Webster Reports Fourth Quarter 2020 Earnings of $0.64 Per Diluted Share

Rhea-AI Summary

Webster Financial Corporation (WBS) reported earnings of $57.7 million ($0.64 per diluted share) for Q4 2020, down from $88.1 million ($0.96) in Q4 2019. Adjusted EPS would have been $0.99 after strategic charges of $42.0 million. Total revenue reached $293.7 million, with loan growth of $1.6 billion (8.0% YoY). Deposit growth was $4.0 billion (17.2%). The company’s net interest margin was 2.83%, with a provision for credit losses at $(1.0) million. CEO John Ciulla emphasized ongoing support for customers and strategic priorities for growth in 2021.

Positive

• Quarterly loan originations totaled $1.9 billion.
• Total deposits grew by $4.0 billion, or 17.2% YoY.
• Commercial banking loans increased by 10% from 2019.
• Pre-tax, pre-provision net revenue rose 13.8% YoY in Commercial Banking.

Negative

• Earnings decreased from $88.1 million in Q4 2019 to $57.7 million in Q4 2020.
• Net interest margin declined from 3.27% to 2.83% YoY.
• Non-interest income decreased in HSA Banking segment.
• Total loans dropped from $21.9 billion in Q3 2020 to $21.6 billion in Q4 2020.

WATERBURY, Conn., Jan. 21, 2021 /PRNewswire/ -- Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A. and its HSA Bank division, today announced earnings applicable to common shareholders of $57.7 million, or $0.64 per diluted share, for the quarter ended December 31, 2020, compared to $88.1 million, or $0.96 per diluted share, for the quarter ended December 31, 2019. Earnings per diluted share would have been $0.99 for the quarter ended December 31, 2020, adjusting for $42.0 million ($31.2 million after tax) of charges related to strategic optimization initiatives.

For the full year 2020, earnings applicable to common shareholders was $211.5 million, or $2.35 per diluted share, and includes $52.2 million ($38.8 million after tax) of adjustments.

"I am pleased with the results of the quarter as we continue to deliver for our customers and communities as evidenced, in part, by $1.9 billion of quarterly loan originations while maintaining solid credit quality," said John R. Ciulla, chairman and chief executive officer. "We remain focused on our strategic priorities and positioning ourselves for growth as the macro environment improves in 2021."

Highlights for the fourth quarter of 2020:

• Revenue of $293.7 million; $297.4 million excluding $3.7 million in hedge termination costs related to debt prepayments.
• Loan growth of $1.6 billion, or 8.0 percent from a year ago, led by commercial and commercial real estate, which increased 16.1 percent. Excluding Paycheck Protection Program (PPP) loans, total loan growth was $348 million, or 1.7 percent.
• Results include a Current Expected Credit Loss (CECL) provision of $(1.0) million with a reserve decrease of $10.4 million compared to the prior quarter, resulting in an allowance coverage of 1.66 percent, or 1.76 percent excluding $1.3 billion of PPP loans.
• Deposit growth of $4.0 billion, or 17.2 percent from a year ago, with growth of $1.7 billion in demand deposits and $704 million in HSA deposits.
• Results include $42.0 million of charges related to strategic optimization initiatives.
• Net interest margin of 2.83 percent.
• Efficiency ratio (non-GAAP) of 60.3 percent.

"Our continued strong liquidity enabled us to reduce borrowings by $608 million in the quarter and $1.8 billion from a year ago," said Glenn MacInnes, executive vice president and chief financial officer. "The strength of our balance sheet supports our future growth objectives."

Line of Business performance compared to the fourth quarter of 2019

Commercial Banking

Webster's Commercial Banking segment serves middle market, commercial real estate, asset-based lending, equipment finance, private banking, and treasury and payment solutions clients. As of December 31, 2020, Commercial Banking had $12.6 billion in loans and leases and $6.0 billion in deposit balances.

Commercial Banking Operating Results:

							Percent
	Three months ended December 31,						Favorable/
(In thousands)		2020		2019			(Unfavorable)
Net interest income		$112,274		$100,151				12.1	%
Non-interest income		17,303		16,420				5.4
Operating revenue		129,577		116,571				11.2
Non-interest expense		48,724		45,505				(7.1)
Pre-tax, pre-provision net revenue		$80,853		$71,066				13.8
							Percent
	At December 31,						Increase/
(In millions)		2020		2019			(Decrease)
Loans and leases		$12,649		$11,500				10.0	%
Deposits		5,957		4,382				35.9

Note: In 1Q20, segment net interest income was updated to reflect changes in the funds transfer pricing methodology related to allocated capital. The prior period has been restated to reflect the change.

Pre-tax, pre-provision net revenue increased $9.8 million to $80.9 million in the quarter as compared to prior year. Net interest income increased $12.1 million to $112.3 million, primarily driven by loan and deposit growth. Non-interest income increased $0.9 million to $17.3 million as a result of higher loan related fees. Non-interest expense increased $3.2 million to $48.7 million, primarily due to compensation related expense.

HSA Bank

Webster's HSA Bank division offers a comprehensive consumer-directed healthcare solution that includes health savings accounts, health reimbursement arrangements, flexible spending accounts and commuter benefits. Health savings accounts are distributed nationwide directly to employers and individual consumers, as well as through national and regional insurance carriers, benefit consultants and financial advisors. As of December 31, 2020, HSA Bank had $10.0 billion in total footings comprising $7.1 billion in deposit balances and $2.9 billion in assets under administration through linked investment accounts.

HSA Bank Operating Results:

							Percent
	Three months ended December 31,						Favorable/
(In thousands)		2020		2019			(Unfavorable)
Net interest income		$40,495		$41,993				(3.6)	%
Non-interest income		24,105		22,959				5.0
Operating revenue		64,600		64,952				(0.5)
Non-interest expense		34,750		34,893				0.4
Pre-tax, net revenue		$29,850		$30,059				(0.7)
							Percent
		At December 31,					Increase/
(Dollars in millions)		2020		2019			(Decrease)
Number of accounts (thousands)		2,953		2,974				(0.7)	%
Deposits		$7,120		$6,416				11.0
Linked investment accounts *		2,853		2,071				37.8
Total footings		$9,973		$8,487				17.5
* Linked investment accounts are held off balance sheet

Note: In 1Q20, segment net interest income was updated to reflect changes in the funds transfer pricing methodology related to allocated capital. The prior period has been restated to reflect the change.

