 
(13,576
)
Average tangible common shareholders’ equity
$
1,453,322

 
$
1,419,766

 
$
1,426,552

 
$
1,389,469

 
$
1,341,923

 
 
 
 
 
 
 
 
 
 
Reconciliation of period-end shareholders’ equity to period-end tangible shareholders’ equity
 
 
 
 
 
 
 
 
 
Shareholders' equity
$
2,127,475

 
$
2,128,131

 
$
2,093,530

 
$
1,983,678

 
$
1,931,548

Goodwill
(529,887
)
 
(529,887
)
 
(529,887
)
 
(529,887
)
 
(529,887
)
Intangible assets (excluding mortgage servicing rights)
(7,786
)
 
(9,028
)
 
(10,270
)
 
(11,512
)
 
(12,896
)
     Tangible shareholders’ equity
$
1,589,802

 
$
1,589,216

 
$
1,553,373

 
$
1,442,279

 
$
1,388,765

 
 
 
 
 
 
 
 
 
 
Reconciliation of period-end common shareholders’ equity to period-end tangible common shareholders’ equity
 
 
 
 
 
 
 
 
 
Shareholders' equity
$
2,127,475

 
$
2,128,131

 
$
2,093,530

 
$
1,983,678

 
$
1,931,548

Preferred stock
(151,649
)
 
(151,649
)
 
(151,649
)
 
(28,939
)
 
(28,939
)
Common shareholders' equity
1,975,826

 
1,976,482

 
1,941,881

 
1,954,739

 
1,902,609

Goodwill
(529,887
)
 
(529,887
)
 
(529,887
)
 
(529,887
)
 
(529,887
)
Intangible assets (excluding mortgage servicing rights)
(7,786
)
 
(9,028
)
 
(10,270
)
 
(11,512
)
 
(12,896
)
     Tangible common shareholders’ equity
$
1,438,153

 
$
1,437,567

 
$
1,401,724

 
$
1,413,340

 
$
1,359,826

 
 
 
 
 
 
 
 
 
 
Reconciliation of period-end assets to period-end tangible assets
 
 
 
 
 
 
 
 
 
Assets
$
20,329,238

 
$
20,110,538

 
$
20,146,765

 
$
19,729,662

 
$
19,429,749

Goodwill
(529,887
)
 
(529,887
)
 
(529,887
)
 
(529,887
)
 
(529,887
)
Intangible assets (excluding mortgage servicing rights)
(7,786
)
 
(9,028
)
 
(10,270
)
 
(11,512
)
 
(12,896
)
     Tangible assets
$
19,791,565

 
$
19,571,623

 
$
19,606,608

 
$
19,188,263

 
$
18,886,966


 
 
 
 
 
 
 
 
 
Book value per common share
 
 
 
 
 
 
 
 
 
Common shareholders’ equity
$
1,975,826

 
$
1,976,482

 
$
1,941,881

 
$
1,954,739

 
$
1,902,609

Ending common shares issued and outstanding (in thousands)
90,289

 
90,237

 
85,341

 
87,899

 
87,885

     Book value per share of common stock
$
21.88

 
$
21.90

 
$
22.75

 
$
22.24

 
$
21.65

 

 

 

 

 

Tangible book value per common share

 

 

 

 

Tangible common shareholders’ equity
$
1,438,153

 
$
1,437,567

 
$
1,401,724

 
$
1,413,340

 
$
1,359,826

Ending common shares issued and outstanding (in thousands)
90,289

 
90,237

 
85,341

 
87,899

 
87,885

     Tangible book value per common share
$
15.93

 
$
15.93

 
$
16.42

 
$
16.08

 
$
15.47

 
 
 
 
 
 
 
 
 
 
Reconciliation of noninterest expense to noninterest expense used in the efficiency ratio
 
 
 
 
 
 
 
 
 
Noninterest expense
$
123,604

 
$
125,535

 
$
122,925

 
$
123,887

 
$
127,179

Foreclosed property expense
(331
)
 
(175
)
 
(267
)
 
(118
)
 
(176
)
Intangible assets amortization
(1,242
)
 
(1,242
)
 
(1,242
)
 
(1,384
)
 
(1,397
)
Other expense
(687
)
 
(1,352
)
 
(452
)
 
(187
)
 
(2,572
)
     Noninterest expense used in the efficiency ratio
$
121,344

 
$
122,766

 
$
120,964

 
$
122,198

 
$
123,034

 
 
 
 
 
 
 
 
 
 
Reconciliation of income to income used in the efficiency ratio
 
 
 
 
 
 
 
 
 
Net interest income before provision for loan losses
$
147,061

 
$
145,796

 
$
146,272

 
$
144,890

 
$
144,378

Fully taxable-equivalent adjustment
3,337

 
3,523

 
3,480

 
3,740

 
3,813

Noninterest income
52,251

 
48,278

 
52,940

 
48,479

 
47,353

Net gain on investment securities
(333
)
 
(106
)
 

 
(810
)
 
(2,537
)
     Income used in the efficiency ratio
$
202,316

 
$
197,491

 
$
202,692

 
$
196,299

 
$
193,007