WATERBURY, Conn., Oct. 12, 2012 /PRNewswire/ -- Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today announced net income available to common shareholders of $44.4 million, or $.48 per diluted share, for the quarter ended September 30, 2012 compared to $40.6 million, or $.44 per diluted share, for the quarter ended June 30, 2012 and $41.4 million, or $.45 per diluted share, for the quarter ended September 30, 2011.
Highlights for the quarter or at September 30 include:
Combined growth in commercial and commercial real estate loans of $229.3 million or 4.1 percent from June 30, and $649.2 million or 12.7 percent from a year ago.
Deposit growth of $439.5 million or 3.1 percent linked quarter and $827.5 million or 6.1 percent over prior year. Transaction account deposits now represent an all time high of 39.3 percent of total deposits.
Continued improvement in asset quality as evidenced by a 3.5 percent reduction in nonperforming assets and an 11.9 percent decline in commercial classified loans, both from June 30, and reductions of 30.2 percent and 38.3 percent from a year ago.
Continued achievement of positive operating leverage of 2.5 percent as core revenue grew by 1.8 percent and core expenses declined by 0.7 percent from the second quarter.
Return on assets, return on equity and return on tangible equity improved to 0.92 percent, 9.18 percent and 12.65 percent, respectively, compared to 0.86 percent, 8.62 percent and 11.99 percent, respectively, in the second quarter
Webster Chairman and Chief Executive Officer James C. Smith said, "Webster's momentum continued to build in the third quarter. Loans and deposits grew, revenues increased while expenses declined, asset quality trends remain favorable and earnings regained pre-recession levels. Our investments in business banking, mortgage banking and other relationship development initiatives are positively influencing operating results."
Net interest income
- Net interest income was $144.9 million for the quarter compared to $144.4 million in the second quarter.
- Net interest margin was 3.28 percent compared to 3.32 percent in the second quarter as the yield on interest-earning assets declined 12 basis points, primarily on securities, and the cost of funds declined 9 basis points.
- Average interest-earning assets grew by 1.4 percent from the second quarter and totaled $18.1 billion compared to $17.8 billion in the second quarter.
- Average loans grew by $187.6 million or 1.6 percent from the second quarter.
Webster President and Chief Operating Officer Jerry Plush noted, "A double-digit increase in commercial and commercial real estate loans over the past year and growth in lower-cost transaction deposits have contributed to improving operating results. We achieved positive operating leverage again and continued improvement in our efficiency ratio from 63.7 percent in the second quarter to 62.3 percent as a result of increased revenue and disciplined expense management."
Provision for loan losses
- The Company recorded a provision of $5.0 million in the quarter, the same as in the second quarter and in the year ago period.
- Net charge-offs were $17.7 million in the quarter compared to $16.5 million for the second quarter and $28.9 million a year ago.
- The allowance for loan losses represented 114 percent of nonperforming loans compared to 117 percent in the prior quarter.
Noninterest income
- Total noninterest income increased $1.1 million compared to the second quarter. Included in noninterest income is $0.8 million of securities gains in the third quarter and $2.5 million in the second quarter.
- The $2.9 million increase in core noninterest income compared to the second quarter reflects an increase of $2.9 million in mortgage banking activities attributable to favorable spreads on loans originated for sale. Deposit service fees increased by $1.0 million. Loan fees increased by $0.5 million.
- Other income decreased $1.6 million primarily from $0.5 million of direct investment write-downs compared to $0.5 million of direct investment income in the second quarter.
Noninterest expense
- Total noninterest expense decreased $3.3 million compared to the second quarter. Included in noninterest expense are net one time costs of $0.6 million in the third quarter and $3.2 million in the second quarter.
- Total noninterest expense excluding one time costs decreased $0.6 million from the second quarter and increased $3.6 million from a year ago. The decrease compared to the second quarter is driven by a combined reduction of $2.6 million in technology, marketing, professional services and loan workout expenses offset by an increase of $2.5 million in compensation and benefits expense. The increase in compensation and benefits is primarily the result of compensation tied to stock valuation, including increases of $0.6 million in cash award plan expense and $0.5 million in deferred compensation. The cash award plan vests during the fourth quarter, which will eliminate expense volatility from this plan in future quarters. Gains on foreclosed and repossessed assets were $0.4 million in the third quarter and $0.7 million in the second quarter.
Income taxes
- The Company recorded $19.5 million of income tax expense in the quarter on the $64.5 million of pre-tax income applicable to continuing operations in the period. The effective tax rate for the quarter was 30.2 percent, compared to 30.7 percent for the second quarter, and reflects a net tax benefit of $0.3 million that was specific to the period.
Investment securities
- Total investment securities were $6.3 billion at September 30, 2012 and $6.2 billion at June 30, 2012. The carrying value of the available for sale portfolio included $68.9 million in net unrealized gains compared to net unrealized gains of $46.7 million at June 30, while the carrying value of the held to maturity portfolio does not reflect $179.2 million in net unrealized gains compared to net unrealized gains of $158.4 million at June 30.
Loans
- Total loans were $11.7 billion at September 30, 2012 compared to $11.5 billion at June 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 $152.8 million and $76.5 million, respectively. Residential mortgage and consumer loans decreased by $7.7 million and $34.0 million, respectively.
