Webster Reports Higher 2011 Third Quarter Profit

Oct 14, 2011, 08:00 ET from Webster Financial Corporation

WATERBURY, Conn., Oct. 14, 2011 /PRNewswire/ -- Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today announced net income available to common shareholders of $41.5 million, or $.45 per diluted share, for the quarter ended September 30, 2011 compared to $33.4 million, or $.36 per diluted share, for the quarter ended June 30, 2011.

Key points for the quarter or at September 30:

Combined growth of $79.9 million in commercial non-mortgage and commercial real estate loans from June 30, and $440.4 million from a year ago.

Continued growth in average demand deposits, which represented 17.1 percent of average total deposits compared to 15.9 percent in the second quarter and 13.3 percent a year ago.

Net interest margin of 3.45 percent compared to 3.46 percent in the second quarter and 3.36 percent a year ago.

Noninterest expense before one time costs of $119.7 million compared to $126.0 million in the second quarter and $126.6 million a year ago.

Continued improvement in asset quality as evidenced by a 4.1 percent reduction in nonperforming assets and an 8.8 percent decline in commercial classified loans, both from June 30.

Provision for loan losses of $5.0 million compared to $5.0 million in the second quarter and $25.0 million a year ago.

Webster Chairman and Chief Executive Officer James C. Smith said, “We are pleased to report improved performance in our operating results. Highlights include continued strong growth in business lending, a stable net interest margin, further improvement in credit metrics and reduction in expenses. Slow economic growth and margin pressures ahead require further management action to sustain earnings momentum. Recent events in consumer banking underscore the increasing competitive advantage we enjoy as a community focused bank which appeals to local customers seeking value and personal attention in their banking relationships.”

Net interest income

  • Net interest margin was essentially unchanged at 3.45 percent compared to 3.46 percent in the second quarter; the yield on interest-earning assets and the cost of funds each declined seven basis points as compared to the second quarter.
  • Average interest-earning assets totaled $16.6 billion, same as in the second quarter.  

Provision for loan losses

  • The Company recorded a provision of $5.0 million in the quarter, same as in the second quarter and a decrease of $20 million as compared to a year ago.
  • Net charge-offs were $28.9 million in the quarter compared to $21.7 million for the second quarter and $28.7 million a year ago.
  • The allowance for loan losses represented 116 percent of nonperforming loans compared to 123 percent in the prior quarter.

Webster Vice Chairman and Chief Operating Officer Jerry Plush stated, “Asset quality continued to improve as evidenced by lower levels of past due loans, nonperforming loans, other real estate owned and classified assets compared to the end of the second quarter. Commercial classified loans declined 9 percent from the second quarter, the lowest level since June 2009. We continue to pursue ways to further expedite problem asset resolution.”

Noninterest income

  • Total noninterest income decreased $0.8 million compared to the second quarter. Third quarter results include increases of $1.0 million in deposit services fees and $0.4 million in loan related fees, offset by a decline of $1.0 million in wealth and investment services, a reflection of market conditions in the quarter. Mortgage banking activities totaled $1.3 million compared to $1.2 million in the second quarter, and there were no net gains on investment securities compared to $1.6 million in the second quarter.

Noninterest expense

  • Total noninterest expense decreased $8.8 million compared to the second quarter. Included in noninterest expense is $3.5 million of net one time costs in the third quarter and $6.1 million of such costs in the second quarter. The $6.2 million decline in noninterest expense, apart from one time costs in each quarter, primarily reflects reductions of $3.7 million in compensation and benefits of which $1.8 million is related to a decline in market based incentive plan expense and $1.4 million in deposit insurance. In addition, included in noninterest expense was $0.7 million in gains on foreclosed and repossessed assets compared to $0.8 million of write-downs in the second quarter.

Income taxes

  • The Company recorded $16.0 million of income tax expense in the quarter on the $58.4 million of pre-tax income applicable to continuing operations in the period.  Income tax expense included $1.4 million of items discrete to the quarter. The effective tax rate for the quarter was 27.4 percent compared to 31.7 percent for the second quarter. Discrete items accounted for the majority of the decline in the effective tax rate for the quarter.

Investment securities

  • Total investment securities were $5.6 billion at September 30, 2011 compared to $5.3 billion at June 30, 2011. The carrying value of the available for sale portfolio included $30.0 million in net unrealized gains compared to net unrealized gains of $45.4 million at June 30, while the carrying value of the held to maturity portfolio does not reflect $155.7 million in net unrealized gains compared to net unrealized gains of $115.6 million at June 30.

