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Webster Reports Increased 2012 Fourth Quarter Earnings
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Net Income Grows by 8 Percent over Third Quarter and 21 Percent over Prior Year

WATERBURY, Conn., Jan. 18, 2013 /PRNewswire/ -- Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today announced net income available to common shareholders of $47.9 million, or $0.52 per diluted share, for the quarter ended December 31, 2012 compared to $44.4 million, or $0.48 per diluted share, for the quarter ended September 30, 2012 and $39.6 million, or $0.43 per diluted share, for the quarter ended December 31, 2011. 

Highlights for the quarter or at December 31 include:

Combined growth in commercial and commercial real estate loans of $339.4 million, or 5.9 percent, from September 30, and $860.6 million, or 16.4 percent, from a year ago.

Deposit growth of $117.4 million, or 0.8 percent, linked quarter and $874.8 million, or 6.4 percent, over prior year. Transaction account deposits, which had a cost of 0.13 percent in the quarter, now represent an all time high of 41.0 percent of total deposits.

Continued improvement in asset quality as evidenced by a 7.2 percent reduction in commercial classified loans from September 30 and a reduction of 34.8 percent from a year ago; nonperforming assets increased 18.3 percent from September 30 and 2.7 percent from a year ago and otherwise would have decreased compared to each date as a net of $39.5 million of residential and consumer loans were reclassified as nonaccrual in the quarter under regulatory guidance.

Continued achievement of positive operating leverage of 4.6 percent as core revenue grew by 3.5 percent and core expenses declined by 1.1 percent from the third quarter, which resulted in achievement of a 60 percent operating efficiency ratio in the fourth quarter.

Return on assets, return on common equity, and return on total equity improved to 0.98 percent, 9.74 percent, and 9.54 percent, respectively, compared to 0.92 percent, 9.19 percent, and 9.18 percent, respectively, in the third quarter.

"Our record fourth quarter results cap a year of strong performance for Webster," Chairman and Chief Executive Officer James C. Smith said. "Core net income reached an all-time high in the fourth quarter. Loan originations rose 40 percent in the fourth quarter from a year ago and 46 percent for the full year to set a new record, and our loans to businesses now comprise more than half of our total loan portfolio. Webster's solid capital position and earnings momentum will enable us to return capital to our shareholders over time by gradually increasing the dividend payout ratio and repurchasing additional common shares. We are deeper, stronger, and able to meet our customers' financial needs better than ever before."

Net interest income

  • Net interest income was $146.3 million for the quarter compared to $144.9 million in the third quarter.
  • Net interest margin was 3.27 percent compared to 3.28 percent in the third quarter as the yield on interest-earning assets declined 4 basis points and the cost of funds declined 3 basis points.  
  • Average interest-earning assets grew by 1.1 percent from the third quarter and totaled $18.3 billion compared to $18.1 billion in the third quarter. 
  • Average loans grew by $184.4 million or 1.6 percent from the third quarter.

Webster President and Chief Operating Officer Jerry Plush noted, "Some other significant business achievements in the quarter include the completion of the upgrade to our entire ATM network to envelope-free, image-capture technology, the rollout of our mobile app, the opening of a new retail office in Simsbury, and completion of a new retail and private banking office in Greenwich, Connecticut that opened this month. In 2013, we will continue to invest in additional improvements to our physical and electronic distribution network.  This will make banking with Webster easier and convenient while meeting the changing preferences of our customers."

Provision for loan losses

  • The Company recorded a provision of $7.5 million in the quarter compared to $5.0 million in the third quarter and $2.5 million in the year ago period; the increased level of the provision over the past year reflects growth in the loan portfolio.
  • Net charge-offs were $16.5 million in the quarter compared to $17.7 million for the third quarter and $26.4 million a year ago.
  • The allowance for loan losses represented 91 percent of nonperforming loans compared to 114 percent in the prior quarter, with the reduction reflecting the reclassification of a net $39.5 million of residential and consumer loans as nonaccrual in the quarter under regulatory guidance.

Noninterest income

  • Total noninterest income increased $4.5 million compared to the third quarter; there were no securities gains in the fourth quarter, while the third quarter included $0.8 million of securities gains.
  • The $5.3 million increase in core noninterest income compared to the third quarter reflects increases of $2.0 million in mortgage banking activities, $1.5 million in loan fees, $0.8 million in bank-owned life insurance, and $0.7 million in wealth and investment services.

Noninterest expense

  • Total noninterest expense decreased $1.0 million compared to the third quarter. Included in noninterest expense are net one time costs of $0.8 million in the fourth quarter and $0.6 million in the third quarter.
  • Total noninterest expense excluding one time costs decreased $1.2 million from the third quarter with a combined decrease of $2.3 million in compensation and benefits, occupancy, marketing, and professional services expenses offset by a combined increase of $1.0 million in technology and equipment and loan workout expenses. Noninterest expense declined $3.3 million from a year ago, primarily reflecting a reduction of $2.4 million in compensation and benefits expense. The decrease in compensation and benefits expense compared to a year ago reflects a reduction of $2.6 million in cash award expense under a plan that fully vested in the fourth quarter of 2012.
  • Foreclosed and repossessed asset expenses were $0.3 million in the quarter compared to $0.1 million in the third quarter, while gains on foreclosed and repossessed assets were $0.4 million in both quarters.

