Webster Reports Fourth Quarter 2021 Earnings of $1.20 Per Diluted Share

Jan 20, 2022

WATERBURY, Conn., Jan. 20, 2022 /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 $108.4 million, or $1.20 per diluted share, for the quarter ended December 31, 2021, compared to $57.7 million, or $0.64 per diluted share, for the quarter ended December 31, 2020. Earnings per diluted share would have been $1.31 for the quarter ended December 31, 2021, adjusting for a net $13.7 million ($10.1 million after tax) of merger related, strategic optimization, and debt prepayment expenses.

For the full year 2021, earnings applicable to common shareholders was $398.7 million, or $4.42 per diluted share, and includes $47.1 million ($39.1 million after tax) of merger related, strategic optimization, and debt prepayment expenses.

"We are very proud of our performance for the fourth quarter and full-year of 2021, as we achieved a record level of EPS and net income on both a quarterly and full-year basis," said John R. Ciulla, chairman and chief executive officer. "As we have secured all regulatory approvals, we look forward to closing our merger with Sterling. The combination will form a uniquely positioned commercial bank that will further the exceptional performance Webster's stakeholders have come to expect."

Highlights for the fourth quarter of 2021:

  • Revenue of $316.9 million, an increase of 7.9 percent compared to the prior year.
  • Loan growth of 4.1 percent linked quarter, excluding Paycheck Protection Program (PPP) loans, led by commercial and residential which together increased 5.0 percent.
  • Current Expected Credit Loss (CECL) benefit of $15.0 million with a reserve decrease of $13.7 million compared to the prior quarter, resulting in an allowance coverage of 1.35 percent, or 1.37 percent excluding $0.2 billion of PPP loans.
  • Deposit decline of $0.2 billion or 0.6 percent linked quarter, with decreases of $239.7 million in money market deposits and $94.3 million in demand deposits.
  • Charges related to merger, strategic optimization initiatives, and debt prepayments totaled $13.7 million.
  • Net interest margin of 2.73 percent.
  • Efficiency ratio (non-GAAP) of 54.85 percent.

"Our financial performance is the result of a broad effort across our company," said Glenn MacInnes, executive vice president and chief financial officer. "We continued to generate robust loan growth, we were successful in deploying the meaningful liquidity our deposit growth generated, and measures of asset quality remained exceptionally strong. We approach our merger with Sterling with substantial momentum."

Line of Business performance compared to the fourth quarter of 2020

Commercial Banking

Webster's Commercial Banking segment serves businesses that have more than $2 million of revenue through our business banking, middle market, asset-based lending, equipment finance, commercial real estate, sponsor finance, and treasury services business units. Additionally, our Wealth group provides wealth management solutions to business owners, operators, and consumers within our targeted markets and retail footprint. As of December 31, 2021, Commercial Banking had $15.2 billion in loans and leases and $9.6 billion in deposit balances.

Commercial Banking Operating Results:

         

Percent

 

Three months ended December 31,

 

Favorable/

(In thousands)

 

2021

2020

 

(Unfavorable)

Net interest income

 

$151,767

$137,291

   

10.5

%

Non-interest income

 

31,304

25,523

   

22.7

 

Operating revenue

 

183,071

162,814

   

12.4

 

Non-interest expense

 

66,263

67,989

   

2.5

 

Pre-tax, pre-provision net revenue

 

$116,808

$94,825

   

23.2

 
               
         

Percent

   

At December 31,

 

Increase/

(In millions)

 

2021

2020

 

(Decrease)

Loans and leases

 

$15,210

$14,573

   

4.4

%

Deposits

 

9,645

8,191

   

17.7

 

AUA / AUM (off balance sheet)

 

7,202

6,586

   

9.4

 

Pre-tax, pre-provision net revenue increased $22.0 million to $116.8 million in the quarter as compared to prior year. Net interest income increased $14.5 million to $151.8 million, primarily driven by loan and deposit growth. Non-interest income increased $5.8 million to $31.3 million, driven by a gain on loan sale and trust and investment service fees. Non-interest expense decreased $1.7 million to $66.3 million, primarily driven by lower support costs.

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, 2021, HSA Bank had $11.1 billion in total footings comprising $7.4 billion in deposit balances and $3.7 billion in assets under administration through linked investment accounts.

HSA Bank Operating Results:

         

Percent

 

Three months ended December 31,

 

Favorable/

(In thousands)

 

2021

2020

 

(Unfavorable)

Net interest income

 

$42,219

$40,495

   

4.3

%

Non-interest income

 

24,499

24,105

   

1.6

 

Operating revenue

 

66,718

64,600

   

3.3

 

Non-interest expense

 

34,155

34,750

   

1.7

 

Pre-tax, net revenue

 

$32,563

$29,850

   

9.1

 
               
         

Percent

   

At December 31,

 

Increase/

(Dollars in millions)

 

2021

2020

 

(Decrease)

Number of accounts (thousands)

 

2,992

2,953

   

1.3

%

               

Deposits

 

$7,398

$7,120

   

3.9

 

Linked investment accounts (off balance sheet)

 

3,719

2,853

   

30.3

 

Total footings

 

$11,117

$9,973

   

11.5

 

Pre-tax net revenue increased $2.7 million to $32.6 million in the quarter as compared to prior year. Net interest income increased $1.7 million to $42.2 million, due to growth in deposits. Non-interest income increased $0.4 million to $24.5 million, primarily due to increased interchange revenue. Non-interest expense decreased $0.6 million to $34.2 million, primarily due to reduced occupancy, telephone, and postage costs.

