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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 23, 2020

 _________________________ 

WEBSTER FINANCIAL CORPORATION

 

(Exact name of registrant as specified in its charter)

Delaware

001-31486

06-1187536

(State or other jurisdiction of incorporation)

(Commission File Number)

(IRS Employer 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			WBS-F			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. ☐

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Item 2.02			Results of Operations and Financial Condition

On January 23, 2020, Webster Financial Corporation (the Company) issued a press release describing its results of operations for the fiscal quarter ending December 31, 2019. 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 23, 2020, the Company will hold a conference call to discuss its financial results for the quarter ended December 31, 2019, 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 Webster’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 Number						Description
99.1						Press release dated January 23, 2020
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).

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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 23, 2020

/s/ Albert J. Wang

Albert J. Wang

Senior Vice President and Chief Accounting Officer

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EXHIBIT INDEX

Exhibit Number						Description
99.1						Press release dated January 23, 2020
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).

Exhibit 99.1

Media Contact

Investor Contact

Alice Ferreira, 203-578-2610

Terry Mangan, 203-578-2318

[email protected]

[email protected]

WEBSTER REPORTS

FOURTH QUARTER 2019 EARNINGS OF $0.96 PER DILUTED SHARE

WATERBURY, Conn., January 23, 2020 - 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 $88.1 million, or $0.96 per diluted share, for the quarter ended December 31, 2019, compared to $96.7 million, or $1.05 per diluted share, for the quarter ended December 31, 2018. Earnings per diluted share would have been $1.01 for the quarter ended December 31, 2018, adjusting for $4.6 million related to a one-time gain on the sale of six banking centers.

For the full year 2019, earnings applicable to common shareholders was $373.0 million, or $4.06 per diluted share, compared to $351.7 million, or $3.81 per diluted share, for the full year 2018.

“Webster’s fourth quarter results demonstrate our ongoing commitment to strong execution on our strategic priorities. Commercial loan growth exceeded 10 percent for the second year in a row and total footings at HSA Bank increased 18 percent from a year ago, while credit metrics remained strong,” said John R. Ciulla, president and chief executive officer. “We’ve now achieved our tenth consecutive year of annual earnings per share growth, which puts us in select company in the banking industry.”

Highlights for the fourth quarter of 2019:

•Revenue of $302.2 million.

•Loan growth of $1.6 billion, or 8.5 percent from a year ago, led by commercial real estate and residential mortgage loans, which increased 16.9 percent.

•Deposit growth of $1.5 billion, or 6.7 percent from a year ago, with growth of $676 million, or 11.8 percent, in HSA deposits.

•Net interest margin of 3.27 percent.

•Efficiency ratio (non-GAAP) of 58.5 percent.

•Annualized return on average common shareholders’ equity of 11.60 percent, exceeding our cost of capital.

•Annualized return on average tangible common shareholders’ equity (non-GAAP) of 14.34 percent.

“Our performance in 2019 represents our third consecutive year of positive operating leverage,” said Glenn MacInnes, executive vice president and chief financial officer. “Tangible book value now exceeds $2.5 billion and increased 15 percent from a year ago.”

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Line of Business performance compared to the fourth quarter of 2018

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, 2019, Commercial Banking had $11.5 billion in loans and leases and $4.4 billion in deposit balances.

Commercial Banking Operating Results:

															Percent
			Three months ended December 31,																		Favorable/
(In thousands)						2019			2018						(Unfavorable)
Net interest income						$93,347			$92,156									1.3		%
Non-interest income						16,420			16,103									2.0
Operating revenue						109,767			108,259									1.4
Non-interest expense						45,505			45,324									(0.4)
Pre-tax, pre-provision net revenue						$64,262			$62,935									2.1
															Percent
						At December 31,												Increase/
(In millions)						2019			2018						(Decrease)
Loans and leases						$11,500			$10,438									10.2		%
Deposits						4,382			4,031									8.7

Pre-tax, pre-provision net revenue increased $1.3 million to $64.3 million in the quarter as compared to prior year. Net interest income increased $1.2 million to $93.3 million, primarily due to loan growth. Non-interest income increased $0.3 million to $16.4 million, primarily due to higher syndication fees in the quarter. Non-interest expense increased $0.2 million to $45.5 million, primarily due to investments in product enhancements and infrastructure.

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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, 2019, HSA Bank had $8.5 billion in total footings comprising $6.4 billion in deposit balances and $2.1 billion in assets under administration through linked investment accounts.

HSA Bank Operating Results:

															Percent
			Three months ended December 31,																		Favorable/
(In thousands)						2019			2018						(Unfavorable)
Net interest income						$40,666			$38,335									6.1		%
Non-interest income						22,959			21,613									6.2
Operating revenue						63,625			59,948									6.1
Non-interest expense						34,893			31,106									(12.2)
Pre-tax, net revenue						$28,732			$28,842									(0.4)
															Percent
						At December 31,												Increase/
(Dollars in millions)						2019			2018						(Decrease)
Number of accounts (thousands)						2,974			2,722									9.3		%
Deposits						$6,416			$5,741									11.8
Linked investment accounts *						2,071			1,460									41.8
Total footings						$8,487			$7,201									17.9
* Linked investment accounts are held off balance sheet

Pre-tax net revenue decreased $0.1 million to $28.7 million in the quarter as compared to prior year. Net interest income increased $2.3 million to $40.7 million, due to 12 percent growth in deposits and a decline in deposit spreads. Non-interest income increased $1.3 million to $23.0 million, primarily due to 9 percent growth in accounts over the past year. Non-interest expense increased $3.8 million to $34.9 million, primarily due to account growth and expanded distribution.