Income taxes

  • The Company recorded $20.3 million of income tax expense in the quarter on the $68.8 million of pre-tax income applicable to continuing operations in the period. The effective tax rate for the quarter was 29.5 percent compared to 30.2 percent for the third quarter and reflects a net tax benefit of $0.7 million specific to the quarter compared to $0.3 million specific to the third quarter.

Investment securities

  • Total investment securities were $6.2 billion at December 31, 2012 and $6.3 billion at September 30, 2012. The carrying value of the available for sale portfolio included $68.2 million in net unrealized gains compared to net unrealized gains of $68.9 million at September 30, while the carrying value of the held to maturity portfolio does not reflect $157.2 million in net unrealized gains compared to net unrealized gains of $179.2 million at September 30.

Loans

  • Total loans were $12.0 billion at December 31, 2012 compared to $11.7 billion at September 30, 2012 and are reflective of continued growth in commercial and commercial real estate loans. In the quarter, commercial and commercial real estate loans increased by $184.2 million and $155.2 million, respectively. Residential mortgage and consumer loans decreased by $1.2 million and $37.1 million, respectively.
  • Loan originations for portfolio in the fourth quarter were $1.279 billion compared to $835.6 million in the third quarter and $971.7 million a year ago. In addition to loan originations for portfolio, $221.8 million of residential loans were originated and sold with servicing retained in the quarter compared to $207.7 million in the third quarter and $100.0 million a year ago.

Asset quality

  • Total nonperforming loans increased to $194.8 million, or 1.62 percent of total loans, at December 31, 2012 compared to $162.6 million, or 1.39 percent, at September 30, 2012. The increase reflects the reclassification of a net $14.9 million of residential and a net $24.6 million of consumer loans as nonaccrual in the quarter under regulatory guidance. Total paying nonperforming loans at December 31 were $46.5 million compared to $16.8 million at September 30.  At December 31, $28.8 million of the total paying nonperforming loans related to loans reclassified in the quarter.
  • Apart from the reclassification, nonperforming loans decreased by $6.6 million, or 4.1 percent, from September 30 and $32.1 million, or 17.1 percent, from a year ago.
  • Other real estate owned (OREO) totaled $3.4 million compared to $4.9 million at September 30.
  • Past due loans increased to $74.3 million at December 31 compared to $67.4 million at September 30 as past due commercial real estate loans increased by $7.6 million. Past due loans represented 0.62 percent of total loans at December 31 and 0.57 percent at September 30. Past due loans for the continuing portfolios were $70.7 million at December 31 compared to $62.5 million at September 30. Past due loans for the liquidating portfolio were $3.6 million at December 31 compared to $4.9 million at September 30.

Deposits and borrowings

  • Total deposits were $14.5 billion at December 31, 2012 compared to $14.4 billion at September 30, 2012. Increases of $94.6 million in demand, $196.6 million in interest-bearing checking, and $43.4 million in savings deposits were offset by declines of $135.6 million in money market deposits and $81.5 million in certificates of deposit. Core to total deposits and loans to deposits were 82.5 percent and 82.8 percent, respectively, compared to 81.8 percent and 81.4 percent at September 30.
  • Total borrowings were $3.2 billion at December 31 compared to $3.1 billion at September 30.

Capital

  • On November 27, 2012, $126.5 million of Webster Financial Corporation 6.40 % Series E Non-Cumulative Perpetual Preferred Stock was issued through an underwritten public offering.
  • On December 6, 2012, a $100 million common stock authorization was announced with $50.0 million of the authorization utilized later in the quarter in connection with an underwritten secondary offering of 10 million shares of Webster's common stock by a selling shareholder.
  • The tangible common equity and Tier 1 common equity to risk-weighted assets ratios were 7.17 percent and 10.78 percent, respectively, at December 31, 2012 compared to 7.39 percent and 11.10 percent, respectively, at September 30, 2012.
  • Book value and tangible book value per common share were $22.75 and $16.47, respectively, at December 31 compared to $22.24 and $16.13, respectively, at September 30.
  • Return on average common shareholders' equity and return on average total equity were 9.74 percent and 9.54 percent, respectively, at December 31 compared to 9.19 percent and 9.18 percent, respectively, at September 30.

Webster Financial Corporation is the holding company for Webster Bank, National Association. With $20 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust and investment services through 168 banking offices, 294 ATMs, telephone banking, mobile banking, and the Internet. Webster Bank owns the asset based lending firm Webster Business Credit Corporation; the equipment finance firm Webster Capital Finance Corporation; and provides health savings account trustee and administrative services through HSA Bank, a division of Webster Bank. Member FDIC and 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 2012 fourth quarter earnings announcement will be held today, Friday, January 18, 2013 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 1-877-407-8289 or 201-689-8341 internationally. The call will be archived on the website and available for future retrieval.

