WEBSTER FINANCIAL CORPORATION WATERBURY, Conn., Jan. 22, 2015 /PRNewswire/ -- Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today announced net income available to common shareholders of $48.4 million, or $0.53 per diluted share, for the quarter ended December 31, 2014 compared to $41.1 million, or $0.45 per diluted share, for the quarter ended December 31, 2013. The quarter ended December 31, 2013 included a $0.05 per diluted share negative impact from the Volcker Rule.
For the full year 2014, net income available to common shareholders was $189.2 million, or $2.08 per diluted share, compared to $168.7 million, or $1.86 per diluted share, for the full year 2013.
"Strong loan demand boosted revenue and profit in the fourth quarter and full year 2014. Revenue grew for the twenty-first consecutive quarter and net income reached record levels," said James C. Smith, chairman and chief executive officer. "Record lending to businesses once again led the way, as Webster bankers excelled in service to our customers and communities. Further strength in credit quality reflects our customers' solid financial condition amid a gradually improving economy."
Highlights for the fourth quarter of 2014 compared to the fourth quarter of 2013:
-- Core revenue of $214.2 million, a record, increased 4.3 percent, while
core expenses increased by 2.2 percent leading to record core
pre-provision net revenue of $86.6 million, or a 7.5 percent
improvement.
-- Record level of net income at $51.0 million, up 16.6 percent.
-- Efficiency ratio of 58.65 percent, an improvement of 65 basis points.
Positive operating leverage of 2.1 percent.
-- Continued improvement in asset quality: annualized net charge-off rate
at 20 basis points of average total loans is at the lowest level since
the third quarter of 2007; nonperforming loans as a percentage of total
loans at December 31, 2014 is at the lowest level since the end of 2007.
-- Annualized return on average tangible common shareholders' equity of
11.75 percent.
Year-over-year highlights:
-- Growth in commercial and commercial real estate loans of $1.0 billion,
or 15.3 percent. Overall loan growth of $1.2 billion, or 9.5 percent.
-- Deposit growth of $797.2 million, or 5.4 percent.
"Webster's consistent achievement of revenue growth while strategically investing in our businesses resulted in the efficiency ratio improving a full percentage point to 59.30 percent in 2014," said Glenn MacInnes, executive vice president and chief financial officer. "Webster's recent Health Savings Account acquisition underscores our ability to invest in businesses that achieve Economic Profit."
Quarterly net interest income compared to fourth quarter of 2013:
-- Net interest income was $160.6 million, a record, compared to $153.9
million.
-- Net interest margin was 3.17 percent compared to 3.27 percent. The yield
on interest-earning assets declined by 11 basis points, while the cost
of funds was unchanged.
-- Average interest-earning assets totaled $20.5 billion and grew by $1.4
billion, or 7.4 percent.
-- Average loans grew by $1.2 billion, or 9.3 percent.
Quarterly provision for loan losses:
-- The Company recorded a provision for loan losses of $9.5 million in the
fourth quarter of 2014 compared to $9.5 million in the third quarter of
2014 and $9.0 million in the fourth quarter of 2013.
-- Net charge-offs were $6.7 million compared to $7.9 million in the prior
quarter and $14.0 million a year ago. The ratio of net charge-offs to
average loans on an annualized basis was 0.20 percent compared to 0.24
percent in the prior quarter and 0.45 percent a year ago.
-- The allowance for loan losses represented 1.15 percent of total loans at
December 31, 2014 compared to 1.16 percent at September 30, 2014 and
1.20 percent at December 31, 2013. The allowance for loan losses
represented 121 percent of nonperforming loans at December 31 compared
to 112 percent at September 30 and 94 percent a year ago.
Quarterly non-interest income compared to the fourth quarter of 2013:
-- Total non-interest income was $53.8 million compared to $44.3 million,
an increase of $9.5 million. Excluding securities gains and
other-than-temporary impairment charges, a $2.0 million year-over-year
increase in core non-interest income reflects an increase of $2.4
million in loan related fees, an increase of $2.3 million in other
income, and a $0.7 million increase in deposit service fees offset by a
$1.8 million reduction in mortgage banking activities and a $1.5 million
reduction in wealth and investment services.
Quarterly non-interest expense compared to the fourth quarter of 2013:
-- Total non-interest expense was $130.3 million compared to $126.6
million, an increase of $3.7 million. Included in non-interest expense
are $2.7 million of net one-time costs. These costs primarily consist of
a provision for a litigation reserve and other costs. There were $1.6
million of net one-time costs in the year-ago quarter.
-- Non-interest expense, excluding one-time costs, increased $2.5 million.
This increase is attributable to an increase of $3.1 million in
compensation and benefits primarily related to annual merit increases
and an increase of $1.2 million in technology and equipment expense
primarily due to the installation of a new core system at the company's
HSA Bank division offset by a $1.7 million reduction in professional and
outside services.
-- Foreclosed and repossessed asset expenses were $0.2 million compared to
$0.4 million, while net gains on foreclosed and repossessed assets were
flat to a year ago at $0.2 million.
Quarterly income taxes compared to the fourth quarter of 2013:
-- The Company recorded $23.6 million of income tax expense in the fourth
quarter. The effective tax rate was 31.6 percent compared to 30.0
percent a year ago, reflecting a $0.3 million net tax expense specific
to the quarter, compared to a $0.3 million net tax benefit a year ago,
and the effects of increased pre-tax income and decreased benefits from
tax-exempt interest income
Investment securities:
-- Total investment securities were $6.7 billion at December 31, 2014
compared to $6.5 billion at September 30, 2014 and a year ago. The
carrying value of the available-for-sale portfolio included $25.9
million of net unrealized gains compared to $20.8 million at September
30 and $3.9 million a year ago, while the carrying value of the
held-to-maturity portfolio does not reflect $75.8 million of net
unrealized gains compared to $57.8 million at September 30 and $12.2
million a year ago.
