8-K
WEBSTER FINANCIAL CORP (WBS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 8-K
_________________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 21, 2021
_________________________
WEBSTER FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 001-31486 | 06-1187536 |
|---|---|---|
| (State or other jurisdiction<br>of incorporation) | (Commission<br>File Number) | (IRS Employer<br>Identification No.) |
145 Bank Street, Waterbury, Connecticut 06702
(Address and zip code of principal executive offices)
203-578-2202
(Registrant’s telephone number, including area code)
______________________________________________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of Exchange on which registered |
|---|---|---|
| Common Stock, $0.01 par value | WBS | New York Stock Exchange |
| Depository Shares, each representing 1/1000th interest in a share of 5.25% Series F Non-Cumulative Perpetual Preferred Stock | WBS-PrF | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition |
|---|
On January 21, 2021, Webster Financial Corporation (the Company) issued a press release describing its results of operations for the fiscal quarter ending December 31, 2020. That press release is attached hereto as Exhibit 99.1.
Information contained herein, including Exhibit 99.1, shall not be deemed filed for the purposes of the Securities Exchange Act of 1934, nor shall such information and Exhibit be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such a filing.
| Item 7.01 | Regulation FD Disclosure |
|---|
On January 21, 2021, the Company will hold a conference call to discuss its financial results for the quarter ended December 31, 2020, including the press release and other matters relating to the Company. Presentation slides and a link to the live webcast will be available in the Investor Relations section of the Company’s website at www.wbst.com.
| Item 9.01 | Financial Statements and Exhibits |
|---|
(a)Not applicable.
(b)Not applicable.
(c)Not applicable.
(d)Exhibits.
| Exhibit<br>Number | Description |
|---|---|
| 99.1 | Press release datedJanuary 21, 2021 |
| 101 | Pursuant to Rule 406 of Regulation S-T, the cover page is formatted in Inline XBRL (Inline eXtensible Business Reporting Language). |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
| WEBSTER FINANCIAL CORPORATION | |
|---|---|
| (Registrant) | |
| Date: January 21, 2021 | /s/ Albert J. Wang |
| Albert J. Wang | |
| Senior Vice President and Chief Accounting Officer |
EXHIBIT INDEX
| Exhibit<br>Number | Description |
|---|---|
| 99.1 | Press release datedJanuary 21, 2021 |
| 101 | Pursuant to Rule 406 of Regulation S-T, the cover page is formatted in Inline XBRL (Inline eXtensible Business Reporting Language). |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101). |
Document
Exhibit 99.1
| Media Contact | Investor Contact |
|---|---|
| Alice Ferreira, 203-578-2610 | Terry Mangan, 203-578-2318 |
| acferreira@websterbank.com | tmangan@websterbank.com |
| Kristen Manginelli, 203-578-2307 | |
| kmanginelli@websterbank.com |
WEBSTER REPORTS
FOURTH QUARTER 2020 EARNINGS OF $0.64 PER DILUTED SHARE
WATERBURY, Conn., January 21, 2021 - 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 $57.7 million, or $0.64 per diluted share, for the quarter ended December 31, 2020, compared to $88.1 million, or $0.96 per diluted share, for the quarter ended December 31, 2019. Earnings per diluted share would have been $0.99 for the quarter ended December 31, 2020, adjusting for $42.0 million ($31.2 million after tax) of charges related to strategic optimization initiatives.
For the full year 2020, earnings applicable to common shareholders was $211.5 million, or $2.35 per diluted share, and includes $52.2 million ($38.8 million after tax) of adjustments.
“I am pleased with the results of the quarter as we continue to deliver for our customers and communities as evidenced, in part, by $1.9 billion of quarterly loan originations while maintaining solid credit quality,” said John R. Ciulla, chairman and chief executive officer. “We remain focused on our strategic priorities and positioning ourselves for growth as the macro environment improves in 2021.”
Highlights for the fourth quarter of 2020:
•Revenue of $293.7 million; $297.4 million excluding $3.7 million in hedge termination costs related to debt prepayments.
•Loan growth of $1.6 billion, or 8.0 percent from a year ago, led by commercial and commercial real estate, which increased 16.1 percent. Excluding Paycheck Protection Program (PPP) loans, total loan growth was $348 million, or 1.7 percent.
•Results include a Current Expected Credit Loss (CECL) provision of $(1.0) million with a reserve decrease of $10.4 million compared to the prior quarter, resulting in an allowance coverage of 1.66 percent, or 1.76 percent excluding $1.3 billion of PPP loans.
•Deposit growth of $4.0 billion, or 17.2 percent from a year ago, with growth of $1.7 billion in demand deposits and $704 million in HSA deposits.
•Results include $42.0 million of charges related to strategic optimization initiatives.
•Net interest margin of 2.83 percent.
•Efficiency ratio (non-GAAP) of 60.3 percent.
“Our continued strong liquidity enabled us to reduce borrowings by $608 million in the quarter and $1.8 billion from a year ago,” said Glenn MacInnes, executive vice president and chief financial officer. “The strength of our balance sheet supports our future growth objectives.”
Line of Business performance compared to the fourth 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 December 31, 2020, Commercial Banking had $12.6 billion in loans and leases and $6.0 billion in deposit balances.
Commercial Banking Operating Results:
| Three months ended December 31, | |||||
| (In thousands) | 2020 | 2019 | |||
| Net interest income | $112,274 | 100,151 | 12.1 | % | |
| Non-interest income | 17,303 | 16,420 | 5.4 | ||
| Operating revenue | 129,577 | 116,571 | 11.2 | ||
| Non-interest expense | 48,724 | 45,505 | (7.1) | ||
| Pre-tax, pre-provision net revenue | $80,853 | 71,066 | 13.8 | ||
| At December 31, | |||||
| (In millions) | 2020 | 2019 | |||
| Loans and leases | $12,649 | 11,500 | 10.0 | % | |
| Deposits | 5,957 | 4,382 | 35.9 |
All values are in US Dollars.
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 $9.8 million to $80.9 million in the quarter as compared to prior year. Net interest income increased $12.1 million to $112.3 million, primarily driven by loan and deposit growth. Non-interest income increased $0.9 million to $17.3 million as a result of higher loan related fees. Non-interest expense increased $3.2 million to $48.7 million, primarily due to compensation related expense.
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 December 31, 2020, HSA Bank had $10.0 billion in total footings comprising $7.1 billion in deposit balances and $2.9 billion in assets under administration through linked investment accounts.
HSA Bank Operating Results:
| Three months ended December 31, | |||||
| (In thousands) | 2020 | 2019 | |||
| Net interest income | $40,495 | 41,993 | (3.6) | % | |
| Non-interest income | 24,105 | 22,959 | 5.0 | ||
| Operating revenue | 64,600 | 64,952 | (0.5) | ||
| Non-interest expense | 34,750 | 34,893 | 0.4 | ||
| Pre-tax, net revenue | $29,850 | 30,059 | (0.7) | ||
| At December 31, | |||||
| (Dollars in millions) | 2020 | 2019 | |||
| Number of accounts (thousands) | 2,953 | 2,974 | (0.7) | % | |
| Deposits | $7,120 | 6,416 | 11.0 | ||
| Linked investment accounts * | 2,853 | 2,071 | 37.8 | ||
| Total footings | $9,973 | 8,487 | 17.5 | ||
| * Linked investment accounts are held off balance sheet |
All values are in US Dollars.