Retail Banking

Retail Banking serves consumer and business banking customers primarily throughout southern New England and into Westchester County, New York. Retail Banking is comprised of the Consumer Lending and Small Business Banking (businesses that have less than $2 million of revenue) business units, as well as a distribution network consisting of 130 banking centers and 251 ATMs, a customer care center, and a full range of web and mobile-based banking services. As of December 31, 2021, Retail Banking had $7.1 billion in loans and $12.8 billion in deposit balances.

Retail Banking Operating Results:

         

Percent

 

Three months ended December 31,

 

Favorable/

(In thousands)

 

2021

2020

 

(Unfavorable)

Net interest income

 

$93,749

$85,404

   

9.8

%

Non-interest income

 

17,323

18,064

   

(4.1)

 

Operating revenue

 

111,072

103,468

   

7.3

 

Non-interest expense

 

74,310

79,687

   

6.7

 

Pre-tax, pre-provision net revenue

 

$36,762

$23,781

   

54.6

 
               
         

Percent

   

At December 31,

 

Increase/

(In millions)

 

2021

2020

 

(Decrease)

Loans

 

$7,062

$7,068

   

(0.1)

%

Deposits

 

12,802

12,024

   

6.5

 

Pre-tax, pre-provision net revenue increased $13.0 million to $36.8 million in the quarter as compared to prior year. Net interest income increased $8.3 million to $93.7 million, driven by deposit balance growth and lower interest paid on deposits, partially offset by lower loan balances. Non-interest income decreased $0.7 million to $17.3 million, resulting from lower mortgage banking fee income, partially offset by higher deposit service fees, loan servicing income, and credit card and merchant services fees. Non-interest expense decreased $5.4 million to $74.3 million, driven by lower employee-related, occupancy, technology and equipment, and marketing expenses.

Consolidated financial performance:

Quarterly net interest income compared to the fourth quarter of 2020:

  • Net interest income was $226.8 million compared to $216.9 million.
  • Net interest margin was 2.73 percent compared to 2.83 percent. The yield on interest-earning assets declined by 24 basis points, and the cost of interest-bearing liabilities declined by 14 basis points.
  • Average interest-earning assets totaled $33.5 billion and grew by $2.6 billion, or 8.4 percent.
  • Average loans and leases totaled $21.9 billion and grew by $0.2 billion, or 0.8 percent.
  • Average deposits totaled $30.1 billion and grew by $2.9 billion, or 10.7 percent.

Quarterly provision for credit losses:

  • The provision for credit losses reflects a $15.0 million benefit in the quarter, contributing to a $13.7 million decrease in the allowance for credit losses on loans and leases. The decrease in the allowance reflects a stable economic outlook and favorable credit quality trends. The provision for credit losses reflected an expense of $7.8 million in the prior quarter compared to a benefit of $1.0 million a year ago.
  • Net (recoveries) were $(1.2) million, compared to net charge-offs of $0.9 million in the prior quarter and $9.4 million a year ago. The ratio of net (recoveries) charge-offs to average loans on an annualized basis was (0.02) percent, compared to 0.02 percent in the prior quarter and 0.17 percent a year ago.
  • The allowance for credit losses on loans and leases represented 1.35 percent of total loans at December 31, 2021, compared to 1.46 percent at September 30, 2021 and 1.66 percent at December 31, 2020. Excluding $0.2 billion of risk free PPP loans, the coverage ratio was 1.37 percent at December 31, 2021, compared to 1.49 percent at September 30, 2021 excluding $0.4 billion of risk free PPP loans, and 1.76 percent at December 31, 2020 excluding $1.3 billion of risk free PPP loans. The allowance represented 274 percent of nonperforming loans at December 31, 2021 compared to 309 percent at September 30, 2021 and 214 percent at December 31, 2020.

Quarterly non-interest income compared to the fourth quarter of 2020:

  • Total non-interest income was $90.1 million compared to $76.8 million, an increase of $13.3 million. This primarily reflects an increase of $12.5 million in Other primarily due to realized gains and fair value adjustments on direct investments and a gain on the sale of a commercial loan; $2.8 million in deposit service fees driven by higher levels of transactional fees across all three business lines; and $1.3 million primarily due to increased investment activity. These increases were partially offset by a $3.4 million decrease in mortgage banking activities which is in line with our strategic choice to originate loans for portfolio along with lower spreads on loans originated for sale.

Quarterly non-interest expense compared to the fourth quarter of 2020:

  • Total non-interest expense was $189.9 million compared to $219.5 million, a decrease of $29.6 million. Total non-interest expense includes a net $13.7 million of merger, strategic initiative, and debt prepayment charges compared to $38.3 million of strategic initiatives a year ago. Excluding those charges, total non-interest expense decreased $5.0 million driven by the benefits of our strategic initiatives partially offset by higher performance-based compensation and medical claims.

