Webster Reports 2015 Fourth Quarter Earnings

21 Jan, 2016, 07:30 ET from Webster Financial Corporation

WATERBURY, Conn., Jan. 21, 2016 /PRNewswire/ -- Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today announced net income available to common shareholders of $50.6 million, or $0.55 per diluted share, for the quarter ended December 31, 2015 compared to $48.4 million, or $0.53 per diluted share, for the quarter ended December 31, 2014.

For the full year 2015, net income available to common shareholders was $197.6 million, or $2.15 per diluted share, compared to $189.2 million, or $2.08 per diluted share, for the full year 2014.

"Webster's record net income for the fourth quarter and full year 2015 showcase our sustained progress in executing growth strategies that maximize value to customers and shareholders," said James C. Smith, chairman and chief executive officer. "Record quarterly loan originations and net interest margin expansion helped produce our 25th consecutive quarter of year-over-year core revenue growth. Record full year 2015 loan originations of $5.6 billion were 19 percent higher than a year ago, as Webster bankers excelled in service to our customers and communities."

Highlights for the fourth quarter of 2015 compared to the fourth quarter of 2014:

  • Record quarterly pre-provision net revenue of $90.3 million, an increase of 4.2 percent.
  • Loan growth of $1.8 billion, or 12.8 percent, with double-digit growth in commercial, commercial real estate and residential mortgage loans.
  • Deposit growth of $2.3 billion, or 14.7 percent, primarily reflecting HSA Bank's strong organic growth and its January 2015 acquisition.
  • Record core revenue of $233.6 million, an increase of 9.1 percent, including a record level of net interest income of $173.3 million.
  • Efficiency ratio of 59.87 percent represents the eleventh consecutive quarter at or below 60 percent.
  • Annualized return on average tangible common shareholders' equity of 11.99 percent.

"We've now achieved eleven consecutive quarters with the efficiency ratio at or below 60 percent," said Glenn MacInnes, executive vice president and chief financial officer. "We've accomplished this even as we continue to invest in our future."

Quarterly net interest income compared to the fourth quarter of 2014:

  • Net interest income was $173.3 million compared to $160.6 million.
  • Net interest margin was 3.08 percent compared to 3.17 percent. The yield on interest-earning assets declined by 10 basis points, while the cost of funds declined by 2 basis points.
  • Net interest margin increased 4 basis points on a linked-quarter basis.
  • Average interest-earning assets totaled $22.7 billion and grew by $2.2 billion, or 10.8 percent.
  • Average loans grew by $1.7 billion, or 12.7 percent.

Quarterly provision for loan losses:

  • The Company recorded a provision for loan losses of $13.8 million compared to $13.0 million in the third quarter and $9.5 million a year ago. The increase compared to each period primarily reflects continued growth in the loan portfolio.
  • Net charge-offs were $11.8 million compared to $7.9 million in the prior quarter and $6.7 million a year ago. The ratio of net charge-offs to average loans on an annualized basis was 0.31 percent compared to 0.21 percent in the prior quarter and 0.20 percent a year ago. The increase in net charge-offs was primarily in the commercial segment.
  • The allowance for loan losses represented 1.12 percent of total loans compared to 1.14 percent at September 30, 2015 and 1.15 percent at December 31, 2014. The allowance for loan losses represented 125 percent of nonperforming loans compared to 109 percent at September 30 and 123 percent a year ago.

Quarterly non-interest income compared to the fourth quarter of 2014:

  • Total non-interest income was $60.3 million compared to $53.8 million, an increase of $6.6 million. Excluding securities gains and other-than-temporary impairment charges, a year-over-year increase of $6.7 million in core non-interest income reflects increases of $8.3 million in deposit service fees related to HSA Bank and $1.3 million in mortgage banking activities, offset by decreases of $2.5 million in loan related fees and $0.5 million in wealth and investment services.

Quarterly non-interest expense compared to the fourth quarter of 2014:

  • Total non-interest expense was $143.2 million compared to $130.2 million, an increase of $13.0 million.
  • Non-interest expense, excluding one-time costs, increased $15.8 million with $8.9 million of the increase related to HSA Bank. The remaining $6.9 million increase reflects higher compensation expense, professional and outside services, and other.

Quarterly income taxes compared to the fourth quarter of 2014:

  • Income tax expense was $24.1 million compared to $23.8 million. The effective tax rate was 31.5 percent compared to 31.8 percent, and the current quarter included a $1.2 million net tax benefit specific to the period compared to $0.1 million a year ago.

Investment securities:

  • Total investment securities were $6.9 billion compared to $7.0 billion at September 30, 2015 and $6.7 billion a year ago. The carrying value of the available-for-sale portfolio included $10.3 million of net unrealized losses compared to net unrealized gains of $16.0 million at September 30 and $25.9 million a year ago, while the carrying value of the held-to-maturity portfolio does not reflect $38.5 million of net unrealized gains compared to $72.3 million at September 30 and $75.8 million a year ago.

