WBS
$52.32
Webster Financial
($.49)
(.93%)
Earnings Details
3rd Quarter September 2019
Tuesday, October 22, 2019 7:30:00 AM
Tweet Share Watch
Summary

Webster Financial (WBS) Recent Earnings

Webster Financial (WBS) reported 3rd Quarter September 2019 earnings of $1.01 per share on revenue of $364.1 million. The consensus earnings estimate was $1.00 per share on revenue of $314.7 million. Revenue grew 6.9% on a year-over-year basis.

Webster Financial Corp through its Webster Bank and non-banking financial services subsidiaries, delivers financial services to individuals, families and businesses throughout southern New England and eastern New York State.

Results
Reported Earnings
$1.01
Earnings Whisper
-
Consensus Estimate
$1.00
Reported Revenue
$364.1 Mil
Revenue Estimate
$314.7 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Webster Reports Third Quarter 2019 Earnings Of $1.00 Per Diluted Share

WATERBURY, Conn., Oct. 22, 2019  /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 $91.4 million, or $1.00 per diluted share, for the quarter ended September 30, 2019, compared to $97.5 million, or $1.06 per diluted share, for the quarter ended September 30, 2018. Earnings per diluted share would have been $1.01 for the quarter ended September 30, 2019, adjusting for $1.7 million of one-time business optimization costs, compared to $0.98 for the quarter ended September 30, 2018, adjusting for a one-time net benefit of $5.6 million.

"The third quarter continues to demonstrate the power of our banking franchise as evidenced by strong year-over-year loan and deposit growth," said John R. Ciulla, president and chief executive officer. "We have now posted 40 consecutive quarters of year-over-year revenue growth and seven quarters of return on average tangible common equity above 15 percent."

Highlights for the third quarter of 2019 compared to prior year:

  • Revenue of $310.5 million, an increase of 2.6 percent.
  • Loan growth of $1.2 billion, or 6.7 percent, led by commercial real estate and residential mortgage loans, which increased 11.8 percent.
  • Deposit growth of $1.3 billion, or 5.8 percent, with growth of $689 million, or 12.3 percent, in HSA deposits.
  • Net interest margin of 3.49 percent, down 12 basis points, with 5 basis points of the reduction due to balance sheet repositioning.
  • Pre-tax, pre-provision net revenue growth of $6.7 million, or 5.4 percent, led by HSA Bank's growth of 16.6 percent.
  • Efficiency ratio (non-GAAP) of 56.6 percent compared to 57.4 percent.
  • Annualized return on average common shareholders' equity of 12.36 percent compared to 14.74 percent; annualized return on average tangible common shareholders' equity (non-GAAP) of 15.37 percent compared to 18.88 percent.

"We've achieved our tenth consecutive quarter of positive operating leverage and our efficiency ratio has been below 57 percent over the past year," said Glenn MacInnes, executive vice president and chief financial officer. "We're diligently controlling expenses while investing confidently in our future."

Line of Business performance compared to the third 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 September 30, 2019, Commercial Banking had $11.1 billion in loans and leases and $4.5 billion in deposit balances.

Commercial Banking Operating Results:






Percent


Three months ended September 30,


Favorable/

(In thousands)


2019


2018



(Unfavorable)

Net interest income


$96,817


$91,243




6.1

%

Non-interest income


13,987


18,305




(23.6)


Operating revenue


110,804


109,548




1.1


Non-interest expense


45,261


44,506




(1.7)


Pre-tax, pre-provision net revenue


$65,543


$65,042




0.8















Percent



At September 30,


Increase/

(In millions)


2019


2018



(Decrease)

Loans and leases


$11,121


$10,289




8.1

%

Deposits


4,528


4,251




6.5


Pre-tax, pre-provision net revenue increased $0.5 million to $65.5 million in the quarter as compared to prior year. Net interest income increased $5.6 million to $96.8 million, primarily due to loan growth. Non-interest income decreased $4.3 million to $14.0 million, primarily due to lower syndication fees in the quarter. Non-interest expense increased $0.8 million to $45.3 million, primarily due to strategic hires and 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 September 30, 2019, HSA Bank had $8.2 billion in total footings comprising $6.3 billion in deposit balances and $1.9 billion in assets under administration through linked investment accounts.

HSA Bank Operating Results:






Percent


Three months ended September 30,


Favorable/

(In thousands)


2019


2018



(Unfavorable)

Net interest income


$42,206


$36,731




14.9

%


Non-interest income


23,526


22,159




6.2



Operating revenue


65,732


58,890




11.6



Non-interest expense


32,918


30,753




(7.0)



Pre-tax, net revenue


$32,814


$28,137




16.6
















Percent



At September 30,


Increase/

(Dollars in millions)


2019


2018



(Decrease)

Number of accounts (thousands)


2,992


2,702




10.7

%










Deposits


$6,288


$5,600




12.3



Linked investment accounts *


1,875


1,599




17.3



Total footings


$8,163


$7,199




13.4



* Linked investment accounts are held off balance sheet





Pre-tax net revenue increased $4.7 million to $32.8 million in the quarter as compared to prior year. Net interest income increased $5.5 million to $42.2 million, due to 12 percent growth in deposits and improvement in deposit spreads. Non-interest income increased $1.4 million to $23.5 million, primarily due to 11 percent growth in accounts over the past year. Non-interest expense increased $2.2 million to $32.9 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 September 30, 2019, Community Banking had $8.4 billion in loans and $12.5 billion in deposit balances.