Quarterly income taxes compared to the fourth quarter of 2020:

  • Income tax expense was $31.0 million compared to $15.1 million, and the effective tax rate was 21.8 percent compared to 20.1 percent. The higher effective tax rate in the quarter primarily reflects the effects of increased pre-tax income in 2021 compared to 2020, partially offset by the recognition of a higher level of net discrete tax benefits during the period compared to a year ago.

Investment securities:

  • Total investment securities, net were $10.4 billion, compared to $9.4 billion at September 30, 2021 and $8.9 billion at December 31, 2020. The carrying value of the available-for-sale portfolio included $7.2 million of net unrealized gains, compared to $44.7 million at September 30, 2021 and $92.5 million at December 31, 2020. The carrying value of the held-to-maturity portfolio does not reflect $82.6 million of net unrealized gains, compared to $152.9 million at September 30, 2021 and $267.2 million at December 31, 2020.

Loans:

  • Total loans were $22.3 billion, compared to $21.6 billion at both September 30, 2021 and December 31, 2020. Compared to September 30, 2021, commercial loans (excluding PPP loans) increased by $601.6 million, residential mortgages increased by $245.4 million, and commercial real estate loans increased by $80.5 million while consumer loans decreased by $52.1 million, and PPP loans decreased by $183.9 million.
  • Compared to a year ago, commercial loans (excluding PPP loans) increased by $1.0 billion, residential mortgages increased by $0.6 billion, and commercial real estate loans increased by $0.3 billion, while consumer loans decreased by $0.3 billion. PPP loans totaled $0.2 billion at December 31, 2021.
  • Loan originations for the portfolio were $2.553 billion, compared to $1.987 billion in the prior quarter and $1.804 billion a year ago. In addition, $42 million of residential loans were originated for sale in the quarter, compared to $57 million in the prior quarter and $125 million a year ago.

Asset quality:

  • Total nonperforming loans were $109.8 million, or 0.49 percent of total loans, compared to $101.8 million, or 0.47 percent of total loans, at September 30, 2021 and $168.0 million, or 0.78 percent of total loans, at December 31, 2020. As of December 31, 2021, $60.3 million of nonperforming loans were contractually current.
  • Past due loans were $21.9 million, compared to $17.1 million at September 30, 2021 and $32.9 million at December 31, 2020.

Deposits and borrowings:

  • Total deposits were $29.8 billion, compared to $30.0 billion at September 30, 2021 and $27.3 billion at December 31, 2020. Core deposits to total deposits were 94.0 percent, compared to 93.7 percent at September 30, 2021 and 90.9 percent at December 31, 2020. The loan to deposit ratio was 74.6 percent, compared to 71.9 percent at September 30, 2021 and 79.2 percent at December 31, 2020.
  • Total borrowings were $1.2 billion, compared to $1.3 billion at September 30, 2021 and $1.7 billion at December 31, 2020.

Capital:

  • The return on average common shareholders' equity and the return on average tangible common shareholders' equity were 13.35 percent and 16.23 percent, respectively, compared to 7.51 percent and 9.31 percent, respectively, in the fourth quarter of 2020.
  • The tangible equity and tangible common equity ratios were 8.39 percent and 7.97 percent, respectively, compared to 8.35 percent and 7.90 percent, respectively, at December 31, 2020. The common equity tier 1 risk-based capital ratio was 11.72 percent, compared to 11.35 percent at December 31, 2020.
  • Book value and tangible book value per common share were $36.36 and $30.22, respectively, compared to $34.25 and $28.04, respectively, at December 31, 2020.

Webster Financial Corporation is the holding company for Webster Bank, National Association and its HSA Bank division. With $34.9 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust, and investment services through 130 banking centers and 251 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 2021 earnings announcement will be held today, Thursday, January 20, 2022 at 9:00 a.m. Eastern Time. To listen to the live call, please dial 877-407-8289, or 201-689-8341 for international callers. The webcast, along with related slides, will be available on the Webster website (www.wbst.com). A replay of the conference call will be available for one week via the website listed above, beginning at approximately 11:00 a.m. (Eastern) on January 20, 2022. To access the replay, dial 877-660-6853, or 201-612-7415 for international callers. The replay conference ID number is 13725763.

