Webster Reports Increased 2012 Fourth Quarter Earnings

Net Income Grows by 8 Percent over Third Quarter and 21 Percent over Prior Year

Jan 18, 2013, 07:55 ET from Webster Financial Corporation

WATERBURY, Conn., Jan. 18, 2013 /PRNewswire/ -- Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today announced net income available to common shareholders of $47.9 million, or $0.52 per diluted share, for the quarter ended December 31, 2012 compared to $44.4 million, or $0.48 per diluted share, for the quarter ended September 30, 2012 and $39.6 million, or $0.43 per diluted share, for the quarter ended December 31, 2011. 

Highlights for the quarter or at December 31 include:

Combined growth in commercial and commercial real estate loans of $339.4 million, or 5.9 percent, from September 30, and $860.6 million, or 16.4 percent, from a year ago.

Deposit growth of $117.4 million, or 0.8 percent, linked quarter and $874.8 million, or 6.4 percent, over prior year. Transaction account deposits, which had a cost of 0.13 percent in the quarter, now represent an all time high of 41.0 percent of total deposits.

Continued improvement in asset quality as evidenced by a 7.2 percent reduction in commercial classified loans from September 30 and a reduction of 34.8 percent from a year ago; nonperforming assets increased 18.3 percent from September 30 and 2.7 percent from a year ago and otherwise would have decreased compared to each date as a net of $39.5 million of residential and consumer loans were reclassified as nonaccrual in the quarter under regulatory guidance.

Continued achievement of positive operating leverage of 4.6 percent as core revenue grew by 3.5 percent and core expenses declined by 1.1 percent from the third quarter, which resulted in achievement of a 60 percent operating efficiency ratio in the fourth quarter.

Return on assets, return on common equity, and return on total equity improved to 0.98 percent, 9.74 percent, and 9.54 percent, respectively, compared to 0.92 percent, 9.19 percent, and 9.18 percent, respectively, in the third quarter.

"Our record fourth quarter results cap a year of strong performance for Webster," Chairman and Chief Executive Officer James C. Smith said. "Core net income reached an all-time high in the fourth quarter. Loan originations rose 40 percent in the fourth quarter from a year ago and 46 percent for the full year to set a new record, and our loans to businesses now comprise more than half of our total loan portfolio. Webster's solid capital position and earnings momentum will enable us to return capital to our shareholders over time by gradually increasing the dividend payout ratio and repurchasing additional common shares. We are deeper, stronger, and able to meet our customers' financial needs better than ever before."

Net interest income

  • Net interest income was $146.3 million for the quarter compared to $144.9 million in the third quarter.
  • Net interest margin was 3.27 percent compared to 3.28 percent in the third quarter as the yield on interest-earning assets declined 4 basis points and the cost of funds declined 3 basis points.  
  • Average interest-earning assets grew by 1.1 percent from the third quarter and totaled $18.3 billion compared to $18.1 billion in the third quarter. 
  • Average loans grew by $184.4 million or 1.6 percent from the third quarter.

Webster President and Chief Operating Officer Jerry Plush noted, "Some other significant business achievements in the quarter include the completion of the upgrade to our entire ATM network to envelope-free, image-capture technology, the rollout of our mobile app, the opening of a new retail office in Simsbury, and completion of a new retail and private banking office in Greenwich, Connecticut that opened this month. In 2013, we will continue to invest in additional improvements to our physical and electronic distribution network.  This will make banking with Webster easier and convenient while meeting the changing preferences of our customers."

Provision for loan losses

  • The Company recorded a provision of $7.5 million in the quarter compared to $5.0 million in the third quarter and $2.5 million in the year ago period; the increased level of the provision over the past year reflects growth in the loan portfolio.
  • Net charge-offs were $16.5 million in the quarter compared to $17.7 million for the third quarter and $26.4 million a year ago.
  • The allowance for loan losses represented 91 percent of nonperforming loans compared to 114 percent in the prior quarter, with the reduction reflecting the reclassification of a net $39.5 million of residential and consumer loans as nonaccrual in the quarter under regulatory guidance.

