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): April 28, 2022
_________________________
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.) |
200 Elm Street, Stamford, Connecticut 06902
(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 Symbols | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.01 per share | WBS | New York Stock Exchange |
| Depositary 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 |
| Depositary Shares, each representing 1/40th interest in a share of 6.50% Series G Non-Cumulative Perpetual Preferred Stock | WBS-PrG | 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 April 28, 2022, Webster Financial Corporation (the Company) issued a press release reporting its results of operations for the fiscal quarter ended March 31, 2022. 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 or 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 April 28, 2022, the Company will hold a conference call to discuss its financial results for the fiscal quarter ended March 31, 2022, 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 datedApril28, 2022 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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: April 28, 2022 | /s/ Albert J. Wang |
| Albert J. Wang | |
| Executive Vice President and Chief Accounting Officer |
EXHIBIT INDEX
| Exhibit<br>Number | Description |
|---|---|
| 99.1 | Press release datedApril28, 2022 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
Document
Exhibit 99.1
WEBSTER REPORTS
FIRST QUARTER 2022 EPS OF $(0.14); ADJUSTED EPS OF $1.24
STAMFORD, Conn., April 28, 2022 - Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A. and its HSA Bank division, today announced net (loss) income available to common shareholders of $(20.2) million, or $(0.14) per diluted share, for the quarter ended March 31, 2022, compared to $106.1 million, or $1.17 per diluted share, for the quarter ended March 31, 2021.
First quarter 2022 results reflect the impact of the January 31, 2022 merger with Sterling Bancorp ("Sterling") and include $279.5 million pre-tax, ($204.3 million after tax), or $1.38 per diluted share, of primarily merger-related expenses and initial non-purchase credit deteriorated (non-PCD) provision. Excluding these expenses, earnings per diluted share would have been $1.24 for the quarter ended March 31, 2022. Reported results prior to the first quarter of 2022 reflect legacy Webster Financial results only.
“This was a landmark quarter for Webster, as we closed our merger of equals with Sterling Bancorp,” said John R. Ciulla, President and Chief Executive Officer. “We are excited about our future as a combined entity, as we are adding scale, talent, and capabilities that will enhance our client experience. I am equally proud we were able to produce strong underlying business trends while at the same time combining these complementary organizations.”
Highlights for the first quarter of 2022:
•Completed merger with Sterling Bancorp, the parent company of Sterling National Bank, which closed effective January 31, 2022, creating an approximately $65 billion institution.
•Completed the acquisition of Bend Financial, Inc. which will advance our delivery of a differentiated modern approach to HSA management and engagement.
•Charges related to the merger, strategic initiatives, and initial non-PCD provision totaled $279.5 million.
•Revenue of $498.3 million.
•Current period includes a state deferred tax asset revaluation benefit of $9.9 million.
•Period end loan and lease balance of $43.5 billion; 80 percent commercial loans and leases, 20 percent consumer loans, and a loan to deposit ratio of 80 percent.
•Period end deposit balance of $54.4 billion.
•Provision totaled $188.8 million and included $175.1 million related to non-PCD loans and leases.
•Return on average assets of (0.12) percent; adjusted 1.37 percent (non-GAAP).
•Return on average tangible common equity of (1.36) percent; adjusted 17.01 percent (non-GAAP).
•Net interest margin of 3.21 percent includes net accretion of 0.29 percent.
•Common equity tier 1 ratio of 11.42 percent.
•Efficiency ratio (non-GAAP) of 48.73 percent.
•Tangible common equity ratio of 8.26 percent.
•Authorized to repurchase an additional $600 million in shares under Webster's existing share repurchase program.
“The power of our combined entity is already evident in our financial performance,” said Glenn MacInnes, Executive Vice President and Chief Financial Officer. “On an adjusted basis, we generated a return on assets of 1.37 percent and return on tangible common equity of 17 percent. We also exhibited meaningful growth in key product categories, and anticipate carrying this momentum into future periods.”
The first quarter results do not represent a full quarter of comparable combined earnings given the merger with Sterling Bancorp on January 31, 2022. Additionally, the increases in the balance sheet and income statement during the quarter are largely attributable to the merger.
Line of Business performance compared to the first quarter of 2021
Webster realigned its investment services related operations from Commercial Banking to Consumer Banking to deliver operational efficiencies and better serve its customers. As a result, effective January 1, 2022, $4.3 billion of assets under administration (off balance sheet) and $125 million of deposits were moved from Commercial Banking to Consumer Banking. In addition, the expense allocation approach was modified to exclude certain overhead and merger-related expenses that are not tied directly to segment performance. Prior period results have been recasted.
Commercial Banking
Webster’s Commercial Banking segment serves businesses that have more than $2 million of revenue through our business banking, middle market, asset-based lending, equipment finance, commercial real estate, sponsor finance, and treasury services business units. Additionally, our Wealth group provides wealth management solutions to business owners, operators, and consumers within our targeted markets and retail footprint. As of March 31, 2022, Commercial Banking had $34.9 billion in loans and leases and $21.5 billion in deposit balances.
Commercial Banking Operating Results:
| Three months ended March 31, | |||||
| (In thousands) | 2022 | 2021 | |||
| Net interest income | $287,069 | 141,486 | 102.9 | % | |
| Non-interest income | 38,743 | 18,376 | 110.8 | ||
| Operating revenue | 325,812 | 159,862 | 103.8 | ||
| Non-interest expense | 89,240 | 46,284 | (92.8) | ||
| Pre-tax, pre-provision net revenue | $236,572 | 113,578 | 108.3 | ||
| At March 31, | |||||
| (In millions) | 2022 | 2021 | |||
| Loans and leases | $34,928 | 14,413 | 142.3 | % | |
| Deposits | 21,528 | 8,313 | 159.0 | ||
| AUA / AUM (off balance sheet) | 2,692 | 2,686 | 0.2 |
All values are in US Dollars.
Pre-tax, pre-provision net revenue increased $123.0 million to $236.6 million in the quarter as compared to prior year. The increase in balances and income was largely attributable to the merger. Net interest income increased $145.6 million to $287.1 million, with $136.3 million driven by the merger, and $9.3 million due to loan and deposit growth in the legacy Webster portfolios. Non-interest income increased $20.4 million to $38.7 million, with $15.9 million driven by the merger, and $4.5 million driven by growth in loan related fees and client hedging activity. Non-interest expense increased $43.0 million to $89.2 million, with $37.9 million due to the merger, and $5.1 million driven by loan and deposit growth in the legacy Webster portfolios.
HSA Bank
Webster’s HSA Bank division offers a comprehensive consumer-directed healthcare solution that includes health savings accounts, health reimbursement arrangements, flexible spending accounts and commuter benefits. Health savings accounts are distributed nationwide directly to employers and individual consumers, as well as through national and regional insurance carriers, benefit consultants and financial advisors. As of March 31, 2022, HSA Bank had $11.6 billion in total footings comprising $7.8 billion in deposit balances and $3.8 billion in assets under administration through linked investment accounts.
On February 18, 2022 Webster closed on the acquisition of Bend Financial, Inc. Leveraging Bend’s cloud native technology, HSA Bank will accelerate our digital transformation and strengthen our technology to enhance customer experience.
