WEBSTER FINANCIAL CORPORATION WATERBURY, Conn., July 17, 2014 /PRNewswire/ -- Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today announced net income available to common shareholders of $45.2 million, or $0.50 per diluted share, for the quarter ended June 30, 2014 compared to $43.7 million, or $0.48 per diluted share, for the quarter ended June 30, 2013.
Highlights for the quarter or at June 30 include:
-- Combined growth in commercial and commercial real estate loans of $985.2
million, or 15.5 percent, from a year ago. Overall loan growth of $1.0
billion, or 8.4 percent, from a year ago.
-- Deposit growth of $367.3 million, or 2.5 percent, from a year ago.
-- Core revenue improved 1.9 percent from a year ago, while expenses
remained flat leading to core pre-provision net revenue growth of 5.1
percent.
-- Continued improvement in asset quality: annualized net charge-off rate
at 24 basis points of total loans; nonperforming loans as a percentage
of total loans at the lowest level since the end of 2007.
-- Efficiency ratio of 59.26 percent, an improvement of 72 basis points
from a year ago. Positive operating leverage of 2.0 percent
year-over-year.
-- Return on average tangible common shareholders' equity of 11.52 percent.
"We are pleased to report another solid quarterly performance, marked by a 3 percent increase in net income over prior year, as Webster bankers continue to excel in service to our customers and communities," said James C. Smith, chairman and chief executive officer. "Loans grew across all categories with especially strong performance once again by Commercial Banking. Credit quality continues to improve as the economy gathers strength, and disciplined expense management contributed to Webster's thirteenth consecutive quarter of positive operating leverage."
Net interest income (compared to prior year)
-- Net interest income was $155.1 million compared to $147.1 million.
-- Net interest margin was 3.19 percent compared to 3.23 percent. The yield
on interest-earning assets declined by 9 basis points, while the cost of
funds declined by 5 basis points.
-- Average interest-earning assets totaled $19.7 billion and grew by $1.2
billion, or 6.2 percent.
-- Average loans grew by $1.1 billion, or 8.9 percent.
Provision for loan losses
-- The Company recorded a provision for loan losses of $9.25 million
compared to $9.0 million in the prior quarter and $8.5 million a year
earlier.
-- Net charge-offs were $8.0 million, flat to the first quarter, and $12.9
million in the year-ago period. The ratio of net charge-offs to average
loans on an annualized basis was 0.24 percent compared to 0.25 percent
in the first quarter and 0.43 percent a year ago.
-- The allowance for loan losses represented 1.17 percent of total loans at
June 30, 2014 compared to 1.18 percent at March 31, 2014 and 1.33
percent at June 30, 2013. The allowance for loan losses represented 107
percent of nonperforming loans at June 30 compared to 106 percent at
March 31 and 88 percent a year ago.
Non-interest income (compared to prior year)
-- Total non-interest income was $47.6 million compared to $52.3 million, a
decrease of $4.7 million. Excluding securities gains and a nominal
other-than-temporary impairment charge, a $4.3 million year-over-year
decrease in core non-interest income reflects a decrease of $5.4 million
in mortgage banking activities and $0.6 million in loan related fees,
offset by increases of $1.7 million in deposit service fees and $0.3
million in other income.
Non-interest expense (compared to prior year)
-- Total non-interest expense of $122.6 million compared to $123.6 million,
a decrease of $1.0 million. Included in non-interest expense are $0.5
million of net one-time costs. These costs primarily consisted of branch
and facility optimization and severance expenses. There were $0.9
million of net one-time costs in the year-ago quarter.
-- Foreclosed and repossessed asset expenses were $0.1 million compared to
$0.3 million, while net gains on foreclosed and repossessed assets were
$0.6 million compared $0.3 million in the year-ago quarter.
"Once again, Webster demonstrated a disciplined approach to business investment as evidenced by positive operating leverage and a lower efficiency ratio," said Glenn MacInnes, executive vice president and chief financial officer. "In addition, our commitment to managing risk is reflected in continued improvement in our key asset quality metrics."
Income taxes
-- The Company recorded $23.0 million of income tax expense in the second
quarter. The effective tax rate was 32.5 percent compared to 31.0
percent a year ago and reflects primarily the effects of increased
pre-tax income and decreased benefits from tax-exempt interest income,
and a $0.2 million net tax expense specific to the quarter.
Investment securities
-- Total investment securities were $6.5 billion at both June 30 and March
31, 2014 and $6.4 billion a year ago. The carrying value of the
available-for-sale portfolio included $33.6 million in net unrealized
gains compared to $8.8 million at March 31 and $4.4 million a year ago,
while the carrying value of the held-to-maturity portfolio does not
reflect $73.7 million in net unrealized gains compared to $30.2 million
at March 31 and $44.3 million a year ago.
Loans
-- Total loans were $13.3 billion at June 30, 2014 compared to $13.0
billion at March 31, 2014 and $12.2 billion at June 30, 2013. In the
quarter, commercial, commercial real estate, residential mortgage, and
consumer loans increased by $98.6 million, $148.3 million, $9.6 million,
and $24.2 million, respectively.
