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Webster Reports 2013 First Quarter Earnings
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Diluted Earnings per Share of $.44 for the Quarter - an Increase of 5 Percent over Prior Year

WATERBURY, Conn., April 15, 2013 /PRNewswire/ -- Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today announced net income available to common shareholders of $39.2 million, or $0.44 per diluted share, for the quarter ended March 31, 2013 compared to $38.3 million, or $0.42 per diluted share, for the quarter ended March 31, 2012. 

Highlights for the quarter or at March 31 include:

Combined growth in commercial and commercial real estate loans of $822.7 million, or 15.5 percent, from a year ago.

Deposit growth of $679.4 million, or 4.9 percent, from a year ago.

Positive operating leverage of 5.7 percent compared to a year ago as core revenue grew by 3.5 percent and core expenses declined by 2.2 percent; as a result, the efficiency ratio improved by 347 basis points from a year ago.

Continued improvement in asset quality as evidenced by a reduction of $169 million, or 33.5 percent, in commercial classified loans from a year ago while past due loans declined $19.9 million, or 33.2 percent from a year ago. Nonperforming assets increased $19.1 million, or 10.4 percent, from a year ago and otherwise would have decreased as a net of $44.0 million of residential and consumer loans were classified as nonaccrual under regulatory guidance that took effect in the fourth quarter of 2012.

Return on average assets and return on average tangible common equity were 0.84 percent and 11.28 percent, respectively, in the quarter compared to 0.82 percent and 12.04 percent, respectively, in the year ago quarter.

James C. Smith, chairman and chief executive officer, said, "Webster's first quarter results delivered a solid 16 percent increase in core pre-tax, pre-provision net earnings from a year ago. Core revenue grew and expenses dropped, creating positive operating leverage of six percent compared to a year ago. Loans grew by six percent from a year ago, led by another double-digit increase in the commercial portfolio as we continued to help lead the region's economic recovery."

Net interest income

  • Net interest income was $145.8 million in the first quarter of 2013 compared to $143.4 million a year ago.
  • Net interest margin was 3.23 percent compared to 3.36 percent a year ago. The yield on interest-earning assets declined 30 basis points and the cost of funds declined 18 basis points from the year ago quarter.  
  • Average interest-earning assets totaled $18.5 billion in the quarter and grew by 5.9 percent from a year ago. 
  • Average loans grew by $749.3 million, or 6.6 percent, from the year ago quarter.

Provision for loan losses

  • The Company recorded a provision for loan losses of $7.5 million in both the first quarter of 2013 and fourth quarter of 2012, and $4.0 million in the year ago period; the increased level of the provision reflects growth in the loan portfolio over prior year.
  • Net charge-offs were $16.8 million in the quarter compared to $27.2 million a year ago. The ratio of net charge-offs to average loans on an annualized basis was 0.56 percent in the quarter compared to 0.96 percent a year ago.
  • The allowance for loan losses represented 1.40 percent of total loans at March 31, 2013 compared to 1.47 percent at December 31, 2012 and 1.86 percent at March 31, 2012.

Noninterest income

  • Total noninterest income in the first quarter of 2013 increased $4.3 million compared to a year ago; there were $0.1 million of securities gains in the quarter while the year ago quarter had no securities gains.
  • Excluding securities gains, the $4.2 million increase in core noninterest income compared to a year ago reflects increases of $2.6 million in mortgage banking activities, $0.9 million from increase in cash surrender value of life insurance policies and $0.5 million from wealth and investment services. Other income was $0.2 million lower than in the year ago quarter reflecting a write-down of $1.5 million in the current quarter on a loan previously transferred to held for sale.

Webster President and Chief Operating Officer Jerry Plush noted, "During the first quarter, we announced outsourcing agreements with Jones Lang LaSalle for optimization of our facilities management and location decision-making and with Fidelity Information Services for management of our IT network and enhancement of our ability to deliver exceptional service to customers. These agreements create not only cost savings for future quarters but enhance our ability to optimize the size and locations of our banking centers and enable us to roll out new banking technologies quickly and seamlessly. We also launched our eForms initiative which will drive additional efficiency gains in future periods."

Noninterest expense

  • Total noninterest expense of $125.5 million in the first quarter of 2013 decreased $2.3 million compared to the year ago period. Included in noninterest expense in the first quarter of 2013 are $1.6 million of net one-time costs that amounted to $.01 per diluted share on an after-tax basis. These costs consisted primarily of contract termination and severance expenses. There were $1.2 million of net one-time costs in the year ago quarter that also amounted to $.01 per diluted share.
  • Total noninterest expense excluding one-time costs decreased $2.7 million from the first quarter of 2012. The decrease largely reflects a reduction of $2.6 million in compensation and benefits expense.
  • Foreclosed and repossessed asset expenses were $0.2 million in the quarter compared to $0.5 million a year ago, while gains on foreclosed and repossessed assets were $0.3 million and $0.7 million in the respective periods.