Forward-Looking Statements

This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"). Forward-looking statements can be identified by words such as "believes," "anticipates," "expects," "intends," "targeted," "continue," "remain," "will," "should," "may," "plans," "estimates," and similar references to future periods; however, such words are not the exclusive means of identifying such statements.  Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, and other financial items; (ii) statements of plans, objectives, and expectations of Webster or its management or Board of Directors; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Forward-looking statements are based on Webster's current expectations and assumptions regarding its business, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Webster's actual results may differ materially from those contemplated by the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to: (1) local, regional, national, and international economic conditions and the impact they may have on us and our customers and our assessment of that impact; (2) volatility and disruption in national and international financial markets; (3) government intervention in the U.S. financial system; (4) changes in the level of non-performing assets and charge-offs; (5) changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (6) adverse conditions in the securities markets that lead to impairment in the value of securities in our investment portfolio; (7) inflation, interest rate, securities market, and monetary fluctuations; (8) the timely development and acceptance of new products and services and perceived overall value of these products and services by customers; (9) changes in consumer spending, borrowings, and savings habits; (10) technological changes; (11) the ability to increase market share and control expenses; (12) changes in the competitive environment among banks, financial holding companies, and other financial service providers; (13) the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities, and insurance) with which we and our subsidiaries must comply, including those under the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III update to the Basel Accords that is under development; (14) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters; (15) the costs and effects of legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews; and (16) our success at managing the risks involved in the foregoing items and (17) the other factors that are described in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q under the heading "Risk Factors."  Any forward-looking statement made by the Company in this release speaks only as of the date on which it is made. Factors or events that could cause the Company's actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Non-GAAP Financial Measures

In addition to results presented in accordance with GAAP, this press release contains certain non-GAAP financial measures. A reconciliation of net income and other performance ratios, as adjusted, is included in the accompanying selected financial highlights table.

We believe that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, our performance trends and financial position. Specifically, we provide measures based on what we believe are our operating earnings on a consistent basis and exclude non-core operating items which affect the GAAP reporting of results of operations. 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.

Media Contact

Investor Contact

Bob Guenther, 203-578-2391

Terry Mangan 203-578-2318

rguenther@websterbank.com

tmangan@websterbank.com 

 

WEBSTER FINANCIAL CORPORATION
Selected Financial Highlights (unaudited)
















At or for the Three Months Ended



(In thousands, except per share data)

December 31, 2012


September 30, 2012


June 30, 2012


March 31, 2012


December 31, 2011











Income and performance ratios, (annualized):










Net income attributable to Webster Financial Corp.

$ 48,526


$ 44,993


$ 41,240


$ 38,938


$ 40,384

Net income available to common shareholders

47,911


44,378


40,625


38,323


39,591

Net income per diluted common share

0.52


0.48


0.44


0.42


0.43

Return on average assets

0.98 %


0.92 %


0.86 %


0.82 %


0.88 %

Return on average common shareholders' equity

9.74


9.19


8.62


8.30


8.68

Return on average shareholders' equity

9.54


9.18


8.62


8.30


8.67

Noninterest income as a percentage of total revenue

26.57


25.07


24.70


23.48


23.05

Efficiency ratio

59.68


62.25


63.75


65.63


65.83

Asset quality:










Allowance for loan losses

$ 177,129


$ 186,089


$ 198,757


$ 210,288


$ 233,487

Nonperforming assets

198,180


167,524


173,621


184,218


193,047

Allowance for loan losses / total loans

1.47 %


1.59 %


1.72 %


1.86 %


2.08 %

Net charge-offs / average loans (annualized)

0.56


0.61


0.58


0.96


0.95

Nonperforming loans / total loans

1.62


1.39


1.47


1.58


1.68

Nonperforming assets / total loans plus OREO

1.65


1.43


1.50


1.63


1.72

Allowance for loan losses / nonperforming loans

90.93


114.44


117.44


117.96


124.14

Other ratios (annualized):










Tangible equity ratio

7.94 %


7.54 %


7.38 %


7.29 %


7.18 %

Tangible common equity ratio

7.17


7.39


7.22


7.14


7.03

Tier 1 risk-based capital ratio (a)

12.48


11.90


12.82


12.86


13.05

Total risk-based capital (a)

13.73


13.16


14.08


14.12


14.61

Tier 1 common equity / risk-weighted assets (a)

10.78


11.10


10.97


10.96


11.08

Shareholders' equity / total assets

10.39


10.05


9.94


9.90


9.86

Net interest margin

3.27


3.28


3.32


3.36


3.39

Share and equity related:










Common equity

$ 1,941,881


$ 1,954,739


$ 1,902,609


$ 1,866,003


$ 1,816,835

Book value per common share

22.75


22.24


21.65


21.24


20.74

Tangible book value per common share

16.47


16.13


15.53


15.10


14.57

Common stock closing price

20.55


23.7


21.66


22.67


20.39

Dividends declared per common share

0.10


0.10


0.10


0.05


0.05











Common shares outstanding

85,341


87,899


87,885


87,849


87,600

Basic shares (weighted average)

86,949


87,394


87,291


87,216


87,097

Diluted shares (weighted average)

91,315


91,884


91,543


91,782


90,929

(a) The ratios presented are projected for December 31, 2012 and actual for the remaining periods presented.



