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Community Banking

Community Banking serves consumer and business banking customers primarily throughout southern New England and into Westchester County, New York. Community Banking is comprised of the Personal Banking and Business Banking operating segments, as well as a distribution network consisting of 157 banking centers and 309 ATMs, a customer care center, and a full range of web and mobile-based banking services. As of December 31, 2019, Community Banking had $8.5 billion in loans and $12.5 billion in deposit balances.

Community Banking Operating Results:

															Percent
			Three months ended December 31,																		Favorable/
(In thousands)						2019			2018						(Unfavorable)
Net interest income						$97,226			$102,087									(4.8)		%
Non-interest income *						28,098			31,248									(10.1)
Operating revenue						125,324			133,335									(6.0)
Non-interest expense						97,323			96,804									(0.5)
Pre-tax, pre-provision net revenue						$28,001			$36,531									(23.4)
															Percent
						At December 31,												Increase/
(In millions)						2019			2018						(Decrease)
Loans						$8,537			$8,028									6.3		%
Deposits						12,528			11,857									5.7

* Non-interest income for the three months ended December 31, 2018 includes a $4.6 million gain on sale of six banking centers.

Pre-tax, pre-provision net revenue decreased $8.5 million to $28.0 million in the quarter as compared to prior year. Net interest income decreased $4.9 million to $97.2 million, due to declining interest rates on loans coupled with a year-over-year increase in deposit costs; which was partially offset by balance growth in the loan and deposit portfolios. Non-interest income decreased $3.2 million due to a $4.6 million gain on sale of six banking centers recorded in the prior year. Partially offsetting the decrease were increases in income from mortgage banking activities, fees from loan interest rate hedging activities, loan-related fee income, and fees from investment services. Non-interest expense increased $0.5 million to $97.3 million driven by increased employee related expenses and continued investments in technology offset by lower marketing-related costs and occupancy expenses.

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Consolidated financial performance:

Quarterly net interest income compared to the fourth quarter of 2018:

•Net interest income was $231.3 million compared to $237.1 million.

•Net interest margin was 3.27 percent compared to 3.66 percent. The yield on interest-earning assets declined by 34 basis points, and the cost of interest-bearing liabilities increased by 5 basis points.

•Average interest-earning assets totaled $28.3 billion and grew by $2.6 billion, or 10.0 percent.

•Average loans totaled $19.8 billion and grew by $1.4 billion, or 7.5 percent.

•Average deposits totaled $23.4 billion and grew by $1.4 billion, or 6.5 percent.

Quarterly provision for loan losses:

•The provision for loan losses was $6.0 million, compared to $11.3 million in the prior quarter and $10.0 million a year ago.

•Net charge-offs were $6.1 million, compared to $13.8 million in the prior quarter and $9.5 million a year ago. The ratio of net charge-offs to average loans on an annualized basis was 0.12 percent, compared to 0.28 percent in the prior quarter and 0.21 percent a year ago.

•The allowance for loan losses represented 1.04 percent of total loans at December 31, 2019, compared to 1.07 percent at September 30, 2019 and 1.15 percent at December 31, 2018. The allowance for loan losses represented 139 percent of nonperforming loans at December 31, 2019 compared to 129 percent at September 30, 2019 and 137 percent at December 31, 2018.

Quarterly non-interest income compared to the fourth quarter of 2018:

•Total non-interest income was $70.9 million, compared to $73.2 million, a decrease of $2.2 million. This reflects a decrease of $5.2 million in other income primarily due to a $4.6 million gain a year ago related to the sale of six banking centers as well as lower client hedging income. There was offset from a $1.5 million increase in mortgage banking activities and $1.4 million in HSA fee income driven by interchange revenue and linked investment fees.

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Quarterly non-interest expense compared to the fourth quarter of 2018:

•Total non-interest expense was $179.7 million, compared to $174.8 million, an increase of $5.0 million. The increase reflects increases of $3.4 million in compensation and benefits due to annual merit increases and other benefits and $2.8 million in technology/equipment. Offsetting these increases was a decrease of $1.5 million in professional and outside services driven by lower consulting costs.

Quarterly income taxes compared to the fourth quarter of 2018:

•Income tax expense was $26.0 million compared to $26.7 million and the effective tax rate was 22.3 percent compared to 21.3 percent.

•The higher effective tax rate in the quarter includes a discrete tax expense associated with a state and local tax position contributing to a lower level of net discrete tax benefits recognized during the period compared to a year ago.

Investment securities:

•Total investment securities were $8.2 billion, compared to $8.2 billion at September 30, 2019 and $7.2 billion at December 31, 2018. The carrying value of the available-for-sale portfolio included $24.4 million of net unrealized gains, compared to $20.9 million at September 30, 2019 and $95.9 million of net unrealized losses at December 31, 2018. The carrying value of the held-to-maturity portfolio does not reflect $86.7 million of net unrealized gains, compared to $92.2 million at September 30, 2019 and $116.3 million of net unrealized losses at December 31, 2018.

