WEBSTER FINANCIAL CORPORATION 
By WATERBURY, Conn., Jan. 18, 2013 /PRNewswire/ -- Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today announced net income available to common shareholders of $47.9 million, or $0.52 per diluted share, for the quarter ended December 31, 2012 compared to $44.4 million, or $0.48 per diluted share, for the quarter ended September 30, 2012 and $39.6 million, or $0.43 per diluted share, for the quarter ended December 31, 2011.
Highlights for the quarter or at December 31 include:
Combined growth in commercial and commercial real estate loans of $339.4 million, or 5.9 percent, from September 30, and $860.6 million, or 16.4 percent, from a year ago.
Deposit growth of $117.4 million, or 0.8 percent, linked quarter and $874.8 million, or 6.4 percent, over prior year. Transaction account deposits, which had a cost of 0.13 percent in the quarter, now represent an all time high of 41.0 percent of total deposits.
Continued improvement in asset quality as evidenced by a 7.2 percent reduction in commercial classified loans from September 30 and a reduction of 34.8 percent from a year ago; nonperforming assets increased 18.3 percent from September 30 and 2.7 percent from a year ago and otherwise would have decreased compared to each date as a net of $39.5 million of residential and consumer loans were reclassified as nonaccrual in the quarter under regulatory guidance.
Continued achievement of positive operating leverage of 4.6 percent as core revenue grew by 3.5 percent and core expenses declined by 1.1 percent from the third quarter, which resulted in achievement of a 60 percent operating efficiency ratio in the fourth quarter.
Return on assets, return on common equity, and return on total equity improved to 0.98 percent, 9.74 percent, and 9.54 percent, respectively, compared to 0.92 percent, 9.19 percent, and 9.18 percent, respectively, in the third quarter.
"Our record fourth quarter results cap a year of strong performance for Webster," Chairman and Chief Executive Officer James C. Smith said. "Core net income reached an all-time high in the fourth quarter. Loan originations rose 40 percent in the fourth quarter from a year ago and 46 percent for the full year to set a new record, and our loans to businesses now comprise more than half of our total loan portfolio. Webster's solid capital position and earnings momentum will enable us to return capital to our shareholders over time by gradually increasing the dividend payout ratio and repurchasing additional common shares. We are deeper, stronger, and able to meet our customers' financial needs better than ever before."
Net interest income
-- Net interest income was $146.3 million for the quarter compared to
$144.9 million in the third quarter.
-- Net interest margin was 3.27 percent compared to 3.28 percent in the
third quarter as the yield on interest-earning assets declined 4 basis
points and the cost of funds declined 3 basis points.
-- Average interest-earning assets grew by 1.1 percent from the third
quarter and totaled $18.3 billion compared to $18.1 billion in the third
quarter.
-- Average loans grew by $184.4 million or 1.6 percent from the third
quarter.
Webster President and Chief Operating Officer Jerry Plush noted, "Some other significant business achievements in the quarter include the completion of the upgrade to our entire ATM network to envelope-free, image-capture technology, the rollout of our mobile app, the opening of a new retail office in Simsbury, and completion of a new retail and private banking office in Greenwich, Connecticut that opened this month. In 2013, we will continue to invest in additional improvements to our physical and electronic distribution network. This will make banking with Webster easier and convenient while meeting the changing preferences of our customers."
Provision for loan losses
-- The Company recorded a provision of $7.5 million in the quarter compared
to $5.0 million in the third quarter and $2.5 million in the year ago
period; the increased level of the provision over the past year reflects
growth in the loan portfolio.
-- Net charge-offs were $16.5 million in the quarter compared to $17.7
million for the third quarter and $26.4 million a year ago.
-- The allowance for loan losses represented 91 percent of nonperforming
loans compared to 114 percent in the prior quarter, with the reduction
reflecting the reclassification of a net $39.5 million of residential
and consumer loans as nonaccrual in the quarter under regulatory
guidance.
Noninterest income
-- Total noninterest income increased $4.5 million compared to the third
quarter; there were no securities gains in the fourth quarter, while the
third quarter included $0.8 million of securities gains.
-- The $5.3 million increase in core noninterest income compared to the
third quarter reflects increases of $2.0 million in mortgage banking
activities, $1.5 million in loan fees, $0.8 million in bank-owned life
insurance, and $0.7 million in wealth and investment services.
Noninterest expense
-- Total noninterest expense decreased $1.0 million compared to the third
quarter. Included in noninterest expense are net one time costs of $0.8
million in the fourth quarter and $0.6 million in the third quarter.
-- Total noninterest expense excluding one time costs decreased $1.2
million from the third quarter with a combined decrease of $2.3 million
in compensation and benefits, occupancy, marketing, and professional
services expenses offset by a combined increase of $1.0 million in
technology and equipment and loan workout expenses. Noninterest expense
declined $3.3 million from a year ago, primarily reflecting a reduction
of $2.4 million in compensation and benefits expense. The decrease in
compensation and benefits expense compared to a year ago reflects a
reduction of $2.6 million in cash award expense under a plan that fully
vested in the fourth quarter of 2012.
-- Foreclosed and repossessed asset expenses were $0.3 million in the
quarter compared to $0.1 million in the third quarter, while gains on
foreclosed and repossessed assets were $0.4 million in both quarters.
Income taxes
-- The Company recorded $20.3 million of income tax expense in the quarter
on the $68.8 million of pre-tax income applicable to continuing
operations in the period. The effective tax rate for the quarter was
29.5 percent compared to 30.2 percent for the third quarter and reflects
a net tax benefit of $0.7 million specific to the quarter compared to
$0.3 million specific to the third quarter.
Investment securities
-- Total investment securities were $6.2 billion at December 31, 2012 and
$6.3 billion at September 30, 2012. The carrying value of the available
for sale portfolio included $68.2 million in net unrealized gains
compared to net unrealized gains of $68.9 million at September 30, while
the carrying value of the held to maturity portfolio does not reflect
$157.2 million in net unrealized gains compared to net unrealized gains
of $179.2 million at September 30.
