WEBSTER REPORTS FOURTH QUARTER 2021 EARNINGS OF $1.20 PER DILUTED SHARE

Rhea-AI Summary

Webster Financial Corporation (NYSE: WBS) reported earnings of $108.4 million ($1.20 per diluted share) for Q4 2021, a significant increase from $57.7 million ($0.64 per share) in Q4 2020. Full-year earnings reached $398.7 million ($4.42 per share), reflecting strong loan growth of 4.1% and a 7.9% rise in revenue totaling $316.9 million. The company anticipates closing its merger with Sterling soon, aiming to enhance its market position. 2021's net interest margin stood at 2.73%, despite a 0.6% drop in deposits.

Positive

• Q4 2021 earnings climbed to $108.4 million, a 88% increase year-over-year.
• Full-year earnings totaled $398.7 million, marking a substantial annual growth.
• 4.1% loan growth linked quarter, demonstrating robust commercial and residential lending.
• Net interest margin of 2.73%, indicating stable interest income.
• Successful merger plans with Sterling which are anticipated to enhance performance.

Negative

• Deposits declined by $0.2 billion (0.6%) linked quarter, indicating potential liquidity issues.
• Net interest margin decreased from 2.83% to 2.73% year-over-year, reflecting a tighter interest spread.

WATERBURY, Conn., Jan. 20, 2022 /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 $108.4 million, or $1.20 per diluted share, for the quarter ended December 31, 2021, compared to $57.7 million, or $0.64 per diluted share, for the quarter ended December 31, 2020. Earnings per diluted share would have been $1.31 for the quarter ended December 31, 2021, adjusting for a net $13.7 million ($10.1 million after tax) of merger related, strategic optimization, and debt prepayment expenses.

For the full year 2021, earnings applicable to common shareholders was $398.7 million, or $4.42 per diluted share, and includes $47.1 million ($39.1 million after tax) of merger related, strategic optimization, and debt prepayment expenses.

"We are very proud of our performance for the fourth quarter and full-year of 2021, as we achieved a record level of EPS and net income on both a quarterly and full-year basis," said John R. Ciulla, chairman and chief executive officer. "As we have secured all regulatory approvals, we look forward to closing our merger with Sterling. The combination will form a uniquely positioned commercial bank that will further the exceptional performance Webster's stakeholders have come to expect."

Highlights for the fourth quarter of 2021:

• Revenue of $316.9 million, an increase of 7.9 percent compared to the prior year.
• Loan growth of 4.1 percent linked quarter, excluding Paycheck Protection Program (PPP) loans, led by commercial and residential which together increased 5.0 percent.
• Current Expected Credit Loss (CECL) benefit of $15.0 million with a reserve decrease of $13.7 million compared to the prior quarter, resulting in an allowance coverage of 1.35 percent, or 1.37 percent excluding $0.2 billion of PPP loans.
• Deposit decline of $0.2 billion or 0.6 percent linked quarter, with decreases of $239.7 million in money market deposits and $94.3 million in demand deposits.
• Charges related to merger, strategic optimization initiatives, and debt prepayments totaled $13.7 million.
• Net interest margin of 2.73 percent.
• Efficiency ratio (non-GAAP) of 54.85 percent.

"Our financial performance is the result of a broad effort across our company," said Glenn MacInnes, executive vice president and chief financial officer. "We continued to generate robust loan growth, we were successful in deploying the meaningful liquidity our deposit growth generated, and measures of asset quality remained exceptionally strong. We approach our merger with Sterling with substantial momentum."

Line of Business performance compared to the fourth quarter of 2020

Commercial Banking

Webster's Commercial Banking segment serves businesses that have more than $2 million of revenue through our business banking, middle market, asset-based lending, equipment finance, commercial real estate, sponsor finance, and treasury services business units. Additionally, our Wealth group provides wealth management solutions to business owners, operators, and consumers within our targeted markets and retail footprint. As of December 31, 2021, Commercial Banking had $15.2 billion in loans and leases and $9.6 billion in deposit balances.

Commercial Banking Operating Results:

					Percent
	Three months ended December 31,				Favorable/
(In thousands)		2021	2020		(Unfavorable)
Net interest income		$151,767	$137,291			10.5	%
Non-interest income		31,304	25,523			22.7
Operating revenue		183,071	162,814			12.4
Non-interest expense		66,263	67,989			2.5
Pre-tax, pre-provision net revenue		$116,808	$94,825			23.2
					Percent
		At December 31,			Increase/
(In millions)		2021	2020		(Decrease)
Loans and leases		$15,210	$14,573			4.4	%
Deposits		9,645	8,191			17.7
AUA / AUM (off balance sheet)		7,202	6,586			9.4

Pre-tax, pre-provision net revenue increased $22.0 million to $116.8 million in the quarter as compared to prior year. Net interest income increased $14.5 million to $151.8 million, primarily driven by loan and deposit growth. Non-interest income increased $5.8 million to $31.3 million, driven by a gain on loan sale and trust and investment service fees. Non-interest expense decreased $1.7 million to $66.3 million, primarily driven by lower support costs.

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, 2021, HSA Bank had $11.1 billion in total footings comprising $7.4 billion in deposit balances and $3.7 billion in assets under administration through linked investment accounts.