Community Banking Operating Results:






Percent


Three months ended September 30,


Favorable/

(In thousands)


2019


2018



(Unfavorable)

Net interest income


$99,459


$101,952




(2.4)

%


Non-interest income


28,115


26,848




4.7



Operating revenue


127,574


128,800




(1.0)



Non-interest expense *


99,835


95,769




(4.2)



Pre-tax, pre-provision net revenue


$27,739


$33,031




(16.0)
















Percent



At September 30,


Increase/

(In millions)


2019


2018



(Decrease)

Loans


$8,430


$8,032




5.0

%


Deposits


12,462


11,798




5.6



* Non-interest expense for the three months ended September 30, 2019 includes $1.7 million in business 
optimization costs.

Pre-tax, pre-provision net revenue decreased $5.3 million to $27.7 million in the quarter as compared to prior year. Net interest income decreased $2.5 million to $99.5 million, due to declining interest rates on loans coupled with an increase in deposit costs; which was partially offset by balance growth in the loan and deposit portfolios. Non-interest income increased $1.3 million due to increased income from mortgage banking activities, as well as increases in both deposit and loan related fee income. Non-interest expense increased $4.1 million to $99.8 million driven by increased employee related expenses and continued investments in technology.

Consolidated financial performance:

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

  • Net interest income was $240.5 million compared to $230.4 million.
  • Net interest margin was 3.49 percent compared to 3.61 percent. The yield on interest-earning assets increased by 5 basis points, and the cost of interest-bearing liabilities increased by 18 basis points.
  • Average interest-earning assets totaled $27.6 billion and grew by $2.2 billion, or 8.7 percent.
  • Average loans totaled $19.5 billion and grew by $1.4 billion, or 7.8 percent.
  • Average deposits totaled $23.2 billion and grew by $1.2 billion, or 5.7 percent.

Quarterly provision for loan losses:

  • The provision for loan losses was $11.3 million, compared to $11.9 million in the prior quarter and $10.5 million a year ago.
  • Net charge-offs were $13.8 million, compared to $11.6 million in the prior quarter and $6.0 million a year ago. The ratio of net charge-offs to average loans on an annualized basis was 0.28 percent, compared to 0.24 percent in the prior quarter and 0.13 percent a year ago.
  • The allowance for loan losses represented 1.07 percent of total loans at September 30, 2019, compared to 1.10 percent at June 30, 2019 and 1.16 percent at September 30, 2018. The allowance for loan losses represented 129 percent of nonperforming loans at September 30, 2019 compared to 143 percent at June 30, 2019 and 139 percent at September 30, 2018.

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

  • Total non-interest income was $69.9 million, compared to $72.3 million, a decrease of $2.4 million. This reflects a decrease of $2.5 million in loan related fees primarily related to syndication fees, and $1.9 million in other income primarily related to client hedging income, offset by a $1.4 million increase in HSA fee income driven by account fees and interchange revenue due to account growth.

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

  • Total non-interest expense was $179.9 million, compared to $178.8 million, an increase of $1.1 million. The increase reflects increases of $2.0 million in compensation and benefits due to annual merit increases and other benefits, $1.6 million in technology/equipment, and $2.1 million in other expenses primarily due to optimization costs related to technology. Offsetting these increases were decreases of $5.3 million in deposit insurance which reflects prior period one-time charges of $2.9 million and the benefit of a fully funded deposit insurance fund, and $0.8 million in pension costs.

Quarterly income taxes compared to the third quarter of 2018:

  • Income tax expense was $25.4 million compared to $13.7 million and the effective tax rate was 21.3 percent compared to 12.1 percent.
  • The year-ago period included $8.5 million of discrete tax benefits attributable to tax planning and a higher level of other discrete tax benefits, primarily excess tax benefits from stock-based compensation.

Investment securities:

  • Total investment securities were $8.2 billion, compared to $7.6 billion at June 30, 2019 and $7.2 billion at September 30, 2018. The carrying value of the available-for-sale portfolio included $20.9 million of net unrealized gains, compared to $12.0 million at June 30, 2019 and $105.1 million of net unrealized losses at September 30, 2018. The carrying value of the held-to-maturity portfolio does not reflect $92.2 million of net unrealized gains, compared to $37.8 million at June 30, 2019 and $168.1 million of net unrealized losses at September 30, 2018.