Media Contact
Alice Ferreira, 203-578-2610
acferreira@websterbank.com

Investor Contact
Kristen Manginelli, 203-578-2307
kmanginelli@websterbank.com

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 complete the merger with Sterling Bancorp and realize the anticipated benefits of the merger; (2) our ability to successfully execute our business plan and strategic initiatives, and manage any risks or uncertainties; (3) our ability to successfully achieve the anticipated cost reductions and operating efficiencies from our completed branch consolidations and other strategic initiatives, including process automation, organization simplification, and spending reductions, and avoid any higher than anticipated costs or delays in the ongoing implementation; (4) local, regional, national, and international economic conditions and the impact they may have on us and our customers; (5) volatility and disruption in national and international financial markets; (6) the potential adverse effects of the ongoing novel coronavirus (COVID-19) pandemic and any governmental or societal responses thereto, or other unusual and infrequently occurring events; (7) changes in the level of nonperforming assets and charge-offs; (8) changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (9) adverse conditions in the securities markets that lead to impairment in the value of our investment securities; (10) inflation, changes in interest rates (including the replacement of LIBOR as an interest rate benchmark), and monetary fluctuations; (11) the timely development and acceptance of new products and services and the perceived value of those products and services by customers; (12) changes in deposit flows, consumer spending, borrowings, and savings habits; (13) our ability to implement new technologies and maintain secure and reliable technology systems; (14) the effects of any cyber threats, attacks or events or fraudulent activity; (15) performance by our counterparties and vendors; (16) our ability to increase market share and control expenses; (17) changes in the competitive environment among banks, financial holding companies, and other financial services providers; (18) changes in laws and regulations (including those concerning banking, taxes, dividends, securities, insurance, and healthcare) with which we and our subsidiaries must comply; (19) the effect of changes in accounting policies and practices applicable to us, including impacts of recently adopted accounting guidance; (20) legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews; (21) our ability to appropriately address social, environmental, and sustainability concerns that may arise from our business activities; and (22) 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,
2021

     

September 30,
2021

     

June 30,
2021

     

March 31,
2021

     

December 31,
2020

 
                                       

Income and performance ratios:

                                     

Net income

$

111,038

   

$

95,713

   

$

94,035

   

$

108,078

   

$

60,044

 

Earnings applicable to common shareholders

 

108,426

     

93,171

     

91,555

     

105,530

     

57,715

 

Earnings per diluted common share

 

1.20

     

1.03

     

1.01

     

1.17

     

0.64

 

Return on average assets

 

1.26

%

   

1.10

%

   

1.12

%

   

1.31

%

   

0.73

%

Return on average tangible common shareholders' equity(non-GAAP)

 

16.23

     

14.16

     

14.26

     

16.79

     

9.31

 

Return on average common shareholders' equity

 

13.35

     

11.61

     

11.63

     

13.65

     

7.51

 

Non-interest income as a percentage of total revenue

 

28.44

     

26.73

     

24.77

     

25.54

     

26.14

 
                                       

Asset quality:

                                     

Allowance for credit losses on loans and leases

$

301,187

   

$

314,922

   

$

307,945

   

$

328,351

   

$

359,431

 

Nonperforming assets

 

112,590

     

104,209

     

123,497

     

152,808

     

170,314

 

Allowance for credit losses on loans and leases / total loans and leases

 

1.35

%

   

1.46

%

   

1.43

%

   

1.54

%

   

1.66

%

Net charge-offs (recoveries) / average loans and leases (annualized)

 

(0.02)

     

0.02

     

(0.02)

     

0.10

     

0.17

 

Nonperforming loans and leases / total loans and leases

 

0.49

     

0.47

     

0.56

     

0.71

     

0.78

 

Nonperforming assets / total loans and leases plus OREO

 

0.51

     

0.48

     

0.57

     

0.72

     

0.79

 

Allowance for credit losses on loans and leases / nonperforming loans and leases

 

274.36

     

309.44

     

255.05

     

218.29

     

213.94

 
                                       

Other ratios:

                                     

Tangible equity(non-GAAP)

 

8.39

%

   

8.12

%

   

8.35

%

   

8.30

%

   

8.35

%

Tangible common equity (non-GAAP)

 

7.97

     

7.71

     

7.91

     

7.85

     

7.90

 

Tier 1 risk-based capital (a)

 

12.32

     

12.39

     

12.30

     

12.55

     

11.99

 

Total risk-based capital (a)

 

13.64

     

13.79

     

13.70

     

14.08

     

13.59

 

Common equity tier 1 risk-based capital (a)

 

11.72

     

11.77

     

11.66

     

11.89

     

11.35

 

Shareholders' equity / total assets

 

9.85

     

9.57

     

9.86

     

9.84

     

9.92

 

Net interest margin

 

2.73

     

2.80

     

2.82

     

2.92

     

2.83

 

Efficiency ratio (non-GAAP)

 

54.85

     

54.84

     

56.64

     

58.46

     

60.27

 
                                       

Equity and share related:

                                     

Common equity

$

3,293,288

   

$

3,241,152

   

$

3,184,668

   

$

3,127,891

   

$

3,089,588

 

Book value per common share

 

36.36

     

35.78

     

35.15

     

34.60

     

34.25

 

Tangible book value per common share(non-GAAP)

 

30.22

     

29.63

     

28.99

     

28.41

     

28.04

 

Common stock closing price

 

55.84

     

54.46

     

53.34

     

55.11

     

42.15

 

Dividends declared per common share

 

0.40

     

0.40

     

0.40

     

0.40

     

0.40

 

Common shares issued and outstanding

 

90,584

     

90,588

     

90,594

     

90,410

     

90,199

 

Weighted-average common shares outstanding - Basic

 

90,052

     

90,038

     

90,027

     

89,809

     

89,645

 

Weighted-average common shares outstanding - Diluted

 

90,284

     

90,232

     

90,221

     

90,108

     

89,915

 
 

(a) Presented as preliminary for December 31, 2021 and actual for the remaining periods. In accordance with regulatory capital rules, the Company elected an option to delay the estimated impact of CECL on its regulatory capital for two years followed by a three year transition period ending December 31, 2024. As a result, capital ratios and amounts for all periods presented exclude the impact of the increased allowance for credit losses on loans, held-to-maturity debt securities and unfunded loan commitments attributed to the adoption of CECL.