 

WEBSTER FINANCIAL CORPORATION
Consolidated Balance Sheets (unaudited)









(In thousands)

December 31, 2012


September 30, 2012


December 31, 2011

Assets:






Cash and due from banks

$         252,283


$       164,556


$        195,957

Interest-bearing deposits

98,205


79,763


96,062

Investment securities:






Available for sale, at fair value

3,136,160


3,120,354


2,874,764

Held to maturity

3,107,529


3,142,160


2,973,727

Total securities

6,243,689


6,262,514


5,848,491

Loans held for sale

107,633


91,207


57,391

Loans:






Commercial

3,323,044


3,138,807


2,860,597

Commercial real estate

2,783,061


2,627,893


2,384,889

Residential mortgages

3,291,724


3,292,948


3,219,889

Consumer

2,630,867


2,668,004


2,760,029

Total loans

12,028,696


11,727,652


11,225,404

Allowance for loan losses

(177,129)


(186,089)


(233,487)

Loans, net

11,851,567


11,541,563


10,991,917

Prepaid FDIC premiums

16,323


21,673


37,946

Federal Home Loan Bank and Federal Reserve Bank stock

155,630


142,595


143,874

Premises and equipment, net

134,562


135,394


147,379

Goodwill and other intangible assets, net

540,157


541,399


545,577

Cash surrender value of life insurance policies

418,293


414,797


307,039

Deferred tax asset, net

68,681


74,098


105,665

Accrued interest receivable and other assets

259,742


260,103


237,042

Total Assets

$    20,146,765


$  19,729,662


$   18,714,340

Liabilities and Equity:






Deposits:






Demand

$      2,881,131


$    2,786,525


$     2,473,693

Interest-bearing checking

3,079,767


2,883,216


2,578,520

Money market

2,205,072


2,340,717


2,021,056

Savings

3,819,713


3,776,280


3,748,121

Certificates of deposit

2,418,853


2,507,647


2,715,583

Brokered certificates of deposit

126,299


119,052


119,052

Total deposits

14,530,835


14,413,437


13,656,025

Securities sold under agreements to repurchase and other short-term borrowings  

 

1,076,160


1,310,015


1,164,706

Federal Home Loan Bank advances

1,827,612


1,452,660


1,252,609

Long-term debt

334,276


335,678


552,589

Accrued expenses and other liabilities

284,352


234,194


242,637

Total liabilities

18,053,235


17,745,984


16,868,566

Webster Financial Corporation shareholders' equity

2,093,530


1,983,678


1,845,774

Noncontrolling interests



Total equity

2,093,530


1,983,678


1,845,774

Total Liabilities and Equity

20,146,765


19,729,662


18,714,340







 

WEBSTER FINANCIAL CORPORATION
Consolidated Statements of Operations (unaudited)













(In thousands, except per share data)

Three Months Ended December 31,


Twelve Months Ended, December 31,


2012


2011


2012


2011

Interest income:








Interest and fees on loans and leases

$         122,179


$       121,223


$        485,666


$       486,883

Interest and dividends on securities

49,752


51,260


205,411


211,605

Loans held for sale

615


370


2,425


1,235

   Total interest income

172,546


172,853


693,502


699,723

Interest expense:








Deposits

13,885


17,268


59,586


80,808

Borrowings

12,389


14,576


55,008


55,147

   Total interest expense

26,274


31,844


114,594


135,955

Net interest income

146,272


141,009


578,908


563,768

Provision for loan losses

7,500


2,500


21,500


22,500

Net interest income after provision for loan losses

138,772


138,509


557,408


541,268

Noninterest income:








Deposit service fees

24,823


24,286


96,633


102,795

Loan related fees

5,570


4,896


18,043


20,237

Wealth and investment services

7,859


5,759


29,515


26,421

Mortgage banking activities

8,515


1,094


23,037


4,905

Increase in cash surrender value of life insurance policies

3,496


2,609


11,254


10,360

Net gain on investment securities



3,347


2,024

Other income

2,677


3,602


10,929


10,300

   Total noninterest income

52,940


42,246


192,758


177,042

Noninterest expense:








Compensation and benefits

65,769


68,146


264,101


262,647

Occupancy

12,209


13,125


50,131


53,866

Technology and equipment expense

15,489


15,054


62,210


60,721

Marketing

3,104


4,540


16,827


18,456

Professional and outside services

2,479


2,835


11,348


11,203

Intangible assets amortization

1,242


1,397


5,420


5,588

Foreclosed and repossessed asset expenses

267


730


1,028


3,050

Foreclosed and repossessed asset gains

(383)


(63)


(2,126)


(306)

Loan workout expenses

2,338


1,956


8,056


7,547

Deposit insurance

5,642


4,756


22,749


20,927

Other expenses

13,934


12,864


56,172


55,896


122,090


125,340


495,916


499,595

Debt prepayment penalties


5,203


4,040


5,203

Write-down for expedited asset disposition


1,187



6,260

Contract termination and severance

642


2,485


1,505


5,100

Branch and facility optimization

18


1,689


168


5,004

Preferred stock redemption costs


423



423

Stock registration costs

175



175


Costs for warrant registration




350

Provision (benefit) for litigation and settlements


(9,755)



