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Webster Reports First Quarter 2018 Earnings

WATERBURY, Conn., April 19, 2018 /PRNewswire/ -- Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A. and its HSA Bank division, today announced earnings applicable to common shareholders of $78.1 million, or $0.85 per diluted share, for the quarter ended March 31, 2018 compared to $57.3 million, or $0.62 per diluted share, for the quarter ended March 31, 2017.

"Webster's first quarter results demonstrate the meaningful progress we are making on the execution of our strategic priorities," said John Ciulla, president and chief executive officer. "Total revenues increased more than 10 percent from a year ago, driven by a 22 basis point increase in the net interest margin. Revenue growth, continuing investment, and effective risk management are enabling Webster to produce increasing levels of economic profit."

Highlights for the first quarter of 2018:

  • Revenue of $282.9 million, an increase of 10.6 percent from a year ago, including net interest income of $214.2 million, an increase of 11.2 percent from a year ago.
  • Loan growth of $711 million, or 4.2 percent from a year ago, with growth of $654 million, or 6.4 percent, in commercial and commercial real estate loans.
  • Deposit growth of $1.1 billion, or 5.6 percent from a year ago, with growth of $694 million, or 14.5 percent, in health savings account deposits.
  • Net interest margin of 3.44 percent, up 22 basis points from a year ago.
  • Pre-tax, pre-provision net revenue growth of $19.4 million, or 21.1 percent from a year ago, led by HSA Bank's growth of 59.6 percent.
  • Annualized return on average common shareholders' equity of 12.15 percent compared to 9.43 percent a year ago; annualized return on average tangible common shareholders' equity (non-GAAP) of 15.73 percent compared to 12.47 percent a year ago.

"Our ongoing balance sheet transformation is producing tangible results," said Glenn MacInnes, executive vice president and chief financial officer. "Our loan portfolio yield is 40 basis points higher than a year ago as 52 percent of our loans reprice in 30 days or less. The cost of deposits has increased only 7 basis points as 57 percent of our deposits are in low-costing transactional and health savings accounts."

Line of Business performance compared to the first quarter of 2017:

Commercial Banking
Webster's Commercial Banking segment serves middle market, commercial real estate, asset-based lending, equipment finance, private banking, and treasury and payment solutions clients. As of March 31, 2018, Commercial Banking had $9.7 billion in loans and leases and $4.0 billion in deposit balances.

Commercial Banking Operating Results:

 


Three months ended March 31,

(In thousands)

2018

2017

Net interest income

$84,651

$78,247

Non-interest income

15,316

13,424

Operating revenue

99,967

91,671

Non-interest expense

41,245

38,124

Pre-tax, pre-provision net revenue

$58,722

$53,547





           At March 31,

(In millions)

2018

2017

Loans and leases

$9,686

$9,112

Deposits

$4,041

$3,918

 

Pre-tax, pre-provision net revenue increased $5.2 million to $58.7 million in the quarter as compared to prior year. Net interest income increased $6.4 million to $84.7 million, primarily due to loan growth and higher deposit margin.  Non-interest income increased $1.9 million to $15.3 million, primarily due to greater client interest rate hedging activity in the quarter as compared to prior year. Non-interest expense increased $3.1 million to $41.2 million, primarily due to investments in people and technology.

HSA Bank
Webster's HSA Bank division offers a comprehensive consumer-directed healthcare solution that includes health savings accounts, health reimbursement arrangements, flexible spending accounts and commuter benefits. Health savings accounts are distributed nationwide directly to employers and individual consumers, as well as through national and regional insurance carriers, benefit consultants and financial advisors. As of March 31, 2018, HSA Bank had $6.9 billion in total footings comprising $5.5 billion in deposit balances and $1.4 billion in assets under administration through linked investment accounts.

