WEBSTER FINANCIAL CORPORATION WATERBURY, Conn., Oct. 16, 2014 /PRNewswire/ -- Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today announced net income available to common shareholders of $47.8 million, or $0.53 per diluted share, for the quarter ended September 30, 2014 compared to $44.7 million, or $0.49 per diluted share, for the quarter ended September 30, 2013.
Highlights for the quarter or at September 30 (compared to prior year):
-- Record net interest income of $157.4 million, core revenue of $208.4
million, core pre-tax, pre-provision income of $83.5 million, pre-tax
income of $74.1 million, and net income of $50.5 million.
-- Combined growth in commercial and commercial real estate loans of $881.2
million, or 13.4 percent. Overall loan growth of $1.0 billion, or 8.3
percent.
-- Deposit growth of $547.4 million, or 3.7 percent.
-- Core revenue improved 6.3 percent from a year ago, while core expenses
increased by 3.3 percent leading to core pre-tax pre-provision net
revenue growth of 11.2 percent.
-- Continued improvement in asset quality: annualized net charge-off rate
at 24 basis points of average total loans; nonperforming loans as a
percentage of total loans at the lowest level since the end of 2007.
-- Efficiency ratio of 58.98 percent, an improvement of 109 basis points.
Positive operating leverage of 3.0 percent.
-- Return on average tangible common shareholders' equity of 11.86 percent.
"Webster reported record net income in the quarter as record revenue and continuing expense discipline produced an 8 percent increase in earnings per share," said James C. Smith, chairman and chief executive officer. "Led by strong performance of lending to businesses once again, loan balances grew in every key category, as our bankers excel in service to our customers. Credit quality trends remain favorable, a sign of the strengthening economy, and business confidence is on the rise."
Net interest income (compared to prior year)
-- Net interest income was $157.4 million compared to $150.0 million.
-- Net interest margin was 3.17 percent compared to 3.23 percent. The yield
on interest-earning assets declined by 6 basis points, while the cost of
funds declined by 1 basis point.
-- Average interest-earning assets totaled $20.0 billion and grew by $1.2
billion, or 6.4 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 $9.5 million
compared to $9.25 million in the prior quarter and $8.5 million a year
ago.
-- Net charge-offs were $7.9 million compared to $8.0 million in the prior
quarter and $14.4 million a year ago. The ratio of net charge-offs to
average loans on an annualized basis was consistent with the second
quarter at 0.24 percent compared to 0.47 percent a year ago.
-- The allowance for loan losses represented 1.16 percent of total loans at
September 30, 2014 compared to 1.17 percent at June 30, 2014 and 1.26
percent at September 30, 2013. The allowance for loan losses represented
112 percent of nonperforming loans at September 30 compared to 107
percent at June 30 and 89 percent a year ago.
Non-interest income (compared to prior year)
-- Total non-interest income was $50.9 million compared to $46.3 million,
an increase of $4.6 million. Excluding securities gains and a nominal
other-than-temporary impairment charge, a $5.0 million year-over-year
increase in core non-interest income reflects an increase of $1.3
million in deposit service fees, an increase of $1.1 million in mortgage
banking activities, and an increase of $2.4 million in other income.
Non-interest expense (compared to prior year)
-- Total non-interest expense was $124.6 million compared to $122.3
million, an increase of $2.3 million. Included in non-interest expense
are branch and facility optimization costs, which include a $1.0 million
gain on a building disposition offset by a $0.4 million building
write-down for a net benefit of $0.6 million. There were $1.5 million of
net one-time costs in the year-ago quarter.
-- Foreclosed and repossessed asset expenses were flat to a year ago at
$0.4 million, while net gains on foreclosed and repossessed assets were
$0.2 million compared to $0.5 million in the year ago quarter.
-- "We have now had twenty consecutive quarters of year-over-year core
revenue growth and fourteen consecutive quarters of year-over-year
positive operating leverage," said Glenn MacInnes, executive vice
president and chief financial officer. "We have accomplished this while
continuing to invest in revenue generating initiatives."
Income taxes
-- The Company recorded $23.7 million of income tax expense in the third
quarter. The effective tax rate was 31.9 percent compared to 27.7
percent a year ago, which included a $2.1 million net tax benefit
specific to that period, and reflects primarily the effects of increased
pre-tax income and decreased benefits from tax-exempt interest income.
Investment securities
-- Total investment securities were $6.5 billion at both September 30 and
June 30, 2014 and $6.4 billion a year ago. The carrying value of the
available-for-sale portfolio included $20.8 million of net unrealized
gains compared to $33.6 million at June 30 and $12.4 million a year ago,
while the carrying value of the held-to-maturity portfolio does not
reflect $57.8 million of net unrealized gains compared to $73.7 million
at June 30 and $42.6 million a year ago.
Loans
-- Total loans were $13.5 billion at September 30, 2014 compared to $13.3
billion at June 30, 2014 and $12.5 billion at September 30, 2013. In the
quarter, commercial, commercial real estate, residential mortgage, and
consumer loans increased by $54.1 million, $62.2 million, $89.3 million,
and $32.6 million, respectively.
-- Compared to a year ago, commercial, commercial real estate, residential
mortgage, and consumer loans increased by $510.9 million, $370.2
million, $104.8 million, and $49.6 million, respectively.