(9,523)

Loan repurchase and unfunded commitment reserve benefit, net




(1,436)

   Total noninterest expense

122,925


126,572


501,804


510,976

Income from continuing operations before income taxes

68,787


54,183


248,362


207,334

Income tax expense

20,261


13,799


74,665


57,951

   Income from continuing operations

48,526


40,384


173,697


149,383

Income from discontinued operations, net of tax




1,995

   Consolidated net income

48,526


40,384


173,697


151,378

Less: Net loss attributable to noncontrolling interests




(1)

   Net income attributable to Webster Financial Corp.

48,526


40,384


173,697


151,379

Preferred stock dividends

(615)


(793)


(2,460)


(3,286)

   Net income available to common shareholders

$           47,911


$         39,591


$        171,237


$       148,093









   Diluted shares (average)

91,315


90,929


91,649


91,688

Net income per common share available to common shareholders:   








Basic








   Income from continuing operations

$               0.55


$             0.45


$              1.96


$             1.67

   Net income

0.55


0.45


1.96


1.69

Diluted








   Income from continuing operations

0.52


0.43


1.86


1.59

   Net income

0.52


0.43


1.86


1.61









 

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


















Three Months Ended


Dec. 31,


Sept. 30,


June 30,


March 31,


Dec. 31,

(In thousands, except per share data)

2012


2012


2012


2012


2011

Interest income:










Interest and fees on loans and leases

$         122,179


$       121,367


$        121,379


$       120,741


$       121,223

Interest and dividends on securities

49,752


50,194


52,597


52,868


51,260

Loans held for sale

615


655


657


498


370

Total interest income

172,546


172,216


174,633


174,107


172,853

Interest expense:










Deposits

13,885


14,543


15,102


16,056


17,268

Borrowings

12,389


12,783


15,153


14,683


14,576

Total interest expense

26,274


27,326


30,255


30,739


31,844

Net interest income

146,272


144,890


144,378


143,368


141,009

Provision for loan losses

7,500


5,000


5,000


4,000


2,500

Net interest income after provision for loan losses

138,772


139,890


139,378


139,368


138,509

Noninterest income:










Deposit service fees

24,823


24,728


23,719


23,363


24,286

Loan related fees

5,570


4,039


3,565


4,869


4,896

Wealth and investment services

7,859


7,186


7,249


7,221


5,759

Mortgage banking activities

8,515


6,515


3,624


4,383


1,094

Increase in cash surrender value of life insurance policies

3,496


2,680


2,561


2,517


2,609

Net gain on investment securities


810


2,537



Other income

2,677


2,521


4,098


1,633


3,602

Total noninterest income

52,940


48,479


47,353


43,986


42,246

Noninterest expense:










Compensation and benefits

65,769


66,126


63,587


68,619


68,146

Occupancy

12,209


12,462


12,578


12,882


13,125

Technology and equipment expense

15,489


15,118


16,021


15,582


15,054

Marketing

3,104


4,529


5,094


4,100


4,540

Professional and outside services

2,479


2,790


3,387


2,692


2,835

Intangible assets amortization

1,242


1,384


1,397


1,397


1,397

Foreclosed and repossessed asset expenses

267


118


176


467


730

Foreclosed and repossessed asset gains

(383)


(409)


(670)


(664)


(63)

Loan workout expenses

2,338


1,693


2,201


1,824


1,956

Deposit insurance

5,642


5,675


5,723


5,709


4,756

Other expenses

13,934


13,805


14,443


13,990


12,864


122,090


123,291


123,937


126,598


125,340

Debt prepayment penalties


391


2,515


1,134


5,203

Write-down for expedited asset disposition





1,187

Contract termination and severance

642


136


727



2,485

Branch and facility optimization

18


69



81


1,689

Preferred stock redemption costs





423

Stock registration costs

175





Provision (benefit) for litigation and settlements





(9,755)

Total noninterest expense

122,925


123,887


127,179


127,813


126,572

Income from continuing operations before income taxes

68,787


64,482


59,552


55,541


54,183

Income tax expense

20,261


19,489


18,312


16,603


13,799

Income from continuing operations

48,526


44,993


41,240


38,938


40,384

Income from discontinued operations, net of tax





Consolidated net income

48,526


44,993


41,240


38,938


40,384

Less: Net loss attributable to noncontrolling interests





Net income attributable to Webster Financial Corp.

