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Webster Reports 2013 Fourth Quarter Earnings
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Diluted Earnings per Share of $0.45 for the Quarter including a $0.05 Negative Impact from the Volcker Rule

WATERBURY, Conn., Jan. 17, 2014 /PRNewswire/ -- Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today announced net income available to common shareholders of $41.1 million, or $0.45 per diluted share, for the quarter ended December 31, 2013 compared to $47.9 million, or $0.52 per diluted share, for the quarter ended December 31, 2012. 

Highlights for the quarter or at December 31 include:

  • Earnings per diluted share, excluding one-time items, would be $0.52 compared to $0.50 in the prior quarter and $0.53 a year ago.
  • Combined growth in commercial and commercial real estate loans of $695.6 million, or 11.4 percent, from a year ago. Overall loan growth of $671.1 million, or 5.6 percent, from a year ago.
  • Deposit growth of $323.6 million, or 2.2 percent, from a year ago.
  • The efficiency ratio of 59.30 percent improved by 38 basis points from a year ago. Positive operating leverage of 1.6 percent from the linked quarter and 0.9 percent year-over-year.
  • Record core revenue of $205.4 million including record net interest income of $153.9 million.
  • Continued improvement in asset quality as evidenced by a reduction of 37.6 percent in commercial classified loans and a 28.8 percent reduction in past due loans from a year ago. Nonperforming assets decreased 13.4 percent from a year ago.
  • $7.3 million pre-tax impact from other-than-temporary impairment ("OTTI") charge on certain investment securities (CDO's and CLO's) which was required due to the recently released interagency guidance on permissible investments under the Volcker Rule in the Dodd-Frank Act. The after-tax effect was $4.7 million or $0.05 per diluted share in the quarter.
  • Excluding the OTTI charge, return on average assets and return on average tangible common equity were 0.94 percent and 12.38 percent, respectively, in the quarter compared to 0.98 percent and 13.66 percent, respectively, in the year ago quarter.

"Webster posted a solid quarter with record core pre-provision net revenue of $80 million. Total core revenue exceeded $200 million for the first time in our history," said James C. Smith, chairman and chief executive officer. "Commercial Banking once again led the way in the quarter with continued double-digit loan growth, and wealth management achieved record revenue."

Net interest income (compared to prior year)

  • Net interest income was $153.9 million compared to $146.3 million.
  • Net interest margin was 3.27 percent for both periods. The yield on interest-earning assets and the cost of funds both declined by 12 basis points.
  • Average interest-earning assets totaled $19.1 billion and grew by $811 million, or 4.4 percent. 
  • Average loans grew by $755.5 million, or 6.4 percent.

Provision for loan losses


  • The Company recorded a provision for loan losses of $9.0 million as total loans grew, compared to $8.5 million in the prior quarter and $7.5 million a year earlier.
  • Net charge-offs were $14.0 million compared to $14.4 million in the third quarter and $16.5 million in the year ago period. The ratio of net charge-offs to average loans on an annualized basis was 0.45 percent compared to 0.47 percent in the third quarter and 0.56 percent a year ago.
  • The allowance for loan losses represented 1.20 percent of total loans at year end compared to 1.26 percent at September 30 and 1.47 percent at year end 2012. The allowance for loan losses represented 93.65 percent of nonperforming loans at year end compared to 88.7 percent at September 30 and 90.9 percent at year end 2012.

Noninterest income (compared to prior year)

  • Total noninterest income was $44.3 million compared to $52.9 million, a decrease of $8.7 million; of this decrease, $7.3 million was related to the OTTI charge for certain investment securities related to the Volcker Rule of the Dodd-Frank Act.
  • Excluding the OTTI charge and securities gains, a $1.4 million year-over-year decrease in core noninterest income reflects a decrease of $5.7 million in mortgage banking activities, which was offset by increases of $2.1 million in wealth and investment services, $1.6 million in other income which included $1.1 million in client swap fees, $0.4 million in loan related fees, and $0.4 million in deposit service fees.