Loans:

  • Total loans were $19.6 billion, compared to $19.3 billion at June 30, 2019 and $18.3 billion at September 30, 2018. Compared to June 30, 2019, commercial real estate loans increased by $173.7 million and residential mortgages increased by $155.0 million while consumer loans decreased by $31.3 million and commercial loans decreased by $15.6 million.
  • Compared to a year ago, commercial real estate loans increased by $626.8 million, residential mortgages increased by $458.7 million, and commercial loans increased by $316.4 million, while consumer loans decreased by $171.2 million.
  • Loan originations for portfolio were $1.610 billion, compared to $1.382 billion in the prior quarter and $1.375 billion a year ago. In addition, $73 million of residential loans were originated for sale in the quarter, compared to $41 million in the prior quarter and $55 million a year ago.

Asset quality:

  • Total nonperforming loans were $162.7 million, or 0.83 percent of total loans, compared to $148.1 million, or 0.77 percent, at June 30, 2019 and $152.7 million, or 0.83 percent, at September 30, 2018. Total paying nonperforming loans were $71.9 million, compared to $52.9 million at June 30, 2019 and $28.9 million at September 30, 2018.
  • Past due loans were $35.6 million, compared to $32.3 million at June 30, 2019 and $39.2 million at September 30, 2018.

Deposits and borrowings:

  • Total deposits were $23.3 billion, compared to $22.6 billion at June 30, 2019 and $22.0 billion at September 30, 2018. Core deposits to total deposits were 86.0 percent, compared to 85.3 percent at June 30, 2019 and 85.9 percent at September 30, 2018. The loan to deposit ratio was 84.0 percent, compared to 85.3 percent at June 30, 2019 and 83.3 percent at September 30, 2018.
  • Total borrowings were $3.2 billion, compared to $2.9 billion at June 30, 2019 and $2.2 billion at September 30, 2018.

Capital:

  • The return on average common shareholders' equity and the return on average tangible common shareholders' equity were 12.36 percent and 15.37 percent, respectively, compared to 14.74 percent and 18.88 percent, respectively, in the third quarter of 2018.
  • The tangible equity and tangible common equity ratios were 8.83 percent and 8.34 percent, respectively, compared to 8.41 percent and 7.86 percent, respectively, at September 30, 2018. The common equity tier 1 risk-based capital ratio was 11.61 percent, compared to 11.23 percent at September 30, 2018.
  • Book value and tangible book value per common share were $32.68 and $26.58, respectively, compared to $28.96 and $22.83, respectively, at September 30, 2018.

Webster Financial Corporation is the holding company for Webster Bank, National Association and its HSA Bank division. With $29.9 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 2019 third quarter earnings announcement will be held today, Tuesday, October 22, 2019 at 9:00 a.m. (Eastern) and may be heard through Webster's Investor Relations website at www.wbst.com, or in listen-only mode by calling 877-407-8289 or 201-689-8341 internationally. The call will be archived on the website and available for future retrieval.

Forward-Looking Statements

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

Non-GAAP Financial Measures
In addition to results presented in accordance with GAAP, this press release contains certain non-GAAP financial measures. A reconciliation of net income and other performance ratios, as adjusted, is included in the accompanying selected financial highlights table.

We believe that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, our performance trends and financial position. We utilize these measures for internal planning and forecasting purposes. We, as well as securities analysts, investors, and other interested parties, also use these measures to compare peer company operating performance. We believe that our presentation and discussion, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting our business and allows investors to view performance in a manner similar to management. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results, and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.

 

WEBSTER FINANCIAL CORPORATION
Selected Financial Highlights (unaudited)





At or for the Three Months Ended



(In thousands, except per share data)


September 30, 2019




June 30, 2019




March 31, 2019




December 31, 2018




September 30, 2018
























Income and performance ratios:





















Net income

$

93,865



$

98,649



$

99,736



$

98,838



$

99,673



Earnings applicable to common shareholders


91,442




96,193




97,549




96,666




97,460



Earnings per diluted common share


1.00




1.05




1.06




1.05




1.06



Return on average assets


1.27

%



1.38

%



1.44

%



1.44

%



1.47

%


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


15.37




16.88




17.70




18.22




18.88



Return on average common shareholders' equity


12.36




13.47




14.01




14.31




14.74



Non-interest income as a percentage of total revenue


22.52




23.88




22.12




23.58




23.88
























Asset quality:





















Allowance for loan and lease losses

$

209,152



$

211,671



$

211,389



$

212,353



$

211,832



Nonperforming assets


166,716




153,247




164,431




161,617




157,967



Allowance for loan and lease losses / total loans and leases


1.07

%



1.10

%



1.12

%



1.15

%



1.16

%


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


0.28




0.24




0.21




0.21




0.13



Nonperforming loans and leases / total loans and leases


0.83




0.77




0.84




0.84




0.83



Nonperforming assets / total loans and leases plus OREO


0.85




0.80




0.87




0.87




0.86



Allowance for loan and lease losses / nonperforming loans and leases


128.55




142.97




133.01




137.22




138.76
























Other ratios:





