HSA Bank Operating Results:

 


Three months ended March 31,

(In thousands)

2018

2017

Net interest income

$32,924

$24,052

Non-interest income

22,669

19,271

Operating revenue

55,593

43,323

Non-interest expense

31,515

28,239

Pre-tax net revenue

$24,078

$15,084




            At March 31,

(In millions)

2018

2017

Number of accounts

2,643

2,364

Deposits

$5,488

$4,794

Linked investment accounts*

1,364

992

Total footings

$6,852

$5,786

*Linked investment accounts are held off balance sheet



                                                 

Pre-tax net revenue increased $9.0 million to $24.1 million in the quarter as compared to prior year. Net interest income increased $8.9 million to $32.9 million, primarily due to growth in deposits and improved deposit spreads. Non-interest income increased $3.4 million to $22.7 million, primarily due to growth in accounts over the past year. Non-interest expense increased $3.3 million to $31.5 million, primarily due to account growth and continued investment in the business including expanded distribution.

Community Banking
Community Banking serves consumer and business banking customers primarily throughout southern New England and into Westchester County, New York. Community Banking is comprised of the Personal Banking and Business Banking operating segments, as well as a distribution network consisting of 167 banking centers and 333 ATMs, a customer care center, and a full range of web and mobile-based banking services.

As of March 31, 2018, Community Banking had $8.1 billion in loans and $11.6 billion in deposit balances.


Community Banking Operating Results:


Three months ended March 31,

(In thousands)

2018

2017

Net interest income

$98,928

$93,590

Non-interest income

25,195

25,379

Operating revenue

124,123

118,969

Non-interest expense

96,829

95,179

Pre-tax, pre-provision net revenue

$27,294

$23,790





             At March 31,

(In millions)

2018

2017

Loans

$8,121

$7,985

Deposits

11,580

11,156

 

Pre-tax, pre-provision net revenue increased $3.5 million to $27.3 million in the quarter as compared to prior year. Net interest income increased $5.3 million to $98.9 million, primarily due to growth in loan and deposit balances, as well as improved interest rate spreads on deposits. Non-interest income decreased $0.2 million primarily driven by lower mortgage production and related returns on mortgage banking activities, offset by growth in fees from investment services, credit cards and client interest rate hedging activities. Non-interest expense increased $1.7 million as a result of higher compensation expenses coupled with investments in technology and risk management, partially offset by lower direct marketing expenses.

Consolidated financial performance:

Quarterly net interest income compared to the first quarter of 2017:

  • Net interest income was $214.2 million compared to $192.7 million.
  • Net interest margin was 3.44 percent compared to 3.22 percent. The yield on interest-earning assets increased by 28 basis points, and the cost of funds increased by 7 basis points.
  • Average interest-earning assets totaled $25.1 billion and grew by $717 million, or 2.9 percent.
  • Average loans totaled $17.8 billion and grew by $714 million, or 4.2 percent.

Quarterly provision for loan losses:

  • The Company recorded a provision for loan losses of $11.0 million, compared to $13.0 million in the prior quarter and $10.5 million a year ago.
  • Net charge-offs were $5.6 million, compared to $14.8 million in the prior quarter and $5.7 million a year ago. The decrease to prior quarter is primarily due to decreased commercial charge-offs. The ratio of net charge-offs to average loans on an annualized basis was 0.13 percent, compared to 0.34 percent in the prior quarter and 0.13 percent a year ago.
  • The allowance for loan losses represented 1.15 percent of total loans at March 31, 2018 compared to 1.14 percent at December 31, 2017 and 1.16 percent at March 31, 2017. The allowance for loan losses represented 153 percent of nonperforming loans compared to 158 percent at December 31, 2017 and 115 percent at March 31, 2017.

Quarterly non-interest income compared to the first quarter of 2017:

  • Total non-interest income was $68.7 million compared to $63.0 million, an increase of $5.7 million. This reflects increases of $3.4 million driven by account growth and $2.9 million related to client hedging and break-funding revenue, offset by a decrease of $1.1 million in mortgage banking activities driven by lower originations.

Quarterly non-interest expense compared to the first quarter of 2017:

  • Total non-interest expense was $171.6 million compared to $163.8 million, an increase of $7.8 million. This reflects an increase of $7.3 million in compensation and benefits along with an increase of $2.3 million in technology and equipment, offset by a decrease of $1.9 million in marketing. 