Loans:

•Total loans were $20.0 billion, compared to $19.6 billion at September 30, 2019 and $18.5 billion at December 31, 2018. Compared to September 30, 2019, commercial real estate loans increased by $551.3 million and residential mortgages increased by $99.0 million while commercial loans decreased by $129.0 million and consumer loans decreased by $35.8 million.

•Compared to a year ago, commercial real estate loans increased by $1.022 billion, residential mortgages increased by $556.0 million, and commercial loans increased by $155.8 million, while consumer loans decreased by $162.6 million.

•Loan originations for portfolio were $1.919 billion, compared to $1.610 billion in the prior quarter and $1.611 billion a year ago. In addition, $94 million of residential loans were originated for sale in the quarter, compared to $73 million in the prior quarter and $30 million a year ago.

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Asset quality:

•Total nonperforming loans were $150.9 million, or 0.75 percent of total loans, compared to $162.7 million, or 0.83 percent of total loans, at September 30, 2019 and $154.8 million, or 0.84 percent of total loans, at December 31, 2018. Total paying nonperforming loans were $59.0 million, compared to $71.9 million at September 30, 2019 and $42.5 million at December 31, 2018.

•Past due loans were $42.6 million, compared to $35.6 million at September 30, 2019 and $34.3 million at December 31, 2018.

Deposits and borrowings:

•Total deposits were $23.3 billion, compared to $23.3 billion at September 30, 2019 and $21.9 billion at December 31, 2018. Core deposits to total deposits were 86.7 percent, compared to 86.0 percent at September 30, 2019 and 85.4 percent at December 31, 2018. The loan to deposit ratio was 85.9 percent, compared to 84.0 percent at September 30, 2019 and 84.5 percent at December 31, 2018.

•Total borrowings were $3.5 billion, compared to $3.2 billion at September 30, 2019 and $2.6 billion at December 31, 2018.

Capital:

•The return on average common shareholders’ equity and the return on average tangible common shareholders’ equity were 11.60 percent and 14.34 percent, respectively, compared to 14.31 percent and 18.22 percent, respectively, in the fourth quarter of 2018.

•The tangible equity and tangible common equity ratios were 8.88 percent and 8.39 percent, respectively, compared to 8.59 percent and 8.05 percent, respectively, at December 31, 2018. The common equity tier 1 risk-based capital ratio was 11.56 percent, compared to 11.44 percent at December 31, 2018.

•Book value and tangible book value per common share were $33.28 and $27.19, respectively, compared to $29.72 and $23.60, respectively, at December 31, 2018.

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***

Webster Financial Corporation is the holding company for Webster Bank, National Association and its HSA Bank division. With $30.4 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust, and investment services through 157 banking centers and 309 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 2019 earnings announcement will be held today, Thursday, January 23, 2020 at 9:00 a.m. (Eastern) and may be heard through Webster’s Investor Relations website at www.wbst.com, or in listen-only mode by calling 877-407-8289 or 201-689-8341 internationally. The call will be archived on the website and available for future retrieval.

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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) changes in the level of nonperforming assets and charge-offs; (5) changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (6) adverse conditions in the securities markets that lead to impairment in the value of our investment securities; (7) inflation, changes in interest rate, and monetary fluctuations; (8) the timely development and acceptance of new products and services and the perceived value of those products and services by customers; (9) changes in deposit flows, consumer spending, borrowings, and savings habits; (10) our ability to implement new technologies and maintain secure and reliable technology systems; (11) performance by our counterparties and vendors; (12) our ability to increase market share and control expenses; (13) changes in the competitive environment among banks, financial holding companies, and other financial services providers; (14) changes in laws and regulations (including those concerning taxes, banking, securities, insurance, and healthcare) with which we and our subsidiaries must comply; (15) 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 our adoption of new accounting guidance regarding the recognition of credit losses; (16) 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 (17) the other factors that are described in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q under the headings “Risk Factors” and “Management Discussion and Analysis of Financial Condition and Results of Operation.” Any forward-looking statement made by the Company in this release speaks only as of the date on which it is made. Factors or events that could cause the Company’s actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

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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.