Noninterest expense (compared to prior year)

  • Total noninterest expense of $126.6 million compared to $122.9 million, an increase of $3.7 million. Included in noninterest expense in the fourth quarter of 2013 are $1.6 million of net one-time costs that amounted to $0.01 per diluted share on an after-tax basis. These costs consisted primarily of a write-down on assets held for disposition as part of our banking office optimization and severance expenses. There were $0.8 million of net one-time costs in the year ago quarter.
  • Total noninterest expense excluding one-time costs increased $3.0 million. This reflects increases of $2.4 million in compensation and benefits primarily related to group medical and share-price increase expenses; $1.6 million in other expenses; $1.1 million in professional and outside services; and $0.3 million in foreclosed and repossessed asset expenses, net of gains. These increases were partially offset by decreases of $1.0 million in loan workout expenses, $0.9 million in technology and equipment expenses, $0.5 million in deposit insurance, and $0.1 million in occupancy expenses.
  • Foreclosed and repossessed asset expenses were $0.4 million compared to $0.3 million, while net gains on foreclosed and repossessed assets were $0.2 million compared to $0.4 million.

Glenn MacInnes, chief financial officer, said, "The fourth quarter results reflect our ongoing commitment to operating efficiency, pricing discipline on both loans and deposits, prudent management of interest rate and credit risk, and continued attention to asset quality."  


Income taxes

  • The Company recorded $18.8 million of income tax expense in the fourth quarter. The effective tax rate was 30.0 percent compared to 29.5 percent a year ago and reflects a $0.3 million net tax benefit specific to the quarter compared to $0.7 million a year ago.

Investment securities

  • Total investment securities were $6.5 billion at year end and $6.2 billion a year ago. The carrying value of the available for sale portfolio included $4.0 million in net unrealized losses compared to net unrealized gains of $67.0 million a year ago, while the carrying value of the held to maturity portfolio does not reflect $12.2 million in net unrealized gains compared to net unrealized gains of $157.2 million a year ago.

Loans

  • Total loans were $12.7 billion at year end compared to $12.5 billion at September 30 and $12.0 billion at year end 2012. In the quarter, commercial, commercial real estate, residential mortgage, and consumer increased by $132.1 million, $74.5 million, $10.8 million, and $4.4 million, respectively.
  • Compared to a year ago, commercial, commercial real estate, and residential mortgage loans increased by $420.3 million, $275.3 million, and $69.7 million, respectively. Consumer loans decreased by $94.2 million.
  • Loan originations for portfolio in the quarter were $1,094 million compared to $1,144 million in the prior quarter and $1,279 million a year ago. In addition, $95 million of residential loans were originated for sale in the quarter compared to $157 million in the third quarter and $222 million a year ago.

Asset quality

  • Past due loans were $52.9 million at year end compared to $48.3 million at September 30 and $74.3 million a year ago. Compared to September 30, past due commercial non-mortgage, commercial real estate, and consumer loans increased $1.1 million, $4.4 million, and $2.0 million, respectively.  Past due residential mortgages decreased $2.5 million, and loans past due 90 days and still accruing decreased $0.3 million.  Compared to a year ago, all loan categories contributed to the decline except commercial non-mortgage and loans past due 90 days or more and still accruing, which increased $1.3 million and $3.3 million, respectively.
  • Past due loans represented 0.42 percent of total loans at year end, 0.39 percent at September 30, and 0.62 percent a year ago. Past due loans for the continuing portfolios were $51.1 million at year end compared to $45.6 million at September 30 and $70.7 million a year ago. Past due loans for the liquidating portfolio were $1.8 million at December 31 compared to $2.7 million at September 30 and $3.6 million a year ago.
  • Total nonperforming loans decreased to $162.9 million, or 1.28 percent of total loans, at year end compared to $177.6 million, or 1.42 percent, at September 30, and $194.8 million, or 1.62 percent, at year end 2012. Included in nonperforming loans at year end were $43.7 million of residential and consumer loans classified as nonaccrual under regulatory guidance that took effect in the fourth quarter of 2012. This compares to $43.5 million of such loans at September 30 and $39.5 million a year ago. Total paying nonperforming loans at December 31 were $48.8 million compared to $55.8 million at September 30 and $46.5 million a year ago.

Deposits and borrowings


  • Total deposits were $14.9 billion at year end compared to $15.0 billion at September 30 and $14.5 billion at year end 2012. Compared to September 30, increases of $159.4 million in demand, $93.5 million in interest bearing checking, $36.6 million in savings, and $14.6 million in brokered certificates of deposit were offset by declines of $404.1 million in money market deposits due to a seasonal decline in government deposits, and $45.0 million in certificates of deposit. Compared to a year ago, increases of $387.8 million in interest-bearing checking, $247.0 million in demand deposits, $44.2 million in savings, and $21.8 million in brokered certificates of deposit were offset by a decline of $339.8 million in certificates of deposit and $37.5 million in money market deposits.
  • Core to total deposits were 85.0 percent compared to the same level at September 30 and 82.5 percent a year ago. Loans to deposits were 85.5 percent compared to 83.2 percent at September 30 and 82.8 percent a year ago.
  • Total borrowings were $3.6 billion at year end compared to $3.2 billion at both September 30 and a year ago.