HSA Bank Operating Results:
| Three months ended March 31, | |||||
| (In thousands) | 2022 | 2021 | |||
| Net interest income | $44,577 | 42,109 | 5.9 | % | |
| Non-interest income | 26,958 | 27,005 | (0.2) | ||
| Operating revenue | 71,535 | 69,114 | 3.5 | ||
| Non-interest expense | 36,409 | 36,005 | (1.1) | ||
| Pre-tax, net revenue | $35,126 | 33,109 | 6.1 | ||
| At March 31, | |||||
| (Dollars in millions) | 2022 | 2021 | |||
| Number of accounts (thousands) | 3,067 | 3,040 | 0.9 | % | |
| Deposits | $7,805 | 7,455 | 4.7 | ||
| Linked investment accounts (off balance sheet) | 3,761 | 3,118 | 20.6 | ||
| Total footings | $11,566 | 10,573 | 9.4 |
All values are in US Dollars.
Pre-tax net revenue increased $2.0 million to $35.1 million in the quarter as compared to prior year. Net interest income increased $2.5 million to $44.6 million, primarily due to an increase in net deposit spread and growth in deposits. Non-interest income was flat at $27.0 million. Non-interest expense increased $0.4 million to $36.4 million, primarily due to incremental expenses from Bend's acquired business, partially offset by lower compensation and benefits costs.
Consumer Banking
Consumer Banking serves consumer and business banking customers primarily throughout southern New England and the New York Metro and Suburban markets. Consumer Banking is comprised of the Consumer Lending and Small Business Banking (businesses that have less than $2 million of revenue) business units, as well as a distribution network consisting of 202 banking centers and 359 ATMs, a customer care center, and a full range of web and mobile-based banking services. Additionally, our Webster Investment Services group provides investment services to consumers and small business owners within our targeted markets and retail footprint. As of March 31, 2022, Consumer Banking had $8.6 billion in loans and $24.1 billion in deposit balances, as well as $7.9 billion in assets under administration.
Consumer Banking Operating Results:
| Three months ended March 31, | |||||
| (In thousands) | 2022 | 2021 | |||
| Net interest income | $136,580 | 89,365 | 52.8 | % | |
| Non-interest income | 27,892 | 22,872 | 21.9 | ||
| Operating revenue | 164,472 | 112,237 | 46.5 | ||
| Non-interest expense | 95,747 | 75,311 | (27.1) | ||
| Pre-tax, pre-provision net revenue | $68,725 | 36,926 | 86.1 | ||
| At March 31, | |||||
| (In millions) | 2022 | 2021 | |||
| Loans | $8,589 | 6,888 | 24.7 | % | |
| Deposits | 24,115 | 12,715 | 89.7 | ||
| AUA (off balance sheet) | 7,929 | 4,008 | 97.9 |
All values are in US Dollars.
Pre-tax, pre-provision net revenue increased $31.8 million to $68.7 million in the quarter as compared to prior year. The increase in balances and income was largely attributable to the merger. Net interest income increased $47.2 million to $136.6 million, with $42.3 million driven by the merger, and $4.9 million driven by deposit and loan growth coupled with lower interest paid on deposits. Non-interest income increased $5.0 million to $27.9 million, with $4.4 million driven by the merger and $0.6 million driven by higher deposit service fees. Non-interest expense increased $20.4 million to $95.7 million, primarily driven by the incremental expenses from the merger.
Consolidated financial performance:
Quarterly net interest income compared to the first quarter of 2021:
•Net interest income was $394.2 million compared to $223.8 million.
•Net interest margin was 3.21 percent compared to 2.92 percent. The yield on interest-earning assets increased by 25 basis points, and the cost of interest-bearing liabilities decreased by 3 basis points.
•Average interest-earning assets totaled $50.3 billion and increased by $19.2 billion, or 61.6 percent.
•Average loans and leases totaled $35.9 billion and grew by $14.4 billion, or 67.2 percent.
•Average deposits totaled $45.9 billion and grew by $17.6 billion, or 62.4 percent.
Quarterly provision for credit losses:
•The provision for credit losses reflects a $188.8 million provision in the quarter, contributing to a $268.2 million increase in the allowance for credit losses on loans and leases. The provision for the quarter includes $175.1 million associated with day one accounting provision required for loans and leases acquired during the quarter from the Sterling merger. The provision for credit losses reflected a benefit of $15.0 million in the prior quarter compared to a benefit of $25.8 million a year ago.
•Net charge-offs were $8.9 million, compared to net recoveries of $(1.2) million in the prior quarter and net charge-offs of $5.3 million a year ago. The ratio of net charge-offs (recoveries) to average loans and leases on an annualized basis was 0.10 percent, compared to (0.02) percent in the prior quarter and 0.10 percent a year ago.
•The allowance for credit losses on loans and leases represented 1.31 percent of total loans and leases at March 31, 2022, compared to 1.35 percent at December 31, 2021 and 1.54 percent at March 31, 2021. The allowance represented 229 percent of nonperforming loans and leases at March 31, 2022 compared to 274 percent at December 31, 2021 and 218 percent at March 31, 2021.
Quarterly non-interest income compared to the first quarter of 2021:
•Total non-interest income was $104.0 million compared to $76.8 million, an increase of $27.2 million. The increase primarily reflects the two month impact of the merger with Sterling.
Quarterly non-interest expense compared to the first quarter of 2021:
•Total non-interest expense was $359.8 million compared to $188.0 million, an increase of $171.8 million. Total non-interest expense includes a net $104.4 million of merger and strategic initiative charges compared to $9.4 million of strategic initiative charges a year ago. Excluding those charges, total non-interest expense increased $76.8 million which primarily reflects the two month impact of the merger with Sterling.
Quarterly income taxes compared to the first quarter of 2021:
•Income tax (benefit) expense was $(33.6) million compared to $30.2 million, and the effective tax benefit rate was (66.7) percent compared to an effective tax rate of 21.8 percent. The income tax benefit in the current quarter reflects the pre-tax loss, coupled with the effects of tax-exempt income and tax credits, and includes $9.3 million of net tax benefits related to the merger.
Investment securities:
•Total investment securities, net were $15.1 billion, compared to $10.4 billion at December 31, 2021 and $8.9 billion at March 31, 2021. All investment securities acquired from the merger were classified as available-for-sale. The carrying value of the available-for-sale portfolio included $328.4 million of net unrealized losses, compared to net unrealized gains of $7.2 million at December 31, 2021 and $51.3 million at March 31, 2021. The carrying value of the held-to-maturity portfolio does not reflect $270.8 million of net unrealized losses, compared to net unrealized gains of $82.6 million at December 31, 2021 and $162.6 million at March 31, 2021.
Loans and Leases:
•Total loans and leases were $43.5 billion, compared to $22.3 billion at December 31, 2021 and $21.3 billion at March 31, 2021. Compared to December 31, 2021, commercial loans and leases increased by $8.8 billion, commercial real estate loans and leases increased by $11.0 billion, residential mortgages increased by $1.4 billion, and consumer loans increased by $88.3 million.
•Compared to a year ago, commercial loans and leases increased by $8.9 billion, commercial real estate loans and leases increased by $11.2 billion, and residential mortgages increased by $2.1 billion, while consumer loans decreased by $89.7 million.
•Loan originations for the portfolio were $2.570 billion, compared to $2.553 billion in the prior quarter and $1.807 billion a year ago. In addition, $23 million of residential loans were originated for sale in the quarter, compared to $42 million in the prior quarter and $81 million a year ago.