48,526


44,993


41,240


38,938


40,384

Preferred stock dividends

(615)


(615)


(615)


(615)


(793)

Net income available to common shareholders

$           47,911


$         44,378


$          40,625


$         38,323


$         39,591











      Diluted shares (average)

91,315


91,884


91,543


91,782


90,929

Net income per common share available to common shareholders:










Basic










       Income from continuing operations

$               0.55


$             0.51


$              0.46


$             0.44


$             0.45

       Net income

0.55


0.51


0.46


0.44


0.45

Diluted










       Income from continuing operations

0.52


0.48


0.44


0.42


0.43

       Net income

0.52


0.48


0.44


0.42


0.43











 



























WEBSTER FINANCIAL CORPORATION
Consolidated Average Balances, Yields, and Rates Paid (unaudited)

 

Three Months Ended December 31,



2012






2011



(Dollars in thousands)

Average
balance


Interest


 

Fully tax-
equivalent
yield/rate


Average
balance


Interest


Fully tax-
equivalent
yield/rate

Assets:












  Interest-earning assets:












  Loans

$    11,792,691


$       122,179


4.10 %


$  11,122,372


$       121,223


4.31 %

  Investment securities (a)

6,170,119


52,326


3.43


5,638,172


54,414


3.88

  Loans held for sale

90,266


615


2.72


35,321


370


4.18

  Federal Home Loan and Federal Reserve Bank stock

143,557


872


2.42


143,874


831


2.29

  Interest-bearing deposits

72,539


34


0.18


86,156


26


0.12

  Total interest-earning assets

18,269,172


176,026


3.84


17,025,895


176,864


4.13

Noninterest-earning assets

1,511,979






1,371,923





  Total assets

$    19,781,151






$  18,397,818





Liabilities and Shareholders' Equity:












  Interest-bearing liabilities:












  Deposits:












  Demand

$      2,832,130


$                  —


—%


$    2,364,594


$                  —


—%

  Savings, interest checking, and money market

9,054,442


4,845


0.21


8,420,850


6,302


0.30

  Certificates of deposit

2,594,963


9,040


1.39


2,899,642


10,966


1.50

  Total deposits

14,481,535


13,885


0.38


13,685,086


17,268


0.50

Securities sold under agreements to repurchase












and other short-term borrowings

1,281,503


5,646


1.72


1,212,019


4,450


1.44

Federal Home Loan Bank advances

1,418,606


4,011


1.11


854,539


4,151


1.90

Long-term debt

334,954


2,732


3.26


553,684


5,975


4.32

  Total borrowings

3,035,063


12,389


1.61


2,620,242


14,576


2.20

  Total interest-bearing liabilities

17,516,598


26,274


0.59


16,305,328


31,844


0.77

Noninterest-bearing liabilities

230,923






221,096





  Total liabilities

17,747,521






16,526,424

















Noncontrolling interests






7,703

















Preferred Stock

66,318






28,939





Common shareholders' equity

1,967,312






1,834,752





Webster Financial Corp. shareholders' equity

2,033,630






1,863,691





  Total liabilities and equity

$    19,781,151






$  18,397,818





Tax-equivalent net interest income



149,752






145,020



Less: tax-equivalent adjustment



(3,480)






(4,011)



Net interest income



$       146,272






$       141,009



Net interest margin





3.27 %






3.39 %

 

(a) For purposes of the yield computation, unrealized gains (losses) on securities available for sale are excluded from the average balance.














 

WEBSTER FINANCIAL CORPORATION
Consolidated Average Balances, Yields, and Rates Paid (unaudited)













Twelve Months Ended December 31,



2012






2011



(Dollars in thousands)

Average
balance


Interest


Fully tax-
equivalent
yield/rate


Average
balance


 

Interest


Fully tax-
equivalent
yield/rate

Assets:












  Interest-earning assets:












  Loans

$    11,525,233


$       485,666


4.21 %


$  11,054,100


$       486,883


4.40 %

  Investment securities (a)

6,100,219


216,513


3.58


5,407,867


223,568


4.16

  Loans held for sale

73,156


2,425


3.31


28,144


1,235


4.39

  Federal Home Loan and Federal Reserve Bank stock

143,074


3,508


2.45


143,874


3,318


2.31

  Interest-bearing deposits

77,265


141


0.18


112,232


216


0.19

Total interest-earning assets

17,918,947


708,253


3.96


16,746,217


715,220


4.28

Noninterest-earning assets

1,427,824






1,335,374





Total assets

$    19,346,771






$  18,081,591





Liabilities and Shareholders' Equity:












  Interest-bearing liabilities:












Deposits:












Demand

$      2,638,025


$                  —


—%


$    2,278,419


$                  —


—%

Savings, interest checking, and money market

8,824,581


21,061


0.24


8,534,333


33,747


0.40

Certificates of deposit

2,703,414


38,525


1.43


3,031,835


47,061


1.55

Total deposits

14,166,020


59,586


0.42


13,844,587


80,808


0.58

Securities sold under agreements to repurchase and other short-term borrowings

1,207,623


21,034


1.74


1,053,323


16,173


1.54

Federal Home Loan Bank advances

1,389,999


16,943


1.22


569,987


14,352


2.52

Long-term debt

418,896


17,031


4.07


565,331


24,622


4.36

Total borrowings

3,016,518


55,008


1.82


2,188,641


55,147


2.52

Total interest-bearing liabilities

17,182,538


114,594


0.67


16,033,228


135,955


0.85

Noninterest-bearing liabilities

217,653






202,205





Total liabilities

17,400,191






16,235,433





Noncontrolling interests






9,119

















Preferred Stock

38,335






28,942





Common shareholders' equity

1,908,245






1,808,097





Webster Financial Corp. shareholders' equity

1,946,580






1,837,039





Total liabilities and equity

$    19,346,771






$  18,081,591





Tax-equivalent net interest income



593,659






579,265



Less: tax-equivalent adjustment



(14,751)






(15,497)



Net interest income



$       578,908






$       563,768



Net interest margin





3.32 %






3.47 %

 

(a) For purposes of the yield computation, unrealized gains (losses) on securities available for sale are excluded from the average balance.














