Webster Reports 2017 First Quarter Earnings

WATERBURY, Conn., April 21, 2017 /PRNewswire/ — Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today announced earnings applicable to common shareholders of $57.3 million, or $0.62 per diluted share, for the quarter ended March 31, 2017 compared to $44.9 million, or $0.49 per diluted share, for the quarter ended March 31, 2016.

“Record net income was driven by $1.1 billion in commercial loan growth year-over-year, fully funded by HSA and transactional account deposit growth,” said James C. Smith, chairman and chief executive officer. “Our 30th consecutive quarter of year-over-year revenue growth benefited from rising interest rates. The solid results reflect sustained progress in executing sound growth strategies that maximize value for customers and shareholders.”

Highlights for the first quarter of 2017 compared to the first quarter of 2016:

  • Revenue of $255.7 million, an increase of 7.3 percent, including a record level of net interest income of $192.7 million, and non-interest income of $63.0 million.
  • Loan growth of $1.2 billion, or 7.8 percent, with growth of $1.1 billion in commercial and commercial real estate loans.
  • Deposit growth of $1.5 billion, or 8.1 percent, with growth of $1.2 billion in health savings account and transactional deposits.
  • Net charge-off ratio of 0.13 percent.
  • Annualized return on average tangible common shareholders’ equity (non-GAAP) of 12.47 percent.
  • Net interest margin of 3.22 percent, up 11 basis points.
  • Effective tax rate of 27 percent benefited from an accounting change.

“We are beginning to realize the transformational benefits of our balance sheet management strategies as evidenced by the 11 basis point increase in the net interest margin,” said Glenn MacInnes, executive vice president and chief financial officer. “Credit quality remains stable and we continue to execute on our strategic roadmap, with a disciplined approach to investing in our business, driving sustainable long-term shareholder value.”

Quarterly net interest income compared to the first quarter of 2016:

  • Net interest income was $192.7 million compared to $176.2 million.
  • Net interest margin was 3.22 percent compared to 3.11 percent. The yield on interest-earning assets increased by 11 basis points, while the cost of funds remained flat.
  • Average interest-earning assets totaled $24.4 billion and grew by $1.4 billion, or 6.2 percent.
  • Average loans totaled $17.0 billion and grew by $1.2 billion, or 7.9 percent.

Quarterly provision for loan losses:

  • The Company recorded a provision for loan losses of $10.5 million compared to $12.5 million in the prior quarter and $15.6 million a year ago.
  • Net charge-offs were $5.7 million compared to $6.1 million in the prior quarter and $16.4 million a year ago. The ratio of net charge-offs to average loans on an annualized basis was 0.13 percent compared to 0.15 percent in the prior quarter and 0.41 percent a year ago.
  • The allowance for loan losses represented 1.16 percent of total loans compared to 1.14 percent at December 31, 2016 and 1.10 percent at March 31, 2016. The allowance for loan losses represented 115 percent of nonperforming loans compared to 145 percent at December 31, 2016 and 124 percent at March 31, 2016.

Quarterly non-interest income compared to the first quarter of 2016:

  • Total non-interest income was $63.1 million compared to $62.4 million, an increase of $0.7 million. This reflects increases of $2.2 million in loan and lease fees and $2.1 million in deposit service fees offset by a decrease of $2.0 million in HSA other income related to an adjustment of an acquisition receivable and a decrease of $1.8 million in client swap activity.

Quarterly non-interest expense compared to the first quarter of 2016:

  • Total non-interest expense was $163.7 million compared to $152.4 million, an increase of $11.3 million. The increase reflects $7.6 million in compensation and benefits, $1.7 million in technology and equipment, $1.5 million in professional and outside services, and $1.1 million due to continued facility optimization, offset by a slight decline in other expenses.

Quarterly income taxes compared to the first quarter of 2016:

  • Income tax expense was $22.0 million compared to $23.4 million and the effective tax rate was 27.0 percent compared to 33.2 percent.
  • The lower effective tax rate in the quarter resulted from a change in the accounting rules for equity-based compensation that took effect on January 1, 2017, which reduced tax expense in the current quarter by $4.8 million.