Loans
-- Total loans were $12.0 billion at December 31, 2012 compared to $11.7
billion at September 30, 2012 and are reflective of continued growth in
commercial and commercial real estate loans. In the quarter, commercial
and commercial real estate loans increased by $184.2 million and $155.2
million, respectively. Residential mortgage and consumer loans decreased
by $1.2 million and $37.1 million, respectively.
-- Loan originations for portfolio in the fourth quarter were $1.279
billion compared to $835.6 million in the third quarter and $971.7
million a year ago. In addition to loan originations for portfolio,
$221.8 million of residential loans were originated and sold with
servicing retained in the quarter compared to $207.7 million in the
third quarter and $100.0 million a year ago.
Asset quality
-- Total nonperforming loans increased to $194.8 million, or 1.62 percent
of total loans, at December 31, 2012 compared to $162.6 million, or 1.39
percent, at September 30, 2012. The increase reflects the
reclassification of a net $14.9 million of residential and a net $24.6
million of consumer loans as nonaccrual in the quarter under regulatory
guidance. Total paying nonperforming loans at December 31 were $46.5
million compared to $16.8 million at September 30. At December 31,
$28.8 million of the total paying nonperforming loans related to loans
reclassified in the quarter.
-- Apart from the reclassification, nonperforming loans decreased by $6.6
million, or 4.1 percent, from September 30 and $32.1 million, or 17.1
percent, from a year ago.
-- Other real estate owned (OREO) totaled $3.4 million compared to $4.9
million at September 30.
-- Past due loans increased to $74.3 million at December 31 compared to
$67.4 million at September 30 as past due commercial real estate loans
increased by $7.6 million. Past due loans represented 0.62 percent of
total loans at December 31 and 0.57 percent at September 30. Past due
loans for the continuing portfolios were $70.7 million at December 31
compared to $62.5 million at September 30. Past due loans for the
liquidating portfolio were $3.6 million at December 31 compared to $4.9
million at September 30.
Deposits and borrowings
-- Total deposits were $14.5 billion at December 31, 2012 compared to $14.4
billion at September 30, 2012. Increases of $94.6 million in demand,
$196.6 million in interest-bearing checking, and $43.4 million in
savings deposits were offset by declines of $135.6 million in money
market deposits and $81.5 million in certificates of deposit. Core to
total deposits and loans to deposits were 82.5 percent and 82.8 percent,
respectively, compared to 81.8 percent and 81.4 percent at September 30.
-- Total borrowings were $3.2 billion at December 31 compared to $3.1
billion at September 30.
Capital
-- On November 27, 2012, $126.5 million of Webster Financial Corporation
6.40 % Series E Non-Cumulative Perpetual Preferred Stock was issued
through an underwritten public offering.
-- On December 6, 2012, a $100 million common stock authorization was
announced with $50.0 million of the authorization utilized later in the
quarter in connection with an underwritten secondary offering of 10
million shares of Webster's common stock by a selling shareholder.
-- The tangible common equity and Tier 1 common equity to risk-weighted
assets ratios were 7.17 percent and 10.78 percent, respectively, at
December 31, 2012 compared to 7.39 percent and 11.10 percent,
respectively, at September 30, 2012.
-- Book value and tangible book value per common share were $22.75 and
$16.47, respectively, at December 31 compared to $22.24 and $16.13,
respectively, at September 30.
-- Return on average common shareholders' equity and return on average
total equity were 9.74 percent and 9.54 percent, respectively, at
December 31 compared to 9.19 percent and 9.18 percent, respectively, at
September 30.
Webster Financial Corporation is the holding company for Webster Bank, National Association. With $20 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust and investment services through 168 banking offices, 294 ATMs, telephone banking, mobile banking, and the Internet. Webster Bank owns the asset based lending firm Webster Business Credit Corporation; the equipment finance firm Webster Capital Finance Corporation; and provides health savings account trustee and administrative services through HSA Bank, a division of Webster Bank. Member FDIC and equal housing lender. For more information about Webster, including past press releases and the latest annual report, visit the Webster website at www.websterbank.com.
Conference Call
A conference call covering Webster's 2012 fourth quarter earnings announcement will be held today, Friday, January 18, 2013 at 9:00 a.m. (Eastern) and may be heard through Webster's Investor Relations website at www.wbst.com, or in listen-only mode by calling 1-877-407-8289 or 201-689-8341 internationally. The call will be archived on the website and available for future retrieval.
Forward-Looking Statements
This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"). Forward-looking statements can be identified by words such as "believes," "anticipates," "expects," "intends," "targeted," "continue," "remain," "will," "should," "may," "plans," "estimates," and similar references to future periods; however, such words are not the exclusive means of identifying such statements. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, and other financial items; (ii) statements of plans, objectives, and expectations of Webster or its management or Board of Directors; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Forward-looking statements are based on Webster's current expectations and assumptions regarding its business, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Webster's actual results may differ materially from those contemplated by the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to: (1) local, regional, national, and international economic conditions and the impact they may have on us and our customers and our assessment of that impact; (2) volatility and disruption in national and international financial markets; (3) government intervention in the U.S. financial system; (4) changes in the level of non-performing assets and charge-offs; (5) changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (6) adverse conditions in the securities markets that lead to impairment in the value of securities in our investment portfolio; (7) inflation, interest rate, securities market, and monetary fluctuations; (8) the timely development and acceptance of new products and services and perceived overall value of these products and services by customers; (9) changes in consumer spending, borrowings, and savings habits; (10) technological changes; (11) the ability to increase market share and control expenses; (12) changes in the competitive environment among banks, financial holding companies, and other financial service providers; (13) the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities, and insurance) with which we and our subsidiaries must comply, including those under the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III update to the Basel Accords that is under development; (14) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters; (15) the costs and effects of legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews; and (16) our success at managing the risks involved in the foregoing items and (17) the other factors that are described in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q under the heading "Risk Factors." Any forward-looking statement made by the Company in this release speaks only as of the date on which it is made. Factors or events that could cause the Company's actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
Non-GAAP Financial Measures
In addition to results presented in accordance with GAAP, this press release contains certain non-GAAP financial measures. A reconciliation of net income and other performance ratios, as adjusted, is included in the accompanying selected financial highlights table.