 

WEBSTER FINANCIAL CORPORATION
Consolidated Balance Sheets (unaudited)

(In thousands)

 

December 31,
2021

     

September 30,
2021

     

December 31,
2020

Assets:

                   

Cash and due from banks

$

137,385

   

$

161,369

   

$

193,501

Interest-bearing deposits

 

324,185

     

2,442,790

     

69,603

Securities:

                   

Available for sale

 

4,234,854

     

3,410,443

     

3,326,776

Held to maturity, net

 

6,198,125

     

5,986,308

     

5,567,889

Total securities, net

 

10,432,979

     

9,396,751

     

8,894,665

Loans held for sale

 

4,694

     

24,969

     

14,012

Loans and Leases:

                   

Commercial

 

8,576,786

     

8,159,127

     

8,577,898

Commercial real estate

 

6,603,180

     

6,522,679

     

6,322,637

Residential mortgages

 

5,412,905

     

5,167,527

     

4,782,016

Consumer

 

1,678,858

     

1,731,002

     

1,958,664

Total loans and leases

 

22,271,729

     

21,580,335

     

21,641,215

Allowance for credit losses on loans and leases

 

(301,187)

     

(314,922)

     

(359,431)

Loans and leases, net

 

21,970,542

     

21,265,413

     

21,281,784

Federal Home Loan Bank and Federal Reserve Bank stock

 

71,836

     

75,936

     

77,594

Premises and equipment, net

 

204,557

     

209,573

     

226,743

Goodwill and other intangible assets, net

 

556,242

     

557,360

     

560,756

Cash surrender value of life insurance policies

 

572,305

     

572,368

     

564,195

Deferred tax asset, net

 

109,405

     

96,489

     

81,286

Accrued interest receivable and other assets

 

531,469

     

571,240

     

626,551

Total Assets

$

34,915,599

   

$

35,374,258

   

$

32,590,690

                     

Liabilities and Shareholders' Equity:

                   

Deposits:

                   

Demand

$

7,060,488

   

$

7,154,835

   

$

6,155,592

Health savings accounts

 

7,397,582

     

7,329,405

     

7,120,017

Interest-bearing checking

 

4,182,497

     

4,181,825

     

3,652,763

Money market

 

3,718,953

     

3,958,700

     

2,940,215

Savings

 

5,689,739

     

5,517,189

     

4,979,031

Certificates of deposit

 

1,797,770

     

1,884,373

     

2,487,818

Total deposits

 

29,847,029

     

30,026,327

     

27,335,436

Securities sold under agreements to repurchase and other borrowings

 

674,896

     

655,871

     

995,355

Federal Home Loan Bank advances

 

10,997

     

113,334

     

133,164

Long-term debt

 

562,931

     

564,114

     

567,663

Accrued expenses and other liabilities

 

381,421

     

628,423

     

324,447

Total liabilities

 

31,477,274

     

31,988,069

     

29,356,065

Preferred stock

 

145,037

     

145,037

     

145,037

Common shareholders' equity

 

3,293,288

     

3,241,152

     

3,089,588

Total shareholders' equity

 

3,438,325

     

3,386,189

     

3,234,625

Total Liabilities and Shareholders' Equity

$

34,915,599

   

$

35,374,258

   

$

32,590,690

 

WEBSTER FINANCIAL CORPORATION
Consolidated Statements of Income (unaudited)

   

Three Months Ended December 31,

     

Twelve Months Ended December 31,

(In thousands, except per share data)

 

2021

     

2020

     

2021

     

2020

Interest income:

                           

Interest and fees on loans and leases

$

189,985

   

$

189,010

   

$

762,713

   

$

789,719

Interest and dividends on securities

 

45,990

     

46,874

     

179,885

     

211,561

Loans held for sale

 

45

     

181

     

246

     

769

Total interest income

 

236,020

     

236,065

     

942,844

     

1,002,049

Interest expense:

                           

Deposits

 

4,027

     

8,651

     

20,131

     

67,897

Borrowings

 

5,211

     

10,485

     

21,624

     

42,759

Total interest expense

 

9,238

     

19,136

     

41,755

     

110,656

Net interest income

 

226,782

     

216,929

     

901,089

     

891,393

Provision for credit losses

 

(15,000)

     

(1,000)

     

(54,500)

     

137,750

Net interest income after provision for loan and lease losses

 

241,782

     

217,929

     

955,589

     

753,643

Non-interest income:

                           

Deposit service fees

 

40,544

     

38,345

     

162,710

     

156,032

Loan and lease related fees

 

9,602

     

9,095

     

36,658

     

29,127

Wealth and investment services

 

10,111

     

8,820

     

39,586

     