Loans:
-- Total loans were $13.9 billion at December 31, 2014 compared to $13.5
billion at September 30, 2014 and $12.7 billion at December 31, 2013. In
the quarter, commercial, commercial real estate, and residential
mortgage loans increased by $164.9 million, $200.3 million, and $53.8
million, respectively, while consumer loans decreased by $32.5 million.
-- Compared to a year ago, commercial, commercial real estate, residential
mortgage, and consumer loans increased by $543.7 million, $496.1
million, $147.8 million, and $12.7 million, respectively.
-- Loan originations for portfolio in the fourth quarter were $1.319
billion compared to $1.168 billion in the third quarter and $1.094
billion a year ago. In addition, $87 million of residential loans were
originated for sale in the quarter compared to $78 million in the prior
quarter and $95 million a year ago.
Asset quality:
-- Past due loans were $40.3 million at December 31, 2014 compared to $45.3
million at September 30, 2014 and $52.9 million a year ago. Compared to
September 30, past due commercial non-mortgage loans decreased $6.7
million while past due residential mortgage, commercial real estate,
equipment financing, and liquidating consumer loans increased $1.2
million, $1.1 million, $0.3 million, and $0.2 million, respectively.
Loans past due 90 days and still accruing decreased $1.2 million.
Compared to a year ago, past due consumer, commercial real estate,
commercial non-mortgage, residential mortgages, and consumer liquidating
loans decreased $3.1 million, $2.2 million, $2.0 million, $1.1 million,
and $0.1 million, respectively, while past due equipment financing loans
increased $0.3 million. Loans past due 90 days and still accruing
decreased $4.5 million.
-- Past due loans represented 0.29 percent of total loans at year end, 0.34
percent at September 30, and 0.42 percent a year ago. Past due loans for
the continuing portfolio were $38.6 million at year end compared to
$43.9 million at September 30 and $51.1 million a year ago. Past due
loans for the liquidating portfolio were $1.7 million at December 31
compared to $1.4 million at September 30 and $1.8 million a year ago.
-- Total nonperforming loans decreased to $131.9 million, or 0.95 percent
of total loans, at quarter end compared to $139.8 million, or 1.03
percent, at September 30, and $162.9 million, or 1.28 percent, a year
ago. Total paying nonperforming loans at December 31 were $30.5 million
compared to $35.0 million at September 30 and $48.8 million a year ago.
Deposits and borrowings:
-- Total deposits were $15.7 billion at December 31, 2014 compared to $15.5
billion at September 30, 2014 and $14.9 billion a year ago. Compared to
September 30, increases of $342.1 million in demand deposits, $108.7
million in interest-bearing checking, $15.1 million in savings, and $5.7
million in brokered certificates of deposit were offset by declines of
$330.6 million in money market deposits and $36.4 million in
certificates of deposit. Compared to a year ago, increases of $512.2
million in interest-bearing checking, $470.7 million in demand deposits,
$151.9 million in brokered certificates of deposit, and $28.8 million in
savings were offset by declines of $259.1 million in money market
deposits and $107.5 million in certificates of deposit.
-- Core to total deposits were 85.5 percent at December 31, 85.2 percent at
September 30, and 85.0 percent a year ago. Loans to deposits were 88.8
percent compared to 86.9 percent at September 30 and 85.5 percent a year
ago.
-- Total borrowings were $4.3 billion at year end compared to $3.8 billion
at September 30 and $3.6 billion a year ago.
Capital:
-- The return on average tangible common shareholders' equity and the
return on average common shareholders' equity were 11.75 percent and
8.84 percent, respectively, for the fourth quarter of 2014 compared to
11.14 percent and 8.06 percent, respectively, in the fourth quarter of
2013.
-- The tangible equity and tangible common equity ratios were 8.14 percent
and 7.45 percent, respectively, at December 31, 2014 compared to 8.24
percent and 7.49 percent, respectively, at December 31, 2013. The Tier 1
common equity to risk-weighted assets ratio was 11.44 percent at
December 31 compared to 11.43 percent a year ago.
-- Book value and tangible book value per common share were $23.99 and
$18.10, respectively, at December 31, 2014 compared to $22.77 and
$16.85, respectively, at December 31, 2013.
