News Article

Webster Reports Second Quarter 2020 Earnings Of $0.57 Per Diluted Share

July 23, 2020 at 7:30 AM EDT

WATERBURY, Conn., July 23, 2020 /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 $50.7 million, or $0.57 per diluted share, for the quarter ended June 30, 2020, compared to $96.2 million, or $1.05 per diluted share, for the quarter ended June 30, 2019. Results in the quarter reflect a provision for credit losses of $40.0 million under the Current Expected Credit Loss (CECL) accounting standard compared to a provision for credit losses of $11.9 million in prior year. Adjusting for a $5.5 million discrete negative adjustment related to customer derivatives, earnings would have been $0.61 per diluted share.

"We continue to focus on prudently managing capital, credit and liquidity during these uncertain times, while also supporting our customers, employees, and communities," said John R. Ciulla, chairman and chief executive officer. "We are pleased with our performance in the quarter given the challenging environment."

Highlights for the second quarter of 2020:

  • Revenue of $284.5 million.
  • Loan growth of $2.5 billion, or 13.1 percent from a year ago, led by commercial and commercial real estate, which increased 20.4 percent. Excluding Paycheck Protection Program (PPP) loans, total loan growth was $1.2 billion, or 6.1 percent.
  • Results include a reserve build of $23.6 million resulting in an allowance coverage of 1.64 percent, or 1.75 percent excluding $1.4 billion of PPP loans.
  • Deposit growth of $3.8 billion, or 16.6 percent from a year ago, with growth of $2.0 billion in demand deposits and $574 million in HSA deposits.
  • Net interest margin of 2.99 percent.
  • Efficiency ratio (non-GAAP) of 60.0 percent.

"We are proud to have efficiently funded $1.4 billion in loans to businesses under the Paycheck Protection Program during the quarter given our strong capital and liquidity positions," said Glenn MacInnes, executive vice president and chief financial officer. "Our Common Equity Tier 1 capital ratio now exceeds 11 percent and the loan-to-deposit ratio improved to 83 percent."

Line of Business performance compared to the second quarter of 2019

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, 2020, Commercial Banking had $12.5 billion in loans and leases and $5.4 billion in deposit balances.

Commercial Banking Operating Results:






Percent


Three months ended June 30,


Favorable/

(In thousands)


2020

2019


(Unfavorable)

Net interest income


$104,862


$100,216




4.6

%


Non-interest income


14,725


14,645




0.5



Operating revenue


119,587


114,861




4.1



Non-interest expense


44,694


46,196




3.3



Pre-tax, pre-provision net revenue


$74,893


$68,665




9.1
















Percent



At June 30,


Increase/

(In millions)


2020

2019


(Decrease)

Loans and leases


$12,485


$11,005




13.4

%


Deposits


5,400


3,870




39.5





Note: In 1Q20, segment net interest income was updated to reflect changes in the funds transfer pricing methodology related to allocated capital. The prior period has been restated to reflect the change.

Pre-tax, pre-provision net revenue increased $6.2 million to $74.9 million in the quarter as compared to prior year. Net interest income increased $4.6 million to $104.9 million, primarily due to loan and deposit growth. Non-interest income increased $0.1 million to $14.7 million. Non-interest expense decreased $1.5 million to $44.7 million, primarily due to a significant reduction in travel and entertainment spend.

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, 2020, HSA Bank had $9.0 billion in total footings comprising $6.8 billion in deposit balances and $2.2 billion in assets under administration through linked investment accounts.

HSA Bank Operating Results:






Percent


Three months ended June 30,


Favorable/

(In thousands)


2020

2019


(Unfavorable)

Net interest income


$39,334


$44,013




(10.6)

%


Non-interest income


23,103


24,979




(7.5)



Operating revenue


62,437


68,992




(9.5)



Non-interest expense


34,020


34,253




0.7



Pre-tax, net revenue


$28,417


$34,739




(18.2)
















Percent



At June 30,


Increase/

(Dollars in millions)


2020

2019


(Decrease)

Number of accounts (thousands)


2,996


2,964




1.1

%










Deposits


$6,787


$6,212




9.2



Linked investment accounts *


2,249


1,817




23.8



Total footings


$9,036


$8,029




12.5



* Linked investment accounts are held off balance sheet



Note: In 1Q20, segment net Interest income was updated to reflect changes in the funds transfer pricing methodology related to allocated capital. The prior period has been restated to reflect the change.