HSA Bank Operating Results:

					Percent
	Three months ended December 31,				Favorable/
(In thousands)		2021	2020		(Unfavorable)
Net interest income		$42,219	$40,495			4.3	%
Non-interest income		24,499	24,105			1.6
Operating revenue		66,718	64,600			3.3
Non-interest expense		34,155	34,750			1.7
Pre-tax, net revenue		$32,563	$29,850			9.1
					Percent
		At December 31,			Increase/
(Dollars in millions)		2021	2020		(Decrease)
Number of accounts (thousands)		2,992	2,953			1.3	%
Deposits		$7,398	$7,120			3.9
Linked investment accounts (off balance sheet)		3,719	2,853			30.3
Total footings		$11,117	$9,973			11.5

Pre-tax net revenue increased $2.7 million to $32.6 million in the quarter as compared to prior year. Net interest income increased $1.7 million to $42.2 million, due to growth in deposits. Non-interest income increased $0.4 million to $24.5 million, primarily due to increased interchange revenue. Non-interest expense decreased $0.6 million to $34.2 million, primarily due to reduced occupancy, telephone, and postage costs.

Retail Banking

Retail Banking serves consumer and business banking customers primarily throughout southern New England and into Westchester County, New York. Retail Banking is comprised of the Consumer Lending and Small Business Banking (businesses that have less than $2 million of revenue) business units, as well as a distribution network consisting of 130 banking centers and 251 ATMs, a customer care center, and a full range of web and mobile-based banking services. As of December 31, 2021, Retail Banking had $7.1 billion in loans and $12.8 billion in deposit balances.

Retail Banking Operating Results:

					Percent
	Three months ended December 31,				Favorable/
(In thousands)		2021	2020		(Unfavorable)
Net interest income		$93,749	$85,404			9.8	%
Non-interest income		17,323	18,064			(4.1)
Operating revenue		111,072	103,468			7.3
Non-interest expense		74,310	79,687			6.7
Pre-tax, pre-provision net revenue		$36,762	$23,781			54.6
					Percent
		At December 31,			Increase/
(In millions)		2021	2020		(Decrease)
Loans		$7,062	$7,068			(0.1)	%
Deposits		12,802	12,024			6.5

Pre-tax, pre-provision net revenue increased $13.0 million to $36.8 million in the quarter as compared to prior year. Net interest income increased $8.3 million to $93.7 million, driven by deposit balance growth and lower interest paid on deposits, partially offset by lower loan balances. Non-interest income decreased $0.7 million to $17.3 million, resulting from lower mortgage banking fee income, partially offset by higher deposit service fees, loan servicing income, and credit card and merchant services fees. Non-interest expense decreased $5.4 million to $74.3 million, driven by lower employee-related, occupancy, technology and equipment, and marketing expenses.

Consolidated financial performance:

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

• Net interest income was $226.8 million compared to $216.9 million.
• Net interest margin was 2.73 percent compared to 2.83 percent. The yield on interest-earning assets declined by 24 basis points, and the cost of interest-bearing liabilities declined by 14 basis points.
• Average interest-earning assets totaled $33.5 billion and grew by $2.6 billion, or 8.4 percent.
• Average loans and leases totaled $21.9 billion and grew by $0.2 billion, or 0.8 percent.
• Average deposits totaled $30.1 billion and grew by $2.9 billion, or 10.7 percent.

Quarterly provision for credit losses:

• The provision for credit losses reflects a $15.0 million benefit in the quarter, contributing to a $13.7 million decrease in the allowance for credit losses on loans and leases. The decrease in the allowance reflects a stable economic outlook and favorable credit quality trends. The provision for credit losses reflected an expense of $7.8 million in the prior quarter compared to a benefit of $1.0 million a year ago.
• Net (recoveries) were $(1.2) million, compared to net charge-offs of $0.9 million in the prior quarter and $9.4 million a year ago. The ratio of net (recoveries) charge-offs to average loans on an annualized basis was (0.02) percent, compared to 0.02 percent in the prior quarter and 0.17 percent a year ago.
• The allowance for credit losses on loans and leases represented 1.35 percent of total loans at December 31, 2021, compared to 1.46 percent at September 30, 2021 and 1.66 percent at December 31, 2020. Excluding $0.2 billion of risk free PPP loans, the coverage ratio was 1.37 percent at December 31, 2021, compared to 1.49 percent at September 30, 2021 excluding $0.4 billion of risk free PPP loans, and 1.76 percent at December 31, 2020 excluding $1.3 billion of risk free PPP loans. The allowance represented 274 percent of nonperforming loans at December 31, 2021 compared to 309 percent at September 30, 2021 and 214 percent at December 31, 2020.

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

• Total non-interest income was $90.1 million compared to $76.8 million, an increase of $13.3 million. This primarily reflects an increase of $12.5 million in Other primarily due to realized gains and fair value adjustments on direct investments and a gain on the sale of a commercial loan; $2.8 million in deposit service fees driven by higher levels of transactional fees across all three business lines; and $1.3 million primarily due to increased investment activity. These increases were partially offset by a $3.4 million decrease in mortgage banking activities which is in line with our strategic choice to originate loans for portfolio along with lower spreads on loans originated for sale.