Income taxes

  • The Company recorded $18.9 million of income tax expense in the first quarter of 2013 on the $61.0 million of pre-tax income in the period. The effective tax rate was 31.0 percent compared to 29.9 percent a year ago, which reflected a net tax benefit of $0.5 million specific to that period.

Investment securities

  • Total investment securities were $6.4 billion at March 31, 2013 and $6.2 billion a year ago. The carrying value of the available for sale portfolio included $64.5 million in net unrealized gains compared to net unrealized gains of $43.4 million a year ago, while the carrying value of the held to maturity portfolio does not reflect $130.9 million in net unrealized gains compared to net unrealized gains of $154.9 million a year ago.

Loans

  • Total loans were $12.0 billion at both March 31, 2013 and December 31, 2012, and $11.3 billion at March 31, 2012. In the quarter, commercial and commercial real estate loans increased by $23.4 million and $7.9 million, respectively. Residential mortgage and consumer loans decreased by $4.7 million and $53.3 million, respectively.
  • Compared to a year ago, commercial, commercial real estate and residential mortgage loans increased by $457.5 million, $365.2 million and $16.9 million, respectively. Consumer loans decreased by $149.6 million.
  • Loan originations for portfolio in the first quarter were $690.5 million compared to $1.279 billion in the fourth quarter and $790.8 million a year ago. In addition, $229.0 million of residential loans were originated and sold with servicing retained in the quarter compared to $221.8 million in the fourth quarter and $131.4 million a year ago.

Asset quality

  • Past due loans decreased to $40.0 million at March 31, 2013 compared to $74.3 million at December 31, 2012 and $60.0 million at March 31, 2012. Compared to December 31, 2012, past due commercial real estate, residential mortgage and consumer loans decreased by $13.4 million, $8.6 million and $10.3 million, respectively. Compared to March 31, 2012, all loan categories contributed to the decline except commercial real estate, which totaled $1.3 million compared to $1.1 million a year ago.
  • Past due loans represented 0.33 percent of total loans at March 31, 0.62 percent at December 31 and 0.53 percent a year ago. Past due loans for the continuing portfolios were $37.2 million at March 31 compared to $70.7 million at December 31 and $54.7 million a year ago. Past due loans for the liquidating portfolio were $2.8 million at March 31 compared to $3.6 million at December 31 and $5.3 million a year ago.
  • Total nonperforming loans increased to $198.8 million, or 1.66 percent of total loans, at March 31, 2013 compared to $194.8 million, or 1.62 percent, at December 31, 2012 and $178.3 million, or 1.58 percent, at March 31, 2012. Included in nonperforming loans at March 31 and December 31 are $44.0 million and $39.5 million, respectively, of residential and consumer loans classified as nonaccrual under regulatory guidance that took effect in the fourth quarter of 2012. Total paying nonperforming loans at March 31 were $55.3 million compared to $46.5 million at December 31 and $18.1 million a year ago, with the increase consisting primarily of the loans classified as such due to the regulatory guidance.

Deposits and borrowings

  • Total deposits were $14.6 billion at March 31, 2013 compared to $14.5 billion at December 31, 2012 and $13.9 billion at March 31, 2012. Compared to December 31, increases of $206.8 million in interest-bearing checking and $65.7 million in savings deposits were offset by declines of $31.8 million in demand deposits, $39.3 in money market deposits and $108.3 million in certificates of deposit. Compared to a year ago, increases of $357.9 million in demand, $479.6 in interest-bearing checking, $120.7 million in money market and $50.2 million in savings deposits were offset by a decline of $329.0 million in certificates of deposit.
  • Core to total deposits and loans to deposits were 83.3 percent and 82.1 percent, respectively, compared to 82.5 percent and 82.8 percent at December 31, and 80.2 percent and 81.1 percent a year ago.
  • Total borrowings were $3.2 billion at both March 31 and December 31, and $3.1 billion a year ago.

Capital

  • As previously disclosed, the holder of 8.625 million warrants on Webster's common stock exercised the warrants on a net exercise basis on March 22, 2013. Webster issued 4.565 million shares, net, of common stock. The issuance of the 4.565 million shares is reflected in the 90.237 million common shares issued and outstanding at March 31, 2013.  
  • The tangible equity and tangible common equity ratios were 8.12 percent and 7.35 percent, respectively, at March 31, 2013 compared to 7.27 percent and 7.11 percent, respectively, a year ago. The tier 1 common equity to risk-weighted assets ratio was 11.02 percent at March 31 compared to 10.96 percent a year ago.
  • Book value and tangible book value per common share were $21.90 and $15.93, respectively, at March 31 compared to $21.24 and $15.05, respectively a year ago. The comparisons for each figure to a year ago reflect the 4.565 million shares issued during the first quarter of 2013 in connection with the exercise of the 8.625 million warrants on Webster's common stock.
  • Return on average tangible common shareholders' equity and return on average common shareholders' equity were 11.28 percent and 8.01 percent, respectively, in the first quarter compared to 12.04 percent and 8.30 percent, respectively, a year ago.