We believe that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, our performance trends and financial position. Specifically, we provide measures based on what we believe are our operating earnings on a consistent basis and exclude non-core operating items which affect the GAAP reporting of results of operations. We utilize these measures for internal planning and forecasting purposes. We, as well as securities analysts, investors, and other interested parties, also use these measures to compare peer company operating performance. We believe that our presentation and discussion, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting our business and allows investors to view performance in a manner similar to management. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results, and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.
Media Contact Investor Contact
Bob Guenther, 203-578-2391 Terry Mangan 203-578-2318
rguenther@websterbank.com tmangan@websterbank.com
WEBSTER FINANCIAL CORPORATION
Selected Financial Highlights (unaudited)
----------------------------------------
At or for the Three Months Ended
--------------------------------
(In thousands, except per share data) December 31, 2012 September 30, 2012 June 30, 2012 March 31, 2012 December 31, 2011
----------------- ------------------ ------------- -------------- -----------------
Income and performance ratios, (annualized):
Net income attributable to Webster Financial Corp. $48,526 $44,993 $41,240 $38,938 $40,384
Net income available to common shareholders 47,911 44,378 40,625 38,323 39,591
Net income per diluted common share 0.52 0.48 0.44 0.42 0.43
Return on average assets 0.98 % 0.92 % 0.86 % 0.82 % 0.88 %
Return on average common shareholders' equity 9.74 9.19 8.62 8.30 8.68
Return on average shareholders' equity 9.54 9.18 8.62 8.30 8.67
Noninterest income as a percentage of total revenue 26.57 25.07 24.70 23.48 23.05
Efficiency ratio 59.68 62.25 63.75 65.63 65.83
Asset quality:
--------------
Allowance for loan losses $177,129 $186,089 $198,757 $210,288 $233,487
Nonperforming assets 198,180 167,524 173,621 184,218 193,047
Allowance for loan losses / total loans 1.47 % 1.59 % 1.72 % 1.86 % 2.08 %
Net charge-offs / average loans (annualized) 0.56 0.61 0.58 0.96 0.95
Nonperforming loans / total loans 1.62 1.39 1.47 1.58 1.68
Nonperforming assets / total loans plus OREO 1.65 1.43 1.50 1.63 1.72
Allowance for loan losses / nonperforming loans 90.93 114.44 117.44 117.96 124.14
Other ratios (annualized):
--------------------------
Tangible equity ratio 7.94 % 7.54 % 7.38 % 7.29 % 7.18 %
Tangible common equity ratio 7.17 7.39 7.22 7.14 7.03
Tier 1 risk-based capital ratio (a) 12.48 11.90 12.82 12.86 13.05
Total risk-based capital (a) 13.73 13.16 14.08 14.12 14.61
Tier 1 common equity / risk-weighted assets (a) 10.78 11.10 10.97 10.96 11.08
Shareholders' equity / total assets 10.39 10.05 9.94 9.90 9.86
Net interest margin 3.27 3.28 3.32 3.36 3.39
Share and equity related:
-------------------------
Common equity $1,941,881 $1,954,739 $1,902,609 $1,866,003 $1,816,835
Book value per common share 22.75 22.24 21.65 21.24 20.74
Tangible book value per common share 16.47 16.13 15.53 15.10 14.57
Common stock closing price 20.55 23.7 21.66 22.67 20.39
Dividends declared per common share 0.10 0.10 0.10 0.05 0.05
Common shares outstanding 85,341 87,899 87,885 87,849 87,600
Basic shares (weighted average) 86,949 87,394 87,291 87,216 87,097
Diluted shares (weighted average) 91,315 91,884 91,543 91,782 90,929
(a) The ratios presented are projected for December 31, 2012 and actual for the remaining periods presented.