Investment securities:

  • Total investment securities were $7.1 billion compared to $7.2 billion at December 31, 2016 and $7.1 billion at March 31, 2016. The carrying value of the available-for-sale portfolio included $28.2 million of net unrealized losses compared to $24.7 million of net unrealized losses at December 31, 2016 and $1.6 million of net unrealized gains at March 31, 2016. The carrying value of the held-to-maturity portfolio does not reflect $41.6 million of net unrealized losses compared to $35.5 million of net unrealized losses at December 31, 2016, and $82.2 million of net unrealized gains at March 31, 2016.

Loans:

  • Total loans were $17.1 billion compared to $17.0 billion at December 31, 2016 and $15.9 billion at March 31, 2016. Compared to December 31, 2016, commercial, commercial real estate, and residential mortgage loans increased by $62.7 million, $19.7 million, and $36.0 million, respectively, while consumer loans decreased by $50.4 million.
  • Compared to a year ago, commercial, commercial real estate, and residential mortgage loans increased by $663.9 million, $483.6 million, and $181.4 million, respectively, while consumer loans decreased by $92.8 million.
  • Loan originations for portfolio were $1.107 billion compared to $1.686 billion in the prior quarter and $0.9 billion a year ago. In addition, $73 million of residential loans were originated for sale in the quarter compared to $132 million in the prior quarter and $73 million a year ago.

Asset quality:

  • Total nonperforming loans were $173.8 million, or 1.02 percent of total loans, compared to $134.0 million, or 0.79 percent, at December 31, 2016 and $140.7 million, or 0.89 percent, at March 31, 2016. Total paying nonperforming loans were $73.5 million compared to $38.4 million at December 31, 2016 and $43.7 million at March 31, 2016.
  • Past due loans were $32.1 million compared to $42.0 million at December 31, 2016 and $55.7 million at March 31, 2016. Included in past due loans are loans past due 90 days or more and still accruing, which were flat with the prior quarter and decreased $2.6 million from the prior year.

Deposits and borrowings:

  • Total deposits were $20.2 billion compared to $19.3 billion at December 31, 2016 and $18.7 billion at March 31, 2016. Core deposits to total deposits were 90.0 percent compared to 89.5 percent at December 31, 2016 and 89.2 percent at March 31, 2016. Loans to deposits were 84.5 percent compared to 88.2 percent at December 31, 2016 and 84.7 percent at March 31, 2016.
  • Total borrowings were $3.0 billion compared to $4.0 billion at December 31, 2016 and $3.5 billion at March 31, 2016.

Capital:

  • The return on average tangible common shareholders’ equity and the return on average common shareholders’ equity were 12.47 percent and 9.43 percent, respectively, compared to 10.63 percent and 7.80 percent, respectively, in the first quarter of 2016.
  • The tangible equity and tangible common equity ratios were 7.82 percent and 7.34 percent, respectively, compared to 7.63 percent and 7.13 percent, respectively, at March 31, 2016. The common equity tier 1 risk-based capital ratio was 10.73 percent compared to 10.61 percent at March 31, 2016.
  • Book value and tangible book value per common share were $26.45 and $20.26, respectively, compared to $25.24 and $18.95, respectively, at March 31, 2016.

Webster Financial Corporation is the holding company for Webster Bank, National Association. With $26.0 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust, and investment services through 175 banking centers and 349 ATMs. Webster also provides mobile and Internet banking. Webster Bank owns the asset-based lending firm Webster Business Credit Corporation; the equipment finance firm Webster Capital Finance Corporation; and HSA Bank, a division of Webster Bank, which provides health savings account trustee and administrative services. Webster Bank is a member of the FDIC and an equal housing lender. For more information about Webster, including past press releases and the latest annual report, visit the Webster website at www.websterbank.com.

Conference Call

A conference call covering Webster’s 2017 first quarter earnings announcement will be held today, Friday, April 21, 2017 at 9:00 a.m. (Eastern) and may be heard through Webster’s Investor Relations website at www.wbst.com, or in listen-only mode by calling 877-407-8289 or 201-689-8341 internationally. The call will be archived on the website and available for future retrieval.

