WATERBURY, Conn., April 16, 2015 /PRNewswire/ -- Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today announced net income available to common shareholders of $47.1 million, or $0.52 per diluted share, for the quarter ended March 31, 2015 compared to $47.8 million, or $0.53 per diluted share, for the quarter ended March 31, 2014.
"Webster's solid first quarter results mark our 22nd consecutive quarter of year-over-year revenue growth, a clear reflection of our bankers' success in serving our customers and communities," said James C. Smith, chairman and chief executive officer. "Commercial Banking once again recorded double-digit loan growth, while HSA Bank opened a record number of new health savings accounts, as consumers increasingly reap the rewards of taking ownership for their health care costs."
Highlights for the first quarter of 2015 compared to the first quarter of 2014:
-- Excluding security gains, earnings per diluted share of $0.52 compared to $0.50 a year ago. -- Growth in commercial and commercial real estate loans of $993.4 million, or 14.0 percent. Overall loan growth of $1.3 billion, or 9.8 percent. -- Successful closing of acquired HSA business resulted in the addition of $1.4 billion in low-cost, long duration health savings account deposits (HSAs), reinforcing HSA Bank's position as a market leader in this fast growing segment. -- Overall deposit growth of $2.5 billion, or 16.7 percent, primarily reflecting the HSA acquisition. -- Record core revenue of $217.6 million increased 8.3 percent, while core expenses increased by 7.1 percent resulting in core pre-provision net revenue of $84.7 million, or a 10.3 percent improvement. -- Efficiency ratio of 59.76 percent, an improvement of 51 basis points. Positive operating leverage of 1.2 percent. -- Annualized return on average tangible common shareholders' equity of 11.82 percent.
"We've now completed eight consecutive quarters with the efficiency ratio at or below 60 percent," said Glenn MacInnes, executive vice president and chief financial officer. "In addition, the annualized net charge-off ratio has been 25 basis points or less for five consecutive quarters as we maintain credit discipline in a competitive market."
Quarterly net interest income compared to the first quarter of 2014:
-- Net interest income was $159.8 million, compared to $155.3 million. -- Net interest margin was 3.10 percent compared to 3.26 percent. The yield on interest-earning assets declined by 18 basis points, while the cost of funds declined by 3 basis points. -- Average interest-earning assets totaled $21.0 billion and grew by $1.6 billion, or 8.0 percent. -- Average loans grew by $1.1 billion, or 8.9 percent.
Quarterly provision for loan losses:
-- The Company recorded a provision for loan losses of $9.75 million in the first quarter of 2015 compared to $9.5 million in the fourth quarter of 2014 and $9.0 million in the first quarter of 2014. -- Net charge-offs were $7.0 million compared to $6.7 million in the prior quarter and $8.0 million a year ago. The ratio of net charge-offs to average loans on an annualized basis was 0.20 percent compared to 0.20 percent in the prior quarter and 0.25 percent a year ago. -- The allowance for loan losses represented 1.14 percent of total loans at March 31, 2015 compared to 1.15 percent at December 31, 2014 and 1.18 percent at March 31, 2014. The allowance for loan losses represented 106 percent of nonperforming loans at March 31 compared to 123 percent at December 31 and 106 percent a year ago.
Quarterly non-interest income compared to the first quarter of 2014:
-- Total non-interest income was $57.9 million compared to $49.8 million, an increase of $8.1 million. Excluding securities gains and other-than-temporary impairment charges, a $12.3 million year-over-year increase in core non-interest income reflects increases of $7.9 million in deposit service fees of which $6.7 million resulted from the HSA acquisition, $1.2 million in loan related fees, $0.8 million in mortgage banking activities, and $3.4 million in other income, offset by a $0.9 million reduction in wealth and investment services.
Quarterly non-interest expense compared to the first quarter of 2014:
-- Total non-interest expense was $134.1 million compared to $124.5 million, an increase of $9.6 million. Included in non-interest expense are $0.5 million of net one-time costs, which consisted primarily of costs related to the HSA acquisition. There were $0.2 million of net one-time costs in the year-ago quarter. -- Non-interest expense, excluding one-time costs, increased $9.4 million. This increase is attributable to an increase of $4.5 million in compensation and benefits primarily related to staff additions and an increase of $4.2 million in technology and equipment expense at HSA Bank primarily from the acquisition. -- Foreclosed and repossessed asset expenses were $0.2 million compared to $0.5 million, while net losses on foreclosed and repossessed assets were $0.5 million compared to net gains of $0.3 million a year ago.
Quarterly income taxes compared to the first quarter of 2014:
-- The Company recorded $24.1 million of income tax expense compared to $21.2 million, an increase of $2.9 million. The effective tax rate was 32.6 percent compared to 29.6 percent. The year ago quarter reflected a $2.0 million net tax benefit compared to a net benefit of $0.5 million in the current quarter.
Investment securities:
-- Total investment securities were $6.9 billion at March 31, 2015 compared to $6.7 billion at December 31, 2014 and $6.5 billion a year ago. The carrying value of the available-for-sale portfolio included $36.9 million of net unrealized gains compared to $25.9 million at December 31 and $8.8 million a year ago, while the carrying value of the held-to-maturity portfolio does not reflect $99.8 million of net unrealized gains compared to $75.8 million at December 31 and $30.2 million a year ago.
