Webster Reports Second Quarter 2021 Earnings Of $1.01 Per Diluted Share

Rhea-AI Summary

Webster Financial Corporation (NYSE: WBS) reported strong second-quarter 2021 earnings of $91.6 million, or $1.01 per diluted share, compared to $50.7 million, or $0.57 per share, a year prior. Adjusted earnings would be $1.21 per diluted share after merger-related charges of $18.2 million. Revenue reached $293.6 million, with loan growth of 3.2% excluding PPP loans, and $2.4 billion in loan originations, up 26%. Credit trends improved, with a reserve decrease of $20.4 million. Total deposits increased by $2.5 billion, marking a 9.5% year-over-year growth.

Positive

• Earnings increased to $91.6 million, an increase of 80.8% YoY.
• Loan originations rose to $2.4 billion, up 26.4% linked quarter.
• Deposit growth of $2.5 billion, or 9.5% from a year ago.

Negative

• Net interest income declined to $220.9 million from $224.4 million YoY.
• Net interest margin decreased to 2.82% from 2.99% YoY.

WATERBURY, Conn., July 22, 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 $91.6 million, or $1.01 per diluted share, for the quarter ended June 30, 2021, compared to $50.7 million, or $0.57 per diluted share, for the quarter ended June 30, 2020. Earnings per diluted share would have been $1.21 for the quarter ended June 30, 2021, adjusting for $18.2 million ($17.6 million after tax) of charges related to merger and strategic optimization initiatives.

"We generated strong business performance in the quarter, led by loan growth of 3.2% excluding PPP and an increase in loan originations of $0.5 billion or 26%," said John R. Ciulla, chairman and chief executive officer. "We are making significant progress planning for the integration of two great banking organizations, Webster and Sterling, by working together to deliver for customers, communities, bankers and shareholders."

Highlights for the second quarter of 2021:

• Revenue of $293.6 million.
• Loan growth of 3.2 percent linked quarter, excluding Paycheck Protection Program (PPP) loans, led by commercial and commercial real estate which increased 3.8 percent.
• Originated $2.4 billion in loans, up 26.4 percent linked quarter. Excluding PPP loans, originations totaled $2.3 billion, up 71.5 percent linked quarter.
• Current Expected Credit Loss (CECL) benefit of $21.5 million with a reserve decrease of $20.4 million compared to the prior quarter, resulting in an allowance coverage of 1.43 percent, or 1.49 percent excluding $0.8 billion of PPP loans.
• Deposit growth of $2.5 billion, or 9.5 percent from a year ago, with growth of $557.6 million in demand deposits and $536.6 million in HSA deposits.
• Charges related to merger and strategic optimization initiatives totaled $18.2 million.
• Net interest margin of 2.82 percent.
• Efficiency ratio (non-GAAP) of 56.6 percent.

"In the quarter, credit trends continue to be favorable, resulting in a reserve decrease of $20.4 million," said Glenn MacInnes, executive vice president and chief financial officer. "During the quarter, we continued to make progress on our strategic initiatives and remain on track to deliver an 8% to 10% reduction in run rate core non-interest expense by the end of the fourth quarter 2021."

Line of Business performance compared to the second 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 June 30, 2021, Commercial Banking had $14.7 billion in loans and leases and $8.8 billion in deposit balances.

Commercial Banking Operating Results:

							Percent
	Three months ended June 30,						Favorable/
(In thousands)		2021		2020			(Unfavorable)
Net interest income		$141,124		$128,123				10.1	%
Non-interest income		25,713		21,849				17.7
Operating revenue		166,837		149,972				11.2
Non-interest expense		61,445		61,261				(0.3)
Pre-tax, pre-provision net revenue		$105,392		$88,711				18.8
							Percent
		At June 30,					Increase/
(In millions)		2021		2020			(Decrease)
Loans and leases		$14,654		$14,394				1.8	%
Deposits		8,844		7,747				14.2
AUA / AUM (off balance sheet)		7,061		5,739				23.0

Pre-tax, pre-provision net revenue increased $16.7 million to $105.4 million in the quarter as compared to prior year. Net interest income increased $13.0 million to $141.1 million, primarily driven by PPP loan fee acceleration associated with PPP loan forgiveness, loan rates, and deposit growth. Non-interest income increased $3.9 million to $25.7 million driven by higher trust and investment service fees. Non-interest expense increased $0.2 million to $61.4 million.

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 June 30, 2021, HSA Bank had $10.7 billion in total footings comprising $7.3 billion in deposit balances and $3.4 billion in assets under administration through linked investment accounts.