-- Compared to a year ago, commercial, commercial real estate, and
residential mortgage loans increased by $560.2 million, $425.1 million,
and $52.3 million, respectively. Consumer loans decreased by $8.4
million.
-- Loan originations for portfolio in the second quarter were $1,069
million compared to $879 million in the first quarter and $1,204 million
a year ago. In addition, $73 million of residential loans were
originated for sale in the quarter compared to $59 million in the prior
quarter and $206 million a year ago.
Asset quality
-- Past due loans were $46.9 million at June 30, 2014 compared to $48.0
million at March 31, 2014 and $49.8 million a year ago. Compared to
March 31, past due commercial non-mortgage, residential mortgage,
commercial real estate, and equipment finance loans decreased $2.9
million, $1.1 million, $1.1 million, and $0.4 million respectively,
while past due consumer loans increased $4.2 million. Loans past due 90
days and still accruing increased $0.3 million. Compared to a year ago,
all loan categories contributed to the decrease except for consumer and
residential mortgage loans, which increased $3.2 million and $1.8
million, respectively.
-- Past due loans represented 0.35 percent of total loans at quarter end,
0.37 percent at March 31, and 0.41 percent a year ago. Past due loans
for the continuing portfolio were $44.8 million at quarter end compared
to $45.7 million at March 31 and $47.9 million a year ago. Past due
loans for the liquidating portfolio were $2.1 million at June 30
compared to $2.3 million at March 31 and $1.9 million a year ago.
-- Total nonperforming loans decreased to $144.5 million, or 1.09 percent
of total loans, at quarter end compared to $145.1 million, or 1.12
percent, at March 31, and $186.7 million, or 1.52 percent, a year ago.
Total paying nonperforming loans at June 30 were $37.6 million compared
to $35.7 million at March 31 and $61.9 million a year ago.
Deposits and borrowings
-- Total deposits were $15.2 billion at June 30, 2014 compared to $15.0
billion at March 31, 2014 and $14.8 billion a year ago. Compared to
March 31, increases of $221.4 million in demand deposits, $150.7 million
in interest-bearing checking, $52.9 million in savings, and $52.4
million in brokered certificates of deposit were offset by declines of
$289.0 million in money market deposits, and $25.5 million in
certificates of deposit. Compared to a year ago, increases of $440.1
million in interest-bearing checking, $293.7 million in demand deposits,
$128.7 million in brokered certificates of deposit, and $90.4 million in
savings were offset by declines of $423.4 million in money market
deposits and $162.2 million in certificates of deposit.
-- Core to total deposits were consistent with March 31 at 84.8 percent
compared to 84.2 percent a year ago. Loans to deposits were 87.3 percent
compared to 86.4 percent at March 31 and 82.6 percent a year ago.
-- Total borrowings were $3.8 billion at quarter end compared to $3.7
billion at March 31 and $3.1 billion a year ago.
Capital (compared to prior year)
-- The return on average tangible common shareholders' equity and the
return on average common shareholders' equity were 11.52 percent and
8.54 percent, respectively, at quarter end compared to 12.26 percent and
8.78 percent, respectively.
-- The tangible equity and tangible common equity ratios were 8.34 percent
and 7.62 percent, respectively, at quarter end compared to 8.03 percent
and 7.27 percent, respectively. The Tier 1 common equity to
risk-weighted assets ratio was 11.37 percent at quarter end compared to
11.24 percent.
-- Book value and tangible book value per common share were $23.63 and
$17.72, respectively, at quarter end compared to $21.88 and $15.93,
respectively.
Webster Financial Corporation is the holding company for Webster Bank, National Association. With $22 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust and investment services through 166 banking centers, 311 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 second quarter earnings announcement will be held today, Thursday, July 17, 2014 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) June 30, March 31, December 31, September 30, June 30,
2014 2014 2013 2013 2013
--- ---- ---- ---- ---- ----
Income and performance ratios (annualized):
------------------------------------
Net income
attributable to
Webster Financial
Corp. $47,856 $50,423 $43,754 $47,305 $46,373
Net income available
to common
shareholders 45,217 47,784 41,115 44,666 43,734
Net income per
diluted common share 0.50 0.53 0.45 0.49 0.48
