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Webster Reports Second Quarter 2018 Earnings

WATERBURY, Conn., July 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 $79.5 million, or $0.86 per diluted share, for the quarter ended June 30, 2018 compared to $59.5 million, or $0.64 per diluted share, for the quarter ended June 30, 2017. Adjusting for $7.2 million related to an accrual for deposit insurance assessments for periods prior to 2018 and $1.4 million of banking center optimization expenses, earnings per diluted share would have been $0.92.

"Webster's second quarter results reflect continued progress in executing on our strategic priorities," said John R. Ciulla, president and chief executive officer. "We achieved record levels of performance as a result of double-digit pre-provision net revenue growth in all three lines of business."

Highlights for the second quarter of 2018:

  • Revenue of $293.4 million, an increase of 11.8 percent from a year ago, including net interest income of $225.0 million, an increase of 13.8 percent from a year ago.
  • Loan growth of $752 million, or 4.4 percent from a year ago, with growth of $799 million, or 7.8 percent, in commercial and commercial real estate loans.
  • Deposit growth of $885 million, or 4.3 percent from a year ago, with growth of $690 million, or 14.3 percent, in health savings account deposits.
  • Net interest margin of 3.57 percent, up 30 basis points from a year ago.
  • Non-interest expense of $180.5 million includes $7.2 million related to an accrual for deposit insurance assessments prior to 2018. Excluding this amount, non-interest expense increased 5.4 percent from a year ago.
  • Efficiency ratio of 57.78 percent excludes the accrual for deposit insurance assessments for periods prior to 2018 and banking center optimization expenses.
  • Pre-tax, pre-provision net revenue growth of $14.9 million, or 15.2 percent from a year ago, led by HSA Bank's growth of 62.5 percent.
  • Annualized return on average common shareholders' equity of 12.22 percent compared to 9.63 percent a year ago; annualized return on average tangible common shareholders' equity (non-GAAP) of 15.76 percent compared to 12.65 percent a year ago.

"Year-over-year revenue growth exceeded 10 percent for the second consecutive quarter, led by a 30 basis point increase in the net interest margin," said Glenn MacInnes, executive vice president and chief financial officer. "Our balance sheet structure positions us well for future growth."

Line of Business performance compared to the second 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 June 30, 2018, Commercial Banking had $9.9 billion in loans and leases and $3.7 billion in deposit balances.

Commercial Banking Operating Results:



Three months ended June 30,

(In thousands)

2018

2017

Net interest income

$88,458

$78,946

Non-interest income

15,041

12,532

Operating revenue

103,499

91,478

Non-interest expense

42,979

37,304

Pre-tax, pre-provision net revenue

$60,520

$54,174





At June 30,

(In millions)

2018

2017

Loans and leases

$9,936

$9,215

Deposits

$3,681

$3,826

Pre-tax, pre-provision net revenue increased $6.3 million to $60.5 million in the quarter as compared to prior year. Net interest income increased $9.5 million to $88.5 million, primarily due to loan growth and higher loan and deposit margins.  Non-interest income increased $2.5 million to $15.0 million, primarily due to greater client interest rate hedging activity in the quarter as compared to prior year. Non-interest expense increased $5.7 million to $43.0 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 June 30, 2018, HSA Bank had $7.0 billion in total footings comprising $5.5 billion in deposit balances and $1.5 billion in assets under administration through linked investment accounts.

HSA Bank Operating Results:



Three months ended June 30,

(In thousands)

2018

2017

Net interest income

$35,265

$25,574

Non-interest income

22,882

19,750

Operating revenue

58,147

45,324

Non-interest expense

31,220

28,750

Pre-tax net revenue

$26,927

$16,574




At June 30,

(In millions)

2018

2017

Number of accounts

2,674

2,368

Deposits

$5,518

$4,828

Linked investment accounts*

1,476

1,076

Total footings

$6,994

$5,904

*Linked investment accounts are held off balance sheet

Pre-tax net revenue increased $10.4 million to $26.9 million in the quarter as compared to prior year. Net interest income increased $9.7 million to $35.3 million, due to a 14 percent growth in deposits and a 20 percent improvement in deposit spreads. Non-interest income increased $3.1 million to $22.9 million, primarily due to growth in accounts over the past year. Non-interest expense increased $2.5 million to $31.2 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 163 banking centers and 329 ATMs, a customer care center, and a full range of web and mobile-based banking services.