Pre-tax net revenue decreased $6.3 million to $28.4 million in the quarter as compared to prior year. Net interest income decreased $4.7 million to $39.3 million, due to a decline in deposit spreads partially offset by 9.2 percent growth in deposits. Non-interest income decreased $1.9 million to $23.1 million, primarily due to a decline in interchange revenue as a result of COVID-19. Non-interest expense decreased $0.2 million to $34.0 million, primarily due to reduced travel expenses as a result of COVID-19, partially offset by account growth.

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 157 banking centers and 306 ATMs, a customer care center, and a full range of web and mobile-based banking services. As of June 30, 2020, Community Banking had $9.3 billion in loans and $14.2 billion in deposit balances.

Community Banking Operating Results:






Percent


Three months ended June 30,


Favorable/

(In thousands)


2020

2019


(Unfavorable)

Net interest income


$104,870


$107,838




(2.8)

%


Non-interest income


23,405


27,675




(15.4)



Operating revenue


128,275


135,513




(5.3)



Non-interest expense


93,686


96,166




2.6



Pre-tax, pre-provision net revenue


$34,589


$39,347




(12.1)
















Percent



At June 30,


Increase/

(In millions)


2020

2019


(Decrease)

Loans


$9,317


$8,265




12.7

%


Deposits


14,173


12,480




13.6





Note: In 1Q20, segment net Interest income was updated to reflect changes in the funds transfer pricing methodology related to allocated capital. The prior period has been restated to reflect the change.

Pre-tax, pre-provision net revenue decreased $4.8 million to $34.6 million in the quarter as compared to prior year. Net interest income decreased $3.0 million to $104.9 million, due to the decreasing credit value of deposits, partially offset by balance growth in the loan and deposit portfolios. Non-interest income decreased $4.3 million driven by lower deposit-related service charges which were partially offset by higher deposit balances. Non-interest expense decreased $2.5 million to $93.7 million resulting from lower loan operations and other costs.

Consolidated financial performance:

Quarterly net interest income compared to the second quarter of 2019:

  • Net interest income was $224.4 million compared to $241.8 million.
  • Net interest margin was 2.99 percent compared to 3.63 percent. The yield on interest-earning assets declined by 104 basis points, and the cost of interest-bearing liabilities declined by 41 basis points.
  • Average interest-earning assets totaled $30.4 billion and grew by $3.7 billion, or 14.0 percent.
  • Average loans totaled $21.6 billion and grew by $2.6 billion, or 13.6 percent.
  • Average deposits totaled $25.9 billion and grew by $3.2 billion, or 14.0 percent.

Quarterly provision for credit losses:

  • The provision for credit losses was $40.0 million in the quarter, contributing to a $23.6 million increase in the allowance for credit losses on loans and leases. The increase in the allowance reflects our revised estimate of forecasted economic conditions. The provision for credit losses was $76.0 million in the prior quarter and $11.9 million a year ago. The increase compared to a year ago is primarily due to the adoption of CECL and the impact of COVID-19.
  • Net charge-offs were $16.4 million, compared to $7.8 million in the prior quarter and $11.6 million a year ago. The ratio of net charge-offs to average loans on an annualized basis was 0.30 percent, compared to 0.15 percent in the prior quarter and 0.24 percent a year ago.
  • The allowance for credit losses on loans and leases represented 1.64 percent of total loans at June 30, 2020, compared to 1.60 percent at March 31, 2020 and 1.10 percent at June 30, 2019. Excluding $1.4 billion of PPP loans, the coverage ratio was 1.75 percent at June 30, 2020. The allowance for credit losses at June 30 and March 31 was estimated in accordance with the CECL accounting standard. The allowance represented 207 percent of nonperforming loans at June 30, 2020 compared to 206 percent at March 31, 2020 and 143 percent at June 30, 2019.

Quarterly non-interest income compared to the second quarter of 2019:

  • Total non-interest income was $60.1 million compared to $75.9 million, a decrease of $15.8 million. This reflects a decrease of $11.0 million in other income primarily due to a $5.5 million discrete fair value adjustment related to customer derivatives and a $7.3 million decrease in deposit service fees due to lower NSF, account related, and interchange fees. These decreases were partially offset by an increase of $3.3 million in mortgage banking activities due to higher origination volume.