Capital (compared to prior year)

  • The tangible equity and tangible common equity ratios were 8.24 percent and 7.49 percent, respectively, at year end compared to 7.92 percent and 7.15 percent, respectively, a year ago. The Tier 1 common equity to risk-weighted assets ratio was 11.43 percent at year end compared to 10.78 percent a year ago.
  • Book value and tangible book value per common share were $22.77 and $16.85, respectively, at year end compared to $22.75 and $16.42, respectively, a year ago.
  • Excluding the OTTI charge, return on average tangible common shareholders' equity and return on average common shareholders' equity were 12.38 percent and 8.98 percent, respectively, in the fourth quarter compared to 13.66 percent and 9.74 percent, respectively, a year ago.

***

Webster Financial Corporation is the holding company for Webster Bank, National Association. With $21 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust and investment services through 169 banking centers, 309 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 fourth quarter earnings announcement will be held today, Friday, January 17, 2014 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,
2013


September 30,
2013


June 30,
2013


March 31,
2013


December 31,
2012











Income and performance ratios (annualized):










Net income attributable to Webster Financial Corp.

$           43,754


$           47,305


$           46,373


$            42,117


$           48,526

Net income available to common shareholders

41,115


44,666


43,734


39,231


47,911

Net income per diluted common share

0.45


0.49


0.48


0.44


0.52

Return on average assets

0.85 %


0.93 %


0.92 %


0.84 %


0.98 %

Return on average tangible common shareholders' equity

11.14


12.43


12.26


11.28


13.66

Return on average common shareholders' equity

8.06


8.93


8.78


8.01


9.74

Noninterest income as a percentage of total revenue

22.34


23.57


26.22


24.88


26.57

Efficiency ratio

59.30


60.07


59.98


62.16


59.68











Asset quality:










Allowance for loan losses

$         152,573


$         157,545


$         163,442


$          167,840


$         177,129

Nonperforming assets

171,607


185,566


190,539


203,355


198,181

Allowance for loan losses / total loans

1.20 %


1.26 %


1.33 %


1.40 %


1.47 %

Net charge-offs / average loans (annualized)

0.45


0.47


0.43


0.56


0.56

Nonperforming loans / total loans

1.28


1.42


1.52


1.66


1.62

Nonperforming assets / total loans plus OREO

1.35


1.49


1.56


1.69


1.65

Allowance for loan losses / nonperforming loans

93.65


88.73


87.55


84.42


90.93











Other ratios (annualized):










Tangible equity ratio

8.24 %


8.13 %


8.03 %


8.12 %


7.92 %

Tangible common equity ratio

7.49


7.37


7.27


7.35


7.15

Tier 1 risk-based capital ratio (a)

13.07


13.05


12.93


12.75


12.47

Total risk-based capital (a)

14.21


14.25


14.19


14.01


13.73

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

11.43


11.38


11.24


11.06


10.78

Shareholders' equity / total assets

10.59


10.52


10.47


10.58


10.39

Net interest margin

3.27


3.23


3.23


3.23


3.27











Share and equity related:










Common equity

$      2,057,539


$      2,016,010


$      1,975,826


$       1,976,482


$      1,941,881

Book value per common share

22.77


22.34


21.88


21.90


22.75

Tangible book value per common share

16.85


16.40


15.93


15.93


16.42

Common stock closing price

31.18


25.53


25.68


24.26


20.55

Dividends declared per common share

0.15


0.15


0.15


0.10


0.10











Common shares issued and outstanding

90,367


90,245


90,289


90,237


85,341

Basic shares (weighted average)

89,887


89,759


89,645


85,501


86,949

Diluted shares (weighted average)

90,602


90,423


90,087


89,662


91,315


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

 

WEBSTER FINANCIAL CORPORATION
Consolidated Balance Sheets (unaudited)



(In thousands)

December 31,
2013


September 30,
2013


December 31,
2012

Assets:






Cash and due from banks

$         223,616


$         266,747


$         252,283

Interest-bearing deposits

23,674


18,192


98,205

Investment securities:






Available for sale, at fair value

3,106,931


3,193,772


3,136,160

Held to maturity

3,358,721


3,205,999


3,107,529

Total securities

6,465,652


6,399,771


6,243,689

Loans held for sale

20,802


40,193


107,633

Loans:






Commercial

3,743,301


3,611,226


3,323,044

Commercial real estate

3,058,362


2,983,863


2,783,061

Residential mortgages

3,361,425


3,350,577


3,291,724

Consumer

2,536,688


2,532,299


2,630,867

Total loans

12,699,776


12,477,965


12,028,696

Allowance for loan losses

(152,573)


(157,545)


(177,129)

Loans, net

12,547,203


12,320,420


11,851,567

Prepaid FDIC premiums



16,323

Federal Home Loan Bank and Federal Reserve Bank stock

158,878


158,878


155,630

Premises and equipment, net

121,605


121,250


134,562

Goodwill and other intangible assets, net

535,238


536,431


540,157

Cash surrender value of life insurance policies

430,535


427,113


418,293

Deferred tax asset, net

65,109


72,180


68,681

Accrued interest receivable and other assets

260,687


248,379


259,742

Total Assets

$    20,852,999


$    20,609,554


$    20,146,765







Liabilities and Equity:






Deposits:






Demand

$      3,128,152


$      2,968,727


$      2,881,131

Interest-bearing checking

3,467,601


3,374,120


3,079,767

Money market

2,167,593


2,571,712


2,205,072

Savings

3,863,930


3,827,345


3,819,713

Certificates of deposit

2,079,027


2,124,073


2,418,853

Brokered certificates of deposit

148,117


133,554


126,299

Total deposits

14,854,420


14,999,531


14,530,835

Securities sold under agreements to repurchase and other borrowings

1,331,662


1,372,290


1,076,160

Federal Home Loan Bank advances

2,052,421


1,602,469


1,827,612

Long-term debt

228,365


229,146


334,276

Accrued expenses and other liabilities

176,943


238,459


284,352

Total liabilities

18,643,811


18,441,895


18,053,235







Preferred stock

151,649


151,649


151,649

Common shareholders' equity

2,057,539


2,016,010


1,941,881

Webster Financial Corporation shareholders' equity

2,209,188


2,167,659


2,093,530

Total Liabilities and Equity

$    20,852,999


$    20,609,554


$    20,146,765







WEBSTER FINANCIAL CORPORATION
Consolidated Statements of Income (unaudited)






Three Months Ended December 31,


Twelve Months Ended December 31,

(In thousands, except per share data)

2013


2012


2013


2012

Interest income:








Interest and fees on loans and leases

$         124,540


$         122,179


$         490,985


$          485,666

Interest and dividends on securities

50,864


49,752


194,587


205,411

Loans held for sale

307


615


2,068


2,425

Total interest income

175,711


172,546


687,640


693,502

Interest expense:








Deposits

10,800


13,885


46,582


59,586

Borrowings

11,027


12,389


44,330


55,008

Total interest expense

21,827


26,274


90,912


114,594

Net interest income

153,884


146,272


596,728


578,908

Provision for loan losses

9,000


7,500


33,500


21,500

Net interest income after provision for loan losses

144,884


138,772


563,228


557,408

Noninterest income:








Deposit service fees

25,182


24,823


98,968


96,633

Loan related fees

5,930


5,570


21,860


18,043

Wealth and investment services

9,990


7,859


34,771


29,515

Mortgage banking activities

2,775


8,515


16,359


23,037

Increase in cash surrender value of life insurance policies

3,422


3,496


13,770


11,254

Net gain on investment securities

4



712


3,347

Other income

4,238


2,677


11,887


10,929


51,541


52,940


198,327


192,758

Loss on write-down of investment securities to fair value

(7,277)



(7,277)


Total noninterest income

44,264


52,940


191,050


192,758

Noninterest expense:








Compensation and benefits

68,155


65,769


264,835


264,101

Occupancy

12,084


12,209


48,794


50,131

Technology and equipment expense

14,583


15,489


60,326


62,210

Marketing

3,225


3,104


15,502


16,827

Professional and outside services

3,601


2,479


9,532


11,348

Intangible assets amortization

1,193


1,242


4,919


5,420

Foreclosed and repossessed asset expenses

400


267


1,338


1,028

Foreclosed and repossessed asset gains

(229)