Forward-Looking Statements

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

Non-GAAP Financial Measures

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

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

 

 

WEBSTER FINANCIAL CORPORATION
Selected Financial Highlights (unaudited)

At or for the Three Months Ended

(In thousands, except per share data)

March 31,
2017

December 31,
2016

September 30,
2016

June 30,
2016

March 31,
2016

Income and performance ratios:

Net income

$              59,471

$              57,660

$              51,817

$              50,603

$              47,047

Earnings applicable to common shareholders

57,342

55,501

49,634

48,398

44,921

Earnings per diluted common share

0.62

0.60

0.54

0.53

0.49

Return on average assets

0.91 %

0.89 %

0.82 %

0.81 %

0.76 %

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

12.47

12.31

11.24

11.25

10.63

Return on average common shareholders’ equity

9.43

9.26

8.36

8.31

7.80

Non-interest income as a percentage of total revenue

24.65

27.60

26.93

26.89

26.15

Asset quality:

Allowance for loan and lease losses

$            199,107

$            194,320

$            187,925

$            180,428

$            174,201

Nonperforming assets

177,935

137,946

132,350

137,347

145,787

Allowance for loan and lease losses / total loans and leases

1.16 %

1.14 %

1.13 %

1.11 %

1.10 %

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

0.13

0.15

0.16

0.19

0.41

Nonperforming loans and leases / total loans and leases

1.02

0.79

0.77

0.82

0.89

Nonperforming assets / total loans and leases plus OREO

1.04

0.81

0.80

0.84

0.92

Allowance for loan and lease losses / nonperforming loans and leases

114.54

144.98

146.57

135.75

123.79

Other ratios:

Tangible equity (non-GAAP)

7.82 %

7.67 %

7.74 %

7.75 %

7.63 %

Tangible common equity (non-GAAP)

7.34

7.19

7.25

7.25

7.13

Tier 1 risk-based capital (a)

11.40

11.19

11.16

11.19

11.33

Total risk-based capital (a)

12.93

12.68

12.64

12.66

12.80

Common equity tier 1 risk-based capital (a)

10.73

10.52

10.48

10.50

10.61

Shareholders’ equity / total assets

9.85

9.69

9.80

9.86

9.77

Net interest margin

3.22

3.11

3.10

3.08

3.11

Efficiency ratio (non-GAAP)

62.10

63.13

61.43

61.47

62.00

Equity and share related:

Common equity

$         2,437,648

$         2,404,302

$         2,388,919

$         2,354,256

$         2,312,076

Book value per common share

26.45

26.17

26.06

25.68

25.24

Tangible book value per common share (non-GAAP)

20.26

19.94

19.80

19.41

18.95

Common stock closing price

50.04

54.28

38.01

33.95

35.90

Dividends declared per common share

0.25

0.25

0.25

0.25

0.23

Common shares issued and outstanding

92,154

91,868

91,687

91,677

91,617

Weighted-average common shares outstanding – Basic

91,886

91,572

91,365

91,244

91,328

Weighted-average common shares outstanding – Diluted

92,342

92,099

91,857

91,745

91,809

(a) Presented as projected for March 31, 2017 and actual for the remaining periods.

WEBSTER FINANCIAL CORPORATION
Consolidated Balance Sheets (unaudited)

(In thousands)

March 31,
2017

December 31,
2016

March 31,
2016

Assets:

Cash and due from banks

$            184,044

$            190,663

$            198,174

Interest-bearing deposits

38,150

29,461

27,805

Securities:

Available for sale

2,897,060

2,991,091

3,080,469

Held to maturity

4,212,050

4,160,658

4,012,289

Total securities

7,109,110

7,151,749

7,092,758

Loans held for sale

28,698

67,577

30,425

Loans and Leases:

Commercial

5,639,244

5,576,560

4,975,332

Commercial real estate

4,530,507

4,510,846

4,046,911

Residential mortgages

4,290,685

4,254,682

4,109,243

Consumer

2,634,063

2,684,500

2,726,869

Total loans and leases

17,094,499

17,026,588

15,858,355

Allowance for loan and lease losses

(199,107)

(194,320)

(174,201)