As of June 30, 2018, Community Banking had $8.1 billion in loans and $11.8 billion in deposit balances.

Community Banking Operating Results:



Three months ended June 30,

(In thousands)

2018

2017

Net interest income

$101,902

$95,902

Non-interest income

26,378

28,058

Operating revenue

128,280

123,960

Non-interest expense

95,197

94,322

Pre-tax, pre-provision net revenue

$33,083

$29,638





At June 30,

(In millions)

2018

2017

Loans

$8,090

$8,058

Deposits

$11,796

$11,423

Pre-tax, pre-provision net revenue increased $3.4 million to $33.1 million in the quarter as compared to prior year. Net interest income increased $6.0 million to $101.9 million, primarily due to growth in loan and deposit balances, coupled with improved interest rate spreads on deposits. Non-interest income decreased $1.7 million primarily driven by lower mortgage production and related returns on mortgage banking activities, offset by growth in fees from investment services and other miscellaneous fee income. Non-interest expense increased $0.9 million as a result of higher compensation-related expenses, investments in technology and risk management; partially offset by reductions in other expense categories.

Consolidated financial performance:

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

  • Net interest income was $225.0 million compared to $197.8 million.
  • Net interest margin was 3.57 percent compared to 3.27 percent. The yield on interest-earning assets increased by 39 basis points, and the cost of funds increased by 10 basis points.
  • Average interest-earning assets totaled $25.2 billion and grew by $695 million, or 2.8 percent.
  • Average loans totaled $17.9 billion and grew by $620 million, or 3.6 percent.

Quarterly provision for loan losses:

  • The Company recorded a provision for loan losses of $10.5 million, compared to $11.0 million in the prior quarter and $7.3 million a year ago.
  • Net charge-offs were $8.5 million, compared to $5.6 million in the prior quarter and $6.8 million a year ago. The increase from prior quarter is primarily due to increased commercial non-mortgage charge-offs. The ratio of net charge-offs to average loans on an annualized basis was 0.19 percent, compared to 0.13 percent in the prior quarter and 0.16 percent a year ago.
  • The allowance for loan losses represented 1.15 percent of total loans at June 30, 2018, compared to 1.15 percent at March 31, 2018 and 1.16 percent at June 30, 2017. The allowance for loan losses represented 148 percent of nonperforming loans compared to 153 percent at March 31, 2018 and 120 percent at June 30, 2017.

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

  • Total non-interest income was $68.4 million, compared to $64.7 million, an increase of $3.7 million. This reflects an increase in HSA fee income of $3.1 million driven by account growth and $2.5 million related to additional client hedging income, offset by a decrease of $2.1 million in mortgage banking activities driven by lower originations.

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

  • Total non-interest expense was $180.5 million compared, to $164.4 million, an increase of $16.1 million. This reflects a $7.2 million accrual for deposit insurance assessments for periods prior to 2018, $6.7 million in compensation due to strategic hires and annual merit increases, as well as an increase of $2.1 million in technology and equipment due to higher depreciation and service contracts to support infrastructure.

Quarterly income taxes compared to the second quarter of 2017:

  • Income tax expense was $20.7 million, compared to $29.1 million and the effective tax rate was 20.3 percent, compared to 32.1 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, as well as discrete tax benefits in the quarter.

