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Webster Reports Third Quarter 2018 Earnings

WATERBURY, Conn., Oct. 18, 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 $97.5 million, or $1.06 per diluted share, for the quarter ended September 30, 2018 compared to $62.4 million, or $0.67 per diluted share, for the quarter ended September 30, 2017. Adjusting for $2.9 million related to the final accrual for deposit insurance assessments for periods prior to 2018 and $8.5 million of discrete tax benefits specific to the quarter, earnings per diluted share would have been $0.98.  

"Webster's third quarter results reflect the positive outcomes of our organizational commitment to key strategic priorities and strong execution by our bankers," said John R. Ciulla, president and chief executive officer. "Record earnings were driven by the 36th consecutive quarter of year-over-year revenue growth led by double-digit commercial loan growth and a 31 basis point increase in the net interest margin." 

Highlights for the third quarter of 2018:

  • Revenue of $302.7 million, an increase of 13.5 percent from a year ago, including net interest income of $230.4 million, an increase of 14.7 percent from a year ago.
  • Loan growth of $875 million, or 5.0 percent from a year ago, with growth of $1.1 billion, or 10.5 percent, in commercial and commercial real estate loans.
  • Deposit growth of $1.1 billion, or 5.5 percent from a year ago, with growth of $709 million, or 14.5 percent, in health savings account deposits.
  • Net interest margin of 3.61 percent, up 31 basis points from a year ago.
  • Non-interest expense of $178.8 million includes $2.9 million related to an accrual for deposit insurance assessments prior to 2018. Excluding this amount, non-interest expense increased 8.7 percent from a year ago.
  • Pre-tax, pre-provision net revenue growth of $18.9 million, or 18.1 percent from a year ago, led by HSA Bank's growth of 49.2 percent.
  • Efficiency ratio of 57.4 percent (non-GAAP) compared to 59.2 percent a year ago.
  • Annualized return on average common shareholders' equity of 14.74 percent compared to 9.95 percent a year ago; annualized return on average tangible common shareholders' equity (non-GAAP) of 18.88 percent compared to 12.99 percent a year ago.

"Third quarter results benefit from our long-term balance sheet positioning, emphasizing the bi-directional value of increasing loan yields funded by long duration, low-cost transactional and HSA deposits," said Glenn MacInnes, executive vice president and chief financial officer. "Our loan portfolio yield is 57 basis points higher than a year ago while our cost of deposits increased only 12 basis points, with the outcome being record quarterly net interest income."

Line of Business performance compared to the third 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 September 30, 2018, Commercial Banking had $10.3 billion in loans and leases and $4.3 billion in deposit balances.

Commercial Banking Operating Results:



Three months ended September 30,

(In thousands)

2018

2017

Net interest income

$91,243

$81,925

Non-interest income

18,305

13,207

Operating revenue

109,548

95,132

Non-interest expense

44,506

38,339

Pre-tax, pre-provision net revenue

$65,042

$56,793





At September 30,

(In millions)

2018

2017

Loans and leases

$10,289

$9,291

Deposits

$4,251

$4,251

Pre-tax, pre-provision net revenue increased $8.2 million to $65.0 million in the quarter as compared to prior year. Net interest income increased $9.3 million to $91.2 million, primarily due to loan growth and higher loan and deposit margins.  Non-interest income increased $5.1 million to $18.3 million, primarily due to greater syndication fees and client interest rate hedging activity in the quarter as compared to prior year. Non-interest expense increased $6.2 million to $44.5 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 September 30, 2018, HSA Bank had $7.2 billion in total footings comprising $5.6 billion in deposit balances and $1.6 billion in assets under administration through linked investment accounts.