Webster Financial Corporation is the holding company for Webster Bank, National Association. With $22.5 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust and investment services through 164 banking centers, 314 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 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 2014 fourth quarter earnings announcement will be held today, Thursday, January 22, 2015 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 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; (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, September 30, June 30, March 31, December 31,
2014 2014 2014 2014 2013
--- ---- ---- ---- ---- ----
Income and performance ratios (annualized):
-------------------------------------------
Net income $51,015 $50,458 $47,856 $50,423 $43,754
Net income available to common shareholders 48,376 47,819 45,217 47,784 41,115
Net income per diluted common share 0.53 0.53 0.50 0.53 0.45
Return on average assets 0.93 % 0.94 % 0.90 % 0.96 % 0.85 %
Return on average tangible common shareholders' equity 11.75 11.86 11.52 12.51 11.14
Return on average common shareholders' equity 8.84 8.88 8.54 9.16 8.06
Non-interest income as a percentage of total revenue 25.08 24.44 23.48 24.29 22.34
Efficiency ratio 58.65 58.98 59.26 60.34 59.30
Asset quality:
--------------
Allowance for loan losses $159,264 $156,482 $154,868 $153,600 $152,573
Nonperforming assets 138,436 145,053 151,207 152,900 171,607
Allowance for loan losses / total loans 1.15 % 1.16 % 1.17 % 1.18 % 1.20 %
Net charge-offs / average loans (annualized) 0.20 0.24 0.24 0.25 0.45
Nonperforming loans / total loans 0.95 1.03 1.09 1.12 1.28
Nonperforming assets / total loans plus OREO 1.00 1.07 1.14 1.18 1.35
Allowance for loan losses / nonperforming loans 120.73 111.91 107.19 105.84 93.65
Other ratios (annualized):
--------------------------
Tangible equity ratio 8.14 % 8.35 % 8.34 % 8.26 % 8.24 %
Tangible common equity ratio 7.45 7.64 7.62 7.53 7.49
Tier 1 risk-based capital ratio (a) 12.96 13.06 12.97 13.07 13.07
Total risk-based capital (a) 14.06 14.17 14.09 14.20 14.21
Tier 1 common equity / risk-weighted assets (a) 11.44 11.50 11.40 11.45 11.43
Shareholders' equity / total assets 10.31 10.59 10.61 10.58 10.59
Net interest margin 3.17 3.17 3.19 3.26 3.27
Share and equity related:
-------------------------
Common equity $2,171,032 $2,159,201 $2,132,829 $2,087,980 $2,057,539
Book value per common share 23.99 23.93 23.63 23.13 22.77
Tangible book value per common share 18.10 18.02 17.72 17.21 16.85
Common stock closing price 32.53 29.14 31.54 31.06 31.18
Dividends declared per common share 0.20 0.20 0.20 0.15 0.15
Common shares issued and outstanding 90,512 90,248 90,246 90,269 90,367
Basic shares (weighted average) 90,045 89,888 89,776 89,880 89,887
Diluted shares (weighted average) 90,741 90,614 90,528 90,658 90,602
(a) The ratios presented are projected for December 31,2014 and actual for the remaining periods presented.
WEBSTER FINANCIAL CORPORATION
Consolidated Balance Sheets (unaudited)
--------------------------------------
(In thousands) December 31, September 30, December 31,
2014 2014 2013
--- ---- ---- ----
Assets:
Cash and due from banks $261,544 $207,128 $223,616
Interest-bearing deposits 132,695 105,394 23,674
Investment securities:
Available for sale, at fair value 2,793,873 2,873,886 3,106,931
Held to maturity 3,872,955 3,641,979 3,358,721
--------- --------- ---------
Total securities 6,666,828 6,515,865 6,465,652
Loans held for sale 67,952 26,083 20,802
Loans:
Commercial 4,287,021 4,122,141 3,743,301
Commercial real estate 3,554,428 3,354,107 3,058,362
Residential mortgages 3,509,175 3,455,354 3,361,425
Consumer 2,549,401 2,581,900 2,536,688
Total loans 13,900,025 13,513,502 12,699,776
Allowance for loan losses (159,264) (156,482) (152,573)
Loans, net 13,740,761 13,357,020 12,547,203
Federal Home Loan Bank and Federal Reserve Bank stock 193,290 171,174 158,878
Premises and equipment, net 121,933 118,608 121,605
Goodwill and other intangible assets, net 532,553 532,969 535,238
Cash surrender value of life insurance policies 440,073 438,100 430,535
Deferred tax asset, net 74,077 62,884 65,109
Accrued interest receivable and other assets 301,304 291,657 260,687
Total Assets $22,533,010 $21,826,882 $20,852,999
----------- ----------- -----------
Liabilities and Equity:
Deposits:
Demand $3,598,872 $3,256,741 $3,128,152
Interest-bearing checking 3,979,846 3,871,152 3,467,601
Money market 1,908,522 2,239,106 2,167,593
Savings 3,892,778 3,877,673 3,863,930
Certificates of deposit 1,971,567 2,007,942 2,079,027
Brokered certificates of deposit 300,020 294,304 148,117
------- ------- -------
Total deposits 15,651,605 15,546,918 14,854,420
Securities sold under agreements to repurchase and other borrowings 1,250,756 1,236,975 1,331,662
Federal Home Loan Bank advances 2,859,431 2,290,204 2,052,421
Long-term debt 226,237 226,208 228,365
Accrued expenses and other liabilities 222,300 215,727 176,943
------- ------- -------
Total liabilities 20,210,329 19,516,032 18,643,811
---------- ---------- ----------
Preferred stock 151,649 151,649 151,649
Common shareholders' equity 2,171,032 2,159,201 2,057,539
--------- --------- ---------
Webster Financial Corporation shareholders' equity 2,322,681 2,310,850 2,209,188