- Loan originations for portfolio in the third quarter were $835.6 million compared to $973.0 million in the second quarter and $716.2 million a year ago. In addition to loan originations for portfolio, $207.7 million of residential loans were originated and sold with servicing retained in the quarter compared to $198.3 million in the second quarter and $69.5 million a year ago.
Asset quality
- Total nonperforming loans declined to $162.6 million, or 1.39 percent of total loans, at September 30, 2012 compared to $169.2 million, or 1.47 percent, at June 30, 2012. Included in nonperforming loans were paying loans totaling $16.8 million at September 30 compared to $17.0 million at June 30. Also included in nonperforming loans are $4.6 million in consumer liquidating loans compared to $4.5 million at June 30.
- Past due loans increased to $67.4 million at September 30 compared to $65.9 million at June 30 attributable to one commercial real estate loan that is no longer past due subsequent to the end of the third quarter. Past due loans represented 0.57 percent of total loans at both September 30 and June 30. Past due loans for the continuing portfolios were $62.5 million at September 30 compared to $61.5 million at June 30. Past due loans for the liquidating portfolio were $4.9 million at September 30 compared to $4.4 million at June 30.
- Other real estate owned (OREO) totaled $4.9 million compared to $4.4 million at June 30.
Deposits and borrowings
- Total deposits were $14.4 billion at September 30, 2012 compared to $14.0 billion at June 30, 2012. Increases of $175.2 million in demand, $20.1 million in interest-bearing checking and $406.6 million in money market deposits were offset by declines of $74.3 million in savings and $88.2 million in certificates of deposit. Core to total deposits and loans to deposits were 81.8 percent and 81.4 percent, respectively, compared to 80.6 percent and 82.6 percent at June 30.
- Total borrowings were $3.1 billion at September 30 compared to $3.2 billion at June 30.
Capital
- The tangible common equity and Tier 1 common equity to risk-weighted assets ratios were 7.39 percent and 11.09 percent, respectively, at September 30, 2012 compared to 7.22 percent and 10.97 percent, respectively, at June 30, 2012.
- Book value and tangible book value per common share were $22.24 and $16.13, respectively, at September 30 compared to $21.65 and $15.53, respectively, at June 30.
- Return on average shareholders' equity and return on average tangible equity were 9.18 percent and 12.65 percent, respectively, at September 30 compared to 8.62 percent and 11.99 percent, respectively, at June 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 167 banking offices, 466 ATMs, 293 of which are owned by Webster and 173 of which are branded, 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 third quarter earnings announcement will be held today, Friday, October 12, 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.
WEBSTER FINANCIAL CORPORATION
Selected Financial Highlights (unaudited)
At or for the Three Months Ended
Sept. 30,
June 30,
March 31,
Dec. 31,
Sept. 30,
(In thousands, except per share data)
2012
2012
2012
2011
2011
Income and performance ratios, (annualized):
Income attributable to Webster Financial Corp.
$ 44,993
$ 41,240
$ 38,938
$ 40,384
$ 42,231
Net income available to common shareholders
44,378
40,625
38,323
39,591
41,400
Net income per diluted common share
0.48
0.44
0.42
0.43
0.45
Return on average shareholders' equity
9.18
%
8.62
%
8.30
%
8.67
%
9.14
%
Return on average tangible equity
12.65
11.99
11.65
12.21
12.92
Return on average assets
0.92
0.86
0.82
0.88
0.94
Noninterest income as a percentage of total revenue
25.07
24.70
23.48
23.05
23.98
Efficiency ratio
62.25
63.75
65.63
65.83
62.22
Asset quality:
Allowance for loan losses
$ 186,089
$ 198,757
$ 210,288
$ 233,487
$ 257,352
Nonperforming assets
167,524
173,621
184,218
193,047
239,945
Allowance for loan losses / total loans
1.59
%
1.72
%
1.86
%
2.08
%
2.33
%
Net charge-offs / average loans (annualized)
0.61
0.58
0.96
0.95
1.05
Nonperforming loans / total loans
1.39
1.47
1.58
1.68
2.00
Nonperforming assets / total loans plus OREO
1.43
1.50
1.63
1.72
2.17
Allowance for loan losses / nonperforming loans
114.44
117.44
117.96
124.14
116.43
Other ratios (annualized):
Tangible equity ratio
7.54
%
7.38
%
7.29
%
7.18
%
7.32
%
Tangible common equity ratio
7.39
7.22
7.14
7.03
7.16
Tier 1 risk-based capital ratio(b)
11.89
12.82
12.86
13.05
13.04
Total risk-based capital(b)
13.15
14.08
14.12
14.61
14.60
Tier 1 common equity / risk-weighted assets(b)
11.09
10.97
10.96
11.08
11.01
Shareholders' equity / total assets
10.05
9.94
9.90
9.86
10.08
Interest rate spread
3.26
3.29
3.33
3.36
3.45
Net interest margin
3.28
3.32
3.36
3.39
3.49
Share and equity related:
Common equity
$ 1,954,739
$ 1,902,609
$ 1,866,003
$ 1,816,835
$ 1,807,330
Book value per common share
22.24
21.65
21.24
20.74
20.65
Tangible book value per common share
16.13
15.53
15.10
14.57
14.47
Common stock closing price
23.70
21.66
22.67
20.39
15.30
Dividends declared per common share
0.10
0.10
0.05
0.05
0.05
Common shares outstanding
87,899
87,885
87,849
87,600
87,507
Basic shares (weighted average)
87,394
87,291
87,216
87,097
87,046
Diluted shares ( weighted average)
91,884
91,543
91,782
90,929
91,205
Footnotes:
(a)
For purposes of the yield computation, unrealized gains (losses) on securities available for sale are excluded from the average balance.