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 $0.2 million to $29.9 million in the quarter as compared to prior year. Net interest income decreased $1.5 million to $40.5 million, due to a decline in deposit spreads partially offset by an 11.0 percent growth in deposits. Non-interest income increased $1.1 million to $24.1 million, due primarily to account fees and increased interchange as a result of additional spending compared to the prior year. Non-interest expense decreased $0.1 million to $34.8 million, essentially flat to the prior year.
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 155 banking centers and 297 ATMs, a customer care center, and a full range of web and mobile-based banking services. As of December 31, 2020, Community Banking had $9.0 billion in loans and $14.3 billion in deposit balances.
Community Banking Operating Results:
| Three months ended December 31, | |||||
| (In thousands) | 2020 | 2019 | |||
| Net interest income | $110,421 | 102,157 | 8.1 | % | |
| Non-interest income | 26,284 | 28,098 | (6.5) | ||
| Operating revenue | 136,705 | 130,255 | 5.0 | ||
| Non-interest expense | 98,952 | 97,323 | (1.7) | ||
| Pre-tax, pre-provision net revenue | $37,753 | 32,932 | 14.6 | ||
| At December 31, | |||||
| (In millions) | 2020 | 2019 | |||
| Loans | $8,992 | 8,537 | 5.3 | % | |
| Deposits | 14,258 | 12,528 | 13.8 |
All values are in US Dollars.
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 $4.8 million to $37.8 million in the quarter as compared to prior year. Net interest income increased $8.3 million to $110.4 million, driven by loan and deposit balance growth, partially offset by a decline in deposit spreads due to the lower interest rate environment. Non-interest income decreased $1.8 million resulting from lower deposit-related service charges, as well as lower loan servicing fees in the current quarter. This decrease was partially offset by fee income from mortgage banking activities. Non-interest expense increased $1.6 million to $99.0 million due to continued investments in technology and outside services.
Consolidated financial performance:
Quarterly net interest income compared to the fourth quarter of 2019:
•Net interest income was $216.9 million compared to $231.3 million.
•Net interest margin was 2.83 percent compared to 3.27 percent. The yield on interest-earning assets declined by 90 basis points, and the cost of interest-bearing liabilities declined by 49 basis points.
•Average interest-earning assets totaled $30.9 billion and grew by $2.5 billion, or 8.9 percent.
•Average loans totaled $21.7 billion and grew by $1.9 billion, or 9.7 percent.
•Average deposits totaled $27.2 billion and grew by $3.9 billion, or 16.5 percent.
Quarterly provision for credit losses:
•The provision for credit losses was $(1.0) million in the quarter, contributing to a $10.4 million decrease in the allowance for credit losses on loans and leases. The decrease in the allowance reflects our current estimate of forecasted economic conditions. The provision for credit losses was $22.8 million in the prior quarter and $6.0 million a year ago. The reserve release reflects continued favorable credit trends.
•Net charge-offs were $9.4 million, compared to $11.5 million in the prior quarter and $6.1 million a year ago. The ratio of net charge-offs to average loans on an annualized basis was 0.17 percent, compared to 0.21 percent in the prior quarter and 0.12 percent a year ago.
•The allowance for credit losses on loans and leases represented 1.66 percent of total loans at December 31, 2020, compared to 1.69 percent at September 30, 2020 and 1.04 percent at December 31, 2019. Excluding $1.3 billion of risk free PPP loans, the coverage ratio was 1.76 percent at December 31, 2020, compared to 1.80 percent at September 30, 2020 after excluding $1.4 billion of risk free PPP loans. The allowance for credit losses at December 31 and September 30 was estimated in accordance with the CECL accounting standard. The allowance represented 214 percent of nonperforming loans at December 31, 2020 compared to 227 percent at September 30, 2020 and 139 percent at December 31, 2019.
Quarterly non-interest income compared to the fourth quarter of 2019:
•Total non-interest income was $76.8 million compared to $70.9 million, an increase of $5.8 million. This reflects an increase of $5.1 million due to direct investment income, mark to market on customer derivatives, and miscellaneous fee income; an increase of $1.8 million in mortgage banking activities primarily due to higher origination volume and spreads on loans originated for sale; and an increase of $1.1 million in HSA fee income driven primarily by higher account service fees. These increases were partially offset by a $3.0 decrease in deposit service fees driven by lower overdraft and service related fees.
Quarterly non-interest expense compared to the fourth quarter of 2019:
•Total non-interest expense was $219.5 million compared to $179.7 million, an increase of $39.8 million. This reflects strategic optimization initiative charges of $38.3 million: $17.9 million in compensation and benefits; $14.0 million in occupancy; $5.5 million in professional and outside services; and $0.9 million in other expenses. Excluding these charges, non-interest expense increased $1.5 million. This reflects an increase in compensation and benefits of $4.4 million and an increase in technology and equipment of $1.4 million offset by a decrease in other expenses of $4.4 million primarily due to lower pension, travel, and OREO costs.
Quarterly income taxes compared to the fourth quarter of 2019:
•Income tax expense was $15.1 million compared to $26.0 million and the effective tax rate was 20.1 percent compared to 22.3 percent.
•The lower effective tax rate in the quarter primarily reflects the effects of reduced pre-tax income in 2020 compared to 2019.
Investment securities:
•Total investment securities were $8.9 billion, compared to $9.0 billion at September 30, 2020 and $8.2 billion at December 31, 2019. The carrying value of the available-for-sale portfolio included $92.5 million of net unrealized gains, compared to $103.1 million at September 30, 2020 and $24.4 million of net unrealized gains at December 31, 2019. The carrying value of the held-to-maturity portfolio does not reflect $267.2 million of net unrealized gains, compared to $283.0 million at September 30, 2020 and $86.7 million of net unrealized gains at December 31, 2019.
Loans:
•Total loans were $21.6 billion, compared to $21.9 billion at September 30, 2020 and $20.0 billion at December 31, 2019. Compared to September 30, 2020, commercial loans increased by $34.7 million, commercial real estate loans increased by $15.1 million, while consumer loans decreased by $87.4 million and residential mortgages decreased by $103.8 million.
•Compared to a year ago, commercial loans increased by $1.697 billion, with PPP loans representing $1.3 billion of the increase. Commercial real estate loans increased by $373.3 million and residential mortgages increased by $190.7 million, while consumer loans decreased by $275.5 million.
•Loan originations for the portfolio were $1.804 billion, compared to $1.560 billion in the prior quarter ($1.525 billion excluding PPP loan originations), and $1.919 billion a year ago. In addition, $125 million of residential loans were originated for sale in the quarter, compared to $149 million in the prior quarter and $94 million a year ago.
Asset quality:
•Total nonperforming loans were $168.0 million, or 0.78 percent of total loans, compared to $162.6 million, or 0.74 percent of total loans, at September 30, 2020 and $150.9 million, or 0.75 percent of total loans, at December 31, 2019. Total paying nonperforming loans were $59.7 million, compared to $67.4 million at September 30, 2020 and $59.0 million at December 31, 2019.
•Past due loans were $32.9 million, compared to $21.8 million at September 30, 2020 and $42.6 million at December 31, 2019.
