EX-99.1 2 exhibit991earningsreleaseq.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1
wbsupdatedheadera09.jpg

Media Contact
 
 
  
Investor Contact
Alice Ferreira, 203-578-2610
 
 
  
Terry Mangan, 203-578-2318
acferreira@websterbank.com
 
 
  
tmangan@websterbank.com

WEBSTER REPORTS
FIRST QUARTER 2019 EARNINGS OF $1.06 PER SHARE

WATERBURY, Conn., April 18, 2019 - Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A. and its HSA Bank division, today announced earnings applicable to common shareholders of $97.5 million, or $1.06 per diluted share, for the quarter ended March 31, 2019 compared to $78.1 million, or $0.85 per diluted share, for the quarter ended March 31, 2018.

“The first quarter represented our 38th consecutive quarter of year-over-year revenue growth as we continue to execute on our strategic priorities,” said John R. Ciulla, president and chief executive officer. “Our disciplined approach to capital allocation aligns with our overarching goal to deliver for our customers while maximizing economic profit over time.”

Highlights for the first quarter of 2019 compared to prior year:
•
Revenue of $310.2 million, an increase of 9.6 percent, including net interest income of $241.6 million, an increase of 12.8 percent.
•
Loan growth of $1.0 billion, or 5.7 percent; all of the growth was in commercial and commercial real estate loans, which increased 9.4 percent.
•
Deposit growth of $1.4 billion, or 6.4 percent, with growth of $722 million, or 13.1 percent at HSA Bank.
•
Net interest margin of 3.74 percent, up 30 basis points.
•
Pre-tax, pre-provision net revenue growth of $23.2 million, or 20.8 percent, led by HSA Bank’s growth of 40.4 percent.
•
Efficiency ratio of 55.9 percent (non-GAAP) compared to 59.8 percent.
•
Annualized return on average common shareholders’ equity of 14.01 percent compared to 12.15 percent; annualized return on average tangible common shareholders’ equity (non-GAAP) of 17.70 percent compared to 15.73 percent.
    
“We have now earned in excess of our cost of capital for eight consecutive quarters,” said Glenn MacInnes, executive vice president and chief financial officer. “We continue to report strong performance measured by positive operating leverage, net interest margin expansion and disciplined expense management, leading to an efficiency ratio below 56 percent for the quarter.”





Line of Business performance compared to the first quarter of 2018

Commercial Banking
Webster’s Commercial Banking segment serves middle market, commercial real estate, asset-based lending, equipment finance, private banking, and treasury and payment solutions clients. As of March 31, 2019, Commercial Banking had $10.6 billion in loans and leases and $4.2 billion in deposit balances.


Commercial Banking Operating Results:
 
 
 
 
Percent

 
Three months ended March 31,
 
Favorable/

(In thousands)
2019

2018

 
(Unfavorable)
Net interest income
$
90,510

$
84,651

 
6.9
 %
Non-interest income
14,011

15,316

 
(8.5
)
Operating revenue
104,521

99,967

 
4.6

Non-interest expense
44,618

41,245

 
(8.2
)
Pre-tax, pre-provision net revenue
$
59,903

$
58,722

 
2.0

 
 
 
 
 
 
 
 
 
Percent

 
At March 31,
 
Increase/

(In millions)
2019

2018

 
(Decrease)
Loans and leases
$
10,631

$
9,686

 
9.8%
Deposits
4,191

4,041

 
3.7


Pre-tax, pre-provision net revenue increased $1.2 million to $59.9 million in the quarter as compared to prior year. Net interest income increased $5.9 million to $90.5 million, primarily due to loan growth and higher deposit margins. Non-interest income decreased $1.3 million to $14.0 million, primarily due to lower client interest rate hedging activity. Non-interest expense increased $3.4 million to $44.6 million, primarily due to investments in people and technology.





HSA Bank
Webster’s HSA Bank division offers a comprehensive consumer-directed healthcare solution that includes health savings accounts, health reimbursement arrangements, flexible spending accounts and commuter benefits. Health savings accounts are distributed nationwide directly to employers and individual consumers, as well as through national and regional insurance carriers, benefit consultants and financial advisors. As of March 31, 2019, HSA Bank had $7.9 billion in total footings comprising $6.2 billion in deposit balances and $1.7 billion in assets under administration through linked investment accounts.


HSA Bank Operating Results:
 
 
 
 
Percent

 
Three months ended March 31,
 
Favorable/

(In thousands)
2019

2018

 
(Unfavorable)
Net interest income
$
41,741

$
32,924

 
26.8
 %
Non-interest income
25,576

22,669

 
12.8

Operating revenue
67,317

55,593

 
21.1

Non-interest expense
33,522

31,515

 
(6.4
)
Pre-tax, net revenue
$
33,795

$
24,078

 
40.4

 
 
 
 
 
 
 
 
 
Percent

 
At March 31,
 
Increase/

(Dollars in millions)
2019

2018

 
(Decrease)
Number of accounts (thousands)
2,933

2,643

 
11.0
 %
 
 
 
 
 
Deposits
$
6,209

$
5,488

 
13.1

Linked investment accounts *
1,703

1,364

 
24.9

Total footings
$
7,912

$
6,852

 
15.5

* Linked investment accounts are held off balance sheet
 
 


Pre-tax net revenue increased $9.7 million to $33.8 million in the quarter as compared to prior year. Net interest income increased $8.8 million to $41.7 million, due to 13 percent growth in deposits and 12 percent improvement in deposit spreads. Non-interest income increased $2.9 million to $25.6 million, primarily due to 11 percent growth in accounts over the past year. Non-interest expense increased $2.0 million to $33.5 million, primarily due to account growth and expanded distribution.