Investment securities:

  • Total investment securities were $7.1 billion, compared to $7.2 billion at March 31, 2018 and $7.0 billion at June 30, 2017. The carrying value of the available-for-sale portfolio included $86.5 million of net unrealized losses, compared to $74.0 million at March 31, 2018 and $23.1 million at June 30, 2017. The carrying value of the held-to-maturity portfolio does not reflect $130.2 million of net unrealized losses, compared to $111.3 million at March 31, 2018, and $21.8 million at June 30, 2017.

Loans:

  • Total loans were $18.0 billion, compared to $17.8 billion at March 31, 2018 and $17.3 billion at June 30, 2017. Compared to March 31, 2018, commercial loans increased by $226.0 million and commercial real estate loans increased by $35.4 million, while consumer loans decreased by $36.7 million and residential loans decreased by $4.3 million.
  • Compared to a year ago, commercial loans increased by $774.7 million, residential loans increased by $67.3 million, and commercial real estate loans increased by $24.0 million, while consumer loans decreased by $113.6 million.
  • Loan originations for portfolio were $1.509 billion, compared to $1.111 billion in the prior quarter and $1.374 billion a year ago. In addition, $44 million of residential loans were originated for sale in the quarter, compared to $43 million in the prior quarter and $74 million a year ago.

Asset quality:

  • Total nonperforming loans were $140.1 million, or 0.78 percent of total loans, compared to $134.3 million, or 0.75 percent, at March 31, 2018 and $166.4 million, or 0.96 percent, at June 30, 2017. Total paying nonperforming loans were $34.1 million, compared to $32.2 million at March 31, 2018 and $75.6 million at March 31, 2017.
  • Past due loans were $33.5 million, compared to $41.6 million at March 31, 2018 and $29.2 million at March 31, 2017.

Deposits and borrrowings:

  • Total deposits were $21.3 billion, compared to $21.4 billion at March 31, 2018 and $20.5 billion at June 30, 2017. Core deposits to total deposits were 86.7 percent, compared to 88.1 percent at March 31, 2018 and 89.8 percent at June 30, 2017. The loan to deposit ratio was 84.5 percent, compared to 83.3 percent at March 31, 2018 and 84.4 percent at June 30, 2017.
  • Total borrowings were $2.7 billion, compared to $2.4 billion at March 31, 2018 and $2.9 billion at June 30, 2017.

Capital:

  • The return on average common shareholders' equity and the return on average tangible common shareholders' equity were 12.22 percent and 15.76 percent, respectively, compared to 9.63 percent and 12.65 percent, respectively, in the second quarter of 2017.
  • The tangible equity and tangible common equity ratios were 8.29 percent and 7.75 percent, respectively, compared to 7.95 percent and 7.47 percent, respectively, at June 30, 2017. The common equity tier 1 risk-based capital ratio was 11.03 percent, compared to 10.84 percent at June 30, 2017.
  • Book value and tangible book value per common share were $28.40 and $22.25, respectively, compared to $26.93 and $20.74, respectively, at June 30, 2017.

 

***

 

Webster Financial Corporation is the holding company for Webster Bank, National Association and its HSA Bank division. With $27.0 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust, and investment services through 163 banking centers and 329 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 second quarter earnings announcement will be held today, Thursday, July 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)


June 30,
2018



March 31,
2018



December 31,
2017



September 30,
2017



June 30,
2017




















Income and performance ratios:

















Net income

$

81,682


$

80,225


$

69,893


$

64,496


$

61,579



Earnings applicable to common shareholders


79,489



78,083



67,710



62,426



59,485



Earnings per diluted common share


0.86



0.85



0.73



0.67



0.64



Return on average assets


1.22

%


1.20

%


1.05

%


0.98

%


0.94


%

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


15.76



15.73



13.85



12.99



12.65



Return on average common shareholders' equity


12.22



12.15



10.66



9.95



9.63



Non-interest income as a percentage of total revenue


23.31



24.30



24.37



24.68



24.61




















Asset quality:

