--------- --------- ---------
Total Liabilities and Equity $22,533,010 $21,826,882 $20,852,999
----------- ----------- -----------
WEBSTER FINANCIAL CORPORATION
Consolidated Statements of Income (unaudited)
--------------------------------------------
Three Months Ended December 31, Twelve Months Ended December 31,
------------------------------- --------------------------------
(In thousands, except per share data) 2014 2013 2014 2013
------------------------------------ ---- ---- ---- ----
Interest income:
Interest and fees on loans and leases $132,604 $124,110 $511,612 $489,372
Interest and dividends on securities 50,921 51,294 206,472 196,200
Loans held for sale 226 307 857 2,068
Total interest income 183,751 175,711 718,941 687,640
------- ------- ------- -------
Interest expense:
Deposits 11,322 10,800 44,162 46,582
Borrowings 11,781 11,027 46,338 44,330
Total interest expense 23,103 21,827 90,500 90,912
------ ------ ------ ------
Net interest income 160,648 153,884 628,441 596,728
Provision for loan losses 9,500 9,000 37,250 33,500
Net interest income after provision for loan losses 151,148 144,884 591,191 563,228
------- ------- ------- -------
Non-interest income:
Deposit service fees 25,928 25,182 103,431 98,968
Loan related fees 8,361 5,930 23,212 21,860
Wealth and investment services 8,517 9,990 34,946 34,771
Mortgage banking activities 977 2,775 4,070 16,359
Increase in cash surrender value of life insurance policies 3,278 3,422 13,178 13,770
Net gain on investment securities 1,121 4 5,499 712
Other income 6,492 4,238 18,917 11,887
54,674 51,541 203,253 198,327
Loss on write-down of investment securities to fair value (899) (7,277) (1,145) (7,277)
Total non-interest income 53,775 44,264 202,108 191,050
------ ------ ------- -------
Non-interest expense:
Compensation and benefits 71,220 68,155 270,151 264,835
Occupancy 11,518 12,084 47,325 48,794
Technology and equipment expense 15,827 14,583 61,993 60,326
Marketing 3,918 3,225 15,379 15,502
Professional and outside services 1,855 3,601 8,296 9,532
Intangible assets amortization 416 1,193 2,685 4,919
Foreclosed and repossessed asset expenses 244 400 1,223 1,338
Foreclosed and repossessed asset gains (238) (229) (1,297) (1,295)
Loan workout expenses 685 1,370 3,507 6,216
Deposit insurance 5,856 5,116 22,670 21,114
Other expenses 16,288 15,547 67,177 61,129
------ ------ ------ ------
127,589 125,045 499,109 492,410
Debt prepayment penalties - - - 43
Severance, contract, and other 633 389 964 4,284
Acquisition costs 396 - 540 -
Branch and facility optimization 276 1,205 125 1,322
Provision for litigation and settlements 1,400 - 1,400 -
--- ---
Total non-interest expense 130,294 126,639 502,138 498,059
------- ------- ------- -------
Income before income taxes 74,629 62,509 291,161 256,219
Income tax expense 23,614 18,755 91,409 76,670
------ ------ ------ ------
Net income 51,015 43,754 199,752 179,549
Preferred stock dividends (2,639) (2,639) (10,556) (10,803)
Net income available to common shareholders $48,376 $41,115 $189,196 $168,746
------- ------- -------- --------
Diluted shares (average) 90,741 90,602 90,620 90,261
Net income per common share available to common shareholders:
Basic $0.54 $0.46 $2.10 $1.90
Diluted 0.53 0.45 2.08 1.86
WEBSTER FINANCIAL CORPORATION
Five Quarter Consolidated Statements of Income (unaudited)
---------------------------------------------------------
Three Months Ended
------------------
(In thousands, except per share data) December 31, September 30, June 30, March 31, December 31,
2014 2014 2014 2014 2013
--- ---- ---- ---- ---- ----
Interest income:
Interest and fees on loans and leases $132,604 $129,227 $125,771 $124,010 $124,110
Interest and dividends on securities 50,921 50,448 51,511 53,592 51,294
Loans held for sale 226 239 215 177 307
Total interest income 183,751 179,914 177,497 177,779 175,711
------- ------- ------- ------- -------
Interest expense:
Deposits 11,322 11,345 10,851 10,644 10,800
Borrowings 11,781 11,199 11,524 11,834 11,027
Total interest expense 23,103 22,544 22,375 22,478 21,827
------ ------ ------ ------ ------
Net interest income 160,648 157,370 155,122 155,301 153,884
Provision for loan losses 9,500 9,500 9,250 9,000 9,000
Net interest income after provision for loan losses 151,148 147,870 145,872 146,301 144,884
------- ------- ------- ------- -------
Non-interest income:
Deposit service fees 25,928 26,489 26,302 24,712 25,182
Loan related fees 8,361 5,479 4,890 4,482 5,930
Wealth and investment services 8,517 8,762 8,829 8,838 9,990
Mortgage banking activities 977 1,805 513 775 2,775
Increase in cash surrender value of life insurance policies 3,278 3,346 3,296 3,258 3,422
Net gain on investment securities 1,121 42 - 4,336 4
Other income 6,492 5,071 3,839 3,515 4,238
54,674 50,994 47,669 49,916 51,541
Loss on write-down of investment securities to fair value (899) (85) (73) (88) (7,277)
----
Total non-interest income 53,775 50,909 47,596 49,828 44,264
------ ------ ------ ------ ------
Non-interest expense:
Compensation and benefits 71,220 66,849 65,711 66,371 68,155
Occupancy 11,518 11,557 11,491 12,759 12,084
Technology and equipment expense 15,827 15,419 15,737 15,010 14,583
Marketing 3,918 4,032 4,249 3,180 3,225
Professional and outside services 1,855 2,470 1,269 2,702 3,601