(383)


(1,295)


(2,126)

Loan workout expenses

1,370


2,338


6,216


8,056

Deposit insurance

5,116


5,642


21,114


22,749

Other expenses

15,547


13,934


61,129


56,172


125,045


122,090


492,410


495,916

Debt prepayment penalties



43


4,040

Severance, contract, and other

389


817


4,284


1,680

Branch and facility optimization

1,205


18


1,322


168

Total noninterest expense

126,639


122,925


498,059


501,804

Income before income taxes

62,509


68,787


256,219


248,362

Income tax expense

18,755


20,261


76,670


74,665

Net income attributable to Webster Financial Corp.

43,754


48,526


179,549


173,697

Preferred stock dividends

(2,639)


(615)


(10,803)


(2,460)

Net income available to common shareholders

$           41,115


$           47,911


$         168,746


$          171,237









Diluted shares (average)

90,602


91,315


90,261


91,649









Net income per common share available to common shareholders:








Basic

$               0.46


$               0.55


$               1.90


$                1.96

Diluted

0.45


0.52


1.86


1.86

 

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








Three Months Ended

(In thousands, except per share data)

December 31,
2013


September 30,
2013


June 30,
2013


March 31,
2013


December 31,
2012

Interest income:










Interest and fees on loans and leases

$         124,540


$         123,664


$         121,720


$          121,061


$         122,179

Interest and dividends on securities

50,864


47,516


47,822


48,385


49,752

Loans held for sale

307


573


551


637


615

Total interest income

175,711


171,753


170,093


170,083


172,546

Interest expense:










Deposits

10,800


10,908


12,024


12,850


13,885

Borrowings

11,027


10,858


11,008


11,437


12,389

Total interest expense

21,827


21,766


23,032


24,287


26,274

Net interest income

153,884


149,987


147,061


145,796


146,272

Provision for loan losses

9,000


8,500


8,500


7,500


7,500

Net interest income after provision for loan losses

144,884


141,487


138,561


138,296


138,772

Noninterest income:










Deposit service fees

25,182


25,170


24,622


23,994


24,823

Loan related fees

5,930


5,840


5,505


4,585


5,570

Wealth and investment services

9,990


8,095


8,920


7,766


7,859

Mortgage banking activities

2,775


665


5,888


7,031


8,515

Increase in cash surrender value of life insurance policies

3,422


3,516


3,448


3,384


3,496

Net gain on investment securities

4


269


333


106


Other income

4,238


2,702


3,535


1,412


2,677


51,541


46,257


52,251


48,278


52,940

Loss on write-down of investment securities to fair value

(7,277)





Total noninterest income

44,264


46,257


52,251


48,278


52,940

Noninterest expense:










Compensation and benefits

68,155


64,862


65,768


66,050


65,769

Occupancy

12,084


11,994


11,837


12,879


12,209

Technology and equipment expense

14,583


14,895


15,495


15,353


15,489

Marketing

3,225


3,649


3,817


4,811


3,104

Professional and outside services

3,601


2,254


1,527


2,150


2,479

Intangible assets amortization

1,193


1,242


1,242


1,242


1,242

Foreclosed and repossessed asset expenses

400


432


331


175


267

Foreclosed and repossessed asset gains

(229)


(532)


(250)


(284)


(383)

Loan workout expenses

1,370


1,296


1,576


1,974


2,338

Deposit insurance

5,116


5,300


5,524


5,174


5,642

Other expenses

15,547


15,407


15,800


14,375


13,934


125,045


120,799


122,667


123,899


122,090

Debt prepayment penalties




43


Severance, contract, and other

389


1,482


919


1,494


817

Branch and facility optimization

1,205



18


99


18

Total noninterest expense

126,639


122,281


123,604


125,535


122,925

Income before income taxes

62,509


65,463


67,208


61,039


68,787

Income tax expense

18,755


18,158


20,835


18,922


20,261

Net income attributable to Webster Financial Corp.