Loans:
-- Total loans were $14.3 billion at March 31, 2015 compared to $13.9 billion at December 31, 2014 and $13.0 billion a year ago. Compared to December 31, commercial, commercial real estate, residential mortgage, and consumer loans increased by $156.4 million, $108.6 million, $85.1 million, and $20.0 million, respectively. -- Compared to a year ago, commercial real estate, commercial, residential mortgage, and consumer loans increased by $519.5 million, $473.9 million, $237.7 million, and $44.4 million, respectively. -- Loan originations for portfolio in the first quarter were $1.062 billion compared to $1.378 billion in the fourth quarter and $879 million a year ago. In addition, $87 million of residential loans were originated for sale in the quarter compared to $87 million in the prior quarter and $59 million a year ago.
Asset quality:
-- Past due loans were $45.1 million at March 31, 2015 compared to $42.3 million at December 31, 2014 and $48.5 million a year ago. Compared to December 31, past due consumer, commercial non-mortgage, commercial real estate, liquidating consumer, and equipment financing loans increased $2.6 million, $1.9 million, $1.2 million, $0.2 million, and $0.1 million, respectively, while past due residential mortgage loans decreased $3.2 million. Loans past due 90 days and still accruing increased $22 thousand. Compared to a year ago, past due residential mortgage, commercial non-mortgage, and liquidating consumer loans decreased $5.0 million, $3.9 million, and $0.1 million, respectively, while past due consumer, commercial real estate, and equipment financing loans increased $3.9 million, $1.3 million, and $0.1 million, respectively. Loans past due 90 days and still accruing increased $0.7 million. -- Past due loans represented 0.32 percent of total loans at quarter end, 0.30 percent at December 31, and 0.37 percent a year ago. Past due loans for the continuing portfolio were $43.3 million at quarter end compared to $40.7 million at December 31 and $46.2 million a year ago. Past due loans for the liquidating portfolio were $1.8 million at March 31 compared to $1.7 million at December 31 and $2.3 million a year ago. -- Total nonperforming loans increased to $152.2 million, or 1.07 percent of total loans, at quarter end compared to $129.9 million, or 0.93 percent, at December 31, and $144.6 million, or 1.11 percent, a year ago. Total paying nonperforming loans at March 31 were $53.8 million compared to $30.5 million at December 31 and $48.8 million a year ago.
Deposits and borrowings:
-- Total deposits were $17.5 billion at March 31, 2015 compared to $15.7 billion at December 31, 2014 and $15.0 billion a year ago. Compared to December 31, increases of $1.7 billion in health savings accounts, $205.8 million in money market, $112.3 million in interest-bearing checking, and $85.9 million in savings deposits, were offset by declines of $148.6 million in demand deposits, $65.6 million in certificates of deposit, and $235 thousand in brokered certificates of deposit. Compared to a year ago, increases of $1.8 billion in health savings accounts, $421.7 million in demand deposits, $309.3 million in interest-bearing checking, $74.1 million in brokered certificates of deposit, and $58.5 million in savings deposits, were offset by declines of $148.6 million in certificates of deposit and $18.7 million in money market deposits. -- Core to total deposits were 87.4 percent at quarter end, 85.5 percent at December 31, and 84.8 percent a year ago. Loans to deposits were 81.3 percent compared to 88.8 percent at December 31 and 86.4 percent a year ago. -- Total borrowings were $2.9 billion at March 31 compared to $4.3 billion at December 31 and $3.7 billion a year ago.
Capital:
-- The return on average tangible common shareholders' equity and the return on average common shareholders' equity were 11.82 percent and 8.57 percent, respectively, for the first quarter of 2015 compared to 12.51 percent and 9.16 percent, respectively, in the first quarter of 2014. -- The tangible equity and tangible common equity ratios were 7.87 percent and 7.20 percent, respectively, at March 31, 2015 compared to 8.26 percent and 7.53 percent, respectively, at March 31, 2014. The Tier 1 common equity to risk-weighted assets ratio was 10.93 percent at March 31 compared to 11.45 percent a year ago. -- Book value and tangible book value per common share were $24.29 and $17.87, respectively, at March 31, 2015 compared to $23.13 and $17.22, respectively, at March 31, 2014.
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Webster Financial Corporation is the holding company for Webster Bank, National Association. With $23.1 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust, and investment services through 164 banking centers, 313 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.
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Conference Call
A conference call covering Webster's 2015 first quarter earnings announcement will be held today, Thursday, April 16, 2015 at 9:00 a.m. (Eastern) and may be heard through Webster's Investor Relations website at www.wbst.com, or in listen-only mode by calling 1-877-407-8289 or 201-689-8341 internationally. The call will be archived on the website and available for future retrieval.