Intangible assets amortization 416 432 669 1,168 1,193
Foreclosed and repossessed asset expenses 244 387 134 458 400
Foreclosed and repossessed asset gains (238) (225) (574) (260) (229)
Loan workout expenses 685 969 801 1,052 1,370
Deposit insurance 5,856 5,938 5,565 5,311 5,116
Other expenses 16,288 17,227 17,008 16,654 15,547
------ ------ ------ ------ ------
127,589 125,055 122,060 124,405 125,045
Severance, contract, and other 633 42 267 22 389
Acquisition costs 396 144 - - -
Branch and facility optimization 276 (599) 258 190 1,205
Provision for litigation and settlements 1,400 - - - -
----- ---
Total non-interest expense 130,294 124,642 122,585 124,617 126,639
------- ------- ------- ------- -------
Income before income taxes 74,629 74,137 70,883 71,512 62,509
Income tax expense 23,614 23,679 23,027 21,089 18,755
------
Net income 51,015 50,458 47,856 50,423 43,754
Preferred stock dividends (2,639) (2,639) (2,639) (2,639) (2,639)
------
Net income available to common shareholders $48,376 $47,819 $45,217 $47,784 $41,115
------- ------- ------- ------- -------
Diluted shares (average) 90,741 90,614 90,528 90,658 90,602
Net income per common share available to common shareholders:
Basic $0.54 $0.53 $0.50 $0.53 $0.46
Diluted 0.53 0.53 0.50 0.53 0.45
WEBSTER FINANCIAL CORPORATION
Consolidated Average Balances, Yields, and Rates Paid (unaudited)
----------------------------------------------------------------
Three Months Ended December 31,
-------------------------------
2014 2013
---- ----
(Dollars in thousands) Average Interest Fully tax- Average Interest Fully tax-
balance equivalent balance equivalent
yield/rate yield/rate
---
Assets:
Interest-earning assets:
Loans $13,715,522 $133,141 3.83 % $12,548,193 $124,540 3.92 %
Investment securities (a) 6,522,767 51,778 3.19 6,327,569 53,141 3.37
Federal Home Loan and Federal Reserve Bank stock 177,324 1,206 2.70 158,878 862 2.15
Interest-bearing deposits 43,864 28 0.25 15,190 11 0.28
Loans held for sale 25,427 226 3.55 30,645 307 4.01
Total interest-earning assets 20,484,904 $186,379 3.61 % 19,080,475 $178,861 3.72 %
Non-interest-earning assets 1,545,106 1,495,745
Total assets $22,030,010 $20,576,220
----------- -----------
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Deposits:
Demand $3,364,956 $ - -% $3,038,618 $ - -%
Savings, interest checking, and money market 9,912,875 4,359 0.17 9,618,539 4,668 0.19
Certificates of deposit 2,288,075 6,963 1.21 2,248,483 6,132 1.08
Total deposits 15,565,906 11,322 0.29 14,905,640 10,800 0.29
---------- ------ ---- ---------- ------ ----
Securities sold under agreements to repurchase and other borrowings 1,282,805 4,514 1.38 1,320,820 5,278 1.56
Federal Home Loan Bank advances 2,444,900 4,857 0.78 1,734,177 3,930 0.89
Long-term debt 226,218 2,410 4.26 228,741 1,819 3.18
Total borrowings 3,953,923 11,781 1.17 3,283,738 11,027 1.32
--------- ------ --------- ------
Total interest-bearing liabilities 19,519,829 $23,103 0.47 % 18,189,378 $21,827 0.47 %
Non-interest-bearing liabilities 169,475 194,758
Total liabilities 19,689,304 18,384,136
---------- ----------
Preferred stock 151,649 151,649
Common shareholders' equity 2,189,057 2,040,435
--------- ---------
Webster Financial Corp. shareholders' equity 2,340,706 2,192,084
Total liabilities and equity $22,030,010 $20,576,220
----------- -----------
Tax-equivalent net interest income 163,276 157,034
Less: tax-equivalent adjustment (2,628) (3,150)
Net interest income $160,648 $153,884
-------- --------
Net interest margin 3.17 % 3.27 %
----- -----
(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,
--------------------------------
2014 2013
(Dollars in thousands) Average Interest Fully tax- Average Interest Fully tax-
balance equivalent balance equivalent
yield/rate yield/rate
--- ----------
Assets:
Interest-earning assets:
Loans $13,275,340 $513,705 3.87 % $12,235,821 $490,985 4.01 %
Investment securities (a) 6,446,799 210,721 3.28 6,268,889 204,287 3.28
Federal Home Loan and Federal Reserve Bank stock 168,036 4,719 2.81 158,233 3,437 2.17
Interest-bearing deposits 24,376 63 0.26 21,800 84 0.39
Loans held for sale 22,642 857 3.78 63,870 2,068 3.24
------ --- ---- ------ ----- ----
Total interest-earning assets 19,937,193 $730,065 3.67 % 18,748,613 $700,861 3.74 %
Non-interest-earning assets 1,523,606 1,513,906
Total assets $21,460,799 $20,262,519
----------- -----------
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Deposits:
Demand $3,216,777 $ - -% $2,939,324 $ - -%
Savings, interest checking, and money market 9,863,703 17,800 0.18 9,511,386 18,376 0.19
Certificates of deposit 2,280,668 26,362 1.16 2,357,321 28,206 1.20
Total deposits 15,361,148 44,162 0.29 14,808,031 46,582 0.31
---------- ------ ---- ---------- ------ ----
Securities sold under agreements to repurchase and other borrowings 1,353,308 19,388 1.43 1,228,002 20,800 1.69
Federal Home Loan Bank advances 2,038,749 16,909 0.83 1,652,471 16,229 0.98
Long-term debt 252,368 10,041 3.98 233,850 7,301 3.12
Total borrowings 3,644,425 46,338 1.27 3,114,323 44,330 1.42
--------- ------ ---- --------- ------ ----
Total interest-bearing liabilities 19,005,573 $90,500 0.48 % 17,922,354 $90,912 0.51 %
Non-interest-bearing liabilities 165,661 190,452
Total liabilities 19,171,234 18,112,806