Quarterly non-interest expense compared to the second quarter of 2019:

  • Total non-interest expense was $176.6 million compared to $180.6 million, a decrease of $4.1 million. This reflects decreases of $6.8 million in other expenses due to lower pension, legal, and other variable operating expenses. Offsetting this were increases of $1.7 million in technology and equipment due to infrastructure investment and $1.2 million in compensation and benefits due to annual merit increases and other benefits.

Quarterly income taxes compared to the second quarter of 2019:

  • Income tax expense was $14.8 million compared to $26.5 million and the effective tax rate was 21.8 percent compared to 21.1 percent.
  • The higher effective tax rate in the quarter primarily reflects a higher level of net discrete tax benefits recognized during the a year ago period, partially offset by the effects of lower pre-tax income in 2020 compared to 2019.

Investment securities:

  • Total investment securities were $8.7 billion, compared to $8.5 billion at March 31, 2020 and $7.6 billion at June 30, 2019. The carrying value of the available-for-sale portfolio included $87.2 million of net unrealized gains, compared to $3.1 million at March 31, 2020 and $12.0 million of net unrealized losses at June 30, 2019. The carrying value of the held-to-maturity portfolio does not reflect $268.4 million of net unrealized gains, compared to $156.3 million at March 31, 2020 and $37.8 million of net unrealized losses at June 30, 2019.

Loans:

  • Total loans were $21.8 billion, compared to $20.9 billion at March 31, 2020 and $19.3 billion at June 30, 2019. Compared to March 31, 2020, commercial loans increased by $980.8 million, commercial real estate loans increased by $84.8 million, while consumer loans decreased by $84.7 million and residential mortgages decreased by $69.9 million.
  • Compared to a year ago, commercial loans increased by $1.521 billion, with PPP loans representing $1.356 billion of the increase. Commercial real estate loans increased by $982.9 million and residential mortgages increased by $202.9 million, while consumer loans decreased by $174.4 million.
  • Loan originations for portfolio were $2.817 billion, or $1.413 billion excluding PPP loan originations, compared to $1.195 billion in the prior quarter and $1.382 billion a year ago. In addition, $115 million of residential loans were originated for sale in the quarter, compared to $60 million in the prior quarter and $41 million a year ago.

Asset quality:

  • Total nonperforming loans were $173.1 million, or 0.79 percent of total loans, compared to $162.3 million, or 0.78 percent of total loans, at March 31, 2020 and $148.1 million, or 0.77 percent of total loans, at June 30, 2019. Total paying nonperforming loans were $58.0 million, compared to $61.9 million at March 31, 2020 and $52.9 million at June 30, 2019.
  • Past due loans were $39.8 million, compared to $37.0 million at March 31, 2020 and $32.3 million at June 30, 2019.

Deposits and borrowings:

  • Total deposits were $26.4 billion, compared to $24.5 billion at March 31, 2020 and $22.6 billion at June 30, 2019. Core deposits to total deposits were 89.9 percent, compared to 87.8 percent at March 31, 2020 and 85.3 percent at June 30, 2019. The loan to deposit ratio was 82.7 percent, compared to 85.2 percent at March 31, 2020 and 85.3 percent at June 30, 2019.
  • Total borrowings were $2.8 billion, compared to $3.6 billion at March 31, 2020 and $2.9 billion at June 30, 2019.

Capital:

  • The return on average common shareholders' equity and the return on average tangible common shareholders' equity were 6.79 percent and 8.47 percent, respectively, compared to 13.47 percent and 16.88 percent, respectively, in the second quarter of 2019.
  • The tangible equity and tangible common equity ratios were 8.14 percent and 7.69 percent, respectively, compared to 8.82 percent and 8.31 percent, respectively, at June 30, 2019. The common equity tier 1 risk-based capital ratio was 11.19 percent, compared to 11.41 percent at June 30, 2019.
  • Book value and tangible book value per common share were $33.59 and $27.40, respectively, compared to $31.74 and $25.63, respectively, at June 30, 2019.