Allowance for loan and lease losses

$

207,322


$

205,349


$

199,994


$

201,803


$

199,578



Nonperforming assets


146,047



140,090



132,646



168,962



170,390



Allowance for loan and lease losses / total loans and leases


1.15

%


1.15

%


1.14

%


1.16

%


1.16


%

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


0.19



0.13



0.34



0.18



0.16



Nonperforming loans and leases / total loans and leases


0.78



0.75



0.72



0.94



0.96



Nonperforming assets / total loans and leases plus OREO


0.81



0.79



0.76



0.97



0.99



Allowance for loan and lease losses / nonperforming loans and leases


148.00



152.95



158.00



123.32



119.96




















Other ratios:

















Tangible equity (non-GAAP)


8.29

%


8.21

%


8.23

%


8.03

%


7.95


%

Tangible common equity (non-GAAP)


7.75



7.65



7.67



7.55



7.47



Tier 1 risk-based capital (a)


11.77



11.75



11.91



11.65



11.51



Total risk-based capital (a)


13.25



13.24



13.40



13.17



13.02



Common equity tier 1 risk-based capital (a)


11.03



10.99



11.14



10.99



10.84



Shareholders' equity / total assets


10.21



10.15



10.20



10.01



9.95



Net interest margin


3.57



3.44



3.33



3.30



3.27



Efficiency ratio (non-GAAP)


57.78



59.76



59.48



59.18



60.65




















Equity and share related:

















Common equity

$

2,616,686


$

2,571,105


$

2,556,902


$

2,516,077


$

2,482,416



Book value per common share


28.40



27.94



27.76



27.34



26.93



Tangible book value per common share (non-GAAP)


22.25



21.78



21.59



21.16



20.74



Common stock closing price


63.70



55.40



56.16



52.55



52.22



Dividends declared per common share


0.33



0.26



0.26



0.26



0.26




















Common shares issued and outstanding


92,151



92,016



92,101



92,034



92,195



Weighted-average common shares outstanding - Basic


91,893



91,921



92,058



92,125



92,092



Weighted-average common shares outstanding - Diluted


92,173



92,254



92,400



92,503



92,495




















(a) Presented as projected for June 30, 2018 and actual for the remaining periods.



 

 

WEBSTER FINANCIAL CORPORATION
Consolidated Balance Sheets (unaudited)

(In thousands)


June 30,
2018



March 31,
2018



June 30,
2017

Assets:









Cash and due from banks

$

228,628


$

164,927


$

231,808

Interest-bearing deposits


70,654



45,899



33,662

Securities:









 Available for sale


2,780,581



2,773,506



2,807,966

 Held to maturity


4,356,219



4,408,321



4,219,198

   Total securities


7,136,800



7,181,827



7,027,164

Loans held for sale


18,645



19,727



39,407

Loans and Leases:









 Commercial


6,504,521



6,278,502



5,729,844

 Commercial real estate


4,580,200



4,544,831



4,556,208

 Residential mortgages


4,455,580



4,459,862



4,388,308

 Consumer


2,485,695



2,522,380



2,599,318

   Total loans and leases


18,025,996



17,805,575



17,273,678

Allowance for loan and lease losses


(207,322)



(205,349)



(199,578)

   Loans and leases, net


17,818,674



17,600,226



17,074,100

Federal Home Loan Bank and Federal Reserve Bank stock


141,293



125,328



155,505

Premises and equipment, net


127,973



127,196



131,833

Goodwill and other intangible assets, net


566,061



567,023



569,964

Cash surrender value of life insurance policies


537,431



535,391



524,674

Deferred tax asset, net


106,910



99,199



80,942

Accrued interest receivable and other assets


283,668



285,404



305,871

Total Assets

$

27,036,737


$

26,752,147


$

26,174,930










Liabilities and Shareholders' Equity:









Deposits:









 Demand

$

4,151,259


$

4,074,992


$

4,074,819

 Health savings accounts


5,517,929



5,487,627



4,828,145

 Interest-bearing checking


2,637,346



2,624,885



2,669,207

 Money market


2,016,453



2,344,526



2,316,460

 Savings


4,180,666



4,299,759



4,473,925

 Certificates of deposit


2,478,589



2,275,897



1,795,871

 Brokered certificates of deposit


361,114



277,356



299,670

   Total deposits


21,343,356



21,385,042



20,458,097

Securities sold under agreements to repurchase and other borrowings


862,568



931,299



872,692

Federal Home Loan Bank advances


1,576,956



1,202,030



1,767,757

Long-term debt


225,894



225,830



225,640

Accrued expenses and other liabilities


266,240



291,804



245,618

Total liabilities


24,275,014



24,036,005



23,569,804

Preferred stock


145,037



145,037



122,710

Common shareholders' equity


2,616,686



2,571,105



2,482,416

   Total shareholders' equity


2,761,723



2,716,142



2,605,126

Total Liabilities and Shareholders' Equity

$

27,036,737


$

26,752,147


$

26,174,930

 

 

WEBSTER FINANCIAL CORPORATION
Consolidated Statements of Income (unaudited)



Three Months Ended June 30,



Six Months Ended June 30,

(In thousands, except per share data)


2018



2017



2018



2017

Interest income:












Interest and fees on loans and leases

$

207,820


$

174,456


$

401,040


$

342,264

Interest and dividends on securities


52,523



52,130



105,082



103,686

Loans held for sale


148



203



290



519

Total interest income


260,491



226,789



506,412



446,469

Interest expense:












Deposits


20,225



14,679



38,381



28,114

Borrowings


15,256



14,323



28,853



27,904

Total interest expense


35,481



29,002



67,234



56,018

Net interest income


225,010



197,787



439,178



390,451

Provision for loan and lease losses


10,500



7,250



21,500



17,750

Net interest income after provision for loan and lease losses


214,510



190,537



417,678



372,701

Non-interest income:












Deposit service fees


40,859



38,192



81,310



75,198

Loan and lease related fees


6,333



6,344



13,329



13,552

Wealth and investment services


8,456



7,877



16,326



15,150

Mortgage banking activities


1,235



3,351



2,379



5,617

Increase in cash surrender value of life insurance policies


3,643



3,648



7,215



7,223

Other income


7,848



5,265



16,562



10,979



68,374



64,677



137,121



127,719

Impairment loss on securities recognized in earnings




(126)





(126)

Total non-interest income


68,374



64,551



137,121



127,593

Non-interest expense:












Compensation and benefits


93,052



86,394



187,817



173,893

Occupancy


15,842



16,034



30,987



32,213

Technology and equipment


24,604



22,458



48,466



44,066

Marketing


4,889



4,615



8,441



10,056

Professional and outside services


4,381



3,507



9,169



7,783

Intangible assets amortization


962



1,028



1,924



2,083

Loan workout expenses


844



755



1,420



1,363

Deposit insurance


13,687



6,625



20,404



13,357

Other expenses


22,198



23,003



43,446



43,389

Total non-interest expense


180,459



164,419



352,074



328,203

Income before income taxes


102,425



90,669



202,725



172,091

Income tax expense


20,743



29,090



40,818



51,041

Net income


81,682



61,579



161,907



121,050

 Preferred stock dividends and other


(2,193)



(2,094)



(4,334)



(4,224)

 Earnings applicable to common shareholders

$

79,489


$

59,485


$

157,573


$

116,826













Weighted-average common shares outstanding - Diluted


92,173



92,495



92,236



92,470













Earnings per common share:












Basic

$

0.87


$

0.65


$

1.71


$

1.27

Diluted


0.86



0.64



1.71



1.26

 

 

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



Three Months Ended

(In thousands, except per share data)


June 30,
2018



March 31,
2018



December 31,
2017



September 30,
2017



June 30,
2017

Interest income:















Interest and fees on loans and leases

$

207,820


$

193,220


$

185,172


$

181,130


$

174,456

Interest and dividends on securities


52,523



52,559



50,735



49,584



52,130

Loans held for sale


148



142



208



307



203

Total interest income


260,491



245,921



236,115



231,021



226,789

Interest expense:















Deposits


20,225



18,156



17,379



16,760



14,679

Borrowings


15,256



13,597



13,804



13,357



14,323

Total interest expense


35,481



31,753



31,183



30,117



29,002

Net interest income


225,010



214,168



204,932



200,904



197,787

Provision for loan and lease losses


10,500



11,000



13,000



10,150



7,250

Net interest income after provision for loan and lease losses


214,510



203,168



191,932



190,754



190,537

Non-interest income:















Deposit service fees


40,859



40,451



37,618



38,321



38,192

Loan and lease related fees


6,333



6,996



6,550



6,346



6,344

Wealth and investment services


8,456



7,870



8,155



7,750



7,877

Mortgage banking activities


1,235



1,144



1,899



2,421



3,351

Increase in cash surrender value of life insurance policies


3,643



3,572



3,684



3,720



3,648

Other income


7,848



8,714



8,133



7,288



5,265



68,374



68,747



66,039



65,846



64,677

Impairment loss on securities recognized in earnings










(126)

Total non-interest income


68,374



68,747



66,039



65,846



64,551

Non-interest expense:















Compensation and benefits


93,052



94,765



94,217



88,395



86,394

Occupancy


15,842



15,145



13,533



14,744



16,034

Technology and equipment


24,604



23,862



22,818



22,580



22,458

Marketing


4,889



3,552



3,320



4,045



4,615

Professional and outside services


4,381



4,788



5,045



4,030



3,507

Intangible assets amortization


962



962



977



1,002



1,028

Loan workout expenses


844



576



891



840



755

Deposit insurance


13,687



6,717



5,948



6,344



6,625

Other expenses


22,198



21,248



24,300



19,843



23,003

Total non-interest expense


180,459



171,615



171,049



161,823



164,419

Income before income taxes


102,425



100,300



86,922



94,777



90,669

Income tax expense


20,743



20,075



17,029



30,281



29,090

Net income


81,682



80,225



69,893



64,496



61,579

 Preferred stock dividends and other


(2,193)



(2,142)



(2,183)



(2,070)



(2,094)

 Earnings applicable to common shareholders

$

79,489


$

78,083


$

67,710


$

62,426


$

59,485
















Weighted-average common shares outstanding - Diluted


92,173



92,254



92,400



92,503



92,495
















Earnings per common share:















Basic

$

0.87


$

0.85


$

0.74


$

0.68


$

0.65

Diluted


0.86



0.85



0.73



0.67



0.64


 

 

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




Three Months Ended June 30,




2018






2017


(Dollars in thousands)


Average balance



Interest



Yield/rate






Average balance



Interest


Yield/rate


Assets:





















Interest-earning assets:





















Loans and leases

$

17,886,685


$

208,490



4.63

%




$

17,266,424


$

175,421


4.04

%

Securities (a)


7,142,572



52,277



2.90






7,030,120



53,569


3.04


Federal Home Loan and Federal Reserve Bank stock


133,114



1,546



4.66






165,087



1,563


3.80


Interest-bearing deposits


66,339



247



1.47






64,812



169


1.03


Loans held for sale


15,211



148



3.90






22,956



203


3.53


 Total interest-earning assets


25,243,921


$

262,708



4.13

%





24,549,399


$

230,925


3.74

%

Non-interest-earning assets


1,631,032












1,633,049







 Total Assets

$

26,874,953











$

26,182,448




























Liabilities and Shareholders' Equity:





















Interest-bearing liabilities:





