Pre-tax net revenue decreased $0.2 million to $29.9 million in the quarter as compared to prior year. Net interest income decreased $1.5 million to $40.5 million, due to a decline in deposit spreads partially offset by an 11.0 percent growth in deposits. Non-interest income increased $1.1 million to $24.1 million, due primarily to account fees and increased interchange as a result of additional spending compared to the prior year. Non-interest expense decreased $0.1 million to $34.8 million, essentially flat to the prior year.

Community Banking

Community Banking serves consumer and business banking customers primarily throughout southern New England and into Westchester County, New York. Community Banking is comprised of the Personal Banking and Business Banking operating segments, as well as a distribution network consisting of 155 banking centers and 297 ATMs, a customer care center, and a full range of web and mobile-based banking services. As of December 31, 2020, Community Banking had $9.0 billion in loans and $14.3 billion in deposit balances.

Community Banking Operating Results:

							Percent
	Three months ended December 31,						Favorable/
(In thousands)		2020		2019			(Unfavorable)
Net interest income		$110,421		$102,157				8.1	%
Non-interest income		26,284		28,098				(6.5)
Operating revenue		136,705		130,255				5.0
Non-interest expense		98,952		97,323				(1.7)
Pre-tax, pre-provision net revenue		$37,753		$32,932				14.6
							Percent
		At December 31,					Increase/
(In millions)		2020		2019			(Decrease)
Loans		$8,992		$8,537				5.3	%
Deposits		14,258		12,528				13.8

Note: In 1Q20, segment net interest income was updated to reflect changes in the funds transfer pricing methodology related to allocated capital. The prior period has been restated to reflect the change.

Pre-tax, pre-provision net revenue increased $4.8 million to $37.8 million in the quarter as compared to prior year. Net interest income increased $8.3 million to $110.4 million, driven by loan and deposit balance growth, partially offset by a decline in deposit spreads due to the lower interest rate environment. Non-interest income decreased $1.8 million resulting from lower deposit-related service charges, as well as lower loan servicing fees in the current quarter. This decrease was partially offset by fee income from mortgage banking activities. Non-interest expense increased $1.6 million to $99.0 million due to continued investments in technology and outside services.

Consolidated financial performance:

Quarterly net interest income compared to the fourth quarter of 2019:

• Net interest income was $216.9 million compared to $231.3 million.
• Net interest margin was 2.83 percent compared to 3.27 percent. The yield on interest-earning assets declined by 90 basis points, and the cost of interest-bearing liabilities declined by 49 basis points.
• Average interest-earning assets totaled $30.9 billion and grew by $2.5 billion, or 8.9 percent.
• Average loans totaled $21.7 billion and grew by $1.9 billion, or 9.7 percent.
• Average deposits totaled $27.2 billion and grew by $3.9 billion, or 16.5 percent.

Quarterly provision for credit losses:

• The provision for credit losses was $(1.0) million in the quarter, contributing to a $10.4 million decrease in the allowance for credit losses on loans and leases. The decrease in the allowance reflects our current estimate of forecasted economic conditions. The provision for credit losses was $22.8 million in the prior quarter and $6.0 million a year ago. The reserve release reflects continued favorable credit trends.
• Net charge-offs were $9.4 million, compared to $11.5 million in the prior quarter and $6.1 million a year ago. The ratio of net charge-offs to average loans on an annualized basis was 0.17 percent, compared to 0.21 percent in the prior quarter and 0.12 percent a year ago.
• The allowance for credit losses on loans and leases represented 1.66 percent of total loans at December 31, 2020, compared to 1.69 percent at September 30, 2020 and 1.04 percent at December 31, 2019. Excluding $1.3 billion of risk free PPP loans, the coverage ratio was 1.76 percent at December 31, 2020, compared to 1.80 percent at September 30, 2020 after excluding $1.4 billion of risk free PPP loans. The allowance for credit losses at December 31 and September 30 was estimated in accordance with the CECL accounting standard. The allowance represented 214 percent of nonperforming loans at December 31, 2020 compared to 227 percent at September 30, 2020 and 139 percent at December 31, 2019.

Quarterly non-interest income compared to the fourth quarter of 2019:

• Total non-interest income was $76.8 million compared to $70.9 million, an increase of $5.8 million. This reflects an increase of $5.1 million due to direct investment income, mark to market on customer derivatives, and miscellaneous fee income; an increase of $1.8 million in mortgage banking activities primarily due to higher origination volume and spreads on loans originated for sale; and an increase of $1.1 million in HSA fee income driven primarily by higher account service fees. These increases were partially offset by a $3.0 decrease in deposit service fees driven by lower overdraft and service related fees.

Quarterly non-interest expense compared to the fourth quarter of 2019:

• Total non-interest expense was $219.5 million compared to $179.7 million, an increase of $39.8 million. This reflects strategic optimization initiative charges of $38.3 million: $17.9 million in compensation and benefits; $14.0 million in occupancy; $5.5 million in professional and outside services; and $0.9 million in other expenses. Excluding these charges, non-interest expense increased $1.5 million. This reflects an increase in compensation and benefits of $4.4 million and an increase in technology and equipment of $1.4 million offset by a decrease in other expenses of $4.4 million primarily due to lower pension, travel, and OREO costs.

Quarterly income taxes compared to the fourth quarter of 2019:

• Income tax expense was $15.1 million compared to $26.0 million and the effective tax rate was 20.1 percent compared to 22.3 percent.
• The lower effective tax rate in the quarter primarily reflects the effects of reduced pre-tax income in 2020 compared to 2019.