Forward-Looking Statements
This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"). Forward-looking statements can be identified by words such as "believes," "anticipates," "expects," "intends," "targeted," "continue," "remain," "will," "should," "may," "plans," "estimates," and similar references to future periods; however, such words are not the exclusive means of identifying such statements. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, and other financial items; (ii) statements of plans, objectives, and expectations of Webster or its management or Board of Directors; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Forward-looking statements are based on Webster's current expectations and assumptions regarding its business, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Webster's actual results may differ materially from those contemplated by the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to: (1) local, regional, national, and international economic conditions and the impact they may have on us and our customers and our assessment of that impact; (2) volatility and disruption in national and international financial markets; (3) government intervention in the U.S. financial system; (4) changes in the level of nonperforming assets and charge-offs; (5) changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (6) adverse conditions in the securities markets that lead to impairment in the value of securities in our investment portfolio; (7) inflation, interest rate, securities market, and monetary fluctuations; (8) the timely development and acceptance of new products and services and perceived overall value of these products and services by customers; (9) changes in consumer spending, borrowings, and savings habits; (10) technological changes; (11) the ability to increase market share and control expenses; (12) changes in the competitive environment among banks, financial holding companies, and other financial service providers; (13) the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities, and insurance) with which we and our subsidiaries must comply, including those under the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III update to the Basel Accords that is under development; (14) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters; (15) the costs and effects of legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews; and (16) our success at managing the risks involved in the foregoing items and (17) the other factors that are described in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q under the heading "Risk Factors." Any forward-looking statement made by the Company in this release speaks only as of the date on which it is made. Factors or events that could cause the Company's actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
Non-GAAP Financial Measures
In addition to results presented in accordance with GAAP, this press release contains certain non-GAAP financial measures. A reconciliation of net income and other performance ratios, as adjusted, is included in the accompanying selected financial highlights table.
We believe that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, our performance trends and financial position. Specifically, we provide measures based on what we believe are our operating earnings on a consistent basis and exclude non-core operating items which affect the GAAP reporting of results of operations. We utilize these measures for internal planning and forecasting purposes. We, as well as securities analysts, investors, and other interested parties, also use these measures to compare peer company operating performance. We believe that our presentation and discussion, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting our business and allows investors to view performance in a manner similar to management. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results, and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.
Media Contact Investor Contact Bob Guenther, 203-578-2391 Terry Mangan, 203-578-2318 rguenther@websterbank.com tmangan@websterbank.com
WEBSTER FINANCIAL CORPORATION Selected Financial Highlights (unaudited) ---------------------------------------- At or for the Three Months Ended -------------------------------- (In thousands, except per share data) March 31, December 31, September 30, June 30, March 31, 2015 2014(b) 2014(b) 2014(b) 2014(b) --- ---- ------ ------ ------ ------ Income and performance ratios (annualized): ------------------------------------------- Net income $49,722 $51,006 $50,457 $47,834 $50,429 Net income available to common shareholders 47,083 48,367 47,818 45,195 47,790 Net income per diluted common share 0.52 0.53 0.53 0.50 0.53 Return on average assets 0.88% 0.93% 0.94% 0.90% 0.96% Return on average tangible common shareholders' equity 11.82 11.74 11.86 11.51 12.51 Return on average common shareholders' equity 8.57 8.84 8.87 8.53 9.16 Non-interest income as a percentage of total revenue 26.60 25.08 24.44 23.48 24.29 Efficiency ratio 59.76 58.59 58.91 59.21 60.27 Asset quality: -------------- Allowance for loan losses $161,970 $159,264 $156,482 $154,868 $153,600 Nonperforming assets 157,546 136,397 144,314 150,490 152,382 Allowance for loan losses / total loans 1.14% 1.15% 1.16% 1.17% 1.18% Net charge-offs / average loans (annualized) 0.20 0.20 0.24 0.24 0.25 Nonperforming loans / total loans 1.07 0.93 1.03 1.08 1.11 Nonperforming assets / total loans plus OREO 1.10 0.98 1.07 1.13 1.17 Allowance for loan losses / nonperforming loans 106.39 122.62 112.51 107.73 106.22 Other ratios (annualized): -------------------------- Tangible equity ratio 7.87% 8.14% 8.35% 8.34% 8.26% Tangible common equity ratio 7.20 7.45 7.64 7.62 7.53 Tier 1 risk-based capital ratio (a) 12.04 12.95 13.06 12.97 13.07 Total risk-based capital(a) 13.47 14.06 14.17 14.09 14.20 Tier 1 common equity / risk-weighted assets (a) 10.93 11.43 11.50 11.40 11.45 Shareholders' equity / total assets 10.19 10.31 10.59 10.61 10.58 Net interest margin 3.10 3.17 3.17 3.19 3.26 Share and equity related: ------------------------- Common equity $2,203,926 $2,171,166 $2,159,344 $2,132,973 $2,088,146 Book value per common share 24.29 23.99 23.93 23.64 23.13 Tangible book value per common share 17.87 18.10 18.02 17.72 17.22 Common stock closing price 37.05 32.53 29.14 31.54 31.06 Dividends declared per common share 0.20 0.20 0.20 0.20 0.15 Common shares issued and outstanding 90,715 90,512 90,248 90,246 90,269 Basic shares (weighted average) 90,251 90,045 89,888 89,776 89,880 Diluted shares (weighted average) 90,841 90,741 90,614 90,528 90,658 (a) The ratios presented are projected for March 31, 2015 and actual for the remaining periods presented. (b) Certain previously reported information reflects (1) the retrospective application of ASU No. 2014-01, "Accounting for Investments in Qualified Affordable Housing Projects," and (2) the reclassification of residential loans from nonperforming to accrual past due 90 days or more as their principal and accrued interest are well secured due to government guarantees.