-- Loan originations for portfolio in the third quarter were $1,168 million
compared to $1,069 million in the second quarter and $1,144 million a
year ago. In addition, $78 million of residential loans were originated
for sale in the quarter compared to $73 million in the prior quarter and
$157 million a year ago.
Asset quality
-- Past due loans were $45.3 million at September 30, 2014 compared to
$46.9 million at June 30, 2014 and $48.3 million a year ago. Compared to
June 30, past due consumer, residential mortgage, and liquidating
consumer loans decreased $3.1 million, $1.8 million, and $0.7 million,
respectively, while past due commercial non-mortgage, and equipment
finance loans increased $3.8 million and $0.1 million, respectively.
Loans past due 90 days and still accruing increased $0.1 million.
Compared to a year ago, past due residential mortgages, loans past due
90 days and still accruing, and liquidating consumer loans decreased
$4.8 million, $3.6 million, and 1.3 million, respectively, while
commercial non-mortgage and commercial real estate loans increased $5.8
million and $1.1 million, respectively.
-- Past due loans represented 0.34 percent of total loans at quarter end,
0.35 percent at June 30, and 0.39 percent a year ago. Past due loans for
the continuing portfolio were $43.9 million at quarter end compared to
$44.8 million at June 30 and $45.6 million a year ago. Past due loans
for the liquidating portfolio were $1.4 million at September 30 compared
to $2.1 million at June 30 and $2.7 million a year ago.
-- Total nonperforming loans decreased to $139.8 million, or 1.03 percent
of total loans, at quarter end compared to $144.5 million, or 1.09
percent, at June 30, and $177.6 million, or 1.42 percent, a year ago.
Total paying nonperforming loans at September 30 were $35.0 million
compared to $37.6 million at June 30 and $55.8 million a year ago.
Deposits and borrowings
-- Total deposits were $15.5 billion at September 30, 2014 compared to
$15.2 billion at June 30, 2014 and $15.0 billion a year ago. Compared to
June 30, increases of $395.1 million in money market deposits, $42.5
million in interest-bearing checking, $16.2 million in brokered
certificates of deposit, and $6.7 million in demand deposits were offset
by declines of $95.4 million in savings, and $21.1 million in
certificates of deposit. Compared to a year ago, increases of $497.0
million in interest-bearing checking, $288.0 million in demand deposits,
$160.8 million in brokered certificates of deposit, and $50.3 million in
savings were offset by declines of $332.6 million in money market
deposits and $116.1 million in certificates of deposit.
-- Core to total deposits were consistent with June 30 and a year ago at
85.0 percent. Loans to deposits were 86.9 percent compared to 87.3
percent at June 30 and 83.2 percent a year ago.
-- Total borrowings were $3.8 billion at quarter end and at June 30
compared to $3.2 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 11.86 percent and
8.88 percent, respectively, for the third quarter of 2014 compared to
12.43 percent and 8.93 percent, a year ago.
-- The tangible equity and tangible common equity ratios were 8.35 percent
and 7.64 percent, respectively, at September 30 compared to 8.13 percent
and 7.37 percent, a year ago. The Tier 1 common equity to risk-weighted
assets ratio was 11.44 percent at September 30 compared to 11.38 percent
a year ago.
-- Book value and tangible book value per common share were $23.93 and
$18.02, respectively, at quarter end compared to $22.34 and $16.40,
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 third quarter earnings announcement will be held today, Thursday, October 16, 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) September 30, June 30, March 31, December 31, September 30,
2014 2014 2014 2013 2013
--- ---- ---- ---- ---- ----
Income and performance ratios (annualized):
-------------------------------------------
Net income $50,458 $47,856 $50,423 $43,754 $47,305
Net income available to common shareholders 47,819 45,217 47,784 41,115 44,666
Net income per diluted common share 0.53 0.50 0.53 0.45 0.49
Return on average assets 0.94% 0.90% 0.96% 0.85% 0.93%
Return on average tangible common shareholders' equity 11.86 11.52 12.51 11.14 12.43
Return on average common shareholders' equity 8.88 8.54 9.16 8.06 8.93
Non-interest income as a percentage of total revenue 24.44 23.48 24.29 22.34 23.57
Efficiency ratio 58.98 59.26 60.34 59.30 60.07
Asset quality:
--------------
Allowance for loan losses $156,482 $154,868 $153,600 $152,573 $157,545
Nonperforming assets 145,053 151,207 152,900 171,607 185,566
Allowance for loan losses / total loans 1.16% 1.17% 1.18% 1.20% 1.26%
Net charge-offs / average loans (annualized) 0.24 0.24 0.25 0.45 0.47
Nonperforming loans / total loans 1.03 1.09 1.12 1.28 1.42
Nonperforming assets / total loans plus OREO 1.07 1.14 1.18 1.35 1.49
Allowance for loan losses / nonperforming loans 111.91 107.19 105.84 93.65 88.73
Other ratios (annualized):
--------------------------
Tangible equity ratio 8.35% 8.34% 8.26% 8.24% 8.13%
Tangible common equity ratio 7.64 7.62 7.53 7.49 7.37
Tier 1 risk-based capital ratio (a) 12.99 12.97 13.07 13.07 13.05
Total risk-based capital (a) 14.09 14.09 14.20 14.21 14.25
Tier 1 common equity / risk-weighted assets (a) 11.44 11.40 11.45 11.43 11.38
Shareholders' equity / total assets 10.59 10.61 10.58 10.59 10.52
Net interest margin 3.17 3.19 3.26 3.27 3.23
Share and equity related:
-------------------------
Common equity $2,159,201 $2,132,829 $2,087,980 $2,057,539 $2,016,010
Book value per common share 23.93 23.63 23.13 22.77 22.34
Tangible book value per common share 18.02 17.72 17.21 16.85 16.40
Common stock closing price 29.14 31.54 31.06 31.18 25.53
Dividends declared per common share 0.20 0.20 0.15 0.15 0.15
Common shares issued and outstanding 90,248 90,246 90,269 90,367 90,245
Basic shares (weighted average) 89,888 89,776 89,880 89,887 89,759
Diluted shares (weighted average) 90,614 90,528 90,658 90,602 90,423
(a) The ratios presented are projected for September 30, 2014 and actual for the remaining periods presented.