WEBSTER FINANCIAL CORPORATION
Consolidated Balance Sheets (unaudited)
--------------------------------------
(In thousands) December 31, 2012 September 30, 2012 December 31, 2011
----------------- ------------------ -----------------
Assets:
Cash and due from banks $252,283 $164,556 $195,957
Interest-bearing deposits 98,205 79,763 96,062
Investment securities:
Available for sale, at fair value 3,136,160 3,120,354 2,874,764
Held to maturity 3,107,529 3,142,160 2,973,727
--------- --------- ---------
Total securities 6,243,689 6,262,514 5,848,491
Loans held for sale 107,633 91,207 57,391
Loans:
Commercial 3,323,044 3,138,807 2,860,597
Commercial real estate 2,783,061 2,627,893 2,384,889
Residential mortgages 3,291,724 3,292,948 3,219,889
Consumer 2,630,867 2,668,004 2,760,029
--------- --------- ---------
Total loans 12,028,696 11,727,652 11,225,404
Allowance for loan losses (177,129) (186,089) (233,487)
-------- -------- --------
Loans, net 11,851,567 11,541,563 10,991,917
Prepaid FDIC premiums 16,323 21,673 37,946
Federal Home Loan Bank and Federal Reserve Bank stock 155,630 142,595 143,874
Premises and equipment, net 134,562 135,394 147,379
Goodwill and other intangible assets, net 540,157 541,399 545,577
Cash surrender value of life insurance policies 418,293 414,797 307,039
Deferred tax asset, net 68,681 74,098 105,665
Accrued interest receivable and other assets 259,742 260,103 237,042
Total Assets $20,146,765 $19,729,662 $18,714,340
----------- ----------- -----------
Liabilities and Equity:
Deposits:
Demand $2,881,131 $2,786,525 $2,473,693
Interest-bearing checking 3,079,767 2,883,216 2,578,520
Money market 2,205,072 2,340,717 2,021,056
Savings 3,819,713 3,776,280 3,748,121
Certificates of deposit 2,418,853 2,507,647 2,715,583
Brokered certificates of deposit 126,299 119,052 119,052
------- ------- -------
Total deposits 14,530,835 14,413,437 13,656,025
Securities sold under agreements to repurchase and other short-term borrowings 1,076,160 1,310,015 1,164,706
Federal Home Loan Bank advances 1,827,612 1,452,660 1,252,609
Long-term debt 334,276 335,678 552,589
Accrued expenses and other liabilities 284,352 234,194 242,637
------- ------- -------
Total liabilities 18,053,235 17,745,984 16,868,566
Webster Financial Corporation shareholders' equity 2,093,530 1,983,678 1,845,774
Noncontrolling interests - - -
--- --- ---
Total equity 2,093,530 1,983,678 1,845,774
--------- --------- ---------
Total Liabilities and Equity 20,146,765 19,729,662 18,714,340
========== ========== ==========
WEBSTER FINANCIAL CORPORATION
Consolidated Statements of Operations (unaudited)
------------------------------------------------
(In thousands, except per share data) Three Months Ended December 31, Twelve Months Ended, December
31,
------------------------------- ------------------------------
2012 2011 2012 2011
---- ---- ---- ----
Interest income:
Interest and fees on loans and leases $122,179 $121,223 $485,666 $486,883
Interest and dividends on securities 49,752 51,260 205,411 211,605
Loans held for sale 615 370 2,425 1,235
Total interest income 172,546 172,853 693,502 699,723
------- ------- ------- -------
Interest expense:
Deposits 13,885 17,268 59,586 80,808
Borrowings 12,389 14,576 55,008 55,147
Total interest expense 26,274 31,844 114,594 135,955
------ ------ ------- -------
Net interest income 146,272 141,009 578,908 563,768
Provision for loan losses 7,500 2,500 21,500 22,500
Net interest income after provision for loan losses 138,772 138,509 557,408 541,268
------- ------- ------- -------
Noninterest income:
Deposit service fees 24,823 24,286 96,633 102,795
Loan related fees 5,570 4,896 18,043 20,237
Wealth and investment services 7,859 5,759 29,515 26,421
Mortgage banking activities 8,515 1,094 23,037 4,905
Increase in cash surrender value of life insurance policies 3,496 2,609 11,254 10,360
Net gain on investment securities - - 3,347 2,024
Other income 2,677 3,602 10,929 10,300
Total noninterest income 52,940 42,246 192,758 177,042
------ ------ ------- -------
Noninterest expense:
Compensation and benefits 65,769 68,146 264,101 262,647
Occupancy 12,209 13,125 50,131 53,866
Technology and equipment expense 15,489 15,054 62,210 60,721
Marketing 3,104 4,540 16,827 18,456
Professional and outside services 2,479 2,835 11,348 11,203
Intangible assets amortization 1,242 1,397 5,420 5,588
Foreclosed and repossessed asset expenses 267 730 1,028 3,050
Foreclosed and repossessed asset gains (383) (63) (2,126) (306)
Loan workout expenses 2,338 1,956 8,056 7,547
Deposit insurance 5,642 4,756 22,749 20,927
Other expenses 13,934 12,864 56,172 55,896
------ ------ ------ ------
122,090 125,340 495,916 499,595
Debt prepayment penalties - 5,203 4,040 5,203
Write-down for expedited asset disposition - 1,187 - 6,260
Contract termination and severance 642 2,485 1,505 5,100
Branch and facility optimization 18 1,689 168 5,004
Preferred stock redemption costs - 423 - 423
Stock registration costs 175 - 175 -
Costs for warrant registration - - - 350
Provision (benefit) for litigation and settlements - (9,755) - (9,523)
Loan repurchase and unfunded commitment reserve benefit, net - - - (1,436)
Total noninterest expense 122,925 126,572 501,804 510,976
------- ------- ------- -------
Income from continuing operations before income taxes 68,787 54,183 248,362 207,334
Income tax expense 20,261 13,799 74,665 57,951
------ ------ ------ ------
Income from continuing operations 48,526 40,384 173,697 149,383
Income from discontinued operations, net of tax - - - 1,995
--- --- --- -----
Consolidated net income 48,526 40,384 173,697 151,378
Less: Net loss attributable to noncontrolling interests - - - (1)
--- --- --- ---
Net income attributable to Webster Financial Corp. 48,526 40,384 173,697 151,379
Preferred stock dividends (615) (793) (2,460) (3,286)
Net income available to common shareholders $47,911 $39,591 $171,237 $148,093
======= ======= ======== ========
Diluted shares (average) 91,315 90,929 91,649 91,688
Net income per common share available to common shareholders:
Basic
Income from continuing operations $0.55 $0.45 $1.96 $1.67
Net income 0.55 0.45 1.96 1.69
Diluted
Income from continuing operations 0.52 0.43 1.86 1.59
Net income 0.52 0.43 1.86 1.61
WEBSTER FINANCIAL CORPORATION