Asset quality:
•Total nonperforming loans and leases were $248.1 million, or 0.57 percent of total loans and leases, compared to $109.8 million, or 0.49 percent of total loans and leases, at December 31, 2021 and $150.4 million, or 0.71 percent of total loans and leases, at March 31, 2021. As of March 31, 2022, $115.1 million of nonperforming loans and leases were contractually current.
•Past due loans and leases were $73.0 million, compared to $21.9 million at December 31, 2021 and $20.4 million at March 31, 2021.
Deposits and borrowings:
•Total deposits were $54.4 billion, compared to $29.8 billion at December 31, 2021 and $28.5 billion at March 31, 2021. Core deposits to total deposits were 94.8 percent, compared to 94.0 percent at December 31, 2021 and 92.2 percent at March 31, 2021. The loan to deposit ratio was 80.1 percent, compared to 74.6 percent at December 31, 2021 and 74.8 percent at March 31, 2021.
•Total borrowings were $1.6 billion, compared to $1.2 billion at both December 31, 2021 and March 31, 2021.
Capital:
•The return on average common shareholders’ equity and the return on average tangible common shareholders’ equity were (1.25) percent and (1.36) percent, respectively, compared to 13.65 percent and 16.79 percent, respectively, in the first quarter of 2021.
•The tangible equity and tangible common equity ratios were 8.72 percent and 8.26 percent, respectively, compared to 8.30 percent and 7.85 percent, respectively, at March 31, 2021. The common equity tier 1 risk-based capital ratio was 11.42 percent, compared to 11.89 percent at March 31, 2021.
•Book value and tangible book value per common share were $44.32 and $28.94, respectively, compared to $34.60 and $28.41, respectively, at March 31, 2021.
***
Webster Financial Corporation (NYSE:WBS) is the holding company for Webster Bank, N.A. and its HSA Bank Division. Webster is a leading commercial bank in the Northeast that provides a wide range of digital and traditional financial solutions across three differentiated lines of business: Commercial Banking, Consumer Banking and its HSA Bank division, one of the country's largest providers of employee benefits solutions. Headquartered in Stamford, CT, Webster is a values-driven organization with $65 billion in assets. Its core footprint spans the northeastern U.S. from New York to Massachusetts, with certain businesses operating in extended geographies. 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 first quarter 2022 earnings announcement will be held today, Thursday, April 28, 2022 at 9:00 a.m. Eastern Time. To listen to the live call, please dial 877-407-8289, or 201-689-8341 for international callers. The webcast, along with related slides, will be available on the Webster website (www.wbst.com). A replay of the conference call will be available for one week via the website listed above, beginning at approximately 11:00 a.m. (Eastern) on April 28, 2022. To access the replay, dial 877-660-6853, or 201-612-7415 for international callers. The replay conference ID number is 13728411.
Media Contact
Alice Ferreira, 203-578-2610
acferreira@websterbank.com
Investor Contact
Emlen Harmon, 212-309-7646
eharmon@websterbank.com
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 integrate the operations of Webster and Sterling Bancorp and realize the anticipated benefits of the merger; (2) our ability to successfully execute our business plan and strategic initiatives, and manage any risks or uncertainties; (3) our ability to successfully achieve the anticipated cost reductions and operating efficiencies from planned strategic initiatives, including process automation, organization simplification, and spending reductions, and avoid any higher than anticipated costs or delays in the ongoing implementation; (4) local, regional, national, and international economic conditions and the impact they may have on us and our customers; (5) volatility and disruption in national and international financial markets, including as a result of geopolitical conflict such as the war between Russia and Ukraine; (6) the potential adverse effects of the ongoing novel coronavirus (COVID-19) pandemic, or other unusual and infrequently occurring events, and any governmental or societal responses thereto; (7) changes in laws and regulations, including those concerning banking, taxes, dividends, securities, insurance, and healthcare, with which we and our subsidiaries must comply; (8) adverse conditions in the securities markets that lead to impairment in the value of our investment securities and goodwill; (9) inflation, changes in interest rates, and monetary fluctuations; (10) the replacement of and transition from the London Interbank Offered Rate (LIBOR) to the Secured Overnight Financing Rate (SOFR) as the primary interest rate benchmark; (11) the timely development and acceptance of new products and services and the perceived value of those products and services by customers; (12) changes in deposit flows, consumer spending, borrowings, and savings habits; (13) our ability to implement new technologies and maintain secure and reliable technology systems; (14) the effects of any cyber threats, attacks or events or fraudulent activity; (15) performance by our counterparties and vendors; (16) our ability to increase market share and control expenses; (17) changes in the competitive environment among banks, financial holding companies, and other financial services providers; (18) changes in the level of non-performing assets and charge-offs; (19) changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (20) the effect of changes in accounting policies and practices applicable to us, including the impact of recently adopted accounting guidance; (21) legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews; (22) our ability to appropriately address social, environmental, and sustainability concerns that may arise from our business activities; and (23) 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 Operations.” 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, ROATCE, and other performance ratios, in each case 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) | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | |||||||||||||||||