WEBSTER FINANCIAL CORPORATION
Consolidated Balance Sheets (unaudited)
--------------------------------------
(In thousands) September 30, June 30, September 30,
2014 2014 2013
--- ---- ---- ----
Assets:
Cash and due from banks $207,128 $287,917 $266,747
Interest-bearing deposits 105,394 18,620 18,192
Investment securities:
Available for sale, at fair value 2,873,886 2,980,031 3,193,772
Held to maturity 3,641,979 3,478,803 3,205,999
--------- --------- ---------
Total securities 6,515,865 6,458,834 6,399,771
Loans held for sale 26,083 31,671 40,193
Loans:
Commercial 4,122,142 4,068,089 3,611,226
Commercial real estate 3,354,106 3,291,892 2,983,863
Residential mortgages 3,455,354 3,366,092 3,350,577
Consumer 2,581,900 2,549,307 2,532,299
--------- --------- ---------
Total loans 13,513,502 13,275,380 12,477,965
Allowance for loan losses (156,482) (154,868) (157,545)
-------- -------- --------
Loans, net 13,357,020 13,120,512 12,320,420
Federal Home Loan Bank and Federal Reserve Bank stock 171,174 168,595 158,878
Premises and equipment, net 118,608 119,840 121,250
Goodwill and other intangible assets, net 532,969 533,402 536,431
Cash surrender value of life insurance policies 438,100 436,445 427,113
Deferred tax asset, net 62,884 57,671 72,180
Accrued interest receivable and other assets 291,657 290,830 248,379
------- ------- -------
Total Assets $21,826,882 $21,524,337 $20,609,554
----------- ----------- -----------
Liabilities and Equity:
Deposits:
Demand $3,256,741 $3,249,996 $2,968,727
Interest-bearing checking 3,871,152 3,828,638 3,374,120
Money market 2,239,106 1,844,014 2,571,712
Savings 3,877,673 3,973,109 3,827,345
Certificates of deposit 2,007,942 2,029,008 2,124,073
Brokered certificates of deposit 294,304 278,080 133,554
------- ------- -------
Total deposits 15,546,918 15,202,845 14,999,531
Securities sold under agreements to repurchase and other borrowings 1,236,975 1,401,259 1,372,290
Federal Home Loan Bank advances 2,290,204 2,217,324 1,602,469
Long-term debt 226,208 226,178 229,146
Accrued expenses and other liabilities 215,727 192,253 238,459
------- ------- -------
Total liabilities 19,516,032 19,239,859 18,441,895
---------- ---------- ----------
Preferred stock 151,649 151,649 151,649
Common shareholders' equity 2,159,201 2,132,829 2,016,010
--------- --------- ---------
Webster Financial Corporation shareholders' equity 2,310,850 2,284,478 2,167,659
--------- --------- ---------
Total Liabilities and Equity $21,826,882 $21,524,337 $20,609,554
----------- ----------- -----------
WEBSTER FINANCIAL CORPORATION
Consolidated Statements of Income (unaudited)
--------------------------------------------
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
(In thousands, except per share data) 2014 2013 2014 2013
------------------------------------ ---- ---- ---- ----
Interest income:
Interest and fees on loans and leases $129,227 $123,257 $379,008 $365,262
Interest and dividends on securities 50,448 47,923 155,551 144,906
Loans held for sale 239 573 631 1,761
--- --- --- -----
Total interest income 179,914 171,753 535,190 511,929
------- ------- ------- -------
Interest expense:
Deposits 11,345 10,908 32,840 35,782
Borrowings 11,199 10,858 34,557 33,303
------ ------ ------ ------
Total interest expense 22,544 21,766 67,397 69,085
------ ------ ------ ------
Net interest income 157,370 149,987 467,793 442,844
Provision for loan losses 9,500 8,500 27,750 24,500
----- ----- ------ ------
Net interest income after provision for loan losses 147,870 141,487 440,043 418,344
------- ------- ------- -------
Non-interest income:
Deposit service fees 26,489 25,170 77,503 73,786
Loan related fees 5,479 5,840 14,851 15,930
Wealth and investment services 8,762 8,095 26,429 24,781
Mortgage banking activities 1,805 665 3,093 13,584
Increase in cash surrender value of life insurance policies 3,346 3,516 9,900 10,348
Net gain on investment securities 42 269 4,378 708
Other income 5,071 2,702 12,425 7,649
----- ----- ------ -----
50,994 46,257 148,579 146,786
Loss on write-down of investment securities to fair value (85) - (246) -
--- --- ---- ---
Total non-interest income 50,909 46,257 148,333 146,786
------ ------ ------- -------
Non-interest expense:
Compensation and benefits 66,849 64,862 198,931 196,680
Occupancy 11,557 11,994 35,807 36,710
Technology and equipment expense 15,419 14,895 46,166 45,743
Marketing 4,032 3,649 11,461 12,277
Professional and outside services 2,470 2,254 6,441 5,931