(b)
The ratios presented are projected for September 30, 2012 and actual for the remaining periods presented.
(c)
Certain previously reported information has been corrected to reflect the deferment of certain commercial loan fees.
WEBSTER FINANCIAL CORPORATION
Consolidated Balance Sheets (unaudited)
September 30,
June 30,
September 30,
(In thousands)
2012
2012
2011
Assets:
Cash and due from banks
$ 164,556
$ 197,229
$ 168,776
Interest-bearing deposits
79,763
73,598
87,240
Investment securities:
Available for sale, at fair value
3,120,354
3,153,580
2,500,151
Held to maturity
3,142,160
3,076,226
3,106,013
Total securities
6,262,514
6,229,806
5,606,164
Loans held for sale
91,207
89,228
28,266
Loans:
Commercial
3,138,807
2,985,993
2,841,242
Commercial real estate
2,627,893
2,551,427
2,276,295
Residential mortgages
3,292,948
3,300,617
3,150,286
Consumer
2,668,004
2,701,960
2,782,263
Total loans
11,727,652
11,539,997
11,050,086
Allowance for loan losses
(186,089)
(198,757)
(257,352)
Loans, net
11,541,563
11,341,240
10,792,734
Prepaid FDIC premiums
21,673
27,062
42,424
Federal Home Loan Bank and Federal Reserve Bank stock
142,595
142,595
143,874
Premises and equipment, net
135,394
137,420
148,274
Goodwill and other intangible assets, net
541,399
542,783
546,974
Cash surrender value of life insurance policies
414,797
312,117
305,901
Deferred tax asset, net
74,098
79,011
98,588
Accrued interest receivable and other assets
260,103
257,660
254,796
Total Assets
$ 19,729,662
$ 19,429,749
$ 18,224,011
Liabilities and Equity:
Deposits:
Demand
$ 2,786,525
$ 2,611,297
$ 2,292,673
Interest-bearing checking
2,883,216
2,863,076
2,440,464
Money market
2,340,717
1,934,137
2,225,841
Savings
3,776,280
3,850,549
3,689,377
Certificates of deposit
2,507,647
2,595,816
2,818,527
Brokered certificates of deposit
119,052
119,052
119,052
Total deposits
14,413,437
13,973,927
13,585,934
Securities sold under agreements to repurchase and other short-term borrowings
1,310,015
1,203,378
1,220,905
Federal Home Loan Bank advances
1,452,660
1,529,102
760,964
Long-term debt
335,678
472,928
554,478
Accrued expenses and other liabilities
234,194
318,866
255,884
Total liabilities
17,745,984
17,498,201
16,378,165
Webster Financial Corporation shareholders' equity
1,983,678
1,931,548
1,836,269
Noncontrolling interests
-
-
9,577
Total equity
1,983,678
1,931,548
1,845,846
Total Liabilities and Equity
$ 19,729,662
$ 19,429,749
$ 18,224,011
See Selected Financial Highlights for footnotes.
WEBSTER FINANCIAL CORPORATION
Consolidated Statements of Operations (unaudited)
Three Months Ended
Nine Months Ended
September
September
(In thousands, except per share data)
2012
2011
2012
2011
Interest income:
Interest and fees on loans and leases
$ 121,367
$ 121,322
$363,487
$365,660
Interest and dividends on securities
50,194
52,974
155,659
160,345
Loans held for sale
655
266
1,810
865
Total interest income
172,216
174,562
520,956
526,870
Interest expense:
Deposits
14,543
18,930
45,701
63,540
Borrowings
12,783
13,947
42,619
40,571
Total interest expense
27,326
32,877
88,320
104,111
Net interest income
144,890
141,685
432,636
422,759
Provision for loan losses
5,000
5,000
14,000
20,000
Net interest income after provision for loan losses
139,890
136,685
418,636
402,759
Noninterest income:
Deposit service fees
24,728
27,074
71,810
78,509
Loan related fees
4,039
5,308
12,473
15,341
Wealth and investment services
7,186
6,486
21,656
20,662
Mortgage banking activities
6,515
1,324
14,522
3,811
Increase in cash surrender value of life insurance policies
2,680
2,642
7,758
7,751
Net gain on investment securities
810
-
3,347
2,024
Other income
2,521
1,857
8,252
6,698
Total noninterest income
48,479
44,691
139,818
134,796
Noninterest expense:
Compensation and benefits
66,126
61,897
198,332
194,501
Occupancy
12,462
13,150
37,922
40,741
Technology and equipment expense
15,118
15,141
46,721
45,667
Marketing
4,529
4,144
13,723
13,916
Professional and outside services
2,790
3,125
8,869
8,368
Intangible assets amortization
1,384
1,397
4,178
4,191
Foreclosed and repossessed asset expenses
118
726
761
2,320
Foreclosed and repossessed asset gains
(409)
(722)
(1,743)
(243)
Loan workout expenses
1,693
2,012
5,718
5,591
Deposit insurance
5,675
4,472
17,107
16,171
Other expenses
13,805
14,392
42,238
43,032
123,291
119,734
373,826
374,255
Debt prepayment penalties
391
-
4,040
-
Write-down for expedited asset disposition
-
-
-
5,073
Contract termination and severance
136
1,555
863
2,615
Branch and facility optimization
69
2,183
150
3,315
Costs for warrant registration
-
-
-
350
Provision (benefit) for litigation and settlements
-
(254)
-
232
Loan repurchase and unfunded commitment reserve benefit, net
-
-
-
(1,436)
Total noninterest expense
123,887
123,218
378,879
384,404
Income from continuing operations before income taxes
64,482
58,158
179,575
153,151
Income tax expense
19,489
15,927
54,404
44,152
Income from continuing operations
44,993
42,231
125,171
108,999
Income from discontinued operations, net of tax
-
-
-
1,995
Consolidated net income
44,993
42,231
125,171
110,994
Less: Net loss attributable to noncontrolling interests
-
-
-
(1)
Net income attributable to Webster Financial Corp.