Deposits and borrowings:
•Total deposits were $27.3 billion, compared to $26.9 billion at September 30, 2020 and $23.3 billion at December 31, 2019. Core deposits to total deposits were 90.9 percent, compared to 90.5 percent at September 30, 2020 and 86.7 percent at December 31, 2019. The loan to deposit ratio was 79.2 percent, compared to 81.2 percent at September 30, 2020 and 85.9 percent at December 31, 2019.
•Total borrowings were $1.7 billion, compared to $2.3 billion at September 30, 2020 and $3.5 billion at December 31, 2019.
Capital:
•The return on average common shareholders’ equity and the return on average tangible common shareholders’ equity were 7.51 percent and 9.31 percent, respectively, compared to 11.60 percent and 14.34 percent, respectively, in the fourth quarter of 2019.
•The tangible equity and tangible common equity ratios were 8.35 percent and 7.90 percent, respectively, compared to 8.88 percent and 8.39 percent, respectively, at December 31, 2019. The common equity tier 1 risk-based capital ratio was 11.35 percent, compared to 11.56 percent at December 31, 2019.
•Book value and tangible book value per common share were $34.25 and $28.04, respectively, compared to $33.28 and $27.19, respectively, at December 31, 2019.
***
Webster Financial Corporation is the holding company for Webster Bank, National Association and its HSA Bank division. With $32.6 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust, and investment services through 155 banking centers and 297 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 fourth quarter 2020 earnings announcement will be held today, Thursday, January 21, 2021 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, including the deployment and efficacy of COVID-19 vaccines, or any 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<br><br>Selected Financial Highlights (unaudited) | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| At or for the Three Months Ended | |||||||||||||||
| (In thousands, except per share data) | December 31,<br>2020 | September 30,<br>2020 | June 30,<br>2020 | March 31,<br>2020 | December 31,<br>2019 | ||||||||||
| Income and performance ratios: | |||||||||||||||
| Net income | $ | 60,044 | $ | 69,281 | $ | 53,097 | $ | 38,199 | $ | 90,473 | |||||
| Earnings applicable to common shareholders | 57,715 | 66,890 | 50,729 | 36,021 | 88,066 | ||||||||||
| Earnings per diluted common share | 0.64 | 0.75 | 0.57 | 0.39 | 0.96 | ||||||||||
| Return on average assets | 0.73 | % | 0.84 | % | 0.65 | % | 0.50 | % | 1.19 | % | |||||
| Return on average tangible common shareholders' equity (non-GAAP) | 9.31 | 10.91 | 8.47 | 5.95 | 14.34 | ||||||||||
| Return on average common shareholders’ equity | 7.51 | 8.80 | 6.79 | 4.75 | 11.60 | ||||||||||
| Non-interest income as a percentage of total revenue | 26.14 | 25.50 | 21.12 | 24.12 | 23.47 | ||||||||||
| Asset quality: | |||||||||||||||
| Allowance for credit losses on loans and leases | $ | 359,431 | $ | 369,811 | $ | 358,522 | $ | 334,931 | $ | 209,096 | |||||
| Nonperforming assets | 170,314 | 167,314 | 178,381 | 169,120 | 157,380 | ||||||||||
| Allowance for credit losses on loans and leases/total loans and leases | 1.66 | % | 1.69 | % | 1.64 | % | 1.60 | % | 1.04 | % | |||||
| Net charge-offs/average loans and leases (annualized) | 0.17 | 0.21 | 0.30 | 0.15 | 0.12 | ||||||||||
| Nonperforming loans and leases/total loans and leases | 0.78 | 0.74 | 0.79 | 0.78 | 0.75 | ||||||||||
| Nonperforming assets/total loans and leases plus OREO | 0.79 | 0.77 | 0.82 | 0.81 | 0.79 | ||||||||||
| Allowance for credit losses on loans and leases/nonperforming loans and leases | 213.94 | 227.39 | 207.17 | 206.37 | 138.56 | ||||||||||
| Other ratios: | |||||||||||||||
| Tangible equity (non-GAAP) | 8.35 | % | 8.19 | % | 8.14 | % | 8.14 | % | 8.88 | % | |||||
| Tangible common equity (non-GAAP) | 7.90 | 7.75 | 7.69 | 7.67 | 8.39 | ||||||||||
| Tier 1 risk-based capital (a) | 11.99 | 11.88 | 11.82 | 11.60 | 12.22 | ||||||||||
| Total risk-based capital (a) | 13.59 | 13.47 | 13.42 | 13.10 | 13.55 | ||||||||||
| Common equity tier 1 risk-based capital (a) | 11.35 | 11.23 | 11.17 | 10.95 | 11.56 | ||||||||||
| Shareholders’ equity/total assets | 9.92 | 9.76 | 9.71 | 9.76 | 10.56 | ||||||||||
| Net interest margin | 2.83 | 2.88 | 2.99 | 3.23 | 3.27 | ||||||||||
| Efficiency ratio (non-GAAP) | 60.27 | 59.99 | 60.04 | 58.03 | 58.52 | ||||||||||
| Equity and share related: | |||||||||||||||
| Common equity | $ | 3,089,588 | $ | 3,074,653 | $ | 3,029,742 | $ | 2,945,205 | $ | 3,062,733 | |||||
| Book value per common share | 34.25 | 34.09 | 33.59 | 32.66 | 33.28 | ||||||||||
| Tangible book value per common share (non-GAAP) | 28.04 | 27.86 | 27.40 | 26.46 | 27.19 | ||||||||||
| Common stock closing price | 42.15 | 26.41 | 28.61 | 22.90 | 53.36 | ||||||||||
| Dividends declared per common share | 0.40 | 0.40 | 0.40 | 0.40 | 0.40 | ||||||||||
| Common shares issued and outstanding | 90,199 | 90,204 | 90,194 | 90,172 | 92,027 | ||||||||||
| Weighted-average common shares outstanding - Basic | 89,645 | 89,630 | 89,485 | 90,936 | 91,574 | ||||||||||
| Weighted-average common shares outstanding - Diluted | 89,915 | 89,738 | 89,570 | 91,206 | 91,916 | ||||||||||
| (a) Presented as preliminary for December 31, 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 December 31, 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<br><br>Consolidated Balance Sheets (unaudited) | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | |||||||||
| (In thousands) | December 31,<br>2020 | September 30,<br>2020 | December 31,<br>2019 | ||||||||||||
| Assets: | |||||||||||||||
| Cash and due from banks | $ | 193,501 | $ | 181,524 | $ | 185,341 | |||||||||
| Interest-bearing deposits | 69,603 | 60,276 | 72,554 | ||||||||||||
| Securities: | |||||||||||||||
| Available for sale | 3,326,776 | 3,304,217 | 2,925,833 | ||||||||||||