Community Banking
Community Banking serves consumer and business banking customers primarily throughout southern New England and into Westchester County, New York. Community Banking is comprised of the Personal Banking and Business Banking operating segments, as well as a distribution network consisting of 157 banking centers and 315 ATMs, a customer care center, and a full range of web and mobile-based banking services.

As of March 31, 2019, Community Banking had $8.2 billion in loans and $12.3 billion in deposit balances.


Community Banking Operating Results:
 
 
 
 
Percent

 
Three months ended March 31,
 
Favorable/

(In thousands)
2019

2018

 
(Unfavorable)
Net interest income
$
101,360

$
98,928

 
2.5
%
Non-interest income
25,382

25,195

 
0.7

Operating revenue
126,742

124,123

 
2.1

Non-interest expense
95,075

96,829

 
1.8

Pre-tax, pre-provision net revenue
$
31,667

$
27,294

 
16.0

 
 
 
 
 
 
 
 
 
Percent

 
At March 31,
 
Increase/

(In millions)
2019

2018

 
(Decrease)
Loans
$
8,183

$
8,121

 
0.8%
Deposits
12,271

11,580

 
6.0


Pre-tax, pre-provision net revenue increased $4.4 million to $31.7 million in the quarter as compared to prior year. Net interest income increased $2.4 million to $101.4 million, primarily due to growth in deposit balances, coupled with improved interest rate spreads on deposits. Non-interest income was up $0.2 million due to increased deposit and loan related fee income. Non-interest expense decreased $1.8 million to $95.1 million resulting from savings in occupancy and lower marketing expenses.










Consolidated financial performance:
Quarterly net interest income compared to the first quarter of 2018:

•
Net interest income was $241.6 million compared to $214.2 million.
•
Net interest margin was 3.74 percent compared to 3.44 percent. The yield on interest-earning assets increased by 48 basis points, and the cost of funds increased by 20 basis points.
•
Average interest-earning assets totaled $26.0 billion and grew by $884 million, or 3.5 percent.
•
Average loans totaled $18.5 billion and grew by $754 million, or 4.3 percent.
•
Average deposits totaled $22.5 billion and grew by $1.1 billion, or 5.3 percent.

Quarterly provision for loan losses:

•
The provision for loan losses was $8.6 million, compared to $10.0 million in the prior quarter and $11.0 million a year ago.
•
Net charge-offs were $9.6 million, compared to $9.5 million in the prior quarter and $5.6 million a year ago. The ratio of net charge-offs to average loans on an annualized basis was 0.21 percent, compared to 0.21 percent in the prior quarter and 0.13 percent a year ago.
•
The allowance for loan losses represented 1.12 percent of total loans at March 31, 2019, compared to 1.15 percent at December 31, 2018 and 1.15 percent at March 31, 2018. The allowance for loan losses represented 133 percent of nonperforming loans compared to 137 percent at December 31, 2018 and 153 percent at March 31, 2018.
Quarterly non-interest income compared to the first quarter of 2018:
•
Total non-interest income was $68.6 million, compared to $68.7 million, a decrease of $0.1 million. This reflects a decrease in other of $3.1 million primarily related to client hedging income, offset by an increase of $2.9 million in HSA fee income driven by account fees and interchange due to account growth, and an increase of $0.8 million in loan related fees primarily due to prepayment fees.





Quarterly non-interest expense compared to the first quarter of 2018:
•
Total non-interest expense was $175.7 million, compared to $171.6 million, an increase of $4.1 million. This reflects increases of $3.0 million in compensation and benefits due to annual merit increases and other benefits, $1.8 million in technology/equipment primarily due to higher service contracts to support infrastructure, and $1.3 million in professional and outside services, offset by a decrease of $2.3 million in deposit insurance primarily related to a fully funded deposit insurance fund.
Quarterly income taxes compared to the first quarter of 2018:
•
Income tax expense was $26.1 million, compared to $20.1 million and the effective tax rate was 20.8 percent, compared to 20.0 percent.
•
The higher effective tax rate in the quarter reflects a slightly lower level of discrete tax benefits recognized during the period compared to a year ago coupled with a higher level of pre-tax income in the quarter compared to the year-ago period.
Investment securities:
•
Total investment securities were $7.5 billion, compared to $7.2 billion at December 31, 2018 and $7.2 billion at March 31, 2018. The carrying value of the available-for-sale portfolio included $58.6 million of net unrealized losses, compared to $95.9 million at December 31, 2018 and $74.0 million at March 31, 2018. The carrying value of the held-to-maturity portfolio does not reflect $46.8 million of net unrealized losses, compared to $116.3 million at December 31, 2018, and $111.3 million at March 31, 2018.
Loans:
•
Total loans were $18.8 billion, compared to $18.5 billion at December 31, 2018 and $17.8 billion at March 31, 2018. Compared to December 31, 2018, residential mortgages increased by $215.2 million, commercial loans increased by $125.9 million, and commercial real estate loans increased by $64.7 million while consumer loans decreased by $57.0 million.
•
Compared to a year ago, commercial loans increased by $572.4 million, commercial real estate loans increased by $447.0 million, and residential mortgages increased by $171.9 million while consumer loans decreased by $182.6 million.






