Webster Reports Increased 2012 Third Quarter Earnings Net Income Grows by 9 Percent over Second Quarter

WATERBURY, Conn., Oct. 12, 2012 /PRNewswire/ -- Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today announced net income available to common shareholders of $44.4 million, or $.48 per diluted share, for the quarter ended September 30, 2012 compared to $40.6 million, or $.44 per diluted share, for the quarter ended June 30, 2012 and $41.4 million, or $.45 per diluted share, for the quarter ended September 30, 2011. 

Highlights for the quarter or at September 30 include:

Combined growth in commercial and commercial real estate loans of $229.3 million or 4.1 percent from June 30, and $649.2 million or 12.7 percent from a year ago.

Deposit growth of $439.5 million or 3.1 percent linked quarter and $827.5 million or 6.1 percent over prior year. Transaction account deposits now represent an all time high of 39.3 percent of total deposits.

Continued improvement in asset quality as evidenced by a 3.5 percent reduction in nonperforming assets and an 11.9 percent decline in commercial classified loans, both from June 30, and reductions of 30.2 percent and 38.3 percent from a year ago.

Continued achievement of positive operating leverage of 2.5 percent as core revenue grew by 1.8 percent and core expenses declined by 0.7 percent from the second quarter.

Return on assets, return on equity and return on tangible equity improved to 0.92 percent, 9.18 percent and 12.65 percent, respectively, compared to 0.86 percent, 8.62 percent and 11.99 percent, respectively, in the second quarter

Webster Chairman and Chief Executive Officer James C. Smith said, "Webster's momentum continued to build in the third quarter. Loans and deposits grew, revenues increased while expenses declined, asset quality trends remain favorable and earnings regained pre-recession levels. Our investments in business banking, mortgage banking and other relationship development initiatives are positively influencing operating results."

Net interest income

  • Net interest income was $144.9 million for the quarter compared to $144.4 million in the second quarter.
  • Net interest margin was 3.28 percent compared to 3.32 percent in the second quarter as the yield on interest-earning assets declined 12 basis points, primarily on securities, and the cost of funds declined 9 basis points.  
  • Average interest-earning assets grew by 1.4 percent from the second quarter and totaled $18.1 billion compared to $17.8 billion in the second quarter. 
  • Average loans grew by $187.6 million or 1.6 percent from the second quarter.

Webster President and Chief Operating Officer Jerry Plush noted, "A double-digit increase in commercial and commercial real estate loans over the past year and growth in lower-cost transaction deposits have contributed to improving operating results. We achieved positive operating leverage again and continued improvement in our efficiency ratio from 63.7 percent in the second quarter to 62.3 percent as a result of increased revenue and disciplined expense management."

Provision for loan losses

  • The Company recorded a provision of $5.0 million in the quarter, the same as in the second quarter and in the year ago period.
  • Net charge-offs were $17.7 million in the quarter compared to $16.5 million for the second quarter and $28.9 million a year ago.
  • The allowance for loan losses represented 114 percent of nonperforming loans compared to 117 percent in the prior quarter.

Noninterest income

  • Total noninterest income increased $1.1 million compared to the second quarter. Included in noninterest income is $0.8 million of securities gains in the third quarter and $2.5 million in the second quarter.
  • The $2.9 million increase in core noninterest income compared to the second quarter reflects an increase of $2.9 million in mortgage banking activities attributable to favorable spreads on loans originated for sale. Deposit service fees increased by $1.0 million. Loan fees increased by $0.5 million.
  • Other income decreased $1.6 million primarily from $0.5 million of direct investment write-downs compared to $0.5 million of direct investment income in the second quarter.