| Held to maturity | 5,568,188 | 5,723,434 | 5,293,918 | ||||||||||||
| Total securities | 8,894,964 | 9,027,651 | 8,219,751 | ||||||||||||
| Allowance for credit losses on investment securities held-to-maturity | (299) | (306) | — | ||||||||||||
| Securities, net | 8,894,665 | 9,027,345 | 8,219,751 | ||||||||||||
| Loans held for sale | 14,012 | 29,018 | 36,053 | ||||||||||||
| Loans and Leases: | |||||||||||||||
| Commercial | 8,577,898 | 8,612,549 | 6,880,838 | ||||||||||||
| Commercial real estate | 6,322,637 | 6,307,567 | 5,949,339 | ||||||||||||
| Residential mortgages | 4,782,016 | 4,885,821 | 4,972,685 | ||||||||||||
| Consumer | 1,958,664 | 2,046,086 | 2,234,124 | ||||||||||||
| Total loans and leases | 21,641,215 | 21,852,023 | 20,036,986 | ||||||||||||
| Allowance for credit losses on loans and leases | (359,431) | (369,811) | (209,096) | ||||||||||||
| Loans and leases, net | 21,281,784 | 21,482,212 | 19,827,890 | ||||||||||||
| Federal Home Loan Bank and Federal Reserve Bank stock | 77,594 | 89,611 | 149,046 | ||||||||||||
| Premises and equipment, net | 226,743 | 250,535 | 270,413 | ||||||||||||
| Goodwill and other intangible assets, net | 560,756 | 561,902 | 560,290 | ||||||||||||
| Cash surrender value of life insurance policies | 564,195 | 561,021 | 550,651 | ||||||||||||
| Deferred tax asset, net | 81,286 | 76,695 | 61,975 | ||||||||||||
| Accrued interest receivable and other assets | 626,551 | 674,304 | 455,380 | ||||||||||||
| Total Assets | $ | 32,590,690 | $ | 32,994,443 | $ | 30,389,344 | |||||||||
| Liabilities and Shareholders' Equity: | |||||||||||||||
| Deposits: | |||||||||||||||
| Demand | $ | 6,155,592 | $ | 6,136,814 | $ | 4,446,463 | |||||||||
| Health savings accounts | 7,120,017 | 6,976,280 | 6,416,135 | ||||||||||||
| Interest-bearing checking | 3,652,763 | 3,390,921 | 2,689,734 | ||||||||||||
| Money market | 2,940,215 | 3,069,098 | 2,312,840 | ||||||||||||
| Savings | 4,979,031 | 4,777,000 | 4,354,809 | ||||||||||||
| Certificates of deposit | 2,487,818 | 2,570,440 | 3,104,765 | ||||||||||||
| Total deposits | 27,335,436 | 26,920,553 | 23,324,746 | ||||||||||||
| Securities sold under agreements to repurchase and other borrowings | 995,355 | 1,301,822 | 1,040,431 | ||||||||||||
| Federal Home Loan Bank advances | 133,164 | 433,243 | 1,948,476 | ||||||||||||
| Long-term debt | 567,663 | 568,846 | 540,364 | ||||||||||||
| Accrued expenses and other liabilities | 324,447 | 550,289 | 327,557 | ||||||||||||
| Total liabilities | 29,356,065 | 29,774,753 | 27,181,574 | ||||||||||||
| Preferred stock | 145,037 | 145,037 | 145,037 | ||||||||||||
| Common shareholders' equity | 3,089,588 | 3,074,653 | 3,062,733 | ||||||||||||
| Total shareholders’ equity | 3,234,625 | 3,219,690 | 3,207,770 | ||||||||||||
| Total Liabilities and Shareholders' Equity | $ | 32,590,690 | $ | 32,994,443 | $ | 30,389,344 | |||||||||
| WEBSTER FINANCIAL CORPORATION<br><br>Consolidated Statements of Income (unaudited) | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
| (In thousands, except per share data) | 2020 | 2019 | 2020 | 2019 | |||||||||||
| Interest income: | |||||||||||||||
| Interest and fees on loans and leases | $ | 189,010 | $ | 223,527 | $ | 789,719 | $ | 924,693 | |||||||
| Interest and dividends on securities | 46,874 | 58,205 | 211,561 | 229,163 | |||||||||||
| Loans held for sale | 181 | 268 | 769 | 727 | |||||||||||
| Total interest income | 236,065 | 282,000 | 1,002,049 | 1,154,583 | |||||||||||
| Interest expense: | |||||||||||||||
| Deposits | 8,651 | 31,586 | 67,897 | 129,577 | |||||||||||
| Borrowings | 10,485 | 19,164 | 42,759 | 69,879 | |||||||||||
| Total interest expense | 19,136 | 50,750 | 110,656 | 199,456 | |||||||||||
| Net interest income | 216,929 | 231,250 | 891,393 | 955,127 | |||||||||||
| Provision for credit losses | (1,000) | 6,000 | 137,750 | 37,800 | |||||||||||
| Net interest income after provision for loan and lease losses | 217,929 | 225,250 | 753,643 | 917,327 | |||||||||||
| Non-interest income: | |||||||||||||||
| Deposit service fees | 38,345 | 40,470 | 156,032 | 168,022 | |||||||||||
| Loan and lease related fees | 9,095 | 8,704 | 29,127 | 31,327 | |||||||||||
| Wealth and investment services | 8,820 | 8,476 | 32,916 | 32,932 | |||||||||||
| Mortgage banking activities | 4,110 | 2,286 | 18,295 | 6,115 | |||||||||||
| Increase in cash surrender value of life insurance policies | 3,662 | 3,670 | 14,561 | 14,612 | |||||||||||
| Gain on investment securities, net | — | 29 | 8 | 29 | |||||||||||
| Other income | 12,731 | 7,284 | 34,338 | 32,278 | |||||||||||
| Total non-interest income | 76,763 | 70,919 | 285,277 | 285,315 | |||||||||||
| Non-interest expense: | |||||||||||||||
| Compensation and benefits | 122,754 | 100,467 | 428,391 | 395,402 | |||||||||||
| Occupancy | 28,024 | 14,379 | 71,029 | 57,181 | |||||||||||
| Technology and equipment | 29,122 | 27,639 | 112,273 | 105,283 | |||||||||||
| Marketing | 3,485 | 3,957 | 14,125 | 16,286 | |||||||||||
| Professional and outside services | 11,380 | 4,674 | 32,424 | 21,380 | |||||||||||
| Intangible assets amortization | 1,147 | 962 | 4,160 | 3,847 | |||||||||||
| Loan workout expenses | 261 | 474 | 1,758 | 2,952 | |||||||||||
| Deposit insurance | 4,372 | 4,662 | 18,316 | 17,954 | |||||||||||
| Other expenses | 18,985 | 22,516 | 76,470 | 95,665 | |||||||||||
| Total non-interest expense | 219,530 | 179,730 | 758,946 | 715,950 | |||||||||||
| Income before income taxes | 75,162 | 116,439 | 279,974 | 486,692 | |||||||||||
| Income tax expense | 15,118 | 25,966 | 59,353 | 103,969 | |||||||||||
| Net income | 60,044 | 90,473 | 220,621 | 382,723 | |||||||||||
| Preferred stock dividends and other | (2,329) | (2,407) | (9,147) | (9,738) | |||||||||||
| Earnings applicable to common shareholders | $ | 57,715 | $ | 88,066 | $ | 211,474 | $ | 372,985 | |||||||
| Weighted-average common shares outstanding - Diluted | 89,915 | 91,916 | 90,151 | 91,882 | |||||||||||