Loans:

  • Total loans were $15.7 billion compared to $15.2 billion at September 30, 2015 and $13.9 billion a year ago. Compared to September 30, commercial, commercial real estate, consumer, and residential mortgage loans increased by $223.7 million, $134.5 million, $51.9 million, and $45.2 million, respectively.
  • Compared to a year ago, commercial, residential mortgage, commercial real estate, and consumer loans increased by $629.5 million, $551.8 million, $437.2 million, and $153.2 million, respectively.
  • Loan originations for portfolio were $1.534 billion compared to $1.207 billion in the third quarter and $1.378 billion a year ago. In addition, $98 million of residential loans were originated for sale in the quarter compared to $117 million in the prior quarter and $87 million a year ago.

Asset quality:

  • Past due loans were $39.2 million compared to $41.3 million at September 30, 2015 and $42.3 million a year ago. Loans past due 90 days and still accruing decreased $0.2 million from the prior quarter and were flat to the prior year.
  • Total nonperforming loans decreased to $139.9 million, or 0.89 percent of total loans, compared to $159.0 million, or 1.04 percent, at September 30 and $129.9 million, or 0.93 percent, a year ago. Total paying nonperforming loans were $48.7 million compared to $45.0 million at September 30 and $30.5 million a year ago.

Deposits and borrowings:

  • Total deposits were $18.0 billion compared to $17.6 billion at September 30, 2015 and $15.7 billion a year ago. Core to total deposits were 88.4 percent compared to 88.3 percent at September 30 and 85.5 percent a year ago. Loans to deposits were 87.3 percent compared to 86.5 percent at September 30 and 88.8 percent a year ago.
  • Total borrowings were $4.0 billion compared to $3.8 billion at September 30 and $4.3 billion a year ago.

Capital:

  • The return on average tangible common shareholders' equity and the return on average common shareholders' equity were 11.99 percent and 8.79 percent, respectively, compared to 11.74 percent and 8.84 percent, respectively, in the fourth quarter of 2014.
  • The tangible equity and tangible common equity ratios were 7.63 percent and 7.12 percent, respectively, compared to 8.14 percent and 7.45 percent, respectively, at December 31, 2014. The common equity tier 1 risk-based capital ratio was 10.71 percent compared to 11.43 percent a year ago.
  • Book value and tangible book value per common share were $25.01 and $18.71, respectively, compared to $23.99 and $18.10, respectively, a year ago.

Webster Financial Corporation is the holding company for Webster Bank, National Association. With $24.7 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust, and investment services through 178 banking centers and 353 ATMs, with an additional 2 banking centers scheduled to open soon in greater Boston (subject to regulatory approval). Webster also provides telephone banking, mobile banking, 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 2015 fourth quarter earnings announcement will be held today, Thursday, January 21, 2016 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 Dodd-Frank Wall Street Reform and Consumer Protection Act; (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. Specifically, we provide measures based on what we believe are our operating earnings on a consistent basis and exclude non-core operating items which affect the GAAP reporting of results of operations. 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.

Media Contact

Investor Contact

Bob Guenther, 203-578-2391

Terry Mangan, 203-578-2318

rguenther@websterbank.com

tmangan@websterbank.com

 

WEBSTER FINANCIAL CORPORATION Selected Financial Highlights (unaudited)

At or for the Three Months Ended

(In thousands, except per share data)

December 31, 2015

September 30, 2015

June 30, 2015

March 31, 2015

December 31, 2014

Income and performance ratios (annualized):

Net income

$       52,579

$      51,536

$      52,503

$      49,722

$      51,006

Net income available to common shareholders

50,555

49,512

50,479

47,083

48,367

Net income per diluted common share

0.55

0.54

0.55

0.52

0.53

Return on average assets

0.86 %

0.86 %

0.90 %

0.88 %

0.93 %

Return on average tangible common shareholders' equity

11.99

11.89

12.49

11.82

11.74

Return on average common shareholders' equity

8.79

8.68

9.03

8.57

8.84

Non-interest income as a percentage of total revenue

25.82

26.78

26.80

26.60

25.08

Efficiency ratio

59.87

59.49

59.88

59.69

58.54

Asset quality:

Allowance for loan and lease losses

$    174,990

$    172,992

$    167,860

$    161,970

$    159,264

Nonperforming assets

144,970

164,387

172,825

157,546

136,397

Allowance for loan and lease losses / total loans and leases

1.12 %

1.14 %

1.14 %

1.14 %

1.15 %

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

0.31

0.21

0.19

0.20

0.20

Nonperforming loans and leases / total loans and leases

0.89

1.04

1.14

1.07

0.93

Nonperforming assets / total loans and leases plus OREO

0.92

1.08

1.17

1.10

0.98

Allowance for loan and lease losses / nonperforming loans and leases

125.05

108.80

100.00

106.39

122.62

Other ratios (annualized):

Tangible equity

7.63 %

7.76 %

7.81 %

7.87 %

8.14 %

Tangible common equity

7.12

7.24

7.27

7.20

7.45

Tier 1 risk-based capital (a), (b)