Demand deposits

$

4,109,165


$



%




$

3,979,330


$


%

Health savings accounts


5,519,917



2,735



0.20






4,822,188



2,392


0.20


Interest-bearing checking, money market and savings


9,041,286



7,859



0.35






9,479,595



6,331


0.27


Certificates of deposit


2,732,709



9,631



1.41






2,057,335



5,956


1.16


 Total deposits


21,403,077



20,225



0.38






20,338,448



14,679


0.29























Securities sold under agreements to repurchase and other borrowings


869,238



3,998



1.82






844,837



3,583


1.68


Federal Home Loan Bank advances


1,399,344



8,471



2.39






1,997,069



8,156


1.62


Long-term debt


225,863



2,787



4.94






225,604



2,584


4.58


 Total borrowings


2,494,445



15,256



2.42






3,067,510



14,323


1.85


 Total interest-bearing liabilities


23,897,522


$

35,481



0.59

%





23,405,958


$

29,002


0.49

%

Non-interest-bearing liabilities


223,076












179,268







 Total liabilities


24,120,598












23,585,226




























Preferred stock


145,037












122,710







Common shareholders' equity


2,609,318












2,474,512







Total shareholders' equity


2,754,355












2,597,222







 Total Liabilities and Shareholders' Equity

$

26,874,953











$

26,182,448







Tax-equivalent net interest income





227,227












201,923




Less: tax-equivalent adjustments





(2,217)












(4,136)




 Net interest income




$

225,010











$

197,787




 Net interest margin








3.57

%










3.27

%






















(a) For purposes of the yield computation, unrealized gains (losses) on securities available for sale are excluded from the average balance.


 

 

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




Six Months Ended June 30,




2018






2017


(Dollars in thousands)


Average balance



Interest



Yield/rate






Average balance



Interest


Yield/rate


Assets:





















Interest-earning assets:





















Loans and leases

$

17,821,094


$

402,354



4.50

%




$

17,154,412


$

344,150


4.00

%

Securities (a)


7,150,495



104,766



2.91






7,050,583



106,420


3.01


Federal Home Loan and Federal Reserve Bank stock


133,177



3,001



4.54






173,601



3,250


3.78


Interest-bearing deposits


59,563



448



1.50






66,476



299


0.89


Loans held for sale


15,768



290



3.68






29,560



519


3.51


 Total interest-earning assets


25,180,097


$

510,859



4.04

%





24,474,632


$

454,638


3.71

%

Non-interest-earning assets


1,636,345












1,637,865







 Total Assets

$

26,816,442











$

26,112,497




























Liabilities and Shareholders' Equity:





















Interest-bearing liabilities:





















Demand deposits

$

4,136,115


$



%




$

3,957,403


$


%

Health savings accounts


5,473,715



5,359



0.20






4,779,245



4,684


0.20


Interest-bearing checking, money market and savings


9,191,181



15,572



0.34






9,402,581



11,819


0.25


Certificates of deposit


2,596,683



17,450



1.35






2,040,024



11,611


1.15


 Total deposits


21,397,694



38,381



0.36






20,179,253



28,114


0.28























Securities sold under agreements to repurchase and other borrowings


872,516



7,638



1.74






874,871



7,123


1.62


Federal Home Loan Bank advances


1,355,830



15,752



2.31






2,066,551



15,649


1.51


Long-term debt


225,831



5,463



4.84






225,572



5,132


4.55


 Total borrowings


2,454,177



28,853



2.34






3,166,994



27,904


1.75


 Total interest-bearing liabilities


23,851,871


$

67,234



0.57

%





23,346,247


$

56,018


0.48

%

Non-interest-bearing liabilities


226,011












187,858







 Total liabilities


24,077,882












23,534,105




























Preferred stock


145,099












122,710







Common shareholders' equity


2,593,461












2,455,682







Total shareholders' equity


2,738,560












2,578,392







 Total Liabilities and Shareholders' Equity

$

26,816,442











$

26,112,497







Tax-equivalent net interest income





443,625












398,620




Less: tax-equivalent adjustments





(4,447)












(8,169)




 Net interest income




$

439,178











$

390,451




 Net interest margin








3.51

%










3.25

%






















(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)