HSA Bank Operating Results:

							Percent
	Three months ended June 30,						Favorable/
(In thousands)		2021		2020			(Unfavorable)
Net interest income		$42,193		$39,334				7.3	%
Non-interest income		26,554		23,103				14.9
Operating revenue		68,747		62,437				10.1
Non-interest expense		32,792		34,020				3.6
Pre-tax, net revenue		$35,955		$28,417				26.5
							Percent
		At June 30,					Increase/
(Dollars in millions)		2021		2020			(Decrease)
Number of accounts (thousands)		2,995		2,996				—	%
Deposits		$7,323		$6,787				7.9
Linked investment accounts (off balance sheet)		3,384		2,249				50.4
Total footings		$10,707		$9,036				18.5

Pre-tax net revenue increased $7.5 million to $36.0 million in the quarter as compared to prior year. Net interest income increased $2.9 million to $42.2 million, due to a 7.9 percent growth in deposits, partially offset by a decline in deposit spreads. Non-interest income increased $3.5 million to $26.6 million, due primarily to increases in interchange, investment, and notional account fees. Non-interest expense decreased $1.2 million to $32.8 million, primarily due to reduced compensation expenses.

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 business units, as well as a distribution network consisting of 130 banking centers and 253 ATMs, a customer care center, and a full range of web and mobile-based banking services. As of June 30, 2021, Retail Banking had $6.8 billion in loans and $12.7 billion in deposit balances.

Retail Banking Operating Results:

							Percent
	Three months ended June 30,						Favorable/
(In thousands)		2021		2020			(Unfavorable)
Net interest income		$92,540		$81,609				13.4	%
Non-interest income		16,763		16,281				3.0
Operating revenue		109,303		97,890				11.7
Non-interest expense		72,346		77,119				6.2
Pre-tax, pre-provision net revenue		$36,957		$20,771				77.9
							Percent
		At June 30,					Increase/
(In millions)		2021		2020			(Decrease)
Loans		$6,821		$7,409				(7.9)	%
Deposits		12,680		11,826				7.2

Pre-tax, pre-provision net revenue increased $16.2 million to $37.0 million in the quarter as compared to prior year. Net interest income increased $10.9 million to $92.5 million, driven by PPP loan fee acceleration associated with PPP loan forgiveness and deposit growth, partially offset by lower consumer loan balances. Non-interest income increased $0.5 million to $16.8 million driven by higher deposit-related service fees and loan servicing fee income, partially offset by lower fee income from mortgage banking activities. Non-interest expense decreased $4.8 million to $72.3 million driven by lower employee-related, occupancy, and marketing expenses.

Consolidated financial performance:

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

• Net interest income was $220.9 million compared to $224.4 million.
• Net interest margin was 2.82 percent compared to 2.99 percent. The yield on interest-earning assets declined by 40 basis points, and the cost of interest-bearing liabilities declined by 25 basis points.
• Average interest-earning assets totaled $31.6 billion and grew by $1.2 billion, or 3.9 percent.
• Average loans totaled $21.4 billion and declined by $0.2 billion, or 0.9 percent.
• Average deposits totaled $28.7 billion and grew by $2.8 billion, or 10.7 percent.

Quarterly provision for credit losses:

• The provision for credit losses reflects a $21.5 million benefit in the quarter, contributing to a $20.4 million decrease in the allowance for credit losses on loans and leases. The decrease in the allowance reflects improvements to the forecasted economic outlook and favorable credit trends resulting in a release of reserves. The provision for credit losses reflected a $25.8 million benefit in the prior quarter compared to an expense of $40.0 million a year ago.
• Net recoveries were $1.2 million, compared to net charge-offs of $5.3 million in the prior quarter and $16.4 million a year ago. The ratio of net charge-offs (recoveries) to average loans on an annualized basis was (0.02) percent, compared to 0.10 percent in the prior quarter and 0.30 percent a year ago.
• The allowance for credit losses on loans and leases represented 1.43 percent of total loans at June 30, 2021, compared to 1.54 percent at March 31, 2021 and 1.64 percent at June 30, 2020. Excluding $0.8 billion of risk free PPP loans, the coverage ratio was 1.49 percent at June 30, 2021, compared to 1.64 percent at March 31, 2021 excluding $1.3 billion of risk free PPP loans, and 1.75 percent at June 30, 2020 excluding $1.3 billion of risk free PPP loans. The allowance represented 255 percent of nonperforming loans at June 30, 2021 compared to 218 percent at March 31, 2021 and 207 percent at June 30, 2020.

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

• Total non-interest income was $72.7 million compared to $60.1 million, an increase of $12.6 million. This primarily reflects an increase of $5.3 million due to fair value adjustments; $3.4 million in HSA fee income driven primarily by higher interchange and account service fees; $3.0 million in wealth and investment services primarily due to increase investment activity; and $2.9 million in deposit service fees driven by higher overdraft, interchange, and cash management fees. These increases were partially offset by a $2.9 million decrease in mortgage banking activities due to lower volume and spreads on loans originated for sale.