Tangible equity (non-GAAP)


8.83

%



8.82

%



8.68

%



8.59

%



8.41

%


Tangible common equity (non-GAAP)


8.34




8.31




8.16




8.05




7.86



Tier 1 risk-based capital (a)


12.29




12.09




12.17




12.16




11.96



Total risk-based capital (a)


13.65




13.48




13.60




13.63




13.44



Common equity tier 1 risk-based capital (a)


11.61




11.41




11.46




11.44




11.23



Shareholders' equity / total assets


10.54




10.59




10.50




10.45




10.30



Net interest margin


3.49




3.63




3.74




3.66




3.61



Efficiency ratio (non-GAAP)


56.60




56.09




55.93




56.19




57.41
























Equity and share related:





















Common equity

$

3,007,357



$

2,920,180



$

2,821,218



$

2,741,478



$

2,671,161



Book value per common share


32.68




31.74




30.62




29.72




28.96



Tangible book value per common share (non-GAAP)


26.58




25.63




24.51




23.60




22.83



Common stock closing price


46.87




47.77




50.67




49.29




58.96



Dividends declared per common share


0.40




0.40




0.33




0.33




0.33
























Common shares issued and outstanding


92,034




92,007




92,125




92,247




92,230



Weighted-average common shares outstanding - Basic


91,559




91,534




91,962




91,971




91,959



Weighted-average common shares outstanding - Diluted


91,874




91,855




92,225




92,202




92,208
























(a) Presented as projected for September 30, 2019 and actual for the remaining periods.



 

 

WEBSTER FINANCIAL CORPORATION
Consolidated Balance Sheets (unaudited)

(In thousands)

September 30, 2019



June 30, 2019



September 30, 2018

Assets:











Cash and due from banks

$

227,966



$

190,828



$

222,234

Interest-bearing deposits


74,865




26,652




99,746

Securities:











Available for sale


2,960,103




2,978,657




2,823,953

Held to maturity


5,193,521




4,636,707




4,332,458

Total securities


8,153,624




7,615,364




7,156,411

Loans held for sale


27,061




19,249




17,137

Loans and Leases:











Commercial


7,009,884




7,025,506




6,693,450

Commercial real estate


5,398,084




5,224,382




4,771,325

Residential mortgages


4,873,726




4,718,704




4,415,063

Consumer


2,269,952




2,301,291




2,441,181

Total loans and leases


19,551,646




19,269,883




18,321,019

Allowance for loan and lease losses


(209,152)




(211,671)




(211,832)

Loans and leases, net


19,342,494




19,058,212




18,109,187

Federal Home Loan Bank and Federal Reserve Bank stock


116,984




118,371




133,740

Premises and equipment, net


278,642




278,227




128,507

Goodwill and other intangible assets, net


561,252




562,214




565,099

Cash surrender value of life insurance policies


549,335




546,963




539,923

Deferred tax asset, net


59,956




73,462




92,910

Accrued interest receivable and other assets


502,921




452,501




281,423

Total Assets

$

29,895,100



$

28,942,043



$

27,346,317












Liabilities and Shareholders' Equity:











Deposits:











Demand

$

4,291,659



$

4,174,806



$

4,231,505

Health savings accounts


6,288,218




6,212,372




5,599,596

Interest-bearing checking


2,619,452




2,636,109




2,587,679

Money market


2,560,918




2,073,006




2,376,649

Savings


4,264,853




4,169,492




4,106,942

Certificates of deposit


3,249,860




3,291,617




2,746,884

Brokered certificates of deposit


5,705




41,376




348,368

Total deposits


23,280,665




22,598,778




21,997,623

Securities sold under agreements to repurchase and other borrowings


1,210,692




956,920




564,488

Federal Home Loan Bank advances


1,392,849




1,426,656




1,441,884

Long-term debt


549,158




538,379




225,957

Accrued expenses and other liabilities


309,342




356,093




300,167

Total liabilities


26,742,706




25,876,826




24,530,119

Preferred stock


145,037




145,037




145,037

Common shareholders' equity


3,007,357




2,920,180




2,671,161

Total shareholders' equity


3,152,394




3,065,217




2,816,198

Total Liabilities and Shareholders' Equity

$

29,895,100



$

28,942,043



$

27,346,317

 

 

WEBSTER FINANCIAL CORPORATION
Consolidated Statements of Income (unaudited)


Three Months Ended September 30,



Nine Months Ended September 30,

(In thousands, except per share data)


2019




2018




2019




2018

Interest income:















Interest and fees on loans and leases

$

236,453



$

215,448



$

701,166



$

616,488

Interest and dividends on securities


57,517




52,707




170,958




157,789

Loans held for sale


166




208




459




498

Total interest income


294,136




268,363




872,583




774,775

Interest expense:















Deposits


34,214




24,397




97,991




62,778

Borrowings


19,383




13,594




50,715




42,447

Total interest expense


53,597




37,991




148,706




105,225

Net interest income


240,539




230,372




723,877




669,550

Provision for loan and lease losses


11,300




10,500




31,800




32,000

Net interest income after provision for loan and lease losses


229,239




219,872




692,077




637,550

Non-interest income:















Deposit service fees


41,410




40,601




127,552




121,911

Loan and lease related fees


8,246




10,782




22,623




24,111

Wealth and investment services


8,496




8,412




24,456




24,738

Mortgage banking activities


2,133




1,305




3,829




3,684

Increase in cash surrender value of life insurance policies


3,708




3,706




10,942




10,921

Other income


5,938




7,478




24,994




24,040

Total non-interest income


69,931




72,284




214,396




209,405

Non-interest expense:















Compensation and benefits


98,623




96,640




294,935




284,457

Occupancy


14,087




14,502




42,802




45,489

Technology and equipment


26,180




24,553




77,644




73,019

Marketing


4,758




4,052




12,329




12,493

Professional and outside services


5,024




4,930




16,706




14,099

Intangible assets amortization


961




961




2,885




2,885

Loan workout expenses


986




681




2,478




2,101

Deposit insurance


4,409




9,694




13,292




30,098

Other expenses


24,866




22,770




73,149




66,216

Total non-interest expense


179,894




178,783




536,220




530,857

Income before income taxes


119,276




113,373




370,253




316,098

Income tax expense


25,411




13,700




78,003




54,518

Net income


93,865




99,673




292,250




261,580

Preferred stock dividends and other


(2,423)




(2,213)




(7,331)




(6,540)

Earnings applicable to common shareholders

$

91,442



$

97,460



$

284,919



$

255,040
















Weighted-average common shares outstanding - Diluted


91,874




92,208




91,883




92,221
















Earnings per common share:















Basic

$

1.00



$

1.06



$

3.11



$

2.77

Diluted


1.00




1.06




3.10




2.77
















 

 

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



Three Months Ended

(In thousands, except per share data)

September 30, 2019



June 30, 2019



March 31, 2019



December 31, 2018



September 30, 2018

Interest income:



















Interest and fees on loans and leases

$

236,453



$

235,949



$

228,764



$

225,961



$

215,448

Interest and dividends on securities


57,517




56,163




57,278




54,301




52,707

Loans held for sale


166




145




148




130




208

Total interest income


294,136




292,257




286,190




280,392




268,363

Interest expense:



















Deposits


34,214




32,757




31,020




27,629




24,397

Borrowings


19,383




17,713




13,619




15,632




13,594

Total interest expense


53,597




50,470




44,639




43,261




37,991

Net interest income


240,539




241,787




241,551




237,131




230,372

Provision for loan and lease losses


11,300




11,900




8,600




10,000




10,500

Net interest income after provision for loan and lease losses


229,239




229,887




232,951




227,131




219,872

Non-interest income:



















Deposit service fees


41,410




43,118




43,024




40,272




40,601

Loan and lease related fees


8,246




6,558




7,819




7,914




10,782

Wealth and investment services


8,496




8,309




7,651




8,105




8,412

Mortgage banking activities


2,133




932




764




740




1,305

Increase in cash surrender value of life insurance policies


3,708




3,650




3,584




3,693




3,706

Other income


5,938




13,286




5,770




12,439




7,478



69,931




75,853




68,612




73,163




72,284

Non-interest expense:



















Compensation and benefits


98,623




98,527




97,785




97,039




96,640

Occupancy


14,087




14,019




14,696




13,974




14,502

Technology and equipment


26,180




25,767




25,697




24,858




24,553

Marketing


4,758




4,243




3,328




4,345




4,052

Professional and outside services


5,024




5,634




6,048




6,201




4,930

Intangible assets amortization


961




962




962




962




961

Loan workout expenses


986




832




660




1,150




681

Deposit insurance


4,409




4,453




4,430




4,651




9,694

Other expenses


24,866




26,203




22,080




21,579




22,770

Total non-interest expense


179,894




180,640




175,686




174,759




178,783

Income before income taxes


119,276




125,100




125,877




125,535




113,373

Income tax expense


25,411




26,451




26,141




26,697




13,700

Net income


93,865




98,649




99,736




98,838




99,673

Preferred stock dividends and other


(2,423)




(2,456)




(2,187)




(2,172)




(2,213)

Earnings applicable to common shareholders

$

91,442



$

96,193



$

97,549



$

96,666



$

97,460




















Weighted-average common shares outstanding - Diluted


91,874




91,855




92,225




92,202




92,208




















Earnings per common share:



















Basic

$

1.00



$

1.05



$

1.06



$

1.05



$

1.06

Diluted


1.00




1.05




1.06




1.05




1.06

 

 

WEBSTER FINANCIAL CORPORATION
Consolidated Average Balances, Interest, Yields and Rates, and Net Interest Margin on a Fully Tax-equivalent Basis (unaudited)




Three Months Ended September 30,




2019








2018


(Dollars in thousands)


