Document

EX-99.1 2 exhibit991earningsrele.htm EX-99.1 Document

Exhibit 99.1

Media Contact

Investor Contact

Alice Ferreira, 203-578-2610

Terry Mangan, 203-578-2318

acferreira@websterbank.com

tmangan@websterbank.com

WEBSTER REPORTS

FOURTH QUARTER 2019 EARNINGS OF $0.96 PER DILUTED SHARE

WATERBURY, Conn., January 23, 2020 - 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 $88.1 million, or $0.96 per diluted share, for the quarter ended December 31, 2019, compared to $96.7 million, or $1.05 per diluted share, for the quarter ended December 31, 2018. Earnings per diluted share would have been $1.01 for the quarter ended December 31, 2018, adjusting for $4.6 million related to a one-time gain on the sale of six banking centers.

For the full year 2019, earnings applicable to common shareholders was $373.0 million, or $4.06 per diluted share, compared to $351.7 million, or $3.81 per diluted share, for the full year 2018.

“Webster’s fourth quarter results demonstrate our ongoing commitment to strong execution on our strategic priorities. Commercial loan growth exceeded 10 percent for the second year in a row and total footings at HSA Bank increased 18 percent from a year ago, while credit metrics remained strong,” said John R. Ciulla, president and chief executive officer. “We’ve now achieved our tenth consecutive year of annual earnings per share growth, which puts us in select company in the banking industry.”

Highlights for the fourth quarter of 2019:

•Revenue of $302.2 million.

•Loan growth of $1.6 billion, or 8.5 percent from a year ago, led by commercial real estate and residential mortgage loans, which increased 16.9 percent.

•Deposit growth of $1.5 billion, or 6.7 percent from a year ago, with growth of $676 million, or 11.8 percent, in HSA deposits.

•Net interest margin of 3.27 percent.

•Efficiency ratio (non-GAAP) of 58.5 percent.

•Annualized return on average common shareholders’ equity of 11.60 percent, exceeding our cost of capital.

•Annualized return on average tangible common shareholders’ equity (non-GAAP) of 14.34 percent.

“Our performance in 2019 represents our third consecutive year of positive operating leverage,” said Glenn MacInnes, executive vice president and chief financial officer. “Tangible book value now exceeds $2.5 billion and increased 15 percent from a year ago.”

Line of Business performance compared to the fourth 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 December 31, 2019, Commercial Banking had $11.5 billion in loans and leases and $4.4 billion in deposit balances.

Commercial Banking Operating Results:


				Percent
	Three months ended December 31,						Favorable/
(In thousands)		2019	2018	(Unfavorable)
Net interest income		$93,347	$92,156		1.3	%
Non-interest income		16,420	16,103		2.0
Operating revenue		109,767	108,259		1.4
Non-interest expense		45,505	45,324		(0.4)
Pre-tax, pre-provision net revenue		$64,262	$62,935		2.1

				Percent
		At December 31,			Increase/
(In millions)		2019	2018	(Decrease)
Loans and leases		$11,500	$10,438		10.2	%
Deposits		4,382	4,031		8.7

Pre-tax, pre-provision net revenue increased $1.3 million to $64.3 million in the quarter as compared to prior year. Net interest income increased $1.2 million to $93.3 million, primarily due to loan growth. Non-interest income increased $0.3 million to $16.4 million, primarily due to higher syndication fees in the quarter. Non-interest expense increased $0.2 million to $45.5 million, primarily due to investments in product enhancements and infrastructure.

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 December 31, 2019, HSA Bank had $8.5 billion in total footings comprising $6.4 billion in deposit balances and $2.1 billion in assets under administration through linked investment accounts.

HSA Bank Operating Results:


				Percent
	Three months ended December 31,						Favorable/
(In thousands)		2019	2018	(Unfavorable)
Net interest income		$40,666	$38,335		6.1	%
Non-interest income		22,959	21,613		6.2
Operating revenue		63,625	59,948		6.1
Non-interest expense		34,893	31,106		(12.2)
Pre-tax, net revenue		$28,732	$28,842		(0.4)

				Percent
		At December 31,			Increase/
(Dollars in millions)		2019	2018	(Decrease)
Number of accounts (thousands)		2,974	2,722		9.3	%

Deposits		$6,416	$5,741		11.8
Linked investment accounts *		2,071	1,460		41.8
Total footings		$8,487	$7,201		17.9
* Linked investment accounts are held off balance sheet

Pre-tax net revenue decreased $0.1 million to $28.7 million in the quarter as compared to prior year. Net interest income increased $2.3 million to $40.7 million, due to 12 percent growth in deposits and a decline in deposit spreads. Non-interest income increased $1.3 million to $23.0 million, primarily due to 9 percent growth in accounts over the past year. Non-interest expense increased $3.8 million to $34.9 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 309 ATMs, a customer care center, and a full range of web and mobile-based banking services. As of December 31, 2019, Community Banking had $8.5 billion in loans and $12.5 billion in deposit balances.