Noninterest income

  • Total noninterest income increased $4.5 million compared to the third quarter; there were no securities gains in the fourth quarter, while the third quarter included $0.8 million of securities gains.
  • The $5.3 million increase in core noninterest income compared to the third quarter reflects increases of $2.0 million in mortgage banking activities, $1.5 million in loan fees, $0.8 million in bank-owned life insurance, and $0.7 million in wealth and investment services.

Noninterest expense

  • Total noninterest expense decreased $1.0 million compared to the third quarter. Included in noninterest expense are net one time costs of $0.8 million in the fourth quarter and $0.6 million in the third quarter.
  • Total noninterest expense excluding one time costs decreased $1.2 million from the third quarter with a combined decrease of $2.3 million in compensation and benefits, occupancy, marketing, and professional services expenses offset by a combined increase of $1.0 million in technology and equipment and loan workout expenses. Noninterest expense declined $3.3 million from a year ago, primarily reflecting a reduction of $2.4 million in compensation and benefits expense. The decrease in compensation and benefits expense compared to a year ago reflects a reduction of $2.6 million in cash award expense under a plan that fully vested in the fourth quarter of 2012.
  • Foreclosed and repossessed asset expenses were $0.3 million in the quarter compared to $0.1 million in the third quarter, while gains on foreclosed and repossessed assets were $0.4 million in both quarters.

Income taxes

  • The Company recorded $20.3 million of income tax expense in the quarter on the $68.8 million of pre-tax income applicable to continuing operations in the period. The effective tax rate for the quarter was 29.5 percent compared to 30.2 percent for the third quarter and reflects a net tax benefit of $0.7 million specific to the quarter compared to $0.3 million specific to the third quarter.

Investment securities

  • Total investment securities were $6.2 billion at December 31, 2012 and $6.3 billion at September 30, 2012. The carrying value of the available for sale portfolio included $68.2 million in net unrealized gains compared to net unrealized gains of $68.9 million at September 30, while the carrying value of the held to maturity portfolio does not reflect $157.2 million in net unrealized gains compared to net unrealized gains of $179.2 million at September 30.

Loans

  • Total loans were $12.0 billion at December 31, 2012 compared to $11.7 billion at September 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 $184.2 million and $155.2 million, respectively. Residential mortgage and consumer loans decreased by $1.2 million and $37.1 million, respectively.
  • Loan originations for portfolio in the fourth quarter were $1.279 billion compared to $835.6 million in the third quarter and $971.7 million a year ago. In addition to loan originations for portfolio, $221.8 million of residential loans were originated and sold with servicing retained in the quarter compared to $207.7 million in the third quarter and $100.0 million a year ago.

Asset quality

  • Total nonperforming loans increased to $194.8 million, or 1.62 percent of total loans, at December 31, 2012 compared to $162.6 million, or 1.39 percent, at September 30, 2012. The increase reflects the reclassification of a net $14.9 million of residential and a net $24.6 million of consumer loans as nonaccrual in the quarter under regulatory guidance. Total paying nonperforming loans at December 31 were $46.5 million compared to $16.8 million at September 30.  At December 31, $28.8 million of the total paying nonperforming loans related to loans reclassified in the quarter.
  • Apart from the reclassification, nonperforming loans decreased by $6.6 million, or 4.1 percent, from September 30 and $32.1 million, or 17.1 percent, from a year ago.
  • Other real estate owned (OREO) totaled $3.4 million compared to $4.9 million at September 30.
  • Past due loans increased to $74.3 million at December 31 compared to $67.4 million at September 30 as past due commercial real estate loans increased by $7.6 million. Past due loans represented 0.62 percent of total loans at December 31 and 0.57 percent at September 30. Past due loans for the continuing portfolios were $70.7 million at December 31 compared to $62.5 million at September 30. Past due loans for the liquidating portfolio were $3.6 million at December 31 compared to $4.9 million at September 30.