Loans and leases, net

16,895,392

16,832,268

15,684,154

Federal Home Loan Bank and Federal Reserve Bank stock

163,557

194,646

188,347

Premises and equipment, net

134,551

137,413

134,212

Goodwill and other intangible assets, net

570,992

572,047

576,145

Cash surrender value of life insurance policies

521,427

517,852

506,746

Deferred tax asset, net

76,869

84,391

81,191

Accrued interest receivable and other assets

280,126

294,462

412,134

Total Assets

$       26,002,916

$       26,072,529

$       24,932,091

Liabilities and Shareholders’ Equity:

Deposits:

Demand

$         3,913,058

$         4,021,061

$         3,625,605

Interest-bearing checking

2,607,060

2,528,274

2,421,692

Health savings accounts

4,793,734

4,362,503

4,084,190

Money market

2,452,726

2,047,121

2,319,588

Savings

4,456,980

4,320,090

4,244,383

Certificates of deposit

1,718,193

1,724,906

1,727,934

Brokered certificates of deposit

299,906

299,902

301,131

Total deposits

20,241,657

19,303,857

18,724,523

Securities sold under agreements to repurchase and other borrowings

807,573

949,526

910,149

Federal Home Loan Bank advances

1,922,832

2,842,908

2,363,131

Long-term debt

225,577

225,514

225,323

Accrued expenses and other liabilities

244,919

223,712

274,179

Total liabilities

23,442,558

23,545,517

22,497,305

Preferred stock

122,710

122,710

122,710

Common shareholders’ equity

2,437,648

2,404,302

2,312,076

Total shareholders’ equity

2,560,358

2,527,012

2,434,786

Total Liabilities and Shareholders’ Equity

$       26,002,916

$       26,072,529

$       24,932,091

WEBSTER FINANCIAL CORPORATION
Consolidated Statements of Income (unaudited)

Three Months Ended March 31,

(In thousands, except per share data)

2017

2016

Interest income:

Interest and fees on loans and leases

$            167,808

$            149,808

Interest and dividends on securities

51,556

52,254

Loans held for sale

316

273

Total interest income

219,680

202,335

Interest expense:

Deposits

13,435

12,299

Borrowings

13,581

13,884

Total interest expense

27,016

26,183

Net interest income

192,664

176,152

Provision for loan and lease losses

10,500

15,600

Net interest income after provision for loan and lease losses

182,164

160,552

Non-interest income:

Deposit service fees

37,006

34,925

Loan and lease related fees

7,208

5,044

Wealth and investment services

7,273

7,195

Mortgage banking activities

2,266

3,260

Increase in cash surrender value of life insurance policies

3,575

3,653

Gain on investment securities, net

320

Other income

5,714

8,126

63,042

62,523

Impairment loss on securities recognized in earnings

(149)

Total non-interest income

63,042

62,374

Non-interest expense:

Compensation and benefits

88,276

80,710

Occupancy

16,179

15,069

Technology and equipment

21,608

19,938

Marketing

5,441

4,924

Professional and outside services

4,276

2,811

Intangible assets amortization

1,055

1,554

Loan workout expenses

608

965

Deposit insurance

6,732

6,786

Other expenses

19,609

19,688

Total non-interest expense

163,784

152,445

Income before income taxes

81,422

70,481

Income tax expense

21,951

23,434

Net income

59,471

47,047

Preferred stock dividends and other

(2,129)

(2,126)

Earnings applicable to common shareholders

$              57,342

$              44,921

Weighted-average common shares outstanding – Diluted

92,342

91,809

Earnings per common share:

Basic

$                  0.62

$                  0.49

Diluted

0.62

0.49

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

Three Months Ended

(In thousands, except per share data)

March 31,
2017

December 31,
2016

September 30,
2016

June 30,
2016

March 31,
2016

Interest income:

Interest and fees on loans and leases

$            167,808

$            161,978

$            157,071

$            152,171

$            149,808

Interest and dividends on securities

51,556

49,011

48,204

49,967

52,254

Loans held for sale

316

443

440

293

273

Total interest income

219,680

211,432

205,715

202,431

202,335

Interest expense:

Deposits

13,435

12,591

12,594

12,374

12,299

Borrowings

13,581

13,582

12,924

13,152

13,884

Total interest expense

27,016

26,173

25,518

25,526

26,183

Net interest income

192,664

185,259

180,197

176,905

176,152

Provision for loan and lease losses

10,500

12,500

14,250

14,000

15,600

Net interest income after provision for loan and lease losses

182,164

172,759

165,947

162,905

160,552

Non-interest income:

Deposit service fees

37,006

35,132

35,734

34,894

34,925

Loan and lease related fees

7,208

6,018

9,253

6,266

5,044

Wealth and investment services

7,273

6,970

7,593

7,204

7,195

Mortgage banking activities

2,266

3,300

4,322

3,753

3,260

Increase in cash surrender value of life insurance policies

3,575

3,699

3,743

3,664

3,653

Gain on investment securities, net

94

320

Other income

5,714

15,498

5,767

9,200

8,126

63,042

70,617

66,412

65,075

62,523

Impairment loss on securities recognized in earnings

(149)

Total non-interest income

63,042

70,617

66,412

65,075

62,374

Non-interest expense:

Compensation and benefits

88,276

88,038

83,148

80,231

80,710

Occupancy

16,179

16,195

15,004

14,842

15,069

Technology and equipment

21,608

20,815

19,753

19,376

19,938

Marketing

5,441

5,488

4,622

4,669

4,924

Professional and outside services

4,276

3,441

4,795

3,754

2,811

Intangible assets amortization

1,055

1,082

1,493

1,523

1,554

Loan workout expenses

608

378

1,133

530

965

Deposit insurance

6,732

6,410

6,177

6,633

6,786

Other expenses

19,609

20,024

19,972

21,220

19,688

Total non-interest expense

163,784

161,871

156,097

152,778

152,445

Income before income taxes

81,422

81,505

76,262

75,202

70,481

Income tax expense

21,951

23,845

24,445

24,599

23,434

Net income

59,471

57,660

51,817

50,603

47,047

Preferred stock dividends and other

(2,129)

(2,159)

(2,183)

(2,205)

(2,126)

Earnings applicable to common shareholders

$              57,342

$              55,501

$              49,634

$              48,398

$              44,921

Weighted-average common shares outstanding – Diluted

92,342

92,099

91,857

91,745

91,809

Earnings per common share:

Basic

$                  0.62

$                  0.61

$                  0.54

$                  0.53

$                  0.49

Diluted

0.62

0.60

0.54

0.53

0.49

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

Three Months Ended March 31,

2017

2016

(Dollars in thousands)

Average balance

Interest

Yield/rate

Average balance

Interest

Yield/rate

Assets:

Interest-earning assets:

Loans and leases

$       17,041,156

$            168,729

3.97 %

$       15,798,897

$            150,536

3.79 %

Securities (a)

7,071,274

52,851

2.98

6,895,407

53,012

3.07

Federal Home Loan and Federal Reserve Bank stock

182,211

1,687

3.76

188,347

1,417

3.03

Interest-bearing deposits

68,157

130

0.77

57,337

72

0.49

Loans held for sale

36,239

316

3.49

26,623

273

4.10

Total interest-earning assets

24,399,037

$            223,713

3.67 %

22,966,611

$            205,310

3.56 %

Non-interest-earning assets (b)

1,642,732

1,822,608

Total Assets

$       26,041,769

$       24,789,219

Liabilities and Shareholders’ Equity:

Interest-bearing liabilities:

Demand deposits

$         3,935,232

$                      —

—%

$         3,665,928

$                     —

—%

Savings, interest checking, and money market deposits

14,060,535

7,780

0.22

12,761,677

6,615

0.21

Certificates of deposit

2,022,522

5,655

1.13

2,057,650

5,684

1.11

Total deposits

20,018,289

13,435

0.27

18,485,255

12,299

0.27

Securities sold under agreements to repurchase and other borrowings

905,239

3,540

1.56

1,048,997

4,173

1.57

Federal Home Loan Bank advances

2,136,804

7,493

1.40

2,337,746

7,247

1.23

Long-term debt

225,541

2,548

4.52

226,191

2,464

4.36

Total borrowings

3,267,584

13,581

1.66

3,612,934

13,884

1.52

Total interest-bearing liabilities

23,285,873

$              27,016

0.47 %

22,098,189

$              26,183

0.47 %

Non-interest-bearing liabilities (b)