 

WEBSTER FINANCIAL CORPORATION
Five Quarter Loan Balances (unaudited)

















(Dollars in thousands)

Dec. 31,

2012


Sept. 30,

2012


June 30,

2012


March 31,

2012


Dec. 31,

2011

Loan Balances (actuals):










Continuing Portfolio:










Commercial non-mortgage

$      2,399,500


$    2,201,732


$     2,069,127


$    1,972,205


$    1,932,542

Equipment financing

419,311


401,748


417,654


446,585


474,804

Asset based lending

504,233


535,327


499,212


470,187


453,251

Commercial real estate

2,755,320


2,597,835


2,518,392


2,389,206


2,345,241

Residential development

27,741


30,058


33,035


36,591


39,648

Residential mortgages

3,291,723


3,292,947


3,300,616


3,270,212


3,219,888

Consumer

2,508,992


2,537,039


2,565,654


2,585,685


2,612,476

Total continuing

11,906,820


11,596,686


11,403,690


11,170,671


11,077,850

Allowance for loan losses

(152,495)


(156,214)


(168,882)


(180,413)


(203,612)

Total continuing, net

11,754,325


11,440,472


11,234,808


10,990,258


10,874,238

Liquidating Portfolio:










National Construction Lending Center (NCLC)  

1


1


1


1


1

Consumer

121,875


130,965


136,306


141,478


147,553

Total liquidating portfolio

121,876


130,966


136,307


141,479


147,554

Allowance for loan losses

(24,634)


(29,875)


(29,875)


(29,875)


(29,875)

Total liquidating, net

97,242


101,091


106,432


111,604


117,679

Total Loan Balances (actuals)

12,028,696


11,727,652


11,539,997


11,312,150


11,225,404

Allowance for loan losses

(177,129)


(186,089)


(198,757)


(210,288)


(233,487)

Loans, net

$    11,851,567


$  11,541,563


$   11,341,240


$  11,101,862


$  10,991,917











Loan Balances (average):










 Continuing Portfolio:










Commercial non-mortgage

$      2,238,557


$    2,137,882


$     2,008,778


$    1,970,656


$    1,868,885

Equipment financing

405,702


404,180


430,882


458,111


495,667

Asset based lending

516,749


520,100


480,574


474,264


492,982

Commercial real estate

2,653,749


2,528,394


2,453,430


2,336,576


2,254,970

Residential development

29,322


31,484


35,422


38,401


49,182

Residential mortgages

3,294,254


3,300,067


3,296,306


3,253,199


3,186,885

Consumer

2,526,656


2,552,660


2,576,521


2,598,758


2,622,378

Total continuing

11,664,989


11,474,767


11,281,913


11,129,965


10,970,949

Allowance for loan losses

(161,239)


(167,469)


(179,139)


(201,592)


(219,566)

Total continuing, net

11,503,750


11,307,298


11,102,774


10,928,373


10,751,383

 Liquidating Portfolio:










NCLC

1


1


1


1


1

Consumer

127,701


133,566


138,807


145,367


151,422

Total liquidating portfolio

127,702


133,567


138,808


145,368


151,423

Allowance for loan losses

(24,634)


(29,875)


(29,875)


(29,875)


(29,875)

Total liquidating, net

103,068


103,692


108,933


115,493


121,548

Total Loan Balances (average)

11,792,691


11,608,334


11,420,721


11,275,333


11,122,372

Allowance for loan losses

(185,873)


(197,344)


(209,014)


(231,467)


(249,441)

Loans, net

$    11,606,818


$  11,410,990


$   11,211,707


$  11,043,866


$  10,872,931











 

WEBSTER FINANCIAL CORPORATION
Five Quarter Nonperforming Assets (unaudited)

















(Dollars in thousands)

Dec. 31,

2012


Sept. 30,

2012


June 30,

2012


March 31,

2012


Dec. 31,

2011

Nonperforming loans:










 Continuing Portfolio:










Commercial non-mortgage

$           17,538


$         30,315


$          29,271


$         31,547


$         27,884

Equipment financing

3,325


3,052


5,862


4,868


7,154

Asset based lending


92


262


1,475


1,880

Commercial real estate

15,683


15,768


23,457


25,131


32,197

Residential development

5,043


5,431


5,982


6,140


6,762

Residential mortgages (a)

95,540


79,736


77,336


79,110


82,052

Consumer (a)

49,536


23,602


22,616


26,098


25,059

Nonperforming loans - continuing portfolio

186,665


157,996


164,786


174,369


182,988

 Liquidating Portfolio:










Consumer (a)

8,133


4,616


4,460


3,896


5,091

Nonperforming loans - liquidating portfolio

8,133


4,616


4,460


3,896


5,091

Total nonperforming loans

$         194,798


$       162,612


$        169,246


$       178,265


$       188,079











Other real estate owned and repossessed assets:










 Continuing Portfolio:










Commercial

$                541


$              917


$               917


$           2,051


$           1,961

Repossessed equipment

182


1,840


721


674


123

Residential

2,369


1,705


2,271


2,648


1,947

Consumer

290


450


466


580


805

Total continuing

3,382


4,912


4,375


5,953


4,836

 Liquidating Portfolio:










NCLC





132

Total liquidating





132

Total other real estate owned and repossessed assets   

$             3,382


$           4,912


$            4,375


$           5,953


$           4,968

Total nonperforming assets

$         198,180


$       167,524


$        173,621


$       184,218


$       193,047

 

(a) The increases in the residential and consumer categories during 4Q12 are related to an OCC requirement to reflect Chapter 7 bankruptcies as nonaccruing loans.











 

WEBSTER FINANCIAL CORPORATION
Five Quarter Past Due Loans (unaudited)

















(Dollars in thousands)

Dec. 31,

2012


Sept. 30, 

2012


June 30,

2012


March 31,

2012


Dec. 31,

2011

Past due 30-89 days:










Accruing loans:










 Continuing Portfolio:










Commercial non-mortgage

$             2,769


$           4,424


$            6,479


$           6,938


$           4,619

Equipment financing

1,926


3,524


1,665


4,099


4,800

Asset based lending





Commercial real estate

14,710


7,136


3,152


1,101


1,766

Residential development


317




Residential mortgages

25,183


22,230


26,966


22,915


24,361

Consumer

24,860


24,664


22,163


19,592


20,847

Past Due 30-89 days - continuing portfolio

69,448


62,295


60,425


54,645


56,393

 Liquidating Portfolio:










Consumer

3,588


4,909


4,377


5,263


4,538

Past Due 30-89 days - liquidating portfolio   

3,588


4,909


4,377


5,263


4,538

Accruing loans past due 90 days or more

1,236


205


1,074


43


724

Total past due loans

$           74,272


$         67,409


$          65,876


$         59,951


$         61,655











 

WEBSTER FINANCIAL CORPORATION
Five Quarter Changes in the Allowance for Loan Losses (unaudited)








For the Three Months Ended

(Dollars in thousands)

Dec. 31,

2012


Sept. 30,

2012


June 30,

2012


March 31,

2012


Dec. 31,

2011

Beginning balance

$         186,089


$       198,757


$        210,288


$       233,487


$       257,352

   Provision

7,500


5,000


5,000


4,000


2,500

Charge-offs continuing portfolio:










Commercial non-mortgage

6,411


8,642


5,164


14,994


6,684

Equipment financing

682


187


165


634


55

Asset based lending

69



512



2,150

Commercial real estate

170


2,655


1,066


5,848


7,768

Residential development

156





453

Residential mortgages

2,597


3,234


3,948


3,115


2,548

Consumer

8,149


6,752


8,122


6,487


7,551

Charge-offs continuing portfolio

18,234


21,470


18,977


31,078


27,209

Charge-offs liquidating portfolio:










NCLC


28


4



7

Consumer

5,137


2,482


3,227


3,564


3,958

Charge-offs liquidating portfolio

5,137


2,510


3,231


3,564


3,965

Total charge-offs

23,371


23,980


22,208


34,642


31,174

Recoveries continuing portfolio:










Commercial non-mortgage

1,045


779


957


886


1,215

Equipment financing

2,899


3,111


1,115


2,348


1,161

Asset based lending

996


518


721


914


195

Commercial real estate

43


121


34


1,069


96

Residential development

721


181


12


31


5

Residential mortgages

99


318


126


118


135

Consumer

674


933


2,453


1,932


1,721

Recoveries continuing portfolio

6,477


5,961


5,418


7,298


4,528

Recoveries liquidating portfolio:










NCLC

74


35


10


23


177

Consumer

360


316


249


122


104

Recoveries liquidating portfolio

434


351


259


145


281

Total recoveries

6,911


6,312


5,677


7,443


4,809

Total net charge-offs

16,460


17,668


16,531


27,199


26,365

Ending balance

$         177,129


$       186,089


$        198,757


$       210,288


$       233,487











Note: $5.3 million of net charge-offs in 4Q12 relate to an OCC requirement to reduce Chapter 7 bankruptcies to collateral value.











 


WEBSTER FINANCIAL CORPORATION
Reconciliations to GAAP Financial Measures

 

The Company evaluates its business based on the following ratios that utilize tangible equity, a non-GAAP financial measure. Return on average tangible equity measures the Company's earnings contribution as a percentage of average shareholders' equity less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities on intangible assets. The tangible equity ratio represents total ending shareholders' equity less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities divided by total assets less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities on intangible assets. The tangible common equity ratio represents ending common shareholders' equity less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities divided by total assets less goodwill and intangible assets (excluding mort