•
Loan originations for portfolio were $1.132 billion, compared to $1.611 billion in the prior quarter and $1.111 billion a year ago. In addition, $33 million of residential loans were originated for sale in the quarter, compared to $30 million in the prior quarter and $43 million a year ago.
Asset quality:
•
Total nonperforming loans were $158.9 million, or 0.84 percent of total loans, compared to $154.8 million, or 0.84 percent, at December 31, 2018 and $134.3 million, or 0.75 percent, at March 31, 2018. Total paying nonperforming loans were $38.6 million, compared to $42.5 million at December 31, 2018 and $32.2 million at March 31, 2018.
•
Past due loans were $50.5 million, compared to $34.3 million at December 31, 2018 and $41.6 million at March 31, 2018.
Deposits and borrowings:
•
Total deposits were $22.8 billion, compared to $21.9 billion at December 31, 2018 and $21.4 billion at March 31, 2018. Core deposits to total deposits were 85.3 percent, compared to 85.4 percent at December 31, 2018 and 88.1 percent at March 31, 2018. The loan to deposit ratio was 82.7 percent, compared to 84.5 percent at December 31, 2018 and 83.3 percent at March 31, 2018.
•
Total borrowings were $2.2 billion, compared to $2.6 billion at December 31, 2018 and $2.4 billion at March 31, 2018.
Capital:

•
The return on average common shareholders’ equity and the return on average tangible common shareholders’ equity were 14.01 percent and 17.70 percent, respectively, compared to 12.15 percent and 15.73 percent, respectively, in the first quarter of 2018.
•
The tangible equity and tangible common equity ratios were 8.68 percent and 8.16 percent, respectively, compared to 8.21 percent and 7.65 percent, respectively, at March 31, 2018. The common equity tier 1 risk-based capital ratio was 11.46 percent, compared to 10.99 percent at March 31, 2018.
•
Book value and tangible book value per common share were $30.62 and $24.51, respectively, compared to $27.94 and $21.78, respectively, at March 31, 2018.

***





Webster Financial Corporation is the holding company for Webster Bank, National Association and its HSA Bank division. With $28.2 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust, and investment services through 157 banking centers and 315 ATMs. Webster also provides mobile and Internet banking. 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 2019 first quarter earnings announcement will be held today, Thursday, April 18, 2019 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 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 nonperforming 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 and cyber-security matters; (11) the ability to increase market share and control expenses; (12) changes in the competitive environment among banks, financial holding companies, and other financial services 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 the impact of recent changes with respect to the recognition of credit losses; (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; (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 headings “Risk Factors” and “Management Discussion and Analysis of Financial Condition and Results of Operation.” 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. 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)
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
 
 
 
 
 
 
 
 
 
Income and performance ratios:
 
 
 
 
 
 
 
 
 
Net income
$
99,736

 
$
98,838

 
$
99,673

 
$
81,682

 
$
80,225

Earnings applicable to common shareholders
97,549

 
96,666

 
97,460

 
79,489

 
78,083

Earnings per diluted common share
1.06

 
1.05

 
1.06

 
0.86

 
0.85

Return on average assets
1.44
%
 
1.44
%
 
1.47
%
 
1.22
%
 
1.20
%
Return on average tangible common shareholders' equity (non-GAAP)
17.70

 
18.22

 
18.88

 
15.76

 
15.73

Return on average common shareholders’ equity
14.01

 
14.31

 
14.74

 
12.22

 
12.15

Non-interest income as a percentage of total revenue
22.12

 
23.58

 
23.88

 
23.31

 
24.30

 
 
 
 
 
 
 
 
 
 
Asset quality:
 
 
 
 
 
 
 
 
 
Allowance for loan and lease losses
$
211,389

 
$
212,353

 
$
211,832

 
$
207,322

 
$
205,349

Nonperforming assets
164,431

 
161,617

 
157,967

 
146,047

 
140,090

Allowance for loan and lease losses / total loans and leases
1.12
%
 
1.15
%
 
1.16
%
 
1.15
%
 
1.15
%
Net charge-offs / average loans and leases (annualized)
0.21

 
0.21

 
0.13

 
0.19

 
0.13

Nonperforming loans and leases / total loans and leases
0.84

 
0.84

 
0.83

 
0.78

 
0.75

Nonperforming assets / total loans and leases plus OREO
0.87

 
0.87

 
0.86

 
0.81

 
0.79

Allowance for loan and lease losses / nonperforming loans and leases
133.01

 
137.22

 
138.76

 
148.00

 
152.95

 
 
 
 
 
 
 
 
 
 
Other ratios:
 
 
 
 
 
 
 
 
 
Tangible equity (non-GAAP)
8.68
%
 
8.59
%
 
8.41
%
 
8.29
%
 
8.21
%
Tangible common equity (non-GAAP)
8.16

 
8.05

 
7.86

 
7.75

 
7.65

Tier 1 risk-based capital (a)
12.17

 
12.16

 
11.96

 
11.74

 
11.75

Total risk-based capital (a)
13.60

 
13.63

 
13.44

 
13.21

 
13.24

Common equity tier 1 risk-based capital (a)
11.46

 
11.44

 
11.23

 
10.99

 
10.99

Shareholders’ equity / total assets
10.50

 
10.45

 
10.30

 
10.21

 
10.15

Net interest margin
3.74

 
3.66

 
3.61

 
3.57

 
3.44

Efficiency ratio (non-GAAP)
55.93

 
56.19

 
57.41

 
57.78

 
59.76

 
 
 
 
 
 
 
 
 
 
Equity and share related:
 
 
 
 
 
 
 
 
 