Community Banking Operating Results:


				Percent
	Three months ended December 31,						Favorable/
(In thousands)		2019	2018	(Unfavorable)
Net interest income		$97,226	$102,087		(4.8)	%
Non-interest income *		28,098	31,248		(10.1)
Operating revenue		125,324	133,335		(6.0)
Non-interest expense		97,323	96,804		(0.5)
Pre-tax, pre-provision net revenue		$28,001	$36,531		(23.4)

				Percent
		At December 31,			Increase/
(In millions)		2019	2018	(Decrease)
Loans		$8,537	$8,028		6.3	%
Deposits		12,528	11,857		5.7

* Non-interest income for the three months ended December 31, 2018 includes a $4.6 million gain on sale of six banking centers.

Pre-tax, pre-provision net revenue decreased $8.5 million to $28.0 million in the quarter as compared to prior year. Net interest income decreased $4.9 million to $97.2 million, due to declining interest rates on loans coupled with a year-over-year increase in deposit costs; which was partially offset by balance growth in the loan and deposit portfolios. Non-interest income decreased $3.2 million due to a $4.6 million gain on sale of six banking centers recorded in the prior year. Partially offsetting the decrease were increases in income from mortgage banking activities, fees from loan interest rate hedging activities, loan-related fee income, and fees from investment services. Non-interest expense increased $0.5 million to $97.3 million driven by increased employee related expenses and continued investments in technology offset by lower marketing-related costs and occupancy expenses.

Consolidated financial performance:

Quarterly net interest income compared to the fourth quarter of 2018:

•Net interest income was $231.3 million compared to $237.1 million.

•Net interest margin was 3.27 percent compared to 3.66 percent. The yield on interest-earning assets declined by 34 basis points, and the cost of interest-bearing liabilities increased by 5 basis points.

•Average interest-earning assets totaled $28.3 billion and grew by $2.6 billion, or 10.0 percent.

•Average loans totaled $19.8 billion and grew by $1.4 billion, or 7.5 percent.

•Average deposits totaled $23.4 billion and grew by $1.4 billion, or 6.5 percent.

Quarterly provision for loan losses:

•The provision for loan losses was $6.0 million, compared to $11.3 million in the prior quarter and $10.0 million a year ago.

•Net charge-offs were $6.1 million, compared to $13.8 million in the prior quarter and $9.5 million a year ago. The ratio of net charge-offs to average loans on an annualized basis was 0.12 percent, compared to 0.28 percent in the prior quarter and 0.21 percent a year ago.

•The allowance for loan losses represented 1.04 percent of total loans at December 31, 2019, compared to 1.07 percent at September 30, 2019 and 1.15 percent at December 31, 2018. The allowance for loan losses represented 139 percent of nonperforming loans at December 31, 2019 compared to 129 percent at September 30, 2019 and 137 percent at December 31, 2018.

Quarterly non-interest income compared to the fourth quarter of 2018:

•Total non-interest income was $70.9 million, compared to $73.2 million, a decrease of $2.2 million. This reflects a decrease of $5.2 million in other income primarily due to a $4.6 million gain a year ago related to the sale of six banking centers as well as lower client hedging income. There was offset from a $1.5 million increase in mortgage banking activities and $1.4 million in HSA fee income driven by interchange revenue and linked investment fees.

Quarterly non-interest expense compared to the fourth quarter of 2018:

•Total non-interest expense was $179.7 million, compared to $174.8 million, an increase of $5.0 million. The increase reflects increases of $3.4 million in compensation and benefits due to annual merit increases and other benefits and $2.8 million in technology/equipment. Offsetting these increases was a decrease of $1.5 million in professional and outside services driven by lower consulting costs.

Quarterly income taxes compared to the fourth quarter of 2018:

•Income tax expense was $26.0 million compared to $26.7 million and the effective tax rate was 22.3 percent compared to 21.3 percent.

•The higher effective tax rate in the quarter includes a discrete tax expense associated with a state and local tax position contributing to a lower level of net discrete tax benefits recognized during the period compared to a year ago.

Investment securities:

•Total investment securities were $8.2 billion, compared to $8.2 billion at September 30, 2019 and $7.2 billion at December 31, 2018. The carrying value of the available-for-sale portfolio included $24.4 million of net unrealized gains, compared to $20.9 million at September 30, 2019 and $95.9 million of net unrealized losses at December 31, 2018. The carrying value of the held-to-maturity portfolio does not reflect $86.7 million of net unrealized gains, compared to $92.2 million at September 30, 2019 and $116.3 million of net unrealized losses at December 31, 2018.

Loans:

•Total loans were $20.0 billion, compared to $19.6 billion at September 30, 2019 and $18.5 billion at December 31, 2018. Compared to September 30, 2019, commercial real estate loans increased by $551.3 million and residential mortgages increased by $99.0 million while commercial loans decreased by $129.0 million and consumer loans decreased by $35.8 million.

•Compared to a year ago, commercial real estate loans increased by $1.022 billion, residential mortgages increased by $556.0 million, and commercial loans increased by $155.8 million, while consumer loans decreased by $162.6 million.