Return on average
assets 0.90 % 0.96 % 0.85 % 0.93 % 0.92 %
Return on average
tangible common
shareholders' equity 11.52 12.51 11.14 12.43 12.26
Return on average
common shareholders'
equity 8.54 9.16 8.06 8.93 8.78
Non-interest income
as a percentage of
total revenue 23.48 24.29 22.34 23.57 26.22
Efficiency ratio 59.26 60.34 59.30 60.07 59.98
Asset quality:
--------------
Allowance for loan
losses $154,868 $153,600 $152,573 $157,545 $163,442
Nonperforming assets 151,207 152,900 171,607 185,566 190,539
Allowance for loan
losses /total loans 1.17 % 1.18 % 1.20 % 1.26 % 1.33 %
Net charge-offs /
average loans
(annualized) 0.24 0.25 0.45 0.47 0.43
Nonperforming loans /
total loans 1.09 1.12 1.28 1.42 1.52
Nonperforming assets
/total loans plus
OREO 1.14 1.18 1.35 1.49 1.56
Allowance for loan
losses /
nonperforming loans 107.19 105.84 93.65 88.73 87.55
Other ratios (annualized):
--------------------------
Tangible equity ratio 8.34 % 8.26 % 8.24 % 8.13 % 8.03 %
Tangible common
equity ratio 7.62 7.53 7.49 7.37 7.27
Tier 1 risk-based
capital ratio(a) 12.94 13.07 13.07 13.05 12.93
Total risk-based
capital(a) 14.05 14.20 14.21 14.25 14.19
Tier 1 common equity
/risk-weighted
assets(a) 11.37 11.45 11.43 11.38 11.24
Shareholders' equity
/total assets 10.61 10.58 10.59 10.52 10.47
Net interest margin 3.19 3.26 3.27 3.23 3.23
Share and equity related:
-------------------------
Common equity $2,132,829 $2,087,980 $2,057,539 $2,016,010 $1,975,826
Book value per common
share 23.63 23.13 22.77 22.34 21.88
Tangible book value
per common share 17.72 17.21 16.85 16.40 15.93
Common stock closing
price 31.54 31.06 31.18 25.53 25.68
Dividends declared
per common share 0.20 0.15 0.15 0.15 0.15
Common shares issued
and outstanding 90,246 90,269 90,367 90,245 90,289
Basic shares
(weighted average) 89,776 89,880 89,887 89,759 89,645
Diluted shares
(weighted average) 90,528 90,658 90,602 90,423 90,087
(a) The ratios presented are projected for June 30, 2014 and actual for the remaining periods presented.
WEBSTER FINANCIAL CORPORATION
Consolidated Balance Sheets (unaudited)
--------------------------------------
(In thousands) June 30, March 31, June 30,
2014 2014 2013
--- ---- ---- ----
Assets:
Cash and due from banks $287,917 $251,886 $179,068
Interest-bearing deposits 18,620 29,893 32,601
Investment securities:
Available for sale, at fair
value 2,980,031 3,008,856 3,257,360
Held to maturity 3,478,803 3,448,195 3,129,864
--------- --------- ---------
Total securities 6,458,834 6,457,051 6,387,224
Loans held for sale 31,671 14,631 81,161
Loans:
Commercial 4,068,089 3,969,508 3,507,927
Commercial real estate 3,291,892 3,143,612 2,866,814
Residential mortgages 3,366,092 3,356,539 3,313,833
Consumer 2,549,307 2,525,083 2,557,719
--------- --------- ---------
Total loans 13,275,380 12,994,742 12,246,293
Allowance for loan losses (154,868) (153,600) (163,442)
-------- -------- --------
Loans, net 13,120,512 12,841,142 12,082,851
Federal Home Loan Bank and
Federal Reserve Bank stock 168,595 166,133 158,878
Premises and equipment, net 119,840 121,473 122,704
Goodwill and other
intangible assets, net 533,402 534,070 537,673
Cash surrender value of life
insurance policies 436,445 433,793 423,598
Deferred tax asset, net 57,671 55,316 73,166
Accrued interest receivable
and other assets 290,830 270,357 250,314
Total Assets $21,524,337 $21,175,745 $20,329,238
----------- ----------- -----------
Liabilities and Equity:
Deposits:
Demand $3,249,996 $3,028,625 $2,956,320
Interest-bearing checking 3,828,638 3,677,917 3,388,505
Money market 1,844,014 2,133,036 2,267,463
Savings 3,973,109 3,920,171 3,882,691
Certificates of deposit 2,029,008 2,054,541 2,191,188
Brokered certificates of
deposit 278,080 225,699 149,408
------- ------- -------
Total deposits 15,202,845 15,039,989 14,835,575
Securities sold under
agreements to repurchase
and other borrowings 1,401,259 1,147,882 1,213,349
Federal Home Loan Bank
advances 2,217,324 2,203,606 1,627,517
Long-term debt 226,178 376,412 229,928
Accrued expenses and other
liabilities 192,253 168,227 295,394
------- ------- -------
Total liabilities 19,239,859 18,936,116 18,201,763
---------- ---------- ----------
Preferred stock 151,649 151,649 151,649
Common shareholders' equity 2,132,829 2,087,980 1,975,826
--------- --------- ---------
Webster Financial
Corporation shareholders'
equity 2,284,478 2,239,629 2,127,475
--------- --------- ---------
Total Liabilities and Equity $21,524,337 $21,175,745 $20,329,238
----------- ----------- -----------
WEBSTER FINANCIAL CORPORATION
Consolidated Statements of Income (unaudited)