Quarterly income taxes compared to the first quarter of 2017:

  • Income tax expense was $20.1 million compared to $22.0 million and the effective tax rate was 20.0 percent compared to 27.0 percent.
  • The lower effective tax rate in the quarter primarily reflects the reduction of the U.S. corporate tax rate effective in 2018 as a result of the Tax Cuts and Jobs Act enacted in 2017.

Investment securities:

  • Total investment securities were $7.2 billion compared to $7.1 billion at December 31, 2017 and $7.1 billion at March 31, 2017. The carrying value of the available-for-sale portfolio included $74.0 million of net unrealized losses compared to $37.1 million at December 31, 2017 and $28.2 million at March 31, 2017. The carrying value of the held-to-maturity portfolio does not reflect $111.3 million of net unrealized losses compared to $31.0 million at December 31, 2017, and $41.6 million at March 31, 2017.

Loans:

  • Total loans were $17.8 billion compared to $17.5 billion at December 31, 2017 and $17.1 billion at March 31, 2017. Compared to December 31, 2017, commercial loans increased by $359.6 million and commercial real estate loans increased by $21.0 million, while consumer loans decreased by $67.8 million and residential loans decreased by $31.0 million.
  • Compared to a year ago, commercial loans increased by $639.3 million, residential loans increased by $169.2 million, and commercial real estate loans increased by $14.3 million, while consumer loans decreased by $111.7 million.
  • Loan originations for portfolio were $1.111 billion compared to $1.302 billion in the prior quarter and $1.107 billion a year ago. In addition, $43 million of residential loans were originated for sale in the quarter compared to $60 million in the prior quarter and $73 million a year ago.

Asset quality:

  • Total nonperforming loans were $134.3 million, or 0.75 percent of total loans, compared to $126.6 million, or 0.72 percent, at December 31, 2017 and $173.8 million, or 1.02 percent, at March 31, 2017. Total paying nonperforming loans were $32.2 million compared to $33.2 million at December 31, 2017 and $73.5 million at March 31, 2017.
  • Past due loans were $41.6 million compared to $45.8 million at December 31, 2017 and $32.1 million at March 31, 2017.

Deposits and borrowings:

  • Total deposits were $21.4 billion compared to $21.0 billion at December 31, 2017 and $20.2 billion at March 31, 2017. Core deposits to total deposits were 88.1 percent compared to 88.2 percent at December 31, 2017 and 90.0 percent at March 31, 2017. The loan to deposit ratio was 83.3 percent compared to 83.5 percent at December 31, 2017 and 84.5 percent at March 31, 2017.
  • Total borrowings were $2.4 billion compared to $2.5 billion at December 31, 2017 and $3.0 billion at March 31, 2017.

Capital:

  • The return on average common shareholders' equity and the return on average tangible common shareholders' equity were 12.15 percent and 15.73 percent, respectively, compared to 9.43 percent and 12.47 percent, respectively, in the first quarter of 2017.
  • The tangible equity and tangible common equity ratios were 8.21 percent and 7.65 percent, respectively, compared to 7.82 percent and 7.34 percent, respectively, at March 31, 2017. The common equity tier 1 risk-based capital ratio was 10.99 percent compared to 10.75 percent at March 31, 2017.
  • Book value and tangible book value per common share were $27.94 and $21.78 respectively, compared to $26.45 and $20.26, respectively, at March 31, 2017.

Webster Financial Corporation is the holding company for Webster Bank, National Association and its HSA Bank division. With $26.8 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust, and investment services through 167 banking centers and 333 ATMs. Webster also provides mobile and Internet banking. Webster Bank owns the asset-based lending firm Webster Business Credit Corporation; the equipment finance firm Webster Capital Finance Corporation; and HSA Bank, a division of Webster Bank, which provides health savings account trustee and administrative services. Webster Bank is a member of the FDIC and an equal housing lender. For more information about Webster, including past press releases and the latest annual report, visit the Webster website at www.websterbank.com.

Conference Call

A conference call covering Webster's 2018 first quarter earnings announcement will be held today, Thursday, April 19, 2018 at 9:00 a.m. (Eastern) and may be heard through Webster's Investor Relations website at www.wbst.com, or in listen-only mode by calling 877-407-8289 or 201-689-8341 internationally. The call will be archived on the website and available for future retrieval.

