WATERBURY, Conn., July 22, 2021 /PRNewswire/ -- Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A. and its HSA Bank division, today announced earnings applicable to common shareholders of $91.6 million, or $1.01 per diluted share, for the quarter ended June 30, 2021, compared to $50.7 million, or $0.57 per diluted share, for the quarter ended June 30, 2020. Earnings per diluted share would have been $1.21 for the quarter ended June 30, 2021, adjusting for $18.2 million ($17.6 million after tax) of charges related to merger and strategic optimization initiatives.

"We generated strong business performance in the quarter, led by loan growth of 3.2% excluding PPP and an increase in loan originations of $0.5 billion or 26%," said John R. Ciulla, chairman and chief executive officer. "We are making significant progress planning for the integration of two great banking organizations, Webster and Sterling, by working together to deliver for customers, communities, bankers and shareholders."

Highlights for the second quarter of 2021:

  • Revenue of $293.6 million.
  • Loan growth of 3.2 percent linked quarter, excluding Paycheck Protection Program (PPP) loans, led by commercial and commercial real estate which increased 3.8 percent.
  • Originated $2.4 billion in loans, up 26.4 percent linked quarter. Excluding PPP loans, originations totaled $2.3 billion, up 71.5 percent linked quarter.
  • Current Expected Credit Loss (CECL) benefit of $21.5 million with a reserve decrease of $20.4 million compared to the prior quarter, resulting in an allowance coverage of 1.43 percent, or 1.49 percent excluding $0.8 billion of PPP loans.
  • Deposit growth of $2.5 billion, or 9.5 percent from a year ago, with growth of $557.6 million in demand deposits and $536.6 million in HSA deposits.
  • Charges related to merger and strategic optimization initiatives totaled $18.2 million.
  • Net interest margin of 2.82 percent.
  • Efficiency ratio (non-GAAP) of 56.6 percent.

"In the quarter, credit trends continue to be favorable, resulting in a reserve decrease of $20.4 million," said Glenn MacInnes, executive vice president and chief financial officer. "During the quarter, we continued to make progress on our strategic initiatives and remain on track to deliver an 8% to 10% reduction in run rate core non-interest expense by the end of the fourth quarter 2021."

Line of Business performance compared to the second quarter of 2020
Commercial Banking
Webster's Commercial Banking segment serves businesses that have more than $2 million of revenue through our business banking, middle market, asset-based lending, equipment finance, commercial real estate, sponsor finance, and treasury services business units. Additionally, our Wealth group provides wealth management solutions to business owners, operators, and consumers within our targeted markets and retail footprint. As of June 30, 2021, Commercial Banking had $14.7 billion in loans and leases and $8.8 billion in deposit balances.

Commercial Banking Operating Results:






Percent


Three months ended June 30,


Favorable/

(In thousands)


2021

2020


(Unfavorable)

Net interest income


$141,124


$128,123




10.1

%


Non-interest income


25,713


21,849




17.7



Operating revenue


166,837


149,972




11.2



Non-interest expense


61,445


61,261




(0.3)



Pre-tax, pre-provision net revenue


$105,392


$88,711




18.8
















Percent



At June 30,


Increase/

(In millions)


2021

2020


(Decrease)

Loans and leases


$14,654


$14,394




1.8

%


Deposits


8,844


7,747




14.2



AUA / AUM (off balance sheet)


7,061


5,739




23.0



Pre-tax, pre-provision net revenue increased $16.7 million to $105.4 million in the quarter as compared to prior year. Net interest income increased $13.0 million to $141.1 million, primarily driven by PPP loan fee acceleration associated with PPP loan forgiveness, loan rates, and deposit growth. Non-interest income increased $3.9 million to $25.7 million driven by higher trust and investment service fees. Non-interest expense increased $0.2 million to $61.4 million.

HSA Bank
Webster's HSA Bank division offers a comprehensive consumer-directed healthcare solution that includes health savings accounts, health reimbursement arrangements, flexible spending accounts and commuter benefits. Health savings accounts are distributed nationwide directly to employers and individual consumers, as well as through national and regional insurance carriers, benefit consultants and financial advisors. As of June 30, 2021, HSA Bank had $10.7 billion in total footings comprising $7.3 billion in deposit balances and $3.4 billion in assets under administration through linked investment accounts.

HSA Bank Operating Results:






Percent


Three months ended June 30,


Favorable/

(In thousands)


2021

2020


(Unfavorable)

Net interest income


$42,193


$39,334




7.3

%


Non-interest income


26,554


23,103




14.9



Operating revenue


68,747


62,437




10.1



Non-interest expense


32,792


34,020




3.6



Pre-tax, net revenue


$35,955


$28,417




26.5
















Percent



At June 30,


Increase/

(Dollars in millions)


2021

2020


(Decrease)

Number of accounts (thousands)


2,995


2,996




%










Deposits


$7,323


$6,787




7.9



Linked investment accounts (off balance sheet)


3,384


2,249




50.4



Total footings


$10,707


$9,036




18.5



Pre-tax net revenue increased $7.5 million to $36.0 million in the quarter as compared to prior year. Net interest income increased $2.9 million to $42.2 million, due to a 7.9 percent growth in deposits, partially offset by a decline in deposit spreads. Non-interest income increased $3.5 million to $26.6 million, due primarily to increases in interchange, investment, and notional account fees. Non-interest expense decreased $1.2 million to $32.8 million, primarily due to reduced compensation expenses.

Retail Banking
Retail Banking serves consumer and business banking customers primarily throughout southern New England and into Westchester County, New York. Retail Banking is comprised of the Consumer Lending and Small Business Banking business units, as well as a distribution network consisting of 130 banking centers and 253 ATMs, a customer care center, and a full range of web and mobile-based banking services. As of June 30, 2021, Retail Banking had $6.8 billion in loans and $12.7 billion in deposit balances.