WEBSTER FINANCIAL CORPORATION Consolidated Balance Sheets (unaudited) -------------------------------------- (In thousands) March 31, December 31, March 31, 2015 2014(a) 2014(a) --- ---- ------ ------ Assets: Cash and due from banks $233,970 $261,544 $251,886 Interest-bearing deposits 119,297 132,695 29,893 Investment securities: Available for sale, at fair value 2,968,109 2,793,873 3,008,856 Held to maturity 3,923,189 3,872,955 3,448,195 --------- --------- --------- Total securities 6,891,298 6,666,828 6,457,051 Loans held for sale 45,866 67,952 14,631 Loans: Commercial 4,443,446 4,287,021 3,969,508 Commercial real estate 3,663,071 3,554,428 3,143,612 Residential mortgages 3,594,272 3,509,175 3,356,539 Consumer 2,569,437 2,549,401 2,525,083 --------- --------- --------- Total loans 14,270,226 13,900,025 12,994,742 Allowance for loan losses (161,970) (159,264) (153,600) -------- -------- -------- Loans, net 14,108,256 13,740,761 12,841,142 Federal Home Loan Bank and Federal Reserve Bank stock 193,290 193,290 166,133 Premises and equipment, net 123,548 121,933 121,473 Goodwill and other intangible assets, net 582,751 532,553 534,070 Cash surrender value of life insurance policies 443,225 440,073 433,793 Deferred tax asset, net 61,136 73,873 55,107 Accrued interest receivable and other assets 304,051 301,670 270,734 ------- ------- ------- Total Assets $23,106,688 $22,533,172 $21,175,913 ----------- ----------- ----------- Liabilities and Equity: Deposits: Demand $3,450,316 $3,598,872 $3,028,625 Interest-bearing checking 2,267,350 2,155,047 1,958,027 Health savings accounts 3,529,301 1,824,799 1,719,890 Money market 2,114,300 1,908,522 2,133,036 Savings 3,978,655 3,892,778 3,920,171 Certificates of deposit 1,905,943 1,971,567 2,054,541 Brokered certificates of deposit 299,785 300,020 225,699 ------- ------- ------- Total deposits 17,545,650 15,651,605 15,039,989 Securities sold under agreements to repurchase and other borrowings 1,083,877 1,250,756 1,147,882 Federal Home Loan Bank advances 1,584,357 2,859,431 2,203,606 Long-term debt 226,267 226,237 376,412 Accrued expenses and other liabilities 310,962 222,328 168,229 ------- ------- ------- Total liabilities 20,751,113 20,210,357 18,936,118 ---------- ---------- ---------- Preferred stock 151,649 151,649 151,649 Common shareholders' equity 2,203,926 2,171,166 2,088,146 --------- --------- --------- Webster Financial Corporation shareholders' equity 2,355,575 2,322,815 2,239,795 --------- --------- --------- Total Liabilities and Equity $23,106,688 $22,533,172 $21,175,913 ----------- ----------- ----------- (a) Certain previously reported information reflects the retrospective application of ASU No. 2014-01, "Accounting for Investments in Qualified Affordable Housing Projects."
WEBSTER FINANCIAL CORPORATION Consolidated Statements of Income (unaudited) -------------------------------------------- Three Months Ended March 31, ------------------------ (In thousands, except per share data) 2015 2014(a) ------------------------- ---- ------ Interest income: Interest and fees on loans and leases $130,723 $124,010 Interest and dividends on securities 51,679 53,592 Loans held for sale 510 177 Total interest income 182,912 177,779 ------- ------- Interest expense: Deposits 11,542 10,644 Borrowings 11,606 11,834 Total interest expense 23,148 22,478 ------ ------ Net interest income 159,764 155,301 Provision for loan losses 9,750 9,000 Net interest income after provision for loan losses 150,014 146,301 ------- ------- Non-interest income: Deposit service fees 32,625 24,712 Loan related fees 5,679 4,482 Wealth and investment services 7,889 8,838 Mortgage banking activities 1,561 775 Increase in cash surrender value of life insurance policies 3,152 3,258 Net gain on investment securities 43 4,336 Other income 6,941 3,515 ----- ----- 57,890 49,916 Loss on write-down of investment securities to fair value - (88) Total non-interest income 57,890 49,828 ------ ------ Non-interest expense: Compensation and benefits 70,864 66,371 Occupancy 13,596 12,759 Technology and equipment expense 19,248 15,010 Marketing 4,176 3,180 Professional and outside services 2,453 2,702 Intangible assets amortization 1,288 1,168 Foreclosed and repossessed asset expenses 169 458 Foreclosed and repossessed asset gains 536 (260) Loan workout expenses 878 1,052 Deposit insurance 6,241 5,311 Other expenses 14,166 16,500 ------ ------ 133,615 124,251 Severance, contract, and other 290 22 Acquisition costs 509 - Branch and facility optimization (324) 190 Total non-interest expense 134,090 124,463 ------- ------- Income before income taxes 73,814 71,666 Income tax expense 24,092 21,237 ------ ------ Net income 49,722 50,429 Preferred stock dividends (2,639) (2,639) Net income available to common shareholders $47,083 $47,790 ------- ------- Diluted shares (average) 90,841 90,658 Net income per common share available to common shareholders: Basic $0.52 $0.53 Diluted 0.52 0.53 (a) Certain previously reported information reflects the retrospective application of ASU No. 2014-01, "Accounting for Investments in Qualified Affordable Housing Projects."