•Loan originations for portfolio were $1.919 billion, compared to $1.610 billion in the prior quarter and $1.611 billion a year ago. In addition, $94 million of residential loans were originated for sale in the quarter, compared to $73 million in the prior quarter and $30 million a year ago.

Asset quality:

•Total nonperforming loans were $150.9 million, or 0.75 percent of total loans, compared to $162.7 million, or 0.83 percent of total loans, at September 30, 2019 and $154.8 million, or 0.84 percent of total loans, at December 31, 2018. Total paying nonperforming loans were $59.0 million, compared to $71.9 million at September 30, 2019 and $42.5 million at December 31, 2018.

•Past due loans were $42.6 million, compared to $35.6 million at September 30, 2019 and $34.3 million at December 31, 2018.

Deposits and borrowings:

•Total deposits were $23.3 billion, compared to $23.3 billion at September 30, 2019 and $21.9 billion at December 31, 2018. Core deposits to total deposits were 86.7 percent, compared to 86.0 percent at September 30, 2019 and 85.4 percent at December 31, 2018. The loan to deposit ratio was 85.9 percent, compared to 84.0 percent at September 30, 2019 and 84.5 percent at December 31, 2018.

•Total borrowings were $3.5 billion, compared to $3.2 billion at September 30, 2019 and $2.6 billion at December 31, 2018.

Capital:

•The return on average common shareholders’ equity and the return on average tangible common shareholders’ equity were 11.60 percent and 14.34 percent, respectively, compared to 14.31 percent and 18.22 percent, respectively, in the fourth quarter of 2018.

•The tangible equity and tangible common equity ratios were 8.88 percent and 8.39 percent, respectively, compared to 8.59 percent and 8.05 percent, respectively, at December 31, 2018. The common equity tier 1 risk-based capital ratio was 11.56 percent, compared to 11.44 percent at December 31, 2018.

•Book value and tangible book value per common share were $33.28 and $27.19, respectively, compared to $29.72 and $23.60, respectively, at December 31, 2018.

***

Webster Financial Corporation is the holding company for Webster Bank, National Association and its HSA Bank division. With $30.4 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust, and investment services through 157 banking centers and 309 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 fourth quarter 2019 earnings announcement will be held today, Thursday, January 23, 2020 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) our ability to successfully execute our business plan and manage our risks; (2) local, regional, national, and international economic conditions and the impact they may have on us and our customers; (3) volatility and disruption in national and international financial markets; (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 our investment securities; (7) inflation, changes in interest rate, and monetary fluctuations; (8) the timely development and acceptance of new products and services and the perceived value of those products and services by customers; (9) changes in deposit flows, consumer spending, borrowings, and savings habits; (10) our ability to implement new technologies and maintain secure and reliable technology systems; (11) performance by our counterparties and vendors; (12) our ability to increase market share and control expenses; (13) changes in the competitive environment among banks, financial holding companies, and other financial services providers; (14) changes in laws and regulations (including those concerning taxes, banking, securities, insurance, and healthcare) with which we and our subsidiaries must comply; (15) the effect of changes in accounting policies and practices applicable to us, including changes in our allowance for loan and lease losses and other impacts of our adoption of new accounting guidance regarding the recognition of credit losses; (16) 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 (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.


WEBSTER FINANCIAL CORPORATION Selected Financial Highlights (unaudited)
	At or for the Three Months Ended
(In thousands, except per share data)	December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019			December 31, 2018

Income and performance ratios:
Net income	$	90,473		$	93,865		$	98,649		$	99,736		$	98,838
Earnings applicable to common shareholders	88,066			91,442			96,193			97,549			96,666
Earnings per diluted common share	0.96			1.00			1.05			1.06			1.05
Return on average assets	1.19		%	1.27		%	1.38		%	1.44		%	1.44		%
Return on average tangible common shareholders' equity ^(non-GAAP)	14.34			15.37			16.88			17.70			18.22
Return on average common shareholders’ equity	11.60			12.36			13.47			14.01			14.31
Non-interest income as a percentage of total revenue	23.47			22.52			23.88			22.12			23.58

Asset quality:
Allowance for loan and lease losses	$	209,096		$	209,152		$	211,671		$	211,389		$	212,353
Nonperforming assets	157,380			166,716			153,247			164,431			161,617
Allowance for loan and lease losses / total loans and leases	1.04		%	1.07		%	1.10		%	1.12		%	1.15		%
Net charge-offs / average loans and leases (annualized)	0.12			0.28			0.24			0.21			0.21
Nonperforming loans and leases / total loans and leases	0.75			0.83			0.77			0.84			0.84
Nonperforming assets / total loans and leases plus OREO	0.79			0.85			0.80			0.87			0.87
Allowance for loan and lease losses / nonperforming loans and leases	138.56			128.55			142.97			133.01			137.22