***

About Webster

Webster Financial Corporation is the holding company for Webster Bank, National Association and its HSA Bank division. With $32.7 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust, and investment services through 157 banking centers and 306 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 second quarter 2020 earnings announcement will be held today, Thursday, July 23, 2020 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) our ability to successfully execute our business plan and manage our risks; (2) local, regional, national, and international economic conditions and the impact they may have on us and our customers; (3) volatility and disruption in national and international financial markets; (4) the potential adverse effects of the ongoing novel coronavirus (COVID-19) pandemic and any governmental or societal responses thereto, or other unusual and infrequently occurring events; (5) changes in the level of nonperforming assets and charge-offs; (6) changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (7) adverse conditions in the securities markets that lead to impairment in the value of our investment securities; (8) inflation, changes in interest rate, and monetary fluctuations; (9) the timely development and acceptance of new products and services and the perceived value of those products and services by customers; (10) changes in deposit flows, consumer spending, borrowings, and savings habits; (11) our ability to implement new technologies and maintain secure and reliable technology systems; (12) performance by our counterparties and vendors; (13) our ability to increase market share and control expenses; (14) changes in the competitive environment among banks, financial holding companies, and other financial services providers; (15) changes in laws and regulations (including those concerning taxes, banking, securities, insurance, and healthcare) with which we and our subsidiaries must comply, including recent and potential legislative and regulatory changes in response to the COVID-19 pandemic such as the CARES Act and the rules and regulations that may be promulgated thereunder; (16) the effect of changes in accounting policies and practices applicable to us, including changes in our allowance for loan and lease losses and other impacts of recently adopted accounting guidance regarding the recognition of credit losses; (17) 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 (18) 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, 2020




March 31, 2020




December 31, 2019




September 30, 2019




June 30, 2019






















Income and performance ratios:




















Net income

$

53,097



$

38,199



$

90,473



$

93,865



$

98,649


Earnings applicable to common shareholders


50,729




36,021




88,066




91,442




96,193


Earnings per diluted common share


0.57




0.39




0.96




1.00




1.05


Return on average assets


0.65

%



0.50

%



1.19

%



1.27

%



1.38

%

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


8.47




5.95




14.34




15.37




16.88


Return on average common shareholders' equity


6.79




4.75




11.60




12.36




13.47


Non-interest income as a percentage of total revenue


21.12




24.12




23.47




22.52




23.88






















Asset quality:




















Allowance for credit losses on loans and leases

$

358,522



$

334,931



$

209,096



$

209,152



$

211,671


Nonperforming assets


178,381




169,120




157,380




166,716




153,247


Allowance for credit losses on loans and leases / total loans and leases


1.64

%



1.60

%



1.04

%



1.07

%



1.10

%

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


0.30




0.15




0.12




0.28




0.24


Nonperforming loans and leases / total loans and leases


0.79




0.78




0.75




0.83




0.77


Nonperforming assets / total loans and leases plus OREO


0.82




0.81




0.79




0.85




0.80


Allowance for credit losses on loans and leases / nonperforming loans and leases


207.17




206.37




138.56




128.55




142.97






















Other ratios:




















Tangible equity (non-GAAP)


8.14

%



8.14

%



8.88

%



8.83

%



8.82

%

Tangible common equity (non-GAAP)


7.69




7.67




8.39




8.34




8.31


Tier 1 risk-based capital (a)


11.84




11.60




12.22




12.32




12.09


Total risk-based capital (a)


13.44




13.10




13.55




13.68




13.48


Common equity tier 1 risk-based capital (a)


11.19




10.95




11.56




11.63




11.41


Shareholders' equity / total assets


9.71




9.76




10.56




10.54




10.59


Net interest margin


2.99




3.23




3.27




3.49




3.63


Efficiency ratio (non-GAAP)


60.04




58.03




58.52




56.60




56.09






















Equity and share related:




















Common equity

$

3,029,742



$

2,945,205



$

3,062,733



$

3,007,357



$

2,920,180


Book value per common share


33.59




32.66




33.28




32.68




31.74


Tangible book value per common share (non-GAAP)