Common equity
$
2,821,218

 
$
2,741,478

 
$
2,671,161

 
$
2,616,686

 
$
2,571,105

Book value per common share
30.62

 
29.72

 
28.96

 
28.40

 
27.94

Tangible book value per common share (non-GAAP)
24.51

 
23.60

 
22.83

 
22.25

 
21.78

Common stock closing price
50.67

 
49.29

 
58.96

 
63.70

 
55.40

Dividends declared per common share
0.33

 
0.33

 
0.33

 
0.33

 
0.26

Common shares issued and outstanding
92,125

 
92,247

 
92,230

 
92,151

 
92,016

Weighted-average common shares outstanding - Basic
91,962

 
91,971

 
91,959

 
91,893

 
91,921

Weighted-average common shares outstanding - Diluted
92,165

 
92,202

 
92,208

 
92,173

 
92,254

 
(a) Presented as projected for March 31, 2019 and actual for the remaining periods.





WEBSTER FINANCIAL CORPORATION
Consolidated Balance Sheets (unaudited)
 
 
 
 
 
(In thousands)
March 31,
2019
 
December 31,
2018
 
March 31,
2018
Assets:
 
 
 
 
 
Cash and due from banks
$
167,587

 
$
260,422

 
$
164,927

Interest-bearing deposits
53,072

 
69,077

 
45,899

Securities:
 
 
 
 
 
Available for sale
2,977,316

 
2,898,730

 
2,773,506

Held to maturity
4,480,160

 
4,325,420

 
4,408,321

Total securities
7,457,476

 
7,224,150

 
7,181,827

Loans held for sale
20,615

 
11,869

 
19,727

Loans and Leases:
 
 
 
 
 
Commercial
6,850,942

 
6,725,003

 
6,278,502

Commercial real estate
4,991,825

 
4,927,145

 
4,544,831

Residential mortgages
4,631,787

 
4,416,637

 
4,459,862

Consumer
2,339,736

 
2,396,704

 
2,522,380

Total loans and leases
18,814,290

 
18,465,489

 
17,805,575

Allowance for loan and lease losses
(211,389
)
 
(212,353
)
 
(205,349
)
Loans and leases, net
18,602,901

 
18,253,136

 
17,600,226

Federal Home Loan Bank and Federal Reserve Bank stock
106,674

 
149,286

 
125,328

Premises and equipment, net
279,580

 
124,850

 
127,196

Goodwill and other intangible assets, net
563,176

 
564,137

 
567,023

Cash surrender value of life insurance policies
546,094

 
543,616

 
535,391

Deferred tax asset, net
76,576

 
96,516

 
99,199

Accrued interest receivable and other assets
364,378

 
313,256

 
285,404

Total Assets
$
28,238,129

 
$
27,610,315

 
$
26,752,147

 
 
 
 
 
 
Liabilities and Shareholders' Equity:
 
 
 
 
 
Deposits:
 
 
 
 
 
Demand
$
4,224,144

 
$
4,162,446

 
$
4,074,992

Health savings accounts
6,209,213

 
5,740,601

 
5,487,627

Interest-bearing checking
2,560,975

 
2,518,472

 
2,624,885

Money market
2,299,229

 
2,100,084

 
2,344,526

Savings
4,102,740

 
4,140,696

 
4,299,759

Certificates of deposit
3,273,120

 
2,961,564

 
2,275,897

Brokered certificates of deposit
81,507

 
234,982

 
277,356

Total deposits
22,750,928

 
21,858,845

 
21,385,042

Securities sold under agreements to repurchase and other borrowings
688,065

 
581,874

 
931,299

Federal Home Loan Bank advances
951,730

 
1,826,808

 
1,202,030

Long-term debt
524,303

 
226,021

 
225,830

Accrued expenses and other liabilities
356,848

 
230,252

 
291,804

Total liabilities
25,271,874

 
24,723,800

 
24,036,005

Preferred stock
145,037

 
145,037

 
145,037

Common shareholders' equity
2,821,218

 
2,741,478

 
2,571,105

Total shareholders’ equity
2,966,255

 
2,886,515

 
2,716,142

Total Liabilities and Shareholders' Equity
$
28,238,129

 
$
27,610,315

 
$
26,752,147

 





WEBSTER FINANCIAL CORPORATION
Consolidated Statements of Income (unaudited)
 
 
 
 
Three Months Ended March 31,
(In thousands, except per share data)
2019
 
2018
Interest income:
 
 
 
Interest and fees on loans and leases
$
228,764

 
$
193,220

Interest and dividends on securities
57,278

 
52,559

Loans held for sale
148

 
142

Total interest income
286,190

 
245,921

Interest expense:
 
 
 
Deposits
31,020

 
18,156

Borrowings
13,619

 
13,597

Total interest expense
44,639

 
31,753

Net interest income
241,551

 
214,168

Provision for loan and lease losses
8,600

 
11,000

Net interest income after provision for loan and lease losses
232,951

 
203,168

Non-interest income:
 
 
 
Deposit service fees
43,024

 
40,451

Loan and lease related fees
7,819

 
6,996

Wealth and investment services
7,651

 
7,870

Mortgage banking activities
764

 
1,144

Increase in cash surrender value of life insurance policies
3,584

 
3,572

Other income
5,770

 
8,714

Total non-interest income
68,612

 
68,747

Non-interest expense:
 
 
 