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

• Total non-interest expense was $189.9 million compared to $219.5 million, a decrease of $29.6 million. Total non-interest expense includes a net $13.7 million of merger, strategic initiative, and debt prepayment charges compared to $38.3 million of strategic initiatives a year ago. Excluding those charges, total non-interest expense decreased $5.0 million driven by the benefits of our strategic initiatives partially offset by higher performance-based compensation and medical claims.

Quarterly income taxes compared to the fourth quarter of 2020:

• Income tax expense was $31.0 million compared to $15.1 million, and the effective tax rate was 21.8 percent compared to 20.1 percent. The higher effective tax rate in the quarter primarily reflects the effects of increased pre-tax income in 2021 compared to 2020, partially offset by the recognition of a higher level of net discrete tax benefits during the period compared to a year ago.

Investment securities:

• Total investment securities, net were $10.4 billion, compared to $9.4 billion at September 30, 2021 and $8.9 billion at December 31, 2020. The carrying value of the available-for-sale portfolio included $7.2 million of net unrealized gains, compared to $44.7 million at September 30, 2021 and $92.5 million at December 31, 2020. The carrying value of the held-to-maturity portfolio does not reflect $82.6 million of net unrealized gains, compared to $152.9 million at September 30, 2021 and $267.2 million at December 31, 2020.

Loans:

• Total loans were $22.3 billion, compared to $21.6 billion at both September 30, 2021 and December 31, 2020. Compared to September 30, 2021, commercial loans (excluding PPP loans) increased by $601.6 million, residential mortgages increased by $245.4 million, and commercial real estate loans increased by $80.5 million while consumer loans decreased by $52.1 million, and PPP loans decreased by $183.9 million.
• Compared to a year ago, commercial loans (excluding PPP loans) increased by $1.0 billion, residential mortgages increased by $0.6 billion, and commercial real estate loans increased by $0.3 billion, while consumer loans decreased by $0.3 billion. PPP loans totaled $0.2 billion at December 31, 2021.
• Loan originations for the portfolio were $2.553 billion, compared to $1.987 billion in the prior quarter and $1.804 billion a year ago. In addition, $42 million of residential loans were originated for sale in the quarter, compared to $57 million in the prior quarter and $125 million a year ago.

Asset quality:

• Total nonperforming loans were $109.8 million, or 0.49 percent of total loans, compared to $101.8 million, or 0.47 percent of total loans, at September 30, 2021 and $168.0 million, or 0.78 percent of total loans, at December 31, 2020. As of December 31, 2021, $60.3 million of nonperforming loans were contractually current.
• Past due loans were $21.9 million, compared to $17.1 million at September 30, 2021 and $32.9 million at December 31, 2020.

Deposits and borrowings:

• Total deposits were $29.8 billion, compared to $30.0 billion at September 30, 2021 and $27.3 billion at December 31, 2020. Core deposits to total deposits were 94.0 percent, compared to 93.7 percent at September 30, 2021 and 90.9 percent at December 31, 2020. The loan to deposit ratio was 74.6 percent, compared to 71.9 percent at September 30, 2021 and 79.2 percent at December 31, 2020.
• Total borrowings were $1.2 billion, compared to $1.3 billion at September 30, 2021 and $1.7 billion at December 31, 2020.

Capital:

• The return on average common shareholders' equity and the return on average tangible common shareholders' equity were 13.35 percent and 16.23 percent, respectively, compared to 7.51 percent and 9.31 percent, respectively, in the fourth quarter of 2020.
• The tangible equity and tangible common equity ratios were 8.39 percent and 7.97 percent, respectively, compared to 8.35 percent and 7.90 percent, respectively, at December 31, 2020. The common equity tier 1 risk-based capital ratio was 11.72 percent, compared to 11.35 percent at December 31, 2020.
• Book value and tangible book value per common share were $36.36 and $30.22, respectively, compared to $34.25 and $28.04, respectively, at December 31, 2020.

Webster Financial Corporation is the holding company for Webster Bank, National Association and its HSA Bank division. With $34.9 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust, and investment services through 130 banking centers and 251 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 2021 earnings announcement will be held today, Thursday, January 20, 2022 at 9:00 a.m. Eastern Time. To listen to the live call, please dial 877-407-8289, or 201-689-8341 for international callers. The webcast, along with related slides, will be available on the Webster website (www.wbst.com). A replay of the conference call will be available for one week via the website listed above, beginning at approximately 11:00 a.m. (Eastern) on January 20, 2022. To access the replay, dial 877-660-6853, or 201-612-7415 for international callers. The replay conference ID number is 13725763.