Investment securities:

• Total investment securities were $8.9 billion, compared to $9.0 billion at September 30, 2020 and $8.2 billion at December 31, 2019. The carrying value of the available-for-sale portfolio included $92.5 million of net unrealized gains, compared to $103.1 million at September 30, 2020 and $24.4 million of net unrealized gains at December 31, 2019. The carrying value of the held-to-maturity portfolio does not reflect $267.2 million of net unrealized gains, compared to $283.0 million at September 30, 2020 and $86.7 million of net unrealized gains at December 31, 2019.

Loans:

• Total loans were $21.6 billion, compared to $21.9 billion at September 30, 2020 and $20.0 billion at December 31, 2019. Compared to September 30, 2020, commercial loans increased by $34.7 million, commercial real estate loans increased by $15.1 million, while consumer loans decreased by $87.4 million and residential mortgages decreased by $103.8 million.
• Compared to a year ago, commercial loans increased by $1.697 billion, with PPP loans representing $1.3 billion of the increase. Commercial real estate loans increased by $373.3 million and residential mortgages increased by $190.7 million, while consumer loans decreased by $275.5 million.
• Loan originations for the portfolio were $1.804 billion, compared to $1.560 billion in the prior quarter ($1.525 billion excluding PPP loan originations), and $1.919 billion a year ago. In addition, $125 million of residential loans were originated for sale in the quarter, compared to $149 million in the prior quarter and $94 million a year ago.

Asset quality:

• Total nonperforming loans were $168.0 million, or 0.78 percent of total loans, compared to $162.6 million, or 0.74 percent of total loans, at September 30, 2020 and $150.9 million, or 0.75 percent of total loans, at December 31, 2019. Total paying nonperforming loans were $59.7 million, compared to $67.4 million at September 30, 2020 and $59.0 million at December 31, 2019.
• Past due loans were $32.9 million, compared to $21.8 million at September 30, 2020 and $42.6 million at December 31, 2019.

Deposits and borrowings:

• Total deposits were $27.3 billion, compared to $26.9 billion at September 30, 2020 and $23.3 billion at December 31, 2019. Core deposits to total deposits were 90.9 percent, compared to 90.5 percent at September 30, 2020 and 86.7 percent at December 31, 2019. The loan to deposit ratio was 79.2 percent, compared to 81.2 percent at September 30, 2020 and 85.9 percent at December 31, 2019.
• Total borrowings were $1.7 billion, compared to $2.3 billion at September 30, 2020 and $3.5 billion at December 31, 2019.

Capital:

• The return on average common shareholders' equity and the return on average tangible common shareholders' equity were 7.51 percent and 9.31 percent, respectively, compared to 11.60 percent and 14.34 percent, respectively, in the fourth quarter of 2019.
• The tangible equity and tangible common equity ratios were 8.35 percent and 7.90 percent, respectively, compared to 8.88 percent and 8.39 percent, respectively, at December 31, 2019. The common equity tier 1 risk-based capital ratio was 11.35 percent, compared to 11.56 percent at December 31, 2019.
• Book value and tangible book value per common share were $34.25 and $28.04, respectively, compared to $33.28 and $27.19, respectively, at December 31, 2019.

Webster Financial Corporation is the holding company for Webster Bank, National Association and its HSA Bank division. With $32.6 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust, and investment services through 155 banking centers and 297 ATMs. Webster also provides mobile and Internet banking. Webster Bank owns the asset-based lending firm Webster Business Credit Corporation; the equipment finance firm Webster Capital Finance Corporation; and HSA Bank, a division of Webster Bank, which provides health savings account trustee and administrative services. Webster Bank is a member of the FDIC and an equal housing lender. For more information about Webster, including past press releases and the latest annual report, visit the Webster website at www.websterbank.com.

Conference Call

A conference call covering Webster's fourth quarter 2020 earnings announcement will be held today, Thursday, January 21, 2021 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 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) our ability to successfully execute our business plan and manage our risks; (2) local, regional, national, and international economic conditions and the impact they may have on us and our customers; (3) volatility and disruption in national and international financial markets; (4) the potential adverse effects of the ongoing novel coronavirus (COVID-19) pandemic and any governmental or societal responses thereto, including the deployment and efficacy of COVID-19 vaccines, or any other unusual and infrequently occurring events; (5) changes in the level of nonperforming assets and charge-offs; (6) changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (7) adverse conditions in the securities markets that lead to impairment in the value of our investment securities; (8) inflation, changes in interest rate, and monetary fluctuations; (9) the timely development and acceptance of new products and services and the perceived value of those products and services by customers; (10) changes in deposit flows, consumer spending, borrowings, and savings habits; (11) our ability to implement new technologies and maintain secure and reliable technology systems; (12) performance by our counterparties and vendors; (13) our ability to increase market share and control expenses; (14) changes in the competitive environment among banks, financial holding companies, and other financial services providers; (15) changes in laws and regulations (including those concerning taxes, banking, securities, insurance, and healthcare) with which we and our subsidiaries must comply, including recent and potential legislative and regulatory changes in response to the COVID-19 pandemic such as the CARES Act and the rules and regulations that may be promulgated thereunder; (16) the effect of changes in accounting policies and practices applicable to us, including changes in our allowance for loan and lease losses and other impacts of recently adopted accounting guidance regarding the recognition of credit losses; (17) 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 (18) the other factors that are described in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q under the headings "Risk Factors" and "Management Discussion and Analysis of Financial Condition and Results of Operation." Any forward-looking statement made by the Company in this release speaks only as of the date on which it is made. Factors or events that could cause the Company's actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Non-GAAP Financial Measures

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

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

 