---------- ----------
Preferred stock 151,649 151,649
Common shareholders' equity 2,137,916 1,998,064
--------- ---------
Webster Financial Corp. shareholders' equity 2,289,565 2,149,713
Total liabilities and equity $21,460,799 $20,262,519
----------- -----------
Tax-equivalent net interest income 639,565 609,949
Less: tax-equivalent adjustment (11,124) (13,221)
Net interest income $628,441 $596,728
-------- --------
Net interest margin 3.21 % 3.26 %
----- -----
(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) December 31, September 30, June 30, March 31, December 31,
2014 2014 2014 2014 2013
--- ---- ---- ---- ---- ----
Loan Balances (actuals):
Continuing Portfolio:
Commercial non-mortgage $3,087,940 $2,984,949 $2,978,576 $2,926,223 $2,723,566
Equipment financing 537,751 490,150 464,948 457,670 460,450
Asset-based lending 661,330 647,042 624,565 585,615 559,285
Commercial real estate 3,554,428 3,354,107 3,291,892 3,143,612 3,058,362
Residential mortgages 3,509,174 3,455,353 3,366,091 3,356,538 3,361,424
Consumer 2,457,345 2,485,870 2,449,730 2,422,377 2,431,786
--------- --------- --------- --------- ---------
Total continuing portfolio 13,807,968 13,417,471 13,175,802 12,892,035 12,594,873
Allowance for loan losses (149,813) (145,818) (143,440) (141,352) (137,821)
Total continuing portfolio, net 13,658,155 13,271,653 13,032,362 12,750,683 12,457,052
---------- ---------- ---------- ---------- ----------
Liquidating Portfolio:
National Construction Lending Center (NCLC) 1 1 1 1 1
Consumer 92,056 96,030 99,577 102,706 104,902
------ ------ ------ ------- -------
Total liquidating portfolio 92,057 96,031 99,578 102,707 104,903
Allowance for loan losses (9,451) (10,664) (11,428) (12,248) (14,752)
------ ------- ------- ------- -------
Total liquidating portfolio, net 82,606 85,367 88,150 90,459 90,151
------ ------ ------ ------ ------
Total Loan Balances (actuals) 13,900,025 13,513,502 13,275,380 12,994,742 12,699,776
Allowance for loan losses (159,264) (156,482) (154,868) (153,600) (152,573)
Loans, net $13,740,761 $13,357,020 $13,120,512 $12,841,142 $12,547,203
----------- ----------- ----------- ----------- -----------
Loan Balances (average):
Continuing Portfolio:
Commercial non-mortgage $3,036,412 $2,987,403 $2,963,150 $2,853,516 $2,625,654
Equipment financing 509,331 478,333 459,140 456,391 436,328
Asset-based lending 647,952 621,856 612,170 562,443 587,039
Commercial real estate 3,452,954 3,329,767 3,195,746 3,080,575 3,003,837
Residential mortgages 3,483,444 3,409,010 3,361,276 3,364,746 3,359,186
Consumer 2,491,359 2,467,839 2,437,452 2,431,900 2,429,354
--------- --------- --------- --------- ---------
Total continuing portfolio 13,621,452 13,294,208 13,028,934 12,749,571 12,441,398
Allowance for loan losses (150,706) (146,863) (143,811) (143,676) (141,460)
Total continuing portfolio, net 13,470,746 13,147,345 12,885,123 12,605,895 12,299,938
---------- ---------- ---------- ---------- ----------
Liquidating Portfolio:
NCLC 1 1 53 1 1
Consumer 94,069 97,661 100,878 103,777 106,794
------ ------ ------- ------- -------
Total liquidating portfolio 94,070 97,662 100,931 103,778 106,795
Allowance for loan losses (9,451) (10,664) (11,428) (12,248) (14,752)
Total liquidating portfolio, net 84,619 86,998 89,503 91,530 92,043
------ ------ ------ ------ ------
Total Loan Balances (average) 13,715,522 13,391,870 13,129,865 12,853,349 12,548,193
Allowance for loan losses (160,157) (157,527) (155,239) (155,924) (156,212)
Loans, net $13,555,365 $13,234,343 $12,974,626 $12,697,425 $12,391,981
----------- ----------- ----------- ----------- -----------
WEBSTER FINANCIAL CORPORATION
Five Quarter Nonperforming Assets (unaudited)
--------------------------------------------
(Dollars in thousands) December 31, September 30, June 30, March 31, December 31,
2014 2014 2014 2014(a) 2013
--- ---- ---- ---- ------ ----
Nonperforming loans:
Continuing Portfolio:
Commercial non-mortgage $6,436 $12,421 $14,152 $12,869 $10,933
Equipment financing 518 1,659 863 1,325 1,141
Asset-based lending - - - - -
Commercial real estate 18,675 18,341 19,023 20,009 17,663
Residential mortgages 66,061 68,280 68,439 66,373 81,370
Consumer 35,770 34,566 36,526 38,670 45,573
Nonperforming loans - continuing portfolio 127,460 135,267 139,003 139,246 156,680
------- ------- ------- ------- -------
Liquidating Portfolio:
Consumer 4,460 4,560 5,475 5,875 6,245
Total nonperforming loans $131,920 $139,827 $144,478 $145,121 $162,925
-------- -------- -------- -------- --------
Other real estate owned and repossessed assets:
Continuing Portfolio:
Commercial $2,899 $2,899 $3,238 $3,466 $3,618
Repossessed equipment 100 100 100 123 134
Residential 2,280 1,712 2,748 3,721 4,648
Consumer 1,237 515 643 469 282
Total continuing portfolio 6,516 5,226 6,729 7,779 8,682
----- ----- ----- ----- -----
Liquidating Portfolio:
Total liquidating portfolio - - - - -
Total other real estate owned and repossessed assets $6,516 $5,226 $6,729 $7,779 $8,682
------ ------ ------ ------ ------
Total nonperforming assets $138,436 $145,053 $151,207 $152,900 $171,607
-------- -------- -------- -------- --------
(a) The decreases reflect the reclassification of $17.6 million of residential and consumer loans as accruing in the quarter under regulatory guidance.