Noninterest expense

  • Total noninterest expense decreased $3.3 million compared to the second quarter. Included in noninterest expense are net one time costs of $0.6 million in the third quarter and $3.2 million in the second quarter.
  • Total noninterest expense excluding one time costs decreased $0.6 million from the second quarter and increased $3.6 million from a year ago. The decrease compared to the second quarter is driven by a combined reduction of $2.6 million in technology, marketing, professional services and loan workout expenses offset by an increase of $2.5 million in compensation and benefits expense. The increase in compensation and benefits is primarily the result of compensation tied to stock valuation, including increases of $0.6 million in cash award plan expense and $0.5 million in deferred compensation. The cash award plan vests during the fourth quarter, which will eliminate expense volatility from this plan in future quarters. Gains on foreclosed and repossessed assets were $0.4 million in the third quarter and $0.7 million in the second quarter.

Income taxes

  • The Company recorded $19.5 million of income tax expense in the quarter on the $64.5 million of pre-tax income applicable to continuing operations in the period. The effective tax rate for the quarter was 30.2 percent, compared to 30.7 percent for the second quarter, and reflects a net tax benefit of $0.3 million that was specific to the period.

Investment securities

  • Total investment securities were $6.3 billion at September 30, 2012 and $6.2 billion at June 30, 2012. The carrying value of the available for sale portfolio included $68.9 million in net unrealized gains compared to net unrealized gains of $46.7 million at June 30, while the carrying value of the held to maturity portfolio does not reflect $179.2 million in net unrealized gains compared to net unrealized gains of $158.4 million at June 30.

Loans

  • Total loans were $11.7 billion at September 30, 2012 compared to $11.5 billion at June 30, 2012 and are reflective of continued growth in commercial and commercial real estate loans. In the quarter, commercial and commercial real estate loans increased by $152.8 million and $76.5 million, respectively. Residential mortgage and consumer loans decreased by $7.7 million and $34.0 million, respectively.
  • Loan originations for portfolio in the third quarter were $835.6 million compared to $973.0 million in the second quarter and $716.2 million a year ago. In addition to loan originations for portfolio, $207.7 million of residential loans were originated and sold with servicing retained in the quarter compared to $198.3 million in the second quarter and $69.5 million a year ago.

Asset quality

  • Total nonperforming loans declined to $162.6 million, or 1.39 percent of total loans, at September 30, 2012 compared to $169.2 million, or 1.47 percent, at June 30, 2012. Included in nonperforming loans were paying loans totaling $16.8 million at September 30 compared to $17.0 million at June 30. Also included in nonperforming loans are $4.6 million in consumer liquidating loans compared to $4.5 million at June 30.
  • Past due loans increased to $67.4 million at September 30 compared to $65.9 million at June 30 attributable to one commercial real estate loan that is no longer past due subsequent to the end of the third quarter. Past due loans represented 0.57 percent of total loans at both September 30 and June 30. Past due loans for the continuing portfolios were $62.5 million at September 30 compared to $61.5 million at June 30. Past due loans for the liquidating portfolio were $4.9 million at September 30 compared to $4.4 million at June 30.
  • Other real estate owned (OREO) totaled $4.9 million compared to $4.4 million at June 30.

Deposits and borrowings

  • Total deposits were $14.4 billion at September 30, 2012 compared to $14.0 billion at June 30, 2012. Increases of $175.2 million in demand, $20.1 million in interest-bearing checking and $406.6 million in money market deposits were offset by declines of $74.3 million in savings and $88.2 million in certificates of deposit. Core to total deposits and loans to deposits were 81.8 percent and 81.4 percent, respectively, compared to 80.6 percent and 82.6 percent at June 30.
  • Total borrowings were $3.1 billion at September 30 compared to $3.2 billion at June 30.

Capital

  • The tangible common equity and Tier 1 common equity to risk-weighted assets ratios were 7.39 percent and 11.09 percent, respectively, at September 30, 2012 compared to 7.22 percent and 10.97 percent, respectively, at June 30, 2012.
  • Book value and tangible book value per common share were $22.24 and $16.13, respectively, at September 30 compared to $21.65 and $15.53, respectively, at June 30.
  • Return on average shareholders' equity and return on average tangible equity were 9.18 percent and 12.65 percent, respectively, at September 30 compared to 8.62 percent and 11.99 percent, respectively, at June 30.

