Webster Reports Fourth Quarter 2019 Earnings Of $0.96 Per Diluted Share

Jan 23, 2020

WATERBURY, Conn., Jan. 23, 2020 /PRNewswire/ -- 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




1150




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




1150

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

%

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 the yield 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

%

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



1125


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 the yield 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 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

 

 

WEBSTER FINANCIAL CORPORATION
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

%





















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


 

 

Media Contact 

Investor Contact

Alice Ferreira, 203-578-2610

Terry Mangan, 203-578-2318

acferreira@websterbank.com 

tmangan@websterbank.com

 

 

Cision View original content:http://www.prnewswire.com/news-releases/webster-reports-fourth-quarter-2019-earnings-of-0-96-per-diluted-share-300991850.html

SOURCE Webster Financial Corporation