11.54

11.62

11.80

12.01

12.95

Total risk-based capital (a), (b)

12.91

13.02

13.21

13.44

14.06

Common equity tier 1 risk-based capital (a), (b)

10.71

10.78

10.94

10.93

11.43

Shareholders' equity / total assets

9.79

9.98

10.07

10.19

10.31

Net interest margin

3.08

3.04

3.05

3.10

3.17

Share and equity related:

Common equity

$ 2,292,861

$ 2,279,835

$ 2,256,985

$ 2,203,926

$ 2,171,166

Book value per common share

25.01

24.87

24.55

24.29

23.99

Tangible book value per common share

18.71

18.55

18.23

17.87

18.10

Common stock closing price

37.19

35.63

39.55

37.05

32.53

Dividends declared per common share

0.23

0.23

0.23

0.20

0.20

Common shares issued and outstanding

91,677

91,663

91,919

90,715

90,512

Basic shares (weighted average)

91,419

91,458

90,713

90,251

90,045

Diluted shares (weighted average)

91,956

92,007

91,302

90,841

90,741

(a) The ratios presented are projected for December 31, 2015 and actual for the remaining periods.

(b) Calculated under the Basel III capital standard for the 2015 periods and under the Basel I capital standard for the 2014 period.

 

 

WEBSTER FINANCIAL CORPORATION Consolidated Balance Sheets (unaudited)

(In thousands)

December 31, 2015

September 30, 2015

December 31, 2014

Assets:

Cash and due from banks

$       251,258

$      251,898

$       261,544

Interest-bearing deposits

155,907

19,257

132,695

Investment securities:

Available for sale, at fair value

2,984,631

3,015,417

2,793,873

Held to maturity

3,923,052

3,951,208

3,872,955

Total securities

6,907,683

6,966,625

6,666,828

Loans held for sale

37,091

38,331

67,952

Loans and Leases:

Commercial

4,916,525

4,692,829

4,287,021

Commercial real estate

3,991,649

3,857,155

3,554,428

Residential mortgages

4,061,001

4,015,839

3,509,175

Consumer

2,702,560

2,650,702

2,549,401

Total loans and leases

15,671,735

15,216,525

13,900,025

Allowance for loan and lease losses

(174,990)

(172,992)

(159,264)

Loans and leases, net

15,496,745

15,043,533

13,740,761

Federal Home Loan Bank and Federal Reserve Bank stock

188,347

184,280

193,290

Premises and equipment, net

129,426

127,216

121,933

Goodwill and other intangible assets, net

577,699

579,287

532,553

Cash surrender value of life insurance policies

503,093

449,711

440,073

Deferred tax asset, net

101,578

84,743

73,873

Accrued interest receivable and other assets

328,993

324,901

301,670

Total Assets

$  24,677,820

$ 24,069,782

$ 22,533,172

Liabilities and Equity:

Deposits:

Demand

$    3,713,063

$   3,551,229

$   3,598,872

Interest-bearing checking

2,369,971

2,183,267

2,155,047

Health savings accounts

3,802,313

3,643,557

1,824,799

Money market

1,933,460

2,186,383

1,908,522

Savings

4,047,817

3,956,054

3,892,778

Certificates of deposit

1,762,847

1,762,046

1,971,567

Brokered certificates of deposit

323,307

299,694

300,020

Total deposits

17,952,778

17,582,230

15,651,605

Securities sold under agreements to repurchase and other borrowings

1,151,400

1,002,018

1,250,756

Federal Home Loan Bank advances

2,664,139

2,609,212

2,859,431

Long-term debt

226,356

226,327

226,237

Accrued expenses and other liabilities

267,576

247,450

222,328

Total liabilities

22,262,249

21,667,237

20,210,357

Preferred stock

122,710

122,710

151,649

Common shareholders' equity

2,292,861

2,279,835

2,171,166

Webster Financial Corporation shareholders' equity

2,415,571

2,402,545

2,322,815

Total Liabilities and Equity

$  24,677,820

$ 24,069,782

$ 22,533,172

 

 

WEBSTER FINANCIAL CORPORATION Consolidated Statements of Income (unaudited)

Three Months Ended December 31,

Twelve Months Ended December 31,

(In thousands, except per share data)

2015

2014

2015

2014 (a)

Interest income:

Interest and fees on loans and leases

$     145,504

$     132,604

$              552,441

$     511,612

Interest and dividends on securities

52,365

50,921

206,009

206,472

Loans held for sale

291

226

1,590

857

Total interest income

198,160

183,751

760,040

718,941

Interest expense:

Deposits

11,476

11,322

46,031

44,162

Borrowings

13,344

11,781

49,384

46,338

Total interest expense

24,820

23,103

95,415

90,500

Net interest income

173,340

160,648

664,625

628,441

Provision for loan and lease losses

13,800

9,500

49,300

37,250

Net interest income after provision for loan and lease losses

159,540

151,148

615,325

591,191

Non-interest income:

Deposit service fees

34,231

25,928

136,578

103,431

Loan and lease related fees

5,881

8,361

25,594

23,212

Wealth and investment services

8,052

8,517

32,486

34,946

Mortgage banking activities

2,276

977

7,795

4,070

Increase in cash surrender value of life insurance policies

3,383

3,278

13,020

13,178

Net gain on investment securities

80

1,121

609

5,499

Other income

6,474

6,492

23,573

18,917

60,377

54,674

239,655

203,253

Loss on write-down of investment securities to fair value

(28)

(899)

(110)

(1,145)

Total non-interest income

60,349

53,775

239,545

202,108

Non-interest expense:

Compensation and benefits

79,232

71,220

297,517

270,151

Occupancy

11,573

11,518

48,836

47,325

Technology and equipment expense

19,218

15,827

80,026

61,993

Marketing

3,533

3,918

16,053

15,379

Professional and outside services

2,932

1,855

11,156

8,296

Intangible assets amortization

1,588

416

6,340

2,685

Foreclosed and repossessed asset expenses

242

244

827

1,223

Foreclosed and repossessed asset gains

(241)

(238)

(310)

(1,297)

Loan workout expenses

775

685

3,173

3,507

Deposit insurance

6,242

5,856

24,042

22,670

Other expenses

18,178

16,158

65,919

66,639

143,272

127,459

553,579

498,571

Severance, contract, and other

254

633

1,099

964

Acquisition costs

(386)

396

141

540

Branch and facility optimization

24

276

(265)

125

Provision for litigation and settlements

1,400

1,400

Total non-interest expense

143,164

130,164

554,554

501,600

Income before income taxes

76,725

74,759

300,316

291,699

Income tax expense

24,146

23,753

93,976

91,973

Net income

52,579

51,006

206,340

199,726

Preferred stock dividends

(2,024)

(2,639)

(8,711)

(10,556)

Net income available to common shareholders

$         50,555

$       48,367

$              197,629

$     189,170

Diluted shares (average)

91,956

90,741

91,533

90,620

Net income per common share available to common shareholders:

Basic

$            0.55

$           0.54

$                    2.17

$           2.10

Diluted

0.55

0.53

2.15

2.08

(a) Certain previously reported information reflects the retrospective application of ASU No. 2014-01, "Accounting for Investments in Qualified Affordable Housing Projects."

 

 

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

Three Months Ended

(In thousands, except per share data)

December 31, 2015

September 30, 2015

June 30, 2015

March 31, 2015

December 31, 2014

Interest income:

Interest and fees on loans and leases

$    145,504

$   140,520

$  135,694

$   130,723

$   132,604

Interest and dividends on securities

52,365

51,121

50,844

51,679

50,921

Loans held for sale

291

357

432

510

226

Total interest income

198,160

191,998

186,970

182,912

183,751

Interest expense:

Deposits

11,476

11,480

11,533

11,542

11,322

Borrowings

13,344

12,508

11,926

11,606

11,781

Total interest expense

24,820

23,988

23,459

23,148

23,103

Net interest income

173,340

168,010

163,511

159,764

160,648

Provision for loan and lease losses

13,800

13,000

12,750

9,750

9,500

Net interest income after provision for loan and lease losses

159,540

155,010

150,761

150,014

151,148

Non-interest income:

Deposit service fees

34,231

35,229

34,493

32,625

25,928

Loan and lease related fees

5,881

8,305

5,729

5,679

8,361

Wealth and investment services

8,052

7,761

8,784

7,889

8,517

Mortgage banking activities

2,276

1,441

2,517

1,561

977

Increase in cash surrender value of life insurance policies

3,383

3,288

3,197

3,152

3,278

Net gain on investment securities

80

486

43

1,121

Other income

6,474

5,513

4,645

6,941

6,492

60,377

61,537

59,851

57,890

54,674

Loss on write-down of investment securities to fair value

(28)

(82)

(899)

Total non-interest income

60,349

61,455

59,851

57,890

53,775

Non-interest expense:

Compensation and benefits

79,232

73,378

74,043

70,864

71,220

Occupancy

11,573

11,987

11,680

13,596

11,518

Technology and equipment expense

19,218

21,336

20,224

19,248

15,827

Marketing

3,533

4,099

4,245

4,176

3,918

Professional and outside services

2,932

2,896

2,875

2,453

1,855

Intangible assets amortization

1,588

1,621

1,843

1,288

416

Foreclosed and repossessed asset expenses

242

270

146

169

244

Foreclosed and repossessed asset (gains) losses

(241)

(68)

(537)

536

(238)

Loan workout expenses

775

719

801

878

685

Deposit insurance

6,242

6,067

5,492

6,241

5,856

Other expenses

18,178

17,758

15,817

14,166

16,158

143,272

140,063

136,629

133,615

127,459

Severance, contract, and other

254

34

521

290

633

Acquisition costs

(386)

18

509

396

Branch and facility optimization

24

(243)

278

(324)

276

Provision for litigation and settlements

1,400

Total non-interest expense

143,164

139,854

137,446

134,090

130,164

Income before income taxes

76,725

76,611

73,166

73,814

74,759

Income tax expense

24,146

25,075

20,663

24,092

23,753

Net income

52,579

51,536

52,503

49,722

51,006

Preferred stock dividends

(2,024)