| Income and performance ratios: | ||||||||||||||||||||||
| Net (loss) income | $ | (16,747) | $ | 111,038 | $ | 95,713 | $ | 94,035 | $ | 108,078 | ||||||||||||
| Net (loss) income available to common shareholders | (20,178) | 109,069 | 93,745 | 92,066 | 106,109 | |||||||||||||||||
| Earnings (loss) per diluted common share | (0.14) | 1.20 | 1.03 | 1.01 | 1.17 | |||||||||||||||||
| Return on average assets | (0.12) | % | 1.26 | % | 1.10 | % | 1.12 | % | 1.31 | % | ||||||||||||
| Return on average tangible common shareholders' equity (non-GAAP) | (1.36) | 16.23 | 14.16 | 14.26 | 16.79 | |||||||||||||||||
| Return on average common shareholders’ equity | (1.25) | 13.35 | 11.61 | 11.63 | 13.65 | |||||||||||||||||
| Non-interest income as a percentage of total revenue | 20.88 | 28.44 | 26.73 | 24.77 | 25.54 | |||||||||||||||||
| Asset quality: | ||||||||||||||||||||||
| Allowance for credit losses on loans and leases | $ | 569,371 | $ | 301,187 | $ | 314,922 | $ | 307,945 | $ | 328,351 | ||||||||||||
| Nonperforming assets | 251,206 | 112,590 | 104,209 | 123,497 | 152,808 | |||||||||||||||||
| Allowance for credit losses on loans and leases / total loans and leases | 1.31 | % | 1.35 | % | 1.46 | % | 1.43 | % | 1.54 | % | ||||||||||||
| Net charge-offs (recoveries) / average loans and leases (annualized) | 0.10 | (0.02) | 0.02 | (0.02) | 0.10 | |||||||||||||||||
| Nonperforming loans and leases / total loans and leases | 0.57 | 0.49 | 0.47 | 0.56 | 0.71 | |||||||||||||||||
| Nonperforming assets / total loans and leases plus OREO | 0.58 | 0.51 | 0.48 | 0.57 | 0.72 | |||||||||||||||||
| Allowance for credit losses on loans and leases / nonperforming loans and leases | 229.48 | 274.36 | 309.44 | 255.05 | 218.29 | |||||||||||||||||
| Other ratios: | ||||||||||||||||||||||
| Tangible equity (non-GAAP) | 8.72 | % | 8.39 | % | 8.12 | % | 8.35 | % | 8.30 | % | ||||||||||||
| Tangible common equity (non-GAAP) | 8.26 | 7.97 | 7.71 | 7.91 | 7.85 | |||||||||||||||||
| Tier 1 risk-based capital (a) | 12.01 | 12.32 | 12.39 | 12.30 | 12.55 | |||||||||||||||||
| Total risk-based capital (a) | 14.37 | 13.64 | 13.79 | 13.70 | 14.08 | |||||||||||||||||
| Common equity tier 1 risk-based capital (a) | 11.42 | 11.72 | 11.77 | 11.66 | 11.89 | |||||||||||||||||
| Shareholders’ equity / total assets | 12.55 | 9.85 | 9.57 | 9.86 | 9.84 | |||||||||||||||||
| Net interest margin | 3.21 | 2.73 | 2.80 | 2.82 | 2.92 | |||||||||||||||||
| Efficiency ratio (non-GAAP) | 48.73 | 54.85 | 54.84 | 56.64 | 58.46 | |||||||||||||||||
| Equity and share related: | ||||||||||||||||||||||
| Common equity | $ | 7,893,156 | $ | 3,293,288 | $ | 3,241,152 | $ | 3,184,668 | $ | 3,127,891 | ||||||||||||
| Book value per common share | 44.32 | 36.36 | 35.78 | 35.15 | 34.60 | |||||||||||||||||
| Tangible book value per common share (non-GAAP) | 28.94 | 30.22 | 29.63 | 28.99 | 28.41 | |||||||||||||||||
| Common stock closing price | 56.12 | 55.84 | 54.46 | 53.34 | 55.11 | |||||||||||||||||
| Dividends declared per common share | 0.40 | 0.40 | 0.40 | 0.40 | 0.40 | |||||||||||||||||
| Common shares issued and outstanding | 178,102 | 90,584 | 90,588 | 90,594 | 90,410 | |||||||||||||||||
| Weighted-average common shares outstanding - Basic | 147,394 | 90,052 | 90,038 | 90,027 | 89,809 | |||||||||||||||||
| Weighted-average common shares outstanding - Diluted | 147,533 | 90,284 | 90,232 | 90,221 | 90,108 | |||||||||||||||||
| (a) Presented as preliminary for March 31, 2022 and actual for the remaining periods. | ||||||||||||||||||||||
| WEBSTER FINANCIAL CORPORATION<br><br>Consolidated Balance Sheets (unaudited) | ||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||||||||||||
| (In thousands) | March 31,<br>2022 | December 31,<br>2021 | March 31,<br>2021 | |||||||||||||||||||
| Assets: | ||||||||||||||||||||||
| Cash and due from banks | $ | 240,435 | $ | 137,385 | $ | 160,703 | ||||||||||||||||
| Interest-bearing deposits | 552,778 | 324,185 | 1,210,958 | |||||||||||||||||||
| Securities: | ||||||||||||||||||||||
| Available for sale | 8,744,897 | 4,234,854 | 3,313,980 | |||||||||||||||||||
| Held to maturity, net | 6,362,254 | 6,198,125 | 5,567,785 | |||||||||||||||||||
| Total securities, net | 15,107,151 | 10,432,979 | 8,881,765 | |||||||||||||||||||
| Loans held for sale | 17,970 | 4,694 | 17,262 | |||||||||||||||||||
| Loans and Leases: | ||||||||||||||||||||||
| Commercial | 17,386,139 | 8,576,786 | 8,437,487 | |||||||||||||||||||
| Commercial real estate | 17,584,947 | 6,603,180 | 6,338,056 | |||||||||||||||||||
| Residential mortgages | 6,798,199 | 5,412,905 | 4,668,945 | |||||||||||||||||||
| Consumer | 1,767,200 | 1,678,858 | 1,856,895 | |||||||||||||||||||
| Total loans and leases | 43,536,485 | 22,271,729 | 21,301,383 | |||||||||||||||||||
| Allowance for credit losses on loans and leases | (569,371) | (301,187) | (328,351) | |||||||||||||||||||
| Loans and leases, net | 42,967,114 | 21,970,542 | 20,973,032 | |||||||||||||||||||
| Federal Home Loan Bank and Federal Reserve Bank stock | 206,123 | 71,836 | 77,674 | |||||||||||||||||||
| Premises and equipment, net | 490,004 | 204,557 | 220,982 | |||||||||||||||||||
| Goodwill and other intangible assets, net | 2,738,353 | 556,242 | 559,617 | |||||||||||||||||||
| Cash surrender value of life insurance policies | 1,222,898 | 572,305 | 567,298 | |||||||||||||||||||
| Deferred tax asset, net | 178,042 | 109,405 | 80,235 | |||||||||||||||||||
| Accrued interest receivable and other assets | 1,410,616 | 531,469 | 509,511 | |||||||||||||||||||
| Total Assets | $ | 65,131,484 | $ | 34,915,599 | $ | 33,259,037 | ||||||||||||||||