HSA Bank Operating Results:



Three months ended September 30,

(In thousands)

2018

2017

Net interest income

$36,731

$26,713

Non-interest income

22,159

19,371

Operating revenue

58,890

46,084

Non-interest expense

30,753

27,222

Pre-tax net revenue

$28,137

$18,862




At September 30,

(In millions)

2018

2017

Number of accounts

2,702

2,416

Deposits

$5,600

$4,891

Linked investment accounts*

1,599

1,159

Total footings

$7,199

$6,050

*Linked investment accounts are held off balance sheet

Pre-tax net revenue increased $9.3 million to $28.1 million in the quarter as compared to prior year. Net interest income increased $10.0 million to $36.7 million, due to a 14 percent growth in deposits and a 20 percent improvement in deposit spreads. Non-interest income increased $2.8 million to $22.2 million, primarily due to growth in accounts over the past year. Non-interest expense increased $3.5 million to $30.8 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 157 banking centers and 319 ATMs, a customer care center, and a full range of web and mobile-based banking services.

As of September 30, 2018, Community Banking had $8.0 billion in loans and $11.8 billion in deposit balances.

Community Banking Operating Results:



Three months ended September 30,

(In thousands)

2018

2017

Net interest income

$101,952

$96,859

Non-interest income

26,847

27,079

Operating revenue

128,799

123,938

Non-interest expense

95,768

92,478

Pre-tax, pre-provision net revenue

$33,031

$31,460





At September 30,

(In millions)

2018

2017

Loans

$8,031

$8,155

Deposits

$11,799

$11,331

Pre-tax, pre-provision net revenue increased $1.6 million to $33.0 million in the quarter as compared to prior year. Net interest income increased $5.1 million to $102.0 million, primarily due to growth in deposit balances, coupled with 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 and fees from interest rate hedging activities. Non-interest expense increased $3.3 million to $95.8 million as a result of higher compensation-related expenses and investments in technology.

Consolidated financial performance:

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

  • Net interest income was $230.4 million compared to $200.9 million.
  • Net interest margin was 3.61 percent compared to 3.30 percent. The yield on interest-earning assets increased by 42 basis points, and the cost of funds increased by 12 basis points.
  • Average interest-earning assets totaled $25.4 billion and grew by $796 million, or 3.2 percent.
  • Average loans totaled $18.1 billion and grew by $696 million, or 4.0 percent.
  • Deposits totaled $22.0 billion and and grew by $1.1 billion, or 5.5 percent.

Quarterly provision for loan losses:

  • The Company recorded a provision for loan losses of $10.5 million, compared to $10.5 million in the prior quarter and $10.2 million a year ago.
  • Net charge-offs were $6.0 million, compared to $8.5 million in the prior quarter and $7.9 million a year ago. The decrease from prior quarter is primarily due to decreased commercial non-mortgage charge-offs. The ratio of net charge-offs to average loans on an annualized basis was 0.13 percent, compared to 0.19 percent in the prior quarter and 0.18 percent a year ago.
  • The allowance for loan losses represented 1.16 percent of total loans at September 30, 2018, compared to 1.15 percent at June 30, 2018 and 1.16 percent at September 30, 2017. The allowance for loan losses represented 139 percent of nonperforming loans compared to 148 percent at June 30, 2018 and 123 percent at September 30, 2017.

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

  • Total non-interest income was $72.3 million, compared to $65.8 million, an increase of $6.4 million. This reflects an increase in HSA fee income of $2.8 million driven by account growth, $4.4 million in loan-related fees due to loan syndication fees offset by a decrease of $1.1 million in mortgage banking activities driven by lower originations.

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

  • Total non-interest expense was $178.8 million, compared to $161.8 million, an increase of $17.0 million. This reflects an increase in compensation of $8.3 million due to strategic hires, annual merit increases, and higher medical costs, $3.6 million in other due to increased pension expense, consulting fees, and lower deferral of loan related expenses, $3.4 million in deposit insurance primarily related to an accrual for prior period deposit insurance assessments, as well as $2.0 million in technology and equipment due to higher depreciation and service contracts to support infrastructure.

Quarterly income taxes compared to the third quarter of 2017:

  • Income tax expense was $13.7 million, compared to $30.3 million and the effective tax rate was 12.1 percent, compared to 32.0 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, as well as discrete tax benefits attributable to tax planning.