Five Quarter Consolidated Statements of Operations (unaudited)
-------------------------------------------------------------
Three Months Ended
------------------
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
(In thousands, except per share data) 2012 2012 2012 2012 2011
------------------------------------ ---- ---- ---- ---- ----
Interest income:
Interest and fees on loans and leases $122,179 $121,367 $121,379 $120,741 $121,223
Interest and dividends on securities 49,752 50,194 52,597 52,868 51,260
Loans held for sale 615 655 657 498 370
Total interest income 172,546 172,216 174,633 174,107 172,853
------- ------- ------- ------- -------
Interest expense:
Deposits 13,885 14,543 15,102 16,056 17,268
Borrowings 12,389 12,783 15,153 14,683 14,576
Total interest expense 26,274 27,326 30,255 30,739 31,844
------ ------ ------ ------ ------
Net interest income 146,272 144,890 144,378 143,368 141,009
Provision for loan losses 7,500 5,000 5,000 4,000 2,500
Net interest income after provision for loan losses 138,772 139,890 139,378 139,368 138,509
------- ------- ------- ------- -------
Noninterest income:
Deposit service fees 24,823 24,728 23,719 23,363 24,286
Loan related fees 5,570 4,039 3,565 4,869 4,896
Wealth and investment services 7,859 7,186 7,249 7,221 5,759
Mortgage banking activities 8,515 6,515 3,624 4,383 1,094
Increase in cash surrender value of life insurance policies 3,496 2,680 2,561 2,517 2,609
Net gain on investment securities - 810 2,537 - -
Other income 2,677 2,521 4,098 1,633 3,602
Total noninterest income 52,940 48,479 47,353 43,986 42,246
------ ------ ------ ------ ------
Noninterest expense:
Compensation and benefits 65,769 66,126 63,587 68,619 68,146
Occupancy 12,209 12,462 12,578 12,882 13,125
Technology and equipment expense 15,489 15,118 16,021 15,582 15,054
Marketing 3,104 4,529 5,094 4,100 4,540
Professional and outside services 2,479 2,790 3,387 2,692 2,835
Intangible assets amortization 1,242 1,384 1,397 1,397 1,397
Foreclosed and repossessed asset expenses 267 118 176 467 730
Foreclosed and repossessed asset gains (383) (409) (670) (664) (63)
Loan workout expenses 2,338 1,693 2,201 1,824 1,956
Deposit insurance 5,642 5,675 5,723 5,709 4,756
Other expenses 13,934 13,805 14,443 13,990 12,864
------ ------ ------ ------ ------
122,090 123,291 123,937 126,598 125,340
Debt prepayment penalties - 391 2,515 1,134 5,203
Write-down for expedited asset disposition - - - - 1,187
Contract termination and severance 642 136 727 - 2,485
Branch and facility optimization 18 69 - 81 1,689
Preferred stock redemption costs - - - - 423
Stock registration costs 175 - - - -
Provision (benefit) for litigation and settlements - - - - (9,755)
Total noninterest expense 122,925 123,887 127,179 127,813 126,572
------- ------- ------- ------- -------
Income from continuing operations before income taxes 68,787 64,482 59,552 55,541 54,183
Income tax expense 20,261 19,489 18,312 16,603 13,799
Income from continuing operations 48,526 44,993 41,240 38,938 40,384
Income from discontinued operations, net of tax - - - - -
Consolidated net income 48,526 44,993 41,240 38,938 40,384
Less: Net loss attributable to noncontrolling interests - - - - -
Net income attributable to Webster Financial Corp. 48,526 44,993 41,240 38,938 40,384
Preferred stock dividends (615) (615) (615) (615) (793)
Net income available to common shareholders $47,911 $44,378 $40,625 $38,323 $39,591
======= ======= ======= ======= =======
Diluted shares (average) 91,315 91,884 91,543 91,782 90,929
Net income per common share available to common shareholders:
Basic
Income from continuing operations $0.55 $0.51 $0.46 $0.44 $0.45
Net income 0.55 0.51 0.46 0.44 0.45
Diluted
Income from continuing operations 0.52 0.48 0.44 0.42 0.43
Net income 0.52 0.48 0.44 0.42 0.43
WEBSTER FINANCIAL CORPORATION
Consolidated Average Balances, Yields, and Rates Paid (unaudited)
----------------------------------------------------------------
2012 2011
Three Months Ended December 31,
-------------------------------
(Dollars in thousands) Average Interest Average Interest Fully tax-
balance Fully tax- balance equivalent
equivalent yield/rate
yield/rate
--- ---
Assets:
Interest-earning assets:
Loans $11,792,691 $122,179 4.10 % $11,122,372 $121,223 4.31 %
Investment securities (a) 6,170,119 52,326 3.43 5,638,172 54,414 3.88
Loans held for sale 90,266 615 2.72 35,321 370 4.18
Federal Home Loan and Federal Reserve Bank stock 143,557 872 2.42 143,874 831 2.29
Interest-bearing deposits 72,539 34 0.18 86,156 26 0.12
------ --- ---- ------ --- ----
Total interest-earning assets 18,269,172 176,026 3.84 17,025,895 176,864 4.13
Noninterest-earning assets 1,511,979 1,371,923
Total assets $19,781,151 $18,397,818
=========== ===========
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Deposits:
Demand $2,832,130 $ - -% $2,364,594 $ - -%
Savings, interest checking, and money market 9,054,442 4,845 0.21 8,420,850 6,302 0.30
Certificates of deposit 2,594,963 9,040 1.39 2,899,642 10,966 1.50
Total deposits 14,481,535 13,885 0.38 13,685,086 17,268 0.50
---------- ------ ---- ---------- ------ ----
Securities sold under agreements to repurchase
and other short-term borrowings 1,281,503 5,646 1.72 1,212,019 4,450 1.44
Federal Home Loan Bank advances 1,418,606 4,011 1.11 854,539 4,151 1.90
Long-term debt 334,954 2,732 3.26 553,684 5,975 4.32
Total borrowings 3,035,063 12,389 1.61 2,620,242 14,576 2.20
--------- ------ ---- --------- ------ ----
Total interest-bearing liabilities 17,516,598 26,274 0.59 16,305,328 31,844 0.77
Noninterest-bearing liabilities 230,923 221,096
Total liabilities 17,747,521 16,526,424
Noncontrolling interests - 7,703
Preferred Stock 66,318 28,939
Common shareholders' equity 1,967,312 1,834,752
--------- ---------
Webster Financial Corp. shareholders' equity 2,033,630 1,863,691
Total liabilities and equity $19,781,151 $18,397,818
=========== ===========
Tax-equivalent net interest income 149,752 145,020
Less: tax-equivalent adjustment (3,480) (4,011)
Net interest income $146,272 $141,009
======== ========
Net interest margin 3.27 % 3.39 %
===== =====
(a) For purposes of the yield computation, unrealized gains (losses) on securities available for sale are excluded from the average balance.