--------------------------------------------
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
(In thousands, except
per share data) 2014 2013 2014 2013
--------------------- ---- ---- ---- ----
Interest income:
Interest and fees on
loans and leases $125,771 $121,313 $249,781 $242,005
Interest and dividends
on securities 51,511 48,229 105,103 96,983
Loans held for sale 215 551 392 1,188
Total interest income 177,497 170,093 355,276 340,176
------- ------- ------- -------
Interest expense:
Deposits 10,851 12,024 21,495 24,874
Borrowings 11,524 11,008 23,358 22,445
Total interest expense 22,375 23,032 44,853 47,319
------ ------ ------ ------
Net interest income 155,122 147,061 310,423 292,857
Provision for loan
losses 9,250 8,500 18,250 16,000
Net interest income
after provision for
loan losses 145,872 138,561 292,173 276,857
------- ------- ------- -------
Non-interest income:
Deposit service fees 26,302 24,622 51,014 48,616
Loan related fees 4,890 5,505 9,372 10,090
Wealth and investment
services 8,829 8,920 17,667 16,686
Mortgage banking
activities 513 5,888 1,288 12,919
Increase in cash
surrender value of life
insurance policies 3,296 3,448 6,554 6,832
Net gain on investment
securities - 333 4,336 439
Other income 3,839 3,535 7,354 4,947
47,669 52,251 97,585 100,529
Loss on write-down of
investment securities
to fair value (73) - (161) -
Total non-interest
income 47,596 52,251 97,424 100,529
------ ------ ------ -------
Non-interest expense:
Compensation and
benefits 65,711 65,768 132,082 131,818
Occupancy 11,491 11,837 24,250 24,716
Technology and equipment
expense 15,737 15,495 30,747 30,848
Marketing 4,249 3,817 7,429 8,628
Professional and outside
services 1,269 1,527 3,971 3,677
Intangible assets
amortization 669 1,242 1,837 2,484
Foreclosed and
repossessed asset
expenses 134 331 592 506
Foreclosed and
repossessed asset gains (574) (250) (834) (534)
Loan workout expenses 801 1,576 1,853 3,550
Deposit insurance 5,565 5,524 10,876 10,698
Other expenses 17,008 15,800 33,662 30,175
------ ------ ------ ------
122,060 122,667 246,465 246,566
Debt prepayment
penalties - - - 43
Severance, contract, and
other 267 919 289 2,413
Branch and facility
optimization 258 18 448 117
---
Total non-interest
expense 122,585 123,604 247,202 249,139
------- ------- ------- -------
Income before income
taxes 70,883 67,208 142,395 128,247
Income tax expense 23,027 20,835 44,116 39,757
------ ------ ------ ------
Net income attributable
to Webster Financial
Corp. 47,856 46,373 98,279 88,490
Preferred stock
dividends (2,639) (2,639) (5,278) (5,525)
Net income available to
common shareholders $45,217 $43,734 $93,001 $82,965
------- ------- ------- -------
Diluted shares (average) 90,528 90,087 90,584 89,953
Net income per common
share available to
common shareholders:
Basic $0.50 $0.49 $1.03 $0.94
Diluted 0.50 0.48 1.02 0.92
WEBSTER FINANCIAL CORPORATION
Five Quarter Consolidated Statements of Income (unaudited)
---------------------------------------------------------
Three Months Ended
------------------
(In thousands, except per share data) June 30, March 31, December 31, September 30, June 30,
2014 2014 2013 2013 2013
--- ---- ---- ---- ---- ----
Interest income:
Interest and fees on loans and leases $125,771 $124,010 $124,110 $123,257 $121,313
Interest and dividends on securities 51,511 53,592 51,294 47,923 48,229
Loans held for sale 215 177 307 573 551
Total interest income 177,497 177,779 175,711 171,753 170,093
------- ------- ------- ------- -------
Interest expense:
Deposits 10,851 10,644 10,800 10,908 12,024
Borrowings 11,524 11,834 11,027 10,858 11,008
Total interest expense 22,375 22,478 21,827 21,766 23,032
------ ------ ------ ------ ------
Net interest income 155,122 155,301 153,884 149,987 147,061
Provision for loan losses 9,250 9,000 9,000 8,500 8,500
Net interest income after provision for loan losses 145,872 146,301 144,884 141,487 138,561
------- ------- ------- ------- -------
Non-interest income:
Deposit service fees 26,302 24,712 25,182 25,170 24,622
Loan related fees 4,890 4,482 5,930 5,840 5,505
Wealth and investment services 8,829 8,838 9,990 8,095 8,920
Mortgage banking activities 513 775 2,775 665 5,888
Increase in cash surrender value of life insurance policies 3,296 3,258 3,422 3,516 3,448
Net gain on investment securities - 4,336 4 269 333
Other income 3,839 3,515 4,238 2,702 3,535
47,669 49,916 51,541 46,257 52,251
Loss on write-down of investment securities to fair value (73) (88) (7,277) - -
---
Total non-interest income 47,596 49,828 44,264 46,257 52,251
------ ------ ------ ------ ------