Compensation and benefits
97,785

 
94,765

Occupancy
14,696

 
15,145

Technology and equipment
25,697

 
23,862

Marketing
3,328

 
3,552

Professional and outside services
6,048

 
4,788

Intangible assets amortization
962

 
962

Loan workout expenses
660

 
576

Deposit insurance
4,430

 
6,717

Other expenses
22,080

 
21,248

Total non-interest expense
175,686

 
171,615

Income before income taxes
125,877

 
100,300

Income tax expense
26,141

 
20,075

Net income
99,736

 
80,225

Preferred stock dividends and other
(2,187
)
 
(2,142
)
Earnings applicable to common shareholders
$
97,549

 
$
78,083

 
 
 
 
Weighted-average common shares outstanding - Diluted
92,165

 
92,254

 
 
 
 
Earnings per common share:
 
 
 
Basic
$
1.06

 
$
0.85

Diluted
1.06

 
0.85

 
 
 
 





WEBSTER FINANCIAL CORPORATION
Five Quarter Consolidated Statements of Income (unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended
(In thousands, except per share data)
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
Interest income:
 
 
 
 
 
 
 
 
 
Interest and fees on loans and leases
$
228,764

 
$
225,961

 
$
215,448

 
$
207,820

 
$
193,220

Interest and dividends on securities
57,278

 
54,301

 
52,707

 
52,523

 
52,559

Loans held for sale
148

 
130

 
208

 
148

 
142

Total interest income
286,190

 
280,392

 
268,363

 
260,491

 
245,921

Interest expense:
 
 
 
 
 
 
 
 
 
Deposits
31,020

 
27,629

 
24,397

 
20,225

 
18,156

Borrowings
13,619

 
15,632

 
13,594

 
15,256

 
13,597

Total interest expense
44,639

 
43,261

 
37,991

 
35,481

 
31,753

Net interest income
241,551

 
237,131

 
230,372

 
225,010

 
214,168

Provision for loan and lease losses
8,600

 
10,000

 
10,500

 
10,500

 
11,000

Net interest income after provision for loan and lease losses
232,951

 
227,131

 
219,872

 
214,510

 
203,168

Non-interest income:
 
 
 
 
 
 
 
 
 
Deposit service fees
43,024

 
40,272

 
40,601

 
40,859

 
40,451

Loan and lease related fees
7,819

 
7,914

 
10,782

 
6,333

 
6,996

Wealth and investment services
7,651

 
8,105

 
8,412

 
8,456

 
7,870

Mortgage banking activities
764

 
740

 
1,305

 
1,235

 
1,144

Increase in cash surrender value of life insurance policies
3,584

 
3,693

 
3,706

 
3,643

 
3,572

Other income
5,770

 
12,439

 
7,478

 
7,848

 
8,714

Total non-interest income
68,612

 
73,163

 
72,284

 
68,374

 
68,747

Non-interest expense:
 
 
 
 
 
 
 
 
 
Compensation and benefits
97,785

 
97,039

 
96,640

 
93,052

 
94,765

Occupancy
14,696

 
13,974

 
14,502

 
15,842

 
15,145

Technology and equipment
25,697

 
24,858

 
24,553

 
24,604

 
23,862

Marketing
3,328

 
4,345

 
4,052

 
4,889

 
3,552

Professional and outside services
6,048

 
6,201

 
4,930

 
4,381

 
4,788

Intangible assets amortization
962

 
962

 
961

 
962

 
962

Loan workout expenses
660

 
1,150

 
681

 
844

 
576

Deposit insurance
4,430

 
4,651

 
9,694

 
13,687

 
6,717

Other expenses
22,080

 
21,579

 
22,770

 
22,198

 
21,248

Total non-interest expense
175,686

 
174,759

 
178,783

 
180,459

 
171,615

Income before income taxes
125,877

 
125,535

 
113,373

 
102,425

 
100,300

Income tax expense
26,141

 
26,697

 
13,700

 
20,743

 
20,075

Net income
99,736

 
98,838

 
99,673

 
81,682

 
80,225

Preferred stock dividends and other
(2,187
)
 
(2,172
)
 
(2,213
)
 
(2,193
)
 
(2,142
)
Earnings applicable to common shareholders
$
97,549

 
$
96,666

 
$
97,460

 
$
79,489

 
$
78,083

 
 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding - Diluted
92,165

 
92,202

 
92,208

 
92,173

 
92,254

 
 
 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
 
 
Basic
$
1.06

 
$
1.05

 
$
1.06

 
$
0.87

 
$
0.85

Diluted
1.06

 
1.05

 
1.06

 
0.86

 
0.85

 
 
 
 
 
 
 
 
 
 





WEBSTER FINANCIAL CORPORATION
Consolidated Average Balances, Interest, Yields and Rates, and Net Interest Margin on a Fully Tax-equivalent Basis (unaudited)
 
Three Months Ended March 31,
 
 
 
2019
 
 
 
 
 
2018
 
 
(Dollars in thousands)
Average
balance
 
Interest
 
Yield/rate
 
Average
balance
 
Interest
 
Yield/rate
Assets:
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
Loans and leases
$
18,509,174

 
$
229,385

 
4.96
%
 
$
17,754,773

 
$
193,864

 
4.37
%
Securities (a)
7,308,946

 
56,954

 
3.09

 
7,158,505

 
52,489

 
2.91

Federal Home Loan and Federal Reserve Bank stock
113,016

 
1,712

 
6.14

 
133,241

 
1,455

 
4.43

Interest-bearing deposits
55,372

 
329

 
2.37

 
52,711

 
201

 
1.52

Loans held for sale
13,451

 
148

 
4.40

 
16,330

 
142

 
3.49

Total interest-earning assets
25,999,959

 
$
288,528

 
4.43
%
 
25,115,560

 
$
248,151

 
3.95
%
Non-interest-earning assets
1,795,430

 
 