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 centers, 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 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 2013 first quarter earnings announcement will be held today, Monday, April 15, 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)

March 31, 

2013


December 31,

2012


September 30,

2012


June 30, 

2012


March 31, 

2012











Income and performance ratios (annualized):










Net income attributable to Webster Financial Corp.

$           42,117


$         48,526


$         44,993


$         41,240


$         38,938

Net income available to common shareholders

39,231


47,911


44,378


40,625


38,323

Net income per diluted common share

0.44


0.52


0.48


0.44


0.42

Return on average assets

0.84 %


0.98 %


0.92 %


0.86 %


0.82 %

Return on average tangible common shareholders' equity

11.28


13.66


13.03


12.38


12.04

Return on average common shareholders' equity

8.01


9.74


9.19


8.62


8.30

Noninterest income as a percentage of total revenue

24.88


26.57


25.07


24.70


23.48

Efficiency ratio

62.16


59.68


62.25


63.75


65.63











Asset quality:










Allowance for loan losses

$         167,840


$       177,129


$       186,089


$       198,757


$       210,288

Nonperforming assets

203,355


198,181


167,524


173,621


184,218

Allowance for loan losses / total loans

1.40 %


1.47 %


1.59 %


1.72 %


1.86 %

Net charge-offs / average loans (annualized)

0.56


0.56


0.61


0.58


0.96

Nonperforming loans / total loans

1.66


1.62


1.39


1.47


1.58

Nonperforming assets / total loans plus OREO

1.69


1.65


1.43


1.50


1.63

Allowance for loan losses / nonperforming loans

84.42


90.93


114.44


117.44


117.96











Other ratios (annualized):










Tangible equity ratio

8.12 %


7.92 %


7.52 %


7.35 %


7.27 %

Tangible common equity ratio

7.35


7.15


7.37


7.20


7.11

Tier 1 risk-based capital ratio (a)

12.72


12.47


11.90


12.82


12.86

Total risk-based capital (a)

13.98


13.73


13.16


14.08


14.12

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

11.02


10.78


11.10


10.97


10.96

Shareholders' equity / total assets

10.58


10.39


10.05


9.94


9.90

Net interest margin

3.23


3.27


3.28


3.32


3.36











Share and equity related:










Common equity

$      1,976,482


$    1,941,881


$    1,954,739


$    1,902,609


$    1,866,003

Book value per common share

21.90


22.75


22.24


21.65


21.24

Tangible book value per common share

15.93


16.42


16.08


15.47


15.05

Common stock closing price

24.26


20.55


23.70


21.66


22.67

Dividends declared per common share

0.10


0.10


0.10


0.10


0.05











Common shares issued and outstanding

90,237


85,341


87,899


87,885


87,849

Basic shares (weighted average)

85,501


86,949


87,394


87,291


87,216

Diluted shares (weighted average)

89,662


91,315


91,884


91,543


91,782


(a) The ratios presented are projected for March 31, 2013 and actual for the remaining periods presented.

 

WEBSTER FINANCIAL CORPORATION
Consolidated Balance Sheets (unaudited)

(In thousands)

March 31,

2013


December 31,

2012


March 31,

2012

Assets:






Cash and due from banks

$         118,657


$       252,283


$       173,027

Interest-bearing deposits

51,352


98,205


77,921

Investment securities:






  Available for sale, at fair value

3,318,238


3,136,160


3,144,867

  Held to maturity

3,111,169


3,107,529


3,079,654

  Total securities

6,429,407


6,243,689


6,224,521

Loans held for sale

96,706


107,633


59,615

Loans:






  Commercial

3,346,483


3,323,044


2,888,977

  Commercial real estate

2,790,954


2,783,061


2,425,797

  Residential mortgages

3,287,072


3,291,724


3,270,213

  Consumer

2,577,523


2,630,867


2,727,163

  Total loans

12,002,032


12,028,696


11,312,150

Allowance for loan losses

(167,840)


(177,129)


(210,288)