| Earnings per common share: | |||||||||||||||
| Basic | $ | 0.64 | $ | 0.96 | $ | 2.35 | $ | 4.07 | |||||||
| Diluted | 0.64 | 0.96 | 2.35 | 4.06 | |||||||||||
| WEBSTER FINANCIAL CORPORATION<br><br>Five Quarter Consolidated Statements of Income (unaudited) | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||
| Three Months Ended | |||||||||||||||
| (In thousands, except per share data) | December 31,<br>2020 | September 30,<br>2020 | June 30,<br>2020 | March 31,<br>2020 | December 31,<br>2019 | ||||||||||
| Interest income: | |||||||||||||||
| Interest and fees on loans and leases | $ | 189,010 | $ | 188,001 | $ | 196,521 | $ | 216,187 | $ | 223,527 | |||||
| Interest and dividends on securities | 46,874 | 51,009 | 55,570 | 58,108 | 58,205 | ||||||||||
| Loans held for sale | 181 | 229 | 184 | 175 | 268 | ||||||||||
| Total interest income | 236,065 | 239,239 | 252,275 | 274,470 | 282,000 | ||||||||||
| Interest expense: | |||||||||||||||
| Deposits | 8,651 | 12,598 | 18,805 | 27,843 | 31,586 | ||||||||||
| Borrowings | 10,485 | 7,385 | 9,063 | 15,826 | 19,164 | ||||||||||
| Total interest expense | 19,136 | 19,983 | 27,868 | 43,669 | 50,750 | ||||||||||
| Net interest income | 216,929 | 219,256 | 224,407 | 230,801 | 231,250 | ||||||||||
| Provision for credit losses | (1,000) | 22,750 | 40,000 | 76,000 | 6,000 | ||||||||||
| Net interest income after provision for loan and lease losses | 217,929 | 196,506 | 184,407 | 154,801 | 225,250 | ||||||||||
| Non-interest income: | |||||||||||||||
| Deposit service fees | 38,345 | 39,278 | 35,839 | 42,570 | 40,470 | ||||||||||
| Loan and lease related fees | 9,095 | 6,568 | 6,968 | 6,496 | 8,704 | ||||||||||
| Wealth and investment services | 8,820 | 8,255 | 7,102 | 8,739 | 8,476 | ||||||||||
| Mortgage banking activities | 4,110 | 7,087 | 4,205 | 2,893 | 2,286 | ||||||||||
| Increase in cash surrender value of life insurance policies | 3,662 | 3,695 | 3,624 | 3,580 | 3,670 | ||||||||||
| Gain on investment securities, net | — | — | — | 8 | 29 | ||||||||||
| Other income | 12,731 | 10,177 | 2,338 | 9,092 | 7,284 | ||||||||||
| Total non-interest income | 76,763 | 75,060 | 60,076 | 73,378 | 70,919 | ||||||||||
| Non-interest expense: | |||||||||||||||
| Compensation and benefits | 122,754 | 104,019 | 99,731 | 101,887 | 100,467 | ||||||||||
| Occupancy | 28,024 | 14,275 | 14,245 | 14,485 | 14,379 | ||||||||||
| Technology and equipment | 29,122 | 27,846 | 27,468 | 27,837 | 27,639 | ||||||||||
| Marketing | 3,485 | 3,852 | 3,286 | 3,502 | 3,957 | ||||||||||
| Professional and outside services | 11,380 | 9,223 | 6,158 | 5,663 | 4,674 | ||||||||||
| Intangible assets amortization | 1,147 | 1,089 | 962 | 962 | 962 | ||||||||||
| Loan workout expenses | 261 | 612 | 392 | 493 | 474 | ||||||||||
| Deposit insurance | 4,372 | 4,204 | 5,015 | 4,725 | 4,662 | ||||||||||
| Other expenses | 18,985 | 18,876 | 19,327 | 19,282 | 22,516 | ||||||||||
| Total non-interest expense | 219,530 | 183,996 | 176,584 | 178,836 | 179,730 | ||||||||||
| Income before income taxes | 75,162 | 87,570 | 67,899 | 49,343 | 116,439 | ||||||||||
| Income tax expense | 15,118 | 18,289 | 14,802 | 11,144 | 25,966 | ||||||||||
| Net income | 60,044 | 69,281 | 53,097 | 38,199 | 90,473 | ||||||||||
| Preferred stock dividends and other | (2,329) | (2,391) | (2,368) | (2,178) | (2,407) | ||||||||||
| Earnings applicable to common shareholders | $ | 57,715 | $ | 66,890 | $ | 50,729 | $ | 36,021 | $ | 88,066 | |||||
| Weighted-average common shares outstanding - Diluted | 89,915 | 89,738 | 89,570 | 91,206 | 91,916 | ||||||||||
| Earnings per common share: | |||||||||||||||
| Basic | $ | 0.64 | $ | 0.75 | $ | 0.57 | $ | 0.40 | $ | 0.96 | |||||
| Diluted | 0.64 | 0.75 | 0.57 | 0.39 | 0.96 | ||||||||||
| WEBSTER FINANCIAL CORPORATION<br><br>Consolidated Average Balances, Interest, Yields and Rates, and Net Interest Margin on a Fully Tax-equivalent Basis (unaudited) | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||
| Three Months Ended December 31, | |||||||||||||||
| 2020 | 2019 | ||||||||||||||
| (Dollars in thousands) | Average<br>balance | Interest | Yield/rate | Average<br>balance | Interest | Yield/rate | |||||||||
| Assets: | |||||||||||||||
| Interest-earning assets: | |||||||||||||||
| Loans and leases | $ | 21,729,250 | $ | 189,829 | 3.44 | % | $ | 19,808,521 | $ | 224,259 | 4.46 | % | |||
| Investment securities (a) | 8,923,336 | 48,124 | 2.22 | 8,323,512 | 58,724 | 2.86 | |||||||||
| Federal Home Loan and Federal Reserve Bank stock | 85,535 | 484 | 2.25 | 127,770 | 1,007 | 3.13 | |||||||||
| Interest-bearing deposits | 102,011 | 24 | 0.09 | 56,484 | 228 | 1.58 | |||||||||
| Loans held for sale | 25,777 | 181 | 2.80 | 32,599 | 268 | 3.28 | |||||||||
| Total interest-earning assets | 30,865,909 | $ | 238,642 | 3.08 | % | 28,348,886 | $ | 284,486 | 3.98 | % | |||||
| Non-interest-earning assets | 2,000,217 | 1,969,620 | |||||||||||||
| Total Assets | $ | 32,866,126 | $ | 30,318,506 | |||||||||||
| Liabilities and Shareholders' Equity: | |||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||
| Demand deposits | $ | 6,213,119 | $ | — | — | % | $ | 4,417,167 | $ | — | — | % | |||
| Health savings accounts | 7,012,813 | 1,557 | 0.09 | 6,320,475 | 3,166 | 0.20 | |||||||||
| Interest-bearing checking, money market and savings | 11,469,937 | 2,400 | 0.08 | 9,420,738 | 13,944 | 0.59 | |||||||||
| Certificates of deposit | 2,519,845 | 4,694 | 0.74 | 3,202,242 | 14,476 | 1.79 | |||||||||
| Total deposits | 27,215,714 | 8,651 | 0.13 | 23,360,622 | 31,586 | 0.54 | |||||||||
| Securities sold under agreements to repurchase and other borrowings | 1,073,014 | 623 | 0.23 | 1,275,293 | 4,726 | 1.45 | |||||||||
| Federal Home Loan Bank advances | 313,354 | 5,622 | 7.02 | 1,550,528 | 8,932 | 2.25 | |||||||||
| Long-term debt (a) | 568,237 | 4,240 | 3.24 | 547,584 | 5,506 | 4.21 | |||||||||