WEBSTER FINANCIAL CORPORATION
Consolidated Average Balances, Yields, and Rates Paid (unaudited)
----------------------------------------------------------------
Twelve Months Ended December 31, 2012 2011
-------------------------------- ---- ----
(Dollars in thousands) Average Interest Fully tax- Average Fully tax-
balance equivalent balance Interest equivalent
yield/rate yield/rate
--- ----------
Assets:
Interest-earning assets:
Loans $11,525,233 $485,666 4.21 % $11,054,100 $486,883 4.40 %
Investment securities (a) 6,100,219 216,513 3.58 5,407,867 223,568 4.16
Loans held for sale 73,156 2,425 3.31 28,144 1,235 4.39
Federal Home Loan and Federal Reserve Bank stock 143,074 3,508 2.45 143,874 3,318 2.31
Interest-bearing deposits 77,265 141 0.18 112,232 216 0.19
------ --- ---- ------- --- ----
Total interest-earning assets 17,918,947 708,253 3.96 16,746,217 715,220 4.28
Noninterest-earning assets 1,427,824 1,335,374
Total assets $19,346,771 $18,081,591
=========== ===========
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Deposits:
Demand $2,638,025 $ - -% $2,278,419 $ - -%
Savings, interest checking, and money market 8,824,581 21,061 0.24 8,534,333 33,747 0.40
Certificates of deposit 2,703,414 38,525 1.43 3,031,835 47,061 1.55
Total deposits 14,166,020 59,586 0.42 13,844,587 80,808 0.58
---------- ------ ---- ---------- ------ ----
Securities sold under agreements to repurchase and other short-term borrowings 1,207,623 21,034 1.74 1,053,323 16,173 1.54
Federal Home Loan Bank advances 1,389,999 16,943 1.22 569,987 14,352 2.52
Long-term debt 418,896 17,031 4.07 565,331 24,622 4.36
Total borrowings 3,016,518 55,008 1.82 2,188,641 55,147 2.52
--------- ------ ---- --------- ------ ----
Total interest-bearing liabilities 17,182,538 114,594 0.67 16,033,228 135,955 0.85
Noninterest-bearing liabilities 217,653 202,205
Total liabilities 17,400,191 16,235,433
Noncontrolling interests - 9,119
Preferred Stock 38,335 28,942
Common shareholders' equity 1,908,245 1,808,097
--------- ---------
Webster Financial Corp. shareholders' equity 1,946,580 1,837,039
Total liabilities and equity $19,346,771 $18,081,591
=========== ===========
Tax-equivalent net interest income 593,659 579,265
Less: tax-equivalent adjustment (14,751) (15,497)
Net interest income $578,908 $563,768
======== ========
Net interest margin 3.32 % 3.47 %
===== =====
(a) For purposes of the yield computation, unrealized gains (losses) on securities available for sale are excluded from the average balance.
WEBSTER FINANCIAL CORPORATION
Five Quarter Loan Balances (unaudited)
-------------------------------------
(Dollars in thousands) Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2012 2012 2012 2012 2011
--- ---- ---- ---- ---- ----
Loan Balances (actuals):
Continuing Portfolio:
Commercial non-mortgage $2,399,500 $2,201,732 $2,069,127 $1,972,205 $1,932,542
Equipment financing 419,311 401,748 417,654 446,585 474,804
Asset based lending 504,233 535,327 499,212 470,187 453,251
Commercial real estate 2,755,320 2,597,835 2,518,392 2,389,206 2,345,241
Residential development 27,741 30,058 33,035 36,591 39,648
Residential mortgages 3,291,723 3,292,947 3,300,616 3,270,212 3,219,888
Consumer 2,508,992 2,537,039 2,565,654 2,585,685 2,612,476
--------- --------- --------- --------- ---------
Total continuing 11,906,820 11,596,686 11,403,690 11,170,671 11,077,850
Allowance for loan losses (152,495) (156,214) (168,882) (180,413) (203,612)
Total continuing, net 11,754,325 11,440,472 11,234,808 10,990,258 10,874,238
---------- ---------- ---------- ---------- ----------
Liquidating Portfolio:
National Construction Lending Center (NCLC) 1 1 1 1 1
Consumer 121,875 130,965 136,306 141,478 147,553
------- ------- ------- ------- -------
Total liquidating portfolio 121,876 130,966 136,307 141,479 147,554
Allowance for loan losses (24,634) (29,875) (29,875) (29,875) (29,875)
------- ------- ------- ------- -------
Total liquidating, net 97,242 101,091 106,432 111,604 117,679
------ ------- ------- ------- -------
Total Loan Balances (actuals) 12,028,696 11,727,652 11,539,997 11,312,150 11,225,404
Allowance for loan losses (177,129) (186,089) (198,757) (210,288) (233,487)
Loans, net $11,851,567 $11,541,563 $11,341,240 $11,101,862 $10,991,917
=========== =========== =========== =========== ===========
Loan Balances (average):
Continuing Portfolio:
Commercial non-mortgage $2,238,557 $2,137,882 $2,008,778 $1,970,656 $1,868,885
Equipment financing 405,702 404,180 430,882 458,111 495,667
Asset based lending 516,749 520,100 480,574 474,264 492,982
Commercial real estate 2,653,749 2,528,394 2,453,430 2,336,576 2,254,970
Residential development 29,322 31,484 35,422 38,401 49,182
Residential mortgages 3,294,254 3,300,067 3,296,306 3,253,199 3,186,885
Consumer 2,526,656 2,552,660 2,576,521 2,598,758 2,622,378
--------- --------- --------- --------- ---------
Total continuing 11,664,989 11,474,767 11,281,913 11,129,965 10,970,949
Allowance for loan losses (161,239) (167,469) (179,139) (201,592) (219,566)
Total continuing, net 11,503,750 11,307,298 11,102,774 10,928,373 10,751,383
---------- ---------- ---------- ---------- ----------
Liquidating Portfolio:
NCLC 1 1 1 1 1
Consumer 127,701 133,566 138,807 145,367 151,422
------- ------- ------- ------- -------
Total liquidating portfolio 127,702 133,567 138,808 145,368 151,423