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

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

Forward-Looking Statements

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

Non-GAAP Financial Measures

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

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

WEBSTER FINANCIAL CORPORATION Selected Financial Highlights (unaudited)
		At or for the Three Months Ended
(In thousands, except per share data)		December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020
Income and performance ratios:
Net income	$	111,038			$	95,713			$	94,035			$	108,078			$	60,044
Earnings applicable to common shareholders		108,426				93,171				91,555				105,530				57,715
Earnings per diluted common share		1.20				1.03				1.01				1.17				0.64
Return on average assets		1.26	%			1.10	%			1.12	%			1.31	%			0.73	%
Return on average tangible common shareholders' equity(non-GAAP)		16.23				14.16				14.26				16.79				9.31
Return on average common shareholders' equity		13.35				11.61				11.63				13.65				7.51
Non-interest income as a percentage of total revenue		28.44				26.73				24.77				25.54				26.14
Asset quality:
Allowance for credit losses on loans and leases	$	301,187			$	314,922			$	307,945			$	328,351			$	359,431
Nonperforming assets		112,590				104,209				123,497				152,808				170,314
Allowance for credit losses on loans and leases / total loans and leases		1.35	%			1.46	%			1.43	%			1.54	%			1.66	%
Net charge-offs (recoveries) / average loans and leases (annualized)		(0.02)				0.02				(0.02)				0.10				0.17
Nonperforming loans and leases / total loans and leases		0.49				0.47				0.56				0.71				0.78
Nonperforming assets / total loans and leases plus OREO		0.51				0.48				0.57				0.72				0.79
Allowance for credit losses on loans and leases / nonperforming loans and leases		274.36				309.44				255.05				218.29				213.94
Other ratios:
Tangible equity(non-GAAP)		8.39	%			8.12	%			8.35	%			8.30	%			8.35	%
Tangible common equity (non-GAAP)		7.97				7.71				7.91				7.85				7.90
Tier 1 risk-based capital (a)		12.32				12.39				12.30				12.55				11.99
Total risk-based capital (a)		13.64				13.79				13.70				14.08				13.59
Common equity tier 1 risk-based capital (a)		11.72				11.77				11.66				11.89				11.35
Shareholders' equity / total assets		9.85				9.57				9.86				9.84				9.92
Net interest margin		2.73				2.80				2.82				2.92				2.83
Efficiency ratio (non-GAAP)		54.85				54.84				56.64				58.46				60.27
Equity and share related:
Common equity	$	3,293,288			$	3,241,152			$	3,184,668			$	3,127,891			$	3,089,588
Book value per common share		36.36				35.78				35.15				34.60				34.25
Tangible book value per common share(non-GAAP)		30.22				29.63				28.99				28.41				28.04
Common stock closing price		55.84				54.46				53.34				55.11				42.15
Dividends declared per common share		0.40				0.40				0.40				0.40				0.40
Common shares issued and outstanding		90,584				90,588				90,594				90,410				90,199
Weighted-average common shares outstanding - Basic		90,052				90,038				90,027				89,809				89,645
Weighted-average common shares outstanding - Diluted		90,284				90,232				90,221				90,108				89,915

(a) Presented as preliminary for December 31, 2021 and actual for the remaining periods. In accordance with regulatory capital rules, the Company elected an option to delay the estimated impact of CECL on its regulatory capital for two years followed by a three year transition period ending December 31, 2024. As a result, capital ratios and amounts for all periods presented 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, 2021				September 30, 2021				December 31, 2020
Assets:
Cash and due from banks	$	137,385			$	161,369			$	193,501
Interest-bearing deposits		324,185				2,442,790				69,603
Securities:
Available for sale		4,234,854				3,410,443				3,326,776
Held to maturity, net		6,198,125				5,986,308				5,567,889
Total securities, net		10,432,979				9,396,751				8,894,665
Loans held for sale		4,694				24,969				14,012
Loans and Leases:
Commercial		8,576,786				8,159,127				8,577,898
Commercial real estate		6,603,180				6,522,679				6,322,637
Residential mortgages		5,412,905				5,167,527				4,782,016
Consumer		1,678,858				1,731,002				1,958,664
Total loans and leases		22,271,729				21,580,335				21,641,215
Allowance for credit losses on loans and leases		(301,187)				(314,922)				(359,431)
Loans and leases, net		21,970,542				21,265,413				21,281,784
Federal Home Loan Bank and Federal Reserve Bank stock		71,836				75,936				77,594
Premises and equipment, net		204,557				209,573				226,743
Goodwill and other intangible assets, net		556,242				557,360				560,756
Cash surrender value of life insurance policies		572,305				572,368				564,195
Deferred tax asset, net		109,405				96,489				81,286
Accrued interest receivable and other assets		531,469				571,240				626,551
Total Assets	$	34,915,599			$	35,374,258			$	32,590,690
Liabilities and Shareholders' Equity:
Deposits:
Demand	$	7,060,488			$	7,154,835			$	6,155,592
Health savings accounts		7,397,582				7,329,405				7,120,017
Interest-bearing checking		4,182,497				4,181,825				3,652,763
Money market		3,718,953				3,958,700				2,940,215
Savings		5,689,739				5,517,189				4,979,031
Certificates of deposit		1,797,770				1,884,373				2,487,818
Total deposits		29,847,029				30,026,327				27,335,436
Securities sold under agreements to repurchase and other borrowings		674,896				655,871				995,355
Federal Home Loan Bank advances		10,997				113,334				133,164
Long-term debt		562,931				564,114				567,663
Accrued expenses and other liabilities		381,421				628,423				324,447
Total liabilities		31,477,274				31,988,069				29,356,065
Preferred stock		145,037				145,037				145,037
Common shareholders' equity		3,293,288				3,241,152				3,089,588
Total shareholders' equity		3,438,325				3,386,189				3,234,625
Total Liabilities and Shareholders' Equity	$	34,915,599			$	35,374,258			$	32,590,690

 