| Total borrowings | 1,954,605 | 10,485 | 2.17 | 3,373,405 | 19,164 | 2.25 | |||||||||
| Total interest-bearing liabilities | 29,170,319 | $ | 19,136 | 0.26 | % | 26,734,027 | $ | 50,750 | 0.75 | % | |||||
| Non-interest-bearing liabilities | 456,586 | 387,916 | |||||||||||||
| Total liabilities | 29,626,905 | 27,121,943 | |||||||||||||
| Preferred stock | 145,037 | 145,037 | |||||||||||||
| Common shareholders' equity | 3,094,184 | 3,051,526 | |||||||||||||
| Total shareholders' equity | 3,239,221 | 3,196,563 | |||||||||||||
| Total Liabilities and Shareholders' Equity | $ | 32,866,126 | $ | 30,318,506 | |||||||||||
| Tax-equivalent net interest income | 219,506 | 233,736 | |||||||||||||
| Less: tax-equivalent adjustments | (2,577) | (2,486) | |||||||||||||
| Net interest income | $ | 216,929 | $ | 231,250 | |||||||||||
| Net interest margin | 2.83 | % | 3.27 | % | |||||||||||
| (a) For purposes of yield/rate computation, unrealized gain (loss) balances on securities available for sale and senior fixed-rate notes hedges are excluded. | |||||||||||||||
| WEBSTER FINANCIAL CORPORATION<br><br>Consolidated Average Balances, Interest, Yields and Rates, and Net Interest Margin on a Fully Tax-equivalent Basis (unaudited) | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||
| Twelve Months Ended December 31, | |||||||||||||||
| 2020 | 2019 | ||||||||||||||
| (Dollars in thousands) | Average<br>balance | Interest | Yield/rate | Average<br>balance | Interest | Yield/rate | |||||||||
| Assets: | |||||||||||||||
| Interest-earning assets: | |||||||||||||||
| Loans and leases | $ | 21,385,702 | $ | 792,929 | 3.71 | % | $ | 19,209,611 | $ | 927,395 | 4.83 | % | |||
| Investment securities (a) | 8,647,322 | 215,151 | 2.56 | 7,761,937 | 229,989 | 2.97 | |||||||||
| Federal Home Loan and Federal Reserve Bank stock | 102,943 | 3,200 | 3.11 | 113,518 | 4,956 | 4.37 | |||||||||
| Interest-bearing deposits | 93,011 | 246 | 0.26 | 56,458 | 1,211 | 2.14 | |||||||||
| Loans held for sale | 25,902 | 769 | 2.97 | 22,437 | 727 | 3.24 | |||||||||
| Total interest-earning assets | 30,254,880 | $ | 1,012,295 | 3.37 | % | 27,163,961 | $ | 1,164,278 | 4.29 | % | |||||
| Non-interest-earning assets | 2,012,900 | 1,897,078 | |||||||||||||
| Total Assets | $ | 32,267,780 | $ | 29,061,039 | |||||||||||
| Liabilities and Shareholders' Equity: | |||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||
| Demand deposits | $ | 5,698,399 | $ | — | — | % | $ | 4,300,407 | $ | — | — | % | |||
| Health savings accounts | 6,893,996 | 9,530 | 0.14 | 6,240,201 | 12,316 | 0.20 | |||||||||
| Interest-bearing checking, money market and savings | 10,689,634 | 25,248 | 0.24 | 9,144,086 | 54,566 | 0.60 | |||||||||
| Certificates of deposit | 2,760,561 | 33,119 | 1.20 | 3,267,913 | 62,695 | 1.92 | |||||||||
| Total deposits | 26,042,590 | 67,897 | 0.26 | 22,952,607 | 129,577 | 0.56 | |||||||||
| Securities sold under agreements to repurchase and other borrowings | 1,292,571 | 5,941 | 0.46 | 1,008,704 | 17,953 | 1.78 | |||||||||
| Federal Home Loan Bank advances | 730,125 | 18,767 | 2.57 | 1,201,839 | 31,399 | 2.61 | |||||||||
| Long-term debt (a) | 564,919 | 18,051 | 3.45 | 468,111 | 20,527 | 4.51 | |||||||||
| Total borrowings | 2,587,615 | 42,759 | 1.68 | 2,678,654 | 69,879 | 2.62 | |||||||||
| Total interest-bearing liabilities | 28,630,205 | $ | 110,656 | 0.39 | % | 25,631,261 | $ | 199,456 | 0.78 | % | |||||
| Non-interest-bearing liabilities | 439,084 | 362,059 | |||||||||||||
| Total liabilities | 29,069,289 | 25,993,320 | |||||||||||||
| Preferred stock | 145,037 | 145,037 | |||||||||||||
| Common shareholders' equity | 3,053,454 | 2,922,682 | |||||||||||||
| Total shareholders' equity | 3,198,491 | 3,067,719 | |||||||||||||
| Total Liabilities and Shareholders' Equity | $ | 32,267,780 | $ | 29,061,039 | |||||||||||
| Tax-equivalent net interest income | 901,639 | 964,822 | |||||||||||||
| Less: tax-equivalent adjustments | (10,246) | (9,695) | |||||||||||||
| Net interest income | $ | 891,393 | $ | 955,127 | |||||||||||
| Net interest margin | 3.00 | % | 3.55 | % | |||||||||||
| (a) For purposes of yield/rate computation, unrealized gain (loss) balances on securities available for sale and senior fixed-rate notes hedges are excluded. | |||||||||||||||
| WEBSTER FINANCIAL CORPORATION Five Quarter Loan and Lease Balances (unaudited) | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||
| (Dollars in thousands) | December 31,<br>2020 | September 30,<br>2020 | June 30,<br>2020 | March 31,<br>2020 | December 31,<br>2019 | ||||||||||
| Loan and Lease Balances (actual): | |||||||||||||||
| Commercial non-mortgage | $ | 7,687,300 | $ | 7,722,838 | $ | 7,606,245 | $ | 6,385,619 | $ | 5,833,952 | |||||
| Asset-based lending | 890,598 | 889,711 | 940,524 | 1,180,328 | 1,046,886 | ||||||||||
| Commercial real estate | 6,322,637 | 6,307,567 | 6,207,314 | 6,122,474 | 5,949,339 | ||||||||||
| Residential mortgages | 4,782,016 | 4,885,821 | 4,921,573 | 4,991,512 | 4,972,685 | ||||||||||
| Consumer | 1,958,664 | 2,046,086 | 2,126,861 | 2,211,591 | 2,234,124 | ||||||||||
| Total Loan and Lease Balances | 21,641,215 | 21,852,023 | 21,802,517 | 20,891,524 | 20,036,986 | ||||||||||
| Allowance for credit losses on loans and leases | (359,431) | (369,811) | (358,522) | (334,931) | (209,096) | ||||||||||
| Loans and Leases, net | $ | 21,281,784 | $ | 21,482,212 | $ | 21,443,995 | $ | 20,556,593 | $ | 19,827,890 | |||||
| Loan and Lease Balances (average): | |||||||||||||||
| Commercial non-mortgage | $ | 7,662,828 | $ | 7,683,879 | $ | 7,318,814 | $ | 6,005,501 | $ | 5,879,600 | |||||
| Asset-based lending | 874,221 | 922,653 | 1,030,928 | 1,085,624 | 1,087,537 | ||||||||||
| Commercial real estate | 6,363,776 | 6,260,114 | 6,136,091 | 5,996,728 | 5,667,764 | ||||||||||
| Residential mortgages | 4,821,199 | 4,914,368 | 4,946,746 | 5,013,888 | 4,917,365 | ||||||||||