WEBSTER FINANCIAL CORPORATION Five Quarter Consolidated Statements of Income (unaudited) --------------------------------------------------------- Three Months Ended ------------------ (In thousands, except per share data) March 31, December 31, September 30, June 30, March 31, 2015 2014(a) 2014(a) 2014(a) 2014(a) --- ---- ------ ------ ------ ------ Interest income: Interest and fees on loans and leases $130,723 $132,604 $129,227 $125,771 $124,010 Interest and dividends on securities 51,679 50,921 50,448 51,511 53,592 Loans held for sale 510 226 239 215 177 Total interest income 182,912 183,751 179,914 177,497 177,779 ------- ------- ------- ------- ------- Interest expense: Deposits 11,542 11,322 11,345 10,851 10,644 Borrowings 11,606 11,781 11,199 11,524 11,834 Total interest expense 23,148 23,103 22,544 22,375 22,478 ------ ------ ------ ------ ------ Net interest income 159,764 160,648 157,370 155,122 155,301 Provision for loan losses 9,750 9,500 9,500 9,250 9,000 Net interest income after provision for loan losses 150,014 151,148 147,870 145,872 146,301 ------- ------- ------- ------- ------- Non-interest income: Deposit service fees 32,625 25,928 26,489 26,302 24,712 Loan related fees 5,679 8,361 5,479 4,890 4,482 Wealth and investment services 7,889 8,517 8,762 8,829 8,838 Mortgage banking activities 1,561 977 1,805 513 775 Increase in cash surrender value of life insurance policies 3,152 3,278 3,346 3,296 3,258 Net gain on investment securities 43 1,121 42 - 4,336 Other income 6,941 6,492 5,071 3,839 3,515 57,890 54,674 50,994 47,669 49,916 Loss on write-down of investment securities to fair value - (899) (85) (73) (88) --- Total non-interest income 57,890 53,775 50,909 47,596 49,828 ------ ------ ------ ------ ------ Non-interest expense: Compensation and benefits 70,864 71,220 66,849 65,711 66,371 Occupancy 13,596 11,518 11,557 11,491 12,759 Technology and equipment expense 19,248 15,827 15,419 15,737 15,010 Marketing 4,176 3,918 4,032 4,249 3,180 Professional and outside services 2,453 1,855 2,470 1,269 2,702 Intangible assets amortization 1,288 416 432 669 1,168 Foreclosed and repossessed asset expenses 169 244 387 134 458 Foreclosed and repossessed asset gains 536 (238) (225) (574) (260) Loan workout expenses 878 685 969 801 1,052 Deposit insurance 6,241 5,856 5,938 5,565 5,311 Other expenses 14,166 16,158 17,083 16,898 16,500 ------ ------ ------ ------ ------ 133,615 127,459 124,911 121,950 124,251 Severance, contract, and other 290 633 42 267 22 Acquisition costs 509 396 144 - - Branch and facility optimization (324) 276 (599) 258 190 Provision for litigation and settlements - 1,400 - - - --- --- Total non-interest expense 134,090 130,164 124,498 122,475 124,463 ------- ------- ------- ------- ------- Income before income taxes 73,814 74,759 74,281 70,993 71,666 Income tax expense 24,092 23,753 23,824 23,159 21,237 ------ Net income 49,722 51,006 50,457 47,834 50,429 Preferred stock dividends (2,639) (2,639) (2,639) (2,639) (2,639) ------ Net income available to common shareholders $47,083 $48,367 $47,818 $45,195 $47,790 ------- ------- ------- ------- ------- Diluted shares (average) 90,841 90,741 90,614 90,528 90,658 Net income per common share available to common shareholders: Basic $0.52 $0.54 $0.53 $0.50 $0.53 Diluted 0.52 0.53 0.53 0.50 0.53 (a) Certain previously reported information reflects the retrospective application of ASU No. 2014-01, "Accounting for Investments in Qualified Affordable Housing Projects."
WEBSTER FINANCIAL CORPORATION Consolidated Average Balances, Yields, and Rates Paid (unaudited) ---------------------------------------------------------------- Three Months Ended March 31, ---------------------------- 2015 2014 ---- ---- (Dollars in thousands) Average balance Interest Fully tax- Average balance(b) Interest Fully tax- equivalent equivalent yield/rate yield/rate --- ---------- Assets: Interest-earning assets: Loans $13,994,482 $131,254 3.76% $12,853,349 $124,512 3.88% Investment securities(a) 6,695,978 52,426 3.15 6,420,976 54,925 3.43 Federal Home Loan and Federal Reserve Bank stock 193,290 1,316 2.76 158,959 1,167 2.98 Interest-bearing deposits 99,879 63 0.25 15,949 11 0.27 Loans held for sale 40,666 510 5.02 18,128 177 3.92 ------ --- ---- ------ --- ---- Total interest-earning assets 21,024,295 $185,569 3.54 19,467,361 $180,792 3.72 Non-interest-earning assets 1,643,631 1,511,799 Total assets $22,667,926 $20,979,160 ----------- ----------- Liabilities and Shareholders' Equity: Interest-bearing liabilities: Deposits: Demand $3,454,242 $ - -% $3,096,991 $ - -% Savings, interest checking, and money market 11,541,135 4,836 0.17 9,844,931 4,519 0.19 Certificates of deposit 2,242,857 6,706 1.21 2,250,283 6,125 1.10 Total deposits 17,238,234 11,542 0.27 15,192,205 10,644 0.28 ---------- ------ ---- ---------- ------ ---- Securities sold under agreements to repurchase and other borrowings 1,199,025 4,387 1.46 1,351,444 5,205 1.54 Federal Home Loan Bank advances 1,432,717 4,821 1.35 1,721,669 3,847 0.89 Long-term debt 226,248 2,398 4.24 308,985 2,782 3.60 Total borrowings 2,857,990 11,606 1.62 3,382,098 11,834 1.40 --------- ------ ---- --------- ------ ---- Total interest-bearing liabilities 20,096,224 $23,148 0.46% 18,574,303 $22,478 0.49% Non-interest-bearing liabilities 221,799 165,864 Total liabilities 20,318,023 18,740,167 ---------- ---------- Preferred stock 151,649 151,649 Common shareholders' equity 2,198,254 2,087,344 --------- --------- Webster Financial Corp. shareholders' equity 2,349,903 2,238,993 Total liabilities and equity $22,667,926 $20,979,160 ----------- ----------- Tax-equivalent net interest income 162,421 158,314 Less: tax-equivalent adjustment (2,657) (3,013) Net interest income $159,764 $155,301 -------- -------- Net interest margin 3.10% 3.26% ---- ---- (a) For purposes of the yield computation, unrealized gains (losses) on securities available for sale are excluded from the average balance. (b) Certain previously reported information reflects the retrospective application of ASU No. 2014-01, "Accounting for Investments in Qualified Affordable Housing Projects."