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WEBSTER FINANCIAL CORPORATION Selected Financial Highlights (unaudited)
			At or for the Three Months Ended
(In thousands, except per share data)			December 31, 2019						September 30, 2019						June 30, 2019						March 31, 2019						December 31, 2018
Income and performance ratios:
Net income			$	90,473					$	93,865					$	98,649					$	99,736					$	98,838
Earnings applicable to common shareholders			88,066						91,442						96,193						97,549						96,666
Earnings per diluted common share			0.96						1.00						1.05						1.06						1.05
Return on average assets			1.19		%				1.27		%				1.38		%				1.44		%				1.44		%
Return on average tangible common shareholders' equity (non-GAAP)			14.34						15.37						16.88						17.70						18.22
Return on average common shareholders’ equity			11.60						12.36						13.47						14.01						14.31
Non-interest income as a percentage of total revenue			23.47						22.52						23.88						22.12						23.58
Asset quality:
Allowance for loan and lease losses			$	209,096					$	209,152					$	211,671					$	211,389					$	212,353
Nonperforming assets			157,380						166,716						153,247						164,431						161,617
Allowance for loan and lease losses / total loans and leases			1.04		%				1.07		%				1.10		%				1.12		%				1.15		%
Net charge-offs / average loans and leases (annualized)			0.12						0.28						0.24						0.21						0.21
Nonperforming loans and leases / total loans and leases			0.75						0.83						0.77						0.84						0.84
Nonperforming assets / total loans and leases plus OREO			0.79						0.85						0.80						0.87						0.87
Allowance for loan and lease losses / nonperforming loans and leases			138.56						128.55						142.97						133.01						137.22
Other ratios:
Tangible equity (non-GAAP)			8.88		%				8.83		%				8.82		%				8.68		%				8.59		%
Tangible common equity (non-GAAP)			8.39						8.34						8.31						8.16						8.05
Tier 1 risk-based capital (a)			12.23						12.32						12.09						12.17						12.16
Total risk-based capital (a)			13.55						13.68						13.48						13.60						13.63
Common equity tier 1 risk-based capital (a)			11.56						11.63						11.41						11.46						11.44
Shareholders’ equity / total assets			10.56						10.54						10.59						10.50						10.45
Net interest margin			3.27						3.49						3.63						3.74						3.66
Efficiency ratio (non-GAAP)			58.52						56.60						56.09						55.93						56.19
Equity and share related:
Common equity			$	3,062,733					$	3,007,357					$	2,920,180					$	2,821,218					$	2,741,478
Book value per common share			33.28						32.68						31.74						30.62						29.72
Tangible book value per common share (non-GAAP)			27.19						26.58						25.63						24.51						23.60
Common stock closing price			53.36						46.87						47.77						50.67						49.29
Dividends declared per common share			0.40						0.40						0.40						0.33						0.33
Common shares issued and outstanding			92,027						92,034						92,007						92,125						92,247
Weighted-average common shares outstanding - Basic			91,574						91,559						91,534						91,962						91,971
Weighted-average common shares outstanding - Diluted			91,916						91,874						91,855						92,225						92,202
(a) Presented as projected for December 31, 2019 and actual for the remaining periods.

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WEBSTER FINANCIAL CORPORATION Consolidated Balance Sheets (unaudited)
(In thousands)			December 31, 2019						September 30, 2019						December 31, 2018
Assets:
Cash and due from banks			$	185,341					$	227,966					$	260,422
Interest-bearing deposits			72,554						74,865						69,077
Securities:
Available for sale			2,925,833						2,960,103						2,898,730
Held to maturity			5,293,918						5,193,521						4,325,420
Total securities			8,219,751						8,153,624						7,224,150
Loans held for sale			36,053						27,061						11,869
Loans and Leases:
Commercial			6,880,838						7,009,884						6,725,003
Commercial real estate			5,949,339						5,398,084						4,927,145
Residential mortgages			4,972,685						4,873,726						4,416,637
Consumer			2,234,124						2,269,952						2,396,704
Total loans and leases			20,036,986						19,551,646						18,465,489
Allowance for loan and lease losses			(209,096)						(209,152)						(212,353)
Loans and leases, net			19,827,890						19,342,494						18,253,136
Federal Home Loan Bank and Federal Reserve Bank stock			149,046						116,984						149,286
Premises and equipment, net			270,413						278,642						124,850
Goodwill and other intangible assets, net			560,290						561,252						564,137
Cash surrender value of life insurance policies			550,651						549,335						543,616
Deferred tax asset, net			61,975						59,956						96,516
Accrued interest receivable and other assets			455,380						502,921						313,256
Total Assets			$	30,389,344					$	29,895,100					$	27,610,315
Liabilities and Shareholders' Equity:
Deposits:
Demand			$	4,446,463					$	4,291,659					$	4,162,446
Health savings accounts			6,416,135						6,288,218						5,740,601
Interest-bearing checking			2,689,734						2,619,452						2,518,472
Money market			2,312,840						2,560,918						2,100,084
Savings			4,354,809						4,264,853						4,140,696
Certificates of deposit			3,104,765						3,249,860						2,961,564
Brokered certificates of deposit			—						5,705						234,982
Total deposits			23,324,746						23,280,665						21,858,845
Securities sold under agreements to repurchase and other borrowings			1,040,431						1,210,692						581,874
Federal Home Loan Bank advances			1,948,476						1,392,849						1,826,808
Long-term debt			540,364						549,158						226,021
Accrued expenses and other liabilities			327,557						309,342						230,252
Total liabilities			27,181,574						26,742,706						24,723,800
Preferred stock			145,037						145,037						145,037
Common shareholders' equity			3,062,733						3,007,357						2,741,478
Total shareholders’ equity			3,207,770						3,152,394						2,886,515
Total Liabilities and Shareholders' Equity			$	30,389,344					$	29,895,100					$	27,610,315