44,993
42,231
125,171
110,995
Preferred stock dividends
(615)
(831)
(1,845)
(2,493)
Net income available to common shareholders
$ 44,378
$ 41,400
$123,326
$108,502
Diluted shares (weighted average)
91,884
91,205
91,754
91,954
Net income per common share available to common shareholders:
Basic
Income from continuing operations
$ 0.51
$ 0.48
$ 1.41
$ 1.22
Net income
0.51
0.48
1.41
1.24
Diluted
Income from continuing operations
0.48
0.45
1.34
1.15
Net income
0.48
0.45
1.34
1.17
See Selected Financial Highlights for footnotes.
WEBSTER FINANCIAL CORPORATION
Five Quarter Consolidated Statements of Operations (unaudited)
Three Months Ended
Sept. 30,
June 30,
March 31,
Dec. 31,
Sept. 30,
(In thousands, except per share data)
2012
2012
2012
2011
2011
Interest income:
Interest and fees on loans and leases
$ 121,367
$ 121,379
$ 120,741
$ 121,223
$ 121,322
Interest and dividends on securities
50,194
52,597
52,868
51,260
52,974
Loans held for sale
655
657
498
370
266
Total interest income
172,216
174,633
174,107
172,853
174,562
Interest expense:
Deposits
14,543
15,102
16,056
17,268
18,930
Borrowings
12,783
15,153
14,683
14,576
13,947
Total interest expense
27,326
30,255
30,739
31,844
32,877
Net interest income
144,890
144,378
143,368
141,009
141,685
Provision for loan losses
5,000
5,000
4,000
2,500
5,000
Net interest income after provision for loan losses
139,890
139,378
139,368
138,509
136,685
Noninterest income:
Deposit service fees
24,728
23,719
23,363
24,286
27,074
Loan related fees
4,039
3,565
4,869
4,896
5,308
Wealth and investment services
7,186
7,249
7,221
5,759
6,486
Mortgage banking activities
6,515
3,624
4,383
1,094
1,324
Increase in cash surrender value of life insurance policies
2,680
2,561
2,517
2,609
2,642
Net gain on investment securities
810
2,537
-
-
-
Other income
2,521
4,098
1,633
3,602
1,857
Total noninterest income
48,479
47,353
43,986
42,246
44,691
Noninterest expense:
Compensation and benefits
66,126
63,587
68,619
68,146
61,897
Occupancy
12,462
12,578
12,882
13,125
13,150
Technology and equipment expense
15,118
16,021
15,582
15,054
15,141
Marketing
4,529
5,094
4,100
4,540
4,144
Professional and outside services
2,790
3,387
2,692
2,835
3,125
Intangible assets amortization
1,384
1,397
1,397
1,397
1,397
Foreclosed and repossessed asset expenses
118
176
467
730
726
Foreclosed and repossessed asset gains
(409)
(670)
(664)
(63)
(722)
Loan workout expenses
1,693
2,201
1,824
1,956
2,012
Deposit insurance
5,675
5,723
5,709
4,756
4,472
Other expenses
13,805
14,443
13,990
12,864
14,392
123,291
123,937
126,598
125,340
119,734
Debt prepayment penalties
391
2,515
1,134
5,203
-
Write-down for expedited asset disposition
-
-
-
1,187
-
Contract termination and severance
136
727
-
2,485
1,555
Branch and facility optimization
69
-
81
1,689
2,183
Preferred stock redemption costs
-
-
-
423
-
Provision (benefit) for litigation and settlements
-
-
-
(9,755)
(254)
Total noninterest expense
123,887
127,179
127,813
126,572
123,218
Income from continuing operations before income taxes
64,482
59,552
55,541
54,183
58,158
Income tax expense
19,489
18,312
16,603
13,799
15,927
Income from continuing operations
44,993
41,240
38,938
40,384
42,231
Income from discontinued operations, net of tax
-
-
-
-
-
Consolidated net income
44,993
41,240
38,938
40,384
42,231
Less: Net loss attributable to noncontrolling interests
-
-
-
-
-
Net income attributable to Webster Financial Corp.