Forward-Looking Statements

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


Non-GAAP Financial Measures

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

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

 

 

WEBSTER FINANCIAL CORPORATION
Selected Financial Highlights (unaudited)





At or for the Three Months Ended



(In thousands, except per share data)


March 31,
2018



December 31,
2017



September 30,
2017



June 30,
2017



March 31,
2017




















Income and performance ratios:

















Net income

$

80,225


$

69,893


$

64,496


$

61,579


$

59,471



Earnings applicable to common shareholders


78,083



67,710



62,426



59,485



57,342



Earnings per diluted common share


0.85



0.73



0.67



0.64



0.62



Return on average assets


1.20

%


1.05

%


0.98

%


0.94

%


0.91


%

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


15.73



13.85



12.99



12.65



12.47



Return on average common shareholders' equity


12.15



10.66



9.95



9.63



9.43



Non-interest income as a percentage of total revenue


24.30



24.37



24.68



24.61



24.65




















Asset quality:

















Allowance for loan and lease losses

$

205,349


$

199,994


$

201,803


$

199,578


$

199,107



Nonperforming assets


140,090



132,646



168,962



170,390



177,935



Allowance for loan and lease losses / total loans and leases


1.15

%


1.14

%


1.16

%


1.16

%


1.16


%

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


0.13



0.34



0.18



0.16



0.13



Nonperforming loans and leases / total loans and leases


0.75



0.72



0.94



0.96



1.02



Nonperforming assets / total loans and leases plus OREO


0.79



0.76



0.97



0.99



1.04



Allowance for loan and lease losses / nonperforming loans and leases


152.95



158.00



123.32



119.96



114.54




















Other ratios:

















Tangible equity (non-GAAP)


8.21

%


8.23

%


8.03

%


7.95

%


7.82


%

Tangible common equity (non-GAAP)


7.65



7.67



7.55



7.47



7.34



Tier 1 risk-based capital (a)


11.76



11.91



11.65



11.51



11.42



Total risk-based capital (a)


13.25



13.40



13.17



13.02



12.95



Common equity tier 1 risk-based capital (a)


10.99



11.14



10.99



10.84



10.75



Shareholders' equity / total assets


10.15



10.20



10.01



9.95



9.85



Net interest margin


3.44



3.33



3.30



3.27



3.22



Efficiency ratio (non-GAAP)


59.76



59.48



59.18



60.65



62.10




















Equity and share related:

















Common equity

$

2,571,105


$

2,556,902


$

2,516,077


$

2,482,416


$

2,437,648



Book value per common share


27.94



27.76



27.34



26.93



26.45



Tangible book value per common share (non-GAAP)


21.78



21.59



21.16



20.74



20.26



Common stock closing price


55.40



56.16



52.55



52.22



50.04



Dividends declared per common share


0.26



0.26



0.26



0.26



0.25




















Common shares issued and outstanding


92,016



92,101



92,034



92,195



92,154



Weighted-average common shares outstanding - Basic


91,921



92,058



92,125



92,092



91,886



Weighted-average common shares outstanding - Diluted


92,254



92,400



92,503



92,495



92,342




















(a) Presented as projected for March 31, 2018 and actual for the remaining periods.



 

WEBSTER FINANCIAL CORPORATION
Consolidated Balance Sheets (unaudited)

(In thousands)


March 31,
2018



December 31,
2017



March 31,
2017

Assets:









Cash and due from banks

$

164,927


$

231,158


$

184,044

Interest-bearing deposits


45,899



25,628



38,150

Securities:









  Available for sale


2,773,506



2,638,037



2,897,060

  Held to maturity


4,408,321



4,487,392



4,212,050

 Total securities


7,181,827



7,125,429



7,109,110

Loans held for sale


19,727



20,888



28,698

Loans and Leases:









  Commercial


6,278,502



5,918,927



5,639,244

  Commercial real estate


4,544,831



4,523,828



4,530,507

  Residential mortgages


4,459,862



4,490,878



4,290,685

  Consumer


2,522,380



2,590,225



2,634,063

 Total loans and leases


17,805,575



17,523,858



17,094,499

Allowance for loan and lease losses


(205,349)