Loans

  • Total loans were $11.1 billion at September 30, 2011 compared to $11.0 billion at June 30, 2011. Originations for the third quarter were $716.2 million compared to $643.5 million in the second quarter, an increase of 11.3 percent. Originations for the third quarter consisted of $212.9 million in commercial non-mortgage, $20.0 million in equipment finance, $80.7 million in asset based lending, $137.6 million in commercial real estate, $129.5 million in residential, and $135.5 million in consumer. In the quarter, commercial non-mortgage, asset based lending and commercial real estate loans increased by $24.8 million, $29.5 million and $53.0 million, respectively, while equipment finance loans declined by $59.7 million. Residential mortgage loans increased by $10.9 million, while consumer loans declined by $20.6 million.

Asset quality

  • Total nonperforming loans were $221.0 million, or 2.00 percent of total loans, at September 30, 2011 compared to $228.2 million, or 2.07 percent, at June 30, 2011. Included in nonperforming loans were paying loans totaling $55.8 million at September 30 compared to $77.9 million at June 30. Also included in nonperforming loans are $5.5 million in consumer liquidating loans compared to $5.1 million at June 30.
  • Past due loans totaled $64.1 million at September 30 compared to $66.1 million at June 30. Past due loans for the continuing portfolios were $59.5 million at September 30 compared to $59.9 million at June 30. Past due loans for the liquidating portfolio were $4.7 million at September 30 compared to $6.1 million at June 30.

Deposits and borrowings

  • Total deposits were $13.6 billion at September 30, 2011 compared to $13.7 billion at June 30, 2011. An increase of $144.3 million in money market deposits was offset by declines of $123.1 million in certificates of deposit, $84.0 million in savings, $37.2 million in interest-bearing checking and $30.6 million in demand deposits. Core to total deposits and loans to deposits were 78 percent and 81 percent, respectively, compared to 78 percent and 80 percent at June 30.
  • Total borrowings were $2.5 billion at September 30 compared to $2.0 billion at June 30. The increase in borrowings funded growth in loans and investment securities in the quarter. Borrowings represented 14 percent of total assets at September 30 compared to 12 percent at June 30.

Capital

  • The tangible common equity and Tier 1 common equity to risk-weighted assets ratios were 7.15 percent and 11.06 percent, respectively, compared to 7.28 percent and 10.79 percent at June 30, 2011.

Webster Financial Corporation is the holding company for Webster Bank, National Association. With $18 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust and investment services through 171 banking offices, 485 ATMs, 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 14, 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 recently enacted 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.

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

Sept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

(In thousands, except per share data)

2011

2011

2011

2010

2010

Net income and performance ratios (annualized):

Net income attributable to Webster Financial Corp.

$      42,379

$      34,207

$      34,296

$      32,569

$      22,687

Net income available to common shareholders

41,548

33,376

33,465

24,959

17,779

Net income per diluted common share

0.45

0.36

0.36

0.30

0.22

Return on average shareholders' equity

9.15

%

7.44

%

7.66

%

7.11

%

4.80

%

Return on average tangible equity

12.93

10.55

11.00

10.11

6.74

Return on average assets

0.94

0.76

0.76

0.73

0.51

Income and performance ratios, (annualized), from continuing operations:

Income from continuing operations  attributable to Webster Financial Corp.

$      42,379

$      34,207

$      32,301

$      32,475

$      22,687

Net income available to common shareholders

41,548

33,376

31,470

24,865

17,779

Net income from continuing operations per diluted common share

0.45

0.36

0.34

0.30

0.22

Return on average shareholders' equity

9.15

%

7.44

%

7.21

%

7.09

%

4.80

%

Return on average tangible equity

12.93

10.55

10.36

10.08

6.74

Return on average assets

0.94

0.76

0.72

0.73

0.51

Noninterest income as a percentage of total revenue

24.76

25.13

24.11

25.66

25.97

Efficiency ratio (a)

62.15

65.00

67.61

67.82

65.79

Asset quality:

Allowance for loan losses

$    257,352

$    281,243

$    297,948

$    321,665

$    340,341

Nonperforming assets

239,945

250,084

290,349

301,804

343,991

Allowance for loan losses / total loans

2.33

%

2.55

%

2.71

%

2.92

%

3.12

%

Net charge-offs / average loans (annualized)

1.05

0.79

1.22

1.24

1.06

Nonperforming loans / total loans

2.00

2.07

2.38

2.48

2.85

Nonperforming assets / total loans plus OREO

2.17

2.27

2.63

2.73

3.14

Allowance for loan losses / nonperforming loans

116.43

123.22

113.78

117.58

109.39

Other ratios (annualized):