Webster Financial Corporation is the holding company for Webster Bank, National Association. With $20 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust and investment services through 167 banking offices, 466 ATMs, 293 of which are owned by Webster and 173 of which are branded, telephone banking, mobile banking, and the Internet. Webster Bank owns the asset based lending firm Webster Business Credit Corporation; the equipment finance firm Webster Capital Finance Corporation; and provides health savings account trustee and administrative services through HSA Bank, a division of Webster Bank. Member FDIC and 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 third quarter earnings announcement will be held today, Friday, October 12, 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 1-877-407-8289 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 non-performing 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; (11) the ability to increase market share and control expenses; (12) changes in the competitive environment among banks, financial holding companies, and other financial service 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 those under the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III update to the Basel Accords that is under development; (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; and (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 heading "Risk Factors."  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.

 

WEBSTER FINANCIAL CORPORATION

Selected Financial Highlights (unaudited)










At or for the Three Months Ended






Sept. 30,

June 30,

March 31,

Dec. 31,


Sept. 30,


(In thousands, except per share data)

2012

2012

2012

2011


2011


Income and performance ratios, (annualized):















Income attributable to Webster Financial Corp.

$        44,993


$        41,240


$        38,938


$       40,384


$       42,231


Net income available to common shareholders

44,378


40,625


38,323


39,591


41,400


Net income per diluted common share 

0.48


0.44


0.42


0.43


0.45


Return on average shareholders' equity

9.18

%

8.62

%

8.30

%

8.67

%

9.14

%

Return on average tangible equity

12.65


11.99


11.65


12.21


12.92


Return on average assets

0.92


0.86


0.82


0.88


0.94


Noninterest income as a percentage of total revenue

25.07


24.70


23.48


23.05


23.98


Efficiency ratio


62.25


63.75


65.63


65.83


62.22
















Asset quality:

























Allowance for loan losses

$   186,089


$   198,757


$   210,288


$   233,487


$   257,352


Nonperforming assets

167,524


173,621


184,218


193,047


239,945


Allowance for loan losses / total loans

1.59

%

1.72

%

1.86

%

2.08

%

2.33

%

Net charge-offs / average loans (annualized)

0.61


0.58


0.96


0.95


1.05


Nonperforming loans / total loans

1.39


1.47


1.58


1.68


2.00


Nonperforming assets / total loans plus OREO

1.43


1.50


1.63


1.72


2.17


Allowance for loan losses / nonperforming loans

114.44


117.44


117.96


124.14


116.43
















Other ratios (annualized):

























Tangible equity ratio

7.54

%

7.38

%

7.29

%

7.18

%

7.32

%

Tangible common equity ratio

7.39


7.22


7.14


7.03


7.16


Tier 1 risk-based capital ratio(b)

11.89


12.82


12.86


13.05


13.04


Total risk-based capital(b)

13.15


14.08


14.12


14.61


14.60


Tier 1 common equity / risk-weighted assets(b)

11.09


10.97


10.96


11.08


11.01


Shareholders' equity / total assets

10.05


9.94


9.90


9.86


10.08


Interest rate spread

3.26


3.29


3.33


3.36


3.45


Net interest margin

3.28


3.32


3.36


3.39


3.49
















Share and equity related:

























Common equity

$ 1,954,739


$  1,902,609


$ 1,866,003


$ 1,816,835


$ 1,807,330


Book value per common share

22.24


21.65


21.24


20.74


20.65


Tangible book value per common share

16.13


15.53


15.10


14.57


14.47


Common stock closing price

23.70


21.66


22.67


20.39


15.30


Dividends declared per common share 

0.10


0.10


0.05


0.05


0.05
















Common shares outstanding

87,899


87,885


87,849


87,600


87,507


Basic shares (weighted average)

87,394


87,291


87,216


87,097


87,046


Diluted shares ( weighted average)

91,884


91,543


91,782


90,929


91,205






























Footnotes:

(a)

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

(b)

The ratios presented are projected for September 30, 2012 and actual for the remaining periods presented.