(199,994)



(199,107)

Loans and leases, net


17,600,226



17,323,864



16,895,392

Federal Home Loan Bank and Federal Reserve Bank stock


125,328



151,566



163,557

Premises and equipment, net


127,196



130,001



134,551

Goodwill and other intangible assets, net


567,023



567,984



570,992

Cash surrender value of life insurance policies


535,391



531,820



521,427

Deferred tax asset, net


99,199



92,630



76,869

Accrued interest receivable and other assets


285,404



286,677



280,126

Total Assets

$

26,752,147


$

26,487,645


$

26,002,916










Liabilities and Shareholders' Equity:









Deposits:









  Demand

$

4,074,992


$

4,191,496


$

3,913,058

  Interest-bearing checking


2,624,885



2,736,952



2,607,060

  Health savings accounts


5,487,627



5,038,681



4,793,734

  Money market


2,344,526



2,209,492



2,452,726

  Savings


4,299,759



4,348,700



4,456,980

  Certificates of deposit


2,275,897



2,187,756



1,718,193

  Brokered certificates of deposit


277,356



280,652



299,906

 Total deposits


21,385,042



20,993,729



20,241,657

Securities sold under agreements to repurchase and other borrowings


931,299



643,269



807,573

Federal Home Loan Bank advances


1,202,030



1,677,105



1,922,832

Long-term debt


225,830



225,767



225,577

Accrued expenses and other liabilities


291,804



245,817



244,919

Total liabilities


24,036,005



23,785,687



23,442,558

Preferred stock


145,037



145,056



122,710

Common shareholders' equity


2,571,105



2,556,902



2,437,648

Total shareholders' equity


2,716,142



2,701,958



2,560,358

Total Liabilities and Shareholders' Equity

$

26,752,147


$

26,487,645


$

26,002,916

 

 

WEBSTER FINANCIAL CORPORATION
Consolidated Statements of Income (unaudited)






Three Months Ended March 31,

(In thousands, except per share data)








2018



2017

Interest income:












Interest and fees on loans and leases







$

193,220


$

167,808

Interest and dividends on securities








52,559



51,556

Loans held for sale








142



316

 Total interest income








245,921



219,680

Interest expense:












Deposits








18,156



13,435

Borrowings








13,597



13,581

 Total interest expense








31,753



27,016

 Net interest income








214,168



192,664

Provision for loan and lease losses








11,000



10,500

 Net interest income after provision for loan and lease losses








203,168



182,164

Non-interest income:












Deposit service fees








40,451



37,006

Loan and lease related fees








6,996



7,208

Wealth and investment services








7,870



7,273

Mortgage banking activities








1,144



2,266

Increase in cash surrender value of life insurance policies








3,572



3,575

Other income








8,714



5,714

 Total non-interest income








68,747



63,042

Non-interest expense:












Compensation and benefits








94,765



87,499

Occupancy








15,145



16,179

Technology and equipment








23,862



21,608

Marketing








3,552



5,441

Professional and outside services








4,788



4,276

Intangible assets amortization








962



1,055

Loan workout expenses








576



608

Deposit insurance








6,717



6,732

Other expenses








21,248



20,386

 Total non-interest expense








171,615



163,784

Income before income taxes








100,300



81,422

Income tax expense








20,075



21,951

 Net income








80,225



59,471

Preferred stock dividends and other








(2,142)



(2,129)

Earnings applicable to common shareholders







$

78,083


$

57,342













Weighted-average common shares outstanding - Diluted








92,254



92,342













Earnings per common share:












Basic







$

0.85


$

0.62

Diluted








0.85



0.62

 

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



Three Months Ended

(In thousands, except per share data)


March 31,
2018



December 31,
2017



September 30,
2017



June 30,
2017



March 31,
2017

Interest income:















Interest and fees on loans and leases

$

193,220


$

185,172


$

181,130


$

174,456


$

167,808

Interest and dividends on securities


52,559



50,735



49,584



52,130



51,556

Loans held for sale


142



208



307



203



316

 Total interest income


245,921



236,115



231,021



226,789



219,680

Interest expense:















Deposits


18,156



17,379



16,760



14,679



13,435

Borrowings


13,597



13,804



13,357



14,323



13,581

 Total interest expense


31,753



31,183



30,117



29,002



27,016

 Net interest income


214,168



204,932



200,904



197,787



192,664

Provision for loan and lease losses


11,000



13,000



10,150



7,250



10,500

 Net interest income after provision for loan and lease losses


203,168



191,932



190,754



190,537



182,164

Non-interest income:















Deposit service fees


40,451



37,618



38,321



38,192



37,006

Loan and lease related fees


6,996



6,550



6,346



6,344



7,208

Wealth and investment services


7,870



8,155



7,750



7,877



7,273

Mortgage banking activities


1,144



1,899



2,421



3,351



2,266

Increase in cash surrender value of life insurance policies


3,572



3,684



3,720



3,648



3,575

Other income


8,714



8,133



7,288



5,265



5,714



68,747



66,039



65,846



64,677



63,042

Impairment loss on securities recognized in earnings








(126)



 Total non-interest income


68,747



66,039



65,846



64,551



63,042

Non-interest expense:















Compensation and benefits


94,765



94,217



88,395



86,394



87,499

Occupancy


15,145



13,533



14,744



16,034



16,179

Technology and equipment


23,862



22,818



22,580



22,458



21,608

Marketing


3,552



3,320



4,045



4,615



5,441

Professional and outside services


4,788



5,045



4,030



3,507



4,276

Intangible assets amortization


962



977



1,002



1,028



1,055

Loan workout expenses


576



891



840



755



608

Deposit insurance


6,717



5,948



6,344



6,625



6,732

Other expenses


21,248



24,300



19,843



23,003



20,386

 Total non-interest expense


171,615



171,049



161,823



164,419



163,784

Income before income taxes


100,300



86,922



94,777



90,669



81,422

Income tax expense


20,075



17,029



30,281



29,090



21,951

 Net income


80,225



69,893



64,496



61,579



59,471

Preferred stock dividends and other


(2,142)



(2,183)



(2,070)



(2,094)



(2,129)

Earnings applicable to common shareholders

$

78,083


$

67,710


$

62,426


$

59,485


$

57,342
















Weighted-average common shares outstanding - Diluted


92,254



92,400



92,503



92,495



92,342
















Earnings per common share:















 Basic

$

0.85


$

0.74


$

0.68


$

0.65


$

0.62

 Diluted


0.85



0.73



0.67



0.64



0.62

 

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




Three Months Ended March 31,




2018






2017


(Dollars in thousands)


Average balance



Interest



Yield/rate






Average balance



Interest


Yield/rate


Assets:





















  Interest-earning assets:





















  Loans and leases

$

17,754,773


$

193,864



4.37

%




$

17,041,156


$

168,729


3.97

%

  Securities (a)


7,158,505



52,489



2.91






7,071,274



52,851


2.98


  Federal Home Loan and  Federal Reserve Bank stock


133,241



1,455



4.43






182,211



1,687


3.76


  Interest-bearing deposits


52,711



201



1.52






68,157



130


0.77


  Loans held for sale


16,330



142



3.49






36,239



316


3.49


 Total interest-earning assets


25,115,560


$

248,151



3.95

%





24,399,037


$

223,713


3.67

%

 Non-interest-earning assets


1,641,721












1,642,732







Total Assets

$

26,757,281











$

26,041,769




























Liabilities and Shareholders' Equity:





















  Interest-bearing liabilities:





















  Demand deposits

$

4,163,364


$



%




$

3,935,232


$


%

  Savings, interest checking, and money market deposits


14,769,743



10,337



0.28






14,060,535



7,780


0.22


  Certificates of deposit


2,459,145



7,819



1.29






2,022,522



5,655


1.13


 Total deposits


21,392,252



18,156



0.34






20,018,289



13,435


0.27























Securities sold under agreements to repurchase and other borrowings


875,829



3,640



1.66






905,239



3,540


1.56


Federal Home Loan Bank advances


1,311,832



7,281



2.22






2,136,804



7,493


1.40


Long-term debt


225,799



2,676



4.74






225,541



2,548


4.52


Total borrowings


2,413,460



13,597



2.25






3,267,584



13,581


1.66


Total interest-bearing liabilities


23,805,712


$

31,753



0.54

%





23,285,873


$

27,016


0.47

%

Non-interest-bearing liabilities


228,978












196,542







Total liabilities


24,034,690












23,482,415




























Preferred stock


145,161












122,710







Common shareholders' equity


2,577,430












2,436,644







Total shareholders' equity


2,722,591












2,559,354







Total Liabilities and Shareholders' Equity

$

26,757,281











$

26,041,769







Tax-equivalent net interest income





216,398












196,697




Less: tax-equivalent adjustments





(2,230)