Non-interest expense:
Compensation and benefits 65,711 66,371 68,155 64,862 65,768
Occupancy 11,491 12,759 12,084 11,994 11,837
Technology and equipment expense 15,737 15,010 14,583 14,895 15,495
Marketing 4,249 3,180 3,225 3,649 3,817
Professional and outside services 1,269 2,702 3,601 2,254 1,527
Intangible assets amortization 669 1,168 1,193 1,242 1,242
Foreclosed and repossessed asset expenses 134 458 400 432 331
Foreclosed and repossessed asset gains (574) (260) (229) (532) (250)
Loan workout expenses 801 1,052 1,370 1,296 1,576
Deposit insurance 5,565 5,311 5,116 5,300 5,524
Other expenses 17,008 16,654 15,547 15,407 15,800
------ ------ ------ ------ ------
122,060 124,405 125,045 120,799 122,667
Severance, contract, and other 267 22 389 1,482 919
Branch and facility optimization 258 190 1,205 - 18
--- ---
Total non-interest expense 122,585 124,617 126,639 122,281 123,604
------- ------- ------- ------- -------
Income before income taxes 70,883 71,512 62,509 65,463 67,208
Income tax expense 23,027 21,089 18,755 18,158 20,835
------
Net income attributable to Webster Financial Corp. 47,856 50,423 43,754 47,305 46,373
Preferred stock dividends (2,639) (2,639) (2,639) (2,639) (2,639)
Net income available to common shareholders $45,217 $47,784 $41,115 $44,666 $43,734
------- ------- ------- ------- -------
Diluted shares (average) 90,528 90,658 90,602 90,423 90,087
Net income per common share available to common shareholders:
Basic $0.50 $0.53 $0.46 $0.50 $0.49
Diluted 0.50 0.53 0.45 0.49 0.48
WEBSTER FINANCIAL CORPORATION
Consolidated Average Balances, Yields, and Rates Paid (unaudited)
----------------------------------------------------------------
Three Months Ended June 30,
---------------------------
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 $13,129,865 $126,292 3.83 % $12,061,551 $121,720 4.02 %
Investment securities(a) 6,411,407 52,604 3.29 6,257,923 50,277 3.24
Federal Home Loan and Federal Reserve Bank stock 166,350 1,158 2.79 158,878 865 2.18
Interest-bearing deposits 16,792 11 0.27 41,499 17 0.16
Loans held for sale 20,099 215 4.27 70,922 551 3.10
------ --- ---- ------ --- ----
Total interest-earning assets 19,744,513 $180,280 3.64 % 18,590,773 $173,430 3.73 %
Non-interest-earning assets 1,506,934 1,483,394
Total assets $21,251,447 $20,074,167
----------- -----------
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Deposits:
Demand $3,099,114 $ - -% $2,879,745 $ - -%
Savings, interest checking, and money market 9,752,872 4,413 0.18 9,413,301 4,506 0.19
Certificates of deposit 2,280,571 6,438 1.13 2,397,519 7,518 1.26
Total deposits 15,132,557 10,851 0.29 14,690,565 12,024 0.33
---------- ------ ---- ---------- ------ ----
Securities sold under agreements to repurchase and other borrowings 1,412,820 5,082 1.42 1,203,442 5,184 1.70
Federal Home Loan Bank advances 2,035,813 4,002 0.78 1,623,489 4,007 0.98
Long-term debt 249,276 2,440 3.91 230,305 1,817 3.16
Total borrowings 3,697,909 11,524 1.24 3,057,236 11,008 1.43
--------- ------ ---- --------- ------ ----
Total interest-bearing liabilities 18,830,466 $22,375 0.47 % 17,747,801 $23,032 0.52 %
Non-interest-bearing liabilities 150,316 183,117
Total liabilities 18,980,782 17,930,918
---------- ----------
Preferred stock 151,649 151,649
Common shareholders' equity 2,119,016 1,991,600
--------- ---------
Webster Financial Corp. shareholders' equity 2,270,665 2,143,249
Total liabilities and equity $21,251,447 $20,074,167
----------- -----------
Tax-equivalent net interest income 157,905 150,398
Less: tax-equivalent adjustment (2,783) (3,337)
Net interest income $155,122 $147,061
-------- --------
Net interest margin 3.19 % 3.23 %
----- -----
(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)
----------------------------------------------------------------
Six Months Ended June 30,
-------------------------
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 $12,992,371 $250,804 3.85 % $12,043,172 $242,781 4.03 %
Investment securities(a) 6,416,165 107,529 3.36 6,226,578 101,292 3.28
Federal Home Loan and Federal Reserve Bank stock 162,675 2,325 2.88 157,577 1,712 2.19
Interest-bearing deposits 16,373 22 0.27 61,744 63 0.20
Loans held for sale 19,119 392 4.10 80,077 1,188 2.97
------ --- ---- ------ ----- ----
Total interest-earning assets 19,606,703 $361,072 3.68 % 18,569,148 $347,036 3.75 %
Non-interest-earning assets 1,509,269 1,493,738
Total assets $21,115,972 $20,062,886
----------- -----------
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Deposits:
Demand $3,098,058 $ - -% $2,858,018 $ - -%