196,542

258,476

Total liabilities

23,482,415

22,356,665

Preferred stock

122,710

122,710

Common shareholders’ equity

2,436,644

2,309,844

Total shareholders’ equity (b)

2,559,354

2,432,554

Total Liabilities and Shareholders’ Equity

$       26,041,769

$       24,789,219

Tax-equivalent net interest income

196,697

179,127

Less: tax-equivalent adjustments

(4,033)

(2,975)

Net interest income

$            192,664

$            176,152

Net interest margin

3.22 %

3.11 %

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

(b) Previously reported 2016 average balance has been modified to reflect immaterial correction to HSA Bank results.

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

(Dollars in thousands)

March 31,
2017

December 31,
2016

September 30,
2016

June 30,
2016

March 31,
2016

Loan and Lease Balances (actuals):

Commercial non-mortgage

$         4,171,246

$         4,135,625

$         3,976,931

$         3,798,436

$         3,607,176

Equipment financing

619,861

635,629

621,696

618,343

596,572

Asset-based lending

848,137

805,306

802,871

779,046

771,584

Commercial real estate

4,530,507

4,510,846

4,280,513

4,191,087

4,046,911

Residential mortgages

4,290,685

4,254,682

4,234,047

4,156,665

4,109,243

Consumer

2,634,063

2,684,500

2,707,343

2,728,452

2,726,869

Total Loan and Lease Balances (actuals)

17,094,499

17,026,588

16,623,401

16,272,029

15,858,355

Allowance for loan and lease losses

(199,107)

(194,320)

(187,925)

(180,428)

(174,201)

Loans and Leases, net

$       16,895,392

$       16,832,268

$       16,435,476

$       16,091,601

$       15,684,154

Loan and Lease Balances (average):

Commercial non-mortgage

$         4,148,625

$         4,053,728

$         3,921,609

$         3,726,394

$         3,605,483

Equipment financing

625,306

630,546

615,473

607,259

600,123

Asset-based lending

845,269

780,587

744,319

765,605

750,328

Commercial real estate

4,479,379

4,343,949

4,224,602

4,099,855

4,019,260

Residential mortgages

4,279,662

4,252,106

4,200,357

4,137,879

4,101,396

Consumer

2,662,915

2,694,492

2,717,282

2,742,356

2,722,307

Total Loan and Lease Balances (average)

17,041,156

16,755,408

16,423,642

16,079,348

15,798,897

Allowance for loan and lease losses

(198,308)

(192,565)

(185,886)

(180,835)

(179,911)

Loans and Leases, net

$       16,842,848

$       16,562,843

$       16,237,756

$       15,898,513

$       15,618,986

Note: The presentation of loan information above, and on the tables that follow, no longer presents liquidating portfolio information separately.

WEBSTER FINANCIAL CORPORATION
Five Quarter Nonperforming Assets (unaudited)

(Dollars in thousands)

March 31,
2017

December 31,
2016

September 30,
2016

June 30,
2016

March 31,
2016

Nonperforming loans and leases:

Commercial non-mortgage

$              74,483

$              38,550

$              27,398

$              28,700

$              32,517

Equipment financing

703

225

202

480

868

Asset-based lending

Commercial real estate

9,793

10,521

14,379

13,923

15,381

Residential mortgages

46,792

47,201

49,117

52,437

53,700

Consumer

42,054

37,538

37,122

37,372

38,256

Total nonperforming loans and leases

$            173,825

$            134,035

$            128,218

$            132,912

$            140,722

Other real estate owned and repossessed assets:

Commercial

$                      —

$                      —

$                   308

$                      —

$                      —

Repossessed equipment

82

70

220

342

Residential

2,296

2,625

2,987

3,395

3,329

Consumer

1,732

1,286

767

820

1,394

Total other real estate owned and repossessed assets

$                4,110

$                3,911

$                4,132

$                4,435

$                5,065

Total nonperforming assets

$            177,935

$            137,946

$            132,350

$            137,347

$            145,787

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

(Dollars in thousands)

March 31,
2017

December 31,
2016

September 30,
2016

June 30,
2016

March 31,
2016

Past due 30-89 days:

Commercial non-mortgage

$                1,685

$                1,949

$                2,522

$                2,050

$                7,265

Equipment financing

1,298

1,596

3,477

404

594

Asset-based lending

Commercial real estate

2,072

8,173

1,229

3,017

20,730

Residential mortgages

11,530

11,202

11,081

9,632

10,456

Consumer

14,762

18,293

15,449

13,845

13,233

Total past due 30-89 days

31,347

41,213

33,758

28,948

52,278

Past due 90 days or more and accruing

747

749

5,459

5,738

3,391

Total past due loans and leases

$              32,094

$              41,962

$              39,217

$              34,686

$              55,669

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

For the Three Months Ended

(Dollars in thousands)

March 31,
2017

December 31,
2016

September 30,
2016

June 30,
2016

March 31,
2016

Beginning balance

$            194,320

$            187,925

$            180,428

$            174,201

$            174,990

Provision

10,500

12,500

14,250

14,000

15,600

Charge-offs:

Commercial non-mortgage

123

1,067

2,561

3,525

11,208

Equipment financing

185

44

300

70

151

Asset-based lending

Commercial real estate

102

161

995

1,526

Residential mortgages

732

1,099

1,304

638

1,594

Consumer

6,474

6,433

5,259

4,556

4,421

Total charge-offs

7,616

8,804

9,424

9,784

18,900

Recoveries:

Commercial non-mortgage

322

439

370

315

455

Equipment financing

14

95

240

156

45

Asset-based lending

44

1

2

Commercial real estate

7

151

194

212

74

Residential mortgages

237

348

554

133

721

Consumer

1,323

1,622

1,313

1,194

1,214

Total recoveries

1,903

2,699

2,671

2,011

2,511

Total net charge-offs

5,713

6,105

6,753

7,773

16,389

Ending balance

$            199,107

$            194,320

$            187,925

$            180,428

$            174,201

WEBSTER FINANCIAL CORPORATION
Reconciliations to GAAP Financial Measures

The Company evaluates its business based on certain ratios that utilize tangible equity, a non-GAAP financial measure. Return on average tangible common shareholders’ equity
measures the Company’s net income available to common shareholders, adjusted for the tax-affected amortization of intangible assets, as a percentage of average shareholders’ equity
less average preferred stock and average goodwill and intangible assets. The tangible equity ratio represents shareholders’ equity less goodwill and intangible assets divided by total
assets less goodwill and intangible assets. The tangible common equity ratio represents shareholders’ equity less preferred stock and goodwill and intangible assets divided by total
assets less goodwill and intangible assets. Tangible book value per common share represents shareholders’ equity less preferred stock and goodwill and intangible assets divided by
common shares outstanding at the end of the period.

The efficiency ratio, which measures the costs expended to generate a dollar of revenue, is calculated excluding foreclosed property expense, amortization of intangibles, gain or loss on
securities, and other non-recurring items. Core deposits express total deposits less time deposits. Accordingly, these are also non-GAAP financial measures.

The Company believes the use of these non-GAAP financial measures provides additional clarity in assessing the results of the Company. Other companies may define or calculate
supplemental financial data differently. See the tables below for reconciliations of these non-GAAP financial measures with financial measures defined by GAAP.

At or for the Three Months Ended

(In thousands, except per share data)

March 31,
2017

December 31,
2016

September 30,
2016

June 30,
2016

March 31,
2016

Return on average tangible common shareholders’ equity:

Net income (GAAP)

$              59,471

$              57,660

$              51,817

$              50,603

$              47,047

Less: Preferred stock dividends (GAAP)

2,024

2,024

2,024

2,024

2,024

Add: Intangible assets amortization, tax-affected at 35% (GAAP)

686

703

970

990

1,010

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

$              58,133

$              56,339

$              50,763

$              49,569

$              46,033

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

$            232,532

$            225,356

$            203,052

$            198,276

$            184,132

Average shareholders’ equity (non-GAAP)

$         2,559,354

$         2,526,099

$         2,503,960

$         2,460,763

$         2,432,554

Less: Average preferred stock (non-GAAP)

122,710

122,710

122,710

122,710

122,710

Average goodwill and other intangible assets (non-GAAP)