Investment securities:

  • Total investment securities were $7.2 billion, compared to $7.1 billion at June 30, 2018 and $7.1 billion at September 30, 2017. The carrying value of the available-for-sale portfolio included $105.1 million of net unrealized losses, compared to $86.5 million at June 30, 2018 and $21.7 million at September 30, 2017. The carrying value of the held-to-maturity portfolio does not reflect $168.1 million of net unrealized losses, compared to $130.2 million at June 30, 2018, and $15.6 million at September 30, 2017.

Loans:

  • Total loans were $18.3 billion, compared to $18.0 billion at June 30, 2018 and $17.4 billion at September 30, 2017. Compared to June 30, 2018, commercial loans increased by $188.9 million and commercial real estate loans increased by $191.1 million, while consumer loans decreased by $44.5 million and residential loans decreased by $40.5 million.
  • Compared to a year ago, commercial loans increased by $778.4 million and commercial real estate loans increased by $306.4 million, while consumer loans decreased by $125.8 million and residential mortgages decreased by 84.4 million.
  • Loan originations for portfolio were $1.375 billion, compared to $1.509 billion in the prior quarter and $1.085 billion a year ago. In addition, $55 million of residential loans were originated for sale in the quarter, compared to $44 million in the prior quarter and $80 million a year ago.

Asset quality:

  • Total nonperforming loans were $152.7 million, or 0.83 percent of total loans, compared to $140.1 million, or 0.78 percent, at June 30, 2018 and $163.6 million, or 0.94 percent, at September 30, 2017. Total paying nonperforming loans were $28.9 million, compared to $34.1 million at June 30, 2018 and $72.0 million at September 30, 2017.
  • Past due loans were $39.2 million, compared to $33.5 million at June 30, 2018 and $33.5 million at September 30, 2017.

Deposits and borrrowings:

  • Total deposits were $22.0 billion, compared to $21.3 billion at June 30, 2018 and $20.9 billion at September 30, 2017. Core deposits to total deposits were 85.9 percent, compared to 86.7 percent at June 30, 2018 and 89.4 percent at September 30, 2017. The loan to deposit ratio was 83.3 percent, compared to 84.5 percent at June 30, 2018 and 83.7 percent at September 30, 2017.
  • Total borrowings were $2.2 billion, compared to $2.7 billion at June 30, 2018 and $2.6 billion at September 30, 2017.

Capital:

  • The return on average common shareholders' equity and the return on average tangible common shareholders' equity were 14.74 percent and 18.88 percent, respectively, compared to 9.95 percent and 12.99 percent, respectively, in the third quarter of 2017.
  • The tangible equity and tangible common equity ratios were 8.41 percent and 7.86 percent, respectively, compared to 8.03 percent and 7.55 percent, respectively, at September 30, 2017. The common equity tier 1 risk-based capital ratio was 11.23 percent, compared to 10.99 percent at September 30, 2017.
  • Book value and tangible book value per common share were $28.96 and $22.83, respectively, compared to $27.34 and $21.16, respectively, at September 30, 2017.

Webster Financial Corporation is the holding company for Webster Bank, National Association and its HSA Bank division. With $27.3 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust, and investment services through 157 banking centers and 319 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 third quarter earnings announcement will be held today, Thursday, October 18, 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, the final rules establishing a new comprehensive capital framework for U.S. banking organizations, and the Tax Cuts and Jobs Act of 2017 (Tax 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)


September 30,
2018



June 30, 
2018



March 31, 
2018



December 31,
2017



September 30,
2017


















Income and performance ratios:
















Net income

$

99,673


$

81,682


$

80,225


$

69,893


$

64,496


Earnings applicable to common shareholders


97,460



79,489



78,083



67,710



62,426


Earnings per diluted common share


1.06



0.86



0.85



0.73



0.67


Return on average assets


1.47

%


1.22

%


1.20

%


1.05

%


0.98

%

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


18.88



15.76



15.73



13.85



12.99


Return on average common shareholders' equity


14.74



12.22



12.15



10.66



9.95


Non-interest income as a percentage of total revenue


23.88



23.31



24.30



24.37



24.68


















Asset quality:
