WEBSTER FINANCIAL CORPORATION Selected Financial Highlights (unaudited)
		At or for the Three Months Ended
(In thousands, except per share data)		December 31, 2020				September 30, 2020				June 30, 2020				March 31, 2020				December 31, 2019
Income and performance ratios:
Net income	$	60,044			$	69,281			$	53,097			$	38,199			$	90,473
Earnings applicable to common shareholders		57,715				66,890				50,729				36,021				88,066
Earnings per diluted common share		0.64				0.75				0.57				0.39				0.96
Return on average assets		0.73	%			0.84	%			0.65	%			0.50	%			1.19	%
Return on average tangible common shareholders' equity (non-GAAP)		9.31				10.91				8.47				5.95				14.34
Return on average common shareholders' equity		7.51				8.80				6.79				4.75				11.60
Non-interest income as a percentage of total revenue		26.14				25.50				21.12				24.12				23.47
Asset quality:
Allowance for credit losses on loans and leases	$	359,431			$	369,811			$	358,522			$	334,931			$	209,096
Nonperforming assets		170,314				167,314				178,381				169,120				157,380
Allowance for credit losses on loans and leases / total loans and leases		1.66	%			1.69	%			1.64	%			1.60	%			1.04	%
Net charge-offs / average loans and leases (annualized)		0.17				0.21				0.30				0.15				0.12
Nonperforming loans and leases / total loans and leases		0.78				0.74				0.79				0.78				0.75
Nonperforming assets / total loans and leases plus OREO		0.79				0.77				0.82				0.81				0.79
Allowance for credit losses on loans and leases / nonperforming loans and leases		213.94				227.39				207.17				206.37				138.56
Other ratios:
Tangible equity (non-GAAP)		8.35	%			8.19	%			8.14	%			8.14	%			8.88	%
Tangible common equity (non-GAAP)		7.90				7.75				7.69				7.67				8.39
Tier 1 risk-based capital (a)		11.99				11.88				11.82				11.60				12.22
Total risk-based capital (a)		13.59				13.47				13.42				13.10				13.55
Common equity tier 1 risk-based capital (a)		11.35				11.23				11.17				10.95				11.56
Shareholders' equity / total assets		9.92				9.76				9.71				9.76				10.56
Net interest margin		2.83				2.88				2.99				3.23				3.27
Efficiency ratio (non-GAAP)		60.27				59.99				60.04				58.03				58.52
Equity and share related:
Common equity	$	3,089,588			$	3,074,653			$	3,029,742			$	2,945,205			$	3,062,733
Book value per common share		34.25				34.09				33.59				32.66				33.28
Tangible book value per common share (non-GAAP)		28.04				27.86				27.40				26.46				27.19
Common stock closing price		42.15				26.41				28.61				22.90				53.36
Dividends declared per common share		0.40				0.40				0.40				0.40				0.40
Common shares issued and outstanding		90,199				90,204				90,194				90,172				92,027
Weighted-average common shares outstanding - Basic		89,645				89,630				89,485				90,936				91,574
Weighted-average common shares outstanding - Diluted		89,915				89,738				89,570				91,206				91,916

(a)

Presented as preliminary for December 31, 2020 and actual for the remaining periods. In accordance with regulatory capital rules, the Company elected an option to delay the estimated impact of CECL on its regulatory capital over a five-year transition period ending December 31, 2024. As a result, capital ratios and amounts as of December 31, 2020 exclude the impact of the increased allowance for credit losses on loans, held-to-maturity debt securities and unfunded loan commitments attributed to the adoption of CECL.

 

WEBSTER FINANCIAL CORPORATION Consolidated Balance Sheets (unaudited)
(In thousands)		December 31, 2020				September 30, 2020				December 31, 2019
Assets:
Cash and due from banks	$	193,501			$	181,524			$	185,341
Interest-bearing deposits		69,603				60,276				72,554
Securities:
Available for sale		3,326,776				3,304,217				2,925,833
Held to maturity		5,568,188				5,723,434				5,293,918
Total securities		8,894,964				9,027,651				8,219,751
Allowance for credit losses on investment securities held-to-maturity		(299)				(306)				-
Securities, net		8,894,665				9,027,345				8,219,751
Loans held for sale		14,012				29,018				36,053
Loans and Leases:
Commercial		8,577,898				8,612,549				6,880,838
Commercial real estate		6,322,637				6,307,567				5,949,339
Residential mortgages		4,782,016				4,885,821				4,972,685
Consumer		1,958,664				2,046,086				2,234,124
Total loans and leases		21,641,215				21,852,023				20,036,986
Allowance for credit losses on loans and leases		(359,431)				(369,811)				(209,096)
Loans and leases, net		21,281,784				21,482,212				19,827,890
Federal Home Loan Bank and Federal Reserve Bank stock		77,594				89,611				149,046
Premises and equipment, net		226,743				250,535				270,413
Goodwill and other intangible assets, net		560,756				561,902				560,290
Cash surrender value of life insurance policies		564,195				561,021				550,651
Deferred tax asset, net		81,286				76,695				61,975
Accrued interest receivable and other assets		626,551				674,304				455,380
Total Assets	$	32,590,690			$	32,994,443			$	30,389,344
Liabilities and Shareholders' Equity:
Deposits:
Demand	$	6,155,592			$	6,136,814			$	4,446,463
Health savings accounts		7,120,017				6,976,280				6,416,135
Interest-bearing checking		3,652,763				3,390,921				2,689,734
Money market		2,940,215				3,069,098				2,312,840
Savings		4,979,031				4,777,000				4,354,809
Certificates of deposit		2,487,818				2,570,440				3,104,765
Total deposits		27,335,436				26,920,553				23,324,746
Securities sold under agreements to repurchase and other borrowings		995,355				1,301,822				1,040,431
Federal Home Loan Bank advances		133,164				433,243				1,948,476
Long-term debt		567,663				568,846				540,364
Accrued expenses and other liabilities		324,447				550,289				327,557
Total liabilities		29,356,065				29,774,753				27,181,574
Preferred stock		145,037				145,037				145,037
Common shareholders' equity		3,089,588				3,074,653				3,062,733
Total shareholders' equity		3,234,625				3,219,690				3,207,770
Total Liabilities and Shareholders' Equity	$	32,590,690			$	32,994,443			$	30,389,344

 