Average balance




Interest




Yield/rate








Average balance



Interest


Yield/rate


Assets:

























Interest-earning assets:

























Loans and leases

$

19,473,293



$

237,131




4.80

%






$

18,060,842


$

216,065


4.71

%

Securities (a)


7,929,568




57,810




2.93








7,104,625



52,342


2.91


Federal Home Loan and Federal Reserve Bank stock


104,975




1,120




4.23








126,558



1,586


4.97


Interest-bearing deposits


63,751




345




2.12








72,157



334


1.81


Loans held for sale


20,301




166




3.29








20,291



208


4.10


Total interest-earning assets


27,591,888



$

296,572




4.25

%







25,384,473


$

270,535


4.20

%

Non-interest-earning assets


1,965,521
















1,663,012







Total Assets

$

29,557,409















$

27,047,485
































Liabilities and Shareholders' Equity:

























Interest-bearing liabilities:

























Demand deposits

$

4,322,932



$

-




-

%






$

4,257,448


$

-


-

%

Health savings accounts


6,274,341




3,135




0.20








5,576,417



2,793


0.20


Interest-bearing checking, money market and savings


9,256,189




14,697




0.63








9,135,736



9,827


0.43


Certificates of deposit


3,301,588




16,382




1.97








2,935,663



11,777


1.59


Total deposits


23,155,050




34,214




0.59








21,905,264



24,397


0.44



























Securities sold under agreements to repurchase and other borrowings


1,362,877




6,571




1.89








729,154



3,084


1.66


Federal Home Loan Bank advances


1,017,787




6,910




2.66








1,155,768



7,685


2.60


Long-term debt (a)


543,869




5,902




4.52








225,926



2,825


5.00


Total borrowings


2,924,533




19,383




2.63








2,110,848



13,594


2.53


Total interest-bearing liabilities


26,079,583



$

53,597




0.81

%







24,016,112


$

37,991


0.63

%

Non-interest-bearing liabilities


359,135
















234,564







Total liabilities


26,438,718
















24,250,676
































Preferred stock


145,037
















145,037







Common shareholders' equity


2,973,654
















2,651,772







Total shareholders' equity


3,118,691
















2,796,809







Total Liabilities and Shareholders' Equity

$

29,557,409















$

27,047,485







Tax-equivalent net interest income






242,975















232,544




Less: tax-equivalent adjustments






(2,436)















(2,172)




Net interest income





$

240,539














$

230,372




Net interest margin










3.49

%












3.61

%


























(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)




Nine Months Ended September 30,




2019








2018


(Dollars in thousands)


Average balance




Interest




Yield/rate








Average balance



Interest


Yield/rate


Assets:

























Interest-earning assets:

























Loans and leases

$

19,007,780



$

703,136




4.90

%






$

17,901,888


$

618,419


4.58

%

Securities (a)


7,572,687




171,265




3.01








7,135,037



157,108


2.91


Federal Home Loan and Federal Reserve Bank stock


108,716




3,949




4.86








130,947



4,587


4.68


Interest-bearing deposits


56,449




983




2.30








63,807



782


1.62


Loans held for sale


19,013




459




3.22








17,292



498


3.84


Total interest-earning assets


26,764,645



$

879,792




4.36

%







25,248,971


$

781,394


4.09

%

Non-interest-earning assets


1,872,632
















1,645,331







Total Assets

$

28,637,277















$

26,894,302
































Liabilities and Shareholders' Equity:

























Interest-bearing liabilities:

























Demand deposits

$

4,261,060



$

-




-

%






$

4,177,004


$

-


-

%

Health savings accounts


6,213,150




9,150




0.20








5,508,325



8,152


0.20


Interest-bearing checking, money market and savings


9,050,853




40,622




0.60








9,172,498



25,399


0.37


Certificates of deposit


3,290,044




48,219




1.96








2,710,917



29,227


1.44


Total deposits


22,815,107




97,991




0.57








21,568,744



62,778


0.39



























Securities sold under agreements to repurchase and other borrowings


918,864




13,227




1.90








824,203



10,722


1.72


Federal Home Loan Bank advances


1,084,332




22,467




2.73








1,288,410



23,437


2.40


Long-term debt (a)


441,329




15,021




4.63








225,863



8,288


4.89


Total borrowings


2,444,525




50,715




2.75








2,338,476



42,447


2.40


Total interest-bearing liabilities


25,259,632



$

148,706




0.78

%







23,907,220


$

105,225


0.59

%

Non-interest-bearing liabilities


353,346
















228,892







Total liabilities


25,612,978
















24,136,112
































Preferred stock


145,037
















145,078







Common shareholders' equity


2,879,262
















2,613,112







Total shareholders' equity


3,024,299
















2,758,190







Total Liabilities and Shareholders' Equity

$

28,637,277















$

26,894,302







Tax-equivalent net interest income






731,086















676,169




Less: tax-equivalent adjustments






(7,209)















(6,619)




Net interest income





$

723,877














$

669,550




Net interest margin










3.62

%












3.54

%


























(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)