Retail Banking Operating Results:






Percent


Three months ended June 30,


Favorable/

(In thousands)


2021

2020


(Unfavorable)

Net interest income


$92,540


$81,609




13.4

%


Non-interest income


16,763


16,281




3.0



Operating revenue


109,303


97,890




11.7



Non-interest expense


72,346


77,119




6.2



Pre-tax, pre-provision net revenue


$36,957


$20,771




77.9
















Percent



At June 30,


Increase/

(In millions)


2021

2020


(Decrease)

Loans


$6,821


$7,409




(7.9)

%


Deposits


12,680


11,826




7.2



Pre-tax, pre-provision net revenue increased $16.2 million to $37.0 million in the quarter as compared to prior year. Net interest income increased $10.9 million to $92.5 million, driven by PPP loan fee acceleration associated with PPP loan forgiveness and deposit growth, partially offset by lower consumer loan balances. Non-interest income increased $0.5 million to $16.8 million driven by higher deposit-related service fees and loan servicing fee income, partially offset by lower fee income from mortgage banking activities. Non-interest expense decreased $4.8 million to $72.3 million driven by lower employee-related, occupancy, and marketing expenses.

Consolidated financial performance:

Quarterly net interest income compared to the second quarter of 2020:

  • Net interest income was $220.9 million compared to $224.4 million.
  • Net interest margin was 2.82 percent compared to 2.99 percent. The yield on interest-earning assets declined by 40 basis points, and the cost of interest-bearing liabilities declined by 25 basis points.
  • Average interest-earning assets totaled $31.6 billion and grew by $1.2 billion, or 3.9 percent.
  • Average loans totaled $21.4 billion and declined by $0.2 billion, or 0.9 percent.
  • Average deposits totaled $28.7 billion and grew by $2.8 billion, or 10.7 percent.

Quarterly provision for credit losses:

  • The provision for credit losses reflects a $21.5 million benefit in the quarter, contributing to a $20.4 million decrease in the allowance for credit losses on loans and leases. The decrease in the allowance reflects improvements to the forecasted economic outlook and favorable credit trends resulting in a release of reserves. The provision for credit losses reflected a $25.8 million benefit in the prior quarter compared to an expense of $40.0 million a year ago.
  • Net recoveries were $1.2 million, compared to net charge-offs of $5.3 million in the prior quarter and $16.4 million a year ago. The ratio of net charge-offs (recoveries) to average loans on an annualized basis was (0.02) percent, compared to 0.10 percent in the prior quarter and 0.30 percent a year ago.
  • The allowance for credit losses on loans and leases represented 1.43 percent of total loans at June 30, 2021, compared to 1.54 percent at March 31, 2021 and 1.64 percent at June 30, 2020. Excluding $0.8 billion of risk free PPP loans, the coverage ratio was 1.49 percent at June 30, 2021, compared to 1.64 percent at March 31, 2021 excluding $1.3 billion of risk free PPP loans, and 1.75 percent at June 30, 2020 excluding $1.3 billion of risk free PPP loans. The allowance represented 255 percent of nonperforming loans at June 30, 2021 compared to 218 percent at March 31, 2021 and 207 percent at June 30, 2020.

Quarterly non-interest income compared to the second quarter of 2020:

  • Total non-interest income was $72.7 million compared to $60.1 million, an increase of $12.6 million. This primarily reflects an increase of $5.3 million due to fair value adjustments; $3.4 million in HSA fee income driven primarily by higher interchange and account service fees; $3.0 million in wealth and investment services primarily due to increase investment activity; and $2.9 million in deposit service fees driven by higher overdraft, interchange, and cash management fees. These increases were partially offset by a $2.9 million decrease in mortgage banking activities due to lower volume and spreads on loans originated for sale.

Quarterly non-interest expense compared to the second quarter of 2020:

  • Total non-interest expense was $187.0 million compared to $176.6 million, an increase of $10.4 million. This primarily reflects $18.2 million of charges related to merger and strategic optimization initiatives, partially offset by a $2.0 million decrease in compensation and benefits primarily due to the effects of the strategic initiatives and a $1.3 million decrease in deposit insurance.

Quarterly income taxes compared to the second quarter of 2020:

  • Income tax expense was $34.0 million compared to $14.8 million and the effective tax rate was 26.6 percent compared to 21.8 percent.
  • The higher effective tax rate in the quarter reflects the effects of merger related expenses recognized during the period estimated to be nondeductible for tax purposes and increased pre-tax income in 2021 compared to 2020, partially offset by the recognition of discrete tax benefits during the quarter.

Investment securities:

  • Total investment securities were $8.9 billion, compared to $8.9 billion at March 31, 2021 and $8.7 billion at June 30, 2020. The carrying value of the available-for-sale portfolio included $49.3 million of net unrealized gains, compared to $51.3 million at March 31, 2021 and $87.2 million at June 30, 2020. The carrying value of the held-to-maturity portfolio does not reflect $170.5 million of net unrealized gains, compared to $162.6 million at March 31, 2021 and $268.4 million at June 30, 2020.

Loans:

  • Total loans were $21.5 billion, compared to $21.3 billion at March 31, 2021 and $21.8 billion at June 30, 2020. Compared to March 31, 2021, commercial real estate loans increased by $72.6 million while commercial loans decreased by $19.8 million, residential mortgages increased by $187.4 million, and consumer loans decreased by $66.6 million.
  • Compared to a year ago, commercial real estate loans increased by $203.4 million and commercial loans (excluding PPP loans) increased by $341.9 million, while consumer loans decreased by $336.6 million and residential mortgages decreased by $65.3 million. PPP loans totaled $0.8 billion at June 30, 2021.
  • Loan originations for the portfolio were $2.333 billion ($2.269 billion excluding PPP loan originations), compared to $1.807 billion ($1.274 billion excluding PPP loan originations) in the prior quarter and $2.817 billion ($1.413 billion excluding PPP loan originations) a year ago. In addition, $55 million of residential loans were originated for sale in the quarter, compared to $81 million in the prior quarter and $115 million a year ago.