Intangible assets amortization 432 1,242 2,269 3,726
Foreclosed and repossessed asset expenses 387 432 979 938
Foreclosed and repossessed asset gains (225) (532) (1,059) (1,066)
Loan workout expenses 969 1,296 2,822 4,846
Deposit insurance 5,938 5,300 16,814 15,998
Other expenses 17,227 15,407 50,889 45,582
------ ------ ------ ------
125,055 120,799 371,520 367,365
Debt prepayment penalties - - - 43
Severance, contract, and other 42 1,482 331 3,895
Acquisition costs 144 - 144 -
Branch and facility optimization (599) - (151) 117
---- --- ---- ---
Total non-interest expense 124,642 122,281 371,844 371,420
------- ------- ------- -------
Income before income taxes 74,137 65,463 216,532 193,710
Income tax expense 23,679 18,158 67,795 57,915
------ ------ ------ ------
Net income 50,458 47,305 148,737 135,795
Preferred stock dividends (2,639) (2,639) (7,917) (8,164)
------ ------ ------ ------
Net income available to common shareholders $47,819 $44,666 $140,820 $127,631
------- ------- -------- --------
Diluted shares (average) 90,614 90,423 90,591 90,193
Net income per common share available to common
shareholders:
Basic $0.53 $0.50 $1.56 $1.44
Diluted 0.53 0.49 1.55 1.41
WEBSTER FINANCIAL CORPORATION
Five Quarter Consolidated Statements of Income (unaudited)
---------------------------------------------------------
Three Months Ended
------------------
(In thousands, except per share data) September 30, June 30, March 31, December 31, September 30,
2014 2014 2014 2013 2013
--- ---- ---- ---- ---- ----
Interest income:
Interest and fees on loans and leases $129,227 $125,771 $124,010 $124,110 $123,257
Interest and dividends on securities 50,448 51,511 53,592 51,294 47,923
Loans held for sale 239 215 177 307 573
--- --- --- --- ---
Total interest income 179,914 177,497 177,779 175,711 171,753
------- ------- ------- ------- -------
Interest expense:
Deposits 11,345 10,851 10,644 10,800 10,908
Borrowings 11,199 11,524 11,834 11,027 10,858
------ ------ ------ ------ ------
Total interest expense 22,544 22,375 22,478 21,827 21,766
------ ------ ------ ------ ------
Net interest income 157,370 155,122 155,301 153,884 149,987
Provision for loan losses 9,500 9,250 9,000 9,000 8,500
----- ----- ----- ----- -----
Net interest income after provision for loan losses 147,870 145,872 146,301 144,884 141,487
------- ------- ------- ------- -------
Non-interest income:
Deposit service fees 26,489 26,302 24,712 25,182 25,170
Loan related fees 5,479 4,890 4,482 5,930 5,840
Wealth and investment services 8,762 8,829 8,838 9,990 8,095
Mortgage banking activities 1,805 513 775 2,775 665
Increase in cash surrender value of life insurance policies 3,346 3,296 3,258 3,422 3,516
Net gain on investment securities 42 - 4,336 4 269
Other income 5,071 3,839 3,515 4,238 2,702
----- ----- ----- ----- -----
50,994 47,669 49,916 51,541 46,257
Loss on write-down of investment securities to fair value (85) (73) (88) (7,277) -
--- --- --- ------ ---
Total non-interest income 50,909 47,596 49,828 44,264 46,257
------ ------ ------ ------ ------
Non-interest expense:
Compensation and benefits 66,849 65,711 66,371 68,155 64,862
Occupancy 11,557 11,491 12,759 12,084 11,994
Technology and equipment expense 15,419 15,737 15,010 14,583 14,895
Marketing 4,032 4,249 3,180 3,225 3,649
Professional and outside services 2,470 1,269 2,702 3,601 2,254
Intangible assets amortization 432 669 1,168 1,193 1,242
Foreclosed and repossessed asset expenses 387 134 458 400 432
Foreclosed and repossessed asset gains (225) (574) (260) (229) (532)
Loan workout expenses 969 801 1,052 1,370 1,296
Deposit insurance 5,938 5,565 5,311 5,116 5,300
Other expenses 17,227 17,008 16,654 15,547 15,407
------ ------ ------ ------ ------
125,055 122,060 124,405 125,045 120,799
Severance, contract, and other 42 267 22 389 1,482
Acquisition costs 144 - - - -
Branch and facility optimization (599) 258 190 1,205 -
---- --- --- ----- ---
Total non-interest expense 124,642 122,585 124,617 126,639 122,281
------- ------- ------- ------- -------
Income before income taxes 74,137 70,883 71,512 62,509 65,463
Income tax expense 23,679 23,027 21,089 18,755 18,158
------ ------ ------ ------ ------
Net income 50,458 47,856 50,423 43,754 47,305
Preferred stock dividends (2,639) (2,639) (2,639) (2,639) (2,639)
------ ------ ------ ------ ------
Net income available to common shareholders $47,819 $45,217 $47,784 $41,115 $44,666