WEBSTER FINANCIAL CORPORATION Consolidated Statements of Income (unaudited)
		Three Months Ended December 31,								Twelve Months Ended December 31,
(In thousands, except per share data)		2020				2019				2020				2019
Interest income:
Interest and fees on loans and leases	$	189,010			$	223,527			$	789,719			$	924,693
Interest and dividends on securities		46,874				58,205				211,561				229,163
Loans held for sale		181				268				769				727
Total interest income		236,065				282,000				1,002,049				1,154,583
Interest expense:
Deposits		8,651				31,586				67,897				129,577
Borrowings		10,485				19,164				42,759				69,879
Total interest expense		19,136				50,750				110,656				199,456
Net interest income		216,929				231,250				891,393				955,127
Provision for credit losses		(1,000)				6,000				137,750				37,800
Net interest income after provision for loan and lease losses		217,929				225,250				753,643				917,327
Non-interest income:
Deposit service fees		38,345				40,470				156,032				168,022
Loan and lease related fees		9,095				8,704				29,127				31,327
Wealth and investment services		8,820				8,476				32,916				32,932
Mortgage banking activities		4,110				2,286				18,295				6,115
Increase in cash surrender value of life insurance policies		3,662				3,670				14,561				14,612
Gain on investment securities, net		-				29				8				29
Other income		12,731				7,284				34,338				32,278
Total non-interest income		76,763				70,919				285,277				285,315
Non-interest expense:
Compensation and benefits		122,754				100,467				428,391				395,402
Occupancy		28,024				14,379				71,029				57,181
Technology and equipment		29,122				27,639				112,273				105,283
Marketing		3,485				3,957				14,125				16,286
Professional and outside services		11,380				4,674				32,424				21,380
Intangible assets amortization		1,147				962				4,160				3,847
Loan workout expenses		261				474				1,758				2,952
Deposit insurance		4,372				4,662				18,316				17,954
Other expenses		18,985				22,516				76,470				95,665
Total non-interest expense		219,530				179,730				758,946				715,950
Income before income taxes		75,162				116,439				279,974				486,692
Income tax expense		15,118				25,966				59,353				103,969
Net income		60,044				90,473				220,621				382,723
Preferred stock dividends and other		(2,329)				(2,407)				(9,147)				(9,738)
Earnings applicable to common shareholders	$	57,715			$	88,066			$	211,474			$	372,985
Weighted-average common shares outstanding - Diluted		89,915				91,916				90,151				91,882
Earnings per common share:
Basic	$	0.64			$	0.96			$	2.35			$	4.07
Diluted		0.64				0.96				2.35				4.06

 

WEBSTER FINANCIAL CORPORATION Five Quarter Consolidated Statements of Income (unaudited)
		Three Months Ended
(In thousands, except per share data)		December 31, 2020				September 30, 2020				June 30, 2020				March 31, 2020				December 31, 2019
Interest income:
Interest and fees on loans and leases	$	189,010			$	188,001			$	196,521			$	216,187			$	223,527
Interest and dividends on securities		46,874				51,009				55,570				58,108				58,205
Loans held for sale		181				229				184				175				268
Total interest income		236,065				239,239				252,275				274,470				282,000
Interest expense:
Deposits		8,651				12,598				18,805				27,843				31,586
Borrowings		10,485				7,385				9,063				15,826				19,164
Total interest expense		19,136				19,983				27,868				43,669				50,750
Net interest income		216,929				219,256				224,407				230,801				231,250
Provision for credit losses		(1,000)				22,750				40,000				76,000				6,000
Net interest income after provision for loan and lease losses		217,929				196,506				184,407				154,801				225,250
Non-interest income:
Deposit service fees		38,345				39,278				35,839				42,570				40,470
Loan and lease related fees		9,095				6,568				6,968				6,496				8,704
Wealth and investment services		8,820				8,255				7,102				8,739				8,476
Mortgage banking activities		4,110				7,087				4,205				2,893				2,286
Increase in cash surrender value of life insurance policies		3,662				3,695				3,624				3,580				3,670
Gain on investment securities, net		-				-				-				8				29
Other income		12,731				10,177				2,338				9,092				7,284
Total non-interest income		76,763				75,060				60,076				73,378				70,919
Non-interest expense:
Compensation and benefits		122,754				104,019				99,731				101,887				100,467
Occupancy		28,024				14,275				14,245				14,485				14,379
Technology and equipment		29,122				27,846				27,468				27,837				27,639
Marketing		3,485				3,852				3,286				3,502				3,957
Professional and outside services		11,380				9,223				6,158				5,663				4,674
Intangible assets amortization		1,147				1,089				962				962				962
Loan workout expenses		261				612				392				493				474
Deposit insurance		4,372				4,204				5,015				4,725				4,662
Other expenses		18,985				18,876				19,327				19,282				22,516
Total non-interest expense		219,530				183,996				176,584				178,836				179,730
Income before income taxes		75,162				87,570				67,899				49,343				116,439
Income tax expense		15,118				18,289				14,802				11,144				25,966
Net income		60,044				69,281				53,097				38,199				90,473
Preferred stock dividends and other		(2,329)				(2,391)				(2,368)				(2,178)				(2,407)
Earnings applicable to common shareholders	$	57,715			$	66,890			$	50,729			$	36,021			$	88,066
Weighted-average common shares outstanding - Diluted		89,915				89,738				89,570				91,206				91,916
Earnings per common share:
Basic	$	0.64			$	0.75			$	0.57			$	0.40			$	0.96
Diluted		0.64				0.75				0.57				0.39				0.96

 