Asset quality:

  • Total nonperforming loans were $120.7 million, or 0.56 percent of total loans, compared to $150.4 million, or 0.71 percent of total loans, at March 31, 2021 and $173.1 million, or 0.79 percent of total loans, at June 30, 2020. As of June 30, 2021, $52.8 million of nonperforming loans were contractually current.
  • Past due loans were $18.4 million, compared to $20.4 million at March 31, 2021 and $39.8 million at June 30, 2020.

Deposits and borrowings:

  • Total deposits were $28.8 billion, compared to $28.5 billion at March 31, 2021 and $26.4 billion at June 30, 2020. Core deposits to total deposits were 93.0 percent, compared to 92.2 percent at March 31, 2021 and 89.9 percent at June 30, 2020. The loan to deposit ratio was 74.4 percent, compared to 74.8 percent at March 31, 2021 and 82.7 percent at June 30, 2020.
  • Total borrowings were $1.2 billion, compared to $1.2 billion at March 31, 2021 and $2.8 billion at June 30, 2020.

Capital:

  • The return on average common shareholders' equity and the return on average tangible common shareholders' equity were 11.63 percent and 14.26 percent, respectively, compared to 6.79 percent and 8.47 percent, respectively, in the second quarter of 2020.
  • The tangible equity and tangible common equity ratios were 8.35 percent and 7.91 percent, respectively, compared to 8.14 percent and 7.69 percent, respectively, at June 30, 2020. The common equity tier 1 risk-based capital ratio was 11.65 percent, compared to 11.17 percent at June 30, 2020.
  • Book value and tangible book value per common share were $35.15 and $28.99, respectively, compared to $33.59 and $27.40, respectively, at June 30, 2020.

***

Webster Financial Corporation is the holding company for Webster Bank, National Association and its HSA Bank division. With $33.8 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust, and investment services through 130 banking centers and 253 ATMs. Webster also provides mobile and Internet banking. Webster Bank owns the asset-based lending firm Webster Business Credit Corporation; the equipment finance firm Webster Capital Finance Corporation; and HSA Bank, a division of Webster Bank, which provides health savings account trustee and administrative services. Webster Bank is a member of the FDIC and an equal housing lender. For more information about Webster, including past press releases and the latest annual report, visit the Webster website at www.websterbank.com.

Conference Call

A conference call covering Webster's second quarter 2021 earnings announcement will be held today, Thursday, July 22, 2021 at 9:00 a.m. Eastern Time. To listen to the live call, please dial 877-407-8289, or 201-689-8341 for international callers. The webcast, along with related slides, will be available on the Webster website (www.wbst.com). A replay of the conference call will be available for one week via the website listed above, beginning at approximately 11:00 a.m. (Eastern) on July 22, 2021. To access the replay, dial 877-660-6853, or 201-612-7415 for international callers. The replay conference ID number is 13720459.

Media Contact
Alice Ferreira, 203-578-2610
acferreira@websterbank.com

Investor Contact
Kristen Manginelli, 203-578-2307
kmanginelli@websterbank.com

Forward-Looking Statements

This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"). Forward-looking statements can be identified by words such as "believes," "anticipates," "expects," "intends," "targeted," "continue," "remain," "will," "should," "may," "plans," "estimates," and similar references to future periods; however, such words are not the exclusive means of identifying such statements. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, and other financial items; (ii) statements of plans, objectives, and expectations of Webster or its management or Board of Directors; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Forward-looking statements are based on Webster's current expectations and assumptions regarding its business, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Webster's actual results may differ materially from those contemplated by the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to: (1) our ability to complete the acquisition of Sterling Bancorp and realize the anticipated benefits of the merger; (2) our ability to successfully execute our business plan and strategic initiatives, and manage any risks or uncertainties; (3) our ability to successfully achieve the anticipated cost reductions and operating efficiencies from our completed branch consolidations and other strategic initiatives, including process automation, organization simplification, and spending reductions, and avoid any higher than anticipated costs or delays in the ongoing implementation; (4) local, regional, national, and international economic conditions and the impact they may have on us and our customers; (5) volatility and disruption in national and international financial markets; (6) the potential adverse effects of the ongoing novel coronavirus (COVID-19) pandemic and any governmental or societal responses thereto, or other unusual and infrequently occurring events; (7) changes in the level of nonperforming assets and charge-offs; (8) changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (9) adverse conditions in the securities markets that lead to impairment in the value of our investment securities; (10) inflation, changes in interest rates (including the replacement of LIBOR as an interest rate benchmark), and monetary fluctuations; (11) the timely development and acceptance of new products and services and the perceived value of those products and services by customers; (12) changes in deposit flows, consumer spending, borrowings, and savings habits; (13) our ability to implement new technologies and maintain secure and reliable technology systems; (14) the effects of any cyber threats, attacks or events or fraudulent activity; (15) performance by our counterparties and vendors; (16) our ability to increase market share and control expenses; (17) changes in the competitive environment among banks, financial holding companies, and other financial services providers; (18) changes in laws and regulations (including those concerning banking, taxes, dividends, securities, insurance, and healthcare) with which we and our subsidiaries must comply; (19) the effect of changes in accounting policies and practices applicable to us, including impacts of recently adopted accounting guidance; (20) legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews; (21) our ability to appropriately address social, environmental, and sustainability concerns that may arise from our business activities; and (22) the other factors that are described in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q under the headings "Risk Factors" and "Management Discussion and Analysis of Financial Condition and Results of Operation." Any forward-looking statement made by the Company in this release speaks only as of the date on which it is made. Factors or events that could cause the Company's actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Non-GAAP Financial Measures

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

We believe that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, our performance trends and financial position. We utilize these measures for internal planning and forecasting purposes. We, as well as securities analysts, investors, and other interested parties, also use these measures to compare peer company operating performance. We believe that our presentation and discussion, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting our business and allows investors to view performance in a manner similar to management. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results, and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.