WEBSTER FINANCIAL CORPORATION Consolidated Statements of Income (unaudited)
		Three Months Ended December 31,								Twelve Months Ended December 31,
(In thousands, except per share data)		2021				2020				2021				2020
Interest income:
Interest and fees on loans and leases	$	189,985			$	189,010			$	762,713			$	789,719
Interest and dividends on securities		45,990				46,874				179,885				211,561
Loans held for sale		45				181				246				769
Total interest income		236,020				236,065				942,844				1,002,049
Interest expense:
Deposits		4,027				8,651				20,131				67,897
Borrowings		5,211				10,485				21,624				42,759
Total interest expense		9,238				19,136				41,755				110,656
Net interest income		226,782				216,929				901,089				891,393
Provision for credit losses		(15,000)				(1,000)				(54,500)				137,750
Net interest income after provision for loan and lease losses		241,782				217,929				955,589				753,643
Non-interest income:
Deposit service fees		40,544				38,345				162,710				156,032
Loan and lease related fees		9,602				9,095				36,658				29,127
Wealth and investment services		10,111				8,820				39,586				32,916
Mortgage banking activities		733				4,110				6,219				18,295
Increase in cash surrender value of life insurance policies		3,627				3,662				14,429				14,561
Gain on investment securities, net		-				-				-				8
Other income		25,521				12,731				63,770				34,338
Total non-interest income		90,138				76,763				323,372				285,277
Non-interest expense:
Compensation and benefits		109,283				122,754				419,989				428,391
Occupancy		13,256				28,024				55,346				71,029
Technology and equipment		28,750				29,122				112,831				112,273
Marketing		2,599				3,485				12,051				14,125
Professional and outside services		9,360				11,380				47,235				32,424
Intangible assets amortization		1,118				1,147				4,513				4,160
Loan workout expenses		244				261				1,168				1,758
Deposit insurance		4,234				4,372				15,794				18,316
Other expenses		21,009				18,985				76,173				76,470
Total non-interest expense		189,853				219,530				745,100				758,946
Income before income taxes		142,067				75,162				533,861				279,974
Income tax expense		31,029				15,118				124,997				59,353
Net income		111,038				60,044				408,864				220,621
Preferred stock dividends and other		(2,612)				(2,329)				(10,177)				(9,147)
Earnings applicable to common shareholders	$	108,426			$	57,715			$	398,687			$	211,474
Weighted-average common shares outstanding - Diluted		90,284				89,915				90,206				90,151
Earnings per common share:
Basic	$	1.20			$	0.64			$	4.43			$	2.35
Diluted		1.20				0.64				4.42				2.35

 

WEBSTER FINANCIAL CORPORATION Five Quarter Consolidated Statements of Income (unaudited)
		Three Months Ended
(In thousands, except per share data)		December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020
Interest income:
Interest and fees on loans and leases	$	189,985			$	196,273			$	185,919			$	190,536			$	189,010
Interest and dividends on securities		45,990				43,362				45,586				44,947				46,874
Loans held for sale		45				57				53				91				181
Total interest income		236,020				239,692				231,558				235,574				236,065
Interest expense:
Deposits		4,027				4,571				5,094				6,439				8,651
Borrowings		5,211				5,430				5,612				5,371				10,485
Total interest expense		9,238				10,001				10,706				11,810				19,136
Net interest income		226,782				229,691				220,852				223,764				216,929
Provision for credit losses		(15,000)				7,750				(21,500)				(25,750)				(1,000)
Net interest income after provision for loan and lease losses		241,782				221,941				242,352				249,514				217,929
Non-interest income:
Deposit service fees		40,544				40,258				41,439				40,469				38,345
Loan and lease related fees		9,602				10,881				7,862				8,313				9,095
Wealth and investment services		10,111				9,985				10,087				9,403				8,820
Mortgage banking activities		733				1,525				1,319				2,642				4,110
Increase in cash surrender value of life insurance policies		3,627				3,666				3,603				3,533				3,662
Other income		25,521				17,460				8,392				12,397				12,731
Total non-interest income		90,138				83,775				72,702				76,757				76,763
Non-interest expense:
Compensation and benefits		109,283				105,352				97,754				107,600				122,754
Occupancy		13,256				12,430				14,010				15,650				28,024
Technology and equipment		28,750				28,441				27,124				28,516				29,122
Marketing		2,599				3,721				3,227				2,504				3,485
Professional and outside services		9,360				7,074				21,025				9,776				11,380
Intangible assets amortization		1,118				1,124				1,132				1,139				1,147
Loan workout expenses		244				203				327				394				261
Deposit insurance		4,234				3,855				3,749				3,956				4,372
Other expenses		21,009				18,037				18,680				18,447				18,985
Total non-interest expense		189,853				180,237				187,028				187,982				219,530
Income before income taxes		142,067				125,479				128,026				138,289				75,162
Income tax expense		31,029				29,766				33,991				30,211				15,118
Net income		111,038				95,713				94,035				108,078				60,044
Preferred stock dividends and other		(2,612)				(2,542)				(2,480)				(2,548)				(2,329)
Earnings applicable to common shareholders	$	108,426			$	93,171			$	91,555			$	105,530			$	57,715
Weighted-average common shares outstanding - Diluted		90,284				90,232				90,221				90,108				89,915
Earnings per common share:
Basic	$	1.20			$	1.03			$	1.02			$	1.18			$	0.64
Diluted		1.20				1.03				1.01				1.17				0.64