Other ratios:
Tangible equity ^(non-GAAP)	8.88		%	8.83		%	8.82		%	8.68		%	8.59		%
Tangible common equity ^(non-GAAP)	8.39			8.34			8.31			8.16			8.05
Tier 1 risk-based capital ^(a)	12.23			12.32			12.09			12.17			12.16
Total risk-based capital ^(a)	13.55			13.68			13.48			13.60			13.63
Common equity tier 1 risk-based capital ^(a)	11.56			11.63			11.41			11.46			11.44
Shareholders’ equity / total assets	10.56			10.54			10.59			10.50			10.45
Net interest margin	3.27			3.49			3.63			3.74			3.66
Efficiency ratio ^(non-GAAP)	58.52			56.60			56.09			55.93			56.19

Equity and share related:
Common equity	$	3,062,733		$	3,007,357		$	2,920,180		$	2,821,218		$	2,741,478
Book value per common share	33.28			32.68			31.74			30.62			29.72
Tangible book value per common share ^(non-GAAP)	27.19			26.58			25.63			24.51			23.60
Common stock closing price	53.36			46.87			47.77			50.67			49.29
Dividends declared per common share	0.40			0.40			0.40			0.33			0.33
Common shares issued and outstanding	92,027			92,034			92,007			92,125			92,247
Weighted-average common shares outstanding - Basic	91,574			91,559			91,534			91,962			91,971
Weighted-average common shares outstanding - Diluted	91,916			91,874			91,855			92,225			92,202

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


WEBSTER FINANCIAL CORPORATION Consolidated Balance Sheets (unaudited)
(In thousands)	December 31, 2019		September 30, 2019		December 31, 2018
Assets:
Cash and due from banks	$	185,341	$	227,966	$	260,422
Interest-bearing deposits	72,554		74,865		69,077
Securities:
Available for sale	2,925,833		2,960,103		2,898,730
Held to maturity	5,293,918		5,193,521		4,325,420
Total securities	8,219,751		8,153,624		7,224,150
Loans held for sale	36,053		27,061		11,869
Loans and Leases:
Commercial	6,880,838		7,009,884		6,725,003
Commercial real estate	5,949,339		5,398,084		4,927,145
Residential mortgages	4,972,685		4,873,726		4,416,637
Consumer	2,234,124		2,269,952		2,396,704
Total loans and leases	20,036,986		19,551,646		18,465,489
Allowance for loan and lease losses	(209,096)		(209,152)		(212,353)
Loans and leases, net	19,827,890		19,342,494		18,253,136
Federal Home Loan Bank and Federal Reserve Bank stock	149,046		116,984		149,286
Premises and equipment, net	270,413		278,642		124,850
Goodwill and other intangible assets, net	560,290		561,252		564,137
Cash surrender value of life insurance policies	550,651		549,335		543,616
Deferred tax asset, net	61,975		59,956		96,516
Accrued interest receivable and other assets	455,380		502,921		313,256
Total Assets	$	30,389,344	$	29,895,100	$	27,610,315

Liabilities and Shareholders' Equity:
Deposits:
Demand	$	4,446,463	$	4,291,659	$	4,162,446
Health savings accounts	6,416,135		6,288,218		5,740,601
Interest-bearing checking	2,689,734		2,619,452		2,518,472
Money market	2,312,840		2,560,918		2,100,084
Savings	4,354,809		4,264,853		4,140,696
Certificates of deposit	3,104,765		3,249,860		2,961,564
Brokered certificates of deposit	—		5,705		234,982
Total deposits	23,324,746		23,280,665		21,858,845
Securities sold under agreements to repurchase and other borrowings	1,040,431		1,210,692		581,874
Federal Home Loan Bank advances	1,948,476		1,392,849		1,826,808
Long-term debt	540,364		549,158		226,021
Accrued expenses and other liabilities	327,557		309,342		230,252
Total liabilities	27,181,574		26,742,706		24,723,800
Preferred stock	145,037		145,037		145,037
Common shareholders' equity	3,062,733		3,007,357		2,741,478
Total shareholders’ equity	3,207,770		3,152,394		2,886,515
Total Liabilities and Shareholders' Equity	$	30,389,344	$	29,895,100	$	27,610,315


WEBSTER FINANCIAL CORPORATION Consolidated Statements of Income (unaudited)
	Three Months Ended December 31,						Twelve Months Ended December 31,
(In thousands, except per share data)	2019		2018		2019		2018
Interest income:
Interest and fees on loans and leases	$	223,527	$	225,961	$	924,693	$	842,449
Interest and dividends on securities	58,205		54,301		229,163		212,090
Loans held for sale	268		130		727		628
Total interest income	282,000		280,392		1,154,583		1,055,167
Interest expense:
Deposits	31,586		27,629		129,577		90,407
Borrowings	19,164		15,632		69,879		58,079
Total interest expense	50,750		43,261		199,456		148,486
Net interest income	231,250		237,131		955,127		906,681
Provision for loan and lease losses	6,000		10,000		37,800		42,000
Net interest income after provision for loan and lease losses	225,250		227,131		917,327		864,681
Non-interest income:
Deposit service fees	40,470		40,272		168,022		162,183
Loan and lease related fees	8,704		7,914		31,327		32,025
Wealth and investment services	8,476		8,105		32,932		32,843
Mortgage banking activities	2,286		740		6,115		4,424
Increase in cash surrender value of life insurance policies	3,670		3,693		14,612		14,614
Gain on investment securities, net	29		—		29		—
Other income	7,284		12,439		32,278		36,479