WEBSTER FINANCIAL CORPORATION
Selected Financial Highlights (unaudited)




At or for the Three Months Ended


(In thousands, except per share data)


June 30, 2021




March 31, 2021




December 31, 2020




September 30, 2020




June 30, 2020






















Income and performance ratios:




















Net income

$

94,035



$

108,078



$

60,044



$

69,281



$

53,097


Earnings applicable to common shareholders


91,555




105,530




57,715




66,890




50,729


Earnings per diluted common share


1.01




1.17




0.64




0.75




0.57


Return on average assets


1.12

%



1.31

%



0.73

%



0.84

%



0.65

%

Return on average tangible common shareholders' equity (non-GAAP)


14.26




16.79




9.31




10.91




8.47


Return on average common shareholders' equity


11.63




13.65




7.51




8.80




6.79


Non-interest income as a percentage of total revenue


24.77




25.54




26.14




25.50




21.12






















Asset quality:




















Allowance for credit losses on loans and leases

$

307,945



$

328,351



$

359,431



$

369,811



$

358,522


Nonperforming assets


123,497




152,808




170,314




167,314




178,381


Allowance for credit losses on loans and leases / total loans and leases


1.43

%



1.54

%



1.66

%



1.69

%



1.64

%

Net charge-offs (recoveries) / average loans and leases (annualized)


(0.02)




0.10




0.17




0.21




0.30


Nonperforming loans and leases / total loans and leases


0.56




0.71




0.78




0.74




0.79


Nonperforming assets / total loans and leases plus OREO


0.57




0.72




0.79




0.77




0.82


Allowance for credit losses on loans and leases / nonperforming loans and leases


255.05




218.29




213.94




227.39




207.17






















Other ratios:




















Tangible equity (non-GAAP)


8.35

%



8.30

%



8.35

%



8.19

%



8.14

%

Tangible common equity (non-GAAP)


7.91




7.85




7.90




7.75




7.69


Tier 1 risk-based capital (a)


12.28




12.55




11.99




11.88




11.82


Total risk-based capital (a)


13.68




14.08




13.59




13.47




13.42


Common equity tier 1 risk-based capital (a)


11.65




11.89




11.35




11.23




11.17


Shareholders' equity / total assets


9.86




9.84




9.92




9.76




9.71


Net interest margin


2.82




2.92




2.83




2.88




2.99


Efficiency ratio (non-GAAP)


56.64




58.46




60.27




59.99




60.04






















Equity and share related:




















Common equity

$

3,184,668



$

3,127,891



$

3,089,588



$

3,074,653



$

3,029,742


Book value per common share


35.15




34.60




34.25




34.09




33.59


Tangible book value per common share (non-GAAP)


28.99




28.41




28.04




27.86




27.40


Common stock closing price


53.34




55.11




42.15




26.41




28.61


Dividends declared per common share


0.40




0.40




0.40




0.40




0.40


Common shares issued and outstanding


90,594




90,410




90,199




90,204




90,194


Weighted-average common shares outstanding - Basic


90,027




89,809




89,645




89,630




89,485


Weighted-average common shares outstanding - Diluted


90,221




90,108




89,915




89,738




89,570






















(a) Presented as preliminary for June 30, 2021 and actual for the remaining periods. In accordance with regulatory capital rules, the Company elected an option to delay the estimated impact of CECL on its regulatory capital for two years followed by a three year transition period ending December 31, 2024. As a result, capital ratios and amounts as of June 30, 2021 exclude the impact of the increased allowance for credit losses on loans, held-to-maturity debt securities and unfunded loan commitments attributed to the adoption of CECL.

 

WEBSTER FINANCIAL CORPORATION
Consolidated Balance Sheets (unaudited)

(In thousands)


June 30, 2021




March 31, 2021




June 30, 2020

Assets:











Cash and due from banks

$

193,430



$

160,703



$

198,680

Interest-bearing deposits


1,386,463




1,210,958




104,444

Securities:











Available for sale


3,262,893




3,313,980




3,183,624

Held to maturity, net


5,623,243




5,567,785




5,476,817

Total securities, net


8,886,136




8,881,765




8,660,441

Loans held for sale


4,335




17,262




46,446

Loans and Leases:











Commercial


8,417,719




8,437,487




8,546,769

Commercial real estate


6,410,672




6,338,056




6,207,314

Residential mortgages


4,856,302




4,668,945




4,921,573

Consumer


1,790,308




1,856,895




2,126,861

Total loans and leases


21,475,001




21,301,383




21,802,517

Allowance for credit losses on loans and leases


(307,945)




(328,351)




(358,522)

Loans and leases, net


21,167,056




20,973,032




21,443,995

Federal Home Loan Bank and Federal Reserve Bank stock


76,874




77,674




94,495

Premises and equipment, net


215,716




220,982




258,392

Goodwill and other intangible assets, net


558,485




559,617




558,367

Cash surrender value of life insurance policies


570,380




567,298




557,325

Deferred tax asset, net


78,268




80,235




77,145

Accrued interest receivable and other assets


616,609




509,511




708,887

Total Assets

$

33,753,752



$

33,259,037



$

32,708,617












Liabilities and Shareholders' Equity:











Deposits:











Demand

$

6,751,373



$

6,680,114



$

6,193,757

Health savings accounts


7,323,421




7,455,181




6,786,845

Interest-bearing checking


3,843,725




3,792,309




3,280,125

Money market


3,442,319




3,015,565




2,686,650

Savings


5,471,584




5,304,532




4,742,573

Certificates of deposit


2,014,544




2,234,133




2,666,047

Total deposits


28,846,966




28,481,834




26,355,997

Securities sold under agreements to repurchase and other borrowings


507,124




498,378




1,688,805

Federal Home Loan Bank advances


138,444




138,554




523,321

Long-term debt


565,297




566,480




570,029

Accrued expenses and other liabilities


366,216




300,863




395,686

Total liabilities


30,424,047




29,986,109




29,533,838

Preferred stock


145,037




145,037




145,037

Common shareholders' equity


3,184,668




3,127,891




3,029,742

Total shareholders' equity


3,329,705




3,272,928




3,174,779

Total Liabilities and Shareholders' Equity

$

33,753,752



$

33,259,037



$

32,708,617












 