------- ------- ------- ------- -------
Diluted shares (average) 90,614 90,528 90,658 90,602 90,423
Net income per common share available to common shareholders:
Basic $0.53 $0.50 $0.53 $0.46 $0.50
Diluted 0.53 0.50 0.53 0.45 0.49
WEBSTER FINANCIAL CORPORATION
Consolidated Average Balances, Yields, and Rates Paid (unaudited)
----------------------------------------------------------------
Three Months Ended September 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 $13,391,870 $129,760 3.83% $12,302,467 $123,664 3.97%
Investment securities (a) 6,431,099 51,414 3.21 6,293,453 49,854 3.17
Federal Home Loan and Federal Reserve Bank stock 169,295 1,188 2.78 158,878 863 2.16
Interest-bearing deposits 20,636 13 0.25 14,039 10 0.28
Loans held for sale 26,789 239 3.56 65,207 573 3.52
------ --- ---- ------ --- ----
Total interest-earning assets 20,039,689 $182,614 3.62% 18,834,044 $174,964 3.68%
---------- -------- ---- ---------- -------- ----
Non-interest-earning assets 1,530,310 1,507,532
--------- ---------
Total assets $21,569,999 $20,341,576
----------- -----------
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Deposits:
Demand $3,302,164 $ - -% $2,999,991 $ - -%
Savings, interest checking, and money market 9,942,519 4,509 0.18 9,690,140 4,580 0.19
Certificates of deposit 2,303,082 6,836 1.18 2,286,380 6,328 1.10
--------- ----- ---- --------- ----- ----
Total deposits 15,547,765 11,345 0.29 14,976,511 10,908 0.29
---------- ------ ---- ---------- ------ ----
Securities sold under agreements to repurchase and other borrowings 1,366,774 4,587 1.31 1,293,074 5,283 1.60
Federal Home Loan Bank advances 1,945,688 4,203 0.85 1,506,120 3,753 0.98
Long-term debt 226,188 2,409 4.26 229,525 1,822 3.18
------- ----- ---- ------- ----- ----
Total borrowings 3,538,650 11,199 1.24 3,028,719 10,858 1.41
--------- ------ ---- --------- ------ ----
Total interest-bearing liabilities 19,086,415 $22,544 0.47% 18,005,230 $21,766 0.48%
Non-interest-bearing liabilities 176,832 184,679
------- -------
Total liabilities 19,263,247 18,189,909
---------- ----------
Preferred stock 151,649 151,649
Common shareholders' equity 2,155,103 2,000,018
--------- ---------
Webster Financial Corp. shareholders' equity 2,306,752 2,151,667
--------- ---------
Total liabilities and equity $21,569,999 $20,341,576
----------- -----------
Tax-equivalent net interest income 160,070 153,198
Less: tax-equivalent adjustment (2,700) (3,211)
------ ------
Net interest income $157,370 $149,987
-------- --------
Net interest margin 3.17% 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)
----------------------------------------------------------------
Nine Months Ended September 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 $13,127,001 $380,564 3.84% $12,130,553 $366,445 4.01%
Investment securities (a) 6,421,198 158,943 3.31 6,249,115 151,146 3.25
Federal Home Loan and Federal Reserve 164,906 3,513 2.85 158,016 2,575 2.18
Bank stock
Interest-bearing deposits 17,809 35 0.26 24,027 73 0.40
Loans held for sale 21,703 631 3.87 75,066 1,761 3.13
------ --- ---- ------ ----- ----
Total interest-earning assets 19,752,617 $543,686 3.66% 18,636,777 $522,000 3.73%
---------- -------- ---- ---------- -------- ----
Non-interest-earning assets 1,516,361 1,520,026
--------- ---------
Total assets $21,268,978 $20,156,803
----------- -----------
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Deposits:
Demand $3,166,841 $ - -% $2,905,863 $ - -%
Savings, interest checking, and money market 9,847,132 13,441 0.18 9,475,275 13,708 0.19
Certificates of deposit 2,278,172 19,399 1.14 2,393,999 22,074 1.23
--------- ------ ---- --------- ------ ----
Total deposits 15,292,145 32,840 0.29 14,775,137 35,782 0.32
---------- ------ ---- ---------- ------ ----
Securities sold under agreements to repurchase 1,377,069 14,874 1.42 1,196,723 15,522 1.71
and other borrowings
Federal Home Loan Bank advances 1,901,877 12,052 0.84 1,624,937 12,299 1.00
Long-term debt 261,180 7,631 3.90 235,572 5,482 3.10
------- ----- ---- ------- ----- ----
Total borrowings 3,540,126 34,557 1.29 3,057,232 33,303 1.44
--------- ------ ---- --------- ------ ----
Total interest-bearing liabilities 18,832,271 $67,397 0.48% 17,832,369 $69,085 0.51%
Non-interest-bearing liabilities 164,377 189,001
------- -------
Total liabilities 18,996,648 18,021,370
---------- ----------
Preferred stock 151,649 151,649
Common shareholders' equity 2,120,681 1,983,784
