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.
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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.
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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, September 30, June 30, March 31, December 31, 2013 2013 2013 2013 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, September 30, December 31, 2013 2013 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, September 30, June 30, March 31, December 31, 2013 2013 2013 2013 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 Interest Fully tax- Average Interest Fully tax- balance equivalent balance equivalent yield/rate 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 Interest Fully tax- Average Interest Fully tax- balance equivalent balance equivalent yield/rate 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, September 30, June 30, March 31, December 31, 2013 2013 2013 2013 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, September 30, June 30, March 31, December 31, 2013 2013 2013 2013 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, September 30, June 30, March 31, December 31, 2013 2013 2013 2013 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, September 30, June 30, March 31, December 31, 2013 2013 2013 2013 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, September 30, June 30, March 31, December 31, 2013 2013 2013 2013 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 -------- -------- -------- -------- -------- Reconciliation of average common shareholders' equity to average tangible common shareholders' equity -------------------- Average common shareholders' equity $2,040,435 $2,000,018 $1,991,600 $1,959,288 $1,967,312 Average goodwill (529,887) (529,887) (529,887) (529,887) (529,887) Average intangible assets (excluding mortgage servicing rights) (5,922) (7,151) (8,391) (9,635) (10,873) ------ ------ ------ ------ ------- Average tangible common shareholders' equity $1,504,626 $1,462,980 $1,453,322 $1,419,766 $1,426,552 ---------- ---------- ---------- ---------- ---------- Reconciliation of period-end shareholders' equity to period-end tangible shareholders' equity ------ Shareholders' equity $2,209,188 $2,167,659 $2,127,475 $2,128,131 $2,093,530 Goodwill (529,887) (529,887) (529,887) (529,887) (529,887) Intangible assets (excluding mortgage servicing rights) (5,351) (6,544) (7,786) (9,028) (10,270) Tangible shareholders' equity $1,673,950 $1,631,228 $1,589,802 $1,589,216 $1,553,373 ---------- ---------- ---------- ---------- ---------- Reconciliation of period-end common shareholders' equity to period-end tangible common shareholders' equity -------------------- Shareholders' equity $2,209,188 $2,167,659 $2,127,475 $2,128,131 $2,093,530 Preferred stock (151,649) (151,649) (151,649) (151,649) (151,649) -------- -------- -------- -------- -------- Common shareholders' equity 2,057,539 2,016,010 1,975,826 1,976,482 1,941,881 Goodwill (529,887) (529,887) (529,887) (529,887) (529,887) Intangible assets (excluding mortgage servicing rights) (5,351) (6,544) (7,786) (9,028) (10,270) Tangible common shareholders' equity $1,522,301 $1,479,579 $1,438,153 $1,437,567 $1,401,724 ---------- ---------- ---------- ---------- ---------- Reconciliation of period-end assets to period-end tangible assets ----------------------------------------------------------------- Assets $20,852,999 $20,609,554 $20,329,238 $20,110,538 $20,146,765 Goodwill (529,887) (529,887) (529,887) (529,887) (529,887) Intangible assets (excluding mortgage servicing rights) (5,351) (6,544) (7,786) (9,028) (10,270) Tangible assets $20,317,761 $20,073,123 $19,791,565 $19,571,623 $19,606,608 ----------- ----------- ----------- ----------- ----------- Book value per common share --------------------------- Common shareholders' equity $2,057,539 $2,016,010 $1,975,826 $1,976,482 $1,941,881 Ending common shares issued and outstanding (in thousands) 90,367 90,245 90,289 90,237 85,341 Book value per share of common stock $22.77 $22.34 $21.88 $21.90 $22.75 ------ ------ ------ ------ ------ Tangible book value per common share ------------------------------------ Tangible common shareholders' equity $1,522,301 $1,479,579 $1,438,153 $1,437,567 $1,401,724 Ending common shares issued and outstanding (in thousands) 90,367 90,245 90,289 90,237 85,341 Tangible book value per common share $16.85 $16.40 $15.93 $15.93 $16.42 ------ ------ ------ ------ ------ Reconciliation of noninterest expense to noninterest expense used in the efficiency ratio ----------------------------------------------------------------------------------------- Noninterest expense $126,639 $122,281 $123,604 $125,535 $122,925 Foreclosed property expense (400) (432) (331) (175) (267) Intangible assets amortization (1,193) (1,242) (1,242) (1,242) (1,242) Other expense (1,365) (950) (687) (1,352) (452) Noninterest expense used in the efficiency ratio $123,681 $119,657 $121,344 $122,766 $120,964 -------- -------- -------- -------- -------- Reconciliation of income to income used in the efficiency ratio --------------------------------------------------------------- Net interest income before provision for loan losses $153,884 $149,987 $147,061 $145,796 $146,272 Fully taxable-equivalent adjustment 3,150 3,211 3,337 3,523 3,480 Noninterest income 44,264 46,257 52,251 48,278 52,940 Net gain on investment securities (4) (269) (333) (106) - Other 7,277 - - - - Income used in the efficiency ratio $208,571 $199,186 $202,316 $197,491 $202,692 -------- -------- -------- -------- --------
SOURCE Webster Financial Corporation