Deposits and borrowings

  • Total deposits were $14.5 billion at December 31, 2012 compared to $14.4 billion at September 30, 2012. Increases of $94.6 million in demand, $196.6 million in interest-bearing checking, and $43.4 million in savings deposits were offset by declines of $135.6 million in money market deposits and $81.5 million in certificates of deposit. Core to total deposits and loans to deposits were 82.5 percent and 82.8 percent, respectively, compared to 81.8 percent and 81.4 percent at September 30.
  • Total borrowings were $3.2 billion at December 31 compared to $3.1 billion at September 30.

Capital

  • On November 27, 2012, $126.5 million of Webster Financial Corporation 6.40 % Series E Non-Cumulative Perpetual Preferred Stock was issued through an underwritten public offering.
  • On December 6, 2012, a $100 million common stock authorization was announced with $50.0 million of the authorization utilized later in the quarter in connection with an underwritten secondary offering of 10 million shares of Webster's common stock by a selling shareholder.
  • The tangible common equity and Tier 1 common equity to risk-weighted assets ratios were 7.17 percent and 10.78 percent, respectively, at December 31, 2012 compared to 7.39 percent and 11.10 percent, respectively, at September 30, 2012.
  • Book value and tangible book value per common share were $22.75 and $16.47, respectively, at December 31 compared to $22.24 and $16.13, respectively, at September 30.
  • Return on average common shareholders' equity and return on average total equity were 9.74 percent and 9.54 percent, respectively, at December 31 compared to 9.19 percent and 9.18 percent, respectively, at September 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 168 banking offices, 294 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 2012 fourth quarter earnings announcement will be held today, Friday, January 18, 2013 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.

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, 2012

September 30, 2012

June 30, 2012

March 31, 2012

December 31, 2011

Income and performance ratios, (annualized):

Net income attributable to Webster Financial Corp.

$ 48,526

$ 44,993

$ 41,240

$ 38,938

$ 40,384

Net income available to common shareholders

47,911

44,378

40,625

38,323

39,591

Net income per diluted common share

0.52

0.48

0.44

0.42

0.43

Return on average assets

0.98 %

0.92 %

0.86 %

0.82 %

0.88 %

Return on average common shareholders' equity

9.74

9.19

8.62

8.30

8.68

Return on average shareholders' equity

9.54

9.18

8.62

8.30

8.67

Noninterest income as a percentage of total revenue

26.57

25.07

24.70

23.48

23.05

Efficiency ratio

59.68

62.25

63.75

65.63

65.83

Asset quality:

Allowance for loan losses

$ 177,129

$ 186,089

$ 198,757

$ 210,288

$ 233,487

Nonperforming assets

198,180

167,524

173,621

184,218

193,047

Allowance for loan losses / total loans

1.47 %

1.59 %

1.72 %

1.86 %

2.08 %

Net charge-offs / average loans (annualized)

0.56

0.61

0.58

0.96

0.95

Nonperforming loans / total loans

1.62

1.39

1.47

1.58

1.68

Nonperforming assets / total loans plus OREO

1.65

1.43

1.50

1.63

1.72

Allowance for loan losses / nonperforming loans

90.93

114.44

117.44

117.96

124.14

Other ratios (annualized):

Tangible equity ratio

7.94 %

7.54 %

7.38 %

7.29 %

7.18 %

Tangible common equity ratio

7.17

7.39

7.22

7.14

7.03

Tier 1 risk-based capital ratio (a)

12.48

11.90

12.82

12.86

13.05

Total risk-based capital (a)

13.73

13.16

14.08

14.12

14.61

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

10.78

11.10

10.97

10.96

11.08

Shareholders' equity / total assets

10.39

10.05

9.94

9.90

9.86

Net interest margin

3.27

3.28

3.32

3.36

3.39

Share and equity related:

Common equity

$ 1,941,881

$ 1,954,739

$ 1,902,609

$ 1,866,003

$ 1,816,835

Book value per common share

22.75

22.24

21.65

21.24

20.74

Tangible book value per common share

16.47

16.13

15.53

15.10

14.57

Common stock closing price

20.55

23.7

21.66

22.67

20.39

Dividends declared per common share

0.10

0.10

0.10

0.05

0.05

Common shares outstanding

85,341

87,899

87,885

87,849

87,600

Basic shares (weighted average)

86,949

87,394

87,291

87,216

87,097

Diluted shares (weighted average)

91,315

91,884

91,543

91,782

90,929

(a) The ratios presented are projected for December 31, 2012 and actual for the remaining periods presented.