WEBSTER FINANCIAL CORPORATION
Five Quarter Past Due Loans (unaudited)
--------------------------------------
(Dollars in thousands) December 31, September 30, June 30, March 31, December 31,
2014 2014 2014 2014 2013
--- ---- ---- ---- ---- ----
Past due 30-89 days:
Continuing Portfolio:
Commercial non-mortgage $2,099 $8,795 $5,045 $7,913 $4,100
Equipment financing 701 433 290 698 362
Asset-based lending - - - - -
Commercial real estate 2,714 1,625 1,610 2,680 4,897
Residential mortgages 17,216 15,980 17,826 18,966 18,285
Consumer 15,867 15,852 18,956 14,552 18,926
Past due 30-89 days - continuing portfolio 38,597 42,685 43,727 44,809 46,570
------ ------ ------ ------ ------
Liquidating Portfolio:
Consumer 1,658 1,419 2,105 2,325 1,806
Total past due 30-89 days 40,255 44,104 45,832 47,134 48,376
------ ------ ------ ------ ------
Loans past due 90 days or more and accruing 48 1,241 1,111 850 4,501
--- ----- ----- --- -----
Total past due loans $40,303 $45,345 $46,943 $47,984 $52,877
------- ------- ------- ------- -------
WEBSTER FINANCIAL CORPORATION
Five Quarter Changes in the Allowance for Loan Losses (unaudited)
----------------------------------------------------------------
For the Three Months Ended
--------------------------
(Dollars in thousands) December 31, September 30, June 30, March 31, December 31,
2014 2014 2014 2014 2013
--- ---- ---- ---- ---- ----
Beginning balance $156,482 $154,868 $153,600 $152,573 $157,545
Provision 9,500 9,500 9,250 9,000 9,000
Charge-offs continuing portfolio:
Commercial non-mortgage 4,097 2,738 3,685 3,148 5,383
Equipment financing 84 491 20 - 178
Asset-based lending - - - - 3
Commercial real estate 246 139 447 2,405 5,086
Residential mortgages 1,346 1,870 1,840 1,158 2,744
Consumer 3,648 5,078 4,075 4,517 4,402
Charge-offs continuing portfolio 9,421 10,316 10,067 11,228 17,796
----- ------ ------ ------ ------
Charge-offs liquidating portfolio:
NCLC - - - - -
Consumer 563 1,251 1,211 369 1,070
Charge-offs liquidating portfolio 563 1,251 1,211 369 1,070
Total charge-offs 9,984 11,567 11,278 11,597 18,866
----- ------ ------ ------ ------
Recoveries continuing portfolio:
Commercial non-mortgage 1,258 967 1,121 950 2,029
Equipment financing 702 336 397 799 630
Asset-based lending - 50 - 23 11
Commercial real estate 217 120 69 479 750
Residential mortgages 291 250 495 108 445
Consumer 636 1,770 923 865 769
Recoveries continuing portfolio 3,104 3,493 3,005 3,224 4,634
----- ----- ----- ----- -----
Recoveries liquidating portfolio:
NCLC 5 11 12 152 115
Consumer 157 177 279 248 145
Recoveries liquidating portfolio 162 188 291 400 260
Total recoveries 3,266 3,681 3,296 3,624 4,894
----- ----- ----- ----- -----
Total net charge-offs 6,718 7,886 7,982 7,973 13,972
----- ----- ----- ----- ------
Ending balance $159,264 $156,482 $154,868 $153,600 $152,573
-------- -------- -------- -------- --------
WEBSTER FINANCIAL CORPORATION
Reconciliations to GAAP Financial Measures
------------------------------------------
The Company evaluates its business based on the following ratios that utilize tangible equity, a non-GAAP financial measure. Return on average tangible common shareholders' equity measures the Company's net income available to common shareholders, adjusted for the tax-affected amortization of intangible assets, as a percentage of average common shareholders' equity less goodwill and intangible assets (excluding mortgage servicing rights). The tangible
equity ratio represents total ending shareholders' equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by total assets less goodwill and intangible assets (excluding mortgage servicing rights). The tangible common equity ratio represents ending common shareholders' equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by total assets less goodwill and intangible assets (excluding
mortgage servicing rights). Tangible book value per common share represents ending common shareholders' equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by ending common shares outstanding.
The efficiency ratio, which measures the costs expended to generate a dollar of revenue, is calculated excluding foreclosed property expense, amortization of intangibles, gain or loss on securities, and other non-recurring items. Accordingly, this is also a non-GAAP financial measure.