September 30, 2019



June 30, 2019



March 31, 2019



December 31, 2018



September 30, 2018

Loan and Lease Balances (actual):



















Commercial non-mortgage

$

5,887,119



$

5,948,388



$

5,811,309



$

5,755,832



$

5,724,405

Asset-based lending


1,122,765




1,077,118




1,039,633




969,171




969,045

Commercial real estate


5,398,084




5,224,382




4,991,825




4,927,145




4,771,325

Residential mortgages


4,873,726




4,718,704




4,631,787




4,416,637




4,415,063

Consumer


2,269,952




2,301,291




2,339,736




2,396,704




2,441,181

Total Loan and Lease Balances


19,551,646




19,269,883




18,814,290




18,465,489




18,321,019

Allowance for loan and lease losses


(209,152)




(211,671)




(211,389)




(212,353)




(211,832)

Loans and Leases, net

$

19,342,494



$

19,058,212



$

18,602,901



$

18,253,136



$

18,109,187




















Loan and Lease Balances (average):



















Commercial non-mortgage

$

5,933,221



$

5,914,710



$

5,776,334



$

5,754,153



$

5,597,831

Asset-based lending


1,138,189




1,049,403




1,016,069




964,575




944,120

Commercial real estate


5,312,403




5,079,415




4,930,035




4,862,419




4,620,741

Residential mortgages


4,802,497




4,662,033




4,415,434




4,419,826




4,434,056

Consumer


2,286,983




2,324,717




2,371,302




2,423,414




2,464,094

Total Loan and Lease Balances


19,473,293




19,030,278




18,509,174




18,424,387




18,060,842

Allowance for loan and lease losses


(213,130)




(210,719)




(214,966)




(214,453)




(208,102)

Loans and Leases, net

$

19,260,163



$

18,819,559



$

18,294,208



$

18,209,934



$

17,852,740









































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

(Dollars in thousands)

September 30, 2019



June 30, 2019



March 31, 2019



December 31, 2018



September 30, 2018

Nonperforming loans and leases:



















Commercial non-mortgage

$

64,197



$

56,340



$

66,754



$

62,265



$

58,366

Asset-based lending


9,165




184




218




224




1,066

Commercial real estate


12,810




10,413




7,449




8,243




7,255

Residential mortgages


43,733




48,104




49,267




49,069




49,348

Consumer 


32,794




33,015




35,245




34,949




36,621

Total nonperforming loans and leases

$

162,699



$

148,056



$

158,933



$

154,750



$

152,656




















Other real estate owned and repossessed assets:



















Commercial non-mortgage

$

544



$

1,307



$

861



$

407



$

83

Residential mortgages


1,912




2,012




2,769




4,679




3,944

Consumer


1,561




1,872




1,868




1,781




1,284

Total other real estate owned and repossessed assets

$

4,017



$

5,191



$

5,498



$

6,867



$

5,311

Total nonperforming assets

$

166,716



$

153,247



$

164,431



$

161,617



$

157,967


Past due 30-89 days:



















Commercial non-mortgage

$

5,384



$

4,438



$

19,152



$

2,615



$

6,186

Asset-based lending


-




-




-




-




-

Commercial real estate


1,433




2,665




2,283




1,514




2,746

Residential mortgages


13,445




10,844




12,865




12,789




14,499

Consumer


15,217




13,949




16,174




17,324




15,631

Total past due 30-89 days


35,479




31,896




50,474




34,242




39,062

Past due 90 days or more and accruing


92




410




-




104




139

Total past due loans and leases

$

35,571



$

32,306



$

50,474



$

34,346



$

39,201





WEBSTER FINANCIAL CORPORATION
Five Quarter Changes in the Allowance for Loan and Lease Losses (unaudited)



For the Three Months Ended

(Dollars in thousands)

September 30, 2019



June 30, 2019



March 31, 2019



December 31, 2018



September 30, 2018

Beginning balance

$

211,671



$

211,389



$

212,353



$

211,832



$

207,322

Provision


11,300




11,900




8,600




10,000




10,500

Charge-offs:



















Commercial non-mortgage


11,291




5,657




7,837




10,239




876

Asset-based lending


-




-




-




289




-

Commercial real estate


32




2,473




973




22




1,922

Residential mortgages


872




2,154




251




910




874

Consumer


3,765




4,098




3,972




4,384




4,863

Total charge-offs


15,960




14,382




13,033




15,844




8,535

Recoveries:



















Commercial non-mortgage


173




464




569




2,993




376

Asset-based lending


-




-




229




21




66

Commercial real estate


3




33




6




7




143

Residential mortgages


356




295




178




1,137




133

Consumer


1,609




1,972




2,487




2,207




1,827

Total recoveries


2,141




2,764




3,469




6,365




2,545

Total net charge-offs


13,819




11,618




9,564




9,479




5,990

Ending balance

$

209,152



$

211,671



$

211,389



$

212,353



$

211,832

 