32,916

Mortgage banking activities

 

733

     

4,110

     

6,219

     

18,295

Increase in cash surrender value of life insurance policies

 

3,627

     

3,662

     

14,429

     

14,561

Gain on investment securities, net

 

-

     

-

     

-

     

8

Other income

 

25,521

     

12,731

     

63,770

     

34,338

Total non-interest income

 

90,138

     

76,763

     

323,372

     

285,277

Non-interest expense:

                           

Compensation and benefits

 

109,283

     

122,754

     

419,989

     

428,391

Occupancy

 

13,256

     

28,024

     

55,346

     

71,029

Technology and equipment

 

28,750

     

29,122

     

112,831

     

112,273

Marketing

 

2,599

     

3,485

     

12,051

     

14,125

Professional and outside services

 

9,360

     

11,380

     

47,235

     

32,424

Intangible assets amortization

 

1,118

     

1,147

     

4,513

     

4,160

Loan workout expenses

 

244

     

261

     

1,168

     

1,758

Deposit insurance

 

4,234

     

4,372

     

15,794

     

18,316

Other expenses

 

21,009

     

18,985

     

76,173

     

76,470

Total non-interest expense

 

189,853

     

219,530

     

745,100

     

758,946

Income before income taxes

 

142,067

     

75,162

     

533,861

     

279,974

Income tax expense

 

31,029

     

15,118

     

124,997

     

59,353

Net income

 

111,038

     

60,044

     

408,864

     

220,621

Preferred stock dividends and other

 

(2,612)

     

(2,329)

     

(10,177)

     

(9,147)

Earnings applicable to common shareholders

$

108,426

   

$

57,715

   

$

398,687

   

$

211,474

                             

Weighted-average common shares outstanding - Diluted

 

90,284

     

89,915

     

90,206

     

90,151

                             

Earnings per common share:

                           

Basic

$

1.20

   

$

0.64

   

$

4.43

   

$

2.35

Diluted

 

1.20

     

0.64

     

4.42

     

2.35

 

WEBSTER FINANCIAL CORPORATION
Five Quarter Consolidated Statements of Income (unaudited)

   

Three Months Ended

(In thousands, except per share data)

 

December 31,
2021

     

September 30,
2021

     

June 30,
2021

     

March 31,
2021

     

December 31,
2020

Interest income:

                                   

Interest and fees on loans and leases

$

189,985

   

$

196,273

   

$

185,919

   

$

190,536

   

$

189,010

Interest and dividends on securities

 

45,990

     

43,362

     

45,586

     

44,947

     

46,874

Loans held for sale

 

45

     

57

     

53

     

91

     

181

Total interest income

 

236,020

     

239,692

     

231,558

     

235,574

     

236,065

Interest expense:

                                   

Deposits

 

4,027

     

4,571

     

5,094

     

6,439

     

8,651

Borrowings

 

5,211

     

5,430

     

5,612

     

5,371

     

10,485

Total interest expense

 

9,238

     

10,001

     

10,706

     

11,810

     

19,136

Net interest income

 

226,782

     

229,691

     

220,852

     

223,764

     

216,929

Provision for credit losses

 

(15,000)

     

7,750

     

(21,500)

     

(25,750)

     

(1,000)

Net interest income after provision for loan and lease losses

 

241,782

     

221,941

     

242,352

     

249,514

     

217,929

Non-interest income:

                                   

Deposit service fees

 

40,544

     

40,258

     

41,439

     

40,469

     

38,345

Loan and lease related fees

 

9,602

     

10,881

     

7,862

     

8,313

     

9,095

Wealth and investment services

 

10,111

     

9,985

     

10,087

     

9,403

     

8,820

Mortgage banking activities

 

733

     

1,525

     

1,319

     

2,642

     

4,110

Increase in cash surrender value of life insurance policies

 

3,627

     

3,666

     

3,603

     

3,533

     

3,662

Other income

 

25,521

     

17,460

     

8,392

     

12,397

     

12,731

Total non-interest income

 

90,138

     

83,775

     

72,702

     

76,757

     

76,763

Non-interest expense:

                                   

Compensation and benefits

 

109,283

     

105,352

     

97,754

     

107,600

     

122,754

Occupancy

 

13,256

     

12,430

     

14,010

     

15,650

     

28,024

Technology and equipment

 

28,750

     

28,441

     

27,124

     

28,516

     

29,122

Marketing

 

2,599

     

3,721

     

3,227

     

2,504

     

3,485

Professional and outside services

 

9,360

     

7,074

     

21,025

     

9,776

     

11,380

Intangible assets amortization

 

1,118

     

1,124

     

1,132

     

1,139

     

1,147

Loan workout expenses

 

244

     

203

     

327

     

394

     

261

Deposit insurance

 

4,234

     

3,855

     

3,749

     

3,956

     

4,372

Other expenses

 

21,009

     

18,037

     

18,680

     

18,447

     

18,985

Total non-interest expense

 

189,853

     

180,237

     

187,028

     

187,982

     

219,530

Income before income taxes

 

142,067

     

125,479

     

128,026

     

138,289

     

75,162

Income tax expense

 

31,029

     