Savings, interest checking, and money market 9,798,648 8,932 0.18 9,366,063 9,128 0.20
Certificates of deposit 2,265,510 12,563 1.12 2,448,700 15,746 1.30
Total deposits 15,162,216 21,495 0.29 14,672,781 24,874 0.34
---------- ------ ---- ---------- ------ ----
Securities sold under agreements to repurchase and other borrowings 1,382,301 10,287 1.48 1,147,749 10,239 1.77
Federal Home Loan Bank advances 1,879,609 7,849 0.83 1,685,330 8,546 1.01
Long-term debt 278,966 5,222 3.74 238,645 3,660 3.07
Total borrowings 3,540,876 23,358 1.31 3,071,724 22,445 1.45
--------- ------ ---- --------- ------ ----
Total interest-bearing liabilities 18,703,092 $44,853 0.48 % 17,744,505 $47,319 0.53 %
Non-interest-bearing liabilities 158,046 191,198
Total liabilities 18,861,138 17,935,703
---------- ----------
Preferred stock 151,649 151,649
Common shareholders' equity 2,103,185 1,975,534
--------- ---------
Webster Financial Corp. shareholders' equity 2,254,834 2,127,183
Total liabilities and equity $21,115,972 $20,062,886
----------- -----------
Tax-equivalent net interest income 316,219 299,717
Less: tax-equivalent adjustment (5,796) (6,860)
Net interest income $310,423 $292,857
-------- --------
Net interest margin 3.22 % 3.23 %
----- -----
(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) June 30, March 31, December 31, September 30, June 30,
2014 2014 2013 2013 2013
--- ---- ---- ---- ---- ----
Loan Balances
(actuals):
Continuing Portfolio:
Commercial non-
mortgage $2,978,576 $2,926,223 $2,723,566 $2,573,293 $2,515,288
Equipment financing 464,948 457,670 460,450 425,827 400,658
Asset-based lending 624,565 585,615 559,285 612,106 591,981
Commercial real estate 3,291,892 3,143,612 3,058,362 2,983,863 2,866,814
Residential mortgages 3,366,091 3,356,538 3,361,424 3,350,576 3,313,832
Consumer 2,449,730 2,422,377 2,431,786 2,423,829 2,445,792
--------- --------- --------- --------- ---------
Total continuing
portfolio 13,175,802 12,892,035 12,594,873 12,369,494 12,134,365
Allowance for loan
losses (143,440) (141,352) (137,821) (139,734) (142,402)
Total continuing
portfolio, net 13,032,362 12,750,683 12,457,052 12,229,760 11,991,963
---------- ---------- ---------- ---------- ----------
Liquidating Portfolio:
National Construction
Lending Center (NCLC) 1 1 1 1 1
Consumer 99,577 102,706 104,902 108,470 111,927
------ ------- ------- ------- -------
Total liquidating
portfolio 99,578 102,707 104,903 108,471 111,928
Allowance for loan
losses (11,428) (12,248) (14,752) (17,811) (21,040)
------- ------- ------- ------- -------
Total liquidating
portfolio, net 88,150 90,459 90,151 90,660 90,888
------ ------ ------ ------ ------
Total Loan Balances
(actuals) 13,275,380 12,994,742 12,699,776 12,477,965 12,246,293
Allowance for loan
losses (154,868) (153,600) (152,573) (157,545) (163,442)
Loans, net $13,120,512 $12,841,142 $12,547,203 $12,320,420 $12,082,851
----------- ----------- ----------- ----------- -----------
Loan Balances
(average):
Continuing Portfolio:
Commercial non-
mortgage $2,963,150 $2,853,516 $2,625,654 $2,517,496 $2,422,156
Equipment financing 459,140 456,391 436,328 413,975 398,084
Asset-based lending 612,170 562,443 587,039 599,387 566,623
Commercial real estate 3,195,746 3,080,575 3,003,837 2,885,767 2,811,583
Residential mortgages 3,361,276 3,364,746 3,359,186 3,342,516 3,295,192
Consumer 2,437,452 2,431,900 2,429,354 2,433,705 2,454,041
--------- --------- --------- --------- ---------
Total continuing
portfolio 13,028,934 12,749,571 12,441,398 12,192,846 11,947,679
Allowance for loan
losses (143,811) (143,676) (141,460) (145,849) (148,037)
Total continuing
portfolio, net 12,885,123 12,605,895 12,299,938 12,046,997 11,799,642
---------- ---------- ---------- ---------- ----------
Liquidating Portfolio:
NCLC 53 1 1 1 1
Consumer 100,878 103,777 106,794 109,620 113,871
------- ------- ------- ------- -------
Total liquidating
portfolio 100,931 103,778 106,795 109,621 113,872
Allowance for loan
losses (11,428) (12,248) (14,752) (17,811) (21,040)
Total liquidating
portfolio, net 89,503 91,530 92,043 91,810 92,832
------ ------ ------ ------ ------
Total Loan Balances
(average) 13,129,865 12,853,349 12,548,193 12,302,467 12,061,551
Allowance for loan
losses (155,239) (155,924) (156,212) (163,660) (169,077)
Loans, net $12,974,626 $12,697,425 $12,391,981 $12,138,807 $11,892,474
----------- ----------- ----------- ----------- -----------
WEBSTER FINANCIAL CORPORATION
Five Quarter Nonperforming Assets (unaudited)
---------------------------------------------
(Dollars in thousands) June 30, March 31, December 31, September 30, June 30,