27.40




26.46




27.19




26.58




25.63


Common stock closing price


28.61




22.90




53.36




46.87




47.77


Dividends declared per common share


0.40




0.40




0.40




0.40




0.40






















Common shares issued and outstanding


90,194




90,172




92,027




92,034




92,007


Weighted-average common shares outstanding - Basic


89,485




90,936




91,574




91,559




91,534


Weighted-average common shares outstanding - Diluted


89,570




91,206




91,916




91,874




91,855



(a) Presented as projected for June 30, 2020 and actual for the remaining periods. In accordance with regulatory capital rules, the Company elected an option to delay the estimated impact of CECL on its regulatory capital over a five-year transition period ending December 31, 2024. As a result, capital ratios and amounts as of June 30, 2020 exclude the impact of the increased allowance for credit losses on loans, held-to-maturity debt securities and unfunded loan commitments attributed to the adoption of CECL.

 

WEBSTER FINANCIAL CORPORATION
Consolidated Balance Sheets (unaudited)

(In thousands)


June 30, 2020



March 31, 2020



June 30, 2019

Assets:









Cash and due from banks

$

198,680


$

198,458


$

190,828

Interest-bearing deposits


104,444



69,482



26,652

Securities:









Available for sale


3,183,624



3,016,631



2,978,657

Held to maturity


5,477,126



5,486,206



4,636,707

Total securities


8,660,750



8,502,837



7,615,364

Allowance for credit losses on investment securities held-to-maturity


(309)



(312)



-

Securities, net


8,660,441



8,502,525



7,615,364

Loans held for sale


46,446



22,448



19,249

Loans and Leases:









Commercial


8,546,769



7,565,947



7,025,506

Commercial real estate


6,207,314



6,122,474



5,224,382

Residential mortgages


4,921,573



4,991,512



4,718,704

Consumer


2,126,861



2,211,591



2,301,291

Total loans and leases


21,802,517



20,891,524



19,269,883

Allowance for credit losses on loans and leases


(358,522)



(334,931)



(211,671)

Loans and leases, net


21,443,995



20,556,593



19,058,212

Federal Home Loan Bank and Federal Reserve Bank stock


94,495



141,327



118,371

Premises and equipment, net


258,392



268,420



278,227

Goodwill and other intangible assets, net


558,367



559,328



562,214

Cash surrender value of life insurance policies


557,325



554,231



546,963

Deferred tax asset, net


77,145



80,318



73,462

Accrued interest receivable and other assets


708,887



701,744



452,501

Total Assets

$

32,708,617


$

31,654,874


$

28,942,043










Liabilities and Shareholders' Equity:









Deposits:









Demand

$

6,193,757


$

4,883,436


$

4,174,806

Health savings accounts


6,786,845



6,736,178



6,212,372

Interest-bearing checking


3,280,125



3,007,069



2,636,109

Money market


2,686,650



2,477,304



2,073,006

Savings


4,742,573



4,418,689



4,169,492

Certificates of deposit


2,666,047



2,891,161



3,291,617

Brokered certificates of deposit


-



100,000



41,376

Total deposits


26,355,997



24,513,837



22,598,778

Securities sold under agreements to repurchase and other borrowings


1,688,805



1,262,749



956,920

Federal Home Loan Bank advances


523,321



1,773,399



1,426,656

Long-term debt


570,029



571,212



538,379

Accrued expenses and other liabilities


395,686



443,435



356,093

Total liabilities


29,533,838



28,564,632



25,876,826

Preferred stock


145,037



145,037



145,037

Common shareholders' equity


3,029,742



2,945,205



2,920,180

Total shareholders' equity


3,174,779



3,090,242



3,065,217

Total Liabilities and Shareholders' Equity

$

32,708,617


$

31,654,874


$

28,942,043

 

WEBSTER FINANCIAL CORPORATION
Consolidated Statements of Income (unaudited)



Three Months Ended June 30,



Six Months Ended June 30,

(In thousands, except per share data)


2020



2019



2020



2019

Interest income:












Interest and fees on loans and leases

$

196,521


$

235,949


$

412,708


$

464,713

Interest and dividends on securities


55,570



56,163



113,678



113,441

Loans held for sale


184



145



359



293

Total interest income


252,275



292,257



526,745



578,447

Interest expense:












Deposits


18,805



32,757



46,648



63,777

Borrowings


9,063



17,713



24,889



31,332

Total interest expense


27,868



50,470



71,537



95,109

Net interest income


224,407



241,787



455,208



483,338

Provision for credit losses


40,000



11,900



116,000



20,500

Net interest income after provision for loan and lease losses


184,407



229,887



339,208



462,838

Non-interest income:












Deposit service fees


35,839



43,118



78,409



86,142

Loan and lease related fees


6,968



6,558



13,464



14,377

Wealth and investment services


7,102



8,309



15,841



15,960

Mortgage banking activities


4,205



932



7,098



1,696

Increase in cash surrender value of life insurance policies


3,624



3,650



7,204



7,234

Gain on investment securities, net


-



-



8



-

Other income


2,338



13,286



11,430



19,056

Total non-interest income


60,076



75,853



133,454



144,465

Non-interest expense:












Compensation and benefits


99,731



98,527



201,618



196,312

Occupancy


14,245



14,019



28,730



28,715

Technology and equipment


27,468



25,767



55,305



51,464

Marketing


3,286



4,243



6,788



7,571

Professional and outside services


6,158



5,634



11,821



11,682

Intangible assets amortization


962



962



1,924



1,924

Loan workout expenses


392



832



885



1,492

Deposit insurance


5,015



4,453



9,740



8,883

Other expenses


19,327



26,203



38,609



48,283

Total non-interest expense


176,584



180,640



355,420



356,326

Income before income taxes


67,899



125,100



117,242



250,977

Income tax expense


14,802



26,451



25,946



52,592

Net income


53,097



98,649



91,296



198,385

Preferred stock dividends and other


(2,368)



(2,456)



(4,530)



(4,902)

Earnings applicable to common shareholders

$

50,729


$

96,193


$

86,766


$

193,483













Weighted-average common shares outstanding - Diluted


89,570



91,855



90,391



91,898













Earnings per common share:












Basic

$

0.57


$

1.05


$

0.96


$

2.11

Diluted


0.57



1.05



0.96



2.11

 

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



Three Months Ended

(In thousands, except per share data)


June 30, 2020



March 31, 2020



December 31, 2019



September 30, 2019



June 30, 2019

Interest income:















Interest and fees on loans and leases

$

196,521


$

216,187


$

223,527


$

236,453


$

235,949

Interest and dividends on securities


55,570



58,108



58,205



57,517



56,163

Loans held for sale


184



175



268



166



145

Total interest income


252,275



274,470



282,000



294,136



292,257

Interest expense:















Deposits


18,805



27,843



31,586



34,214



32,757

Borrowings


9,063



15,826



19,164



19,383



17,713

Total interest expense


27,868



43,669



50,750



53,597



50,470

Net interest income


224,407



230,801



231,250



240,539



241,787

Provision for credit losses


40,000



76,000



6,000



11,300



11,900

Net interest income after provision for loan and lease losses


184,407



154,801



225,250



229,239



229,887

Non-interest income:















Deposit service fees


35,839



42,570



40,470



41,410



43,118

Loan and lease related fees


6,968



6,496



8,704



8,246



6,558

Wealth and investment services


7,102



8,739



8,476



8,496



8,309

Mortgage banking activities


4,205



2,893



2,286



2,133



932

Increase in cash surrender value of life insurance policies


3,624



3,580



3,670



3,708



3,650

Gain on investment securities, net


-



8



29



-



-

Other income


2,338



9,092



7,284



5,938



13,286

Total non-interest income


60,076



73,378



70,919



69,931



75,853

Non-interest expense:















Compensation and benefits


99,731



101,887



100,467



98,623



98,527

Occupancy


14,245



14,485



14,379



14,087



14,019

Technology and equipment


27,468



27,837



27,639



26,180



25,767

Marketing


3,286



3,502



3,957



4,758



4,243

Professional and outside services


6,158



5,663



4,674



5,024



5,634

Intangible assets amortization


962



962



962



961



962

Loan workout expenses


392



493



474



986



832

Deposit insurance


5,015



4,725



4,662



4,409



4,453

Other expenses


19,327



19,282



22,516



24,866



26,203

Total non-interest expense


176,584



178,836



179,730



179,894



180,640

Income before income taxes


67,899



49,343



116,439



119,276



125,100

Income tax expense


14,802



11,144



25,966



25,411



26,451

Net income


53,097



38,199



90,473



93,865



98,649

Preferred stock dividends and other


(2,368)