Total non-interest income	70,919		73,163		285,315		282,568
Non-interest expense:
Compensation and benefits	100,467		97,039		395,402		381,496
Occupancy	14,379		13,974		57,181		59,463
Technology and equipment	27,639		24,858		105,283		97,877
Marketing	3,957		4,345		16,286		16,838
Professional and outside services	4,674		6,201		21,380		20,300
Intangible assets amortization	962		962		3,847		3,847
Loan workout expenses	474		1,150		2,952		3,251
Deposit insurance	4,662		4,651		17,954		34,749
Other expenses	22,516		21,579		95,665		87,795
Total non-interest expense	179,730		174,759		715,950		705,616
Income before income taxes	116,439		125,535		486,692		441,633
Income tax expense	25,966		26,697		103,969		81,215
Net income	90,473		98,838		382,723		360,418
Preferred stock dividends and other	(2,407)		(2,172)		(9,738)		(8,715)
Earnings applicable to common shareholders	$	88,066	$	96,666	$	372,985	$	351,703

Weighted-average common shares outstanding - Diluted	91,916		92,202		91,882		92,227

Earnings per common share:
Basic	$	0.96	$	1.05	$	4.07	$	3.83
Diluted	0.96		1.05		4.06		3.81


WEBSTER FINANCIAL CORPORATION Five Quarter Consolidated Statements of Income (unaudited)
	Three Months Ended
(In thousands, except per share data)	December 31, 2019		September 30, 2019		June 30, 2019		March 31, 2019		December 31, 2018
Interest income:
Interest and fees on loans and leases	$	223,527	$	236,453	$	235,949	$	228,764	$	225,961
Interest and dividends on securities	58,205		57,517		56,163		57,278		54,301
Loans held for sale	268		166		145		148		130
Total interest income	282,000		294,136		292,257		286,190		280,392
Interest expense:
Deposits	31,586		34,214		32,757		31,020		27,629
Borrowings	19,164		19,383		17,713		13,619		15,632
Total interest expense	50,750		53,597		50,470		44,639		43,261
Net interest income	231,250		240,539		241,787		241,551		237,131
Provision for loan and lease losses	6,000		11,300		11,900		8,600		10,000
Net interest income after provision for loan and lease losses	225,250		229,239		229,887		232,951		227,131
Non-interest income:
Deposit service fees	40,470		41,410		43,118		43,024		40,272
Loan and lease related fees	8,704		8,246		6,558		7,819		7,914
Wealth and investment services	8,476		8,496		8,309		7,651		8,105
Mortgage banking activities	2,286		2,133		932		764		740
Increase in cash surrender value of life insurance policies	3,670		3,708		3,650		3,584		3,693
Gain on investment securities, net	29		—		—		—		—
Other income	7,284		5,938		13,286		5,770		12,439


Total non-interest income	70,919		69,931		75,853		68,612		73,163
Non-interest expense:
Compensation and benefits	100,467		98,623		98,527		97,785		97,039
Occupancy	14,379		14,087		14,019		14,696		13,974
Technology and equipment	27,639		26,180		25,767		25,697		24,858
Marketing	3,957		4,758		4,243		3,328		4,345
Professional and outside services	4,674		5,024		5,634		6,048		6,201
Intangible assets amortization	962		961		962		962		962
Loan workout expenses	474		986		832		660		1,150
Deposit insurance	4,662		4,409		4,453		4,430		4,651
Other expenses	22,516		24,866		26,203		22,080		21,579
Total non-interest expense	179,730		179,894		180,640		175,686		174,759
Income before income taxes	116,439		119,276		125,100		125,877		125,535
Income tax expense	25,966		25,411		26,451		26,141		26,697
Net income	90,473		93,865		98,649		99,736		98,838
Preferred stock dividends and other	(2,407)		(2,423)		(2,456)		(2,187)		(2,172)
Earnings applicable to common shareholders	$	88,066	$	91,442	$	96,193	$	97,549	$	96,666

Weighted-average common shares outstanding - Diluted	91,916		91,874		91,855		92,225		92,202

Earnings per common share:
Basic	$	0.96	$	1.00	$	1.05	$	1.06	$	1.05
Diluted	0.96		1.00		1.05		1.06		1.05


WEBSTER FINANCIAL CORPORATION Consolidated Average Balances, Interest, Yields and Rates, and Net Interest Margin on a Fully Tax-equivalent Basis (unaudited)
	Three Months Ended December 31,
			2019						2018
(Dollars in thousands)	Average balance		Interest		Yield/rate		Average balance		Interest		Yield/rate
Assets:
Interest-earning assets:
Loans and leases	$	19,808,521	$	224,259	4.46	%	$	18,424,387	$	226,727	4.85	%
Investment securities ^(a)	8,323,512		58,724		2.86		7,144,118		54,119		2.99
Federal Home Loan and Federal Reserve Bank stock	127,770		1,007		3.13		137,535		1,480		4.27
Interest-bearing deposits	56,484		228		1.58		61,313		343		2.19
Loans held for sale	32,599		268		3.28		10,258		130		5.04
Total interest-earning assets	28,348,886		$	284,486	3.98	%	25,777,611		$	282,799	4.32	%
Non-interest-earning assets	1,969,620						1,625,706
Total Assets	$	30,318,506					$	27,403,317

Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Demand deposits	$	4,417,167	$	—	—	%	$	4,209,456	$	—	—	%
Health savings accounts	6,320,475		3,166		0.20		5,633,993		2,828		0.20
Interest-bearing checking, money market and savings	9,420,738		13,944		0.59		8,945,051		11,160		0.49
Certificates of deposit	3,202,242		14,476		1.79		3,136,831		13,641		1.72
Total deposits	23,360,622		31,586		0.54		21,925,331		27,629		0.50

Securities sold under agreements to repurchase and other borrowings	1,275,293		4,726		1.45		668,660		2,769		1.62
Federal Home Loan Bank advances	1,550,528		8,932		2.25		1,491,071		10,024		2.63
Long-term debt ^(a)	547,584		5,506		4.21		225,990		2,839		5.03
Total borrowings	3,373,405		19,164		2.25		2,385,721		15,632		2.57
Total interest-bearing liabilities	26,734,027		$	50,750	0.75	%	24,311,052		$	43,261	0.70	%
Non-interest-bearing liabilities	387,916						239,089
Total liabilities	27,121,943						24,550,141

Preferred stock	145,037						145,037
Common shareholders' equity	3,051,526						2,708,139
Total shareholders' equity	3,196,563						2,853,176
Total Liabilities and Shareholders' Equity	$	30,318,506					$	27,403,317
Tax-equivalent net interest income			233,736						239,538
Less: tax-equivalent adjustments			(2,486)						(2,407)
Net interest income			$	231,250					$	237,131
Net interest margin					3.27	%					3.66	%

(a) For purposes of yield/rate computation, unrealized gain (loss) balances on securities available for sale and senior fixed-rate notes hedges are excluded.


WEBSTER FINANCIAL CORPORATION Consolidated Average Balances, Interest, Yields and Rates, and Net Interest Margin on a Fully Tax-equivalent Basis (unaudited)
	Twelve Months Ended December 31,
			2019						2018
(Dollars in thousands)	Average balance		Interest		Yield/rate		Average balance		Interest		Yield/rate
Assets:
Interest-earning assets:
Loans and leases	$	19,209,611	$	927,395	4.83	%	$	18,033,587	$	845,146	4.69	%
Investment securities ^(a)	7,761,937		229,989		2.97		7,137,326		211,227		2.93
Federal Home Loan and Federal Reserve Bank stock	113,518		4,956		4.37		132,607		6,067		4.58
Interest-bearing deposits	56,458		1,211		2.14		63,178		1,125		1.78
Loans held for sale	22,437		727		3.24		15,519		628		4.04
Total interest-earning assets	27,163,961		$	1,164,278	4.29	%	25,382,217		$	1,064,193	4.18	%
Non-interest-earning assets	1,897,078						1,640,385
Total Assets	$	29,061,039					$	27,022,602

Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Demand deposits	$	4,300,407	$	—	—	%	$	4,185,183	$	—	—	%
Health savings accounts	6,240,201		12,316		0.20		5,540,000		10,980		0.20
Interest-bearing checking, money market and savings	9,144,086		54,566		0.60		9,115,168		36,559		0.40
Certificates of deposit	3,267,913		62,695		1.92		2,818,271		42,868		1.52
Total deposits	22,952,607		129,577		0.56		21,658,622		90,407		0.42

Securities sold under agreements to repurchase and other borrowings	1,008,704		17,953		1.78		784,998		13,491		1.72
Federal Home Loan Bank advances	1,201,839		31,399		2.61		1,339,492		33,461		2.50
Long-term debt ^(a)	468,111		20,527		4.51		225,895		11,127		4.93
Total borrowings	2,678,654		69,879		2.62		2,350,385		58,079		2.47
Total interest-bearing liabilities	25,631,261		$	199,456	0.78	%	24,009,007		$	148,486	0.62	%
Non-interest-bearing liabilities	362,059						231,463
Total liabilities	25,993,320						24,240,470

Preferred stock	145,037						145,068
Common shareholders' equity	2,922,682						2,637,064
Total shareholders' equity	3,067,719						2,782,132
Total Liabilities and Shareholders' Equity	$	29,061,039					$	27,022,602
Tax-equivalent net interest income			964,822						915,707
Less: tax-equivalent adjustments			(9,695)						(9,026)
Net interest income			$	955,127					$	906,681
Net interest margin					3.55	%					3.60	%

(a) For purposes of yield/rate computation, unrealized gain (loss) balances on securities available for sale and senior fixed-rate notes hedges are excluded.