WEBSTER FINANCIAL CORPORATION Consolidated Average Balances, Interest, Yields and Rates, and Net Interest Margin on a Fully Tax-equivalent Basis (unaudited)
		Three Months Ended December 31,
		2020																2019
(Dollars in thousands)		Average balance				Interest				Yield/rate								Average balance			Interest		Yield/rate
Assets:
Interest-earning assets:
Loans and leases	$	21,729,250			$	189,829				3.44	%						$	19,808,521		$	224,259		4.46	%
Investment Securities (a)		8,923,336				48,124				2.22								8,323,512			58,724		2.86
Federal Home Loan and Federal Reserve Bank stock		85,535				484				2.25								127,770			1,007		3.13
Interest-bearing deposits		102,011				24				0.09								56,484			228		1.58
Loans held for sale		25,777				181				2.80								32,599			268		3.28
Total interest-earning assets		30,865,909			$	238,642				3.08	%							28,348,886		$	284,486		3.98	%
Non-interest-earning assets		2,000,217																1,969,620
Total Assets	$	32,866,126															$	30,318,506
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Demand deposits	$	6,213,119			$	-				-	%						$	4,417,167		$	-		-	%
Health savings accounts		7,012,813				1,557				0.09								6,320,475			3,166		0.20
Interest-bearing checking, money market and savings		11,469,937				2,400				0.08								9,420,738			13,944		0.59
Certificates of deposit		2,519,845				4,694				0.74								3,202,242			14,476		1.79
Total deposits		27,215,714				8,651				0.13								23,360,622			31,586		0.54
Securities sold under agreements to repurchase and other borrowings		1,073,014				623				0.23								1,275,293			4,726		1.45
Federal Home Loan Bank advances		313,354				5,622				7.02								1,550,528			8,932		2.25
Long-term debt (a)		568,237				4,240				3.24								547,584			5,506		4.21
Total borrowings		1,954,605				10,485				2.17								3,373,405			19,164		2.25
Total interest-bearing liabilities		29,170,319			$	19,136				0.26	%							26,734,027		$	50,750		0.75	%
Non-interest-bearing liabilities		456,586																387,916
Total liabilities		29,626,905																27,121,943
Preferred stock		145,037																145,037
Common shareholders' equity		3,094,184																3,051,526
Total shareholders' equity		3,239,221																3,196,563
Total Liabilities and Shareholders' Equity	$	32,866,126															$	30,318,506
Tax-equivalent net interest income						219,506															233,736
Less: tax-equivalent adjustments						(2,577)															(2,486)
Net interest income					$	216,929														$	231,250
Net interest margin										2.83	%												3.27	%

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

 

WEBSTER FINANCIAL CORPORATION Consolidated Average Balances, Interest, Yields and Rates, and Net Interest Margin on a Fully Tax-equivalent Basis (unaudited)
		Twelve Months Ended December 31,
		2020																2019
(Dollars in thousands)		Average balance				Interest				Yield/rate								Average balance			Interest		Yield/rate
Assets:
Interest-earning assets:
Loans and leases	$	21,385,702			$	792,929				3.71	%						$	19,209,611		$	927,395		4.83	%
Investment Securities (a)		8,647,322				215,151				2.56								7,761,937			229,989		2.97
Federal Home Loan and Federal Reserve Bank stock		102,943				3,200				3.11								113,518			4,956		4.37
Interest-bearing deposits		93,011				246				0.26								56,458			1,211		2.14
Loans held for sale		25,902				769				2.97								22,437			727		3.24
Total interest-earning assets		30,254,880			$	1,012,295				3.37	%							27,163,961		$	1,164,278		4.29	%
Non-interest-earning assets		2,012,900																1,897,078
Total Assets	$	32,267,780															$	29,061,039
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Demand deposits	$	5,698,399			$	-				-	%						$	4,300,407		$	-		-	%
Health savings accounts		6,893,996				9,530				0.14								6,240,201			12,316		0.20
Interest-bearing checking, money market and savings		10,689,634				25,248				0.24								9,144,086			54,566		0.60
Certificates of deposit		2,760,561				33,119				1.20								3,267,913			62,695		1.92
Total deposits		26,042,590				67,897				0.26								22,952,607			129,577		0.56
Securities sold under agreements to repurchase and other borrowings		1,292,571				5,941				0.46								1,008,704			17,953		1.78
Federal Home Loan Bank advances		730,125				18,767				2.57								1,201,839			31,399		2.61
Long-term debt (a)		564,919				18,051				3.45								468,111			20,527		4.51
Total borrowings		2,587,615				42,759				1.68								2,678,654			69,879		2.62
Total interest-bearing liabilities		28,630,205			$	110,656				0.39	%							25,631,261		$	199,456		0.78	%
Non-interest-bearing liabilities		439,084																362,059
Total liabilities		29,069,289																25,993,320
Preferred stock		145,037																145,037
Common shareholders' equity		3,053,454																2,922,682
Total shareholders' equity		3,198,491																3,067,719
Total Liabilities and Shareholders' Equity	$	32,267,780															$	29,061,039
Tax-equivalent net interest income						901,639															964,822
Less: tax-equivalent adjustments						(10,246)															(9,695)
Net interest income					$	891,393														$	955,127
Net interest margin										3.00	%												3.55	%

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

 

WEBSTER FINANCIAL CORPORATION Five Quarter Loan and Lease Balances (unaudited)
(Dollars in thousands)		December 31, 2020				September 30, 2020				June 30, 2020				March 31, 2020				December 31, 2019
Loan and Lease Balances (actual):
Commercial non-mortgage	$	7,687,300			$	7,722,838			$	7,606,245			$	6,385,619			$	5,833,952
Asset-based lending		890,598				889,711				940,524				1,180,328				1,046,886
Commercial real estate		6,322,637				6,307,567				6,207,314				6,122,474				5,949,339
Residential mortgages		4,782,016				4,885,821				4,921,573				4,991,512				4,972,685
Consumer		1,958,664				2,046,086				2,126,861				2,211,591				2,234,124
Total Loan and Lease Balances		21,641,215				21,852,023				21,802,517				20,891,524				20,036,986
Allowance for credit losses on loans and leases		(359,431)				(369,811)				(358,522)				(334,931)				(209,096)
Loans and Leases, net	$	21,281,784			$	21,482,212			$	21,443,995			$	20,556,593			$	19,827,890
Loan and Lease Balances (average):
Commercial non-mortgage	$	7,662,828			$	7,683,879			$	7,318,814			$	6,005,501			$	5,879,600
Asset-based lending		874,221				922,653				1,030,928				1,085,624				1,087,537
Commercial real estate		6,363,776				6,260,114				6,136,091				5,996,728				5,667,764
Residential mortgages		4,821,199				4,914,368				4,946,746				5,013,888				4,917,365
Consumer		2,007,226				2,089,726				2,176,335				2,223,058				2,256,255
Total Loan and Lease Balances		21,729,250				21,870,740				21,608,914				20,324,799				19,808,521
Allowance for credit losses on loans and leases		(375,080)				(363,552)				(340,050)				(269,273)				(211,460)
Loans and Leases, net	$	21,354,170			$	21,507,188			$	21,268,864			$	20,055,526			$	19,597,061