 

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,
		2021																2020
(Dollars in thousands)		Average balance				Interest				Yield/rate								Average balance			Interest		Yield/rate
Assets:
Interest-earning assets:
Loans and leases	$	21,902,101			$	190,698				3.43	%						$	21,729,250		$	189,829		3.44	%
Investment securities (a)		10,267,103				46,903				1.89								8,923,336			48,124		2.22
Federal Home Loan and Federal Reserve Bank stock		72,972				315				1.71								85,535			484		2.25
Interest-bearing deposits (b)		1,214,479				456				0.15								102,011			24		0.09
Loans held for sale		8,302				45				2.15								25,777			181		2.80
Total interest-earning assets		33,464,957			$	238,417				2.84	%							30,865,909		$	238,642		3.08	%
Non-interest-earning assets		1,915,632																2,000,217
Total Assets	$	35,380,589															$	32,866,126
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Demand deposits	$	7,185,323			$	-				-	%						$	6,213,119		$	-		-	%
Health savings accounts		7,320,585				1,057				0.06								7,012,813			1,557		0.09
Interest-bearing checking, money market and savings		13,627,473				1,819				0.05								11,469,937			2,400		0.08
Certificates of deposit		1,985,900				1,151				0.23								2,519,845			4,694		0.74
Total deposits		30,119,281				4,027				0.05								27,215,714			8,651		0.13
Securities sold under agreements to repurchase and other borrowings		604,555				824				0.53								1,073,014			623		0.23
Federal Home Loan Bank advances		38,810				169				1.71								313,354			5,622		7.02
Long-term debt (a)		563,505				4,218				3.22								568,237			4,240		3.24
Total borrowings		1,206,870				5,211				1.78								1,954,605			10,485		2.17
Total interest-bearing liabilities		31,326,151			$	9,238				0.12	%							29,170,319		$	19,136		0.26	%
Non-interest-bearing liabilities		642,527																456,586
Total liabilities		31,968,678																29,626,905
Preferred stock		145,037																145,037
Common shareholders' equity		3,266,874																3,094,184
Total shareholders' equity		3,411,911																3,239,221
Total Liabilities and Shareholders' Equity	$	35,380,589															$	32,866,126
Tax-equivalent net interest income						229,179															219,506
Less: tax-equivalent adjustments						(2,397)															(2,577)
Net interest income					$	226,782														$	216,929
Net interest margin										2.73	%												2.83	%

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

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

 

WEBSTER FINANCIAL CORPORATION Consolidated Average Balances, Interest, Yields and Rates, and Net Interest Margin on a Fully Tax-equivalent Basis (unaudited)
		Twelve Months Ended December 31,
		2021																2020
(Dollars in thousands)		Average balance				Interest				Yield/rate								Average balance			Interest		Yield/rate
Assets:
Interest-earning assets:
Loans and leases	$	21,584,872			$	765,682				3.55	%						$	21,385,702		$	792,929		3.71	%
Investment securities (a)		9,228,743				183,630				2.03								8,647,322			215,151		2.56
Federal Home Loan and Federal Reserve Bank stock		76,015				1,224				1.61								102,943			3,200		3.11
Interest-bearing deposits(b)		1,379,081				1,875				0.14								93,011			246		0.26
Loans held for sale		10,705				246				2.30								25,902			769		2.97
Total interest-earning assets		32,279,416			$	952,657				2.97	%							30,254,880		$	1,012,295		3.37	%
Non-interest-earning assets		1,955,330																2,012,900
Total Assets	$	34,234,746															$	32,267,780
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Demand deposits	$	6,897,464			$	-				-	%						$	5,698,399		$	-		-	%
Health savings accounts		7,390,702				5,777				0.08								6,893,996			9,530		0.14
Interest-bearing checking, money market and savings		12,843,843				6,936				0.05								10,689,634			25,248		0.24
Certificates of deposit		2,105,809				7,418				0.35								2,760,561			33,119		1.20
Total deposits		29,237,818				20,131				0.07								26,042,590			67,897		0.26
Securities sold under agreements to repurchase and other borrowings		543,286				3,040				0.56								1,292,571			5,941		0.46
Federal Home Loan Bank advances		108,216				1,708				1.58								730,125			18,767		2.57
Long-term debt (a)		565,271				16,876				3.22								564,919			18,051		3.45
Total borrowings		1,216,773				21,624				1.84								2,587,615			42,759		1.68
Total interest-bearing liabilities		30,454,591			$	41,755				0.14	%							28,630,205		$	110,656		0.39	%
Non-interest-bearing liabilities		441,391																439,084
Total liabilities		30,895,982																29,069,289
Preferred stock		145,037																145,037
Common shareholders' equity		3,193,727																3,053,454
Total shareholders' equity		3,338,764																3,198,491
Total Liabilities and Shareholders' Equity	$	34,234,746															$	32,267,780
Tax-equivalent net interest income						910,902															901,639
Less: tax-equivalent adjustments						(9,813)															(10,246)
Net interest income					$	901,089														$	891,393
Net interest margin										2.84	%												3.00	%

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

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

 