--------- ---------
Webster Financial Corp. shareholders' equity 2,272,330 2,135,433
--------- ---------
Total liabilities and equity $21,268,978 $20,156,803
----------- -----------
Tax-equivalent net interest income 476,289 452,915
Less: tax-equivalent adjustment (8,496) (10,071)
------ -------
Net interest income $467,793 $442,844
-------- --------
Net interest margin 3.21% 3.24%
---- ----
(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) September 30, June 30, March 31, December 31, September 30,
2014 2014 2014 2013 2013
--- ---- ---- ---- ---- ----
Loan Balances (actuals):
Continuing Portfolio:
Commercial non-mortgage $2,984,949 $2,978,576 $2,926,223 $2,723,566 $2,573,293
Equipment financing 490,151 464,948 457,670 460,450 425,827
Asset-based lending 647,042 624,565 585,615 559,285 612,106
Commercial real estate 3,354,106 3,291,892 3,143,612 3,058,362 2,983,863
Residential mortgages 3,455,353 3,366,091 3,356,538 3,361,424 3,350,576
Consumer 2,485,870 2,449,730 2,422,377 2,431,786 2,423,829
--------- --------- --------- --------- ---------
Total continuing portfolio 13,417,471 13,175,802 12,892,035 12,594,873 12,369,494
Allowance for loan losses (145,818) (143,440) (141,352) (137,821) (139,734)
-------- -------- -------- -------- --------
Total continuing portfolio, net 13,271,653 13,032,362 12,750,683 12,457,052 12,229,760
---------- ---------- ---------- ---------- ----------
Liquidating Portfolio:
National Construction Lending Center (NCLC) 1 1 1 1 1
Consumer 96,030 99,577 102,706 104,902 108,470
------ ------ ------- ------- -------
Total liquidating portfolio 96,031 99,578 102,707 104,903 108,471
Allowance for loan losses (10,664) (11,428) (12,248) (14,752) (17,811)
------- ------- ------- ------- -------
Total liquidating portfolio, net 85,367 88,150 90,459 90,151 90,660
------ ------ ------ ------ ------
Total Loan Balances (actuals) 13,513,502 13,275,380 12,994,742 12,699,776 12,477,965
Allowance for loan losses (156,482) (154,868) (153,600) (152,573) (157,545)
-------- -------- -------- -------- --------
Loans, net $13,357,020 $13,120,512 $12,841,142 $12,547,203 $12,320,420
----------- ----------- ----------- ----------- -----------
Loan Balances (average):
Continuing Portfolio:
Commercial non-mortgage $2,987,403 $2,963,150 $2,853,516 $2,625,654 $2,517,496
Equipment financing 478,333 459,140 456,391 436,328 413,975
Asset-based lending 621,856 612,170 562,443 587,039 599,387
Commercial real estate 3,329,767 3,195,746 3,080,575 3,003,837 2,885,767
Residential mortgages 3,409,010 3,361,276 3,364,746 3,359,186 3,342,516
Consumer 2,467,839 2,437,452 2,431,900 2,429,354 2,433,705
--------- --------- --------- --------- ---------
Total continuing portfolio 13,294,208 13,028,934 12,749,571 12,441,398 12,192,846
Allowance for loan losses (146,863) (143,811) (143,676) (141,460) (145,849)
-------- -------- -------- -------- --------
Total continuing portfolio, net 13,147,345 12,885,123 12,605,895 12,299,938 12,046,997
---------- ---------- ---------- ---------- ----------
Liquidating Portfolio:
NCLC 1 53 1 1 1
Consumer 97,661 100,878 103,777 106,794 109,620
------ ------- ------- ------- -------
Total liquidating portfolio 97,662 100,931 103,778 106,795 109,621
Allowance for loan losses (10,664) (11,428) (12,248) (14,752) (17,811)
------- ------- ------- ------- -------
Total liquidating portfolio, net 86,998 89,503 91,530 92,043 91,810
------ ------ ------ ------ ------
Total Loan Balances (average) 13,391,870 13,129,865 12,853,349 12,548,193 12,302,467
Allowance for loan losses (157,527) (155,239) (155,924) (156,212) (163,660)
-------- -------- -------- -------- --------
Loans, net $13,234,343 $12,974,626 $12,697,425 $12,391,981 $12,138,807
----------- ----------- ----------- ----------- -----------
WEBSTER FINANCIAL CORPORATION
Five Quarter Nonperforming Assets (unaudited)
--------------------------------------------
(Dollars in thousands) September 30, June 30, March 31, December 31, September 30,
2014 2014 2014(a) 2013 2013
--- ---- ---- ------ ---- ----
Nonperforming loans:
Continuing Portfolio:
Commercial non-mortgage $12,421 $14,152 $12,869 $10,933 $17,471
Equipment financing 1,659 863 1,325 1,141 1,669
Asset-based lending - - - - -
Commercial real estate 18,341 19,023 20,009 17,663 20,215
Residential mortgages 68,280 68,439 66,373 81,370 86,099
Consumer 34,566 36,526 38,670 45,573 45,587
------ ------ ------ ------ ------