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WEBSTER FINANCIAL CORPORATION Consolidated Statements of Income (unaudited)
						Three Months Ended December 31,																		Twelve Months Ended December 31,
(In thousands, except per share data)						2019						2018						2019						2018
Interest income:
Interest and fees on loans and leases						$	223,527					$	225,961					$	924,693					$	842,449
Interest and dividends on securities						58,205						54,301						229,163						212,090
Loans held for sale						268						130						727						628
Total interest income						282,000						280,392						1,154,583						1,055,167
Interest expense:
Deposits						31,586						27,629						129,577						90,407
Borrowings						19,164						15,632						69,879						58,079
Total interest expense						50,750						43,261						199,456						148,486
Net interest income						231,250						237,131						955,127						906,681
Provision for loan and lease losses						6,000						10,000						37,800						42,000
Net interest income after provision for loan and lease losses						225,250						227,131						917,327						864,681
Non-interest income:
Deposit service fees						40,470						40,272						168,022						162,183
Loan and lease related fees						8,704						7,914						31,327						32,025
Wealth and investment services						8,476						8,105						32,932						32,843
Mortgage banking activities						2,286						740						6,115						4,424
Increase in cash surrender value of life insurance policies						3,670						3,693						14,612						14,614
Gain on investment securities, net						29						—						29						—
Other income						7,284						12,439						32,278						36,479
Total non-interest income						70,919						73,163						285,315						282,568
Non-interest expense:
Compensation and benefits						100,467						97,039						395,402						381,496
Occupancy						14,379						13,974						57,181						59,463
Technology and equipment						27,639						24,858						105,283						97,877
Marketing						3,957						4,345						16,286						16,838
Professional and outside services						4,674						6,201						21,380						20,300
Intangible assets amortization						962						962						3,847						3,847
Loan workout expenses						474						1,150						2,952						3,251
Deposit insurance						4,662						4,651						17,954						34,749
Other expenses						22,516						21,579						95,665						87,795
Total non-interest expense						179,730						174,759						715,950						705,616
Income before income taxes						116,439						125,535						486,692						441,633
Income tax expense						25,966						26,697						103,969						81,215
Net income						90,473						98,838						382,723						360,418
Preferred stock dividends and other						(2,407)						(2,172)						(9,738)						(8,715)
Earnings applicable to common shareholders						$	88,066					$	96,666					$	372,985					$	351,703
Weighted-average common shares outstanding - Diluted						91,916						92,202						91,882						92,227
Earnings per common share:
Basic						$	0.96					$	1.05					$	4.07					$	3.83
Diluted						0.96						1.05						4.06						3.81

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WEBSTER FINANCIAL CORPORATION Five Quarter Consolidated Statements of Income (unaudited)
			Three Months Ended
(In thousands, except per share data)			December 31, 2019						September 30, 2019						June 30, 2019						March 31, 2019						December 31, 2018
Interest income:
Interest and fees on loans and leases			$	223,527					$	236,453					$	235,949					$	228,764					$	225,961
Interest and dividends on securities			58,205						57,517						56,163						57,278						54,301
Loans held for sale			268						166						145						148						130
Total interest income			282,000						294,136						292,257						286,190						280,392
Interest expense:
Deposits			31,586						34,214						32,757						31,020						27,629
Borrowings			19,164						19,383						17,713						13,619						15,632
Total interest expense			50,750						53,597						50,470						44,639						43,261
Net interest income			231,250						240,539						241,787						241,551						237,131
Provision for loan and lease losses			6,000						11,300						11,900						8,600						10,000
Net interest income after provision for loan and lease losses			225,250						229,239						229,887						232,951						227,131
Non-interest income:
Deposit service fees			40,470						41,410						43,118						43,024						40,272
Loan and lease related fees			8,704						8,246						6,558						7,819						7,914
Wealth and investment services			8,476						8,496						8,309						7,651						8,105
Mortgage banking activities			2,286						2,133						932						764						740
Increase in cash surrender value of life insurance policies			3,670						3,708						3,650						3,584						3,693
Gain on investment securities, net			29						—						—						—						—
Other income			7,284						5,938						13,286						5,770						12,439
Total non-interest income			70,919						69,931						75,853						68,612						73,163
Non-interest expense:
Compensation and benefits			100,467						98,623						98,527						97,785						97,039
Occupancy			14,379						14,087						14,019						14,696						13,974
Technology and equipment			27,639						26,180						25,767						25,697						24,858
Marketing			3,957						4,758						4,243						3,328						4,345
Professional and outside services			4,674						5,024						5,634						6,048						6,201
Intangible assets amortization			962						961						962						962						962
Loan workout expenses			474						986						832						660						1,150
Deposit insurance			4,662						4,409						4,453						4,430						4,651
Other expenses			22,516						24,866						26,203						22,080						21,579
Total non-interest expense			179,730						179,894						180,640						175,686						174,759
Income before income taxes			116,439						119,276						125,100						125,877						125,535
Income tax expense			25,966						25,411						26,451						26,141						26,697
Net income			90,473						93,865						98,649						99,736						98,838
Preferred stock dividends and other			(2,407)						(2,423)						(2,456)						(2,187)						(2,172)
Earnings applicable to common shareholders			$	88,066					$	91,442					$	96,193					$	97,549					$	96,666
Weighted-average common shares outstanding - Diluted			91,916						91,874						91,855						92,225						92,202
Earnings per common share:
Basic			$	0.96					$	1.00					$	1.05					$	1.06					$	1.05
Diluted			0.96						1.00						1.05						1.06						1.05