(2,178)



(2,407)



(2,423)



(2,456)

Earnings applicable to common shareholders

$

50,729


$

36,021


$

88,066


$

91,442


$

96,193
















Weighted-average common shares outstanding - Diluted


89,570



91,206



91,916



91,874



91,855
















Earnings per common share:















Basic

$

0.57


$

0.40


$

0.96


$

1.00


$

1.05

Diluted


0.57



0.39



0.96



1.00



1.05

 

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,




2020




2019


(Dollars in thousands)


Average balance



Interest


Yield/rate




Average balance



Interest


Yield/rate


Assets:


















Interest-earning assets:


















Loans and leases

$

21,608,914


$

197,317


3.63

%


$

19,030,278


$

236,620


4.94

%

Securities (a)


8,579,213



56,465


2.69




7,472,731



56,501


3.01


Federal Home Loan and Federal Reserve Bank stock


108,962



865


3.19




108,244



1,117


4.14


Interest-bearing deposits


99,467



5


0.02




50,131



309


2.44


Loans held for sale


24,266



184


3.03




23,210



145


2.49


Total interest-earning assets


30,420,822


$

254,836


3.35

%



26,684,594


$

294,692


4.39

%

Non-interest-earning assets


2,062,534









1,855,077







Total Assets

$

32,483,356








$

28,539,671

























Liabilities and Shareholders' Equity:


















Interest-bearing liabilities:


















Demand deposits

$

5,823,655


$

-


-

%


$

4,266,938


$

-


-

%

Health savings accounts


6,846,210



2,604


0.15




6,223,570



3,066


0.20


Interest-bearing checking, money market and savings


10,390,143



6,462


0.25




8,934,579



13,132


0.59


Certificates of deposit


2,869,471



9,739


1.36




3,323,203



16,559


2.00


Total deposits


25,929,479



18,805


0.29




22,748,290



32,757


0.58




















Securities sold under agreements to repurchase and other borrowings


1,577,881



980


0.25




788,194



3,904


1.96


Federal Home Loan Bank advances


839,830



3,748


1.77




1,117,285



7,772


2.75


Long-term debt (a)


570,679



4,335


3.31




527,713



6,037


4.62


Total borrowings


2,988,390



9,063


1.23




2,433,192



17,713


2.90


Total interest-bearing liabilities


28,917,869


$

27,868


0.39

%



25,181,482


$

50,470


0.80

%

Non-interest-bearing liabilities


410,119









341,648







Total liabilities


29,327,988









25,523,130

























Preferred stock


145,037









145,037







Common shareholders' equity


3,010,331









2,871,504







Total shareholders' equity


3,155,368









3,016,541







Total Liabilities and Shareholders' Equity

$

32,483,356








$

28,539,671







Tax-equivalent net interest income





226,968









244,222




Less: tax-equivalent adjustments





(2,561)









(2,435)




Net interest income




$

224,407








$

241,787




Net interest margin







2.99

%








3.63

%


(a) For purposes of the yield computation, unrealized gain (loss) balances on securities available for sale and senior fixed-rate notes hedges are excluded.

 

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,



2020




2019

(Dollars in thousands)


Average balance



Interest


Yield/rate




Average balance



Interest


Yield/rate


Assets:


















Interest-earning assets:


















Loans and leases

$

20,966,857


$

414,235


3.93

%


$

18,771,166


$

466,005


4.95

%

Securities (a)


8,449,480



114,873


2.77




7,391,290



113,455


3.05


Federal Home Loan and Federal Reserve Bank stock


117,663



2,116


3.62




110,617



2,829


5.16


Interest-bearing deposits


83,887



196


0.46




52,737



638


2.41


Loans held for sale


23,281



359


3.08




18,358



293


3.19


Total interest-earning assets


29,641,168


$

531,779


3.59

%



26,344,168


$

583,220


4.41

%

Non-interest-earning assets


1,996,765









1,825,418







Total Assets

$

31,637,933








$

28,169,586

























Liabilities and Shareholders' Equity:


















Interest-bearing liabilities:


















Demand deposits

$

5,170,280


$

-


-

%


$

4,229,611


$

-


-

%

Health savings accounts


6,803,784



5,900


0.17




6,182,047



6,015


0.20