WEBSTER FINANCIAL CORPORATION Five Quarter Loan and Lease Balances (unaudited)
(Dollars in thousands)	December 31, 2019		September 30, 2019		June 30, 2019		March 31, 2019		December 31, 2018
Loan and Lease Balances (actual):
Commercial non-mortgage	$	5,833,952	$	5,887,119	$	5,948,388	$	5,811,309	$	5,755,832

Asset-based lending	1,046,886		1,122,765		1,077,118		1,039,633		969,171
Commercial real estate	5,949,339		5,398,084		5,224,382		4,991,825		4,927,145
Residential mortgages	4,972,685		4,873,726		4,718,704		4,631,787		4,416,637
Consumer	2,234,124		2,269,952		2,301,291		2,339,736		2,396,704
Total Loan and Lease Balances	20,036,986		19,551,646		19,269,883		18,814,290		18,465,489
Allowance for loan and lease losses	(209,096)		(209,152)		(211,671)		(211,389)		(212,353)
Loans and Leases, net	$	19,827,890	$	19,342,494	$	19,058,212	$	18,602,901	$	18,253,136

Loan and Lease Balances (average):
Commercial non-mortgage	$	5,879,600	$	5,933,221	$	5,914,710	$	5,776,334	$	5,754,153

Asset-based lending	1,087,537		1,138,189		1,049,403		1,016,069		964,575
Commercial real estate	5,667,764		5,312,403		5,079,415		4,930,035		4,862,419
Residential mortgages	4,917,365		4,802,497		4,662,033		4,415,434		4,419,826
Consumer	2,256,255		2,286,983		2,324,717		2,371,302		2,423,414
Total Loan and Lease Balances	19,808,521		19,473,293		19,030,278		18,509,174		18,424,387
Allowance for loan and lease losses	(211,460)		(213,130)		(210,719)		(214,966)		(214,453)
Loans and Leases, net	$	19,597,061	$	19,260,163	$	18,819,559	$	18,294,208	$	18,209,934


WEBSTER FINANCIAL CORPORATION Five Quarter Nonperforming Assets and Past Due Loans and Leases (unaudited)
(Dollars in thousands)	December 31, 2019		September 30, 2019		June 30, 2019		March 31, 2019		December 31, 2018
Nonperforming loans and leases:
Commercial non-mortgage	$	64,793	$	64,197	$	56,340	$	66,754	$	62,265

Asset-based lending	139		9,165		184		218		224
Commercial real estate	11,554		12,810		10,413		7,449		8,243
Residential mortgages	43,100		43,733		48,104		49,267		49,069
Consumer	31,320		32,794		33,015		35,245		34,949
Total nonperforming loans and leases	$	150,906	$	162,699	$	148,056	$	158,933	$	154,750

Other real estate owned and repossessed assets:
Commercial non-mortgage	$	271	$	544	$	1,307	$	861	$	407

Residential mortgages	4,247		1,912		2,012		2,769		4,679
Consumer	1,956		1,561		1,872		1,868		1,781
Total other real estate owned and repossessed assets	$	6,474	$	4,017	$	5,191	$	5,498	$	6,867
Total nonperforming assets	$	157,380	$	166,716	$	153,247	$	164,431	$	161,617




Past due 30-89 days:
Commercial non-mortgage	$	8,482	$	5,384	$	4,438	$	19,152	$	2,615

Asset-based lending	—		—		—		—		—
Commercial real estate	1,700		1,433		2,665		2,283		1,514
Residential mortgages	13,598		13,445		10,844		12,865		12,789
Consumer	18,835		15,217		13,949		16,174		17,324
Total past due 30-89 days	42,615		35,479		31,896		50,474		34,242
Past due 90 days or more and accruing	—		92		410		—		104
Total past due loans and leases	$	42,615	$	35,571	$	32,306	$	50,474	$	34,346


Five Quarter Changes in the Allowance for Loan and Lease Losses (unaudited)
	For the Three Months Ended
(Dollars in thousands)	December 31, 2019		September 30, 2019		June 30, 2019		March 31, 2019		December 31, 2018
Beginning balance	$	209,152	$	211,671	$	211,389	$	212,353	$	211,832
Provision	6,000		11,300		11,900		8,600		10,000
Charge-offs:
Commercial non-mortgage	5,041		11,291		5,657		7,837		10,239

Asset-based lending	—		—		—		—		289
Commercial real estate	23		32		2,473		973		22
Residential mortgages	876		872		2,154		251		910
Consumer	3,165		3,765		4,098		3,972		4,384
Total charge-offs	9,105		15,960		14,382		13,033		15,844
Recoveries:
Commercial non-mortgage	236		173		464		569		2,993

Asset-based lending	33		—		—		229		21
Commercial real estate	3		3		33		6		7
Residential mortgages	534		356		295		178		1,137
Consumer	2,243		1,609		1,972		2,487		2,207
Total recoveries	3,049		2,141		2,764		3,469		6,365
Total net charge-offs	6,056		13,819		11,618		9,564		9,479
Ending balance	$	209,096	$	209,152	$	211,671	$	211,389	$	212,353