WEBSTER FINANCIAL CORPORATION
Consolidated Statements of Income (unaudited)



Three Months Ended June 30,




Six Months Ended June 30,

(In thousands, except per share data)


2021




2020




2021




2020

Interest income:















Interest and fees on loans and leases

$

185,919



$

196,521



$

376,455



$

412,708

Interest and dividends on securities


45,586




55,570




90,533




113,678

Loans held for sale


53




184




144




359

Total interest income


231,558




252,275




467,132




526,745

Interest expense:















Deposits


5,094




18,805




11,533




46,648

Borrowings


5,612




9,063




10,983




24,889

Total interest expense


10,706




27,868




22,516




71,537

Net interest income


220,852




224,407




444,616




455,208

Provision for credit losses


(21,500)




40,000




(47,250)




116,000

Net interest income after provision for loan and lease losses


242,352




184,407




491,866




339,208

Non-interest income:















Deposit service fees


41,439




35,839




81,908




78,409

Loan and lease related fees


7,862




6,968




16,175




13,464

Wealth and investment services


10,087




7,102




19,490




15,841

Mortgage banking activities


1,319




4,205




3,961




7,098

Increase in cash surrender value of life insurance policies


3,603




3,624




7,136




7,204

Gain on investment securities, net


-




-




-




8

Other income


8,392




2,338




20,789




11,430

Total non-interest income


72,702




60,076




149,459




133,454

Non-interest expense:















Compensation and benefits


97,754




99,731




205,354




201,618

Occupancy


14,010




14,245




29,660




28,730

Technology and equipment


27,124




27,468




55,640




55,305

Marketing


3,227




3,286




5,731




6,788

Professional and outside services


21,025




6,158




30,801




11,821

Intangible assets amortization


1,132




962




2,271




1,924

Loan workout expenses


327




392




721




885

Deposit insurance


3,749




5,015




7,705




9,740

Other expenses


18,680




19,327




37,127




38,609

Total non-interest expense


187,028




176,584




375,010




355,420

Income before income taxes


128,026




67,899




266,315




117,242

Income tax expense


33,991




14,802




64,202




25,946

Net income


94,035




53,097




202,113




91,296

Preferred stock dividends and other


(2,480)




(2,368)




(5,028)




(4,530)

Earnings applicable to common shareholders

$

91,555



$

50,729



$

197,085



$

86,766
















Weighted-average common shares outstanding - Diluted


90,221




89,570




90,164




90,391
















Earnings per common share:















Basic

$

1.02



$

0.57



$

2.19



$

0.96

Diluted


1.01




0.57




2.19




0.96
















 

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



Three Months Ended

(In thousands, except per share data)


June 30, 2021




March 31, 2021




December 31, 2020




September 30, 2020




June 30, 2020

Interest income:



















Interest and fees on loans and leases

$

185,919



$

190,536



$

189,010



$

188,001



$

196,521

Interest and dividends on securities


45,586




44,947




46,874




51,009




55,570

Loans held for sale


53




91




181




229




184

Total interest income


231,558




235,574




236,065




239,239




252,275

Interest expense:



















Deposits


5,094




6,439




8,651




12,598




18,805

Borrowings


5,612




5,371




10,485




7,385




9,063

Total interest expense


10,706




11,810




19,136




19,983




27,868

Net interest income


220,852




223,764




216,929




219,256




224,407

Provision for credit losses


(21,500)




(25,750)




(1,000)




22,750




40,000

Net interest income after provision for loan and lease losses


242,352




249,514




217,929




196,506




184,407

Non-interest income:



















Deposit service fees


41,439




40,469




38,345




39,278




35,839

Loan and lease related fees


7,862




8,313




9,095




6,568




6,968

Wealth and investment services


10,087




9,403




8,820




8,255




7,102

Mortgage banking activities


1,319




2,642




4,110




7,087




4,205

Increase in cash surrender value of life insurance policies


3,603




3,533




3,662




3,695




3,624

Other income


8,392




12,397




12,731




10,177




2,338

Total non-interest income


72,702




76,757




76,763




75,060




60,076

Non-interest expense:



















Compensation and benefits


97,754




107,600




122,754




104,019




99,731

Occupancy


14,010




15,650




28,024




14,275




14,245

Technology and equipment


27,124




28,516




29,122




27,846




27,468

Marketing


3,227




2,504




3,485




3,852




3,286

Professional and outside services


21,025




9,776




11,380




9,223




6,158

Intangible assets amortization


1,132




1,139




1,147




1,089




962

Loan workout expenses


327




394




261




612




392

Deposit insurance


3,749




3,956




4,372




4,204




5,015

Other expenses


18,680




18,447




18,985




18,876




19,327

Total non-interest expense


187,028




187,982




219,530




183,996




176,584

Income before income taxes


128,026




138,289




75,162




87,570




67,899

Income tax expense


33,991




30,211




15,118




18,289




14,802

Net income


94,035




108,078




60,044




69,281




53,097

Preferred stock dividends and other


(2,480)




(2,548)




(2,329)




(2,391)




(2,368)

Earnings applicable to common shareholders

$

91,555



$

105,530



$

57,715



$

66,890



$

50,729




















Weighted-average common shares outstanding - Diluted


90,221




90,108




89,915




89,738




89,570




















Earnings per common share:



















Basic

$

1.02



$

1.18



$

0.64



$

0.75



$

0.57

Diluted


1.01




1.17




0.64




0.75




0.57

 

WEBSTER FINANCIAL CORPORATION
Consolidated Average Balances, Interest, Yields and Rates, and Net Interest Margin on a Fully Tax-equivalent Basis (unaudited)




Three Months Ended June 30,




2021








2020


(Dollars in thousands)