 
 
 
1,641,721

 
 
 
 
Total Assets
$
27,795,389

 
 
 
 
 
$
26,757,281

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Shareholders' Equity:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
Demand deposits
$
4,191,870

 
$
—

 
—
%
 
$
4,163,364

 
$
—

 
—
%
Health savings accounts
6,140,062

 
2,949

 
0.19

 
5,427,000

 
2,624

 
0.20

Interest-bearing checking, money market and savings
8,958,522

 
12,793

 
0.58

 
9,342,743

 
7,713

 
0.33

Certificates of deposit
3,244,714

 
15,278

 
1.91

 
2,459,145

 
7,819

 
1.29

Total deposits
22,535,168

 
31,020

 
0.56

 
21,392,252

 
18,156

 
0.34

 
 
 
 
 
 
 
 
 
 
 
 
Securities sold under agreements to repurchase and other borrowings
597,107

 
2,752

 
1.84

 
875,829

 
3,640

 
1.66

Federal Home Loan Bank advances
1,119,035

 
7,785

 
2.78

 
1,311,832

 
7,281

 
2.22

Long-term debt
249,169

 
3,082

 
4.95

 
225,799

 
2,676

 
4.74

Total borrowings
1,965,311

 
13,619

 
2.77

 
2,413,460

 
13,597

 
2.25

Total interest-bearing liabilities
24,500,479

 
$
44,639

 
0.74
%
 
23,805,712

 
$
31,753

 
0.54
%
Non-interest-bearing liabilities
359,257

 
 
 
 
 
228,978

 
 
 
 
Total liabilities
24,859,736

 
 
 
 
 
24,034,690

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
145,037

 
 
 
 
 
145,161

 
 
 
 
Common shareholders' equity
2,790,616

 
 
 
 
 
2,577,430

 
 
 
 
Total shareholders' equity
2,935,653

 
 
 
 
 
2,722,591

 
 
 
 
Total Liabilities and Shareholders' Equity
$
27,795,389

 
 
 
 
 
$
26,757,281

 
 
 
 
Tax-equivalent net interest income
 
 
243,889

 
 
 
 
 
216,398

 
 
Less: tax-equivalent adjustments
 
 
(2,338
)
 
 
 
 
 
(2,230
)
 
 
Net interest income
 
 
$
241,551

 
 
 
 
 
$
214,168

 
 
Net interest margin
 
 
 
 
3.74
%
 
 
 
 
 
3.44
%
 
(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 and Lease Balances (unaudited)
 
 
 
 
 
 
 
 
(Dollars in thousands)
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
Loan and Lease Balances (actual):
 
 
 
 
 
 
 
 
 
Commercial non-mortgage
$
5,811,309

 
$
5,755,832

 
$
5,724,405

 
$
5,544,685

 
$
5,404,231

Asset-based lending
1,039,633

 
969,171

 
969,045

 
959,836

 
874,271

Commercial real estate
4,991,825

 
4,927,145

 
4,771,325

 
4,580,200

 
4,544,831

Residential mortgages
4,631,787

 
4,416,637

 
4,415,063

 
4,455,580

 
4,459,862

Consumer
2,339,736

 
2,396,704

 
2,441,181

 
2,485,695

 
2,522,380

Total Loan and Lease Balances
18,814,290

 
18,465,489

 
18,321,019

 
18,025,996

 
17,805,575

Allowance for loan and lease losses
(211,389
)
 
(212,353
)
 
(211,832
)
 
(207,322
)
 
(205,349
)
Loans and Leases, net
$
18,602,901

 
$
18,253,136

 
$
18,109,187

 
$
17,818,674

 
$
17,600,226

 
 
 
 
 
 
 
 
 
 
Loan and Lease Balances (average):
 
 
 
 
 
 
 
 
 
Commercial non-mortgage
$
5,776,334

 
$
5,754,153

 
$
5,597,831

 
$
5,470,677

 
$
5,306,412

Asset-based lending
1,016,069

 
964,575

 
944,120

 
897,564

 
864,895

Commercial real estate
4,930,035

 
4,862,419

 
4,620,741

 
4,549,969

 
4,538,429

Residential mortgages
4,415,434

 
4,419,826

 
4,434,056

 
4,460,904

 
4,476,057

Consumer
2,371,302

 
2,423,414

 
2,464,094

 
2,507,571

 
2,568,980

Total Loan and Lease Balances
18,509,174

 
18,424,387

 
18,060,842

 
17,886,685

 
17,754,773

Allowance for loan and lease losses
(214,966
)
 
(214,453
)
 
(208,102
)
 
(207,718
)
 
(201,575
)
Loans and Leases, net
$
18,294,208

 
$
18,209,934

 
$
17,852,740

 
$
17,678,967

 
$
17,553,198





WEBSTER FINANCIAL CORPORATION
Five Quarter Nonperforming Assets (unaudited)
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
Nonperforming loans and leases:
 
 
 
 
 
 
 
 
 
Commercial non-mortgage
$
66,754

 
$
62,265

 
$
58,366

 
$
40,240

 
$
46,843

Asset-based lending
218

 
224

 
1,066

 
1,197

 
1,571

Commercial real estate
7,449

 
8,243

 
7,255

 
9,606

 
3,884

Residential mortgages
49,267

 
49,069

 
49,348

 
50,654

 
44,496

Consumer
35,245

 
34,949

 
36,621

 
38,390

 
37,465

Total nonperforming loans and leases
$
158,933

 
$
154,750

 
$
152,656

 
$
140,087

 
$
134,259

 
 