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)	December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019			December 31, 2018
Efficiency ratio:
Non-interest expense (GAAP)	$	179,730		$	179,894		$	180,640		$	175,686		$	174,759
Less: Foreclosed property activity (GAAP)	263			(128)			(55)			(253)			191
Intangible assets amortization (GAAP)	962			961			962			962			962
Other expenses (non-GAAP)	—			1,750			—			7			320
Non-interest expense (non-GAAP)	$	178,505		$	177,311		$	179,733		$	174,970		$	173,286
Net interest income (GAAP)	$	231,250		$	240,539		$	241,787		$	241,551		$	237,131
Add: Tax-equivalent adjustment (non-GAAP)	2,486			2,436			2,435			2,338			2,407
Non-interest income (GAAP)	70,919			69,931			75,853			68,612			73,163
Other (non-GAAP)	402			350			354			342			282
Less: Gain on investment securities, net (GAAP)	29			—			—			—			—
Less: Gain on the sale of banking centers (GAAP)	—			—			—			—			4,596
Income (non-GAAP)	$	305,028		$	313,256		$	320,429		$	312,843		$	308,387
Efficiency ratio (non-GAAP)	58.52		%	56.60		%	56.09		%	55.93		%	56.19		%

Return on average tangible common shareholders' equity:
Net income (GAAP)	$	90,473		$	93,865		$	98,649		$	99,736		$	98,838
Less: Preferred stock dividends (GAAP)	1,969			1,968			1,969			1,969			1,969
Add: Intangible assets amortization, tax-effected (GAAP)	760			759			760			760			760
Income adjusted for preferred stock dividends and intangible assets amortization (non-GAAP)	$	89,264		$	92,656		$	97,440		$	98,527		$	97,629
Income adjusted for preferred stock dividends and intangible assets amortization, annualized basis (non-GAAP)	$	357,056		$	370,624		$	389,760		$	394,108		$	390,516
Average shareholders' equity (non-GAAP)	$	3,196,563		$	3,118,691		$	3,016,541		$	2,935,653		$	2,853,176
Less: Average preferred stock (non-GAAP)	145,037			145,037			145,037			145,037			145,037
Average goodwill and other intangible assets (non-GAAP)	560,750			561,715			562,679			563,646			564,601
Average tangible common shareholders' equity (non-GAAP)	$	2,490,776		$	2,411,939		$	2,308,825		$	2,226,970		$	2,143,538
Return on average tangible common shareholders' equity (non-GAAP)	14.34		%	15.37		%	16.88		%	17.70		%	18.22		%

WEBSTER FINANCIAL CORPORATION

Reconciliations to GAAP Financial Measures (continued) ___ ___


	At or for the Three Months Ended
(In thousands, except per share data)	December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019			December 31, 2018
Tangible equity:
Shareholders' equity (GAAP)	$	3,207,770		$	3,152,394		$	3,065,217		$	2,966,255		$	2,886,515
Less: Goodwill and other intangible assets (GAAP)	560,290			561,252			562,214			563,176			564,137
Tangible shareholders' equity (non-GAAP)	$	2,647,480		$	2,591,142		$	2,503,003		$	2,403,079		$	2,322,378
Total assets (GAAP)	$	30,389,344		$	29,895,100		$	28,942,043		$	28,238,129		$	27,610,315
Less: Goodwill and other intangible assets (GAAP)	560,290			561,252			562,214			563,176			564,137
Tangible assets (non-GAAP)	$	29,829,054		$	29,333,848		$	28,379,829		$	27,674,953		$	27,046,178
Tangible equity (non-GAAP)	8.88		%	8.83		%	8.82		%	8.68		%	8.59		%

Tangible common equity:
Tangible shareholders' equity (non-GAAP)	$	2,647,480		$	2,591,142		$	2,503,003		$	2,403,079		$	2,322,378
Less: Preferred stock (GAAP)	145,037			145,037			145,037			145,037			145,037
Tangible common shareholders' equity (non-GAAP)	$	2,502,443		$	2,446,105		$	2,357,966		$	2,258,042		$	2,177,341
Tangible assets (non-GAAP)	$	29,829,054		$	29,333,848		$	28,379,829		$	27,674,953		$	27,046,178
Tangible common equity (non-GAAP)	8.39		%	8.34		%	8.31		%	8.16		%	8.05		%

Tangible book value per common share:
Tangible common shareholders' equity (non-GAAP)	$	2,502,443		$	2,446,105		$	2,357,966		$	2,258,042		$	2,177,341
Common shares outstanding	92,027			92,034			92,007			92,125			92,247
Tangible book value per common share (non-GAAP)	$	27.19		$	26.58		$	25.63		$	24.51		$	23.60

Core deposits:
Total deposits	$	23,324,746		$	23,280,665		$	22,598,778		$	22,750,928		$	21,858,845
Less: Certificates of deposit	3,104,765			3,249,860			3,291,617			3,273,120			2,961,564
Brokered certificates of deposit	—			5,705			41,376			81,507			234,982
Core deposits (non-GAAP)	$	20,219,981		$	20,025,100		$	19,265,785		$	19,396,301		$	18,662,299