| Liabilities and Shareholders' Equity: | ||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||
| Demand | $ | 13,570,702 | $ | 7,060,488 | $ | 6,680,114 | ||||||||||||||||
| Health savings accounts | 7,804,858 | 7,397,582 | 7,455,181 | |||||||||||||||||||
| Interest-bearing checking | 9,579,839 | 4,182,497 | 3,792,309 | |||||||||||||||||||
| Money market | 11,964,649 | 3,718,953 | 3,015,565 | |||||||||||||||||||
| Savings | 8,615,138 | 5,689,739 | 5,304,532 | |||||||||||||||||||
| Certificates of deposit | 2,821,097 | 1,797,770 | 2,234,133 | |||||||||||||||||||
| Total deposits | 54,356,283 | 29,847,029 | 28,481,834 | |||||||||||||||||||
| Securities sold under agreements to repurchase and other borrowings | 518,733 | 674,896 | 498,378 | |||||||||||||||||||
| Federal Home Loan Bank advances | 10,903 | 10,997 | 138,554 | |||||||||||||||||||
| Long-term debt | 1,078,274 | 562,931 | 566,480 | |||||||||||||||||||
| Accrued expenses and other liabilities | 990,156 | 381,421 | 300,863 | |||||||||||||||||||
| Total liabilities | 56,954,349 | 31,477,274 | 29,986,109 | |||||||||||||||||||
| Preferred stock | 283,979 | 145,037 | 145,037 | |||||||||||||||||||
| Common shareholders' equity | 7,893,156 | 3,293,288 | 3,127,891 | |||||||||||||||||||
| Total shareholders’ equity | 8,177,135 | 3,438,325 | 3,272,928 | |||||||||||||||||||
| Total Liabilities and Shareholders' Equity | $ | 65,131,484 | $ | 34,915,599 | $ | 33,259,037 | ||||||||||||||||
| WEBSTER FINANCIAL CORPORATION<br><br>Consolidated Statements of Income (unaudited) | ||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | |||||||||||||||||
| Three Months Ended March 31, | ||||||||||||||||||||||
| (In thousands, except per share data) | 2022 | 2021 | ||||||||||||||||||||
| Interest income: | ||||||||||||||||||||||
| Interest and fees on loans and leases | $ | 346,276 | $ | 190,536 | ||||||||||||||||||
| Interest and dividends on securities | 63,526 | 44,947 | ||||||||||||||||||||
| Loans held for sale | 26 | 91 | ||||||||||||||||||||
| Total interest income | 409,828 | 235,574 | ||||||||||||||||||||
| Interest expense: | ||||||||||||||||||||||
| Deposits | 7,399 | 6,439 | ||||||||||||||||||||
| Borrowings | 8,181 | 5,371 | ||||||||||||||||||||
| Total interest expense | 15,580 | 11,810 | ||||||||||||||||||||
| Net interest income | 394,248 | 223,764 | ||||||||||||||||||||
| Provision for credit losses | 188,845 | (25,750) | ||||||||||||||||||||
| Net interest income after provision for loan and lease losses | 205,403 | 249,514 | ||||||||||||||||||||
| Non-interest income: | ||||||||||||||||||||||
| Deposit service fees | 47,827 | 40,469 | ||||||||||||||||||||
| Loan and lease related fees | 22,679 | 8,313 | ||||||||||||||||||||
| Wealth and investment services | 10,597 | 9,403 | ||||||||||||||||||||
| Mortgage banking activities | 428 | 2,642 | ||||||||||||||||||||
| Increase in cash surrender value of life insurance policies | 6,732 | 3,533 | ||||||||||||||||||||
| Other income | 15,772 | 12,397 | ||||||||||||||||||||
| Total non-interest income | 104,035 | 76,757 | ||||||||||||||||||||
| Non-interest expense: | ||||||||||||||||||||||
| Compensation and benefits | 184,002 | 107,600 | ||||||||||||||||||||
| Occupancy | 18,615 | 15,650 | ||||||||||||||||||||
| Technology and equipment | 55,401 | 28,516 | ||||||||||||||||||||
| Marketing | 3,509 | 2,504 | ||||||||||||||||||||
| Professional and outside services | 54,091 | 9,776 | ||||||||||||||||||||
| Intangible assets amortization | 6,387 | 1,139 | ||||||||||||||||||||
| Loan workout expenses | 680 | 394 | ||||||||||||||||||||
| Deposit insurance | 5,222 | 3,956 | ||||||||||||||||||||
| Other expenses | 31,878 | 18,447 | ||||||||||||||||||||
| Total non-interest expense | 359,785 | 187,982 | ||||||||||||||||||||
| (Loss) income before income taxes | (50,347) | 138,289 | ||||||||||||||||||||
| Income tax (benefit) expense | (33,600) | 30,211 | ||||||||||||||||||||
| Net (loss) income | (16,747) | 108,078 | ||||||||||||||||||||
| Preferred stock dividends | (3,431) | (1,969) | ||||||||||||||||||||
| Net (loss) income available to common shareholders | $ | (20,178) | $ | 106,109 | ||||||||||||||||||
| Weighted-average common shares outstanding - Diluted | 147,533 | 90,108 | ||||||||||||||||||||
| (Loss) Earnings per common share: | ||||||||||||||||||||||
| Basic | $ | (0.14) | $ | 1.18 | ||||||||||||||||||
| Diluted | (0.14) | 1.17 | ||||||||||||||||||||
| WEBSTER FINANCIAL CORPORATION<br><br>Five Quarter Consolidated Statements of Income (unaudited) | ||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||
| Three Months Ended | ||||||||||||||||||||||
| (In thousands, except per share data) | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | |||||||||||||||||
| Interest income: | ||||||||||||||||||||||
| Interest and fees on loans and leases | $ | 346,276 | $ | 189,985 | $ | 196,273 | $ | 185,919 | $ | 190,536 | ||||||||||||
| Interest and dividends on securities | 63,526 | 45,990 | 43,362 | 45,586 | 44,947 | |||||||||||||||||
| Loans held for sale | 26 | 45 | 57 | 53 | 91 | |||||||||||||||||
| Total interest income | 409,828 | 236,020 | 239,692 | 231,558 | 235,574 | |||||||||||||||||
| Interest expense: | ||||||||||||||||||||||
| Deposits | 7,399 | 4,027 | 4,571 | 5,094 | 6,439 | |||||||||||||||||
| Borrowings | 8,181 | 5,211 | 5,430 | 5,612 | 5,371 | |||||||||||||||||
| Total interest expense | 15,580 | 9,238 | 10,001 | 10,706 | 11,810 | |||||||||||||||||
| Net interest income | 394,248 | 226,782 | 229,691 | 220,852 | 223,764 | |||||||||||||||||
| Provision for credit losses | 188,845 | (15,000) | 7,750 | (21,500) | (25,750) | |||||||||||||||||
| Net interest income after provision for loan and lease losses | 205,403 | 241,782 | 221,941 | 242,352 | 249,514 | |||||||||||||||||
| Non-interest income: | ||||||||||||||||||||||
| Deposit service fees | 47,827 | 40,544 | 40,258 | 41,439 | 40,469 | |||||||||||||||||