Nonperforming loans - continuing portfolio 135,267 139,003 139,246 156,680 171,041
------- ------- ------- ------- -------
Liquidating Portfolio:
Consumer 4,560 5,475 5,875 6,245 6,517
----- ----- ----- ----- -----
Total nonperforming loans $139,827 $144,478 $145,121 $162,925 $177,558
-------- -------- -------- -------- --------
Other real estate owned and repossessed assets:
Continuing Portfolio:
Commercial $2,899 $3,238 $3,466 $3,618 $3,728
Repossessed equipment 100 100 123 134 193
Residential 1,712 2,748 3,721 4,648 3,601
Consumer 515 643 469 282 486
--- --- --- --- ---
Total continuing portfolio 5,226 6,729 7,779 8,682 8,008
----- ----- ----- ----- -----
Liquidating Portfolio:
Total liquidating portfolio - - - - -
--- --- --- --- ---
Total other real estate owned and repossessed assets $5,226 $6,729 $7,779 $8,682 $8,008
------ ------ ------ ------ ------
Total nonperforming assets $145,053 $151,207 $152,900 $171,607 $185,566
-------- -------- -------- -------- --------
(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) September 30, June 30, March 31, December 31, September 30,
2014 2014 2014 2013 2013
--- ---- ---- ---- ---- ----
Past due 30-89 days:
Continuing Portfolio:
Commercial non-mortgage $8,795 $5,045 $7,913 $4,100 $2,982
Equipment financing 433 290 698 362 455
Asset-based lending - - - - -
Commercial real estate 1,625 1,610 2,680 4,897 547
Residential mortgages 15,980 17,826 18,966 18,285 20,803
Consumer 15,852 18,956 14,552 18,926 15,966
------ ------ ------ ------ ------
Past due 30-89 days - continuing portfolio 42,685 43,727 44,809 46,570 40,753
------ ------ ------ ------ ------
Liquidating Portfolio:
Consumer 1,419 2,105 2,325 1,806 2,726
----- ----- ----- ----- -----
Total past due 30-89 days 44,104 45,832 47,134 48,376 43,479
------ ------ ------ ------ ------
Loans past due 90 days or more and accruing 1,241 1,111 850 4,501 4,811
----- ----- --- ----- -----
Total past due loans $45,345 $46,943 $47,984 $52,877 $48,290
------- ------- ------- ------- -------
WEBSTER FINANCIAL CORPORATION
Five Quarter Changes in the Allowance for Loan Losses (unaudited)
----------------------------------------------------------------
For the Three Months Ended
--------------------------
(Dollars in thousands) September 30, June 30, March 31, December 31, September 30,
2014 2014 2014 2013 2013
--- ---- ---- ---- ---- ----
Beginning balance $154,868 $153,600 $152,573 $157,545 $163,442
Provision 9,500 9,250 9,000 9,000 8,500
Charge-offs continuing portfolio:
Commercial non-mortgage 2,738 3,685 3,148 5,383 3,245
Equipment financing 491 20 - 178 10
Asset-based lending - - - 3 -
Commercial real estate 139 447 2,405 5,086 4,069
Residential mortgages 1,870 1,840 1,158 2,744 3,800
Consumer 5,078 4,075 4,517 4,402 4,525
----- ----- ----- ----- -----
Charge-offs continuing portfolio 10,316 10,067 11,228 17,796 15,649
------ ------ ------ ------ ------
Charge-offs liquidating portfolio:
NCLC - - - - -
Consumer 1,251 1,211 369 1,070 1,302
----- ----- --- ----- -----
Charge-offs liquidating portfolio 1,251 1,211 369 1,070 1,302
----- ----- --- ----- -----
Total charge-offs 11,567 11,278 11,597 18,866 16,951
------ ------ ------ ------ ------
Recoveries continuing portfolio:
Commercial non-mortgage 967 1,121 950 2,029 424
Equipment financing 336 397 799 630 683
Asset-based lending 50 - 23 11 2
Commercial real estate 120 69 479 750 105
Residential mortgages 250 495 108 445 141
Consumer 1,770 923 865 769 1,002
----- --- --- --- -----
Recoveries continuing portfolio 3,493 3,005 3,224 4,634 2,357
----- ----- ----- ----- -----
Recoveries liquidating portfolio:
NCLC 11 12 152 115 11
Consumer 177 279 248 145 186
--- --- --- --- ---
Recoveries liquidating portfolio 188 291 400 260 197
--- --- --- --- ---
Total recoveries 3,681 3,296 3,624 4,894 2,554
----- ----- ----- ----- -----
Total net charge-offs 7,886 7,982 7,973 13,972 14,397
----- ----- ----- ------ ------
Ending balance $156,482 $154,868 $153,600 $152,573 $157,545
-------- -------- -------- -------- --------
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 September 30, 2014, June 30, 2014, March 31, 2014, December 31, 2013, and September 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, except per share data) September 30, June 30, March 31, December 31, September 30,
2014 2014 2014 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 $47,819 $45,217 $47,784 $41,115 $44,666
Amortization of intangibles (tax-affected @ 35%) 281 435 759 775 807