| Consumer | 2,007,226 | 2,089,726 | 2,176,335 | 2,223,058 | 2,256,255 | ||||||||||
| Total Loan and Lease Balances | 21,729,250 | 21,870,740 | 21,608,914 | 20,324,799 | 19,808,521 | ||||||||||
| Allowance for credit losses on loans and leases | (375,080) | (363,552) | (340,050) | (269,273) | (211,460) | ||||||||||
| Loans and Leases, net | $ | 21,354,170 | $ | 21,507,188 | $ | 21,268,864 | $ | 20,055,526 | $ | 19,597,061 | |||||
| WEBSTER FINANCIAL CORPORATION<br><br>Five Quarter Nonperforming Assets and Past Due Loans and Leases (unaudited) | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||
| (Dollars in thousands) | December 31,<br>2020 | September 30,<br>2020 | June 30,<br>2020 | March 31,<br>2020 | December 31,<br>2019 | ||||||||||
| Nonperforming loans and leases: | |||||||||||||||
| Commercial non-mortgage | $ | 71,499 | $ | 75,080 | $ | 75,340 | $ | 74,077 | $ | 64,793 | |||||
| Asset-based lending | 2,622 | 3,789 | 138 | 137 | 139 | ||||||||||
| Commercial real estate | 21,222 | 8,784 | 15,889 | 12,901 | 11,554 | ||||||||||
| Residential mortgages | 41,033 | 41,498 | 46,500 | 42,393 | 43,100 | ||||||||||
| Consumer | 31,629 | 33,485 | 35,187 | 32,785 | 31,320 | ||||||||||
| Total nonperforming loans and leases | $ | 168,005 | $ | 162,636 | $ | 173,054 | $ | 162,293 | $ | 150,906 | |||||
| Other real estate owned and repossessed assets: | |||||||||||||||
| Commercial non-mortgage | $ | 175 | $ | 175 | $ | 272 | $ | 121 | $ | 271 | |||||
| Residential mortgages | 1,544 | 3,899 | 3,081 | 4,480 | 4,247 | ||||||||||
| Consumer | 590 | 604 | 1,974 | 2,226 | 1,956 | ||||||||||
| Total other real estate owned and repossessed assets | $ | 2,309 | $ | 4,678 | $ | 5,327 | $ | 6,827 | $ | 6,474 | |||||
| Total nonperforming assets | $ | 170,314 | $ | 167,314 | $ | 178,381 | $ | 169,120 | $ | 157,380 | |||||
| Past due 30-89 days: | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||
| Commercial non-mortgage | $ | 8,918 | $ | 3,821 | $ | 13,959 | $ | 8,200 | $ | 8,482 | |||||
| Asset-based lending | 1,175 | — | — | — | — | ||||||||||
| Commercial real estate | 3,003 | 329 | 2,363 | 2,217 | 1,700 | ||||||||||
| Residential mortgages | 10,623 | 9,291 | 15,445 | 11,814 | 13,598 | ||||||||||
| Consumer | 8,720 | 8,349 | 7,857 | 14,666 | 18,835 | ||||||||||
| Total past due 30-89 days | 32,439 | 21,790 | 39,624 | 36,897 | 42,615 | ||||||||||
| Past due 90 days or more and accruing | 445 | — | 198 | 75 | — | ||||||||||
| Total past due loans and leases | $ | 32,884 | $ | 21,790 | $ | 39,822 | $ | 36,972 | $ | 42,615 | |||||
| Five Quarter Changes in the Allowance for Credit Losses on Loans and Leases (unaudited) | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||
| For the Three Months Ended | |||||||||||||||
| (Dollars in thousands) | December 31,<br>2020 | September 30,<br>2020 | June 30,<br>2020 | March 31,<br>2020 | December 31,<br>2019 | ||||||||||
| Beginning balance | $ | 369,811 | $ | 358,522 | $ | 334,931 | $ | 209,096 | $ | 209,152 | |||||
| Adoption of ASU No. 2016-13 | — | — | — | 57,568 | — | ||||||||||
| Provision | (992) | 22,753 | 40,003 | 76,085 | 6,000 | ||||||||||
| Charge-offs: | |||||||||||||||
| Commercial non-mortgage | 7,876 | 12,085 | 15,294 | 5,544 | 5,041 | ||||||||||
| Asset-based lending | — | 10 | — | — | — | ||||||||||
| Commercial real estate | 688 | 1,399 | — | 30 | 23 | ||||||||||
| Residential mortgages | 105 | 546 | 194 | 1,511 | 876 | ||||||||||
| Consumer | 2,673 | 1,717 | 2,586 | 3,076 | 3,165 | ||||||||||
| Total charge-offs | 11,342 | 15,757 | 18,074 | 10,161 | 9,105 | ||||||||||
| Recoveries: | |||||||||||||||
| Commercial non-mortgage | 232 | 1,978 | 271 | 558 | 236 | ||||||||||
| Asset-based lending | 33 | — | 10 | 3 | 33 | ||||||||||
| Commercial real estate | 3 | 47 | 2 | 3 | 3 | ||||||||||
| Residential mortgages | 190 | 521 | 83 | 235 | 534 | ||||||||||
| Consumer | 1,496 | 1,747 | 1,296 | 1,544 | 2,243 | ||||||||||
| Total recoveries | 1,954 | 4,293 | 1,662 | 2,343 | 3,049 | ||||||||||
| Total net charge-offs | 9,388 | 11,464 | 16,412 | 7,818 | 6,056 | ||||||||||
| Ending balance | $ | 359,431 | $ | 369,811 | $ | 358,522 | $ | 334,931 | $ | 209,096 |
WEBSTER FINANCIAL CORPORATION
Reconciliations to GAAP Financial Measures
The Company evaluates its business based on certain ratios that utilize non-GAAP financial measures. The Company believes the use of these non-GAAP financial measures provides additional clarity in assessing the results and financial position of the Company. Other companies may define or calculate supplemental financial data differently.
The efficiency ratio, which measures the costs expended to generate a dollar of revenue, is calculated excluding certain non-operational items. Return on average tangible common shareholders' equity measures the Company’s net income available to common shareholders, adjusted for the tax-effected amortization of intangible assets, as a percentage of average shareholders’ equity less average preferred stock and average goodwill and intangible assets. The tangible equity ratio represents shareholders’ equity less goodwill and intangible assets divided by total assets less goodwill and intangible assets. The tangible common equity ratio represents shareholders’ equity less preferred stock and goodwill and intangible assets divided by total assets less goodwill and intangible assets. Tangible book value per common share represents shareholders’ equity less preferred stock and goodwill and intangible assets divided by common shares outstanding at the end of the period. Core deposits express total deposits less time deposits, including brokered time deposits. Adjusted diluted earnings per share (EPS) for the quarter ended December 31, 2020 is calculated by excluding after tax non-operational items from reported earnings applicable to common shareholders. See the tables below for reconciliations of these non-GAAP financial measures with financial measures defined by GAAP.