Average balance




Interest




Yield/rate








Average balance



Interest


Yield/rate

Assets:

























Interest-earning assets:

























Loans and leases

$

21,413,439



$

186,681




3.46

%






$

21,608,914


$

197,317


3.63

%

Investment securities (a)


8,834,859




46,582




2.13








8,579,213



56,465


2.69


Federal Home Loan and Federal Reserve Bank stock


77,292




382




1.98








108,962



865


3.19


Interest-bearing deposits (b)


1,270,121




347




0.11








99,467



5


0.02


Loans held for sale


8,898




53




2.37








24,266



184


3.03


Total interest-earning assets


31,604,609



$

234,045




2.95

%







30,420,822


$

254,836


3.35

%

Non-interest-earning assets


1,901,412
















2,062,534







Total Assets

$

33,506,021















$

32,483,356
































Liabilities and Shareholders' Equity:

























Interest-bearing liabilities:

























Demand deposits

$

6,774,206



$

-




-

%






$

5,823,655


$

-


-

%

Health savings accounts


7,446,735




1,650




0.09








6,846,210



2,604


0.15


Interest-bearing checking, money market and savings


12,365,074




1,603




0.05








10,390,143



6,462


0.25


Certificates of deposit


2,114,889




1,841




0.35








2,869,471



9,739


1.36


Total deposits


28,700,904




5,094




0.07








25,929,479



18,805


0.29



























Securities sold under agreements to repurchase and other borrowings


500,638




860




0.68








1,577,881



980


0.25


Federal Home Loan Bank advances


138,483




534




1.52








839,830



3,748


1.77


Long-term debt (a)


565,874




4,218




3.22








570,679



4,335


3.31


Total borrowings


1,204,995




5,612




1.93








2,988,390



9,063


1.23


Total interest-bearing liabilities


29,905,899



$

10,706




0.14

%







28,917,869


$

27,868


0.39

%

Non-interest-bearing liabilities


288,716
















410,119







Total liabilities


30,194,615
















29,327,988
































Preferred stock


145,037
















145,037







Common shareholders' equity


3,166,369
















3,010,331







Total shareholders' equity


3,311,406
















3,155,368







Total Liabilities and Shareholders' Equity

$

33,506,021















$

32,483,356







Tax-equivalent net interest income






223,339















226,968




Less: tax-equivalent adjustments






(2,487)















(2,561)




Net interest income





$

220,852














$

224,407




Net interest margin










2.82

%












2.99

%


























(a) For purposes of yield/rate computation, unrealized gain (loss) balances on securities available for sale and senior fixed-rate notes hedges are excluded.


(b) Interest-bearing deposits is a component of cash and cash equivalents.


 

WEBSTER FINANCIAL CORPORATION
Consolidated Average Balances, Interest, Yields and Rates, and Net Interest Margin on a Fully Tax-equivalent Basis (unaudited)




Six Months Ended June 30,




2021








2020


(Dollars in thousands)


Average balance




Interest




Yield/rate








Average balance



Interest


Yield/rate


Assets:

























Interest-earning assets:

























Loans and leases

$

21,447,192



$

377,969




3.51

%






$

20,966,857


$

414,235


3.93

%

Investment securities (a)


8,862,314




92,859




2.13








8,449,480



114,873


2.77


Federal Home Loan and Federal Reserve Bank stock


77,461




619




1.61








117,663



2,116


3.62


Interest-bearing deposits (b)


976,873




523




0.11








83,887



196


0.46


Loans held for sale


11,610




144




2.48








23,281



359


3.08


Total interest-earning assets


31,375,450



$

472,114




3.01

%







29,641,168


$

531,779


3.59

%

Non-interest-earning assets


1,941,640
















1,996,765







Total Assets

$

33,317,090















$

31,637,933
































Liabilities and Shareholders' Equity:

























Interest-bearing liabilities:

























Demand deposits

$

6,606,464



$

-




-

%






$

5,170,280


$

-


-

%

Health savings accounts


7,448,943




3,257




0.09








6,803,784



5,900


0.17


Interest-bearing checking, money market and savings


12,181,295




3,323




0.06








10,053,559



18,865


0.38


Certificates of deposit


2,242,250




4,953




0.45








2,968,514



21,883


1.48


Total deposits


28,478,952




11,533




0.08








24,996,137



46,648


0.38



























Securities sold under agreements to repurchase and other borrowings


511,622




1,495




0.58








1,437,403



4,710


0.65


Federal Home Loan Bank advances


137,143




1,047




1.52








1,082,865



10,617


1.94


Long-term debt (a)


566,462




8,441




3.22








560,964



9,562


3.66


Total borrowings


1,215,227




10,983




1.87








3,081,232



24,889


1.62


Total interest-bearing liabilities


29,694,179



$

22,516




0.15

%







28,077,369


$

71,537


0.51

%

Non-interest-bearing liabilities


339,949
















386,118







Total liabilities


30,034,128
















28,463,487
































Preferred stock


145,037
















145,037







Common shareholders' equity


3,137,925
















3,029,409







Total shareholders' equity


3,282,962
















3,174,446







Total Liabilities and Shareholders' Equity

$

33,317,090















$

31,637,933







Tax-equivalent net interest income






449,598















460,242




Less: tax-equivalent adjustments






(4,982)















(5,034)




Net interest income





$

444,616














$

455,208




Net interest margin










2.87

%












3.11

%


























(a) For purposes of yield/rate computation, unrealized gain (loss) balances on securities available for sale and senior fixed-rate notes hedges are excluded.


(b) Interest-bearing deposits is a component of cash and cash equivalents.