Tangible capital ratio

7.31

%

7.44

%

7.27

%

6.99

%

7.79

%

Tangible common equity ratio

7.15

7.28

7.10

6.82

5.91

Tier 1 risk-based capital ratio (c)

13.08

12.94

12.69

12.12

12.90

Total risk-based capital (c)

14.65

14.51

14.27

13.99

14.77

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

11.06

10.79

10.53

9.92

8.16

Shareholders' equity / total assets

10.10

10.29

10.10

9.83

10.66

Interest rate spread

3.42

3.42

3.40

3.37

3.31

Net interest margin

3.45

3.46

3.44

3.40

3.36

Share and equity related:

Common equity

$ 1,811,404

$ 1,804,141

$ 1,786,114

$ 1,744,483

$ 1,572,053

Book value per common share

20.70

20.61

20.42

20.01

20.02

Tangible book value per common share

14.52

14.42

14.21

13.78

13.09

Common stock closing price

15.30

21.02

21.43

19.70

17.56

Dividends declared per common share

0.05

0.05

0.01

0.01

0.01

Common shares issued and outstanding

87,507

87,532

87,474

87,160

78,505

Basic shares (average)

87,046

86,986

86,896

78,663

78,097

Diluted shares (average)

91,205

92,184

92,554

82,766

82,128

Footnotes:

(a) Calculated using SNL’s methodology - noninterest expense (excluding foreclosed property expenses, intangible amortization, goodwill impairments, and other charges) as a percentage of net interest income (FTE basis) plus noninterest income (excluding gain/loss on securities and other charges).

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

(c) The ratios presented are projected for the three month reporting period ending September 30, 2011 and actual for the remaining reporting periods presented.

WEBSTER FINANCIAL CORPORATION

Consolidated Balance Sheets  (unaudited)

September 30,

June 30,

September 30,

(In thousands)

2011

2011

2010

Assets:

Cash and due from banks

$          168,776

$      196,181

$       174,971

Interest-bearing deposits

87,240

57,863

65,255

Investment securities:

Trading, at fair value

-

-

9,991

Available for sale, at fair value

2,500,151

2,143,072

2,258,380

Held to maturity

3,106,013

3,123,510

3,097,515

  Total securities

5,606,164

5,266,582

5,365,886

Loans held for sale

28,266

21,650

13,024

Loans:

 Commercial

2,846,752

2,852,141

2,817,366

 Commercial real estate

2,277,145

2,224,184

2,107,732

 Residential mortgages

3,150,286

3,139,408

3,095,139

 Consumer

2,782,263

2,802,907

2,887,946

  Total loans

11,056,446

11,018,640

10,908,183

Allowance for loan losses

(257,352)

(281,243)

(340,341)

  Loans, net

10,799,094

10,737,397

10,567,842

Prepaid FDIC premiums

42,424

46,546

62,813

Federal Home Loan Bank and Federal Reserve Bank stock

143,874

143,874

143,874

Premises and equipment, net

148,274

152,009

160,774

Goodwill and other intangible assets, net

546,974

548,370

552,561

Cash surrender value of life insurance policies

305,901

303,258

295,516

Deferred tax asset, net

96,310

89,925

113,145

Accrued interest receivable and other assets

254,796

243,173

284,597

Total Assets

$     18,228,093

$ 17,806,828

$  17,800,258

Liabilities and Equity:

Deposits:

 Demand

$       2,292,673

$   2,323,266

$    1,840,937

 Interest-bearing checking

2,440,464

2,477,625

2,349,682

 Money market

2,225,841

2,081,503

2,611,094

 Savings

3,689,377

3,773,417

3,503,930

 Certificates of deposit

2,818,527

2,939,648

3,224,131

 Brokered certificates of deposit

119,052

121,068

44,261

  Total deposits

13,585,934

13,716,527

13,574,035

Securities sold under agreements to repurchase and

other short-term borrowings

1,220,905

1,079,866

1,048,362

Federal Home Loan Bank advances

760,964

403,131

473,512

Long-term debt

554,478

566,677

584,727

Accrued expenses and other liabilities

255,892

197,970

213,126

  Total liabilities

16,378,173

15,964,171

15,893,762

Webster Financial Corporation shareholders' equity

1,840,343

1,833,080

1,896,851

Noncontrolling interests

9,577

9,577

9,645

  Total equity

1,849,920

1,842,657

1,906,496

Total Liabilities and Equity

$     18,228,093

$ 17,806,828

$  17,800,258

See Selected Financial Highlights for footnotes.