| At or for the Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands, except per share data) | December 31,<br>2020 | September 30,<br>2020 | June 30,<br>2020 | March 31,<br>2020 | December 31,<br>2019 | |||||
| Efficiency ratio: | ||||||||||
| Non-interest expense (GAAP) | $ | 219,530 | $ | 183,996 | $ | 176,584 | $ | 178,836 | $ | 179,730 |
| Less: Foreclosed property activity (GAAP) | (836) | (201) | (217) | (250) | 263 | |||||
| Intangible assets amortization (GAAP) | 1,147 | 1,089 | 962 | 962 | 962 | |||||
| Strategic initiatives (non-GAAP) | 38,265 | 4,786 | — | — | — | |||||
| Non-interest expense (non-GAAP) | $ | 180,954 | $ | 178,322 | $ | 175,839 | $ | 178,124 | $ | 178,505 |
| Net interest income (GAAP) | $ | 216,929 | $ | 219,256 | $ | 224,407 | $ | 230,801 | $ | 231,250 |
| Add: Tax-equivalent adjustment (non-GAAP) | 2,577 | 2,635 | 2,561 | 2,473 | 2,486 | |||||
| Non-interest income (GAAP) | 76,763 | 75,060 | 60,076 | 73,378 | 70,919 | |||||
| Other (non-GAAP) | 291 | 297 | 293 | 299 | 402 | |||||
| Loss on hedge terminations (GAAP) | 3,680 | — | — | — | — | |||||
| Customer derivative fair value adjustment (GAAP) | — | — | 5,511 | — | — | |||||
| Less: Gain on investment securities, net (GAAP) | — | — | — | 8 | 29 | |||||
| Income (non-GAAP) | $ | 300,240 | $ | 297,248 | $ | 292,848 | $ | 306,943 | $ | 305,028 |
| Efficiency ratio (non-GAAP) | 60.27% | 59.99% | 60.04% | 58.03% | 58.52% | |||||
| Return on average tangible common shareholders' equity: | ||||||||||
| Net income (GAAP) | $ | 60,044 | $ | 69,281 | $ | 53,097 | $ | 38,199 | $ | 90,473 |
| Less: Preferred stock dividends (GAAP) | 1,969 | 1,968 | 1,969 | 1,969 | 1,969 | |||||
| Add: Intangible assets amortization, tax-effected (GAAP) | 906 | 860 | 760 | 760 | 760 | |||||
| Income adjusted for preferred stock dividends and intangible assets amortization (non-GAAP) | $ | 58,981 | $ | 68,173 | $ | 51,888 | $ | 36,990 | $ | 89,264 |
| Income adjusted for preferred stock dividends and intangible assets amortization, annualized basis (non-GAAP) | $ | 235,924 | $ | 272,692 | $ | 207,552 | $ | 147,960 | $ | 357,056 |
| Average shareholders' equity (non-GAAP) | $ | 3,239,221 | $ | 3,205,330 | $ | 3,155,368 | $ | 3,193,525 | $ | 3,196,563 |
| Less: Average preferred stock (non-GAAP) | 145,037 | 145,037 | 145,037 | 145,037 | 145,037 | |||||
| Average goodwill and other intangible assets (non-GAAP) | 561,303 | 560,959 | 558,835 | 559,786 | 560,750 | |||||
| Average tangible common shareholders' equity (non-GAAP) | $ | 2,532,881 | $ | 2,499,334 | $ | 2,451,496 | $ | 2,488,702 | $ | 2,490,776 |
| Return on average tangible common shareholders' equity (non-GAAP) | 9.31% | 10.91% | 8.47% | 5.95% | 14.34% |
WEBSTER FINANCIAL CORPORATION
Reconciliations to GAAP Financial Measures (continued)
| At or for the Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands, except per share data) | December 31,<br>2020 | September 30,<br>2020 | June 30,<br>2020 | March 31,<br>2020 | December 31,<br>2019 | |||||
| Tangible equity: | ||||||||||
| Shareholders' equity (GAAP) | $ | 3,234,625 | $ | 3,219,690 | $ | 3,174,779 | $ | 3,090,242 | $ | 3,207,770 |
| Less: Goodwill and other intangible assets (GAAP) | 560,756 | 561,902 | 558,367 | 559,328 | 560,290 | |||||
| Tangible shareholders' equity (non-GAAP) | $ | 2,673,869 | $ | 2,657,788 | $ | 2,616,412 | $ | 2,530,914 | $ | 2,647,480 |
| Total assets (GAAP) | $ | 32,590,690 | $ | 32,994,443 | $ | 32,708,617 | $ | 31,654,874 | $ | 30,389,344 |
| Less: Goodwill and other intangible assets (GAAP) | 560,756 | 561,902 | 558,367 | 559,328 | 560,290 | |||||
| Tangible assets (non-GAAP) | $ | 32,029,934 | $ | 32,432,541 | $ | 32,150,250 | $ | 31,095,546 | $ | 29,829,054 |
| Tangible equity (non-GAAP) | 8.35% | 8.19% | 8.14% | 8.14% | 8.88% | |||||
| Tangible common equity: | ||||||||||
| Tangible shareholders' equity (non-GAAP) | $ | 2,673,869 | $ | 2,657,788 | $ | 2,616,412 | $ | 2,530,914 | $ | 2,647,480 |
| Less: Preferred stock (GAAP) | 145,037 | 145,037 | 145,037 | 145,037 | 145,037 | |||||
| Tangible common shareholders' equity (non-GAAP) | $ | 2,528,832 | $ | 2,512,751 | $ | 2,471,375 | $ | 2,385,877 | $ | 2,502,443 |
| Tangible assets (non-GAAP) | $ | 32,029,934 | $ | 32,432,541 | $ | 32,150,250 | $ | 31,095,546 | $ | 29,829,054 |
| Tangible common equity (non-GAAP) | 7.90% | 7.75% | 7.69% | 7.67% | 8.39% | |||||
| Tangible book value per common share: | ||||||||||
| Tangible common shareholders' equity (non-GAAP) | $ | 2,528,832 | $ | 2,512,751 | $ | 2,471,375 | $ | 2,385,877 | $ | 2,502,443 |
| Common shares outstanding | 90,199 | 90,204 | 90,194 | 90,172 | 92,027 | |||||
| Tangible book value per common share (non-GAAP) | $ | 28.04 | $ | 27.86 | $ | 27.40 | $ | 26.46 | $ | 27.19 |
| Core deposits: | ||||||||||
| Total deposits | $ | 27,335,436 | $ | 26,920,553 | $ | 26,355,997 | $ | 24,513,837 | $ | 23,324,746 |
| Less: Certificates of deposit | 2,487,818 | 2,570,440 | 2,666,047 | 2,891,161 | 3,104,765 | |||||
| Brokered certificates of deposit | — | — | — | 100,000 | — | |||||
| Core deposits (non-GAAP) | $ | 24,847,618 | $ | 24,350,113 | $ | 23,689,950 | $ | 21,522,676 | $ | 20,219,981 |
| (In millions, except per share data) | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| GAAP earnings adjusted for strategic optimization initiatives: | Pre-Tax | After Tax | Diluted EPS | |||||||
| Reported net income (GAAP) | $ | 75.2 | $ | 60.0 | $ | 0.64 | ||||
| Severance | 17.9 | 13.2 | 0.15 | |||||||
| Facilities optimization | 14.5 | 10.7 | 0.12 | |||||||
| Project costs | 5.5 | 4.0 | 0.04 | |||||||
| Debt prepayment costs | 4.1 | 3.3 | 0.04 | |||||||
| Adjusted net income (non-GAAP) | $ | 117.2 | $ | 91.2 | $ | 0.99 |