43,754


47,305


46,373


42,117


48,526

Preferred stock dividends

(2,639)


(2,639)


(2,639)


(2,886)


(615)

Net income available to common shareholders

$           41,115


$           44,666


$           43,734


$            39,231


$           47,911











Diluted shares (average)

90,602


90,423


90,087


89,662


91,315











Net income per common share available to common shareholders:










Basic

$               0.46


$               0.50


$               0.49


$                0.46


$               0.55

Diluted

0.45


0.49


0.48


0.44


0.52

 

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










Three Months Ended December 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

$    12,548,193


$         124,540


3.92 %


$     11,792,691


$         122,179


4.10 %

Investment securities (a)

6,327,569


53,141


3.37


6,170,119


52,326


3.43

Federal Home Loan and Federal Reserve Bank stock

158,878


862


2.15


143,557


872


2.42

Interest-bearing deposits

15,190


11


0.28


72,539


34


0.18

Loans held for sale

30,645


307


4.01


90,266


615


2.72

Total interest-earning assets

19,080,475


178,861


3.72


18,269,172


176,026


3.84

Noninterest-earning assets

1,495,745






1,511,979





Total assets

$    20,576,220






$     19,781,151

















Liabilities and Shareholders' Equity:












Interest-bearing liabilities:












Deposits:












Demand

$      3,038,618


$                   —


—%


$       2,832,130


$                   —


—%

Savings, interest checking, and money market

9,618,539


4,668


0.19


9,054,442


4,845


0.21

Certificates of deposit

2,248,483


6,132


1.08


2,594,963


9,040


1.39

Total deposits

14,905,640


10,800


0.29


14,481,535


13,885


0.38













Securities sold under agreements to repurchase and other borrowings

1,320,820


5,278


1.56


1,281,503


5,646


1.72

Federal Home Loan Bank advances

1,734,177


3,930


0.89


1,418,606


4,011


1.11

Long-term debt

228,741


1,819


3.18


334,954


2,732


3.26

Total borrowings

3,283,738


11,027


1.32


3,035,063


12,389


1.61

Total interest-bearing liabilities

18,189,378


21,827


0.47


17,516,598


26,274


0.59

Noninterest-bearing liabilities

194,758






230,923





Total liabilities

18,384,136






17,747,521

















Preferred stock

151,649






66,318





Common shareholders' equity

2,040,435






1,967,312





Webster Financial Corp. shareholders' equity

2,192,084






2,033,630





Total liabilities and equity

$    20,576,220






$     19,781,151





Tax-equivalent net interest income



157,034






149,752



Less: tax-equivalent adjustment



(3,150)






(3,480)



Net interest income



$         153,884






$         146,272



Net interest margin





3.27 %






3.27 %


(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,




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

$    12,235,821


$         490,985


4.01 %


$     11,525,233


$         485,666


4.21 %

Investment securities (a)

6,268,889


204,287


3.28


6,100,219


216,513


3.58

Federal Home Loan and Federal Reserve Bank stock

158,233


3,437


2.17


143,074


3,508


2.45

Interest-bearing deposits

21,800


84


0.39


77,265


141


0.18

Loans held for sale

63,870


2,068


3.24


73,156


2,425


3.31

Total interest-earning assets

18,748,613


700,861


3.74


17,918,947


708,253


3.96

Noninterest-earning assets

1,513,906






1,427,824





Total assets

$    20,262,519






$     19,346,771

















Liabilities and Shareholders' Equity:












Interest-bearing liabilities:












Deposits:












Demand

$      2,939,324


$                   —


—%


$       2,638,025


$                   —


—%

Savings, interest checking, and money market

9,511,386


18,376


0.19


8,824,581


21,061


0.24

Certificates of deposit

2,357,321


28,206


1.20


2,703,414


38,525


1.43

Total deposits

14,808,031


46,582


0.31


14,166,020


59,586


0.42













Securities sold under agreements to repurchase and other borrowings

1,228,002


20,800


1.69


1,207,623


21,034


1.74

Federal Home Loan Bank advances

1,652,471


16,229


0.98


1,389,999


16,943


1.22

Long-term debt

233,850


7,301


3.12


418,896


17,031


4.07

Total borrowings

3,114,323


44,330


1.42


3,016,518


55,008


1.82

Total interest-bearing liabilities

17,922,354


90,912


0.51


17,182,538


114,594


0.67

Noninterest-bearing liabilities

190,452






217,653





Total liabilities

18,112,806






17,400,191

















Preferred stock

151,649






38,335





Common shareholders' equity

1,998,064






1,908,245





Webster Financial Corp. shareholders' equity

2,149,713






1,946,580





Total liabilities and equity

$    20,262,519






$     19,346,771





Tax-equivalent net interest income



609,949






593,659



Less: tax-equivalent adjustment



(13,221)






(14,751)