29,766

     

33,991

     

30,211

     

15,118

Net income

 

111,038

     

95,713

     

94,035

     

108,078

     

60,044

Preferred stock dividends and other

 

(2,612)

     

(2,542)

     

(2,480)

     

(2,548)

     

(2,329)

Earnings applicable to common shareholders

$

108,426

   

$

93,171

   

$

91,555

   

$

105,530

   

$

57,715

                                     

Weighted-average common shares outstanding - Diluted

 

90,284

     

90,232

     

90,221

     

90,108

     

89,915

                                     

Earnings per common share:

                                   

Basic

$

1.20

   

$

1.03

   

$

1.02

   

$

1.18

   

$

0.64

Diluted

 

1.20

     

1.03

     

1.01

     

1.17

     

0.64

 

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,

 
   

2021

             

2020

 

(Dollars in thousands)

 

Average balance

     

Interest

     

Yield/rate

             

Average balance

   

Interest

 

Yield/rate

 

Assets:

                                               

Interest-earning assets:

                                               

Loans and leases

$

21,902,101

   

$

190,698

     

3.43

%

         

$

21,729,250

 

$

189,829

 

3.44

%

Investment securities (a)

 

10,267,103

     

46,903

     

1.89

             

8,923,336

   

48,124

 

2.22

 

Federal Home Loan and Federal Reserve Bank stock

 

72,972

     

315

     

1.71

             

85,535

   

484

 

2.25

 

Interest-bearing deposits (b)

 

1,214,479

     

456

     

0.15

             

102,011

   

24

 

0.09

 

Loans held for sale

 

8,302

     

45

     

2.15

             

25,777

   

181

 

2.80

 

Total interest-earning assets

 

33,464,957

   

$

238,417

     

2.84

%

           

30,865,909

 

$

238,642

 

3.08

%

Non-interest-earning assets

 

1,915,632

                             

2,000,217

           

Total Assets

$

35,380,589

                           

$

32,866,126

           
                                                 

Liabilities and Shareholders' Equity:

                                               

Interest-bearing liabilities:

                                               

Demand deposits

$

7,185,323

   

$

-

     

-

%

         

$

6,213,119

 

$

-

 

-

%

Health savings accounts

 

7,320,585

     

1,057

     

0.06

             

7,012,813

   

1,557

 

0.09

 

Interest-bearing checking, money market and savings

 

13,627,473

     

1,819

     

0.05

             

11,469,937

   

2,400

 

0.08

 

Certificates of deposit

 

1,985,900

     

1,151

     

0.23

             

2,519,845

   

4,694

 

0.74

 

Total deposits

 

30,119,281

     

4,027

     

0.05

             

27,215,714

   

8,651

 

0.13

 
                                                 

Securities sold under agreements to repurchase and other borrowings

 

604,555

     

824

     

0.53

             

1,073,014

   

623

 

0.23

 

Federal Home Loan Bank advances

 

38,810

     

169

     

1.71

             

313,354

   

5,622

 

7.02

 

Long-term debt (a)

 

563,505

     

4,218

     

3.22

             

568,237

   

4,240

 

3.24

 

Total borrowings

 

1,206,870

     

5,211

     

1.78

             

1,954,605

   

10,485

 

2.17

 

Total interest-bearing liabilities

 

31,326,151

   

$

9,238

     

0.12

%

           

29,170,319

 

$

19,136

 

0.26

%

Non-interest-bearing liabilities

 

642,527

                             

456,586

           

Total liabilities

 

31,968,678

                             

29,626,905

           
                                                 

Preferred stock

 

145,037

                             

145,037

           

Common shareholders' equity

 

3,266,874

                             

3,094,184

           

Total shareholders' equity

 

3,411,911

                             

3,239,221

           

Total Liabilities and Shareholders' Equity

$

35,380,589

                           

$

32,866,126

           

Tax-equivalent net interest income

         

229,179

                           

219,506

     

Less: tax-equivalent adjustments

         

(2,397)

                           

(2,577)

     

Net interest income

       

$

226,782

                         

$

216,929

     

Net interest margin

                 

2.73

%

                     

2.83

%

 

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

(b) Interest-bearing deposits is a component of cash and cash equivalents.

 

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,

 
   

2021

             

2020

 

(Dollars in thousands)

 

Average balance

     

Interest

     

Yield/rate

             

Average balance

   

Interest

 

Yield/rate

 

Assets:

                                               

Interest-earning assets:

                                               

Loans and leases

$

21,584,872

   

$

765,682

     

3.55

%

         

$

21,385,702

 

$

792,929

 

3.71

%

Investment securities (a)

 

9,228,743

     

183,630

     

2.03

             

8,647,322

   

215,151

 

2.56

 

Federal Home Loan and Federal Reserve Bank stock

 

76,015

     

1,224

     

1.61

             

102,943

   

3,200

 

3.11

 

Interest-bearing deposits(b)

 

1,379,081

     

1,875

     

0.14

             

93,011

   

246

 

0.26

 

Loans held for sale

 

10,705

     

246

     

2.30

             

25,902

   

769

 

2.97

 

Total interest-earning assets

 

32,279,416

   