See the tables below for reconciliations of these non-GAAP financial measures with financial measures defined by GAAP for the three months ended December 31, 2014, September 30, 2014, June 30, 2014, March 31, 2014, and December 31, 2013. 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.
At or for the Three Months Ended
--------------------------------
(Dollars in thousands, except per share data) December 31, September 30, June 30, March 31, December 31,
2014 2014 2014 2014 2013
--- ---- ---- ---- ---- ----
Reconciliation of net income available to common shareholders to net income used for computing the return on average tangible common shareholders' equity ratio
----------------------------------------------------------------------------------------------------------------------------------------------------------------
Net income available to common shareholders $48,376 $47,819 $45,217 $47,784 $41,115
Amortization of intangibles (tax-affected @ 35%) 270 281 435 759 775
--- --- --- --- ---
Quarterly net income adjusted for amortization of intangibles 48,646 48,100 45,652 48,543 41,890
Annualized net income used in the return on average tangible common shareholders' equity ratio $194,584 $192,400 $182,608 $194,172 $167,560
-------- -------- -------- -------- --------
Reconciliation of average common shareholders' equity to average tangible common shareholders' equity
-----------------------------------------------------------------------------------------------------
Average common shareholders' equity $2,189,057 $2,155,103 $2,119,016 $2,087,179 $2,040,435
Average goodwill (529,887) (529,887) (529,887) (529,887) (529,887)
Average intangible assets (excluding mortgage servicing rights) (2,862) (3,294) (3,762) (4,754) (5,922)
------ ------ ------ ------
Average tangible common shareholders' equity $1,656,308 $1,621,922 $1,585,367 $1,552,538 $1,504,626
---------- ---------- ---------- ---------- ----------
Reconciliation of period-end shareholders' equity to period-end tangible shareholders' equity
---------------------------------------------------------------------------------------------
Shareholders' equity $2,322,681 $2,310,850 $2,284,478 $2,239,629 $2,209,188
Goodwill (529,887) (529,887) (529,887) (529,887) (529,887)
Intangible assets (excluding mortgage servicing rights) (2,666) (3,082) (3,515) (4,183) (5,351)
Tangible shareholders' equity $1,790,128 $1,777,881 $1,751,076 $1,705,559 $1,673,950
---------- ---------- ---------- ---------- ----------
Reconciliation of period-end common shareholders' equity to period-end tangible common shareholders' equity
-----------------------------------------------------------------------------------------------------------
Shareholders' equity $2,322,681 $2,310,850 $2,284,478 $2,239,629 $2,209,188
Preferred stock (151,649) (151,649) (151,649) (151,649) (151,649)
-------- -------- -------- -------- --------
Common shareholders' equity 2,171,032 2,159,201 2,132,829 2,087,980 2,057,539
Goodwill (529,887) (529,887) (529,887) (529,887) (529,887)
Intangible assets (excluding mortgage servicing rights) (2,666) (3,082) (3,515) (4,183) (5,351)
Tangible common shareholders' equity $1,638,479 $1,626,232 $1,599,427 $1,553,910 $1,522,301
---------- ---------- ---------- ---------- ----------
Reconciliation of period-end assets to period-end tangible assets
-----------------------------------------------------------------
Assets $22,533,010 $21,826,882 $21,524,337 $21,175,745 $20,852,999
Goodwill (529,887) (529,887) (529,887) (529,887) (529,887)
Intangible assets (excluding mortgage servicing rights) (2,666) (3,082) (3,515) (4,183) (5,351)
Tangible assets $22,000,457 $21,293,913 $20,990,935 $20,641,675 $20,317,761
----------- ----------- ----------- ----------- -----------
Book value per common share
---------------------------
Common shareholders' equity $2,171,032 $2,159,201 $2,132,829 $2,087,980 $2,057,539
Ending common shares issued and outstanding (in thousands) 90,512 90,248 90,246 90,269 90,367
Book value per share of common stock $23.99 $23.93 $23.63 $23.13 $22.77
------ ------ ------ ------ ------
Tangible book value per common share
------------------------------------
Tangible common shareholders' equity $1,638,479 $1,626,232 $1,599,427 $1,553,910 $1,522,301
Ending common shares issued and outstanding (in thousands) 90,512 90,248 90,246 90,269 90,367
Tangible book value per common share $18.10 $18.02 $17.72 $17.21 $16.85
------ ------ ------ ------ ------
Reconciliation of non-interest expense to non-interest expense used in the efficiency ratio
-------------------------------------------------------------------------------------------
Non-interest expense $130,294 $124,642 $122,585 $124,617 $126,639
Foreclosed property expense (244) (387) (134) (458) (400)
Intangible assets amortization (416) (432) (669) (1,168) (1,193)
Other expense (2,467) 638 49 48 (1,365)
Non-interest expense used in the efficiency ratio $127,167 $124,461 $121,831 $123,039 $123,681
-------- -------- -------- -------- --------
Reconciliation of income to income used in the efficiency ratio
---------------------------------------------------------------
Net interest income before provision for loan losses $160,648 $157,370 $155,122 $155,301 $153,884
Fully taxable-equivalent adjustment 2,628 2,700 2,783 3,013 3,150
Non-interest income 53,775 50,909 47,596 49,828 44,264
Net gain on investment securities (1,121) (42) - (4,336) (4)
Other 899 85 73 88 7,277
Income used in the efficiency ratio $216,829 $211,022 $205,574 $203,894 $208,571
-------- -------- -------- -------- --------
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/webster-reports-2014-fourth-quarter-earnings-300024137.html
SOURCE Webster Financial Corporation