| Loan and lease related fees | 22,679 | 9,602 | 10,881 | 7,862 | 8,313 | |||||||||||||||||
| Wealth and investment services | 10,597 | 10,111 | 9,985 | 10,087 | 9,403 | |||||||||||||||||
| Mortgage banking activities | 428 | 733 | 1,525 | 1,319 | 2,642 | |||||||||||||||||
| Increase in cash surrender value of life insurance policies | 6,732 | 3,627 | 3,666 | 3,603 | 3,533 | |||||||||||||||||
| Other income | 15,772 | 25,521 | 17,460 | 8,392 | 12,397 | |||||||||||||||||
| Total non-interest income | 104,035 | 90,138 | 83,775 | 72,702 | 76,757 | |||||||||||||||||
| Non-interest expense: | ||||||||||||||||||||||
| Compensation and benefits | 184,002 | 109,283 | 105,352 | 97,754 | 107,600 | |||||||||||||||||
| Occupancy | 18,615 | 13,256 | 12,430 | 14,010 | 15,650 | |||||||||||||||||
| Technology and equipment | 55,401 | 28,750 | 28,441 | 27,124 | 28,516 | |||||||||||||||||
| Marketing | 3,509 | 2,599 | 3,721 | 3,227 | 2,504 | |||||||||||||||||
| Professional and outside services | 54,091 | 9,360 | 7,074 | 21,025 | 9,776 | |||||||||||||||||
| Intangible assets amortization | 6,387 | 1,118 | 1,124 | 1,132 | 1,139 | |||||||||||||||||
| Loan workout expenses | 680 | 244 | 203 | 327 | 394 | |||||||||||||||||
| Deposit insurance | 5,222 | 4,234 | 3,855 | 3,749 | 3,956 | |||||||||||||||||
| Other expenses | 31,878 | 21,009 | 18,037 | 18,680 | 18,447 | |||||||||||||||||
| Total non-interest expense | 359,785 | 189,853 | 180,237 | 187,028 | 187,982 | |||||||||||||||||
| (Loss) income before income taxes | (50,347) | 142,067 | 125,479 | 128,026 | 138,289 | |||||||||||||||||
| Income tax (benefit) expense | (33,600) | 31,029 | 29,766 | 33,991 | 30,211 | |||||||||||||||||
| Net (loss) income | (16,747) | 111,038 | 95,713 | 94,035 | 108,078 | |||||||||||||||||
| Preferred stock dividends | (3,431) | (1,969) | (1,968) | (1,969) | (1,969) | |||||||||||||||||
| Net (loss) income available to common shareholders | $ | (20,178) | $ | 109,069 | $ | 93,745 | $ | 92,066 | $ | 106,109 | ||||||||||||
| Weighted-average common shares outstanding - Diluted | 147,533 | 90,284 | 90,232 | 90,221 | 90,108 | |||||||||||||||||
| (Loss) earnings per common share: | ||||||||||||||||||||||
| Basic | $ | (0.14) | $ | 1.20 | $ | 1.03 | $ | 1.02 | $ | 1.18 | ||||||||||||
| Diluted | (0.14) | 1.20 | 1.03 | 1.01 | 1.17 | |||||||||||||||||
| 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 March 31, | ||||||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||
| (Dollars in thousands) | Average<br>balance | Interest | Yield/rate | Average<br>balance | Interest | Yield/rate | ||||||||||||||||
| Assets: | ||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||
| Loans and leases | $ | 35,912,829 | $ | 349,417 | 3.90 | % | $ | 21,481,320 | $ | 191,288 | 3.57 | % | ||||||||||
| Investment securities (a) | 13,421,543 | 67,269 | 2.02 | 8,890,075 | 46,277 | 2.12 | ||||||||||||||||
| Federal Home Loan and Federal Reserve Bank stock | 166,357 | 821 | 2.00 | 77,632 | 237 | 1.24 | ||||||||||||||||
| Interest-bearing deposits (b) | 799,265 | 453 | 0.23 | 680,367 | 176 | 0.10 | ||||||||||||||||
| Loans held for sale | 17,918 | 26 | 0.58 | 14,351 | 91 | 2.54 | ||||||||||||||||
| Total interest-earning assets | 50,317,912 | $ | 417,986 | 3.33 | % | 31,143,745 | $ | 238,069 | 3.08 | % | ||||||||||||
| Non-interest-earning assets | 4,490,665 | 1,982,315 | ||||||||||||||||||||
| Total Assets | $ | 54,808,577 | $ | 33,126,060 | ||||||||||||||||||
| Liabilities and Shareholders' Equity: | ||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||
| Demand deposits | $ | 11,263,282 | $ | — | — | % | $ | 6,436,858 | $ | — | — | % | ||||||||||
| Health savings accounts | 7,759,465 | 1,087 | 0.06 | 7,451,175 | 1,607 | 0.09 | ||||||||||||||||
| Interest-bearing checking, money market and savings | 24,316,436 | 5,019 | 0.08 | 11,995,473 | 1,720 | 0.06 | ||||||||||||||||
| Certificates of deposit | 2,544,286 | 1,293 | 0.21 | 2,371,026 | 3,112 | 0.53 | ||||||||||||||||
| Total deposits | 45,883,469 | 7,399 | 0.07 | 28,254,532 | 6,439 | 0.09 | ||||||||||||||||
| Securities sold under agreements to repurchase and other borrowings | 577,039 | 957 | 0.66 | 522,728 | 635 | 0.49 | ||||||||||||||||
| Federal Home Loan Bank advances | 10,936 | 56 | 2.03 | 135,787 | 513 | 1.51 | ||||||||||||||||
| Long-term debt (a) | 896,310 | 7,168 | 3.34 | 567,058 | 4,223 | 3.23 | ||||||||||||||||
| Total borrowings | 1,484,285 | 8,181 | 2.26 | 1,225,573 | 5,371 | 1.82 | ||||||||||||||||
| Total interest-bearing liabilities | 47,367,754 | $ | 15,580 | 0.13 | % | 29,480,105 | $ | 11,810 | 0.16 | % | ||||||||||||
| Non-interest-bearing liabilities | 749,333 | 391,752 | ||||||||||||||||||||
| Total liabilities | 48,117,087 | 29,871,857 | ||||||||||||||||||||
| Preferred stock | 236,121 | 145,037 | ||||||||||||||||||||
| Common shareholders' equity | 6,455,369 | 3,109,166 | ||||||||||||||||||||
| Total shareholders' equity | 6,691,490 | 3,254,203 | ||||||||||||||||||||
| Total Liabilities and Shareholders' Equity | $ | 54,808,577 | $ | 33,126,060 | ||||||||||||||||||
| Tax-equivalent net interest income | 402,406 | 226,259 | ||||||||||||||||||||
| Less: tax-equivalent adjustments | (8,158) | (2,495) | ||||||||||||||||||||
| Net interest income | $ | 394,248 | $ | 223,764 | ||||||||||||||||||
| Net interest margin | 3.21 | % | 2.92 | % | ||||||||||||||||||
| (a) For the purposes of our average yield/rate and margin computations, unsettled trades on investment securities and unrealized gain (loss) balances on securities available-for-sale and senior fixed-rate notes hedges are excluded. | ||||||||||||||||||||||
| (b) Interest-bearing deposits is a component of cash and cash equivalents. | ||||||||||||||||||||||
| WEBSTER FINANCIAL CORPORATION Five Quarter Loan and Lease Balances (unaudited) | ||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||
| (Dollars in thousands) | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | |||||||||||||||||