571,611

572,682

573,978

575,483

577,029

Average tangible common shareholders’ equity (non-GAAP)

$         1,865,033

$         1,830,707

$         1,807,272

$         1,762,570

$         1,732,815

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

12.47 %

12.31 %

11.24 %

11.25 %

10.63 %

Efficiency ratio:

Non-interest expense (GAAP)

$            163,784

$            161,871

$            156,097

$            152,778

$            152,445

Less: Foreclosed property activity (GAAP)

74

(90)

45

(123)

(158)

Intangible assets amortization (GAAP)

1,055

1,082

1,493

1,523

1,554

Other expenses (non-GAAP)

1,123

1,243

793

260

1,217

Non-interest expense (non-GAAP)

$            161,532

$            159,636

$            153,766

$            151,118

$            149,832

Net interest income (GAAP)

$            192,664

$            185,259

$            180,197

$            176,905

$            176,152

Add: Tax-equivalent adjustment (non-GAAP)

4,033

3,902

3,478

3,282

2,975

Non-interest income (GAAP)

63,042

70,617

66,412

65,075

62,374

Less: Gain on investment securities, net (GAAP)

94

320

Other (non-GAAP)

(391)

(408)

(236)

(655)

(481)

One-time gain on the sale of an asset (GAAP)

(7,331)

Income (non-GAAP)

$            260,130

$            252,855

$            250,323

$            245,823

$            241,662

Efficiency ratio (non-GAAP)

62.10 %

63.13 %

61.43 %

61.47 %

62.00 %

Tangible equity:

Shareholders’ equity (GAAP)

$         2,560,358

$         2,527,012

$         2,511,629

$         2,476,966

$         2,434,786

Less: Goodwill and other intangible assets (GAAP)

570,992

572,047

573,129

574,622

576,145

Tangible shareholders’ equity (non-GAAP)

$         1,989,366

$         1,954,965

$         1,938,500

$         1,902,344

$         1,858,641

Total assets (GAAP)

$       26,002,916

$       26,072,529

$       25,633,617

$       25,120,466

$       24,932,091

Less: Goodwill and other intangible assets (GAAP)

570,992

572,047

573,129

574,622

576,145

Tangible assets (non-GAAP)

$       25,431,924

$       25,500,482

$       25,060,488

$       24,545,844

$       24,355,946

Tangible equity (non-GAAP)

7.82 %

7.67 %

7.74 %

7.75 %

7.63 %

Tangible common equity:

Tangible shareholders’ equity (non-GAAP)

$         1,989,366

$         1,954,965

$         1,938,500

$         1,902,344

$         1,858,641

Less: Preferred stock (GAAP)

122,710

122,710

122,710

122,710

122,710

Tangible common shareholders’ equity (non-GAAP)

$         1,866,656

$         1,832,255

$         1,815,790

$         1,779,634

$         1,735,931

Tangible assets (non-GAAP)

$       25,431,924

$       25,500,482

$       25,060,488

$       24,545,844

$       24,355,946

Tangible common equity (non-GAAP)

7.34 %

7.19 %

7.25 %

7.25 %

7.13 %

Tangible book value per common share:

Tangible common shareholders’ equity (non-GAAP)

$         1,866,656

$         1,832,255

$         1,815,790

$         1,779,634

$         1,735,931

Common shares outstanding

92,154

91,868

91,687

91,677

91,617

Tangible book value per common share (non-GAAP)

$                20.26

$                19.94

$                19.80

$                19.41

$                18.95

Core deposits:

Total deposits

$       20,241,657

$       19,303,857

$       19,200,908

$       18,828,468

$       18,724,523

Less: Certificates of deposit

1,718,193

1,724,906

1,721,056

1,701,307

1,727,934

Brokered certificates of deposit

299,906

299,902

299,887

299,883

301,131

Core deposits (non-GAAP)

$       18,223,558

$       17,279,049

$       17,179,965

$       16,827,278

$       16,695,458

 

Media Contact

Investor Contact

Alice Ferreira, 203-578-2610

Terry Mangan, 203-578-2318

acferreira@websterbank.com

tmangan@websterbank.com

 

SOURCE Webster Financial Corporation