44,993
41,240
38,938
40,384
42,231
Preferred stock dividends
(615)
(615)
(615)
(793)
(831)
Net income available to common shareholders
$ 44,378
$ 40,625
$ 38,323
$ 39,591
$ 41,400
Diluted shares (weighted average)
91,884
91,543
91,782
90,929
91,205
Net income per common share available to common shareholders:
Basic
Income from continuing operations
$ 0.51
$ 0.46
$ 0.44
$ 0.45
$ 0.48
Net income
0.51
0.46
0.44
0.45
0.48
Diluted
Income from continuing operations
0.48
0.44
0.42
0.43
0.45
Net income
0.48
0.44
0.42
0.43
0.45
See Selected Financial Highlights for footnotes.
WEBSTER FINANCIAL CORPORATION
Five Quarter Interest Rate Spreads and Margin (unaudited)
Three Months Ended
September 30,
June 30,
March 31,
December 31,
September 30,
2012
2012
2012
2011
2011
Interest rate spread
Yield on interest-earning assets
3.88
%
4.00
%
4.06
%
4.13
%
4.27
%
Cost of interest-bearing liabilities
0.62
0.71
0.73
0.77
0.82
Interest rate spread
3.26
%
3.29
%
3.33
%
3.36
%
3.45
%
Net interest margin
3.28
%
3.32
%
3.36
%
3.39
%
3.49
%
Consolidated Average Balances, Yields, and Rates Paid (unaudited)
Three Months Ended September 30,
2012
2011 (c)
Fully tax-
Fully tax-
Average
equivalent
Average
equivalent
(Dollars in thousands)
balance
Interest
yield/rate
balance
Interest
yield/rate
Assets:
Interest-earning assets:
Loans
$ 11,608,334
$ 121,367
4.14
%
$ 11,023,674
$ 121,322
4.36
%
Investment securities(a)
6,145,414
53,010
3.48
5,344,987
55,916
4.22
Loans held for sale
82,006
655
3.19
25,593
266
4.17
Federal Home Loan and Federal Reserve Bank stock
142,595
879
2.45
143,874
823
2.27
Interest-bearing deposits
91,502
45
0.19
89,273
33
0.14
Total interest-earning assets
18,069,851
175,956
3.88
16,627,401
178,360
4.27
Noninterest-earning assets
1,420,460
1,326,641
Total assets
$ 19,490,311
$ 17,954,042
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Deposits:
Demand
2,726,790
$ -
-
%
$ 2,358,392
$ -
-
%
Savings, interest checking, and money market
8,935,878
5,137
0.23
8,402,300
7,308
0.35
Certificates of deposit
2,677,939
9,406
1.40
2,997,188
11,622
1.54
Total deposits
14,340,607
14,543
0.40
13,757,880
18,930
0.55
Securities sold under agreements to repurchase and other short-term borrowings
1,171,787
5,594
1.87
1,112,177
4,384
1.54
Federal Home Loan Bank advances
1,433,037
3,942
1.08
465,475
3,551
2.99
Long-term debt
361,468
3,247
3.59
557,585
6,012
4.31
Total borrowings
2,966,292
12,783
1.70
2,135,237
13,947
2.58
Total interest-bearing liabilities
17,306,899
27,326
0.62
15,893,117
32,877
0.82
Noninterest-bearing liabilities
222,929
202,682
Total liabilities
17,529,828
16,095,799
Noncontrolling interests
-
9,577
Webster Financial Corp. shareholders' equity
1,960,483
1,848,666
Total liabilities and equity
$ 19,490,311
$ 17,954,042
Tax-equivalent net interest income
148,630
145,483
Less: tax-equivalent adjustment
(3,740)
(3,798)
Net interest income
$ 144,890
$ 141,685
Interest rate spread
3.26
%
3.45
%
Net interest margin
3.28
%
3.49
%
See Selected Financial Highlights for footnotes.