| Loan and Lease Balances (actual): | ||||||||||||||||||||||
| Commercial non-mortgage | $ | 15,578,594 | $ | 7,509,538 | $ | 7,172,345 | $ | 7,473,758 | $ | 7,530,066 | ||||||||||||
| Asset-based lending | 1,807,545 | 1,067,248 | 986,782 | 943,961 | 907,421 | |||||||||||||||||
| Commercial real estate | 17,584,947 | 6,603,180 | 6,522,679 | 6,410,672 | 6,338,056 | |||||||||||||||||
| Residential mortgages | 6,798,199 | 5,412,905 | 5,167,527 | 4,856,302 | 4,668,945 | |||||||||||||||||
| Consumer | 1,767,200 | 1,678,858 | 1,731,002 | 1,790,308 | 1,856,895 | |||||||||||||||||
| Total Loan and Lease Balances | 43,536,485 | 22,271,729 | 21,580,335 | 21,475,001 | 21,301,383 | |||||||||||||||||
| Allowance for credit losses on loans and leases | (569,371) | (301,187) | (314,922) | (307,945) | (328,351) | |||||||||||||||||
| Loans and Leases, net | $ | 42,967,114 | $ | 21,970,542 | $ | 21,265,413 | $ | 21,167,056 | $ | 20,973,032 | ||||||||||||
| Loan and Lease Balances (average): | ||||||||||||||||||||||
| Commercial non-mortgage | $ | 12,568,454 | $ | 7,304,985 | $ | 7,280,258 | $ | 7,545,398 | $ | 7,650,367 | ||||||||||||
| Asset-based lending | 1,540,301 | 1,010,874 | 956,535 | 937,580 | 896,093 | |||||||||||||||||
| Commercial real estate | 13,732,925 | 6,575,865 | 6,510,100 | 6,365,830 | 6,303,765 | |||||||||||||||||
| Residential mortgages | 6,322,495 | 5,309,127 | 5,036,329 | 4,738,859 | 4,720,703 | |||||||||||||||||
| Consumer | 1,748,654 | 1,701,250 | 1,755,291 | 1,825,772 | 1,910,392 | |||||||||||||||||
| Total Loan and Lease Balances | $ | 35,912,829 | $ | 21,902,101 | $ | 21,538,513 | $ | 21,413,439 | $ | 21,481,320 | ||||||||||||
| WEBSTER FINANCIAL CORPORATION<br><br>Five Quarter Nonperforming Assets and Past Due Loans and Leases (unaudited) | ||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||
| (Dollars in thousands) | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | |||||||||||||||||
| Nonperforming loans and leases: | ||||||||||||||||||||||
| Commercial non-mortgage | $ | 108,460 | $ | 63,553 | $ | 40,774 | $ | 57,831 | $ | 60,103 | ||||||||||||
| Asset-based lending | 5,494 | 2,114 | 2,139 | 2,403 | 2,430 | |||||||||||||||||
| Commercial real estate | 74,581 | 5,058 | 15,972 | 12,687 | 13,743 | |||||||||||||||||
| Residential mortgages | 27,318 | 15,591 | 19,327 | 21,467 | 42,708 | |||||||||||||||||
| Consumer | 32,258 | 23,462 | 23,558 | 26,353 | 31,437 | |||||||||||||||||
| Total nonperforming loans and leases | $ | 248,111 | $ | 109,778 | $ | 101,770 | $ | 120,741 | $ | 150,421 | ||||||||||||
| Other real estate owned and repossessed assets: | ||||||||||||||||||||||
| Commercial non-mortgage | $ | — | $ | — | $ | — | $ | — | $ | 102 | ||||||||||||
| Residential mortgages | 2,582 | 2,276 | 1,759 | 1,934 | 1,695 | |||||||||||||||||
| Consumer | 513 | 536 | 680 | 822 | 590 | |||||||||||||||||
| Total other real estate owned and repossessed assets | $ | 3,095 | $ | 2,812 | $ | 2,439 | $ | 2,756 | $ | 2,387 | ||||||||||||
| Total nonperforming assets | $ | 251,206 | $ | 112,590 | $ | 104,209 | $ | 123,497 | $ | 152,808 | Past due 30-89 days: | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||
| Commercial non-mortgage | $ | 8,025 | $ | 9,340 | $ | 5,537 | $ | 3,154 | $ | 7,395 | ||||||||||||
| Asset-based lending | 24,103 | — | — | — | — | |||||||||||||||||
| Commercial real estate | 22,053 | 921 | 821 | 1,679 | 699 | |||||||||||||||||
| Residential mortgages | 9,307 | 3,561 | 3,447 | 4,690 | 5,241 | |||||||||||||||||
| Consumer | 9,379 | 5,576 | 7,158 | 8,829 | 7,036 | |||||||||||||||||
| Total past due 30-89 days | 72,867 | 19,398 | 16,963 | 18,352 | 20,371 | |||||||||||||||||
| Past due 90 days or more and accruing | 124 | 2,507 | 107 | 25 | 50 | |||||||||||||||||
| Total past due loans and leases | $ | 72,991 | $ | 21,905 | $ | 17,070 | $ | 18,377 | $ | 20,421 | ||||||||||||
| Five Quarter Changes in the Allowance for Credit Losses on Loans and Leases (unaudited) | ||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||
| For the Three Months Ended | ||||||||||||||||||||||
| (Dollars in thousands) | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | |||||||||||||||||
| ACL on loans and leases, beginning balance | $ | 301,187 | $ | 314,922 | $ | 307,945 | $ | 328,351 | $ | 359,431 | ||||||||||||
| Initial allowance on PCD loans and leases (1) | 88,045 | — | — | — | — | |||||||||||||||||
| Provision | 189,068 | (14,980) | 7,898 | (21,574) | (25,759) | |||||||||||||||||
| Charge-offs: | ||||||||||||||||||||||
| Commercial portfolio | 11,248 | 799 | 1,723 | 594 | 6,321 | |||||||||||||||||
| Consumer portfolio | 1,120 | 1,382 | 2,053 | 2,808 | 2,974 | |||||||||||||||||
| Total charge-offs | 12,368 | 2,181 | 3,776 | 3,402 | 9,295 | |||||||||||||||||
| Recoveries: | ||||||||||||||||||||||
| Commercial portfolio | 1,364 | 1,107 | 142 | 836 | 1,636 | |||||||||||||||||
| Consumer portfolio | 2,075 | 2,319 | 2,713 | 3,734 | 2,338 | |||||||||||||||||
| Total recoveries | 3,439 | 3,426 | 2,855 | 4,570 | 3,974 | |||||||||||||||||
| Total net charge-offs (recoveries) | 8,929 | (1,245) | 921 | (1,168) | 5,321 | |||||||||||||||||
| ACL on loans and leases, ending balance | $ | 569,371 | $ | 301,187 | $ | 314,922 | $ | 307,945 | $ | 328,351 | ||||||||||||
| ACL on unfunded loan commitments, beginning balance | $ | 13,104 | $ | 12,170 | $ | 11,974 | $ | 12,800 | $ | 12,755 | ||||||||||||
| Acquisition of Sterling | 6,749 | — | — | — | — | |||||||||||||||||
| Provision | (213) | 934 | 196 | (826) | 45 | |||||||||||||||||
| ACL on unfunded loan commitments, ending balance | $ | 19,640 | $ | 13,104 | $ | 12,170 | $ | 11,974 | $ | 12,800 | ||||||||||||
| Total ending balance | $ | 589,011 | $ | 314,291 | $ | 327,092 | $ | 319,919 | $ | 341,151 |
(1)Represents the establishment of the initial reserve for PCD loans and leases net of $48 million in charge-offs recognized upon completion of the merger in accordance with GAAP.