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WEBSTER FINANCIAL CORPORATION Consolidated Average Balances, Interest, Yields and Rates, and Net Interest Margin on a Fully Tax-equivalent Basis (unaudited)
			Three Months Ended December 31,
									2019																		2018
(Dollars in thousands)			Average balance						Interest						Yield/rate						Average balance						Interest						Yield/rate
Assets:
Interest-earning assets:
Loans and leases			$	19,808,521					$	224,259					4.46		%				$	18,424,387					$	226,727					4.85		%
Investment securities (a)			8,323,512						58,724						2.86						7,144,118						54,119						2.99
Federal Home Loan and Federal Reserve Bank stock			127,770						1,007						3.13						137,535						1,480						4.27
Interest-bearing deposits			56,484						228						1.58						61,313						343						2.19
Loans held for sale			32,599						268						3.28						10,258						130						5.04
Total interest-earning assets			28,348,886						$	284,486					3.98		%				25,777,611						$	282,799					4.32		%
Non-interest-earning assets			1,969,620																		1,625,706
Total Assets			$	30,318,506																	$	27,403,317
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Demand deposits			$	4,417,167					$	—					—		%				$	4,209,456					$	—					—		%
Health savings accounts			6,320,475						3,166						0.20						5,633,993						2,828						0.20
Interest-bearing checking, money market and savings			9,420,738						13,944						0.59						8,945,051						11,160						0.49
Certificates of deposit			3,202,242						14,476						1.79						3,136,831						13,641						1.72
Total deposits			23,360,622						31,586						0.54						21,925,331						27,629						0.50
Securities sold under agreements to repurchase and other borrowings			1,275,293						4,726						1.45						668,660						2,769						1.62
Federal Home Loan Bank advances			1,550,528						8,932						2.25						1,491,071						10,024						2.63
Long-term debt (a)			547,584						5,506						4.21						225,990						2,839						5.03
Total borrowings			3,373,405						19,164						2.25						2,385,721						15,632						2.57
Total interest-bearing liabilities			26,734,027						$	50,750					0.75		%				24,311,052						$	43,261					0.70		%
Non-interest-bearing liabilities			387,916																		239,089
Total liabilities			27,121,943																		24,550,141
Preferred stock			145,037																		145,037
Common shareholders' equity			3,051,526																		2,708,139
Total shareholders' equity			3,196,563																		2,853,176
Total Liabilities and Shareholders' Equity			$	30,318,506																	$	27,403,317
Tax-equivalent net interest income									233,736																		239,538
Less: tax-equivalent adjustments									(2,486)																		(2,407)
Net interest income									$	231,250																	$	237,131
Net interest margin															3.27		%																3.66		%
(a) For purposes of yield/rate computation, unrealized gain (loss) balances on securities available for sale and senior fixed-rate notes hedges are excluded.

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WEBSTER FINANCIAL CORPORATION Consolidated Average Balances, Interest, Yields and Rates, and Net Interest Margin on a Fully Tax-equivalent Basis (unaudited)
			Twelve Months Ended December 31,
									2019																		2018
(Dollars in thousands)			Average balance						Interest						Yield/rate						Average balance						Interest						Yield/rate
Assets:
Interest-earning assets:
Loans and leases			$	19,209,611					$	927,395					4.83		%				$	18,033,587					$	845,146					4.69		%
Investment securities (a)			7,761,937						229,989						2.97						7,137,326						211,227						2.93
Federal Home Loan and Federal Reserve Bank stock			113,518						4,956						4.37						132,607						6,067						4.58
Interest-bearing deposits			56,458						1,211						2.14						63,178						1,125						1.78
Loans held for sale			22,437						727						3.24						15,519						628						4.04
Total interest-earning assets			27,163,961						$	1,164,278					4.29		%				25,382,217						$	1,064,193					4.18		%
Non-interest-earning assets			1,897,078																		1,640,385
Total Assets			$	29,061,039																	$	27,022,602
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Demand deposits			$	4,300,407					$	—					—		%				$	4,185,183					$	—					—		%
Health savings accounts			6,240,201						12,316						0.20						5,540,000						10,980						0.20
Interest-bearing checking, money market and savings			9,144,086						54,566						0.60						9,115,168						36,559						0.40
Certificates of deposit			3,267,913						62,695						1.92						2,818,271						42,868						1.52
Total deposits			22,952,607						129,577						0.56						21,658,622						90,407						0.42
Securities sold under agreements to repurchase and other borrowings			1,008,704						17,953						1.78						784,998						13,491						1.72
Federal Home Loan Bank advances			1,201,839						31,399						2.61						1,339,492						33,461						2.50
Long-term debt (a)			468,111						20,527						4.51						225,895						11,127						4.93
Total borrowings			2,678,654						69,879						2.62						2,350,385						58,079						2.47
Total interest-bearing liabilities			25,631,261						$	199,456					0.78		%				24,009,007						$	148,486					0.62		%
Non-interest-bearing liabilities			362,059																		231,463
Total liabilities			25,993,320																		24,240,470
Preferred stock			145,037																		145,068
Common shareholders' equity			2,922,682																		2,637,064
Total shareholders' equity			3,067,719																		2,782,132
Total Liabilities and Shareholders' Equity			$	29,061,039																	$	27,022,602
Tax-equivalent net interest income									964,822																		915,707
Less: tax-equivalent adjustments									(9,695)																		(9,026)
Net interest income									$	955,127																	$	906,681
Net interest margin															3.55		%																3.60		%
(a) For purposes of yield/rate computation, unrealized gain (loss) balances on securities available for sale and senior fixed-rate notes hedges are excluded.