WEBSTER FINANCIAL CORPORATION
Consolidated Average Balances, Yields, and Rates Paid (unaudited)
Nine Months Ended September 30,
2012
2011 (c)
Fully tax-
Fully tax-
Average
equivalent
Average
equivalent
(Dollars in thousands)
balance
Interest
yield/rate
balance
Interest
yield/rate
Assets:
Interest-earning assets:
Loans
$ 11,435,430
$ 363,487
4.21
%
$ 11,024,732
$ 365,660
4.40
%
Investment securities(a)
6,076,750
164,187
3.63
5,330,255
169,155
4.27
Loans held for sale
67,411
1,810
3.58
25,725
865
4.49
Federal Home Loan and Federal Reserve Bank stock
142,912
2,636
2.46
143,874
2,486
2.31
Interest-bearing deposits
78,852
107
0.18
121,020
190
0.21
Total interest-earning assets
17,801,355
532,227
3.98
16,645,606
538,356
4.31
Noninterest-earning assets
1,399,566
1,325,336
Total assets
$ 19,200,921
$ 17,970,942
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Deposits:
Demand
$ 2,572,851
$ -
-
%
$ 2,249,378
$ -
-
%
Savings, interest checking, and money market
8,747,401
16,216
0.25
8,572,577
27,445
0.43
Certificates of deposit
2,739,829
29,485
1.44
3,076,384
36,095
1.57
Total deposits
14,060,081
45,701
0.43
13,898,339
63,540
0.61
Securities sold under agreements to repurchase and other short-term borrowings
1,182,817
15,388
1.71
999,843
11,723
1.55
Federal Home Loan Bank advances
1,380,393
12,932
1.23
474,094
10,201
2.84
Long-term debt
447,082
14,299
4.26
569,256
18,647
4.37
Total borrowings
3,010,292
42,619
1.87
2,043,193
40,571
2.63
Total interest-bearing liabilities
17,070,373
88,320
0.69
15,941,532
104,111
0.87
Noninterest-bearing liabilities
213,196
195,830
Total liabilities
17,283,569
16,137,362
Noncontrolling interests
-
9,596
Webster Financial Corporation shareholders' equity
1,917,352
1,823,984
Total liabilities and equity
$ 19,200,921
$ 17,970,942
Tax-equivalent net interest income
443,907
434,245
Less: tax-equivalent adjustment
(11,271)
(11,486)
Net interest income
$ 432,636
$ 422,759
Interest rate spread
3.29
%
3.44
%
Net interest margin
3.32
%
3.48
%
See Selected Financial Highlights for footnotes.
WEBSTER FINANCIAL CORPORATION
Five Quarter Loan Balances (unaudited)
Sept. 30,
June 30,
March 31,
Dec. 31,
Sept. 30,
(Dollars in thousands)
2012
2012
2012
2011
2011
Loan Balances (actuals):
Continuing Portfolio:
Commercial non-mortgage
$ 2,201,732
$ 2,069,127
$ 1,972,205
$ 1,932,542
$ 1,812,685
Equipment financing
401,748
417,654
446,585
474,804
518,369
Asset based lending
535,327
499,212
470,187
453,251
510,188
Commercial real estate
2,597,835
2,518,392
2,389,206
2,345,241
2,225,250
Residential development
30,058
33,035
36,591
39,648
51,045
Residential mortgages
3,292,947
3,300,616
3,270,212
3,219,888
3,150,285
Consumer
2,537,039
2,565,654
2,585,685
2,612,476
2,627,385
Total continuing
11,596,686
11,403,690
11,170,671
11,077,850
10,895,207
Allowance for loan losses
(156,214)
(168,882)
(180,413)
(203,612)
(227,477)
Total continuing, net
11,440,472
11,234,808
10,990,258
10,874,238
10,667,730
Liquidating Portfolio:
National Construction Lending Center (NCLC)
1
1
1
1
1
Consumer
130,965
136,306
141,478
147,553
154,878
Total liquidating portfolio
130,966
136,307
141,479
147,554
154,879
Allowance for loan losses
(29,875)
(29,875)
(29,875)
(29,875)
(29,875)
Total liquidating, net
101,091
106,432
111,604
117,679
125,004
Total Loan Balances (actuals)
11,727,652
11,539,997
11,312,150
11,225,404
11,050,086
Allowance for loan losses
(186,089)
(198,757)
(210,288)
(233,487)
(257,352)
Loans, net
$11,541,563
$11,341,240
$11,101,862
$10,991,917
$10,792,734
Loan Balances (average):
Continuing Portfolio:
Commercial non-mortgage
$ 2,137,882
$ 2,008,778
$ 1,970,656
$ 1,868,885
$ 1,798,644
Equipment financing
404,180
430,882
458,111
495,667
551,732
Asset based lending
520,100
480,574
474,264
492,982
497,426
Commercial real estate
2,528,394
2,453,430
2,336,576
2,254,970
2,185,662
Residential development
31,484
35,422
38,401
49,182
51,051
Residential mortgages
3,300,067
3,296,306
3,253,199
3,186,885
3,145,086
Consumer
2,552,660
2,576,521
2,598,758
2,622,378
2,635,911
Total continuing
11,474,767
11,281,913
11,129,965
10,970,949
10,865,512
Allowance for loan losses
(167,469)
(179,139)
(201,592)
(219,566)
(247,551)
Total continuing, net
11,307,298
11,102,774
10,928,373
10,751,383
10,617,961
Liquidating Portfolio:
NCLC
1
1
1
1
1
Consumer
133,566
138,807
145,367
151,422
158,161
Total liquidating portfolio
133,567
138,808
145,368
151,423
158,162
Allowance for loan losses
(29,875)
(29,875)
(29,875)
(29,875)
(29,875)
Total liquidating, net
103,692
108,933
115,493
121,548
128,287
Total Loan Balances (average)
11,608,334
11,420,721
11,275,333
11,122,372
11,023,674
Allowance for loan losses
(197,344)
(209,014)
(231,467)
(249,441)
(277,426)
Loans, net
$11,410,990
$11,211,707
$11,043,866
$10,872,931
$10,746,248
See Selected Financial Highlights for footnotes.