 

WEBSTER FINANCIAL CORPORATION Five Quarter Nonperforming Assets and Past Due Loans and Leases (unaudited)
(Dollars in thousands)		December 31, 2020				September 30, 2020				June 30, 2020				March 31, 2020				December 31, 2019
Nonperforming loans and leases:
Commercial non-mortgage	$	71,499				75,080				75,340				74,077				64,793
Asset-based lending		2,622				3,789				138				137				139
Commercial real estate		21,222				8,784				15,889				12,901				11,554
Residential mortgages		41,033				41,498				46,500				42,393				43,100
Consumer		31,629				33,485				35,187				32,785				31,320
Total nonperforming loans and leases	$	168,005			$	162,636			$	173,054			$	162,293			$	150,906
Other real estate owned and repossessed assets:
Commercial non-mortgage	$	175				175				272				121				271
Residential mortgages		1,544				3,899				3,081				4,480				4,247
Consumer		590				604				1,974				2,226				1,956
Total other real estate owned and repossessed assets	$	2,309			$	4,678			$	5,327			$	6,827			$	6,474
Total nonperforming assets	$	170,314			$	167,314			$	178,381			$	169,120			$	157,380
Past due 30-89 days:
Commercial non-mortgage	$	8,918			$	3,821			$	13,959			$	8,200			$	8,482
Asset-based lending		1,175				-				-				-				-
Commercial real estate		3,003				329				2,363				2,217				1,700
Residential mortgages		10,623				9,291				15,445				11,814				13,598
Consumer		8,720				8,349				7,857				14,666				18,835
Total past due 30-89 days		32,439				21,790				39,624				36,897				42,615
Past due 90 days or more and accruing		445				-				198				75				-
Total past due loans and leases	$	32,884			$	21,790			$	39,822			$	36,972			$	42,615

 

WEBSTER FINANCIAL CORPORATION Five Quarter Changes in the Allowance for Credit Losses on Loans and Leases (unaudited)
		For the Three Months Ended
(Dollars in thousands)		December 31, 2020				September 30, 2020				June 30, 2020				March 31, 2020				December 31, 2019
Beginning balance	$	369,811			$	358,522			$	334,931			$	209,096			$	209,152
Adoption of ASU No. 2016-13		-				-				-				57,568				-
Provision		(992)				22,753				40,003				76,085				6,000
Charge-offs:
Commercial non-mortgage		7,876				12,085				15,294				5,544				5,041
Asset-based lending		-				10				-				-				-
Commercial real estate		688				1,399				-				30				23
Residential mortgages		105				546				194				1,511				876
Consumer		2,673				1,717				2,586				3,076				3,165
Total charge-offs		11,342				15,757				18,074				10,161				9,105
Recoveries:
Commercial non-mortgage		232				1,978				271				558				236
Asset-based lending		33				-				10				3				33
Commercial real estate		3				47				2				3				3
Residential mortgages		190				521				83				235				534
Consumer		1,496				1,747				1,296				1,544				2,243
Total recoveries		1,954				4,293				1,662				2,343				3,049
Total net charge-offs		9,388				11,464				16,412				7,818				6,056
Ending balance	$	359,431			$	369,811			$	358,522			$	334,931			$	209,096

 