 
 
 
 
 
 
 
 
Other real estate owned and repossessed assets:
 
 
 
 
 
 
 
 
 
Commercial non-mortgage
$
861

 
$
407

 
$
83

 
$
148

 
$
218

Residential mortgages
2,769

 
4,679

 
3,944

 
3,271

 
2,785

Consumer
1,868

 
1,781

 
1,284

 
2,541

 
2,828

Total other real estate owned and repossessed assets
$
5,498

 
$
6,867

 
$
5,311

 
$
5,960

 
$
5,831

Total nonperforming assets
$
164,431

 
$
161,617

 
$
157,967

 
$
146,047

 
$
140,090






WEBSTER FINANCIAL CORPORATION
Five Quarter Past Due Loans and Leases (unaudited)
 
 
 
 
 
 
 
 
(Dollars in thousands)
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
Past due 30-89 days:
 
 
 
 
 
 
 
 
 
Commercial non-mortgage
$
19,152

 
$
2,615

 
$
6,186

 
$
7,508

 
$
4,749

Asset-based lending
—

 
—

 
—

 
—

 
—

Commercial real estate
2,283

 
1,514

 
2,746

 
719

 
1,103

Residential mortgages
12,865

 
12,789

 
14,499

 
10,861

 
17,337

Consumer
16,174

 
17,324

 
15,631

 
14,354

 
17,602

Total past due 30-89 days
50,474

 
34,242

 
39,062

 
33,442

 
40,791

Past due 90 days or more and accruing
—

 
104

 
139

 
62

 
845

Total past due loans and leases
$
50,474

 
$
34,346

 
$
39,201

 
$
33,504

 
$
41,636

 




WEBSTER FINANCIAL CORPORATION
Five Quarter Changes in the Allowance for Loan and Lease Losses (unaudited)
 
 
 
 
 
 
For the Three Months Ended
(Dollars in thousands)
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
Beginning balance
$
212,353

 
$
211,832

 
$
207,322

 
$
205,349

 
$
199,994

Provision
8,600

 
10,000

 
10,500

 
10,500

 
11,000

Charge-offs:
 
 
 
 
 
 
 
 
 
Commercial non-mortgage
7,837

 
10,239

 
876

 
5,523

 
1,542

Asset-based lending
—

 
289

 
—

 
174

 
—

Commercial real estate
973

 
22

 
1,922

 
40

 
77

Residential mortgages
251

 
910

 
874

 
754

 
917

Consumer
3,972

 
4,384

 
4,863

 
4,907

 
5,074

Total charge-offs
13,033

 
15,844

 
8,535

 
11,398

 
7,610

Recoveries:
 
 
 
 
 
 
 
 
 
Commercial non-mortgage
569

 
2,993

 
376

 
749

 
69

Asset-based lending
229

 
21

 
66

 
174

 
66

Commercial real estate
6

 
7

 
143

 
9

 
2

Residential mortgages
178

 
1,137

 
133

 
325

 
385

Consumer
2,487

 
2,207

 
1,827

 
1,614

 
1,443

Total recoveries
3,469

 
6,365

 
2,545

 
2,871

 
1,965

Total net charge-offs
9,564

 
9,479

 
5,990

 
8,527

 
5,645

Ending balance
$
211,389

 
$
212,353

 
$
211,832

 
$
207,322

 
$
205,349






WEBSTER FINANCIAL CORPORATION
Reconciliations to GAAP Financial Measures ____ ___
The Company evaluates its business based on certain ratios that utilize non-GAAP financial measures. The Company believes the use of these non-GAAP financial measures provides additional clarity in assessing the results and financial position of the Company. Other companies may define or calculate supplemental financial data differently.
The efficiency ratio, which measures the costs expended to generate a dollar of revenue, is calculated excluding certain non-operational items. Return on average tangible common shareholders' equity measures the Company’s net income available to common shareholders, adjusted for the tax-effected amortization of intangible assets, as a percentage of average shareholders’ equity less average preferred stock and average goodwill and intangible assets. The tangible equity ratio represents shareholders’ equity less goodwill and intangible assets divided by total assets less goodwill and intangible assets. The tangible common equity ratio represents shareholders’ equity less preferred stock and goodwill and intangible assets divided by total assets less goodwill and intangible assets. Tangible book value per common share represents shareholders’ equity less preferred stock and goodwill and intangible assets divided by common shares outstanding at the end of the period. Core deposits express total deposits less time deposits. See the tables below for reconciliations of these non-GAAP financial measures with financial measures defined by GAAP.
 
At or for the Three Months Ended
(In thousands, except per share data)
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
Efficiency ratio:
 
 
 
 
 
 
 
 
 
Non-interest expense (GAAP)
$
175,686

 
$
174,759

 
$
178,783

 
$
180,459

 
$
171,615

Less: Foreclosed property activity (GAAP)
(253
)
 
191

 
(309
)
 
(106
)
 