Net interest income



$         596,728






$         578,908



Net interest margin





3.26 %






3.32 %


(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)

December 31,
2013


September 30,
2013


June 30,
2013


March 31,
2013


December 31,
2012

Loan Balances (actuals):










Continuing Portfolio:










Commercial non-mortgage

$      2,723,566


$      2,573,293


$      2,515,288


$       2,397,774


$      2,399,500

Equipment financing

460,450


425,827


400,658


404,597


419,311

Asset based lending

559,285


612,106


591,981


544,112


504,233

Commercial real estate

3,036,666


2,959,317


2,840,064


2,763,262


2,755,320

Residential development

21,696


24,546


26,750


27,692


27,741

Residential mortgages

3,361,424


3,350,576


3,313,832


3,287,071


3,291,723

Consumer

2,431,786


2,423,829


2,445,792


2,461,595


2,508,992

Total continuing portfolio

12,594,873


12,369,494


12,134,365


11,886,103


11,906,820

Allowance for loan losses

(137,821)


(139,734)


(142,402)


(146,020)


(152,495)

Total continuing portfolio, net

12,457,052


12,229,760


11,991,963


11,740,083


11,754,325

Liquidating Portfolio:










National Construction Lending Center (NCLC)

1


1


1


1


1

Consumer

104,902


108,470


111,927


115,928


121,875

Total liquidating portfolio

104,903


108,471


111,928


115,929


121,876

Allowance for loan losses

(14,752)


(17,811)


(21,040)


(21,820)


(24,634)

Total liquidating portfolio, net

90,151


90,660


90,888


94,109


97,242

Total Loan Balances (actuals)

12,699,776


12,477,965


12,246,293


12,002,032


12,028,696

Allowance for loan losses

(152,573)


(157,545)


(163,442)


(167,840)


(177,129)

Loans, net

$    12,547,203


$    12,320,420


$    12,082,851


$     11,834,192


$    11,851,567











Loan Balances (average):










Continuing Portfolio:










Commercial non-mortgage

$      2,625,654


$      2,517,496


$      2,422,156


$       2,422,372


$      2,238,557

Equipment financing

436,328


413,975


398,084


407,849


405,702

Asset based lending

587,039


599,387


566,623


528,797


516,749

Commercial real estate

2,981,127


2,859,969


2,784,859


2,744,101


2,653,749

Residential development

22,710


25,798


26,724


27,507


29,322

Residential mortgages

3,359,186


3,342,516


3,295,192


3,286,946


3,294,254

Consumer

2,429,354


2,433,705


2,454,041


2,488,154


2,526,656

Total continuing portfolio

12,441,398


12,192,846


11,947,679


11,905,726


11,664,989

Allowance for loan losses

(141,460)


(145,849)


(148,037)


(153,710)


(161,239)

Total continuing portfolio, net

12,299,938


12,046,997


11,799,642


11,752,016


11,503,750

Liquidating Portfolio:










NCLC

1


1


1


1


1

Consumer

106,794


109,620


113,871


118,861


127,701

Total liquidating portfolio

106,795


109,621


113,872


118,862


127,702

Allowance for loan losses

(14,752)


(17,811)


(21,040)


(21,820)


(24,634)

Total liquidating portfolio, net

92,043


91,810


92,832


97,042


103,068

Total Loan Balances (average)

12,548,193


12,302,467


12,061,551


12,024,588


11,792,691

Allowance for loan losses

(156,212)


(163,660)


(169,077)


(175,530)


(185,873)

Loans, net

$    12,391,981


$    12,138,807


$    11,892,474


$     11,849,058


$    11,606,818

 

 

WEBSTER FINANCIAL CORPORATION
Five Quarter Nonperforming Assets (unaudited)







(Dollars in thousands)

December 31,
2013


September 30,
2013


June 30,
2013


March 31,
2013


December 31,
2012

Nonperforming loans:










Continuing Portfolio:










Commercial non-mortgage

$           10,933


$           17,471


$           17,285


$            16,328


$           17,538

Equipment financing

1,141


1,669


1,852


2,801


3,325

Asset based lending





Commercial real estate

13,477


15,899


16,591


24,484


15,683

Residential development

4,186


4,316


4,444


4,793


5,043

Residential mortgages

81,370


86,099


94,208


94,711


95,540

Consumer

45,573


45,587


44,717


48,370


49,537

Nonperforming loans - continuing portfolio

156,680


171,041


179,097


191,487


186,666

Liquidating Portfolio:










Consumer

6,245


6,517


7,594


7,323


8,133

Total nonperforming loans

$         162,925


$         177,558


$         186,691


$          198,810


$         194,799











Other real estate owned and repossessed assets:










Continuing Portfolio:










Commercial

$             3,618


$             3,728


$                404


$                 404


$                541

Repossessed equipment

134


193


505


995


182

Residential

4,648


3,601


2,485


2,629


2,369

Consumer

282


486


454


517


290

Total continuing portfolio

8,682


8,008


3,848


4,545


3,382

Liquidating Portfolio:










Total liquidating portfolio





Total other real estate owned and repossessed assets

$             8,682


$             8,008


$             3,848


$              4,545


$             3,382

Total nonperforming assets

$         171,607


$         185,566


$         190,539


$          203,355


$         198,181



 

WEBSTER FINANCIAL CORPORATION
Five Quarter Past Due Loans (unaudited)







(Dollars in thousands)

December 31,
2013


September 30,
2013


June 30,
2013


March 31,
2013


December 31,
2012

Past due 30-89 days:










Continuing Portfolio:










Commercial non-mortgage

$             4,100


$             2,982


$           10,891


$              3,788


$             2,769

Equipment financing

362


455


783


1,000


1,926

Asset based lending





Commercial real estate

4,897


547


1,985


1,328


14,710

Residential development



737



Residential mortgages

18,285


20,803


16,056


16,571


25,182

Consumer

18,926


15,966


15,976


14,538


24,860

Past due 30-89 days - continuing portfolio

46,570


40,753


46,428


37,225


69,447

Liquidating Portfolio:










Consumer

1,806


2,726


1,902


2,794


3,588

Total past due 30-89 days

48,376


43,479


48,330


40,019


73,035

Loans past due 90 days or more and accruing

4,501


4,811


1,498



1,237

Total past due loans

$           52,877


$           48,290


$           49,828


$            40,019


$           74,272











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








For the Three Months Ended

(Dollars in thousands)

December 31,
2013


September 30,
2013


June 30,
2013


March 31,
2013


December 31,
2012

Beginning balance

$         157,545


$         163,442


$         167,840


$          177,129


$         186,089

Provision

9,000


8,500


8,500


7,500


7,500

Charge-offs continuing portfolio:










Commercial non-mortgage

5,383


3,245


6,156


4,339


6,411

Equipment financing

178


10


4


87


682

Asset based lending

3





69

Commercial real estate

5,086


4,069


2,510


3,617


170

Residential development




143


156

Residential mortgages

2,744


3,800


2,112


2,936


2,597

Consumer

4,402


4,525


5,374


7,358


8,149

Charge-offs continuing portfolio

17,796


15,649


16,156


18,480


18,234

Charge-offs liquidating portfolio:










NCLC





Consumer

1,070


1,302


1,957


3,049


5,137

Charge-offs liquidating portfolio

1,070


1,302


1,957


3,049


5,137

Total charge-offs

18,866


16,951


18,113


21,529


23,371

Recoveries continuing portfolio:










Commercial non-mortgage

2,029


424


998


901


1,045

Equipment financing

630


683


904


828


2,899

Asset based lending

11


2


60


698


996

Commercial real estate

746


99


323


91


43

Residential development

4


6


229


150


721

Residential mortgages

445


141


435


205


99

Consumer

769


1,002


1,571


1,437


674

Recoveries continuing portfolio

4,634


2,357


4,520


4,310


6,477

Recoveries liquidating portfolio:










NCLC

115


11


5


45


74

Consumer

145


186


690


385


360

Recoveries liquidating portfolio

260


197


695


430


434

Total recoveries

4,894


2,554


5,215


4,740


6,911

Total net charge-offs

13,972


14,397


12,898


16,789


16,460

Ending balance

$         152,573


$         157,545


$         163,442


$          167,840


$         177,129



 

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 December 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013, and December 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)

December 31,
2013


September 30,
2013


June 30,
2013


March 31,
2013


December 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

$           41,115


$           44,666


$           43,734


$            39,231


$           47,911

Amortization of intangibles (tax-affected @ 35%)

775


807


807


807


807

Quarterly net income adjusted for amortization of intangibles

41,890


45,473


44,541


40,038


48,718

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

$         167,560


$         181,982


$         178,164


$          160,152


$         194,872