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WEBSTER FINANCIAL CORPORATION Five Quarter Loan and Lease Balances (unaudited)
(Dollars in thousands)			December 31, 2019						September 30, 2019						June 30, 2019						March 31, 2019						December 31, 2018
Loan and Lease Balances (actual):
Commercial non-mortgage			$	5,833,952					$	5,887,119					$	5,948,388					$	5,811,309					$	5,755,832
Asset-based lending			1,046,886						1,122,765						1,077,118						1,039,633						969,171
Commercial real estate			5,949,339						5,398,084						5,224,382						4,991,825						4,927,145
Residential mortgages			4,972,685						4,873,726						4,718,704						4,631,787						4,416,637
Consumer			2,234,124						2,269,952						2,301,291						2,339,736						2,396,704
Total Loan and Lease Balances			20,036,986						19,551,646						19,269,883						18,814,290						18,465,489
Allowance for loan and lease losses			(209,096)						(209,152)						(211,671)						(211,389)						(212,353)
Loans and Leases, net			$	19,827,890					$	19,342,494					$	19,058,212					$	18,602,901					$	18,253,136
Loan and Lease Balances (average):
Commercial non-mortgage			$	5,879,600					$	5,933,221					$	5,914,710					$	5,776,334					$	5,754,153
Asset-based lending			1,087,537						1,138,189						1,049,403						1,016,069						964,575
Commercial real estate			5,667,764						5,312,403						5,079,415						4,930,035						4,862,419
Residential mortgages			4,917,365						4,802,497						4,662,033						4,415,434						4,419,826
Consumer			2,256,255						2,286,983						2,324,717						2,371,302						2,423,414
Total Loan and Lease Balances			19,808,521						19,473,293						19,030,278						18,509,174						18,424,387
Allowance for loan and lease losses			(211,460)						(213,130)						(210,719)						(214,966)						(214,453)
Loans and Leases, net			$	19,597,061					$	19,260,163					$	18,819,559					$	18,294,208					$	18,209,934

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WEBSTER FINANCIAL CORPORATION Five Quarter Nonperforming Assets and Past Due Loans and Leases (unaudited)
(Dollars in thousands)			December 31, 2019						September 30, 2019						June 30, 2019						March 31, 2019						December 31, 2018
Nonperforming loans and leases:
Commercial non-mortgage			$	64,793					$	64,197					$	56,340					$	66,754					$	62,265
Asset-based lending			139						9,165						184						218						224
Commercial real estate			11,554						12,810						10,413						7,449						8,243
Residential mortgages			43,100						43,733						48,104						49,267						49,069
Consumer			31,320						32,794						33,015						35,245						34,949
Total nonperforming loans and leases			$	150,906					$	162,699					$	148,056					$	158,933					$	154,750
Other real estate owned and repossessed assets:
Commercial non-mortgage			$	271					$	544					$	1,307					$	861					$	407
Residential mortgages			4,247						1,912						2,012						2,769						4,679
Consumer			1,956						1,561						1,872						1,868						1,781
Total other real estate owned and repossessed assets			$	6,474					$	4,017					$	5,191					$	5,498					$	6,867
Total nonperforming assets			$	157,380					$	166,716					$	153,247					$	164,431					$	161,617

Past due 30-89 days:
Commercial non-mortgage			$	8,482					$	5,384					$	4,438					$	19,152					$	2,615
Asset-based lending			—						—						—						—						—
Commercial real estate			1,700						1,433						2,665						2,283						1,514
Residential mortgages			13,598						13,445						10,844						12,865						12,789
Consumer			18,835						15,217						13,949						16,174						17,324
Total past due 30-89 days			42,615						35,479						31,896						50,474						34,242
Past due 90 days or more and accruing			—						92						410						—						104
Total past due loans and leases			$	42,615					$	35,571					$	32,306					$	50,474					$	34,346

Five Quarter Changes in the Allowance for Loan and Lease Losses (unaudited)
			For the Three Months Ended
(Dollars in thousands)			December 31, 2019						September 30, 2019						June 30, 2019						March 31, 2019						December 31, 2018
Beginning balance			$	209,152					$	211,671					$	211,389					$	212,353					$	211,832
Provision			6,000						11,300						11,900						8,600						10,000
Charge-offs:
Commercial non-mortgage			5,041						11,291						5,657						7,837						10,239
Asset-based lending			—						—						—						—						289
Commercial real estate			23						32						2,473						973						22
Residential mortgages			876						872						2,154						251						910
Consumer			3,165						3,765						4,098						3,972						4,384
Total charge-offs			9,105						15,960						14,382						13,033						15,844
Recoveries:
Commercial non-mortgage			236						173						464						569						2,993
Asset-based lending			33						—						—						229						21
Commercial real estate			3						3						33						6						7
Residential mortgages			534						356						295						178						1,137
Consumer			2,243						1,609						1,972						2,487						2,207
Total recoveries			3,049						2,141						2,764						3,469						6,365
Total net charge-offs			6,056						13,819						11,618						9,564						9,479
Ending balance			$	209,096					$	209,152					$	211,671					$	211,389					$	212,353