(4,033)




Net interest income




$

214,168











$

192,664




Net interest margin








3.44

%










3.22

%






















(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 and Lease Balances (unaudited)

(Dollars in thousands)


March 31,
2018



December 31,
2017



September 30,
2017



June 30,
2017



March 31,
2017

Loan and Lease Balances (actual):















  Commercial non-mortgage

$

5,404,231


$

5,084,148


$

5,031,481


$

4,868,641


$

4,791,107

  Asset-based lending


874,271



834,779



883,599



861,203



848,137

  Commercial real estate


4,544,831



4,523,828



4,464,917



4,556,208



4,530,507

  Residential mortgages


4,459,862



4,490,878



4,499,441



4,388,308



4,290,685

  Consumer


2,522,380



2,590,225



2,566,983



2,599,318



2,634,063

Total Loan and Lease Balances


17,805,575



17,523,858



17,446,421



17,273,678



17,094,499

Allowance for loan and lease losses


(205,349)



(199,994)



(201,803)



(199,578)



(199,107)

Loans and Leases, net

$

17,600,226


$

17,323,864


$

17,244,618


$

17,074,100


$

16,895,392
















Loan and Lease Balances (average):















  Commercial non-mortgage

$

5,306,412


$

5,080,267


$

4,990,146


$

4,891,446


$

4,773,931

  Asset-based lending


864,895



876,070



859,289



864,247



845,269

  Commercial real estate


4,538,429



4,446,162



4,475,207



4,550,595



4,479,379

  Residential mortgages


4,476,057



4,498,707



4,455,932



4,340,656



4,279,662

  Consumer


2,568,980



2,600,970



2,583,945



2,619,480



2,662,915

Total Loan and Lease Balances


17,754,773



17,502,176



17,364,519



17,266,424



17,041,156

Allowance for loan and lease losses


(201,575)



(202,632)



(202,628)



(201,852)



(198,308)

Loans and Leases, net

$

17,553,198


$

17,299,544


$

17,161,891


$

17,064,572


$

16,842,848



WEBSTER FINANCIAL CORPORATION
Five Quarter Nonperforming Assets (unaudited)

(Dollars in thousands)


March 31,
2018



December 31,
2017



September 30,
2017



June 30,
2017



March 31,
2017

Nonperforming loans and leases:















  Commercial non-mortgage

$

46,843


$

39,795


$

59,512


$

68,977


$

75,186

  Asset-based lending


1,571



589



8,558





  Commercial real estate


3,884



4,484



11,066



11,168



9,793

  Residential mortgages


44,496



44,407



45,597



46,018



46,792

  Consumer


37,465



37,307



38,915



40,206



42,054

Total nonperforming loans and leases

$

134,259


$

126,582


$

163,648


$

166,369


$

173,825
















Other real estate owned and repossessed assets:















  Commercial non-mortgage

$

218


$

305


$

328


$

33


$

82

  Residential mortgages


2,785



3,110



2,843



2,513



2,296

  Consumer


2,828



2,649



2,143



1,475



1,732

Total other real estate owned and repossessed assets

$

5,831


$

6,064


$

5,314


$

4,021


$

4,110

Total nonperforming assets

$

140,090


$

132,646


$

168,962


$

170,390


$

177,935



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

(Dollars in thousands)


March 31,
2018



December 31,
2017



September 30,
2017



June 30,
2017



March 31,
2017

Past due 30-89 days:















  Commercial non-mortgage

$

4,749


$

8,167


$

3,169


$

2,793


$

2,983

  Asset-based lending