Allowance for loan and lease losses

$

211,832


$

207,322


$

205,349


$

199,994


$

201,803


Nonperforming assets


157,967



146,047



140,090



132,646



168,962


Allowance for loan and lease losses / total loans and leases


1.16

%


1.15

%


1.15

%


1.14

%


1.16

%

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


0.13



0.19



0.13



0.34



0.18


Nonperforming loans and leases / total loans and leases


0.83



0.78



0.75



0.72



0.94


Nonperforming assets / total loans and leases plus OREO


0.86



0.81



0.79



0.76



0.97


Allowance for loan and lease losses / nonperforming loans and leases


138.76



148.00



152.95



158.00



123.32


















Other ratios:
















Tangible equity (non-GAAP)


8.41

%


8.29

%


8.21

%


8.23

%


8.03

%

Tangible common equity (non-GAAP)


7.86



7.75



7.65



7.67



7.55


Tier 1 risk-based capital (a)


11.96



11.74



11.75



11.91



11.65


Total risk-based capital (a)


13.44



13.21



13.24



13.40



13.17


Common equity tier 1 risk-based capital (a)


11.23



10.99



10.99



11.14



10.99


Shareholders' equity / total assets


10.30



10.21



10.15



10.20



10.01


Net interest margin


3.61



3.57



3.44



3.33



3.30


Efficiency ratio (non-GAAP)


57.41



57.78



59.76



59.48



59.18


















Equity and share related:
















Common equity

$

2,671,161


$

2,616,686


$

2,571,105


$

2,556,902


$

2,516,077


Book value per common share


28.96



28.40



27.94



27.76



27.34


Tangible book value per common share (non-GAAP)


22.83



22.25



21.78



21.59



21.16


Common stock closing price


58.96



63.70



55.40



56.16



52.55


Dividends declared per common share


0.33



0.33



0.26



0.26



0.26


















Common shares issued and outstanding


92,230



92,151



92,016



92,101



92,034


Weighted-average common shares outstanding - Basic


91,959



91,893



91,921



92,058



92,125


Weighted-average common shares outstanding - Diluted


92,208



92,173



92,254



92,400



92,503


















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

 

 

WEBSTER FINANCIAL CORPORATION
Consolidated Balance Sheets (unaudited)

(In thousands)


September 30,
2018



June 30, 
2018



September 30,
2017


Assets:










Cash and due from banks

$

222,234


$

228,628


$

215,244


Interest-bearing deposits


99,746



70,654



26,992


Securities:










Available for sale


2,823,953



2,780,581



2,591,162


Held to maturity


4,332,458



4,356,219



4,497,311


Total securities


7,156,411



7,136,800



7,088,473


Loans held for sale


17,137



18,645



32,855


Loans and Leases:










Commercial


6,693,450



6,504,521



5,915,080


Commercial real estate


4,771,325



4,580,200



4,464,917


Residential mortgages


4,415,063



4,455,580



4,499,441


Consumer


2,441,181



2,485,695



2,566,983


Total loans and leases


18,321,019



18,025,996



17,446,421


Allowance for loan and lease losses


(211,832)



(207,322)



(201,803)


Loans and leases, net


18,109,187



17,818,674



17,244,618


Federal Home Loan Bank and Federal Reserve Bank stock


133,740



141,293



136,340


Premises and equipment, net


128,507



127,973



130,358


Goodwill and other intangible assets, net


565,099



566,061



568,962


Cash surrender value of life insurance policies


539,923



537,431



528,136


Deferred tax asset, net


92,910



106,910



82,895


Accrued interest receivable and other assets


281,423



283,668



295,309


Total Assets

$

27,346,317


$

27,036,737


$

26,350,182












Liabilities and Shareholders' Equity:










Deposits:










Demand

$

4,231,505


$

4,151,259


$

4,138,206


Health savings accounts


5,599,596



5,517,929



4,891,024


Interest-bearing checking


2,587,679



2,637,346



2,581,266


Money market


2,376,649



2,016,453



2,598,187


Savings


4,106,942



4,180,666



4,428,061


Certificates of deposit


2,746,884



2,478,589



1,918,817


Brokered certificates of deposit


348,368



361,114



299,674


Total deposits


21,997,623



21,343,356



20,855,235


Securities sold under agreements to repurchase and other borrowings


564,488



862,568



902,902


Federal Home Loan Bank advances


1,441,884



1,576,956



1,507,681


Long-term debt


225,957



225,894



225,704


Accrued expenses and other liabilities


300,167



266,240



219,873


Total liabilities


24,530,119



24,275,014



23,711,395


Preferred stock


145,037



145,037



122,710


Common shareholders' equity


2,671,161



2,616,686



2,516,077


Total shareholders' equity


2,816,198



2,761,723



2,638,787


Total Liabilities and Shareholders' Equity

$

27,346,317


$

27,036,737


$

26,350,182


 

 

WEBSTER FINANCIAL CORPORATION
Consolidated Statements of Income (unaudited)



Three Months Ended 
September 30,



Nine Months Ended 
September 30,


(In thousands, except per share data)


2018



2017



2018



2017


Interest income:













Interest and fees on loans and leases

$

215,448


$

181,130


$

616,488


$

523,394


Interest and dividends on securities


52,707



49,584



157,789



153,270


Loans held for sale


208



307



498



826


Total interest income


268,363



231,021



774,775



677,490


Interest expense:













Deposits


24,397



16,760



62,778



44,874


Borrowings


13,594



13,357



42,447



41,261


Total interest expense


37,991



30,117



105,225



86,135


Net interest income


230,372



200,904



669,550



591,355


Provision for loan and lease losses


10,500



10,150



32,000



27,900


Net interest income after provision for loan and lease losses


219,872



190,754



637,550



563,455


Non-interest income:













Deposit service fees


40,601



38,321



121,911



113,519


Loan and lease related fees


10,782



6,346



24,111



19,898


Wealth and investment services


8,412



7,750



24,738



22,900


Mortgage banking activities


1,305



2,421



3,684



8,038


Increase in cash surrender value of life insurance policies


3,706



3,720



10,921



10,943


Other income


7,478



7,288



24,040



18,267




72,284



65,846



209,405



193,565


Impairment loss on securities recognized in earnings


-



-



-



(126)


Total non-interest income


72,284



65,846



209,405



193,439


Non-interest expense:













Compensation and benefits


96,640



88,395



284,457



262,288


Occupancy


14,502



14,744



45,489



46,957


Technology and equipment


24,553



22,580



73,019



66,646


Marketing


4,052



4,045



12,493



14,101


Professional and outside services


4,930



4,030



14,099



11,813


Intangible assets amortization


961



1,002



2,885



3,085


Loan workout expenses


681



840



2,101



2,203


Deposit insurance


9,694



6,344



30,098



19,701


Other expenses


22,770



19,843



66,216



63,232


Total non-interest expense


178,783



161,823



530,857



490,026


Income before income taxes


113,373



94,777



316,098



266,868


Income tax expense


13,700



30,281



54,518



81,322


Net income


99,673



64,496



261,580



185,546


Preferred stock dividends and other


(2,213)



(2,070)



(6,540)



(6,284)


Earnings applicable to common shareholders

$

97,460


$

62,426


$

255,040


$

179,262















Weighted-average common shares outstanding - Diluted


92,208



92,503



92,221



92,412















Earnings per common share:













Basic

$

1.06


$

0.68


$

2.77


$

1.95


Diluted


1.06



0.67



2.77



1.94


 

 

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


Three Months Ended

(In thousands, except per share data)