2014 2014(a) 2013 2013 2013
--- ---- ------ ---- ---- ----
Nonperforming loans:
Continuing Portfolio:
Commercial non-mortgage $14,152 $12,869 $10,933 $17,471 $17,285
Equipment financing 863 1,325 1,141 1,669 1,852
Asset-based lending - - - - -
Commercial real estate 19,023 20,009 17,663 20,215 21,035
Residential mortgages 68,439 66,373 81,370 86,099 94,208
Consumer 36,526 38,670 45,573 45,587 44,717
Nonperforming loans -
continuing portfolio 139,003 139,246 156,680 171,041 179,097
------- ------- ------- ------- -------
Liquidating Portfolio:
Consumer 5,475 5,875 6,245 6,517 7,594
Total nonperforming loans $144,478 $145,121 $162,925 $177,558 $186,691
-------- -------- -------- -------- --------
Other real estate owned and repossessed assets:
Continuing Portfolio:
Commercial $3,238 $3,466 $3,618 $3,728 $404
Repossessed equipment 100 123 134 193 505
Residential 2,748 3,721 4,648 3,601 2,485
Consumer 643 469 282 486 454
Total continuing portfolio 6,729 7,779 8,682 8,008 3,848
----- ----- ----- ----- -----
Liquidating Portfolio:
Total liquidating portfolio - - - - -
Total other real estate
owned and repossessed
assets $6,729 $7,779 $8,682 $8,008 $3,848
------ ------ ------ ------ ------
Total nonperforming assets $151,207 $152,900 $171,607 $185,566 $190,539
-------- -------- -------- -------- --------
(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) June 30, March 31, December 31, September 30, June 30,
2014 2014 2013 2013 2013
--- ---- ---- ---- ---- ----
Past due 30-89 days:
Continuing Portfolio:
Commercial non-
mortgage $5,045 $7,913 $4,100 $2,982 $10,891
Equipment financing 290 698 362 455 783
Asset-based lending - - - - -
Commercial real estate 1,610 2,680 4,897 547 2,722
Residential mortgages 17,826 18,966 18,285 20,803 16,056
Consumer 18,956 14,552 18,926 15,966 15,976
Past due 30-89 days -
continuing portfolio 43,727 44,809 46,570 40,753 46,428
------ ------ ------ ------ ------
Liquidating Portfolio:
Consumer 2,105 2,325 1,806 2,726 1,902
Total past due 30-89
days 45,832 47,134 48,376 43,479 48,330
------ ------ ------ ------ ------
Loans past due 90 days
or more and accruing 1,111 850 4,501 4,811 1,498
----- --- ----- ----- -----
Total past due loans $46,943 $47,984 $52,877 $48,290 $49,828
------- ------- ------- ------- -------
WEBSTER FINANCIAL CORPORATION
Five Quarter Changes in the Allowance for Loan Losses (unaudited)
-----------------------------------------------------------------
For the Three Months Ended
--------------------------
(Dollars in thousands) June 30, March 31, December 31, September 30, June 30,
2014 2014 2013 2013 2013
--- ---- ---- ---- ---- ----
Beginning balance $153,600 $152,573 $157,545 $163,442 $167,840
Provision 9,250 9,000 9,000 8,500 8,500
Charge-offs continuing portfolio:
Commercial non-
mortgage 3,685 3,148 5,383 3,245 6,156
Equipment financing 20 - 178 10 4
Asset-based lending - - 3 - -
Commercial real estate 447 2,405 5,086 4,069 2,510
Residential mortgages 1,840 1,158 2,744 3,800 2,112
Consumer 4,075 4,517 4,402 4,525 5,374
Charge-offs
continuing portfolio 10,067 11,228 17,796 15,649 16,156
------ ------ ------ ------ ------
Charge-offs liquidating portfolio:
NCLC - - - - -
Consumer 1,211 369 1,070 1,302 1,957
Charge-offs
liquidating portfolio 1,211 369 1,070 1,302 1,957
Total charge-offs 11,278 11,597 18,866 16,951 18,113
------ ------ ------ ------ ------
Recoveries continuing portfolio:
Commercial non-
mortgage 1,121 950 2,029 424 998
Equipment financing 397 799 630 683 904
Asset-based lending - 23 11 2 60
Commercial real estate 69 479 750 105 552
Residential mortgages 495 108 445 141 435
Consumer 923 865 769 1,002 1,571
Recoveries continuing
portfolio 3,005 3,224 4,634 2,357 4,520
----- ----- ----- ----- -----
Recoveries liquidating portfolio:
NCLC 12 152 115 11 5
Consumer 279 248 145 186 690
Recoveries liquidating
portfolio 291 400 260 197 695
Total recoveries 3,296 3,624 4,894 2,554 5,215
----- ----- ----- ----- -----
Total net charge-offs 7,982 7,973 13,972 14,397 12,898
Ending balance $154,868 $153,600 $152,573 $157,545 $163,442
-------- -------- -------- -------- --------
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 June 30, 2014, March 31, 2014, December 31, 2013, September 30, 2013, and June 30, 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) June 30, March 31, December 31, September 30, June 30,
2014 2014 2013 2013 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 $45,217 $47,784 $41,115 $44,666 $43,734
Amortization of intangibles (tax-affected @ 35%) 435 759 775 807 807
--- --- --- --- ---