WEBSTER FINANCIAL CORPORATION Five Quarter Loan Balances (unaudited) ------------------------------------- (Dollars in thousands) March 31, December 31, September 30, June 30, March 31, 2015 2014 2014 2014 2014 --- ---- ---- ---- ---- ---- Loan Balances (actuals): Continuing Portfolio: Commercial non-mortgage $3,183,218 $3,087,940 $2,984,949 $2,978,576 $2,926,223 Equipment financing 543,636 537,751 490,150 464,948 457,670 Asset-based lending 716,592 661,330 647,042 624,565 585,615 Commercial real estate 3,663,071 3,554,428 3,354,107 3,291,892 3,143,612 Residential mortgages 3,594,272 3,509,174 3,455,353 3,366,091 3,356,538 Consumer 2,480,270 2,457,345 2,485,870 2,449,730 2,422,377 --------- --------- --------- --------- --------- Total continuing portfolio 14,181,059 13,807,968 13,417,471 13,175,802 12,892,035 Allowance for loan losses (152,825) (149,813) (145,818) (143,440) (141,352) Total continuing portfolio, net 14,028,234 13,658,155 13,271,653 13,032,362 12,750,683 ---------- ---------- ---------- ---------- ---------- Liquidating Portfolio: National Construction Lending Center (NCLC) - 1 1 1 1 Consumer 89,167 92,056 96,030 99,577 102,706 ------ ------ ------ ------ ------- Total liquidating portfolio 89,167 92,057 96,031 99,578 102,707 Allowance for loan losses (9,145) (9,451) (10,664) (11,428) (12,248) ------ ------ ------- ------- ------- Total liquidating portfolio, net 80,022 82,606 85,367 88,150 90,459 ------ ------ ------ ------ ------ Total Loan Balances (actuals) 14,270,226 13,900,025 13,513,502 13,275,380 12,994,742 Allowance for loan losses (161,970) (159,264) (156,482) (154,868) (153,600) Loans, net $14,108,256 $13,740,761 $13,357,020 $13,120,512 $12,841,142 ----------- ----------- ----------- ----------- ----------- Loan Balances (average): Continuing Portfolio: Commercial non-mortgage $3,096,762 $3,036,412 $2,987,403 $2,963,150 $2,853,516 Equipment financing 542,067 509,331 478,333 459,140 456,391 Asset-based lending 675,218 647,952 621,856 612,170 562,443 Commercial real estate 3,574,826 3,452,954 3,329,767 3,195,746 3,080,575 Residential mortgages 3,546,098 3,483,444 3,409,010 3,361,276 3,364,746 Consumer 2,468,422 2,491,359 2,467,839 2,437,452 2,431,900 --------- --------- --------- --------- --------- Total continuing portfolio 13,903,393 13,621,452 13,294,208 13,028,934 12,749,571 Allowance for loan losses (153,790) (150,706) (146,863) (143,811) (143,676) Total continuing portfolio, net 13,749,603 13,470,746 13,147,345 12,885,123 12,605,895 ---------- ---------- ---------- ---------- ---------- Liquidating Portfolio: NCLC 1 1 1 53 1 Consumer 91,088 94,069 97,661 100,878 103,777 ------ ------ ------ ------- ------- Total liquidating portfolio 91,089 94,070 97,662 100,931 103,778 Allowance for loan losses (9,145) (9,451) (10,664) (11,428) (12,248) Total liquidating portfolio, net 81,944 84,619 86,998 89,503 91,530 ------ ------ ------ ------ ------ Total Loan Balances (average) 13,994,482 13,715,522 13,391,870 13,129,865 12,853,349 Allowance for loan losses (162,935) (160,157) (157,527) (155,239) (155,924) -------- -------- -------- -------- Loans, net $13,831,547 $13,555,365 $13,234,343 $12,974,626 $12,697,425 ----------- ----------- ----------- ----------- ----------- WEBSTER FINANCIAL CORPORATION Five Quarter Nonperforming Assets (unaudited) -------------------------------------------- (Dollars in thousands) March 31, December 31, September 30, June 30, March 31, 2015 2014(a) 2014(a) 2014(a) 2014(a) --- ---- ------ ------ ------ ------ Nonperforming loans: Continuing Portfolio: Commercial non-mortgage $27,057 $6,436 $12,421 $14,152 $12,869 Equipment financing 285 518 1,659 863 1,325 Asset-based lending - - - - - Commercial real estate 25,814 18,675 18,341 19,023 20,009 Residential mortgages 61,274 64,022 67,541 67,722 65,855 Consumer 33,696 35,770 34,566 36,526 38,670 Nonperforming loans - continuing portfolio 148,126 125,421 134,528 138,286 138,728 ------- ------- ------- ------- ------- Liquidating Portfolio: Consumer 4,117 4,460 4,560 5,475 5,875 Total nonperforming loans $152,243 $129,881 $139,088 $143,761 $144,603 -------- -------- -------- -------- -------- Other real estate owned and repossessed assets: Continuing Portfolio: Commercial $ - $2,899 $2,899 $3,238 $3,466 Repossessed equipment - 100 100 100 123 Residential 3,051 2,280 1,712 2,748 3,721 Consumer 2,252 1,237 515 643 469 Total continuing portfolio 5,303 6,516 5,226 6,729 7,779 ----- ----- ----- ----- ----- Liquidating Portfolio: Total liquidating portfolio - - - - - Total other real estate owned and repossessed assets $5,303 $6,516 $5,226 $6,729 $7,779 ------ ------ ------ ------ ------ Total nonperforming assets $157,546 $136,397 $144,314 $150,490 $152,382 -------- -------- -------- -------- -------- (a) Certain previously reported information reflects the reclassification of residential loans from nonperforming loans to accruing past due 90 days or more as their principal and accrued interest are well secured due to government guarantees. WEBSTER FINANCIAL CORPORATION Five Quarter Past Due Loans (unaudited) -------------------------------------- (Dollars in thousands) March 31, December 31, September 30, June 30, March 31, 2015 2014(a) 2014(a) 2014(a) 2014(a) --- ---- ------ ------ ------ ------ Past due 30-89 days: Continuing Portfolio: Commercial non-mortgage $3,992 $2,099 $8,795 $5,045 $7,913 Equipment financing 789 701 433 290 698 Asset-based lending - - - - - Commercial real estate 3,962 2,714 1,625 1,610 2,680 Residential mortgages 13,966 17,216 15,980 17,826 18,966 Consumer 18,459 15,867 15,852 18,956 14,552 Past due 30-89 days - continuing portfolio 41,168 38,597 42,685 43,727 44,809 ------ ------ ------ ------ ------ Liquidating Portfolio: Consumer 1,820 1,658 1,419 2,105 2,325 Total past due 30-89 days 42,988 40,255 44,104 45,832 47,134 ------ ------ ------ ------ ------ Loans past due 90 days or more and accruing 2,109 2,087 1,980 1,828 1,368 ----- ----- ----- ----- ----- Total past due loans $45,097 $42,342 $46,084 $47,660 $48,502 ------- ------- ------- ------- ------- (a) Certain previously reported information reflects the reclassification of residential loans from nonperforming loans to accruing past due 90 days or more as their principal and accrued interest are well secured due to government guarantees. WEBSTER FINANCIAL CORPORATION Five Quarter Changes in the Allowance for Loan Losses (unaudited) ---------------------------------------------------------------- For the Three Months Ended -------------------------- (Dollars in thousands) March 31, December 31, September 30, June 30, March 31, 2015 2014 2014 2014 2014 --- ---- ---- ---- ---- ---- Beginning balance $159,264 $156,482 $154,868 $153,600 $152,573 Provision 9,750 9,500 9,500 9,250 9,000 Charge-offs continuing portfolio: Commercial non-mortgage 255 4,097 2,738 3,685 3,148 Equipment financing 15 84 491 20 - Asset-based lending - - - - - Commercial real estate 3,153 246 139 447 2,405 Residential mortgages 1,953 1,346 1,870 1,840 1,158 Consumer 3,634 3,648 5,078 4,075 4,517 Charge-offs continuing portfolio 9,010 9,421 10,316 10,067 11,228 ----- ----- ------ ------ ------ Charge-offs liquidating portfolio: NCLC 2 - - - - Consumer 662 563 1,251 1,211 369 Charge-offs liquidating portfolio 664 563 1,251 1,211 369 Total charge-offs 9,674 9,984 11,567 11,278 11,597 ----- ----- ------ ------ ------ Recoveries continuing portfolio: Commercial non-mortgage 989 1,258 967 1,121 950 Equipment financing 143 702 336 397 799 Asset-based lending 26 - 50 - 23 Commercial real estate 202 217 120 69 479 Residential mortgages 104 291 250 495 108 Consumer 821 636 1,770 923 865 Recoveries continuing portfolio 2,285 3,104 3,493 3,005 3,224 ----- ----- ----- ----- ----- Recoveries liquidating portfolio: NCLC 4 5 11 12 152 Consumer 341 157 177 279 248 Recoveries liquidating portfolio 345 162 188 291 400 Total recoveries 2,630 3,266 3,681 3,296 3,624 ----- ----- ----- ----- ----- Total net charge-offs 7,044 6,718 7,886 7,982 7,973 ----- ----- ----- ----- ----- Ending balance $161,970 $159,264 $156,482 $154,868 $153,600 -------- -------- -------- -------- -------- 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 March 31, 2015, December 31, 2014, September 30, 2014, June 30, 2014, and March 31, 2014. 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) March 31, December 31, September 30, June 30, March 31, 2015 2014(a) 2014(a) 2014(a) 2014(a) --- ---- ------ ------ ------ ------ 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 $47,083 $48,367 $47,818 $45,195 $47,790 Amortization of intangibles (tax-affected @ 35%) 837 270 281 435 759 --- --- --- --- --- Quarterly net income adjusted for amortization of intangibles 47,920 48,637 48,099 45,630 48,549 Annualized net income used in the return on average tangible common shareholders' equity ratio $191,680 $194,548 $192,396 $182,520 $194,196 -------- -------- -------- -------- -------- Reconciliation of average common shareholders' equity to