--- --- --- --- ---
Quarterly net income adjusted for amortization of intangibles 48,100 45,652 48,543 41,890 45,473
Annualized net income used in the return on average $192,400 $182,608 $194,172 $167,560 $181,982
tangible common shareholders' equity ratio
Reconciliation of average common shareholders' equity
to average tangible common shareholders' equity
-----------------------------------------------
Average common shareholders' equity $2,155,103 $2,119,016 $2,087,179 $2,040,435 $2,000,018
Average goodwill (529,887) (529,887) (529,887) (529,887) (529,887)
Average intangible assets (excluding mortgage servicing rights) (3,294) (3,762) (4,754) (5,922) (7,151)
------ ------ ------ ------ ------
Average tangible common shareholders' equity $1,621,922 $1,585,367 $1,552,538 $1,504,626 $1,462,980
---------- ---------- ---------- ---------- ----------
Reconciliation of period-end shareholders' equity to
period-end tangible shareholders' equity
----------------------------------------
Shareholders' equity $2,310,850 $2,284,478 $2,239,629 $2,209,188 $2,167,659
Goodwill (529,887) (529,887) (529,887) (529,887) (529,887)
Intangible assets (excluding mortgage servicing rights) (3,082) (3,515) (4,183) (5,351) (6,544)
------ ------ ------ ------ ------
Tangible shareholders' equity $1,777,881 $1,751,076 $1,705,559 $1,673,950 $1,631,228
---------- ---------- ---------- ---------- ----------
Reconciliation of period-end common shareholders'
equity to period-end tangible common shareholders'
equity
------
Shareholders' equity $2,310,850 $2,284,478 $2,239,629 $2,209,188 $2,167,659
Preferred stock (151,649) (151,649) (151,649) (151,649) (151,649)
-------- -------- -------- -------- --------
Common shareholders' equity 2,159,201 2,132,829 2,087,980 2,057,539 2,016,010
Goodwill (529,887) (529,887) (529,887) (529,887) (529,887)
Intangible assets (excluding mortgage servicing rights) (3,082) (3,515) (4,183) (5,351) (6,544)
------ ------ ------ ------ ------
Tangible common shareholders' equity $1,626,232 $1,599,427 $1,553,910 $1,522,301 $1,479,579
---------- ---------- ---------- ---------- ----------
Reconciliation of period-end assets to period-end
tangible assets
---------------
Assets $21,826,882 $21,524,337 $21,175,745 $20,852,999 $20,609,554
Goodwill (529,887) (529,887) (529,887) (529,887) (529,887)
Intangible assets (excluding mortgage servicing rights) (3,082) (3,515) (4,183) (5,351) (6,544)
------ ------ ------ ------ ------
Tangible assets $21,293,913 $20,990,935 $20,641,675 $20,317,761 $20,073,123
----------- ----------- ----------- ----------- -----------
Book value per common share
---------------------------
Common shareholders' equity $2,159,201 $2,132,829 $2,087,980 $2,057,539 $2,016,010
Ending common shares issued and outstanding (in thousands) 90,248 90,246 90,269 90,367 90,245
------ ------ ------ ------ ------
Book value per share of common stock $23.93 $23.63 $23.13 $22.77 $22.34
------ ------ ------ ------ ------
Tangible book value per common share
------------------------------------
Tangible common shareholders' equity $1,626,232 $1,599,427 $1,553,910 $1,522,301 $1,479,579
Ending common shares issued and outstanding (in thousands) 90,248 90,246 90,269 90,367 90,245
------ ------ ------ ------ ------
Tangible book value per common share $18.02 $17.72 $17.21 $16.85 $16.40
------ ------ ------ ------ ------
Reconciliation of non-interest expense to non-interest
expense used in the efficiency ratio
------------------------------------
Non-interest expense $124,642 $122,585 $124,617 $126,639 $122,281
Foreclosed property expense (387) (134) (458) (400) (432)
Intangible assets amortization (432) (669) (1,168) (1,193) (1,242)
Other expense 638 49 48 (1,365) (950)
--- --- --- ------ ----
Non-interest expense used in the efficiency ratio $124,461 $121,831 $123,039 $123,681 $119,657
-------- -------- -------- -------- --------
Reconciliation of income to income used in
the efficiency ratio
--------------------
Net interest income before provision for loan losses $157,370 $155,122 $155,301 $153,884 $149,987
Fully taxable-equivalent adjustment 2,700 2,783 3,013 3,150 3,211
Non-interest income 50,909 47,596 49,828 44,264 46,257
Net gain on investment securities (42) - (4,336) (4) (269)
Other 85 73 88 7,277 -
--- --- --- ----- ---
Income used in the efficiency ratio $211,022 $205,574 $203,894 $208,571 $199,186
-------- -------- -------- -------- --------
SOURCE Webster Financial Corporation