September 30,
2018



June 30,
2018



March 31,
2018



December 31,
2017



September 30,
2017

Interest income:















Interest and fees on loans and leases

$

215,448


$

207,820


$

193,220


$

185,172


$

181,130

Interest and dividends on securities


52,707



52,523



52,559



50,735



49,584

Loans held for sale


208



148



142



208



307

Total interest income


268,363



260,491



245,921



236,115



231,021

Interest expense:















Deposits


24,397



20,225



18,156



17,379



16,760

Borrowings


13,594



15,256



13,597



13,804



13,357

Total interest expense


37,991



35,481



31,753



31,183



30,117

Net interest income


230,372



225,010



214,168



204,932



200,904

Provision for loan and lease losses


10,500



10,500



11,000



13,000



10,150

Net interest income after provision for loan and lease losses


219,872



214,510



203,168



191,932



190,754

Non-interest income:















Deposit service fees


40,601



40,859



40,451



37,618



38,321

Loan and lease related fees


10,782



6,333



6,996



6,550



6,346

Wealth and investment services


8,412



8,456



7,870



8,155



7,750

Mortgage banking activities


1,305



1,235



1,144



1,899



2,421

Increase in cash surrender value of life insurance policies


3,706



3,643



3,572



3,684



3,720

Other income


7,478



7,848



8,714



8,133



7,288



72,284



68,374



68,747



66,039



65,846

Impairment loss on securities recognized in earnings


-



-



-



-



-

Total non-interest income


72,284



68,374



68,747



66,039



65,846

Non-interest expense:















Compensation and benefits


96,640



93,052



94,765



94,217



88,395

Occupancy


14,502



15,842



15,145



13,533



14,744

Technology and equipment


24,553



24,604



23,862



22,818



22,580

Marketing


4,052



4,889



3,552



3,320



4,045

Professional and outside services


4,930



4,381



4,788



5,045



4,030

Intangible assets amortization


961



962



962



977



1,002

Loan workout expenses


681



844



576



891



840

Deposit insurance


9,694



13,687



6,717



5,948



6,344

Other expenses


22,770



22,198



21,248



24,300



19,843

Total non-interest expense


178,783



180,459



171,615



171,049



161,823

Income before income taxes


113,373



102,425



100,300



86,922



94,777

Income tax expense


13,700



20,743



20,075



17,029



30,281

Net income


99,673



81,682



80,225



69,893



64,496

Preferred stock dividends and other


(2,213)



(2,193)



(2,142)



(2,183)



(2,070)

Earnings applicable to common shareholders

$

97,460


$

79,489


$

78,083


$

67,710


$

62,426
















Weighted-average common shares outstanding - Diluted


92,208



92,173



92,254



92,400



92,503
















Earnings per common share:















Basic

$

1.06


$

0.87


$

0.85


$

0.74


$

0.68

Diluted


1.06



0.86



0.85



0.73



0.67

 

 

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

(unaudited)



Three Months Ended September 30,




2018






2017


(Dollars in thousands)


Average balance



Interest



Yield/rate






Average balance



Interest


Yield/rate


Assets:





















Interest-earning assets:





















Loans and leases

$

18,060,842


$

216,065



4.71

%




$

17,364,519


$

182,269


4.14

%

Securities (a)


7,104,625



52,342



2.91






6,994,661



51,130


2.92


Federal Home Loan and Federal Reserve Bank stock


126,558



1,586



4.97






135,943



1,482


4.33


Interest-bearing deposits


72,157



334



1.81






58,193



173


1.17


Loans held for sale


20,291



208



4.10






34,939



307


3.51


Total interest-earning assets


25,384,473


$

270,535



4.20

%





24,588,255


$

235,361


3.78

%

Non-interest-earning assets


1,663,012












1,721,591







Total Assets

$

27,047,485











$

26,309,846




























Liabilities and Shareholders' Equity:





















Interest-bearing liabilities:





