 

WEBSTER FINANCIAL CORPORATION
Five Quarter Loan and Lease Balances (unaudited)

(Dollars in thousands)


June 30, 2021




March 31, 2021




December 31, 2020




September 30, 2020




June 30, 2020

Loan and Lease Balances (actual):



















Commercial non-mortgage

$

7,473,758



$

7,530,066



$

7,687,300



$

7,722,838



$

7,606,245

Asset-based lending


943,961




907,421




890,598




889,711




940,524

Commercial real estate


6,410,672




6,338,056




6,322,637




6,307,567




6,207,314

Residential mortgages


4,856,302




4,668,945




4,782,016




4,885,821




4,921,573

Consumer


1,790,308




1,856,895




1,958,664




2,046,086




2,126,861

Total Loan and Lease Balances


21,475,001




21,301,383




21,641,215




21,852,023




21,802,517

Allowance for credit losses on loans and leases


(307,945)




(328,351)




(359,431)




(369,811)




(358,522)

Loans and Leases, net

$

21,167,056



$

20,973,032



$

21,281,784



$

21,482,212



$

21,443,995




















Loan and Lease Balances (average):



















Commercial non-mortgage

$

7,545,398



$

7,650,367



$

7,662,828



$

7,683,879



$

7,318,814

Asset-based lending


937,580




896,093




874,221




922,653




1,030,928

Commercial real estate


6,365,830




6,303,765




6,363,776




6,260,114




6,136,091

Residential mortgages


4,738,859




4,720,703




4,821,199




4,914,368




4,946,746

Consumer


1,825,772




1,910,392




2,007,226




2,089,726




2,176,335

Total Loan and Lease Balances


21,413,439




21,481,320




21,729,250




21,870,740




21,608,914

Allowance for credit losses on loans and leases


(332,522)




(364,358)




(375,080)




(363,552)




(340,050)

Loans and Leases, net

$

21,080,917



$

21,116,962



$

21,354,170



$

21,507,188



$

21,268,864


WEBSTER FINANCIAL CORPORATION
Five Quarter Nonperforming Assets and Past Due Loans and Leases (unaudited)

(Dollars in thousands)


June 30, 2021




March 31, 2021




December 31, 2020




September 30, 2020




June 30, 2020

Nonperforming loans and leases:



















Commercial non-mortgage

$

57,831



$

60,103



$

71,499



$

75,080



$

75,340

Asset-based lending


2,403




2,430




2,622




3,789




138

Commercial real estate


12,687




13,743




21,222




8,784




15,889

Residential mortgages


21,467




42,708




41,033




41,498




46,500

Consumer 


26,353




31,437




31,629




33,485




35,187

Total nonperforming loans and leases

$

120,741



$

150,421



$

168,005



$

162,636



$

173,054




















Other real estate owned and repossessed assets:



















Commercial non-mortgage

$

-



$

102



$

175



$

175



$

272

Residential mortgages


1,934




1,695




1,544




3,899




3,081

Consumer


822




590




590




604




1,974

Total other real estate owned and repossessed assets

$

2,756



$

2,387



$

2,309



$

4,678



$

5,327

Total nonperforming assets

$

123,497



$

152,808



$

170,314



$

167,314



$

178,381


Past due 30-89 days:



















Commercial non-mortgage

$

3,154



$

7,395



$

8,918



$

3,821



$

13,959

Asset-based lending


-




-




1,175




-




-

Commercial real estate


1,679




699




3,003




329




2,363

Residential mortgages


4,690




5,241




10,623




9,291




15,445

Consumer


8,829




7,036




8,720




8,349




7,857

Total past due 30-89 days


18,352




20,371




32,439




21,790




39,624

Past due 90 days or more and accruing


25




50




445




-




198

Total past due loans and leases

$

18,377



$

20,421



$

32,884



$

21,790



$

39,822


WEBSTER FINANCIAL CORPORATION
Five Quarter Changes in the Allowance for Credit Losses on Loans and Leases (unaudited)



For the Three Months Ended

(Dollars in thousands)


June 30, 2021




March 31, 2021




December 31, 2020




September 30, 2020




June 30, 2020

Beginning balance

$

328,351



$

359,431



$

369,811



$

358,522



$

334,931

Provision


(21,574)




(25,759)




(992)




22,753




40,003

Charge-offs:



















Commercial non-mortgage


431




1,164




7,876




12,085




15,294

Asset-based lending


-




-




-




10




-

Commercial real estate


163




5,157




688




1,399




-

Residential mortgages


1,105




380




105




546




194

Consumer


1,703




2,594




2,673




1,717




2,586

Total charge-offs


3,402




9,295




11,342




15,757




18,074

Recoveries:



















Commercial non-mortgage


824




209




232




1,978




271

Asset-based lending


2




1,424




33




-




10

Commercial real estate


10




3




3




47




2

Residential mortgages


782




1,158




190




521




83

Consumer


2,952




1,180




1,496




1,747




1,296

Total recoveries


4,570




3,974




1,954




4,293




1,662

Total net charge-offs (recoveries)


(1,168)




5,321




9,388




11,464




16,412

Ending balance

$

307,945



$

328,351



$

359,431



$

369,811



$

358,522

 

WEBSTER FINANCIAL CORPORATION
Reconciliations to GAAP Financial Measures






















The Company evaluates its business based on certain ratios that utilize non-GAAP financial measures. The Company believes the use of these non-GAAP financial measures provides additional clarity in assessing the results and financial position of the Company. Other companies may define or calculate supplemental financial data differently.






















The efficiency ratio, which measures the costs expended to generate a dollar of revenue, is calculated excluding certain non-operational items. Return on average tangible common shareholders' equity measures the Company's net income available to common shareholders, adjusted for the tax-effected amortization of intangible assets, as a percentage of average shareholders' equity less average preferred stock and average goodwill and intangible assets. The tangible equity ratio represents shareholders' equity less goodwill and intangible assets divided by total assets less goodwill and intangible assets. The tangible common equity ratio represents shareholders' equity less preferred stock and goodwill and intangible assets divided by total assets less goodwill and intangible assets. Tangible book value per common share represents shareholders' equity less preferred stock and goodwill and intangible assets divided by common shares outstanding at the end of the period. Core deposits express total deposits less time deposits, including brokered time deposits. Adjusted diluted earnings per share (EPS) is calculated by excluding after tax non-operational items from reported earnings applicable to common shareholders. See the tables below for reconciliations of these non-GAAP financial measures with financial measures defined by GAAP.
