 

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)


September 30, 2019




June 30, 2019




March 31, 2019




December 31, 2018




September 30, 2018


Efficiency ratio:




















Non-interest expense (GAAP)

$

179,894



$

180,640



$

175,686



$

174,759



$

178,783


Less: Foreclosed property activity (GAAP)


(128)




(55)




(253)




191




(309)


         Intangible assets amortization (GAAP)


961




962




962




962




961


         Other expenses (non-GAAP)


1,750




-




7




320




2,959


Non-interest expense (non-GAAP)

$

177,311



$

179,733



$

174,970



$

173,286



$

175,172


Net interest income (GAAP)

$

240,539



$

241,787



$

241,551



$

237,131



$

230,372


Add: Tax-equivalent adjustment (non-GAAP)


2,436




2,435




2,338




2,407




2,172


         Non-interest income (GAAP)


69,931




75,853




68,612




73,163




72,284


         Other (non-GAAP)


350




354




342




282




308


Less: Gain on investment securities, net (GAAP)


-




-




-




-




-


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


-




-




-




4,596




-


Income (non-GAAP)

$

313,256



$

320,429



$

312,843



$

308,387



$

305,136


Efficiency ratio (non-GAAP)


56.60

%



56.09

%



55.93

%



56.19

%



57.41

%





















Return on average tangible common shareholders' equity:




















Net income (GAAP)

$

93,865



$

98,649



$

99,736



$

98,838



$

99,673


Less: Preferred stock dividends (GAAP)


1,968




1,969




1,969




1,969




1,968


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


759




760




760




760




759


Income adjusted for preferred stock dividends and intangible assets amortization (non-GAAP)

$

92,656



$

97,440



$

98,527



$

97,629



$

98,464


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

$

370,624



$

389,760



$

394,108



$

390,516



$

393,856


Average shareholders' equity (non-GAAP)

$

3,118,691



$

3,016,541



$

2,935,653



$

2,853,176



$

2,796,809


Less: Average preferred stock (non-GAAP)


145,037




145,037




145,037




145,037




145,037


Average goodwill and other intangible assets (non-GAAP)


561,715




562,679




563,646




564,601




565,559


Average tangible common shareholders' equity (non-GAAP)

$

2,411,939



$

2,308,825



$

2,226,970



$

2,143,538



$

2,086,213


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


15.37

%



16.88

%



17.70

%



18.22

%



18.88

%





















Tangible equity:




















Shareholders' equity (GAAP)

$

3,152,394



$

3,065,217



$

2,966,255



$

2,886,515



$

2,816,198


Less: Goodwill and other intangible assets (GAAP)


561,252




562,214




563,176




564,137




565,099


Tangible shareholders' equity (non-GAAP)

$

2,591,142



$

2,503,003



$

2,403,079



$

2,322,378



$

2,251,099


Total assets (GAAP)

$

29,895,100



$

28,942,043



$

28,238,129



$

27,610,315



$

27,346,317


Less: Goodwill and other intangible assets (GAAP)


561,252




562,214




563,176




564,137




565,099


Tangible assets (non-GAAP)

$

29,333,848



$

28,379,829



$

27,674,953



$

27,046,178



$

26,781,218


   Tangible equity (non-GAAP)


8.83

%



8.82

%



8.68

%



8.59

%



8.41

%





















Tangible common equity:




















Tangible shareholders' equity (non-GAAP)

$

2,591,142



$

2,503,003



$

2,403,079



$

2,322,378



$

2,251,099


Less: Preferred stock (GAAP)


145,037




145,037




145,037




145,037




145,037


Tangible common shareholders' equity (non-GAAP)

$

2,446,105



$

2,357,966



$

2,258,042



$

2,177,341



$

2,106,062


Tangible assets (non-GAAP)

$

29,333,848



$

28,379,829



$

27,674,953



$

27,046,178



$

26,781,218


Tangible common equity (non-GAAP)


8.34

%



8.31

%



8.16

%



8.05

%



7.86

%





















Tangible book value per common share:




















Tangible common shareholders' equity (non-GAAP)

$

2,446,105



$

2,357,966



$

2,258,042



$

2,177,341



$

2,106,062


Common shares outstanding


92,034




92,007




92,125




92,247




92,230


        Tangible book value per common share (non-GAAP)

$

26.58



$

25.63



$

24.51



$

23.60



$

22.83






















Core deposits:




















Total deposits

$

23,280,665



$

22,598,778



$

22,750,928



$

21,858,845



$

21,997,623


Less: Certificates of deposit


3,249,860




3,291,617




3,273,120




2,961,564




2,746,884


 Brokered certificates of deposit


5,705




41,376




81,507




234,982




348,368


Core deposits (non-GAAP)

$

20,025,100



$

19,265,785



$

19,396,301



$

18,662,299



$

18,902,371


 

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-third-quarter-2019-earnings-of-1-00-per-diluted-share-300942903.html

SOURCE Webster Financial Corporation