Allowance for loan losses (24,634) (29,875) (29,875) (29,875) (29,875)
Total liquidating, net 103,068 103,692 108,933 115,493 121,548
------- ------- ------- ------- -------
Total Loan Balances (average) 11,792,691 11,608,334 11,420,721 11,275,333 11,122,372
Allowance for loan losses (185,873) (197,344) (209,014) (231,467) (249,441)
Loans, net $11,606,818 $11,410,990 $11,211,707 $11,043,866 $10,872,931
=========== =========== =========== =========== ===========
WEBSTER FINANCIAL CORPORATION
Five Quarter Nonperforming Assets (unaudited)
--------------------------------------------
(Dollars in thousands) Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2012 2012 2012 2012 2011
--- ---- ---- ---- ---- ----
Nonperforming loans:
Continuing Portfolio:
Commercial non-mortgage $17,538 $30,315 $29,271 $31,547 $27,884
Equipment financing 3,325 3,052 5,862 4,868 7,154
Asset based lending - 92 262 1,475 1,880
Commercial real estate 15,683 15,768 23,457 25,131 32,197
Residential development 5,043 5,431 5,982 6,140 6,762
Residential mortgages (a) 95,540 79,736 77,336 79,110 82,052
Consumer (a) 49,536 23,602 22,616 26,098 25,059
Nonperforming loans - continuing portfolio 186,665 157,996 164,786 174,369 182,988
------- ------- ------- ------- -------
Liquidating Portfolio:
Consumer (a) 8,133 4,616 4,460 3,896 5,091
Nonperforming loans - liquidating portfolio 8,133 4,616 4,460 3,896 5,091
Total nonperforming loans $194,798 $162,612 $169,246 $178,265 $188,079
======== ======== ======== ======== ========
Other real estate owned and repossessed assets:
Continuing Portfolio:
Commercial $541 $917 $917 $2,051 $1,961
Repossessed equipment 182 1,840 721 674 123
Residential 2,369 1,705 2,271 2,648 1,947
Consumer 290 450 466 580 805
Total continuing 3,382 4,912 4,375 5,953 4,836
----- ----- ----- ----- -----
Liquidating Portfolio:
NCLC - - - - 132
Total liquidating - - - - 132
Total other real estate owned and repossessed assets $3,382 $4,912 $4,375 $5,953 $4,968
------ ------ ------ ------ ------
Total nonperforming assets $198,180 $167,524 $173,621 $184,218 $193,047
======== ======== ======== ======== ========
(a) The increases in the residential and consumer categories during 4Q12 are related to an OCC requirement to reflect Chapter 7 bankruptcies as nonaccruing loans.
WEBSTER FINANCIAL CORPORATION
Five Quarter Past Due Loans (unaudited)
--------------------------------------
(Dollars in thousands) Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2012 2012 2012 2012 2011
--- ---- ---- ---- ---- ----
Past due 30-89 days:
Accruing loans:
Continuing Portfolio:
Commercial non-mortgage $2,769 $4,424 $6,479 $6,938 $4,619
Equipment financing 1,926 3,524 1,665 4,099 4,800
Asset based lending - - - - -
Commercial real estate 14,710 7,136 3,152 1,101 1,766
Residential development - 317 - - -
Residential mortgages 25,183 22,230 26,966 22,915 24,361
Consumer 24,860 24,664 22,163 19,592 20,847
Past Due 30-89 days - continuing portfolio 69,448 62,295 60,425 54,645 56,393
------ ------ ------ ------ ------
Liquidating Portfolio:
Consumer 3,588 4,909 4,377 5,263 4,538
Past Due 30-89 days - liquidating portfolio 3,588 4,909 4,377 5,263 4,538
----- ----- ----- ----- -----
Accruing loans past due 90 days or more 1,236 205 1,074 43 724
Total past due loans $74,272 $67,409 $65,876 $59,951 $61,655
======= ======= ======= ======= =======
WEBSTER FINANCIAL CORPORATION
Five Quarter Changes in the Allowance for Loan Losses (unaudited)
----------------------------------------------------------------
For the Three Months Ended
--------------------------
(Dollars in thousands) Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2012 2012 2012 2012 2011
---- ---- ---- ---- ----
Beginning balance $186,089 $198,757 $210,288 $233,487 $257,352
Provision 7,500 5,000 5,000 4,000 2,500
Charge-offs continuing portfolio:
Commercial non-mortgage 6,411 8,642 5,164 14,994 6,684
Equipment financing 682 187 165 634 55
Asset based lending 69 - 512 - 2,150
Commercial real estate 170 2,655 1,066 5,848 7,768
Residential development 156 - - - 453
Residential mortgages 2,597 3,234 3,948 3,115 2,548
Consumer 8,149 6,752 8,122 6,487 7,551
Charge-offs continuing portfolio 18,234 21,470 18,977 31,078 27,209
------ ------ ------ ------ ------
Charge-offs liquidating portfolio:
NCLC - 28 4 - 7
Consumer 5,137 2,482 3,227 3,564 3,958
Charge-offs liquidating portfolio 5,137 2,510 3,231 3,564 3,965
Total charge-offs 23,371 23,980 22,208 34,642 31,174
------ ------ ------ ------ ------
Recoveries continuing portfolio:
Commercial non-mortgage 1,045 779 957 886 1,215
Equipment financing 2,899 3,111 1,115 2,348 1,161
Asset based lending 996 518 721 914 195
Commercial real estate 43 121 34 1,069 96
Residential development 721 181 12 31 5
Residential mortgages 99 318 126 118 135
Consumer 674 933 2,453 1,932 1,721
Recoveries continuing portfolio 6,477 5,961 5,418 7,298 4,528
----- ----- ----- ----- -----
Recoveries liquidating portfolio:
NCLC 74 35 10 23 177
Consumer 360 316 249 122 104
Recoveries liquidating portfolio 434 351 259 145 281
Total recoveries 6,911 6,312 5,677 7,443 4,809
----- ----- ----- ----- -----
Total net charge-offs 16,460 17,668 16,531 27,199 26,365
Ending balance $177,129 $186,089 $198,757 $210,288 $233,487
======== ======== ======== ======== ========
Note: $5.3 million of net charge-offs in 4Q12 relate to an OCC requirement to reduce Chapter 7 bankruptcies to collateral value.