 

WEBSTER FINANCIAL CORPORATION Consolidated Balance Sheets (unaudited)

(In thousands)

December 31, 2012

September 30, 2012

December 31, 2011

Assets:

Cash and due from banks

$         252,283

$       164,556

$        195,957

Interest-bearing deposits

98,205

79,763

96,062

Investment securities:

Available for sale, at fair value

3,136,160

3,120,354

2,874,764

Held to maturity

3,107,529

3,142,160

2,973,727

Total securities

6,243,689

6,262,514

5,848,491

Loans held for sale

107,633

91,207

57,391

Loans:

Commercial

3,323,044

3,138,807

2,860,597

Commercial real estate

2,783,061

2,627,893

2,384,889

Residential mortgages

3,291,724

3,292,948

3,219,889

Consumer

2,630,867

2,668,004

2,760,029

Total loans

12,028,696

11,727,652

11,225,404

Allowance for loan losses

(177,129)

(186,089)

(233,487)

Loans, net

11,851,567

11,541,563

10,991,917

Prepaid FDIC premiums

16,323

21,673

37,946

Federal Home Loan Bank and Federal Reserve Bank stock

155,630

142,595

143,874

Premises and equipment, net

134,562

135,394

147,379

Goodwill and other intangible assets, net

540,157

541,399

545,577

Cash surrender value of life insurance policies

418,293

414,797

307,039

Deferred tax asset, net

68,681

74,098

105,665

Accrued interest receivable and other assets

259,742

260,103

237,042

Total Assets

$    20,146,765

$  19,729,662

$   18,714,340

Liabilities and Equity:

Deposits:

Demand

$      2,881,131

$    2,786,525

$     2,473,693

Interest-bearing checking

3,079,767

2,883,216

2,578,520

Money market

2,205,072

2,340,717

2,021,056

Savings

3,819,713

3,776,280

3,748,121

Certificates of deposit

2,418,853

2,507,647

2,715,583

Brokered certificates of deposit

126,299

119,052

119,052

Total deposits

14,530,835

14,413,437

13,656,025

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

 

1,076,160

1,310,015

1,164,706

Federal Home Loan Bank advances

1,827,612

1,452,660

1,252,609

Long-term debt

334,276

335,678

552,589

Accrued expenses and other liabilities

284,352

234,194

242,637

Total liabilities

18,053,235

17,745,984

16,868,566

Webster Financial Corporation shareholders' equity

2,093,530

1,983,678

1,845,774

Noncontrolling interests

Total equity

2,093,530

1,983,678

1,845,774

Total Liabilities and Equity

20,146,765

19,729,662

18,714,340

 

WEBSTER FINANCIAL CORPORATION Consolidated Statements of Operations (unaudited)

(In thousands, except per share data)

Three Months Ended December 31,

Twelve Months Ended, December 31,

2012

2011

2012

2011

Interest income:

Interest and fees on loans and leases

$         122,179

$       121,223

$        485,666

$       486,883

Interest and dividends on securities

49,752

51,260

205,411

211,605

Loans held for sale

615

370

2,425

1,235

   Total interest income

172,546

172,853

693,502

699,723

Interest expense:

Deposits

13,885

17,268

59,586

80,808

Borrowings

12,389

14,576

55,008

55,147

   Total interest expense

26,274

31,844

114,594

135,955

Net interest income

146,272

141,009

578,908

563,768

Provision for loan losses

7,500

2,500

21,500

22,500

Net interest income after provision for loan losses

138,772

138,509

557,408

541,268

Noninterest income:

Deposit service fees

24,823

24,286

96,633

102,795

Loan related fees

5,570

4,896

18,043

20,237

Wealth and investment services

7,859

5,759

29,515

26,421

Mortgage banking activities

8,515

1,094

23,037

4,905

Increase in cash surrender value of life insurance policies

3,496

2,609

11,254

10,360

Net gain on investment securities

3,347

2,024

Other income

2,677

3,602

10,929

10,300

   Total noninterest income

52,940

42,246

192,758

177,042

Noninterest expense:

Compensation and benefits

65,769

68,146

264,101

262,647

Occupancy

12,209

13,125

50,131

53,866

Technology and equipment expense

15,489

15,054

62,210

60,721

Marketing

3,104

4,540

16,827

18,456

Professional and outside services

2,479

2,835

11,348

11,203

Intangible assets amortization

1,242

1,397

5,420

5,588

Foreclosed and repossessed asset expenses

267

730

1,028

3,050

Foreclosed and repossessed asset gains

(383)

(63)

(2,126)

(306)

Loan workout expenses

2,338

1,956

8,056

7,547

Deposit insurance

5,642

4,756

22,749

20,927

Other expenses

13,934

12,864

56,172

55,896

122,090

125,340

495,916

499,595

Debt prepayment penalties

5,203

4,040

5,203

Write-down for expedited asset disposition

1,187

6,260

Contract termination and severance

642

2,485

1,505

5,100

Branch and facility optimization

18

1,689

168

5,004

Preferred stock redemption costs

423

423

Stock registration costs

175

175

Costs for warrant registration

350

Provision (benefit) for litigation and settlements

(9,755)

(9,523)

Loan repurchase and unfunded commitment reserve benefit, net

(1,436)

   Total noninterest expense

122,925

126,572

501,804

510,976

Income from continuing operations before income taxes

68,787

54,183

248,362

207,334

Income tax expense

20,261

13,799

74,665

57,951

   Income from continuing operations

48,526

40,384

173,697

149,383

Income from discontinued operations, net of tax

1,995

   Consolidated net income

48,526

40,384

173,697

151,378

Less: Net loss attributable to noncontrolling interests

(1)

   Net income attributable to Webster Financial Corp.

48,526

40,384

173,697

151,379

Preferred stock dividends

(615)

(793)

(2,460)

(3,286)

   Net income available to common shareholders

$           47,911

$         39,591

$        171,237

$       148,093

   Diluted shares (average)

91,315

90,929

91,649

91,688

Net income per common share available to common shareholders:   

Basic

   Income from continuing operations

$               0.55

$             0.45

$              1.96

$             1.67

   Net income

0.55

0.45

1.96

1.69

Diluted

   Income from continuing operations

0.52

0.43

1.86

1.59

   Net income

0.52

0.43

1.86

1.61

 

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

Three Months Ended

Dec. 31,

Sept. 30,

June 30,

March 31,

Dec. 31,

(In thousands, except per share data)

2012

2012

2012

2012

2011

Interest income:

Interest and fees on loans and leases

$         122,179

$       121,367

$        121,379

$       120,741

$       121,223

Interest and dividends on securities

49,752

50,194

52,597

52,868

51,260

Loans held for sale

615

655

657

498

370

Total interest income

172,546

172,216

174,633

174,107

172,853

Interest expense:

Deposits

13,885

14,543

15,102

16,056

17,268

Borrowings

12,389

12,783

15,153

14,683

14,576

Total interest expense

26,274

27,326

30,255

30,739

31,844

Net interest income

146,272

144,890

144,378

143,368

141,009

Provision for loan losses

7,500

5,000

5,000

4,000

2,500

Net interest income after provision for loan losses

138,772

139,890

139,378

139,368

138,509

Noninterest income:

Deposit service fees

24,823

24,728

23,719

23,363

24,286

Loan related fees

5,570

4,039

3,565

4,869

4,896

Wealth and investment services

7,859

7,186

7,249

7,221

5,759

Mortgage banking activities

8,515

6,515

3,624

4,383

1,094

Increase in cash surrender value of life insurance policies

3,496

2,680

2,561

2,517

2,609

Net gain on investment securities

810

2,537

Other income

2,677

2,521

4,098

1,633

3,602

Total noninterest income

52,940

48,479

47,353

43,986

42,246

Noninterest expense:

Compensation and benefits

65,769

66,126

63,587

68,619

68,146

Occupancy

12,209

12,462

12,578

12,882

13,125

Technology and equipment expense

15,489

15,118

16,021

15,582

15,054

Marketing

3,104

4,529

5,094

4,100

4,540

Professional and outside services

2,479

2,790

3,387

2,692

2,835

Intangible assets amortization

1,242

1,384

1,397

1,397

1,397

Foreclosed and repossessed asset expenses

267

118

176

467

730

Foreclosed and repossessed asset gains

(383)

(409)

(670)

(664)

(63)

Loan workout expenses

2,338

1,693

2,201

1,824

1,956

Deposit insurance

5,642

5,675

5,723

5,709

4,756

Other expenses

13,934

13,805

14,443

13,990

12,864

122,090

123,291

123,937

126,598

125,340

Debt prepayment penalties

391

2,515

1,134

5,203

Write-down for expedited asset disposition

1,187

Contract termination and severance

642

136

727

2,485

Branch and facility optimization

18

69

81

1,689

Preferred stock redemption costs

423

Stock registration costs

175

Provision (benefit) for litigation and settlements

(9,755)

Total noninterest expense

122,925

123,887

127,179

127,813

126,572

Income from continuing operations before income taxes

68,787

64,482

59,552

55,541

54,183

Income tax expense

20,261

19,489

18,312

16,603

13,799

Income from continuing operations

48,526

44,993

41,240

38,938

40,384

Income from discontinued operations, net of tax

Consolidated net income

48,526

44,993

41,240

38,938

40,384

Less: Net loss attributable to noncontrolling interests

Net income attributable to Webster Financial Corp.

48,526

44,993

41,240

38,938

40,384

Preferred stock dividends

(615)

(615)

(615)

(615)

(793)

Net income available to common shareholders

$           47,911

$         44,378

$          40,625

$         38,323

$         39,591

      Diluted shares (average)

91,315

91,884

91,543

91,782

90,929

Net income per common share available to common shareholders:

Basic

       Income from continuing operations

$               0.55

$             0.51

$              0.46

$             0.44

$             0.45

       Net income

0.55

0.51

0.46

0.44

0.45

Diluted

       Income from continuing operations

0.52

0.48

0.44

0.42

0.43

       Net income

0.52

0.48

0.44

0.42

0.43

 

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

 

Three Months Ended December 31,

2012

2011

(Dollars in thousands)

Average balance

Interest

 

Fully tax- equivalent yield/rate

Average balance

Interest

Fully tax- equivalent yield/rate

Assets:

  Interest-earning assets:

  Loans

$    11,792,691

$       122,179

4.10 %

$  11,122,372

$       121,223

4.31 %

  Investment securities (a)

6,170,119

52,326

3.43

5,638,172

54,414

3.88

  Loans held for sale

90,266

615

2.72

35,321

370

4.18

  Federal Home Loan and Federal Reserve Bank stock

143,557

872

2.42

143,874

831

2.29

  Interest-bearing deposits

72,539

34

0.18

86,156

26

0.12

  Total interest-earning assets

18,269,172

176,026

3.84

17,025,895

176,864

4.13

Noninterest-earning assets

1,511,979

1,371,923

  Total assets

$    19,781,151

$  18,397,818

Liabilities and Shareholders' Equity:

  Interest-bearing liabilities:

  Deposits:

  Demand

$      2,832,130

$                  —

—%

$    2,364,594

$                  —

—%

  Savings, interest checking, and money market

9,054,442

4,845

0.21

8,420,850

6,302

0.30

  Certificates of deposit

2,594,963

9,040

1.39

2,899,642

10,966

1.50

  Total deposits

14,481,535

13,885

0.38

13,685,086

17,268

0.50

Securities sold under agreements to repurchase

and other short-term borrowings

1,281,503

5,646

1.72

1,212,019

4,450

1.44

Federal Home Loan Bank advances

1,418,606

4,011

1.11

854,539

4,151

1.90

Long-term debt

334,954

2,732

3.26

553,684

5,975

4.32

  Total borrowings

3,035,063

12,389

1.61

2,620,242

14,576

2.20

  Total interest-bearing liabilities

17,516,598

26,274

0.59

16,305,328

31,844

0.77

Noninterest-bearing liabilities

230,923

221,096

  Total liabilities

17,747,521

16,526,424

Noncontrolling interests

7,703

Preferred Stock

66,318

28,939

Common shareholders' equity

1,967,312

1,834,752

Webster Financial Corp. shareholders' equity

2,033,630

1,863,691

  Total liabilities and equity

$    19,781,151

$  18,397,818

Tax-equivalent net interest income

149,752

145,020

Less: tax-equivalent adjustment

(3,480)

(4,011)

Net interest income

$       146,272

$       141,009

Net interest margin

3.27 %

3.39 %

 

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

 

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

Twelve Months Ended December 31,

2012

2011

(Dollars in thousands)

Average balance

Interest

Fully tax- equivalent yield/rate

Average balance

 

Interest

Fully tax- equivalent yield/rate

Assets:

  Interest-earning assets:

  Loans

$    11,525,233

$       485,666

4.21 %

$  11,054,100

$       486,883

4.40 %

  Investment securities (a)

6,100,219

216,513

3.58

5,407,867

223,568

4.16

  Loans held for sale

73,156

2,425

3.31

28,144

1,235

4.39

  Federal Home Loan and Federal Reserve Bank stock

143,074

3,508

2.45

143,874

3,318

2.31

  Interest-bearing deposits

77,265

141

0.18

112,232

216

0.19

Total interest-earning assets

17,918,947

708,253

3.96

16,746,217

715,220

4.28

Noninterest-earning assets

1,427,824

1,335,374

Total assets

$    19,346,771

$  18,081,591

Liabilities and Shareholders' Equity:

  Interest-bearing liabilities:

Deposits:

Demand

$      2,638,025

$                  —

—%

$    2,278,419

$                  —

—%

Savings, interest checking, and money market

8,824,581

21,061

0.24

8,534,333

33,747

0.40

Certificates of deposit

2,703,414

38,525

1.43

3,031,835

47,061

1.55

Total deposits

14,166,020

59,586

0.42

13,844,587

80,808

0.58

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

1,207,623

21,034

1.74

1,053,323

16,173

1.54

Federal Home Loan Bank advances

1,389,999

16,943

1.22

569,987

14,352

2.52

Long-term debt

418,896

17,031

4.07

565,331

24,622

4.36

Total borrowings

3,016,518

55,008

1.82

2,188,641

55,147

2.52

Total interest-bearing liabilities

17,182,538

114,594

0.67

16,033,228

135,955

0.85

Noninterest-bearing liabilities

217,653

202,205

Total liabilities

17,400,191

16,235,433

Noncontrolling interests

9,119

Preferred Stock

38,335

28,942

Common shareholders' equity

1,908,245

1,808,097

Webster Financial Corp. shareholders' equity

1,946,580

1,837,039

Total liabilities and equity

$    19,346,771

$  18,081,591

Tax-equivalent net interest income

593,659

579,265

Less: tax-equivalent adjustment

(14,751)

(15,497)

Net interest income

$       578,908

$       563,768

Net interest margin

3.32 %

3.47 %

 

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

 

WEBSTER FINANCIAL CORPORATION Five Quarter Loan Balances (unaudited)

(Dollars in thousands)

Dec. 31,

2012

Sept. 30,

2012

June 30,

2012

March 31,

2012

Dec. 31,

2011

Loan Balances (actuals):

Continuing Portfolio:

Commercial non-mortgage

$      2,399,500

$    2,201,732

$     2,069,127

$    1,972,205

$    1,932,542

Equipment financing

419,311

401,748

417,654

446,585

474,804

Asset based lending

504,233

535,327

499,212

470,187

453,251

Commercial real estate

2,755,320

2,597,835

2,518,392

2,389,206

2,345,241

Residential development

27,741

30,058

33,035

36,591

39,648

Residential mortgages

3,291,723

3,292,947

3,300,616

3,270,212

3,219,888

Consumer

2,508,992

2,537,039

2,565,654

2,585,685

2,612,476

Total continuing

11,906,820

11,596,686

11,403,690

11,170,671

11,077,850

Allowance for loan losses

(152,495)

(156,214)

(168,882)

(180,413)

(203,612)

Total continuing, net

11,754,325

11,440,472

11,234,808

10,990,258

10,874,238

Liquidating Portfolio:

National Construction Lending Center (NCLC)  

1

1

1

1

1

Consumer

121,875

130,965

136,306

141,478

147,553

Total liquidating portfolio

121,876

130,966

136,307

141,479

147,554

Allowance for loan losses

(24,634)

(29,875)

(29,875)

(29,875)

(29,875)

Total liquidating, net

97,242

101,091

106,432

111,604

117,679

Total Loan Balances (actuals)

12,028,696

11,727,652

11,539,997

11,312,150

11,225,404

Allowance for loan losses

(177,129)

(186,089)

(198,757)

(210,288)

(233,487)

Loans, net

$    11,851,567

$  11,541,563

$   11,341,240

$  11,101,862

$  10,991,917

Loan Balances (average):

 Continuing Portfolio:

Commercial non-mortgage

$      2,238,557

$    2,137,882

$     2,008,778

$    1,970,656

$    1,868,885

Equipment financing

405,702

404,180

430,882

458,111

495,667

Asset based lending

516,749

520,100

480,574

474,264

492,982

Commercial real estate

2,653,749

2,528,394

2,453,430

2,336,576

2,254,970

Residential development

29,322

31,484

35,422

38,401

49,182

Residential mortgages

3,294,254

3,300,067

3,296,306

3,253,199

3,186,885

Consumer

2,526,656

2,552,660

2,576,521

2,598,758

2,622,378

Total continuing

11,664,989

11,474,767

11,281,913

11,129,965

10,970,949

Allowance for loan losses

(161,239)

(167,469)

(179,139)

(201,592)

(219,566)

Total continuing, net

11,503,750

11,307,298

11,102,774

10,928,373

10,751,383

 Liquidating Portfolio:

NCLC

1

1

1

1

1

Consumer

127,701

133,566

138,807

145,367

151,422

Total liquidating portfolio

127,702

133,567

138,808

145,368

151,423

Allowance for loan losses

(24,634)

(29,875)

(29,875)

(29,875)

(29,875)

Total liquidating, net

103,068

103,692

108,933

115,493

121,548

Total Loan Balances (average)

11,792,691

11,608,334

11,420,721

11,275,333

11,122,372

Allowance for loan losses

(185,873)

(197,344)

(209,014)

(231,467)

(249,441)

Loans, net

$    11,606,818

$  11,410,990

$   11,211,707

$  11,043,866

$  10,872,931

 

WEBSTER FINANCIAL CORPORATION Five Quarter Nonperforming Assets (unaudited)

(Dollars in thousands)

Dec. 31,

2012

Sept. 30,

2012

June 30,

2012

March 31,

2012

Dec. 31,

2011

Nonperforming loans:

 Continuing Portfolio:

Commercial non-mortgage

$           17,538

$         30,315

$          29,271

$         31,547

$         27,884

Equipment financing

3,325

3,052

5,862

4,868

7,154

Asset based lending

92

262

1,475

1,880

Commercial real estate

15,683

15,768

23,457

25,131

32,197

Residential development

5,043

5,431

5,982

6,140

6,762

Residential mortgages (a)

95,540

79,736

77,336

79,110