  Loans, net

11,834,192


11,851,567


11,101,862

Prepaid FDIC premiums

16,644


16,323


32,507

Federal Home Loan Bank and Federal Reserve Bank stock

158,878


155,630


142,595

Premises and equipment, net

127,609


134,562


141,088

Goodwill and other intangible assets, net

538,915


540,157


544,180

Cash surrender value of life insurance policies

420,562


418,293


309,556

Deferred tax asset, net

55,656


68,681


81,676

Accrued interest receivable and other assets

261,960


259,742


245,594

Total Assets

$    20,110,538


$  20,146,765


$  19,134,142







Liabilities and Equity:






Deposits:






  Demand

$      2,849,355


$    2,881,131


$    2,491,442

  Interest-bearing checking

3,286,540


3,079,767


2,806,950

  Money market

2,165,744


2,205,072


2,045,090

  Savings

3,885,394


3,819,713


3,835,180

  Certificates of deposit

2,292,441


2,418,853


2,646,783

  Brokered certificates of deposit

144,408


126,299


119,052

  Total deposits

14,623,882


14,530,835


13,944,497

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

1,033,767


1,076,160


1,268,589

Federal Home Loan Bank advances

1,902,563


1,827,612


1,352,466

Long-term debt

230,709


334,276


474,318

Accrued expenses and other liabilities

191,486


284,352


199,330

  Total liabilities

17,982,407


18,053,235


17,239,200







Preferred stock

151,649


151,649


28,939

Common shareholders' equity

1,976,482


1,941,881


1,866,003

  Webster Financial Corporation shareholders' equity

2,128,131


2,093,530


1,894,942

Total Liabilities and Equity

20,110,538


20,146,765


19,134,142

 

WEBSTER FINANCIAL CORPORATION
Consolidated Statements of Income (unaudited)

(In thousands, except per share data)

Three months ended March 31,


2013


2012

Interest income:




Interest and fees on loans and leases

$         121,061


$       120,741

Interest and dividends on securities

48,385


52,868

Loans held for sale

637


498

  Total interest income

170,083


174,107

Interest expense:




Deposits

12,850


16,056

Borrowings

11,437


14,683

  Total interest expense

24,287


30,739

  Net interest income

145,796


143,368

Provision for loan losses

7,500


4,000

  Net interest income after provision for loan losses

138,296


139,368

Noninterest income:




Deposit service fees

23,994


23,363

Loan related fees

4,585


4,869

Wealth and investment services

7,766


7,221

Mortgage banking activities

7,031


4,383

Increase in cash surrender value of life insurance policies

3,384


2,517

Net gain on investment securities

106


Other income

1,412


1,633

  Total noninterest income

48,278


43,986

Noninterest expense:




Compensation and benefits

66,050


68,619

Occupancy

12,879


12,882

Technology and equipment expense

15,353


15,582

Marketing

4,811


4,100

Professional and outside services

2,150


2,692

Intangible assets amortization

1,242


1,397

Foreclosed and repossessed asset expenses

175


467

Foreclosed and repossessed asset gains

(284)


(664)

Loan workout expenses

1,974


1,824

Deposit insurance

5,174


5,709

Other expenses

14,375


13,990


123,899


126,598

Debt prepayment penalties

43


1,134

Severance, contract, and other

1,593


81

  Total noninterest expense

125,535


127,813

Income before income taxes

61,039


55,541

Income tax expense

18,922


16,603

  Net income attributable to Webster Financial Corp.

42,117


38,938

Preferred stock dividends

(2,886)


(615)

  Net income available to common shareholders

$           39,231


$         38,323





Diluted shares (average)

89,662


91,782

Net income per common share available to common shareholders:




  Basic

$               0.46


$             0.44

  Diluted

0.44


0.42

 

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


Three Months Ended

(In thousands, except per share data)

March 31, 

2013


December 31, 2012


September 30, 2012


June 30, 

2012


March 31, 

2012

Interest income:










Interest and fees on loans and leases

$         121,061


$       122,179


$       121,367


$       121,379


$       120,741

Interest and dividends on securities

48,385


49,752


50,194


52,597


52,868

Loans held for sale

637


615


655


657


498

Total interest income

170,083


172,546


172,216


174,633


174,107

Interest expense:










Deposits

12,850


13,885


14,543


15,102


16,056

Borrowings

11,437


12,389


12,783


15,153


14,683

Total interest expense

24,287


26,274


27,326


30,255


30,739

Net interest income

145,796


146,272


144,890


144,378


143,368

Provision for loan losses

7,500


7,500


5,000


5,000


4,000

Net interest income after provision for loan losses

138,296


138,772


139,890


139,378


139,368

Noninterest income:










Deposit service fees

23,994


24,823


24,728


23,719


23,363

Loan related fees

4,585


5,570


4,039


3,565


4,869

Wealth and investment services

7,766


7,859


7,186


7,249


7,221

Mortgage banking activities

7,031


8,515


6,515


3,624


4,383

Increase in cash surrender value of life insurance policies

3,384


3,496


2,680


2,561


2,517

Net gain on investment securities

106



810


2,537


Other income

1,412


2,677


2,521


4,098


1,633

Total noninterest income

48,278


52,940


48,479


47,353


43,986

Noninterest expense:










Compensation and benefits

66,050


65,769


66,126


63,587


68,619

Occupancy

12,879


12,209


12,462


12,578


12,882

Technology and equipment expense

15,353


15,489


15,118


16,021


15,582

Marketing

4,811


3,104


4,529


5,094


4,100

Professional and outside services

2,150


2,479


2,790


3,387


2,692

Intangible assets amortization

1,242


1,242


1,384


1,397


1,397

Foreclosed and repossessed asset expenses

175


267


118


176


467

Foreclosed and repossessed asset gains

(284)


(383)


(409)


(670)


(664)

Loan workout expenses

1,974


2,338


1,693


2,201


1,824

Deposit insurance

5,174


5,642


5,675


5,723


5,709

Other expenses

14,375


13,934


13,805


14,443


13,990


123,899


122,090


123,291


123,937


126,598

Debt prepayment penalties

43



391


2,515


1,134

Severance, contract, and other

1,593


835


205


727


81

Total noninterest expense

125,535


122,925


123,887


127,179


127,813

Income before income taxes

61,039


68,787


64,482


59,552


55,541

Income tax expense

18,922


20,261


19,489


18,312


16,603

Net income attributable to Webster Financial Corp.

42,117


48,526


44,993


41,240


38,938

Preferred stock dividends

(2,886)


(615)


(615)


(615)


(615)

Net income available to common shareholders

$           39,231


$         47,911


$         44,378


$         40,625


$         38,323











      Diluted shares (average)

89,662


91,315


91,884


91,543


91,782

Net income per common share available to common shareholders:










      Basic

$               0.46


$             0.55


$             0.51


$             0.46


$             0.44

      Diluted

0.44


0.52


0.48


0.44


0.42

 

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

Three Months Ended March 31,



2013






2012



(Dollars in thousands)

Average
balance


Interest


Fully tax-
equivalent
yield/rate


Average
balance


Interest


Fully tax-
equivalent
yield/rate

Assets:












  Interest-earning assets:












  Loans

$    12,024,588


$       121,061


4.04 %


$  11,275,333


$       120,741


4.27 %

  Investment securities (a)

6,194,885


51,015


3.33 %


5,961,336


55,680


3.76 %

  Loans held for sale

89,334


637


2.85 %


51,705


498


3.85 %

  Federal Home Loan and Federal Reserve Bank stock

156,261


847


2.20 %


143,551


876


2.45 %

  Interest-bearing deposits

82,215


46


0.22 %


77,435


30


0.15 %

Total interest-earning assets

18,547,283


173,606


3.76 %


17,509,360


177,825


4.06 %

Noninterest-earning assets

1,504,196






1,394,077





Total assets

20,051,479






18,903,437

















Liabilities and Shareholders' Equity:












Interest-bearing liabilities:












Deposits:












Demand

$      2,836,051


$                  —


—%


$    2,435,197


$                  —


—%

Savings, interest checking, and money market

9,318,300


4,622


0.20 %


8,628,048


5,794


0.27 %

Certificates of deposit

2,500,450


8,228


1.33 %


2,810,203


10,262


1.47 %

Total deposits

14,654,801


12,850


0.36 %


13,873,448


16,056


0.47 %













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

1,091,437


5,055


1.85 %


1,166,550


4,434


1.50 %

Federal Home Loan Bank advances

1,747,858


4,539


1.04 %


1,260,217


4,564


1.43 %

Long-term debt

247,077


1,843


2.98 %


507,116


5,685


4.48 %

Total borrowings

3,086,372


11,437


1.48 %


2,933,883


14,683


1.99 %

Total interest-bearing liabilities

17,741,173


24,287


0.55 %


16,807,331


30,739


0.73 %

Noninterest-bearing liabilities

199,369






219,332





Total liabilities

17,940,542






17,026,663

















Preferred stock

151,649






28,939





Common shareholders' equity

1,959,288






1,847,835





Webster Financial Corp. shareholders' equity

2,110,937






1,876,774





Total liabilities and equity

$    20,051,479






$  18,903,437





Tax-equivalent net interest income



149,319






147,086



Less: tax-equivalent adjustment



(3,523)






(3,718)



Net interest income



$       145,796






$       143,368



Net interest margin





3.23 %






3.36 %



(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)

March 31

2013


December 31,

2012


September 30,

2012


June 30, 

2012


March 31, 

2012

Loan Balances (actuals):










Continuing Portfolio:










Commercial non-mortgage

$      2,397,774


$    2,399,500


$    2,201,732


$    2,069,127


$    1,972,205

Equipment financing

404,597


419,311


401,748


417,654


446,585

Asset based lending

544,112


504,233


535,327


499,212


470,187

Commercial real estate

2,763,262


2,755,320


2,597,835


2,518,392


2,389,206

Residential development

27,692


27,741


30,058


33,035


36,591

Residential mortgages

3,287,071


3,291,723


3,292,947


3,300,616


3,270,212

Consumer

2,461,595


2,508,992


2,537,039


2,565,654


2,585,685

Total continuing

11,886,103


11,906,820


11,596,686


11,403,690


11,170,671

Allowance for loan losses

(146,020)


(152,495)


(156,214)


(168,882)


(180,413)

Total continuing, net

11,740,083


11,754,325


11,440,472


11,234,808


10,990,258

Liquidating Portfolio:










National Construction Lending Center (NCLC)

1


1


1


1


1

Consumer

115,928


121,875


130,965


136,306


141,478

Total liquidating portfolio

115,929


121,876


130,966


136,307


141,479

Allowance for loan losses

(21,820)


(24,634)


(29,875)


(29,875)


(29,875)

Total liquidating, net

94,109


97,242


101,091


106,432


111,604

Total Loan Balances (actuals)

12,002,032


12,028,696


11,727,652


11,539,997


11,312,150

Allowance for loan losses

(167,840)


(177,129)


(186,089)


(198,757)


(210,288)

Loans, net

$    11,834,192


$  11,851,567


$  11,541,563


$  11,341,240


$  11,101,862











Loan Balances (average):










Continuing Portfolio:










Commercial non-mortgage

$      2,422,372


$    2,238,557


$    2,137,882


$    2,008,778


$    1,970,656

Equipment financing

407,849


405,702


404,180


430,882


458,111

Asset based lending

528,797


516,749


520,100


480,574


474,264

Commercial real estate

2,744,101


2,653,749


2,528,394


2,453,430


2,336,576

Residential development

27,507


29,322


31,484


35,422


38,401

Residential mortgages

3,286,946


3,294,254


3,300,067


3,296,306


3,253,199

Consumer

2,488,154


2,526,656


2,552,660


2,576,521


2,598,758

Total continuing

11,905,726


11,664,989


11,474,767


11,281,913


11,129,965

Allowance for loan losses

(153,710)


(161,239)


(167,469)


(179,139)


(201,592)

Total continuing, net

11,752,016


11,503,750


11,307,298


11,102,774


10,928,373

Liquidating Portfolio:










NCLC

1


1


1


1


1

Consumer

118,861


127,701


133,566


138,807


145,367

Total liquidating portfolio

118,862


127,702


133,567


138,808


145,368

Allowance for loan losses

(21,820)


(24,634)


(29,875)


(29,875)


(29,875)

Total liquidating, net

97,042


103,068


103,692


108,933


115,493

Total Loan Balances (average)

12,024,588


11,792,691


11,608,334


11,420,721


11,275,333

Allowance for loan losses

(175,530)


(185,873)


(197,344)


(209,014)


(231,467)

Loans, net

$    11,849,058


$  11,606,818


$  11,410,990


$  11,211,707


$  11,043,866

 

WEBSTER FINANCIAL CORPORATION
Five Quarter Nonperforming Assets (unaudited)











(Dollars in thousands)

March 31, 

2013


December 31,

2012 (a)


September 30,

2012


June 30, 

2012


March 31, 

2012

Nonperforming loans:










Continuing Portfolio:










Commercial non-mortgage

$           16,328


$         17,538


$         30,315


$         29,271


$         31,547

Equipment financing

2,801


3,325


3,052


5,862


4,868

Asset based lending



92


262


1,475

Commercial real estate

24,484


15,683


15,768


23,457


25,131

Residential development

4,793


5,043


5,431


5,982


6,140

Residential mortgages

94,711


95,540


79,736


77,336


79,110

Consumer 

48,370


49,537


23,602


22,616


26,098

Nonperforming loans - continuing portfolio

191,487


186,666


157,996


164,786


174,369

Liquidating Portfolio:










Consumer 

7,323


8,133


4,616


4,460


3,896

Nonperforming loans - liquidating portfolio

7,323


8,133


4,616


4,460


3,896

Total nonperforming loans

$         198,810


$       194,799


$       162,612


$       169,246


$       178,265











Other real estate owned and repossessed assets:










Continuing Portfolio:










Commercial

$                404


$              541


$              917


$              917


$           2,051

Repossessed equipment

995


182


1,840


721


674

Residential

2,629


2,369


1,705


2,271


2,648

Consumer

517


290


450


466


580

Total continuing

4,545


3,382


4,912


4,375


5,953

Liquidating Portfolio:










Total liquidating





Total other real estate owned and repossessed assets

$             4,545


$           3,382


$           4,912


$           4,375


$           5,953

Total nonperforming assets

$         203,355


$       198,181


$       167,524


$       173,621


$       184,218


(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)

March 31, 

2013


December 31,

2012


September 30,

2012


June 30, 

2012


March 31,

2012

Past due 30-89 days:










Accruing loans:










Continuing Portfolio:










Commercial non-mortgage

$             3,788


$           2,769


$           4,424


$           6,479


$           6,938

Equipment financing

1,000


1,926


3,524


1,665


4,099

Asset based lending





Commercial real estate

1,328


14,710


7,136


3,152


1,101

Residential development



317



Residential mortgages

16,571


25,182


22,230


26,966


22,915

Consumer

14,538


24,860


24,664


22,163


19,592

Past Due 30-89 days - continuing portfolio

37,225


69,447


62,295


60,425


54,645

Liquidating Portfolio:










Consumer

2,794


3,588


4,909


4,377


5,263

Past Due 30-89 days - liquidating portfolio

2,794


3,588


4,909


4,377


5,263

Accruing loans past due 90 days or more


1,237


205


1,074


43

Total past due loans

$           40,019


$         74,272


$         67,409


$         65,876


$         59,951

 

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


For the Three Months Ended

(Dollars in thousands)

March 31, 

2013


December 31,

2012 (a)


September 30,

2012


June 30, 

2012


March 31, 

2012

Beginning balance

$         177,129


$       186,089


$       198,757


$       210,288


$       233,487

  Provision

7,500


7,500


5,000


5,000


4,000

Charge-offs continuing portfolio:










Commercial non-mortgage

4,340


6,411


8,642


5,164


14,994

Equipment financing

87


682


187


165


634

Asset based lending


69



512


Commercial real estate

3,617


170


2,655


1,066


5,848

Residential development

143


156




Residential mortgages

2,936


2,597


3,234


3,948


3,115

Consumer

7,357


8,149


6,752


8,122


6,487

Charge-offs continuing portfolio

18,480


18,234


21,470


18,977


31,078

Charge-offs liquidating portfolio:










NCLC



28


4


Consumer

3,049


5,137


2,482


3,227


3,564

Charge-offs liquidating portfolio

3,049


5,137


2,510


3,231


3,564

Total charge-offs

21,529


23,371


23,980


22,208


34,642

Recoveries continuing portfolio:










Commercial non-mortgage

901


1,045


779


957


886

Equipment financing

828


2,899


3,111


1,115


2,348

Asset based lending

698


996


518


721


914

Commercial real estate

91


43


121


34


1,069

Residential development

150


721


181


12


31

Residential mortgages

205


99


318


126


118

Consumer

1,437


674


933


2,453


1,932

Recoveries continuing portfolio

4,310


6,477


5,961


5,418


7,298

Recoveries liquidating portfolio:










NCLC

45


74


35


10


23

Consumer

385


360


316


249


122

Recoveries liquidating portfolio

430


434


351


259


145

Total recoveries

4,740


6,911


6,312


5,677


7,443

Total net charge-offs

16,789


16,460


17,668


16,531


27,199

Ending balance

$         167,840


$       177,129


$       186,089


$       198,757


$       210,288


 (a) 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 common shareholders' equity measures the Company's net income available to common shareholders, adjusted for the tax-affected amortization of intangible assets, as a percentage of average common shareholders' equity less goodwill and intangible assets (excluding mortgage servicing rights). The tangible equity ratio represents total ending shareholders' equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by total assets less goodwill and intangible assets (excluding mortgage servicing rights). The tangible common equity ratio represents ending common shareholders' equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by total assets less goodwill and intangible assets (excluding mortgage servicing rights). Tangible book value per common share represents ending common shareholders' equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by ending common shares outstanding.

 

The efficiency ratio, which measures the costs expended to generate a dollar of revenue, is calculated excluding foreclosed property expense, amortization of intangibles, gain or loss on securities, and other non-recurring items. Accordingly, this is also a non-GAAP financial measure.

 

See the tables below for reconciliations of these non-GAAP financial measures with financial measures defined by GAAP for the three months ended March 31, 2013, December 31, 2012, September 30, 2012, June 30, 2012, and March 31, 2012. The Company believes the use of these non-GAAP financial measures provides additional clarity in assessing the results of the Company. Other companies may define or calculate supplemental financial data differently.