(c)

Certain previously reported information has been corrected to reflect the deferment of certain commercial loan fees.

 

 

WEBSTER FINANCIAL CORPORATION



Consolidated Balance Sheets  (unaudited)






September 30,


June 30,


September 30,

(In thousands)

2012


2012


2011










Assets:















Cash and due from banks

$        164,556


$        197,229


$        168,776


Interest-bearing deposits

79,763


73,598


87,240










Investment securities:







  Available for sale, at fair value

3,120,354


3,153,580


2,500,151


  Held to maturity

3,142,160


3,076,226


3,106,013



Total securities

6,262,514


6,229,806


5,606,164










Loans held for sale

91,207


89,228


28,266










Loans:







  Commercial

3,138,807


2,985,993


2,841,242


  Commercial real estate

2,627,893


2,551,427


2,276,295


  Residential mortgages

3,292,948


3,300,617


3,150,286


  Consumer

2,668,004


2,701,960


2,782,263



Total loans

11,727,652


11,539,997


11,050,086


Allowance for loan losses

(186,089)


(198,757)


(257,352)



Loans, net

11,541,563


11,341,240


10,792,734










Prepaid FDIC premiums

21,673


27,062


42,424


Federal Home Loan Bank and Federal Reserve Bank stock

142,595


142,595


143,874


Premises and equipment, net

135,394


137,420


148,274


Goodwill and other intangible assets, net

541,399


542,783


546,974


Cash surrender value of life insurance policies

414,797


312,117


305,901


Deferred tax asset, net

74,098


79,011


98,588


Accrued interest receivable and other assets

260,103


257,660


254,796










Total Assets

$ 19,729,662


$    19,429,749


$    18,224,011










Liabilities and Equity:















Deposits:







  Demand

$     2,786,525


$     2,611,297


$     2,292,673


  Interest-bearing checking

2,883,216


2,863,076


2,440,464


  Money market

2,340,717


1,934,137


2,225,841


  Savings

3,776,280


3,850,549


3,689,377


  Certificates of deposit

2,507,647


2,595,816


2,818,527


  Brokered certificates of deposit

119,052


119,052


119,052



 Total deposits

14,413,437


13,973,927


13,585,934










Securities sold under agreements to repurchase and other short-term borrowings

 

1,310,015


1,203,378


1,220,905



Federal Home Loan Bank advances

1,452,660


1,529,102


760,964


Long-term debt

335,678


472,928


554,478


Accrued expenses and other liabilities

234,194


318,866


255,884



Total liabilities

17,745,984


17,498,201


16,378,165










Webster Financial Corporation shareholders' equity

1,983,678


1,931,548


1,836,269


Noncontrolling interests

-


-


9,577



Total equity

1,983,678


1,931,548


1,845,846


















Total Liabilities and Equity

$ 19,729,662


$    19,429,749


$    18,224,011










See Selected Financial Highlights for footnotes.












 

 

WEBSTER FINANCIAL CORPORATION




Consolidated Statements of Operations (unaudited)





Three Months Ended


Nine Months Ended



September


September

(In thousands, except per share data)

2012


2011


2012


2011











Interest income:









Interest and fees on loans and leases

$  121,367


$ 121,322


$363,487


$365,660


Interest and dividends on securities

50,194


52,974


155,659


160,345


Loans held for sale

655


266


1,810


865


Total interest income

172,216


174,562


520,956


526,870











Interest expense:









Deposits

14,543


18,930


45,701


63,540


Borrowings

12,783


13,947


42,619


40,571


Total interest expense

27,326


32,877


88,320


104,111











Net interest income

144,890


141,685


432,636


422,759


Provision for loan losses

5,000


5,000


14,000


20,000


Net interest income after provision for loan losses

139,890


136,685


418,636


402,759











Noninterest income:









Deposit service fees

24,728


27,074


71,810


78,509


Loan related fees

4,039


5,308


12,473


15,341


Wealth and investment services

7,186


6,486


21,656


20,662


Mortgage banking activities

6,515


1,324


14,522


3,811


Increase in cash surrender value of life insurance policies

2,680


2,642


7,758


7,751


Net gain on investment securities

810


-


3,347


2,024


Other income

2,521


1,857


8,252


6,698


Total noninterest income

48,479


44,691


139,818


134,796











Noninterest expense:









Compensation and benefits

66,126


61,897


198,332


194,501


Occupancy

12,462


13,150


37,922


40,741


Technology and equipment expense

15,118


15,141


46,721


45,667


Marketing

4,529


4,144


13,723


13,916


Professional and outside services

2,790


3,125


8,869


8,368


Intangible assets amortization

1,384


1,397


4,178


4,191


Foreclosed and repossessed asset expenses

118


726


761


2,320


Foreclosed and repossessed asset gains 

(409)


(722)


(1,743)


(243)


Loan workout expenses

1,693


2,012


5,718


5,591


Deposit insurance 

5,675


4,472


17,107


16,171


Other expenses

13,805


14,392


42,238


43,032



123,291


119,734


373,826


374,255


Debt prepayment penalties

391


-


4,040


-


Write-down for expedited asset disposition

-


-


-


5,073


Contract termination and severance

136


1,555


863


2,615


Branch and facility optimization

69


2,183


150


3,315


Costs for warrant registration

-


-


-


350


Provision (benefit) for litigation and settlements

-


(254)


-


232


Loan repurchase and unfunded commitment reserve benefit, net

-


-


-


(1,436)


Total noninterest expense

123,887


123,218


378,879


384,404











Income from continuing operations before income taxes 

64,482


58,158


179,575


153,151


Income tax expense

19,489


15,927


54,404


44,152


Income from continuing operations 

44,993


42,231


125,171


108,999


Income from discontinued operations, net of tax

-


-


-


1,995


Consolidated net income

44,993


42,231


125,171


110,994


Less: Net loss attributable to noncontrolling interests

-


-


-


(1)


Net income attributable to Webster Financial Corp.

44,993


42,231


125,171


110,995


Preferred stock dividends

(615)


(831)


(1,845)


(2,493)


Net income available to common shareholders

$    44,378


$   41,400


$123,326


$108,502











   Diluted shares (weighted average)

91,884


91,205


91,754


91,954











Net income per common share available to common shareholders:









Basic









   Income from continuing operations

$        0.51


$       0.48


$     1.41


$     1.22


   Net income

0.51


0.48


1.41


1.24


Diluted









   Income from continuing operations

0.48


0.45


1.34


1.15


   Net income

0.48


0.45


1.34


1.17











 See Selected Financial Highlights for footnotes.
















 

 

WEBSTER FINANCIAL CORPORATION




Five Quarter Consolidated Statements of Operations (unaudited)






Three Months Ended
















Sept. 30,


June 30,


March 31,


Dec. 31,


Sept. 30,

(In thousands, except per share data)

2012


2012


2012


2011


2011











Interest income:










Interest and fees on loans and leases

$   121,367


$   121,379


$   120,741


$     121,223


$   121,322

Interest and dividends on securities

50,194


52,597


52,868


51,260


52,974

Loans held for sale

655


657


498


370


266

Total interest income

172,216


174,633


174,107


172,853


174,562













Interest expense:










Deposits

14,543


15,102


16,056


17,268


18,930

Borrowings

12,783


15,153


14,683


14,576


13,947

Total interest expense

27,326


30,255


30,739


31,844


32,877













Net interest income

144,890


144,378


143,368


141,009


141,685

Provision for loan losses

5,000


5,000


4,000


2,500


5,000

Net interest income after provision for loan losses

139,890


139,378


139,368


138,509


136,685












Noninterest income:










Deposit service fees

24,728


23,719


23,363


24,286


27,074

Loan related fees

4,039


3,565


4,869


4,896


5,308

Wealth and investment services

7,186


7,249


7,221


5,759


6,486

Mortgage banking activities

6,515


3,624


4,383


1,094


1,324

Increase in cash surrender value of life insurance policies

2,680


2,561


2,517


2,609


2,642

Net gain on investment securities

810


2,537


-


-


-

Other income

2,521


4,098


1,633


3,602


1,857

Total noninterest income

48,479


47,353


43,986


42,246


44,691













Noninterest expense:










Compensation and benefits

66,126


63,587


68,619


68,146


61,897

Occupancy

12,462


12,578


12,882


13,125


13,150

Technology and equipment expense

15,118


16,021


15,582


15,054


15,141

Marketing

4,529


5,094


4,100


4,540


4,144

Professional and outside services

2,790


3,387


2,692


2,835


3,125

Intangible assets amortization

1,384


1,397


1,397


1,397


1,397

Foreclosed and repossessed asset expenses

118


176


467


730


726

Foreclosed and repossessed asset gains 

(409)


(670)


(664)


(63)


(722)

Loan workout expenses

1,693


2,201


1,824


1,956


2,012

Deposit insurance 

5,675


5,723


5,709


4,756


4,472

Other expenses

13,805


14,443


13,990


12,864


14,392




123,291


123,937


126,598


125,340


119,734

Debt prepayment penalties

391


2,515


1,134


5,203


-

Write-down for expedited asset disposition

-


-


-


1,187


-

Contract termination and severance

136


727


-


2,485


1,555

Branch and facility optimization

69


-


81


1,689


2,183

Preferred stock redemption costs

-


-


-


423


-

Provision (benefit) for litigation and settlements

-


-


-


(9,755)


(254)

Total noninterest expense

123,887


127,179


127,813


126,572


123,218













Income from continuing operations before income taxes 

64,482


59,552


55,541


54,183


58,158

Income tax expense

19,489


18,312


16,603


13,799


15,927

Income from continuing operations 

44,993


41,240


38,938


40,384


42,231

Income from discontinued operations, net of tax

-


-


-


-


-

Consolidated net income

44,993


41,240


38,938


40,384


42,231

Less: Net loss attributable to noncontrolling interests

-


-


-


-


-

Net income attributable to Webster Financial Corp.

44,993


41,240


38,938


40,384


42,231

Preferred stock dividends

(615)


(615)


(615)


(793)


(831)

Net income available to common shareholders

$     44,378


$     40,625


$     38,323


$      39,591


$     41,400













   Diluted shares (weighted average)

91,884


91,543


91,782


90,929


91,205













Net income per common share available to common shareholders:








Basic










   Income from continuing operations

$        0.51


$        0.46


$        0.44


$          0.45


$        0.48

   Net income 

0.51


0.46


0.44


0.45


0.48

Diluted










   Income from continuing operations

0.48


0.44


0.42


0.43


0.45

   Net income

0.48


0.44


0.42


0.43


0.45











  See Selected Financial Highlights for footnotes.


 

 

WEBSTER FINANCIAL CORPORATION
























Five Quarter Interest Rate Spreads and Margin  (unaudited)










Three Months Ended





September 30,


June 30,


March 31,


December 31,


September 30,






2012 


2012


2012


2011


2011



















Interest rate spread














Yield on interest-earning assets

3.88

%

4.00

%

4.06

%

4.13

%

4.27

%




Cost of interest-bearing liabilities

0.62


0.71


0.73


0.77


0.82





    Interest rate spread

3.26

%

3.29

%

3.33

%

3.36

%

3.45

%


















    Net interest margin

3.28

%

3.32

%

3.36

%

3.39

%

3.49

%













































Consolidated Average Balances, Yields, and Rates Paid   (unaudited)




















Three Months Ended September 30,



2012





2011 (c)