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 certificates of deposit and brokered time deposits. Adjusted net income (loss) available to common shareholders, adjusted diluted earnings per share (EPS), adjusted ROATCE, and adjusted ROAA are calculated by excluding after tax non-operational items including merger-related expenses and the initial non-PCD provision related to the merger. 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) | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | |||||
| Efficiency ratio: | ||||||||||
| Non-interest expense | $ | 359,785 | $ | 189,853 | $ | 180,237 | $ | 187,028 | $ | 187,982 |
| Less: Foreclosed property activity | (75) | (347) | (142) | (137) | 91 | |||||
| Intangible assets amortization | 6,387 | 1,118 | 1,124 | 1,132 | 1,139 | |||||
| Operating lease depreciation | 1,632 | — | — | — | — | |||||
| Strategic initiatives | (4,140) | 600 | (4,011) | 1,138 | 9,441 | |||||
| Merger related | 108,495 | 10,560 | 9,847 | 17,047 | — | |||||
| Debt prepayment costs | — | 2,526 | — | — | — | |||||
| Non-interest expense | $ | 247,486 | $ | 175,396 | $ | 173,419 | $ | 167,848 | $ | 177,311 |
| Net interest income | $ | 394,248 | $ | 226,782 | $ | 229,691 | $ | 220,852 | $ | 223,764 |
| Add: Tax-equivalent adjustment | 8,158 | 2,397 | 2,434 | 2,487 | 2,495 | |||||
| Non-interest income | 104,035 | 90,138 | 83,775 | 72,702 | 76,757 | |||||
| Other | 3,082 | 431 | 327 | 309 | 277 | |||||
| Less: Operating lease depreciation | 1,632 | — | — | — | — | |||||
| Income | $ | 507,891 | $ | 319,748 | $ | 316,227 | $ | 296,350 | $ | 303,293 |
| Efficiency ratio | 48.73% | 54.85% | 54.84% | 56.64% | 58.46% | |||||
| Return on average tangible common shareholders' equity: | ||||||||||
| Net (loss) income | $ | (16,747) | $ | 111,038 | $ | 95,713 | $ | 94,035 | $ | 108,078 |
| Less: Preferred stock dividends | 3,431 | 1,969 | 1,968 | 1,969 | 1,969 | |||||
| Add: Intangible assets amortization, tax-effected | 5,046 | 883 | 888 | 894 | 900 | |||||
| (Loss) income adjusted for preferred stock dividends and intangible assets amortization | $ | (15,132) | $ | 109,952 | $ | 94,633 | $ | 92,960 | $ | 107,009 |
| (Loss) income adjusted for preferred stock dividends and intangible assets amortization, annualized basis | $ | (60,528) | $ | 439,808 | $ | 378,532 | $ | 371,840 | $ | 428,036 |
| Average shareholders' equity | $ | 6,691,490 | $ | 3,411,911 | $ | 3,375,401 | $ | 3,311,406 | $ | 3,254,203 |
| Less: Average preferred stock | 236,121 | 145,037 | 145,037 | 145,037 | 145,037 | |||||
| Average goodwill and other intangible assets | 2,007,266 | 556,784 | 557,902 | 559,032 | 560,173 | |||||
| Average tangible common shareholders' equity | $ | 4,448,103 | $ | 2,710,090 | $ | 2,672,462 | $ | 2,607,337 | $ | 2,548,993 |
| Return on average tangible common shareholders' equity | (1.36)% | 16.23% | 14.16% | 14.26% | 16.79% |
WEBSTER FINANCIAL CORPORATION
Reconciliations to GAAP Financial Measures (continued)
| At or for the Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands, except per share data) | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | |||||
| Tangible equity: | ||||||||||
| Shareholders' equity | $ | 8,177,135 | $ | 3,438,325 | $ | 3,386,189 | $ | 3,329,705 | $ | 3,272,928 |
| Less: Goodwill and other intangible assets | 2,738,353 | 556,242 | 557,360 | 558,485 | 559,617 | |||||
| Tangible shareholders' equity | $ | 5,438,782 | $ | 2,882,083 | $ | 2,828,829 | $ | 2,771,220 | $ | 2,713,311 |
| Total assets | $ | 65,131,484 | $ | 34,915,599 | $ | 35,374,258 | $ | 33,753,752 | $ | 33,259,037 |
| Less: Goodwill and other intangible assets | 2,738,353 | 556,242 | 557,360 | 558,485 | 559,617 | |||||
| Tangible assets | $ | 62,393,131 | $ | 34,359,357 | $ | 34,816,898 | $ | 33,195,267 | $ | 32,699,420 |
| Tangible equity | 8.72% | 8.39% | 8.12% | 8.35% | 8.30% | |||||
| Tangible common equity: | ||||||||||
| Tangible shareholders' equity | $ | 5,438,782 | $ | 2,882,083 | $ | 2,828,829 | $ | 2,771,220 | $ | 2,713,311 |
| Less: Preferred stock | 283,979 | 145,037 | 145,037 | 145,037 | 145,037 | |||||
| Tangible common shareholders' equity | $ | 5,154,803 | $ | 2,737,046 | $ | 2,683,792 | $ | 2,626,183 | $ | 2,568,274 |
| Tangible assets | $ | 62,393,131 | $ | 34,359,357 | $ | 34,816,898 | $ | 33,195,267 | $ | 32,699,420 |
| Tangible common equity | 8.26% | 7.97% | 7.71% | 7.91% | 7.85% | |||||
| Tangible book value per common share: | ||||||||||
| Tangible common shareholders' equity | $ | 5,154,803 | $ | 2,737,046 | $ | 2,683,792 | $ | 2,626,183 | $ | 2,568,274 |
| Common shares outstanding | 178,102 | 90,584 | 90,588 | 90,594 | 90,410 | |||||
| Tangible book value per common share | $ | 28.94 | $ | 30.22 | $ | 29.63 | $ | 28.99 | $ | 28.41 |
| Core deposits: | ||||||||||
| Total deposits | $ | 54,356,283 | $ | 29,847,029 | $ | 30,026,327 | $ | 28,846,966 | $ | 28,481,834 |
| Less: Certificates of deposit | 2,821,097 | 1,797,770 | 1,884,373 | 2,014,544 | 2,234,133 | |||||
| Core deposits | $ | 51,535,186 | $ | 28,049,259 | $ | 28,141,954 | $ | 26,832,422 | $ | 26,247,701 |
| Three months ended March 31, 2022 | ||||||||||
| --- | --- | --- | --- | |||||||
| Adjusted ROATCE: | ||||||||||
| Net (loss) income | $ | (16,747) | ||||||||
| Less: Preferred stock dividends | 3,431 | |||||||||
| Add: Intangible assets amortization, tax-effected | 5,046 | |||||||||
| Strategic initiatives, tax-effected | (3,017) | |||||||||
| Merger related, tax-effected | 79,698 | |||||||||
| Initial non-PCD provision, tax-effected | 127,585 | |||||||||
| Income adjusted for preferred stock dividends, intangible assets amortization, and other | $ | 189,134 | ||||||||
| Income adjusted for preferred stock dividends, intangible assets amortization, and other, annualized basis | $ | 756,536 | ||||||||
| Average shareholders' equity | $ | 6,691,490 | ||||||||
| Less: Average preferred stock | 236,121 | |||||||||
| Average goodwill and other intangible assets | 2,007,266 | |||||||||
| Average tangible common shareholders' equity | $ | 4,448,103 | ||||||||
| Adjusted return on average tangible common shareholders' equity | 17.01 | % | ||||||||
| Adjusted ROAA: | ||||||||||
| Net (loss) income | $ | (16,747) | ||||||||
| Add: Strategic initiatives, tax-effected | (3,017) | |||||||||
| Merger related, tax-effected | 79,698 | |||||||||
| Initial non-PCD provision, tax-effected | 127,585 | |||||||||
| Income adjusted for strategic initiatives, merger related, and initial non-PCD provision | $ | 187,519 | ||||||||
| Income adjusted for strategic initiatives, merger related, and initial non-PCD provision, annualized basis | $ | 750,076 | ||||||||
| Average assets | $ | 54,808,577 | ||||||||
| Adjusted return on average assets | 1.37 | % | ||||||||
| (In millions, except per share data) | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | ||||
| GAAP to adjusted reconciliation: | ||||||||||
| Three months ended March 31, 2022 | ||||||||||
| Pre-Tax Income (Loss) | Net Income (Loss) Available to Common Shareholders | Diluted EPS | ||||||||
| Reported (GAAP) | $ | (50.3) | $ | (20.2) | $ | (0.14) | ||||
| Strategic initiatives | (4.1) | (3.0) | (0.02) | |||||||
| Merger related expenses | 108.5 | 79.7 | 0.54 | |||||||
| Non-PCD provision | 175.1 | 127.6 | 0.86 | |||||||
| Adjusted (non-GAAP) | $ | 229.2 | $ | 184.1 | $ | 1.24 |
20