$

952,657

     

2.97

%

           

30,254,880

 

$

1,012,295

 

3.37

%

Non-interest-earning assets

 

1,955,330

                             

2,012,900

           

Total Assets

$

34,234,746

                           

$

32,267,780

           
                                                 

Liabilities and Shareholders' Equity:

                                               

Interest-bearing liabilities:

                                               

Demand deposits

$

6,897,464

   

$

-

     

-

%

         

$

5,698,399

 

$

-

 

-

%

Health savings accounts

 

7,390,702

     

5,777

     

0.08

             

6,893,996

   

9,530

 

0.14

 

Interest-bearing checking, money market and savings

 

12,843,843

     

6,936

     

0.05

             

10,689,634

   

25,248

 

0.24

 

Certificates of deposit

 

2,105,809

     

7,418

     

0.35

             

2,760,561

   

33,119

 

1.20

 

Total deposits

 

29,237,818

     

20,131

     

0.07

             

26,042,590

   

67,897

 

0.26

 
                                                 

Securities sold under agreements to repurchase and other borrowings

 

543,286

     

3,040

     

0.56

             

1,292,571

   

5,941

 

0.46

 

Federal Home Loan Bank advances

 

108,216

     

1,708

     

1.58

             

730,125

   

18,767

 

2.57

 

Long-term debt (a)

 

565,271

     

16,876

     

3.22

             

564,919

   

18,051

 

3.45

 

Total borrowings

 

1,216,773

     

21,624

     

1.84

             

2,587,615

   

42,759

 

1.68

 

Total interest-bearing liabilities

 

30,454,591

   

$

41,755

     

0.14

%

           

28,630,205

 

$

110,656

 

0.39

%

Non-interest-bearing liabilities

 

441,391

                             

439,084

           

Total liabilities

 

30,895,982

                             

29,069,289

           
                                                 

Preferred stock

 

145,037

                             

145,037

           

Common shareholders' equity

 

3,193,727

                             

3,053,454

           

Total shareholders' equity

 

3,338,764

                             

3,198,491

           

Total Liabilities and Shareholders' Equity

$

34,234,746

                           

$

32,267,780

           

Tax-equivalent net interest income

         

910,902

                           

901,639

     

Less: tax-equivalent adjustments

         

(9,813)

                           

(10,246)

     

Net interest income

       

$

901,089

                         

$

891,393

     

Net interest margin

                 

2.84

%

                     

3.00

%

 

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

(b) Interest-bearing deposits is a component of cash and cash equivalents.

 

WEBSTER FINANCIAL CORPORATION
Five Quarter Loan and Lease Balances (unaudited)

(Dollars in thousands)

 

December 31,
2021

     

September 30,
2021

     

June 30,
2021

     

March 31,
2021

     

December 31,
2020

Loan and Lease Balances (actual):

                                   

Commercial non-mortgage

$

7,509,538

   

$

7,172,345

   

$

7,473,758

   

$

7,530,066

   

$

7,687,300

Asset-based lending

 

1,067,248

     

986,782

     

943,961

     

907,421

     

890,598

Commercial real estate

 

6,603,180

     

6,522,679

     

6,410,672

     

6,338,056

     

6,322,637

Residential mortgages

 

5,412,905

     

5,167,527

     

4,856,302

     

4,668,945

     

4,782,016

Consumer

 

1,678,858

     

1,731,002

     

1,790,308

     

1,856,895

     

1,958,664

Total Loan and Lease Balances

 

22,271,729

     

21,580,335

     

21,475,001

     

21,301,383

     

21,641,215

Allowance for credit losses on loans and leases

 

(301,187)

     

(314,922)

     

(307,945)

     

(328,351)

     

(359,431)

Loans and Leases, net

$

21,970,542

   

$

21,265,413

   

$

21,167,056

   

$

20,973,032

   

$

21,281,784

                                     

Loan and Lease Balances (average):

                                   

Commercial non-mortgage

$

7,304,985

   

$

7,280,258

   

$

7,545,398

   

$

7,650,367

   

$

7,662,828

Asset-based lending

 

1,010,874

     

956,535

     

937,580

     

896,093

     

874,221

Commercial real estate

 

6,575,865

     

6,510,100

     

6,365,830

     

6,303,765

     

6,363,776

Residential mortgages

 

5,309,127

     

5,036,329

     

4,738,859

     

4,720,703

     

4,821,199

Consumer

 

1,701,250

     

1,755,291

     

1,825,772

     

1,910,392

     

2,007,226

Total Loan and Lease Balances

 

21,902,101

     

21,538,513

     

21,413,439

     

21,481,320

     

21,729,250

Allowance for credit losses on loans and leases

 

(317,848)

     

(308,279)

     

(332,522)

     

(364,358)

     

(375,080)

Loans and Leases, net

$

21,584,253

   

$

21,230,234

   

$

21,080,917

   

$

21,116,962

   

$

21,354,170

 

WEBSTER FINANCIAL CORPORATION
Five Quarter Nonperforming Assets and Past Due Loans and Leases (unaudited)

(Dollars in thousands)

 

December 31,
2021

     

September 30,
2021