(2,024)

(2,024)

(2,639)

(2,639)

Net income available to common shareholders

$       50,555

$     49,512

$    50,479

$     47,083

$     48,367

Diluted shares (average)

91,956

92,007

91,302

90,841

90,741

Net income per common share available to common shareholders:

Basic

$          0.55

$        0.54

$        0.55

$         0.52

$         0.54

Diluted

0.55

0.54

0.55

0.52

0.53

 

 

WEBSTER FINANCIAL CORPORATION Consolidated Average Balances, Yields, and Rates Paid (unaudited)

Three Months Ended December 31,

2015

2014

(Dollars in thousands)

Average balance

Interest

Fully tax-equivalent yield/rate

Average balance (b)

Interest

Fully tax-equivalent yield/rate

Assets:

Interest-earning assets:

Loans and leases

$ 15,452,576

$ 146,091

3.73 %

$  13,715,522

$  133,141

3.83 %

Investment securities (a)

6,930,635

52,591

3.04

6,522,767

51,778

3.19

Federal Home Loan and Federal Reserve Bank stock

186,367

1,862

3.96

177,324

1,206

2.70

Interest-bearing deposits

87,019

63

0.28

43,864

28

0.25

Loans held for sale

33,021

291

3.53

25,427

226

3.55

Total interest-earning assets

22,689,618

$ 200,898

3.51 %

20,484,904

$  186,379

3.61 %

Non-interest-earning assets

1,723,575

1,545,268

Total assets

$ 24,413,193

$  22,030,172

Liabilities and Shareholders' Equity:

Interest-bearing liabilities:

Deposits:

Demand

$   3,693,704

$             —

—%

$    3,364,956

$            —

—%

Savings, interest checking, and money market

12,072,461

5,686

0.19

9,912,875

4,359

0.17

Certificates of deposit

2,066,989

5,790

1.11

2,288,075

6,963

1.21

Total deposits

17,833,154

11,476

0.26

15,565,906

11,322

0.29

Securities sold under agreements to repurchase and other borrowings

1,132,700

4,150

1.43

1,282,805

4,514

1.38

Federal Home Loan Bank advances

2,566,447

6,759

1.03

2,444,900

4,857

0.78

Long-term debt

226,337

2,435

4.30

226,218

2,410

4.26

Total borrowings

3,925,484

13,344

1.34

3,953,923

11,781

1.17

Total interest-bearing liabilities

21,758,638

$   24,820

0.45 %

19,519,829

$    23,103

0.47 %

Non-interest-bearing liabilities

232,352

169,503

Total liabilities

21,990,990

19,689,332

Preferred stock

122,710

151,649

Common shareholders' equity

2,299,493

2,189,191

Webster Financial Corporation shareholders' equity

2,422,203

2,340,840

Total liabilities and equity

$ 24,413,193

$  22,030,172

Tax-equivalent net interest income

176,078

163,276

Less: tax-equivalent adjustment

(2,738)

(2,628)

Net interest income

$ 173,340

$  160,648

Net interest margin

3.08 %

3.17 %

(a) For purposes of the yield computation, unrealized gains (losses) on securities available for sale are excluded from the average balance.

(b) Certain previously reported information reflects the retrospective application of ASU No. 2014-01, "Accounting for Investments in Qualified Affordable Housing Projects."

 

 

WEBSTER FINANCIAL CORPORATION Consolidated Average Balances, Yields, and Rates Paid (unaudited)

Twelve Months Ended December 31,

2015

2014

(Dollars in thousands)

Average balance

Interest

Fully tax-equivalent yield/rate

Average balance (b)

Interest

Fully tax-equivalent yield/rate

Assets:

Interest-earning assets:

Loans and leases

$  14,746,168

$   554,632

3.76 %

$  13,275,340

$   513,705

3.87 %

Investment securities (a)

6,846,297

207,675

3.04

6,446,799

210,721

3.28

Federal Home Loan and Federal Reserve Bank stock

188,631

6,479

3.43

168,036

4,719

2.81

Interest-bearing deposits

107,569

281

0.26

24,376

63

0.26

Loans held for sale

41,101

1,590

3.87

22,642

857

3.78

Total interest-earning assets

21,929,766

$   770,657

3.52 %

19,937,193

$   730,065

3.67 %

Non-interest-earning assets

1,673,793

1,523,768

Total assets

$  23,603,559

$  21,460,961

Liabilities and Shareholders' Equity:

Interest-bearing liabilities:

Deposits:

Demand

$    3,564,751

$             —

—%

$    3,216,777

$            —

—%

Savings, interest checking, and money market

11,846,049

21,472

0.18

9,863,703

17,800

0.18

Certificates of deposit

2,138,778

24,559

1.15

2,280,668

26,362

1.16

Total deposits

17,549,578

46,031

0.26

15,361,148

44,162

0.29

Securities sold under agreements to repurchase and other borrowings

1,144,963

16,861

1.47

1,353,308

19,388

1.43

Federal Home Loan Bank advances

2,084,496

22,858

1.10

2,038,749

16,909

0.83

Long-term debt

226,292

9,665

4.27

252,368

10,041

3.98

Total borrowings

3,455,751

49,384

1.43

3,644,425

46,338

1.27

Total interest-bearing liabilities

21,005,329

$     95,415

0.45 %

19,005,573

$     90,500

0.48 %

Non-interest-bearing liabilities

209,333

165,689

Total liabilities

21,214,662

19,171,262

Preferred stock

134,682

151,649

Common shareholders' equity

2,254,215

2,138,050

Webster Financial Corporation shareholders' equity

2,388,897

2,289,699

Total liabilities and equity

$  23,603,559

$  21,460,961

Tax-equivalent net interest income

675,242

639,565

Less: tax-equivalent adjustment

(10,617)

(11,124)

Net interest income

$   664,625

$   628,441

Net interest margin

3.08 %

3.21 %

(a) For purposes of the yield computation, unrealized gains (losses) on securities available for sale are excluded from the average balance.

(b) Certain previously reported information reflects the retrospective application of ASU No. 2014-01, "Accounting for Investments in Qualified Affordable Housing Projects."

 

 

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

(Dollars in thousands)

December 31, 2015

September 30, 2015

June 30, 2015

March 31, 2015

December 31, 2014

Loan and Lease Balances (actuals):

Continuing Portfolio:

Commercial non-mortgage

$   3,562,784

$     3,423,775

$     3,310,863

$    3,183,218

$    3,087,940

Equipment financing

600,526

552,850

545,441

543,636

537,751

Asset-based lending

753,215

716,204

711,041

716,592

661,330

Commercial real estate

3,991,649

3,857,155

3,770,252

3,663,071

3,554,428

Residential mortgages

4,061,001

4,015,839

3,833,489

3,594,272

3,509,174

Consumer

2,622,998

2,568,009

2,520,970

2,480,270

2,457,345

Total continuing portfolio

15,592,173

15,133,832

14,692,056

14,181,059

13,807,968

Allowance for loan and lease losses

(167,626)

(165,341)

(159,501)

(152,825)

(149,813)

Total continuing portfolio, net

15,424,547

14,968,491

14,532,555

14,028,234

13,658,155

Liquidating Portfolio:

National Construction Lending Center (NCLC)

1

Consumer

79,562

82,693

85,470

89,167

92,056

Total liquidating portfolio

79,562

82,693

85,470

89,167

92,057

Allowance for loan and lease losses

(7,364)

(7,651)

(8,359)

(9,145)

(9,451)

Total liquidating portfolio, net

72,198

75,042

77,111

80,022

82,606

Total Loan and Lease Balances (actuals)

15,671,735

15,216,525

14,777,526

14,270,226

13,900,025

Allowance for loan and lease losses

(174,990)

(172,992)

(167,860)

(161,970)

(159,264)

Loans and Leases, net

$ 15,496,745

$   15,043,533

$   14,609,666

$  14,108,256

$  13,740,761

Loan and Lease Balances (average):

Continuing Portfolio:

Commercial non-mortgage

$   3,482,862

$     3,363,074

$     3,247,527

$    3,096,762

$    3,036,412

Equipment financing

570,686

549,310

542,112

542,067

509,331

Asset-based lending

721,662

712,811

709,985

675,218

647,952

Commercial real estate

3,955,012

3,804,904

3,705,895

3,574,826

3,452,954

Residential mortgages

4,039,341

3,950,654

3,711,096

3,546,098

3,483,444

Consumer

2,601,955

2,544,789

2,504,668

2,468,422

2,491,359

Total continuing portfolio

15,371,518

14,925,542

14,421,283

13,903,393

13,621,452

Allowance for loan and lease losses

(170,724)

(163,421)

(156,698)

(153,790)

(150,706)

Total continuing portfolio, net

15,200,794

14,762,121

14,264,585

13,749,603

13,470,746

Liquidating Portfolio:

NCLC

1

1

Consumer

81,058

84,449

87,418

91,088

94,069

Total liquidating portfolio

81,058

84,449

87,418

91,089

94,070

Allowance for loan and lease losses

(7,364)

(7,651)

(8,359)

(9,145)

(9,451)

Total liquidating portfolio, net

73,694

76,798

79,059

81,944

84,619

Total Loan and Lease Balances (average)

15,452,576

15,009,991

14,508,701

13,994,482

13,715,522

Allowance for loan and lease losses

(178,088)

(171,072)

(165,057)

(162,935)

(160,157)

Loans and Leases, net

$ 15,274,488

$   14,838,919

$   14,343,644

$  13,831,547

$  13,555,365

 

 

WEBSTER FINANCIAL CORPORATION Five Quarter Nonperforming Assets (unaudited)

(Dollars in thousands)

December 31, 2015

September 30, 2015

June 30, 2015

March 31, 2015

December 31, 2014

Nonperforming loans and leases:

Continuing Portfolio:

Commercial non-mortgage

$     27,086

$   40,235

$   43,081

$  27,057

$     6,436

Equipment financing

706

403

301

285

518

Asset-based lending

Commercial real estate

20,211

23,828

26,893

25,814

18,675

Residential mortgages

54,101

57,603

58,663

61,274

64,022

Consumer

33,972

32,969

34,236

33,696

35,770

Nonperforming loans and leases - continuing portfolio

136,076

155,038

163,174

148,126

125,421

Liquidating Portfolio:

Consumer

3,865

3,965

4,682

4,117

4,460

Total nonperforming loans and leases

$  139,941

$ 159,003

$ 167,856

$ 152,243

$ 129,881

Other real estate owned and repossessed assets:

Continuing Portfolio:

Commercial

$           —

$        —

$          —

$           —

$     2,899

Repossessed equipment

100

Residential

3,788

4,078

3,930

3,051

2,280

Consumer

1,241

1,306

1,039

2,252

1,237

Total continuing portfolio

5,029

5,384

4,969

5,303

6,516

Liquidating Portfolio:

Total liquidating portfolio

Total other real estate owned and repossessed assets

$      5,029

$     5,384

$     4,969

$     5,303

$     6,516

Total nonperforming assets

$  144,970

$ 164,387

$ 172,825

$ 157,546

$ 136,397

 

 

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

(Dollars in thousands)

December 31, 2015

September 30, 2015

June 30, 2015

March 31, 2015

December 31, 2014

Past due 30-89 days:

Continuing Portfolio:

Commercial non-mortgage

$   4,052

$  4,415

$  1,778

$  3,992

$  2,099

Equipment financing

602

739

517

789

701

Asset-based lending

Commercial real estate

2,250

1,939

1,547

3,962

2,714

Residential mortgages

15,032

15,222

12,315

13,966

17,216

Consumer

14,225

15,850

13,053

18,459

15,867

Past due 30-89 days - continuing portfolio

36,161

38,165

29,210

41,168

38,597

Liquidating Portfolio:

Consumer

1,036

953

1,299

1,820

1,658

Total past due 30-89 days

37,197

39,118

30,509

42,988

40,255

Past due 90 days or more and accruing

2,051

2,228

1,923

2,109

2,087

Total past due loans and leases

$ 39,248

$ 41,346

$ 32,432

$ 45,097

$  42,342

 

 

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

For the Three Months Ended

(Dollars in thousands)

December 31, 2015

September 30, 2015

June 30, 2015

March 31, 2015

December 31, 2014

Beginning balance

$ 172,992

$ 167,860

$ 161,970

$ 159,264

$ 156,482

Provision

13,800

13,000

12,750

9,750

9,500

Charge-offs continuing portfolio:

Commercial non-mortgage

6,522

2,204

2,541

255

4,097

Equipment financing

244

15

15

84

Asset-based lending

Commercial real estate

1,988

1,346

1,091

3,153

246

Residential mortgages

1,504

1,588

1,461

1,953

1,346

Consumer

4,379

3,991

3,531

3,634

3,648

Charge-offs continuing portfolio

14,637

9,129

8,639

9,010

9,421

Charge-offs liquidating portfolio:

NCLC

2

Consumer

320

840

322

662

563

Charge-offs liquidating portfolio

320

840

322

664

563

Total charge-offs

14,957

9,969

8,961

9,674

9,984

Recoveries continuing portfolio:

Commercial non-mortgage

441

558

527

989

1,258

Equipment financing

1,083

32

102

143

702

Asset-based lending

38

157

2

26

Commercial real estate

325

69

52

202

217

Residential mortgages

115

280

365

104

291

Consumer

948

852

849

821

636

Recoveries continuing portfolio

2,950

1,948

1,897

2,285

3,104

Recoveries liquidating portfolio:

NCLC

1

1

4

4

5

Consumer

204

152

200

341

157

Recoveries liquidating portfolio

205

153

204

345

162

Total recoveries

3,155

2,101

2,101

2,630

3,266

Total net charge-offs

11,802

7,868

6,860

7,044

6,718

Ending balance

$ 174,990

$ 172,992

$ 167,860

$ 161,970

$ 159,264

 

 

WEBSTER FINANCIAL CORPORATION Reconciliations to GAAP Financial Measures

The Company evaluates its business based on the following ratios that utilize tangible equity, a non-GAAP financial measure. Return on average tangible common shareholders' equity measures the Company's net income available to common shareholders, adjusted for the tax-affected amortization of intangible assets, as a percentage of average common shareholders' equity less goodwill and intangible assets (excluding mortgage servicing rights). The tangible equity ratio represents total ending shareholders' equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by total assets less goodwill and intangible assets (excluding mortgage servicing rights). The tangible common equity ratio represents ending common shareholders' equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by total assets less goodwill and intangible assets (excluding mortgage servicing rights). Tangible book value per common share represents ending common shareholders' equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by ending common shares outstanding. The efficiency ratio, which measures the costs expended to generate a dollar of revenue, is calculated excluding foreclosed property expense, amortization of intangibles, gain or loss on securities, and other non-recurring items. Accordingly, this is also a non-GAAP financial measure. The Company believes the use of these non-GAAP financial measures provides additional clarity in assessing the results of the Company. Other companies may define or calculate supplemental financial data differently. 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