Quarterly net income adjusted for amortization of intangibles 45,652 48,543 41,890 45,473 44,541
Annualized net income used in the return on average tangible common shareholders' equity ratio $182,608 $194,172 $167,560 $181,982 $178,164
-------- -------- -------- -------- --------
Reconciliation of average common shareholders' equity to average tangible common shareholders' equity
-----------------------------------------------------------------------------------------------------
Average common shareholders' equity $2,119,016 $2,087,179 $2,040,435 $2,000,018 $1,991,600
Average goodwill (529,887) (529,887) (529,887) (529,887) (529,887)
Average intangible assets (excluding mortgage servicing rights) (3,762) (4,754) (5,922) (7,151) (8,391)
------ ------ ------ ------ ------
Average tangible common shareholders' equity $1,585,367 $1,552,538 $1,504,626 $1,462,980 $1,453,322
---------- ---------- ---------- ---------- ----------
Reconciliation of period-end shareholders' equity to period-end tangible shareholders' equity
---------------------------------------------------------------------------------------------
Shareholders' equity $2,284,478 $2,239,629 $2,209,188 $2,167,659 $2,127,475
Goodwill (529,887) (529,887) (529,887) (529,887) (529,887)
Intangible assets (excluding mortgage servicing rights) (3,515) (4,183) (5,351) (6,544) (7,786)
Tangible shareholders' equity $1,751,076 $1,705,559 $1,673,950 $1,631,228 $1,589,802
---------- ---------- ---------- ---------- ----------
Reconciliation of period-end common shareholders' equity to period-end tangible common shareholders' equity
-----------------------------------------------------------------------------------------------------------
Shareholders' equity $2,284,478 $2,239,629 $2,209,188 $2,167,659 $2,127,475
Preferred stock (151,649) (151,649) (151,649) (151,649) (151,649)
-------- -------- -------- -------- --------
Common shareholders' equity 2,132,829 2,087,980 2,057,539 2,016,010 1,975,826
Goodwill (529,887) (529,887) (529,887) (529,887) (529,887)
Intangible assets (excluding mortgage servicing rights) (3,515) (4,183) (5,351) (6,544) (7,786)
Tangible common shareholders' equity $1,599,427 $1,553,910 $1,522,301 $1,479,579 $1,438,153
---------- ---------- ---------- ---------- ----------
Reconciliation of period-end assets to period-end tangible assets
-----------------------------------------------------------------
Assets $21,524,337 $21,175,745 $20,852,999 $20,609,554 $20,329,238
Goodwill (529,887) (529,887) (529,887) (529,887) (529,887)
Intangible assets (excluding mortgage servicing rights) (3,515) (4,183) (5,351) (6,544) (7,786)
Tangible assets $20,990,935 $20,641,675 $20,317,761 $20,073,123 $19,791,565
----------- ----------- ----------- ----------- -----------
Book value per common share
---------------------------
Common shareholders' equity $2,132,829 $2,087,980 $2,057,539 $2,016,010 $1,975,826
Ending common shares issued and outstanding (in thousands) 90,246 90,269 90,367 90,245 90,289
Book value per share of common stock $23.63 $23.13 $22.77 $22.34 $21.88
------ ------ ------ ------ ------
Tangible book value per common share
------------------------------------
Tangible common shareholders' equity $1,599,427 $1,553,910 $1,522,301 $1,479,579 $1,438,153
Ending common shares issued and outstanding (in thousands) 90,246 90,269 90,367 90,245 90,289
Tangible book value per common share $17.72 $17.21 $16.85 $16.40 $15.93
------ ------ ------ ------ ------
Reconciliation of non-interest expense to non-interest expense used in the efficiency ratio
-------------------------------------------------------------------------------------------
Non-interest expense $122,585 $124,617 $126,639 $122,281 $123,604
Foreclosed property expense (134) (458) (400) (432) (331)
Intangible assets amortization (669) (1,168) (1,193) (1,242) (1,242)
Other expense 49 48 (1,365) (950) (687)
Non-interest expense used in the efficiency ratio $121,831 $123,039 $123,681 $119,657 $121,344
-------- -------- -------- -------- --------
Reconciliation of income to income used in the efficiency ratio
---------------------------------------------------------------
Net interest income before provision for loan losses $155,122 $155,301 $153,884 $149,987 $147,061
Fully taxable-equivalent adjustment 2,783 3,013 3,150 3,211 3,337
Non-interest income 47,596 49,828 44,264 46,257 52,251
Net gain on investment securities - (4,336) (4) (269) (333)
Other 73 88 7,277 - -
Income used in the efficiency ratio $205,574 $203,894 $208,571 $199,186 $202,316
-------- -------- -------- -------- --------
SOURCE Webster Financial Corporation