At or for the Three Months Ended


(In thousands, except per share data)


June 30, 2021




March 31, 2021




December 31, 2020




September 30, 2020




June 30, 2020


Efficiency ratio:




















Non-interest expense (GAAP)

$

187,028



$

187,982



$

219,530



$

183,996



$

176,584


Less: Foreclosed property activity (GAAP)


(137)




91




(836)




(201)




(217)


Intangible assets amortization (GAAP)


1,132




1,139




1,147




1,089




962


Strategic initiatives (non-GAAP)


1,138




9,441




38,265




4,786




-


Merger related (non-GAAP)


17,047




-




-




-




-


Non-interest expense (non-GAAP)

$

167,848



$

177,311



$

180,954



$

178,322



$

175,839


Net interest income (GAAP)

$

220,852



$

223,764



$

216,929



$

219,256



$

224,407


Add: Tax-equivalent adjustment (non-GAAP)


2,487




2,495




2,577




2,635




2,561


Non-interest income (GAAP)


72,702




76,757




76,763




75,060




60,076


Other (non-GAAP)


309




277




291




297




293


Loss on hedge terminations (GAAP)


-




-




3,680




-




-


Customer derivative fair value adjustment (GAAP)


-




-




-




-




5,511


Income (non-GAAP)

$

296,350



$

303,293



$

300,240



$

297,248



$

292,848


Efficiency ratio (non-GAAP)


56.64

%



58.46

%



60.27

%



59.99

%



60.04

%





















Return on average tangible common shareholders' equity:




















Net income (GAAP)

$

94,035



$

108,078



$

60,044



$

69,281



$

53,097


Less: Preferred stock dividends (GAAP)


1,969




1,969




1,969




1,968




1,969


Add: Intangible assets amortization, tax-effected (GAAP)


894




900




906




860




760


Income adjusted for preferred stock dividends and intangible assets amortization (non-GAAP)

$

92,960



$

107,009



$

58,981



$

68,173



$

51,888


Income adjusted for preferred stock dividends and intangible assets amortization, annualized basis (non-GAAP)

$

371,840



$

428,036



$

235,924



$

272,692



$

207,552


Average shareholders' equity (non-GAAP)

$

3,311,406



$

3,254,203



$

3,239,221



$

3,205,330



$

3,155,368


Less: Average preferred stock (non-GAAP)


145,037




145,037




145,037




145,037




145,037


Average goodwill and other intangible assets (non-GAAP)


559,032




560,173




561,303




560,959




558,835


Average tangible common shareholders' equity (non-GAAP)

$

2,607,337



$

2,548,993



$

2,532,881



$

2,499,334



$

2,451,496


Return on average tangible common shareholders' equity (non-GAAP)


14.26

%



16.79

%



9.31

%



10.91

%



8.47

%





















Tangible equity:




















Shareholders' equity (GAAP)

$

3,329,705



$

3,272,928



$

3,234,625



$

3,219,690



$

3,174,779


Less: Goodwill and other intangible assets (GAAP)


558,485




559,617




560,756




561,902




558,367


Tangible shareholders' equity (non-GAAP)

$

2,771,220



$

2,713,311



$

2,673,869



$

2,657,788



$

2,616,412


Total assets (GAAP)

$

33,753,752



$

33,259,037



$

32,590,690



$

32,994,443



$

32,708,617


Less: Goodwill and other intangible assets (GAAP)


558,485




559,617




560,756




561,902




558,367


Tangible assets (non-GAAP)

$

33,195,267



$

32,699,420



$

32,029,934



$

32,432,541



$

32,150,250


Tangible equity (non-GAAP)


8.35

%



8.30

%



8.35

%



8.19

%



8.14

%





















Tangible common equity:




















Tangible shareholders' equity (non-GAAP)

$

2,771,220



$

2,713,311



$

2,673,869



$

2,657,788



$

2,616,412


Less: Preferred stock (GAAP)


145,037




145,037




145,037




145,037




145,037


Tangible common shareholders' equity (non-GAAP)

$

2,626,183



$

2,568,274



$

2,528,832



$

2,512,751



$

2,471,375


Tangible assets (non-GAAP)

$

33,195,267



$

32,699,420



$

32,029,934



$

32,432,541



$

32,150,250


Tangible common equity (non-GAAP)


7.91

%



7.85

%



7.90

%



7.75

%



7.69

%





















Tangible book value per common share:




















Tangible common shareholders' equity (non-GAAP)

$

2,626,183



$

2,568,274



$

2,528,832



$

2,512,751



$

2,471,375


Common shares outstanding


90,594




90,410




90,199




90,204




90,194


Tangible book value per common share (non-GAAP)

$

28.99



$

28.41



$

28.04



$

27.86



$

27.40






















Core deposits:




















Total deposits

$

28,846,966



$

28,481,834



$

27,335,436



$

26,920,553



$

26,355,997


Less: Certificates of deposit


2,014,544




2,234,133




2,487,818




2,570,440




2,666,047


Core deposits (non-GAAP)

$

26,832,422



$

26,247,701



$

24,847,618



$

24,350,113



$

23,689,950






















(In millions, except per share data)




















GAAP earnings adjusted for strategic optimization initiatives and merger related costs:





















Three months ended June 30, 2021












Pre-Tax Income




Earnings Applicable to Common Shareholders




Diluted EPS










Reported (GAAP)

$

128.0



$

91.6



$

1.01










Facilities optimization


1.1




0.8




0.01










Merger related


17.1




16.8




0.19










Adjusted (non-GAAP)

$

146.2



$

109.2



$

1.21










 

Cision View original content:https://www.prnewswire.com/news-releases/webster-reports-second-quarter-2021-earnings-of-1-01-per-diluted-share-301339369.html

SOURCE Webster Financial Corporation

Copyright 2021 PR Newswire

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