(Dollars in thousands, except per share data)

December 31, 2015

September 30, 2015

June 30, 2015

March 31, 2015

December 31, 2014

Reconciliation of net income available to common shareholders to annualized net income used in the  return on average tangible common shareholders' equity ratio

Net income available to common shareholders

$      50,555

$          49,512

$       50,479

$       47,083

$         48,367

Amortization of intangibles (tax-affected @ 35%)

1,032

1,054

1,198

837

270

Quarterly net income adjusted for amortization of intangibles

51,587

50,566

51,677

47,920

48,637

Annualized net income used in the return on average tangible common shareholders' equity ratio

$     206,348

$        202,264

$     206,708

$     191,680

$       194,548

Reconciliation of average common shareholders' equity to average tangible common shareholders' equity

Average common shareholders' equity

$   2,299,493

$     2,280,960

$  2,236,743

$  2,198,254

$    2,189,191

Average goodwill

(538,373)

(538,373)

(538,373)

(537,147)

(529,887)

Average intangible assets (excluding mortgage servicing rights)

(40,225)

(41,845)

(43,538)

(39,559)

(2,862)

Average tangible common shareholders' equity

$   1,720,895

$     1,700,742

$  1,654,832

$  1,621,548

$    1,656,442

Reconciliation of period-end shareholders' equity to period-end tangible shareholders' equity

Shareholders' equity

$   2,415,571

$     2,402,545

$  2,379,695

$  2,355,575

$    2,322,815

Goodwill

(538,373)

(538,373)

(538,373)

(538,373)

(529,887)

Intangible assets (excluding mortgage servicing rights)

(39,326)

(40,914)

(42,535)

(44,378)

(2,666)

Tangible shareholders' equity

$   1,837,872

$     1,823,258

$  1,798,787

$  1,772,824

$    1,790,262

Reconciliation of period-end common shareholders' equity to period-end tangible common shareholders' equity

Common shareholders' equity

$   2,292,861

$     2,279,835

$  2,256,985

$  2,203,926

$    2,171,166

Goodwill

(538,373)

(538,373)

(538,373)

(538,373)

(529,887)

Intangible assets (excluding mortgage servicing rights)

(39,326)

(40,914)

(42,535)

(44,378)

(2,666)

Tangible common shareholders' equity

$   1,715,162

$     1,700,548

$  1,676,077

$  1,621,175

$    1,638,613

Reconciliation of period-end assets to period-end tangible assets

Assets

$ 24,677,820

$   24,069,782

$ 23,620,786

$ 23,106,688

$  22,533,172

Goodwill

(538,373)

(538,373)

(538,373)

(538,373)

(529,887)

Intangible assets (excluding mortgage servicing rights)

(39,326)

(40,914)

(42,535)

(44,378)

(2,666)

Tangible assets

$ 24,100,121

$   23,490,495

$ 23,039,878

$ 22,523,937

$  22,000,619

Book value per common share

Common shareholders' equity

$   2,292,861

$     2,279,835

$   2,256,985

$   2,203,926

$    2,171,166

Ending common shares issued and outstanding (in thousands)

91,677

91,663

91,919

90,715

90,512

Book value per common share

$          25.01

$            24.87

$          24.55

$          24.29

$           23.99

Tangible book value per common share

Tangible common shareholders' equity

$   1,715,162

$     1,700,548

$   1,676,077

$   1,621,175

$    1,638,613

Ending common shares issued and outstanding (in thousands)

91,677

91,663

91,919

90,715

90,512

Tangible book value per common share

$           18.71

$            18.55

$          18.23

$          17.87

$           18.10

Reconciliation of non-interest expense to non-interest expense used in the efficiency ratio

Non-interest expense

$      143,164

$        139,854

$      137,446

$      134,090

$       130,164

Foreclosed property expense

(242)

(270)

(146)

(169)

(244)

Intangible assets amortization

(1,588)

(1,621)

(1,843)

(1,288)

(416)

Other expense

349

277

(280)

(1,011)

(2,467)

Non-interest expense used in the efficiency ratio

$      141,683

$        138,240

$      135,177

$      131,622

$       127,037

Income used in the efficiency ratio

Net interest income before provision for loan losses

$      173,340

$        168,010

$      163,511

$      159,764

$       160,648

Fully taxable-equivalent adjustment

2,738

2,596

2,626

2,657

2,628

Non-interest income

60,349

61,455

59,851

57,890

53,775

Net gain on investment securities

(80)

(486)

(43)

(1,121)

Other

303

324

242

242

1,085

Income used in the efficiency ratio

$      236,650

$        232,385

$      225,744

$      220,510

$       217,015

 

 

SOURCE Webster Financial Corporation



RELATED LINKS

http://www.websterbank.com