WEBSTER FINANCIAL CORPORATION Five Quarter Loan and Lease Balances (unaudited)
(Dollars in thousands)		December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020
Loan and Lease Balances (actual):
Commercial non-mortgage	$	7,509,538			$	7,172,345			$	7,473,758			$	7,530,066			$	7,687,300
Asset-based lending		1,067,248				986,782				943,961				907,421				890,598
Commercial real estate		6,603,180				6,522,679				6,410,672				6,338,056				6,322,637
Residential mortgages		5,412,905				5,167,527				4,856,302				4,668,945				4,782,016
Consumer		1,678,858				1,731,002				1,790,308				1,856,895				1,958,664
Total Loan and Lease Balances		22,271,729				21,580,335				21,475,001				21,301,383				21,641,215
Allowance for credit losses on loans and leases		(301,187)				(314,922)				(307,945)				(328,351)				(359,431)
Loans and Leases, net	$	21,970,542			$	21,265,413			$	21,167,056			$	20,973,032			$	21,281,784
Loan and Lease Balances (average):
Commercial non-mortgage	$	7,304,985			$	7,280,258			$	7,545,398			$	7,650,367			$	7,662,828
Asset-based lending		1,010,874				956,535				937,580				896,093				874,221
Commercial real estate		6,575,865				6,510,100				6,365,830				6,303,765				6,363,776
Residential mortgages		5,309,127				5,036,329				4,738,859				4,720,703				4,821,199
Consumer		1,701,250				1,755,291				1,825,772				1,910,392				2,007,226
Total Loan and Lease Balances		21,902,101				21,538,513				21,413,439				21,481,320				21,729,250
Allowance for credit losses on loans and leases		(317,848)				(308,279)				(332,522)				(364,358)				(375,080)
Loans and Leases, net	$	21,584,253			$	21,230,234			$	21,080,917			$	21,116,962			$	21,354,170

 

WEBSTER FINANCIAL CORPORATION Five Quarter Nonperforming Assets and Past Due Loans and Leases (unaudited)
(Dollars in thousands)		December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020
Nonperforming loans and leases:
Commercial non-mortgage	$	63,553			$	40,774			$	57,831			$	60,103			$	71,499
Asset-based lending		2,114				2,139				2,403				2,430				2,622
Commercial real estate		5,058				15,972				12,687				13,743				21,222
Residential mortgages		15,591				19,327				21,467				42,708				41,033
Consumer		23,462				23,558				26,353				31,437				31,629
Total nonperforming loans and leases	$	109,778			$	101,770			$	120,741			$	150,421			$	168,005
Other real estate owned and repossessed assets:
Commercial non-mortgage	$	-			$	-			$	-			$	102			$	175
Residential mortgages		2,276				1,759				1,934				1,695				1,544
Consumer		536				680				822				590				590
Total other real estate owned and repossessed assets	$	2,812			$	2,439			$	2,756			$	2,387			$	2,309
Total nonperforming assets	$	112,590			$	104,209			$	123,497			$	152,808			$	170,314
Past due 30-89 days:
Commercial non-mortgage	$	9,340			$	5,537			$	3,154			$	7,395			$	8,918
Asset-based lending		-				-				-				-				1,175
Commercial real estate		921				821				1,679				699				3,003
Residential mortgages		3,561				3,447				4,690				5,241				10,623
Consumer		5,576				7,158				8,829				7,036				8,720
Total past due 30-89 days		19,398				16,963				18,352				20,371				32,439
Past due 90 days or more and accruing		2,507				107				25				50				445
Total past due loans and leases	$	21,905			$	17,070			$	18,377			$	20,421			$	32,884

 

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, 2021				September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020
Beginning balance	$	314,922			$	307,945			$	328,351			$	359,431			$	369,811
Provision		(14,980)				7,898				(21,574)				(25,759)				(992)
Charge-offs:
Commercial non-mortgage		708				1,706				431				1,164				7,876
Commercial real estate		91				17				163				5,157				688
Residential mortgages		35				88				1,105				380				105
Consumer		1,347				1,965				1,703				2,594				2,673
Total charge-offs		2,181				3,776				3,402				9,295				11,342
Recoveries:
Commercial non-mortgage		159				137				824				209				232
Asset-based lending		21				-				2				1,424				33
Commercial real estate		927				5				10				3				3
Residential mortgages		145				672				782				1,158				190
Consumer		2,174				2,041				2,952				1,180				1,496
Total recoveries		3,426				2,855				4,570				3,974				1,954
Total net charge-offs (recoveries)		(1,245)				921				(1,168)				5,321				9,388
Ending balance	$	301,187			$	314,922			$	307,945			$	328,351			$	359,431

 