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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. 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, 2019						September 30, 2019						June 30, 2019						March 31, 2019						December 31, 2018
Efficiency ratio:
Non-interest expense (GAAP)			$	179,730					$	179,894					$	180,640					$	175,686					$	174,759
Less: Foreclosed property activity (GAAP)			263						(128)						(55)						(253)						191
Intangible assets amortization (GAAP)			962						961						962						962						962
Other expenses (non-GAAP)			—						1,750						—						7						320
Non-interest expense (non-GAAP)			$	178,505					$	177,311					$	179,733					$	174,970					$	173,286
Net interest income (GAAP)			$	231,250					$	240,539					$	241,787					$	241,551					$	237,131
Add: Tax-equivalent adjustment (non-GAAP)			2,486						2,436						2,435						2,338						2,407
Non-interest income (GAAP)			70,919						69,931						75,853						68,612						73,163
Other (non-GAAP)			402						350						354						342						282
Less: Gain on investment securities, net (GAAP)			29						—						—						—						—
Less: Gain on the sale of banking centers (GAAP)			—						—						—						—						4,596
Income (non-GAAP)			$	305,028					$	313,256					$	320,429					$	312,843					$	308,387
Efficiency ratio (non-GAAP)			58.52		%				56.60		%				56.09		%				55.93		%				56.19		%
Return on average tangible common shareholders' equity:
Net income (GAAP)			$	90,473					$	93,865					$	98,649					$	99,736					$	98,838
Less: Preferred stock dividends (GAAP)			1,969						1,968						1,969						1,969						1,969
Add: Intangible assets amortization, tax-effected (GAAP)			760						759						760						760						760
Income adjusted for preferred stock dividends and intangible assets amortization (non-GAAP)			$	89,264					$	92,656					$	97,440					$	98,527					$	97,629
Income adjusted for preferred stock dividends and intangible assets amortization, annualized basis (non-GAAP)			$	357,056					$	370,624					$	389,760					$	394,108					$	390,516
Average shareholders' equity (non-GAAP)			$	3,196,563					$	3,118,691					$	3,016,541					$	2,935,653					$	2,853,176
Less: Average preferred stock (non-GAAP)			145,037						145,037						145,037						145,037						145,037
Average goodwill and other intangible assets (non-GAAP)			560,750						561,715						562,679						563,646						564,601
Average tangible common shareholders' equity (non-GAAP)			$	2,490,776					$	2,411,939					$	2,308,825					$	2,226,970					$	2,143,538
Return on average tangible common shareholders' equity (non-GAAP)			14.34		%				15.37		%				16.88		%				17.70		%				18.22		%

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WEBSTER FINANCIAL CORPORATION

Reconciliations to GAAP Financial Measures (continued) ___ ___

			At or for the Three Months Ended
(In thousands, except per share data)			December 31, 2019						September 30, 2019						June 30, 2019						March 31, 2019						December 31, 2018
Tangible equity:
Shareholders' equity (GAAP)			$	3,207,770					$	3,152,394					$	3,065,217					$	2,966,255					$	2,886,515
Less: Goodwill and other intangible assets (GAAP)			560,290						561,252						562,214						563,176						564,137
Tangible shareholders' equity (non-GAAP)			$	2,647,480					$	2,591,142					$	2,503,003					$	2,403,079					$	2,322,378
Total assets (GAAP)			$	30,389,344					$	29,895,100					$	28,942,043					$	28,238,129					$	27,610,315
Less: Goodwill and other intangible assets (GAAP)			560,290						561,252						562,214						563,176						564,137
Tangible assets (non-GAAP)			$	29,829,054					$	29,333,848					$	28,379,829					$	27,674,953					$	27,046,178
Tangible equity (non-GAAP)			8.88		%				8.83		%				8.82		%				8.68		%				8.59		%
Tangible common equity:
Tangible shareholders' equity (non-GAAP)			$	2,647,480					$	2,591,142					$	2,503,003					$	2,403,079					$	2,322,378
Less: Preferred stock (GAAP)			145,037						145,037						145,037						145,037						145,037
Tangible common shareholders' equity (non-GAAP)			$	2,502,443					$	2,446,105					$	2,357,966					$	2,258,042					$	2,177,341
Tangible assets (non-GAAP)			$	29,829,054					$	29,333,848					$	28,379,829					$	27,674,953					$	27,046,178
Tangible common equity (non-GAAP)			8.39		%				8.34		%				8.31		%				8.16		%				8.05		%
Tangible book value per common share:
Tangible common shareholders' equity (non-GAAP)			$	2,502,443					$	2,446,105					$	2,357,966					$	2,258,042					$	2,177,341
Common shares outstanding			92,027						92,034						92,007						92,125						92,247
Tangible book value per common share (non-GAAP)			$	27.19					$	26.58					$	25.63					$	24.51					$	23.60
Core deposits:
Total deposits			$	23,324,746					$	23,280,665					$	22,598,778					$	22,750,928					$	21,858,845
Less: Certificates of deposit			3,104,765						3,249,860						3,291,617						3,273,120						2,961,564
Brokered certificates of deposit			—						5,705						41,376						81,507						234,982
Core deposits (non-GAAP)			$	20,219,981					$	20,025,100					$	19,265,785					$	19,396,301					$	18,662,299