Demand deposits

$

4,257,448


$

-



-

%




$

4,201,723


$

-


-

%

Health savings accounts


5,576,417



2,793



0.20






4,870,620



2,449


0.20


Interest-bearing checking, money market and savings


9,135,736



9,827



0.43






9,707,053



7,780


0.32


Certificates of deposit


2,935,663



11,777



1.59






2,155,743



6,531


1.20


Total deposits


21,905,264



24,397



0.44






20,935,139



16,760


0.32























Securities sold under agreements to repurchase and other borrowings


729,154



3,084



1.66






904,854



3,847


1.66


Federal Home Loan Bank advances


1,155,768



7,685



2.60






1,362,165



6,894


1.98


Long-term debt


225,926



2,825



5.00






225,673



2,616


4.64


Total borrowings


2,110,848



13,594



2.53






2,492,692



13,357


2.11


Total interest-bearing liabilities


24,016,112


$

37,991



0.63

%





23,427,831


$

30,117


0.51

%

Non-interest-bearing liabilities


234,564












246,703







Total liabilities


24,250,676












23,674,534




























Preferred stock


145,037












122,710







Common shareholders' equity


2,651,772












2,512,602







Total shareholders' equity


2,796,809












2,635,312







Total Liabilities and Shareholders' Equity

$

27,047,485











$

26,309,846







Tax-equivalent net interest income





232,544












205,244




Less: tax-equivalent adjustments





(2,172)












(4,340)




Net interest income




$

230,372











$

200,904




Net interest margin








3.61

%










3.30

%






















(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)



Nine Months Ended September 30,




2018






2017


(Dollars in thousands)


Average balance



Interest



Yield/rate






Average balance



Interest


Yield/rate


Assets:





















Interest-earning assets:





















Loans and leases

$

17,901,888


$

618,419



4.58

%




$

17,225,217


$

526,419


4.05

%

Securities (a)


7,135,037



157,108



2.91






7,031,738



157,550


2.98


Federal Home Loan and Federal Reserve Bank stock


130,947



4,587



4.68






160,911



4,732


3.93


Interest-bearing deposits


63,807



782



1.62






63,684



472


0.98


Loans held for sale


17,292



498



3.84






31,373



826


3.51


Total interest-earning assets


25,248,971


$

781,394



4.09

%





24,512,923


$

689,999


3.73

%

Non-interest-earning assets


1,645,331












1,666,080







Total Assets

$

26,894,302











$

26,179,003




























Liabilities and Shareholders' Equity:





















Interest-bearing liabilities:





















Demand deposits

$

4,177,004


$

-



-

%




$

4,039,738


$

-


-

%

Health savings accounts


5,508,325



8,152



0.20






4,810,038



7,133


0.20


Interest-bearing checking, money market and savings


9,172,498



25,399



0.37






9,505,187



19,599


0.28


Certificates of deposit


2,710,917



29,227



1.44






2,079,021



18,142


1.17


Total deposits


21,568,744



62,778



0.39






20,433,984



44,874


0.29























Securities sold under agreements to repurchase and other borrowings


824,203



10,722



1.72






884,975



10,970


1.63


Federal Home Loan Bank advances


1,288,410



23,437



2.40






1,829,175



22,543


1.63


Long-term debt


225,863



8,288



4.89






225,607



7,748


4.58


Total borrowings


2,338,476



42,447



2.40






2,939,757



41,261


1.85


Total interest-bearing liabilities


23,907,220


$

105,225



0.59

%





23,373,741


$

86,135


0.49

%

Non-interest-bearing liabilities


228,892












207,688







Total liabilities


24,136,112












23,581,429




























Preferred stock


145,078












122,710







Common shareholders' equity


2,613,112












2,474,864







Total shareholders' equity


2,758,190












2,597,574







Total Liabilities and Shareholders' Equity

$

26,894,302











$

26,179,003







Tax-equivalent net interest income





676,169












603,864




Less: tax-equivalent adjustments





(6,619)












(12,509)




Net interest income




$

669,550