average tangible common shareholders' equity ----------------------------------------------------------------------------------------------------- Average common shareholders' equity $2,198,254 $2,189,191 $2,155,246 $2,119,160 $2,087,344 Average goodwill (537,147) (529,887) (529,887) (529,887) (529,887) Average intangible assets (excluding mortgage servicing rights) (39,559) (2,862) (3,294) (3,762) (4,754) ------- ------ ------ ------ Average tangible common shareholders' equity $1,621,548 $1,656,442 $1,622,065 $1,585,511 $1,552,703 ---------- ---------- ---------- ---------- ---------- Reconciliation of period-end shareholders' equity to period-end tangible shareholders' equity --------------------------------------------------------------------------------------------- Shareholders' equity $2,355,575 $2,322,815 $2,310,993 $2,284,622 $2,239,795 Goodwill (538,373) (529,887) (529,887) (529,887) (529,887) Intangible assets (excluding mortgage servicing rights) (44,378) (2,666) (3,082) (3,515) (4,183) Tangible shareholders' equity $1,772,824 $1,790,262 $1,778,024 $1,751,220 $1,705,725 ---------- ---------- ---------- ---------- ---------- Reconciliation of period-end common shareholders' equity to period-end tangible common shareholders' equity ------------------------------------------------------------------------------------------------------- Shareholders' equity $2,355,575 $2,322,815 $2,310,993 $2,284,622 $2,239,795 Preferred stock (151,649) (151,649) (151,649) (151,649) (151,649) -------- -------- -------- -------- -------- Common shareholders' equity 2,203,926 2,171,166 2,159,344 2,132,973 2,088,146 Goodwill (538,373) (529,887) (529,887) (529,887) (529,887) Intangible assets (excluding mortgage servicing rights) (44,378) (2,666) (3,082) (3,515) (4,183) Tangible common shareholders' equity $1,621,175 $1,638,613 $1,626,375 $1,599,571 $1,554,076 ---------- ---------- ---------- ---------- ---------- Reconciliation of period-end assets to period-end tangible assets ----------------------------------------------------------------- Assets $23,106,688 $22,533,172 $21,827,046 $21,524,484 $21,175,913 Goodwill (538,373) (529,887) (529,887) (529,887) (529,887) Intangible assets (excluding mortgage servicing rights) (44,378) (2,666) (3,082) (3,515) (4,183) Tangible assets $22,523,937 $22,000,619 $21,294,077 $20,991,082 $20,641,843 ----------- ----------- ----------- ----------- ----------- Book value per common share --------------------------- Common shareholders' equity $2,203,926 $2,171,166 $2,159,344 $2,132,973 $2,088,146 Ending common shares issued and outstanding (in thousands) 90,715 90,512 90,248 90,246 90,269 Book value per share of common stock $24.29 $23.99 $23.93 $23.64 $23.13 ------ ------ ------ ------ ------ Tangible book value per common share ------------------------------------ Tangible common shareholders' equity $1,621,175 $1,638,613 $1,626,375 $1,599,571 $1,554,076 Ending common shares issued and outstanding (in thousands) 90,715 90,512 90,248 90,246 90,269 Tangible book value per common share $17.87 $18.10 $18.02 $17.72 $17.22 ------ ------ ------ ------ ------ Reconciliation of non-interest expense to non-interest expense used in the efficiency ratio ------------------------------------------------------------------------------------------- Non-interest expense $134,090 $130,164 $124,498 $122,475 $124,463 Foreclosed property expense (169) (244) (387) (134) (458) Intangible assets amortization (1,288) (416) (432) (669) (1,168) Other expense (1,011) (2,467) 638 49 48 Non-interest expense used in the efficiency ratio $131,622 $127,037 $124,317 $121,721 $122,885 -------- -------- -------- -------- -------- Reconciliation of income to income used in the efficiency ratio --------------------------------------------------------------- Net interest income before provision for loan losses $159,764 $160,648 $157,370 $155,122 $155,301 Fully taxable-equivalent adjustment 2,657 2,628 2,700 2,783 3,013 Non-interest income 57,890 53,775 50,909 47,596 49,828 Net gain on investment securities (43) (1,121) (42) - (4,336) Other - 899 85 73 88 Income used in the efficiency ratio $220,268 $216,829 $211,022 $205,574 $203,894 -------- -------- -------- -------- -------- (a) Certain previously reported information reflects the retrospective application of ASU No. 2014-01, "Accounting for Investments in Qualified Affordable Housing Projects."
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SOURCE Webster Financial Corporation