WEBSTER FINANCIAL CORPORATION
Five Quarter Nonperforming Assets (unaudited)
Sept. 30,
June 30,
March 31,
Dec. 31,
Sept. 30,
(Dollars in thousands)
2012
2012
2012
2011
2011
Nonperforming loans:
Continuing Portfolio:
Commercial non-mortgage
$ 30,315
$ 29,271
$ 31,547
$ 27,884
$ 39,386
Equipment financing
3,052
5,862
4,868
7,154
8,439
Asset based lending
92
262
1,475
1,880
5,126
Commercial real estate
15,768
23,457
25,131
32,197
42,461
Residential development
5,431
5,982
6,140
6,762
16,611
Residential mortgages
79,736
77,336
79,110
82,052
79,285
Consumer
23,602
22,616
26,098
25,059
24,228
Nonperforming loans - continuing portfolio
157,996
164,786
174,369
182,988
215,536
Liquidating Portfolio:
Consumer
4,616
4,460
3,896
5,091
5,492
Nonperforming loans - liquidating portfolio
4,616
4,460
3,896
5,091
5,492
Total nonperforming loans
$ 162,612
$ 169,246
$ 178,265
$ 188,079
$ 221,028
Other real estate owned and repossessed assets:
Continuing Portfolio:
Commercial
$ 917
$ 917
$ 2,051
$ 1,961
$ 12,961
Repossessed equipment
1,840
721
674
123
1,421
Residential
1,705
2,271
2,648
1,947
3,343
Consumer
450
466
580
805
1,021
Total continuing
4,912
4,375
5,953
4,836
18,746
Liquidating Portfolio:
NCLC
-
-
-
132
171
Total liquidating
-
-
-
132
171
Total other real estate owned and repossessed assets
$ 4,912
$ 4,375
$ 5,953
$ 4,968
$ 18,917
Total nonperforming assets
$ 167,524
$ 173,621
$ 184,218
$ 193,047
$ 239,945
See Selected Financial Highlights for footnotes.
WEBSTER FINANCIAL CORPORATION
Five Quarter Past Due Loans (unaudited)
Sept. 30,
June 30,
March 31,
Dec. 31,
Sept. 30,
(Dollars in thousands)
2012
2012
2012
2011
2011
Past due 30-89 days:
Accruing loans:
Continuing Portfolio:
Commercial non-mortgage
$ 4,424
$ 6,479
$ 6,938
$ 4,619
$ 7,428
Equipment financing
3,524
1,665
4,099
4,800
5,054
Asset based lending
-
-
-
-
-
Commercial real estate
7,136
3,152
1,101
1,766
2,969
Residential development
317
-
-
-
664
Residential mortgages
22,230
26,966
22,915
24,361
23,730
Consumer
24,664
22,163
19,592
20,847
18,867
Past Due 30-89 days - continuing portfolio
62,295
60,425
54,645
56,393
58,712
Liquidating Portfolio:
Consumer
4,909
4,377
5,263
4,538
4,653
Past Due 30-89 days - liquidating portfolio
4,909
4,377
5,263
4,538
4,653
Accruing loans past due 90 days or more
205
1,074
43
724
764
Total past due loans
$ 67,409
$ 65,876
$ 59,951
$ 61,655
$ 64,129
See Selected Financial Highlights for footnotes.
WEBSTER FINANCIAL CORPORATION
Five Quarter Changes in the Allowance for Loan Losses (unaudited)
For the Three Months Ended
Sept. 30,
June 30,
March 31,
Dec. 31,
Sept. 30,
(Dollars in thousands)
2012
2012
2012
2011
2011
Beginning balance
$ 198,757
$ 210,288
$ 233,487
$ 257,352
$ 281,243
Provision
5,000
5,000
4,000
2,500
5,000
Charge-offs continuing portfolio:
Commercial non-mortgage
8,642
5,164
14,994
6,684
11,311
Equipment financing
187
165
634
55
551
Asset based lending
-
512
-
2,150
3,317
Commercial real estate
2,655
1,066
5,848
7,768
3,377
Residential development
-
-
-
453
-
Residential mortgages
3,234
3,948
3,115
2,548
2,591
Consumer
6,752
8,122
6,487
7,551
8,874
Charge-offs continuing portfolio
21,470
18,977
31,078
27,209
30,021
Charge-offs liquidating portfolio:
NCLC
28
4
-
7
61
Consumer
2,482
3,227
3,564
3,958
3,734
Charge-offs liquidating portfolio
2,510
3,231
3,564
3,965
3,795
Total charge-offs
23,980
22,208
34,642
31,174
33,816
Recoveries continuing portfolio:
Commercial non-mortgage
779
957
886
1,215
858
Equipment financing
3,111
1,115
2,348
1,161
2,240
Asset based lending
518
721
914
195
273
Commercial real estate
121
34
1,069
96
36
Residential development
181
12
31
5
-
Residential mortgages
318
126
118
135
357
Consumer
933
2,453
1,932
1,721
998
Recoveries continuing portfolio
5,961
5,418
7,298
4,528
4,762
Recoveries liquidating portfolio:
NCLC
35
10
23
177
17
Consumer
316
249
122
104
146
Recoveries liquidating portfolio
351
259
145
281
163
Total recoveries
6,312
5,677
7,443
4,809
4,925
Total net charge-offs
17,668
16,531
27,199
26,365
28,891
Ending balance
$ 186,089
$ 198,757
$ 210,288
$ 233,487
$ 257,352
See Selected Financial Highlights for footnotes.