WEBSTER FINANCIAL CORPORATION

Consolidated Statements of Operations (unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

(In thousands, except per share data)

2011

2010

2011

2010

Interest income:

Interest and fees on loans and leases

$ 120,018

$ 123,042

$ 362,848

$ 368,839

Interest and dividends on securities

52,974

53,182

160,345

162,781

Loans held for sale

266

79

865

537

  Total interest income

173,258

176,303

524,058

532,157

Interest expense:

Deposits

18,930

26,409

63,540

88,842

Borrowings

13,947

15,160

40,571

44,855

  Total interest expense

32,877

41,569

104,111

133,697

  Net interest income

140,381

134,734

419,947

398,460

Provision for loan losses

5,000

25,000

20,000

100,000

  Net interest income after provision for loan losses

135,381

109,734

399,947

298,460

Noninterest income:

Deposit service fees

27,074

26,822

78,509

83,951

Loan related fees

6,823

6,119

18,071

19,349

Wealth and investment services

6,486

6,220

20,662

18,273

Mortgage banking activities

1,324

1,658

3,811

1,947

Increase in cash surrender value of life insurance policies

2,642

2,677

7,751

7,867

Net gain on investment securities

-

1,262

2,024

20,092

Other income

1,857

2,510

6,698

8,325

   Total noninterest income

46,206

47,268

137,526

159,804

Noninterest expense:

Compensation and benefits

61,897

60,133

194,501

181,402

Occupancy

13,150

13,777

40,741

41,763

Technology and equipment expense

15,141

15,886

45,667

46,811

Marketing

4,144

4,634

13,916

14,651

Professional and outside services

3,125

4,038

8,368

10,206

Intangible assets amortization

1,397

1,397

4,191

4,191

Foreclosed and repossessed asset expenses

726

1,596

2,320

4,297

Foreclosed and repossessed asset (gains) write-downs

(722)

2,157

(243)

5,109

Loan workout expenses

2,012

3,477

5,591

7,602

Deposit insurance

4,472

5,882

16,171

19,128

Other expenses

14,392

13,641

43,032

41,134

119,734

126,618

374,255

376,294

Write-down for expedited asset disposition

-

-

5,073

-

Severance and other

1,555

303

2,615

1,186

Branch and facility optimization

2,183

-

3,315

-

Costs for warrant registration

-

-

350

-

Provision (benefit) for litigation and settlements

(254)

2,800

232

22,476

Loan repurchase and unfunded commitment reserve benefit, net

-

-

(1,436)

-

Fraud loss

-

-

-

11,056

  Total noninterest expense

123,218

129,721

384,404

411,012

Income from continuing operations before income taxes

58,369

27,281

153,069

47,252

Income tax expense

15,990

4,597

44,183

5,502

  Income from continuing operations

42,379

22,684

108,886

41,750

Income from discontinued operations, net of tax

-

-

1,995

-

  Consolidated net income

42,379

22,684

110,881

41,750

Less: Net (loss) income attributable to noncontrolling interests

-

(3)

(1)

4

 Net income attributable to Webster Financial Corp.

42,379

22,687

110,882

41,746

Preferred stock dividends

(831)

(4,581)

(2,493)

(14,616)

Preferred stock accretion and accounting adjustments

-

(327)

-

(2,689)

  Net income available to common shareholders

$   41,548

$   17,779

$ 108,389

$   24,441

  Diluted shares (average)

91,205

82,128

91,954

82,028

Net income per common share available to common shareholders:

Basic

  Income from continuing operations

$       0.48

$       0.23

$       1.22

$       0.31

  Net income

0.48

0.23

1.24

0.31

Diluted

  Income from continuing operations

0.45

0.22

1.15

0.30

  Net income

0.45

0.22

1.17

0.30

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)

2011

2011

2011

2010

2010

Interest income:

Interest and fees on loans and leases

$ 120,018

$ 121,599

$ 121,231

$ 121,944

$ 123,042

Interest and dividends on securities

52,974

53,527

53,844

51,652

53,182

Loans held for sale

266

177

422

433

79

Total interest income

173,258

175,303

175,497

174,029

176,303

Interest expense:

Deposits

18,930

21,841

22,769

23,787

26,409

Borrowings

13,947

13,345

13,279

13,892

15,160

Total interest expense

32,877

35,186

36,048

37,679

41,569

Net interest income

140,381

140,117

139,449

136,350

134,734

Provision for loan losses

5,000

5,000

10,000

15,000

25,000

  Net interest income after provision for loan losses

135,381

135,117

129,449

121,350

109,734

Noninterest income:

Deposit service fees

27,074

26,095

25,340

25,026

26,822

Loan related fees

6,823

6,419

4,829

6,568

6,119

Wealth and investment services

6,486

7,454

6,722

6,652

6,220

Mortgage banking activities

1,324

1,234

1,253

2,222

1,658

Increase in cash surrender value of life insurance policies

2,642

2,576

2,533

2,650

2,677

Net gain on investment securities

-

1,647

377

2,295

1,262

Other income

1,857

1,593

3,248

1,639

2,510

Total noninterest income

46,206

47,018

44,302

47,052

47,268

Noninterest expense:

Compensation and benefits

61,897

65,592

67,012

63,941

60,133

Occupancy

13,150

12,856

14,735

13,871

13,777

Technology and equipment expense

15,141

15,134

15,392

16,044

15,886

Marketing

4,144

4,252

5,520

4,317

4,634

Professional and outside services

3,125

2,813

2,430

4,515

4,038

Intangible assets amortization

1,397

1,397

1,397

1,397

1,397

Foreclosed and repossessed asset expenses

726

710

884

1,319

1,596

Foreclosed and repossessed asset (gains) write-downs

(722)

794

(315)

48

2,157

Loan workout expenses

2,012

1,779

1,800

2,228

3,477

Deposit insurance

4,472

5,918

5,781

5,407

5,882

Other expenses

14,392

14,716

13,924

15,117

13,641

119,734

125,961

128,560

128,204

126,618

Write-down for expedited asset disposition

-

5,073

-

-

-

Severance and other

1,555

1,060

-

646

303

Branch and facility optimization

2,183

859

273

4,307

-

Costs for warrant registration

-

350

-

-

-

Provision (benefit) for litigation and settlements

(254)

194

292

-

2,800

Loan repurchase and unfunded commitment reserve benefit, net

-

(1,436)

-

-

-

Fraud recovery

-

-

-

(5,195)

-

Total noninterest expense

123,218

132,061

129,125

127,962

129,721

Income from continuing operations before income taxes

58,369

50,074

44,626

40,440

27,281

Income tax expense

15,990

15,867

12,326

7,966

4,597

  Income from continuing operations

42,379

34,207

32,300

32,474

22,684

Income from discontinued operations, net of tax

-

-

1,995

94

-

  Consolidated net income

42,379

34,207

34,295

32,568

22,684

Less: Net (loss) income attributable to noncontrolling interests

-

-

(1)

(1)

(3)

 Net income attributable to Webster Financial Corp.

42,379

34,207

34,296

32,569

22,687

Preferred stock dividends

(831)

(831)

(831)

(3,469)

(4,581)

Preferred stock accretion and accounting adjustments

-

-

-

(4,141)

(327)

  Net income available to common shareholders

$   41,548

$   33,376

$   33,465

$   24,959

$   17,779

  Diluted shares (average)

91,205

92,184

92,554

82,766

82,128

Net income per common share available to common shareholders:

Basic

  Income from continuing operations

$       0.48

$       0.38

$       0.36

$       0.32

$       0.23

  Net income

0.48

0.38

0.38

0.32

0.23

Diluted

  Income from continuing operations

0.45

0.36

0.34

0.30

0.22

  Net income

0.45

0.36

0.36

0.30

0.22

 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,

2011

2011

2011

2010

2010

Interest rate spread

Yield on interest-earning assets

                  4.24

%

         4.31

%

             4.31

%

              4.32

%

               4.36

%

Cost of interest-bearing liabilities

                  0.82

         0.89

             0.91

              0.95

               1.05

   Interest rate spread

                  3.42

%

         3.42

%

             3.40

%

              3.37

%

               3.31

%

   Net interest margin

                  3.45

%

         3.46

%

             3.44

%

              3.40

%

               3.36

%

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

Three Months Ended September 30,

2011

2010

Fully tax-

Fully tax-

Average

equivalent

Average

equivalent

(Dollars in thousands)

balance

Interest

yield/rate

balance

Interest

yield/rate

Assets:

Interest-earning assets:

Loans

$     11,030,034

$ 120,018

4.31

%

$ 10,886,020

$       123,042

4.48

%

Investment securities (b)

5,344,987

55,916

4.22

5,304,990

56,240

4.27

Loans held for sale

25,593

266

4.17

6,936

79

4.58

Federal Home Loan and Federal Reserve Bank stock

143,874

823

2.27

143,874

761

2.10

Interest-bearing deposits

89,273

33

0.14

113,833

70

0.24

  Total interest-earning assets

16,633,761

177,056

4.24

16,455,653

180,192

4.36

Noninterest-earning assets

1,324,363

1,362,141

  Total assets

$     17,958,124

$ 17,817,794

Liabilities and Shareholders' Equity:

Interest-bearing liabilities:

  Deposits:

    Demand

2,358,392

$           -

-

%

$   1,810,270

$                -

-

%

    Savings, interest checking, and money market

8,402,300

7,308

0.35

8,441,033

11,401

0.54

    Certificates of deposit

2,997,188

11,622

1.54

3,374,112

15,008

1.76

       Total deposits

13,757,880

18,930

0.55

13,625,415

26,409

0.77

Securities sold under agreements to repurchase

 and other short-term borrowings

1,112,177

4,384

1.54

894,475

4,048

1.77

Federal Home Loan Bank advances

465,475

3,551

2.99

603,639

4,682

3.04

Long-term debt

557,585

6,012

4.31

585,825

6,430

4.39

  Total borrowings

2,135,237

13,947

2.58

2,083,939

15,160

2.87

  Total interest-bearing liabilities

15,893,117

32,877

0.82

15,709,354

41,569

1.05

Noninterest-bearing liabilities

202,690

207,419

  Total liabilities

16,095,807

15,916,773

Noncontrolling interests

9,577

9,645

Webster Financial Corp. shareholders' equity

1,852,740

1,891,376

  Total liabilities and equity

$     17,958,124

$ 17,817,794

Tax-equivalent net interest income

144,179

138,623

Less: tax-equivalent adjustment

(3,798)

(3,889)

Net interest income

$ 140,381

$       134,734

Interest rate spread

3.42

%

3.31

%

Net interest margin

3.45

%

3.36

%

See Selected Financial Highlights for footnotes.

WEBSTER FINANCIAL CORPORATION

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

Nine Months Ended September 30,

2011

2010

Fully tax-

Fully tax-

Average

equivalent

Average

equivalent

(Dollars in thousands)

balance

Interest

yield/rate

balance

Interest

yield/rate

Assets:

Interest-earning assets:

Loans

$ 11,031,092

$ 362,848

4.37

%

$ 10,913,211

$ 368,839

4.49

%

Investment securities (b)

5,330,255

169,155

4.27

5,249,708

171,202

4.36

Loans held for sale

25,725

865

4.49

15,639

537

4.58

Federal Home Loan and Federal Reserve Bank stock

143,874

2,486

2.31

142,566

2,223

2.08

Interest-bearing deposits

121,020

190

0.21

182,718

352

0.25

  Total interest-earning assets

16,651,966

535,544

4.29

16,503,842

543,153

4.38

Noninterest-earning assets

1,323,058

1,380,951

  Total assets

$ 17,975,024

$ 17,884,793

Liabilities and Shareholders' Equity:

Interest-bearing liabilities:

  Deposits:

    Demand

$   2,249,378

$           -

-

%

$   1,722,940

$           -

-

%

    Savings, interest checking, and money market

8,572,577

27,445

0.43

8,488,236

38,482

0.61

    Certificates of deposit

3,076,384

36,095

1.57

3,593,845

50,360

1.87

       Total deposits

13,898,339

63,540

0.61

13,805,021

88,842

0.86

Securities sold under agreements to repurchase

 and other short-term borrowings

999,843

11,723

1.55

836,148

12,172

1.92

Federal Home Loan Bank advances

474,094

10,201

2.84

585,830

13,847

3.12

Long-term debt

569,256

18,647

4.37

587,431

18,836

4.28

  Total borrowings

2,043,193

40,571

2.63

2,009,409

44,855

2.96

  Total interest-bearing liabilities

15,941,532

104,111

0.87

15,814,430

133,697

1.13

Noninterest-bearing liabilities

195,838

174,079

  Total liabilities

16,137,370

15,988,509

Noncontrolling interests

9,596

9,641

Webster Financial Corporation shareholders' equity

1,828,058

1,886,643

  Total liabilities and equity

$ 17,975,024

$ 17,884,793

Tax-equivalent net interest income

431,433

409,456

Less: tax-equivalent adjustment

(11,486)

(10,996)

Net interest income

$ 419,947

$ 398,460

Interest rate spread

3.42

%

3.25

%

Net interest margin

3.45

%

3.30

%

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)

2011

2011

2011

2010

2010

Loan Balances (actuals):

  Continuing Portfolio:

  Commercial

$   1,818,195

$   1,793,362

$   1,709,592

$   1,654,615

$   1,562,633

  Equipment financing

518,369

578,117

643,388

710,925

759,416

  Asset based lending

510,188

480,662

483,027

454,398

495,317

  Commercial real estate

2,226,100

2,170,986

2,160,097

2,138,314

2,041,237

  Residential development

51,045

53,198

56,109

59,674

66,495

  Residential mortgages

3,150,285

3,139,407

3,150,268

3,147,491

3,093,581

  Consumer

2,627,385

2,641,102

2,642,533

2,682,645

2,702,920

     Total continuing

10,901,567

10,856,834

10,845,014

10,848,062

10,721,599

     Allowance for loan losses

(227,477)

(243,543)

(258,140)

(278,665)

(293,541)

     Total continuing, net

10,674,090

10,613,291

10,586,874

10,569,397

10,428,058

  Liquidating Portfolio:

   National Construction Lending Center (NCLC)

1

1

1

1

1,558

   Consumer

154,878

161,805

169,035

176,576

185,026

     Total liquidating portfolio

154,879

161,806

169,036

176,577

186,584

     Allowance for loan losses

(29,875)

(37,700)

(39,808)

(43,000)

(46,800)

     Total liquidating, net

125,004

124,106

129,228

133,577

139,784

Total Loan Balances (actuals)

11,056,446

11,018,640

11,014,050

11,024,639

10,908,183

Allowance for loan losses

(257,352)

(281,243)

(297,948)

(321,665)

(340,341)

Loans, net

$ 10,799,094

$ 10,737,397

$ 10,716,102

$ 10,702,974

$ 10,567,842

Loan Balances (average):

  Continuing Portfolio:

  Commercial

$   1,804,154

$   1,753,100

$   1,691,452

$   1,570,641

$   1,555,430

  Equipment finance

551,732

621,447

688,767

733,611

784,215

  Asset based lending

497,426

472,837

488,181

488,639

496,871

  Commercial real estate

2,186,512

2,154,922

2,144,904

2,049,658

2,039,180

  Residential development

51,051

54,757

58,152

62,223

73,510

  Residential mortgages

3,145,086

3,133,742

3,158,754

3,124,899

3,029,900

  Consumer

2,635,911

2,641,621

2,662,454

2,693,191

2,714,835

     Total continuing

10,871,872

10,832,426

10,892,664

10,722,862

10,693,941

     Allowance for loan losses

(247,551)

(255,412)

(280,589)

(288,003)

(295,414)

     Total continuing, net

10,624,321

10,577,014

10,612,075

10,434,859

10,398,527

  Liquidating Portfolio:

   NCLC

1

1

1

1,246

1,975

   Consumer

158,161

165,612

172,929

180,888

190,104

     Total liquidating portfolio

158,162

165,613

172,930

182,134

192,079

     Allowance for loan losses

(29,875)

(37,700)

(39,808)

(43,000)

(46,800)

     Total liquidating, net

128,287

127,913

133,122

139,134

145,279

Total Loan Balances (average)

11,030,034

10,998,039

11,065,594

10,904,996

10,886,020

Allowance for loan losses

(277,426)

(293,112)

(320,397)

(331,003)

(342,214)

Loans, net

$ 10,752,608

$ 10,704,927

$ 10,745,197

$ 10,573,993

$ 10,543,806

See Selected Financial Highlights for footnotes.

WEBSTER FINANCIAL CORPORATION

Five Quarter Nonperforming Assets (unaudited)

Sept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

(Dollars in thousands)

2011

2011

2011

2010

2010

Nonperforming loans:

  Continuing Portfolio:

Commercial

$   39,386

$   46,327

$   40,534

$   34,366

$   45,877

Equipment financing

8,439

11,313

16,602

20,482

23,300

Asset based lending

5,126

3,650

5,062

7,832

15,779

Commercial real estate

42,461

38,794

47,095

51,991

62,721

Residential development

16,611

16,173

17,300

15,477

19,487

Residential mortgages

79,285

82,189

95,750

99,128

97,989

Consumer

24,228

24,674

31,722

34,575

34,894

Nonperforming loans - continuing portfolio

215,536

223,120

254,065

263,851

300,047

  Liquidating Portfolio:

NCLC

-

-

-

-

1,557

Consumer

5,492

5,116

7,802

9,722

9,520

Nonperforming loans - liquidating portfolio

5,492

5,116

7,802

9,722

11,077

Total nonperforming loans

$ 221,028

$ 228,236

$ 261,867

$ 273,573

$ 311,124

Other real estate owned and repossessed assets:

  Continuing Portfolio:

Commercial

$   12,961

$   13,577

$   19,959

$   20,033

$   17,916

Repossessed equipment

1,421

2,115

1,486

1,023

5,056

Asset based lending

-

-

-

-

-

Commercial real estate

-

-

-

-

-

Residential development

-

-

-

-

-

Residential

3,343

4,772

5,056

5,794

5,883

Consumer

1,021

725

978

937

1,041

Total continuing

18,746

21,189

27,479

27,787

29,896

  Liquidating Portfolio:

NCLC

171

659

1,003

444

2,380

Consumer

-

-

-

-

591

Total liquidating

171

659

1,003

444

2,971

Total other real estate owned and repossessed assets

$   18,917

$   21,848

$   28,482

$   28,231

$   32,867

Total nonperforming assets

$ 239,945

$ 250,084

$ 290,349

$ 301,804

$ 343,991

See Selected Financial Highlights for footnotes.

WEBSTER FINANCIAL CORPORATION

Five Quarter Past Due Loans (unaudited)

Sept. 30

June 30,

March 31,

Dec. 31,

Sept. 30,

(Dollars in thousands)

2011

2011

2011

2010

2010

Past due 30-89 days:

Accruing loans:

  Continuing Portfolio:

Commercial

$   7,428

$   8,568

$   8,746

$   5,201

$   9,026

Equipment financing

5,054

7,155

10,520

7,937

6,043

Asset based lending

-

-

-

-

-

Commercial real estate

2,969

4,670

22,229

11,006

7,354

Residential development

664

500

-

194

-

Residential mortgages

23,730

18,631

19,080

21,513

27,821

Consumer

18,867

18,989

17,457

21,539

25,546

Past Due 30-89 days - continuing portfolio

58,712

58,513

78,032

67,390

75,790

  Liquidating Portfolio:

NCLC

-

-

-

-

-

Consumer

4,653

6,134

5,966

6,128

8,133

Past Due 30-89 days - liquidating portfolio

4,653

6,134

5,966

6,128

8,133

Accruing loans past due 90 days or more:

764

1,417

97

91

150

Total past due loans

$ 64,129

$ 66,064

$ 84,095

$ 73,609

$ 84,073

See Selected Financial Highlights for footnotes.

WEBSTER FINANCIAL CORPORATION 

Five Quarter Changes in the Allowance for Loan Losses (unaudited)

For the Three Months Ended

Sept. 30,

June 30,

March 31,

Dec. 31,

Sept. 30,

(Dollars in thousands)

2011

2011

2011

2010

2010

Beginning balance

$ 281,243

$ 297,948

$ 321,665

$ 340,341

$ 344,087

Provision

5,000

5,000

10,000

15,000

25,000

Charge-offs continuing portfolio:

Commercial

11,311

4,911

10,611

4,955

4,069

Equipment financing

551

413

1,134

4,079

3,972

Asset based lending

3,317

450

500

1,500

4,686

Commercial real estate

3,377

3,765

7,169

5,466

2,260

Residential development

-

-

191

871

1,167

Residential mortgages

2,591

2,951

3,318

3,998

2,666

Consumer

8,874

8,843

10,354

9,732

9,472

Charge-offs continuing portfolio

30,021

21,333

33,277

30,601

28,292

Charge-offs liquidating portfolio:

NCLC

61

16

32

1,566

-

Consumer

3,734

5,049

4,634

5,004

6,158

Charge-offs liquidating portfolio

3,795

5,065

4,666

6,570

6,158

Total charge-offs

33,816

26,398

37,943

37,171

34,450

Recoveries continuing portfolio:

Commercial

858

1,150

487

824

408

Equipment financing

2,240

1,579

1,469

1,042

1,473

Asset based lending

273

171

929

94

1,136

Commercial real estate

36

406

-

-

-

Residential development

-

-

-

-

616

Residential mortgages

357

96

67

284

380

Consumer

998

1,079

1,086

971

1,277

Recoveries continuing portfolio

4,762

4,481

4,038

3,215

5,290

Recoveries liquidating portfolio:

NCLC

17

23

61

194

73

Consumer

146

189

127

86

341

Recoveries liquidating portfolio

163

212

188

280

414

Total recoveries

4,925

4,693

4,226

3,495

5,704

Total net charge-offs

28,891

21,705

33,717

33,676

28,746

Ending balance

$ 257,352

$ 281,243

$ 297,948

$ 321,665

$ 340,341

See Selected Financial Highlights for footnotes.

SOURCE Webster Financial Corporation



RELATED LINKS

http://www.websterbank.com