85

         Intangible assets amortization (GAAP)
962

 
962

 
961

 
962

 
962

         Other expenses (non-GAAP)
7

 
320

 
2,959

 
8,599

 
—

Non-interest expense (non-GAAP)
$
174,970

 
$
173,286

 
$
175,172

 
$
171,004

 
$
170,568

Net interest income (GAAP)
$
241,551

 
$
237,131

 
$
230,372

 
$
225,010

 
$
214,168

Add: Tax-equivalent adjustment (non-GAAP)
2,338

 
2,407

 
2,172

 
2,217

 
2,230

         Non-interest income (GAAP)
68,612

 
73,163

 
72,284

 
68,374

 
68,747

         Other (non-GAAP)
342

 
282

 
308

 
359

 
295

Less: Gain on the sale of banking centers (GAAP)
—

 
4,596

 
—

 
—

 
—

Income (non-GAAP)
$
312,843

 
$
308,387

 
$
305,136

 
$
295,960

 
$
285,440

Efficiency ratio (non-GAAP)
55.93
%
 
56.19
%
 
57.41
%
 
57.78
%
 
59.76
%
 
 
 
 
 
 
 
 
 
 
Return on average tangible common shareholders' equity:
 
 
 
 
 
 
 
 
 
Net income (GAAP)
$
99,736

 
$
98,838

 
$
99,673

 
$
81,682

 
$
80,225

Less: Preferred stock dividends (GAAP)
1,969

 
1,969

 
1,968

 
1,969

 
1,947

Add: Intangible assets amortization, tax-effected (GAAP)
760

 
760

 
759

 
760

 
760

Income adjusted for preferred stock dividends and intangible assets amortization (non-GAAP)
$
98,527

 
$
97,629

 
$
98,464

 
$
80,473

 
$
79,038

Income adjusted for preferred stock dividends and intangible assets amortization, annualized basis (non-GAAP)
$
394,108

 
$
390,516

 
$
393,856

 
$
321,892

 
$
316,152

Average shareholders' equity (non-GAAP)
$
2,935,653

 
$
2,853,176

 
$
2,796,809

 
$
2,754,355

 
$
2,722,591

Less: Average preferred stock (non-GAAP)
145,037

 
145,037

 
145,037

 
145,037

 
145,161

         Average goodwill and other intangible assets (non-GAAP)
563,646

 
564,601

 
565,559

 
566,522

 
567,547

Average tangible common shareholders' equity (non-GAAP)
$
2,226,970

 
$
2,143,538

 
$
2,086,213

 
$
2,042,796

 
$
2,009,883

Return on average tangible common shareholders' equity (non-GAAP)
17.70
%
 
18.22
%
 
18.88
%
 
15.76
%
 
15.73
%




WEBSTER FINANCIAL CORPORATION
Reconciliations to GAAP Financial Measures (continued) ___ ___

 
At or for the Three Months Ended
(In thousands, except per share data)
March 31,
2019
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
Tangible equity:
 
 
 
 
 
 
 
 
 
Shareholders' equity (GAAP)
$
2,966,255

 
$
2,886,515

 
$
2,816,198

 
$
2,761,723

 
$
2,716,142

Less: Goodwill and other intangible assets (GAAP)
563,176

 
564,137

 
565,099

 
566,061

 
567,023

Tangible shareholders' equity (non-GAAP)
$
2,403,079

 
$
2,322,378

 
$
2,251,099

 
$
2,195,662

 
$
2,149,119

Total assets (GAAP)
$
28,238,129

 
$
27,610,315

 
$
27,346,317

 
$
27,036,737

 
$
26,752,147

Less: Goodwill and other intangible assets (GAAP)
563,176

 
564,137

 
565,099

 
566,061

 
567,023

Tangible assets (non-GAAP)
$
27,674,953

 
$
27,046,178

 
$
26,781,218

 
$
26,470,676

 
$
26,185,124

Tangible equity (non-GAAP)
8.68
%
 
8.59
%
 
8.41
%
 
8.29
%
 
8.21
%
 
 
 
 
 
 
 
 
 
 
Tangible common equity:
 
 
 
 
 
 
 
 
 
Tangible shareholders' equity (non-GAAP)
$
2,403,079

 
$
2,322,378

 
$
2,251,099

 
$
2,195,662

 
$
2,149,119

Less: Preferred stock (GAAP)
145,037

 
145,037

 
145,037

 
145,037

 
145,037

Tangible common shareholders' equity (non-GAAP)
$
2,258,042

 
$
2,177,341

 
$
2,106,062

 
$
2,050,625

 
$
2,004,082

Tangible assets (non-GAAP)
$
27,674,953

 
$
27,046,178

 
$
26,781,218

 
$
26,470,676

 
$
26,185,124

Tangible common equity (non-GAAP)
8.16
%
 
8.05
%
 
7.86
%
 
7.75
%
 
7.65
%
 
 
 
 
 
 
 
 
 
 
Tangible book value per common share:
 
 
 
 
 
 
 
 
 
Tangible common shareholders' equity (non-GAAP)
$
2,258,042

 
$
2,177,341

 
$
2,106,062

 
$
2,050,625

 
$
2,004,082

Common shares outstanding
92,125

 
92,247

 
92,230

 
92,151

 
92,016

Tangible book value per common share (non-GAAP)
$
24.51

 
$
23.60

 
$
22.83

 
$
22.25

 
$
21.78

 
 
 
 
 
 
 
 
 
 
Core deposits:
 
 
 
 
 
 
 
 
 
Total deposits
$
22,750,928

 
$
21,858,845

 
$
21,997,623

 
$
21,343,356

 
$
21,385,042

Less: Certificates of deposit
3,273,120

 
2,961,564

 
2,746,884

 
2,478,589

 
2,275,897

Brokered certificates of deposit
81,507

 
234,982

 
348,368

 
361,114

 
277,356

Core deposits (non-GAAP)
$
19,396,301

 
$
18,662,299

 
$
18,902,371

 
$
18,503,653

 
$
18,831,789