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 September 30, 2012, June 30, 2012, March 31, 2012, December 31, 2011, and September 30, 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
(Dollars in thousands)
Sept. 30,
June 30,
March 31,
Dec. 31,
Sept. 30,
2012
2012
2012
2011
2011
Reconciliation of average shareholders' equity to average tangible shareholders' equity
Average shareholders' equity
$ 1,960,483
$ 1,914,325
$ 1,876,774
$ 1,863,691
$ 1,848,666
Average goodwill
(529,887)
(529,887)
(529,887)
(529,887)
(529,887)
Average intangible assets (excluding mortgage servicing rights)
(12,188)
(13,576)
(14,973)
(16,368)
(17,771)
Average related deferred tax liabilities
4,364
4,862
5,362
5,729
6,220
Average tangible shareholders' equity
$ 1,422,772
$ 1,375,724
$ 1,337,276
$ 1,323,165
$ 1,307,228
Reconciliation of period-end shareholders' equity to period-end tangible shareholders' equity
Shareholders' equity
$ 1,983,678
$ 1,931,548
$ 1,894,942
$ 1,845,774
$ 1,836,269
Goodwill
(529,887)
(529,887)
(529,887)
(529,887)
(529,887)
Intangible assets (excluding mortgage servicing rights)
(11,512)
(12,896)
(14,293)
(15,690)
(17,086)
Related deferred tax liabilities
4,123
4,618
5,119
5,492
5,980
Tangible shareholders' equity
$ 1,446,402
$ 1,393,383
$ 1,355,881
$ 1,305,689
$ 1,295,276
Reconciliation of period-end common shareholders' equity to period-end tangible common shareholders' equity
Common shareholders' equity
$ 1,954,739
$ 1,902,609
$ 1,866,003
$ 1,816,835
$ 1,807,330
Goodwill
(529,887)
(529,887)
(529,887)
(529,887)
(529,887)
Intangible assets (excluding mortgage servicing rights)
(11,512)
(12,896)
(14,293)
(15,690)
(17,086)
Related deferred tax liabilities
4,123
4,618
5,119
5,492
5,980
Tangible common shareholders' equity
$ 1,417,463
$ 1,364,444
$ 1,326,942
$ 1,276,750
$ 1,266,337
Reconciliation of period-end assets to period-end tangible assets
Assets
$ 19,729,662
$ 19,429,749
$ 19,134,142
$ 18,714,340
$ 18,224,011
Goodwill
(529,887)
(529,887)
(529,887)
(529,887)
(529,887)
Intangible assets (excluding mortgage servicing rights)
(11,512)
(12,896)
(14,293)
(15,690)
(17,086)
Related deferred tax liabilities
4,123
4,618
5,119
5,492
5,980
Tangible assets
$ 19,192,386
$ 18,891,584
$ 18,595,081
$ 18,174,255
$ 17,683,018
Book value per common share
Common shareholders' equity
$ 1,954,739
$ 1,902,609
$ 1,866,003
$ 1,816,835
$ 1,807,330
Ending common shares issued and outstanding (in thousands)
87,899
87,885
87,849
87,600
87,507
Book value per share of common stock
$ 22.24
$ 21.65
$ 21.24
$ 20.74
$ 20.65
Tangible book value per common share
Tangible common shareholders' equity
$ 1,417,463
$ 1,364,444
$ 1,326,942
$ 1,276,750
$ 1,266,337
Ending common shares issued and outstanding (in thousands)
87,899
87,885
87,849
87,600
87,507
Tangible book value per common share
$ 16.13
$ 15.53
$ 15.10
$ 14.57
$ 14.47
Reconciliation of noninterest expense to noninterest expense used in the efficiency ratio
Noninterest expense
$ 123,887
$ 127,179
$ 127,813
$ 126,572
$ 123,218
Foreclosed property expense
(118)
(176)
(467)
(730)
(726)
Amortization of intangibles
(1,384)
(1,397)
(1,397)
(1,397)
(1,397)
Other expense
(187)
(2,572)
(551)
(1,169)
(2,762)
Noninterest expense used in the efficiency ratio
$ 122,198
$ 123,034
$ 125,398
$ 123,276
$ 118,333
Reconciliation of income to income used in the efficiency ratio
Net interest income before provision
$ 144,890
$ 144,378
$ 143,368
$ 141,009
$ 141,685
Fully taxable-equivalent adjustment
3,740
3,813
3,718
4,011
3,798
Noninterest income
48,479
47,353
43,986
42,246
44,691
Less: Net gain on investment securities
(810)
(2,537)
-
-
-
Income used in the efficiency ratio
$ 196,299
$ 193,007
$ 191,072
$ 187,266
$ 190,174
Media Contact
Investor Contact
Bob Guenther, 203-578-2391
Terry Mangan 203-578-2318
SOURCE Webster Financial Corporation