WEBSTER FINANCIAL CORPORATION Reconciliations to GAAP Financial Measures

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

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

		At or for the Three Months Ended
(In thousands, except per share data)		December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020
Efficiency ratio:
Non-interest expense	$	189,853			$	180,237			$	187,028			$	187,982			$	219,530
Less: Foreclosed property activity		(347)				(142)				(137)				91				(836)
Intangible assets amortization		1,118				1,124				1,132				1,139				1,147
Strategic initiatives		600				(4,011)				1,138				9,441				38,265
Merger related		10,560				9,847				17,047				-				-
Debt prepayment costs		2,526				-				-				-				-
Non-interest expense	$	175,396			$	173,419			$	167,848			$	177,311			$	180,954
Net interest income	$	226,782			$	229,691			$	220,852			$	223,764			$	216,929
Add: Tax-equivalent adjustment		2,397				2,434				2,487				2,495				2,577
Non-interest income		90,138				83,775				72,702				76,757				76,763
Other		431				327				309				277				291
Loss on hedge terminations		-				-				-				-				3,680
Income	$	319,748			$	316,227			$	296,350			$	303,293			$	300,240
Efficiency ratio		54.85	%			54.84	%			56.64	%			58.46	%			60.27	%
Return on average tangible common shareholders' equity:
Net income	$	111,038			$	95,713			$	94,035			$	108,078			$	60,044
Less: Preferred stock dividends		1,969				1,968				1,969				1,969				1,969
Add: Intangible assets amortization, tax-effected		883				888				894				900				906
Income adjusted for preferred stock dividends and intangible assets amortization	$	109,952			$	94,633			$	92,960			$	107,009			$	58,981
Income adjusted for preferred stock dividends and intangible assets amortization, annualized basis	$	439,808			$	378,532			$	371,840			$	428,036			$	235,924
Average shareholders' equity	$	3,411,911			$	3,375,401			$	3,311,406			$	3,254,203			$	3,239,221
Less: Average preferred stock		145,037				145,037				145,037				145,037				145,037
Average goodwill and other intangible assets		556,784				557,902				559,032				560,173				561,303
Average tangible common shareholders' equity	$	2,710,090			$	2,672,462			$	2,607,337			$	2,548,993			$	2,532,881
Return on average tangible common shareholders' equity		16.23	%			14.16	%			14.26	%			16.79	%			9.31	%
Tangible equity:
Shareholders' equity	$	3,438,325			$	3,386,189			$	3,329,705			$	3,272,928			$	3,234,625
Less: Goodwill and other intangible assets		556,242				557,360				558,485				559,617				560,756
Tangible shareholders' equity	$	2,882,083			$	2,828,829			$	2,771,220			$	2,713,311			$	2,673,869
Total assets	$	34,915,599			$	35,374,258			$	33,753,752			$	33,259,037			$	32,590,690
Less: Goodwill and other intangible assets		556,242				557,360				558,485				559,617				560,756
Tangible assets	$	34,359,357			$	34,816,898			$	33,195,267			$	32,699,420			$	32,029,934
Tangible equity		8.39	%			8.12	%			8.35	%			8.30	%			8.35	%
Tangible common equity:
Tangible shareholders' equity	$	2,882,083			$	2,828,829			$	2,771,220			$	2,713,311			$	2,673,869
Less: Preferred stock		145,037				145,037				145,037				145,037				145,037
Tangible common shareholders' equity	$	2,737,046			$	2,683,792			$	2,626,183			$	2,568,274			$	2,528,832
Tangible assets	$	34,359,357			$	34,816,898			$	33,195,267			$	32,699,420			$	32,029,934
Tangible common equity		7.97	%			7.71	%			7.91	%			7.85	%			7.90	%
Tangible book value per common share:
Tangible common shareholders' equity	$	2,737,046			$	2,683,792			$	2,626,183			$	2,568,274			$	2,528,832
Common shares outstanding		90,584				90,588				90,594				90,410				90,199
Tangible book value per common share	$	30.22			$	29.63			$	28.99			$	28.41			$	28.04
Core deposits:
Total deposits	$	29,847,029			$	30,026,327			$	28,846,966			$	28,481,834			$	27,335,436
Less: Certificates of deposit		1,797,770				1,884,373				2,014,544				2,234,133				2,487,818
Core deposits	$	28,049,259			$	28,141,954			$	26,832,422			$	26,247,701			$	24,847,618

 

(In millions, except per share data)
GAAP earnings adjusted for one-time charges:
	Three months ended December 31, 2021
		Pre-Tax Income				Earnings Applicable to Common Shareholders				Diluted EPS
Reported (GAAP)	$	142.1			$	108.4			$	1.20
Strategic initiatives		0.6				0.4				-
Merger related		10.6				7.8				0.09
Debt prepayment costs		2.5				1.9				0.02
Adjusted (non-GAAP)	$	155.8			$	118.5			$	1.31

 

View original content:https://www.prnewswire.com/news-releases/webster-reports-fourth-quarter-2021-earnings-of-1-20-per-diluted-share-301464471.html

SOURCE Webster Financial Corporation

FAQ

What were Webster Financial's earnings for Q4 2021?

Webster Financial's earnings for Q4 2021 were $108.4 million, or $1.20 per diluted share.

How did Webster Financial perform in 2021 compared to 2020?

Webster Financial reported full-year earnings of $398.7 million in 2021, compared to $57.7 million in Q4 2020.

What is the loan growth percentage for Webster Financial in Q4 2021?

Webster Financial experienced a loan growth of 4.1% linked quarter in Q4 2021.

What is the anticipated impact of the merger with Sterling on WBS?

The merger aims to enhance Webster's market position and performance, with all regulatory approvals secured.

What was the net interest margin for Webster Financial in Q4 2021?

The net interest margin for Q4 2021 was 2.73%.