WEBSTER FINANCIAL CORPORATION
Reconciliations to GAAP Financial Measures
The Company evaluates its business based on the following ratios that utilize tangible equity, a non-GAAP financial measure. Return on average tangible equity measures the Company's earnings contribution as a percentage of average shareholders' equity less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities on intangible assets. The
tangible equity ratio represents total ending shareholders' equity less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities divided by total assets less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities on intangible assets. The tangible common equity ratio represents ending
common shareholders' equity less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities divided by total assets less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities on intangible assets. Tangible book value per common share represents ending common shareholders' equity less
goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities on intangible assets 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, 2012, September 30, 2012, June 30, 2012, March 31, 2012, December 31, 2011. 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.
Three Months Ended
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
(Dollars in thousands) 2012 2012 2012 2012 2011
--------------------- ---- ---- ---- ---- ----
Reconciliation of period-end shareholders' equity to period-end tangible shareholders'
equity
------
Shareholders' equity $2,093,530 $1,983,678 $1,931,548 $1,894,942 $1,845,774
Goodwill (529,887) (529,887) (529,887) (529,887) (529,887)
Intangible assets (excluding mortgage servicing rights) (10,270) (11,512) (12,896) (14,293) (15,690)
Related deferred tax liabilities 3,678 4,123 4,618 5,119 5,492
Tangible shareholders' equity $1,557,051 $1,446,402 $1,393,383 $1,355,881 $1,305,689
========== ========== ========== ========== ==========
Reconciliation of period-end common shareholders' equity to period-end tangible
common shareholders' equity
---------------------------
Shareholders' equity $2,093,530 $1,983,678 $1,931,548 $1,894,942 $1,845,774
Preferred stock (151,649) (28,939) (28,939) (28,939) (28,939)
-------- ------- ------- ------- -------
Common shareholders' equity 1,941,881 1,954,739 1,902,609 1,866,003 1,816,835
Goodwill (529,887) (529,887) (529,887) (529,887) (529,887)
Intangible assets (excluding mortgage servicing rights) (10,270) (11,512) (12,896) (14,293) (15,690)
Related deferred tax liabilities 3,678 4,123 4,618 5,119 5,492
Tangible common shareholders' equity $1,405,402 $1,417,463 $1,364,444 $1,326,942 $1,276,750
========== ========== ========== ========== ==========
Reconciliation of period-end assets to period-end tangible assets
-----------------------------------------------------------------
Assets $20,146,765 $19,729,662 $19,429,749 $19,134,142 $18,714,340
Goodwill (529,887) (529,887) (529,887) (529,887) (529,887)
Intangible assets (excluding mortgage servicing rights) (10,270) (11,512) (12,896) (14,293) (15,690)
Related deferred tax liabilities 3,678 4,123 4,618 5,119 5,492
Tangible assets $19,610,286 $19,192,386 $18,891,584 $18,595,081 $18,174,255
=========== =========== =========== =========== ===========
Book value per common share
---------------------------
Common shareholders' equity $1,941,881 $1,954,739 $1,902,609 $1,866,003 $1,816,835
Ending common shares issued and outstanding (in thousands) 85,341 87,899 87,885 87,849 87,600
Book value per share of common stock $22.75 $22.24 $21.65 $21.24 $20.74
====== ====== ====== ====== ======
Tangible book value per common share
------------------------------------
Tangible common shareholders' equity $1,405,402 $1,417,463 $1,364,444 $1,326,942 $1,276,750
Ending common shares issued and outstanding (in thousands) 85,341 87,899 87,885 87,849 87,600
Tangible book value per common share $16.47 $16.13 $15.53 $15.10 $14.57
====== ====== ====== ====== ======
Reconciliation of noninterest expense to noninterest expense used in the efficiency ratio
-----------------------------------------------------------------------------------------
Noninterest expense $122,925 $123,887 $127,179 $127,813 $126,572
Foreclosed property expense (267) (118) (176) (467) (730)
Amortization of intangibles (1,242) (1,384) (1,397) (1,397) (1,397)
Other expense (452) (187) (2,572) (551) (1,169)
Noninterest expense used in the efficiency ratio $120,964 $122,198 $123,034 $125,398 $123,276
======== ======== ======== ======== ========
Reconciliation of income to income used in the efficiency ratio
---------------------------------------------------------------
Net interest income before provision $146,272 $144,890 $144,378 $143,368 $141,009
Fully taxable-equivalent adjustment 3,480 3,740 3,813 3,718 4,011
Noninterest income 52,940 48,479 47,353 43,986 42,246
Less: Net gain on investment securities - (810) (2,537) - -
Income used in the efficiency ratio $202,692 $196,299 $193,007 $191,072 $187,266
======== ======== ======== ======== ========
SOURCE Webster Financial Corporation