 


At or for the Three Months Ended











(Dollars in thousands)

March 31, 

2013


December 31,

2012


September 30, 2012


June 30,

2012


March 31, 

2012

Reconciliation of net income available to common shareholders to net income used for computing the  return on average tangible common shareholders' equity ratio










Net income available to common shareholders

$           39,231


$         47,911


$         44,378


$         40,625


$         38,323

Amortization of intangibles (tax-affected @ 35%)

807


807


900


908


908

  Quarterly net income adjusted for amortization of intangibles

40,038


48,718


45,278


41,533


39,231

  Annualized net income used in the return on average tangible common shareholders' equity ratio

$         160,152


$       194,872


$       181,112


$       166,132


$       156,924











Reconciliation of average common shareholders' equity to average tangible common shareholders' equity










Average common shareholders' equity

$      1,959,288


$    1,967,312


$    1,931,544


$    1,885,386


$    1,847,835

Average goodwill

(529,887)


(529,887)


(529,887)


(529,887)


(529,887)

Average intangible assets (excluding mortgage servicing rights)

(9,635)


(10,873)


(12,188)


(13,576)


(14,973)

Average tangible common shareholders' equity

$      1,419,766


$    1,426,552


$    1,389,469


$    1,341,923


$    1,302,975











Reconciliation of period-end shareholders' equity to period-end tangible shareholders' equity










Shareholders' equity

$      2,128,131


$    2,093,530


$    1,983,678


$    1,931,548


$    1,894,942

Goodwill

(529,887)


(529,887)


(529,887)


(529,887)


(529,887)

Intangible assets (excluding mortgage servicing rights)

(9,028)


(10,270)


(11,512)


(12,896)


(14,293)

    Tangible shareholders' equity

$      1,589,216


$    1,553,373


$    1,442,279


$    1,388,765


$    1,350,762











Reconciliation of period-end common shareholders' equity to period-end tangible common shareholders' equity










Shareholders' equity

$      2,128,131


$    2,093,530


$    1,983,678


$    1,931,548


$    1,894,942

Preferred stock

(151,649)


(151,649)


(28,939)


(28,939)


(28,939)

Common shareholders' equity

1,976,482


1,941,881


1,954,739


1,902,609


1,866,003

Goodwill

(529,887)


(529,887)


(529,887)


(529,887)


(529,887)

Intangible assets (excluding mortgage servicing rights)

(9,028)


(10,270)


(11,512)


(12,896)


(14,293)

    Tangible common shareholders' equity

$      1,437,567


$    1,401,724


$    1,413,340


$    1,359,826


$    1,321,823











Reconciliation of period-end assets to period-end tangible assets










Assets

$    20,110,538


$  20,146,765


$  19,729,662


$  19,429,749


$  19,134,142

Goodwill

(529,887)


(529,887)


(529,887)


(529,887)


(529,887)

Intangible assets (excluding mortgage servicing rights)

(9,028)


(10,270)


(11,512)


(12,896)


(14,293)

    Tangible assets

$    19,571,623


$  19,606,608


$  19,188,263


$  18,886,966


$  18,589,962











Book value per common share










Common shareholders' equity

$      1,976,482


$    1,941,881


$    1,954,739


$    1,902,609


$    1,866,003

Ending common shares issued and outstanding (in thousands)

90,237


85,341


87,899


87,885


87,849

    Book value per share of common stock

$             21.90


$           22.75


$           22.24


$           21.65


$           21.24











Tangible book value per common share










Tangible common shareholders' equity

$      1,437,567


$    1,401,724


$    1,413,340


$    1,359,826


$    1,321,823

Ending common shares issued and outstanding (in thousands)

90,237


85,341


87,899


87,885


87,849

    Tangible book value per common share

$             15.93


$           16.42


$           16.08


$           15.47


$           15.05











Reconciliation of noninterest expense to noninterest expense used in the efficiency ratio










Noninterest expense

$         125,535


$       122,925


$       123,887


$       127,179


$       127,813

Foreclosed property expense

(175)


(267)


(118)


(176)


(467)

Intangible assets amortization

(1,242)


(1,242)


(1,384)


(1,397)


(1,397)

Other expense

(1,352)


(452)


(187)


(2,572)


(551)

    Noninterest expense used in the efficiency ratio

$         122,766


$       120,964


$       122,198


$       123,034


$       125,398











Reconciliation of income to income used in the efficiency ratio










Net interest income before provision for loan losses

$         145,796


$       146,272


$       144,890


$       144,378


$       143,368

Fully taxable-equivalent adjustment

3,523


3,480


3,740


3,813


3,718

Noninterest income

48,278


52,940


48,479


47,353


43,986

Less: Net gain on investment securities

(106)



(810)


(2,537)


    Income used in the efficiency ratio

$         197,491


$       202,692


$       196,299


$       193,007


$       191,072

 

SOURCE Webster Financial Corporation