WEBSTER FINANCIAL CORPORATION Reconciliations to GAAP Financial Measures
The Company evaluates its business based on certain ratios that utilize non-GAAP financial measures. The Company believes the use of these non-GAAP financial measures provides additional clarity in assessing the results and financial position of the Company. Other companies may define or calculate supplemental financial data differently.
The efficiency ratio, which measures the costs expended to generate a dollar of revenue, is calculated excluding certain non-operational items. Return on average tangible common shareholders' equity measures the Company's net income available to common shareholders, adjusted for the tax-effected amortization of intangible assets, as a percentage of average shareholders' equity less average preferred stock and average goodwill and intangible assets. The tangible equity ratio represents shareholders' equity less goodwill and intangible assets divided by total assets less goodwill and intangible assets. The tangible common equity ratio represents shareholders' equity less preferred stock and goodwill and intangible assets divided by total assets less goodwill and intangible assets. Tangible book value per common share represents shareholders' equity less preferred stock and goodwill and intangible assets divided by common shares outstanding at the end of the period. Core deposits express total deposits less time deposits, including brokered time deposits. Adjusted diluted earnings per share (EPS) for the quarter ended December 31, 2020 is calculated by excluding after tax non-operational items from reported earnings applicable to common shareholders. See the tables below for reconciliations of these non-GAAP financial measures with financial measures defined by GAAP.
		At or for the Three Months Ended
(In thousands, except per share data)		December 31, 2020				September 30, 2020				June 30, 2020				March 31, 2020				December 31, 2019
Efficiency ratio:
Non-interest expense (GAAP)	$	219,530			$	183,996			$	176,584			$	178,836			$	179,730
Less: Foreclosed property activity (GAAP)		(836)				(201)				(217)				(250)				263
Intangible assets amortization (GAAP)		1,147				1,089				962				962				962
Strategic initiatives (non-GAAP)		38,265				4,786				-				-				-
Non-interest expense (non-GAAP)	$	180,954			$	178,322			$	175,839			$	178,124			$	178,505
Net interest income (GAAP)	$	216,929			$	219,256			$	224,407			$	230,801			$	231,250
Add: Tax-equivalent adjustment (non-GAAP)		2,577				2,635				2,561				2,473				2,486
Non-interest income (GAAP)		76,763				75,060				60,076				73,378				70,919
Other (non-GAAP)		291				297				293				299				402
Loss on hedge terminations (GAAP)		3,680				-				-				-				-
Customer derivative fair value adjustment (GAAP)		-				-				5,511				-				-
Less: Gain on investment securities, net (GAAP)		-				-				-				8				29
Income (non-GAAP)	$	300,240			$	297,248			$	292,848			$	306,943			$	305,028
Efficiency ratio (non-GAAP)		60.27	%			59.99	%			60.04	%			58.03	%			58.52	%
Return on average tangible common shareholders' equity:
Net income (GAAP)	$	60,044			$	69,281			$	53,097			$	38,199			$	90,473
Less: Preferred stock dividends (GAAP)		1,969				1,968				1,969				1,969				1,969
Add: Intangible assets amortization, tax-effected (GAAP)		906				860				760				760				760
Income adjusted for preferred stock dividends and intangible assets amortization (non-GAAP)	$	58,981			$	68,173			$	51,888			$	36,990			$	89,264
Income adjusted for preferred stock dividends and intangible assets amortization, annualized basis (non-GAAP)	$	235,924			$	272,692			$	207,552			$	147,960			$	357,056
Average shareholders' equity (non-GAAP)	$	3,239,221			$	3,205,330			$	3,155,368			$	3,193,525			$	3,196,563
Less: Average preferred stock (non-GAAP)		145,037				145,037				145,037				145,037				145,037
Average goodwill and other intangible assets (non-GAAP)		561,303				560,959				558,835				559,786				560,750
Average tangible common shareholders' equity (non-GAAP)	$	2,532,881			$	2,499,334			$	2,451,496			$	2,488,702			$	2,490,776
Return on average tangible common shareholders' equity (non-GAAP)		9.31	%			10.91	%			8.47	%			5.95	%			14.34	%
Tangible equity:
Shareholders' equity (GAAP)	$	3,234,625			$	3,219,690			$	3,174,779			$	3,090,242			$	3,207,770
Less: Goodwill and other intangible assets (GAAP)		560,756				561,902				558,367				559,328				560,290
Tangible shareholders' equity (non-GAAP)	$	2,673,869			$	2,657,788			$	2,616,412			$	2,530,914			$	2,647,480
Total assets (GAAP)	$	32,590,690			$	32,994,443			$	32,708,617			$	31,654,874			$	30,389,344
Less: Goodwill and other intangible assets (GAAP)		560,756				561,902				558,367				559,328				560,290
Tangible assets (non-GAAP)	$	32,029,934			$	32,432,541			$	32,150,250			$	31,095,546			$	29,829,054
Tangible equity (non-GAAP)		8.35	%			8.19	%			8.14	%			8.14	%			8.88	%
Tangible common equity:
Tangible shareholders' equity (non-GAAP)	$	2,673,869			$	2,657,788			$	2,616,412			$	2,530,914			$	2,647,480
Less: Preferred stock (GAAP)		145,037				145,037				145,037				145,037				145,037
Tangible common shareholders' equity (non-GAAP)	$	2,528,832			$	2,512,751			$	2,471,375			$	2,385,877			$	2,502,443
Tangible assets (non-GAAP)	$	32,029,934			$	32,432,541			$	32,150,250			$	31,095,546			$	29,829,054
Tangible common equity (non-GAAP)		7.90	%			7.75	%			7.69	%			7.67	%			8.39	%
Tangible book value per common share:
Tangible common shareholders' equity (non-GAAP)	$	2,528,832			$	2,512,751			$	2,471,375			$	2,385,877			$	2,502,443
Common shares outstanding		90,199				90,204				90,194				90,172				92,027
Tangible book value per common share (non-GAAP)	$	28.04			$	27.86			$	27.40			$	26.46			$	27.19
Core deposits:
Total deposits	$	27,335,436			$	26,920,553			$	26,355,997			$	24,513,837			$	23,324,746
Less: Certificates of deposit		2,487,818				2,570,440				2,666,047				2,891,161				3,104,765
Brokered certificates of deposit		-				-				-				100,000				-
Core deposits (non-GAAP)	$	24,847,618			$	24,350,113			$	23,689,950			$	21,522,676			$	20,219,981

 

(In millions, except per share data)
GAAP earnings adjusted for strategic optimization initiatives:		Pre-Tax				After Tax				Diluted EPS
Reported net income (GAAP)	$	75.2			$	60.0			$	0.64
Severance		17.9				13.2				0.15
Facilities optimization		14.5				10.7				0.12
Project costs		5.5				4.0				0.04
Dept prepayment costs		4.1				3.3				0.04
Adjusted net income (non-GAAP)	$	117.2			$	91.2			$	0.99

 

Media Contact				Investor Contact
Alice Ferreira, 203-578-2610				Terry Mangan, 203-578-2318
acferreira@websterbank.com				tmangan@websterbank.com
				Kristen Manginelli, 203-578-2307
				kmanginelli@websterbank.com

 

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SOURCE Webster Financial Corporation

FAQ

What were Webster Financial's earnings for Q4 2020?

Webster Financial reported earnings of $57.7 million for Q4 2020.

How did total revenue perform in Q4 2020 for WBS?

Total revenue was $293.7 million in Q4 2020.

What was the loan growth percentage for Webster Financial in Q4 2020?

Loan growth was $1.6 billion, representing an 8.0% increase from the previous year.

What does the net interest margin for WBS indicate for Q4 2020?

The net interest margin was 2.83% in Q4 2020, down from 3.27% in the same quarter last year.

What were the challenges faced by Webster Financial in Q4 2020?

Earnings decreased significantly, and total loans dropped compared to the previous quarter.