 Fully tax- 






 Fully tax- 




Average




 equivalent 


Average




 equivalent 


(Dollars in thousands)

balance


Interest 


 yield/rate 


balance


Interest 


 yield/rate 
















Assets:














Interest-earning assets:














Loans

$ 11,608,334


$      121,367


4.14

%

$ 11,023,674


$      121,322


4.36

%


Investment securities(a)

6,145,414


53,010


3.48


5,344,987


55,916


4.22



Loans held for sale

82,006


655


3.19


25,593


266


4.17



Federal Home Loan and Federal Reserve Bank stock

142,595


879


2.45


143,874


823


2.27



Interest-bearing deposits

91,502


45


0.19


89,273


33


0.14



   Total interest-earning assets

18,069,851


175,956


3.88


16,627,401


178,360


4.27



Noninterest-earning assets

1,420,460






1,326,641







   Total assets

$ 19,490,311






$ 17,954,042




















Liabilities and Shareholders' Equity:














Interest-bearing liabilities:














Deposits:














Demand

2,726,790


$                -


-

%

$   2,358,392


$                -


-

%


Savings, interest checking, and money market

8,935,878


5,137


0.23


8,402,300


7,308


0.35



Certificates of deposit

2,677,939


9,406


1.40


2,997,188


11,622


1.54



        Total deposits

14,340,607


14,543


0.40


13,757,880


18,930


0.55



Securities sold under agreements to repurchase and other short-term borrowings

 

1,171,787


 

5,594


 

1.87


 

1,112,177


 

4,384


 

1.54




Federal Home Loan Bank advances

1,433,037


3,942


1.08


465,475


3,551


2.99



Long-term debt

361,468


3,247


3.59


557,585


6,012


4.31



Total borrowings

2,966,292


12,783


1.70


2,135,237


13,947


2.58



Total interest-bearing liabilities

17,306,899


27,326


0.62


15,893,117


32,877


0.82



Noninterest-bearing liabilities

222,929






202,682







Total liabilities

17,529,828






16,095,799





















Noncontrolling interests

-






9,577





















Webster Financial Corp. shareholders' equity

1,960,483






1,848,666







   Total liabilities and equity

$ 19,490,311






$ 17,954,042







Tax-equivalent net interest income



148,630






145,483





Less: tax-equivalent adjustment



(3,740)






(3,798)



















Net interest income



$      144,890






$      141,685



















Interest rate spread





3.26

%




3.45

%


Net interest margin





3.28

%




3.49

%






























See Selected Financial Highlights for footnotes.









 

 

WEBSTER FINANCIAL CORPORATION






Consolidated Average Balances, Yields, and Rates Paid   (unaudited)




















Nine Months Ended September 30,

2012




2011 (c)










 Fully tax- 






 Fully tax- 




Average




 equivalent 


Average




 equivalent 


(Dollars in thousands)

balance


Interest


 yield/rate 


balance


Interest


 yield/rate 
















Assets:














Interest-earning assets:














Loans

$        11,435,430


$    363,487


4.21

%

$      11,024,732


$       365,660


4.40

%


Investment securities(a)

6,076,750


164,187


3.63


5,330,255


169,155


4.27



Loans held for sale

67,411


1,810


3.58


25,725


865


4.49



Federal Home Loan and Federal Reserve Bank stock

142,912


2,636


2.46


143,874


2,486


2.31



Interest-bearing deposits

78,852


107


0.18


121,020


190


0.21



Total interest-earning assets

17,801,355


532,227


3.98


16,645,606


538,356


4.31



Noninterest-earning assets

1,399,566






1,325,336







Total assets

$        19,200,921






$      17,970,942




















Liabilities and Shareholders' Equity:














Interest-bearing liabilities:














Deposits:














Demand

$          2,572,851


$              -


-

%

$        2,249,378


$               -


-

%


Savings, interest checking, and money market

8,747,401


16,216


0.25


8,572,577


27,445


0.43



Certificates of deposit

2,739,829


29,485


1.44


3,076,384


36,095


1.57



        Total deposits

14,060,081


45,701


0.43


13,898,339


63,540


0.61



Securities sold under agreements to repurchase and other short-term borrowings

 

1,182,817


 

15,388


 

1.71


 

999,843


 

11,723


 

1.55




Federal Home Loan Bank advances

1,380,393


12,932


1.23


474,094


10,201


2.84



Long-term debt

447,082


14,299


4.26


569,256


18,647


4.37



Total borrowings

3,010,292


42,619


1.87


2,043,193


40,571


2.63



Total interest-bearing liabilities

17,070,373


88,320


0.69


15,941,532


104,111


0.87



Noninterest-bearing liabilities

213,196






195,830







  Total liabilities

17,283,569






16,137,362





















Noncontrolling interests

-






9,596





















Webster Financial Corporation shareholders' equity

1,917,352






1,823,984







   Total liabilities and equity

$        19,200,921






$      17,970,942







Tax-equivalent net interest income



443,907






434,245





Less: tax-equivalent adjustment



(11,271)






(11,486)



















Net interest income



$    432,636






$     422,759



















Interest rate spread





3.29

%




3.44

%


Net interest margin





3.32

%




3.48

%
















See Selected Financial Highlights for footnotes.





 

 

WEBSTER FINANCIAL CORPORATION



















Five Quarter Loan Balances (unaudited)









Sept. 30,


June 30,


March 31,


Dec. 31,


Sept. 30,

(Dollars in thousands)

2012


2012


2012


2011


2011












Loan Balances (actuals):










   Continuing Portfolio:











Commercial non-mortgage

$  2,201,732


$  2,069,127


$  1,972,205


$  1,932,542


$  1,812,685


Equipment financing

401,748


417,654


446,585


474,804


518,369


Asset based lending

535,327


499,212


470,187


453,251


510,188


Commercial real estate 

2,597,835


2,518,392


2,389,206


2,345,241


2,225,250


Residential development

30,058


33,035


36,591


39,648


51,045


Residential mortgages

3,292,947


3,300,616


3,270,212


3,219,888


3,150,285


Consumer

2,537,039


2,565,654


2,585,685


2,612,476


2,627,385


Total continuing

11,596,686


11,403,690


11,170,671


11,077,850


10,895,207


Allowance for loan losses

(156,214)


(168,882)


(180,413)


(203,612)


(227,477)


Total continuing, net

11,440,472


11,234,808


10,990,258


10,874,238


10,667,730

   Liquidating Portfolio:











National Construction Lending Center (NCLC)

1


1


1


1


1


Consumer

130,965


136,306


141,478


147,553


154,878


Total liquidating portfolio

130,966


136,307


141,479


147,554


154,879


Allowance for loan losses

(29,875)


(29,875)


(29,875)


(29,875)


(29,875)


Total liquidating, net

101,091


106,432


111,604


117,679


125,004












Total Loan Balances (actuals)

11,727,652


11,539,997


11,312,150


11,225,404


11,050,086

Allowance for loan losses

(186,089)


(198,757)


(210,288)


(233,487)


(257,352)

Loans, net

$11,541,563


$11,341,240


$11,101,862


$10,991,917


$10,792,734























Loan Balances (average):










   Continuing Portfolio:











Commercial non-mortgage

$  2,137,882


$  2,008,778


$  1,970,656


$  1,868,885


$  1,798,644


Equipment financing

404,180


430,882


458,111


495,667


551,732


Asset based lending

520,100


480,574


474,264


492,982


497,426


Commercial real estate 

2,528,394


2,453,430


2,336,576


2,254,970


2,185,662


Residential development

31,484


35,422


38,401


49,182


51,051


Residential mortgages

3,300,067


3,296,306


3,253,199


3,186,885


3,145,086


Consumer

2,552,660


2,576,521


2,598,758


2,622,378


2,635,911


 

Total continuing

11,474,767