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

• Total non-interest expense was $187.0 million compared to $176.6 million, an increase of $10.4 million. This primarily reflects $18.2 million of charges related to merger and strategic optimization initiatives, partially offset by a $2.0 million decrease in compensation and benefits primarily due to the effects of the strategic initiatives and a $1.3 million decrease in deposit insurance.

Quarterly income taxes compared to the second quarter of 2020:

• Income tax expense was $34.0 million compared to $14.8 million and the effective tax rate was 26.6 percent compared to 21.8 percent.
• The higher effective tax rate in the quarter reflects the effects of merger related expenses recognized during the period estimated to be nondeductible for tax purposes and increased pre-tax income in 2021 compared to 2020, partially offset by the recognition of discrete tax benefits during the quarter.

Investment securities:

• Total investment securities were $8.9 billion, compared to $8.9 billion at March 31, 2021 and $8.7 billion at June 30, 2020. The carrying value of the available-for-sale portfolio included $49.3 million of net unrealized gains, compared to $51.3 million at March 31, 2021 and $87.2 million at June 30, 2020. The carrying value of the held-to-maturity portfolio does not reflect $170.5 million of net unrealized gains, compared to $162.6 million at March 31, 2021 and $268.4 million at June 30, 2020.

Loans:

• Total loans were $21.5 billion, compared to $21.3 billion at March 31, 2021 and $21.8 billion at June 30, 2020. Compared to March 31, 2021, commercial real estate loans increased by $72.6 million while commercial loans decreased by $19.8 million, residential mortgages increased by $187.4 million, and consumer loans decreased by $66.6 million.
• Compared to a year ago, commercial real estate loans increased by $203.4 million and commercial loans (excluding PPP loans) increased by $341.9 million, while consumer loans decreased by $336.6 million and residential mortgages decreased by $65.3 million. PPP loans totaled $0.8 billion at June 30, 2021.
• Loan originations for the portfolio were $2.333 billion ($2.269 billion excluding PPP loan originations), compared to $1.807 billion ($1.274 billion excluding PPP loan originations) in the prior quarter and $2.817 billion ($1.413 billion excluding PPP loan originations) a year ago. In addition, $55 million of residential loans were originated for sale in the quarter, compared to $81 million in the prior quarter and $115 million a year ago.

Asset quality:

• Total nonperforming loans were $120.7 million, or 0.56 percent of total loans, compared to $150.4 million, or 0.71 percent of total loans, at March 31, 2021 and $173.1 million, or 0.79 percent of total loans, at June 30, 2020. As of June 30, 2021, $52.8 million of nonperforming loans were contractually current.
• Past due loans were $18.4 million, compared to $20.4 million at March 31, 2021 and $39.8 million at June 30, 2020.

Deposits and borrowings:

• Total deposits were $28.8 billion, compared to $28.5 billion at March 31, 2021 and $26.4 billion at June 30, 2020. Core deposits to total deposits were 93.0 percent, compared to 92.2 percent at March 31, 2021 and 89.9 percent at June 30, 2020. The loan to deposit ratio was 74.4 percent, compared to 74.8 percent at March 31, 2021 and 82.7 percent at June 30, 2020.
• Total borrowings were $1.2 billion, compared to $1.2 billion at March 31, 2021 and $2.8 billion at June 30, 2020.

Capital:

• The return on average common shareholders' equity and the return on average tangible common shareholders' equity were 11.63 percent and 14.26 percent, respectively, compared to 6.79 percent and 8.47 percent, respectively, in the second quarter of 2020.
• The tangible equity and tangible common equity ratios were 8.35 percent and 7.91 percent, respectively, compared to 8.14 percent and 7.69 percent, respectively, at June 30, 2020. The common equity tier 1 risk-based capital ratio was 11.65 percent, compared to 11.17 percent at June 30, 2020.
• Book value and tangible book value per common share were $35.15 and $28.99, respectively, compared to $33.59 and $27.40, respectively, at June 30, 2020.

***

Webster Financial Corporation is the holding company for Webster Bank, National Association and its HSA Bank division. With $33.8 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust, and investment services through 130 banking centers and 253 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 second quarter 2021 earnings announcement will be held today, Thursday, July 22, 2021 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 July 22, 2021. To access the replay, dial 877-660-6853, or 201-612-7415 for international callers. The replay conference ID number is 13720459.

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 acquisition of 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)		June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020
Income and performance ratios:
Net income	$	94,035			$	108,078			$	60,044			$	69,281			$	53,097
Earnings applicable to common shareholders		91,555				105,530				57,715				66,890				50,729
Earnings per diluted common share		1.01				1.17				0.64				0.75				0.57
Return on average assets		1.12	%			1.31	%			0.73	%			0.84	%			0.65	%
Return on average tangible common shareholders' equity (non-GAAP)		14.26				16.79				9.31				10.91				8.47
Return on average common shareholders' equity		11.63				13.65				7.51				8.80				6.79
Non-interest income as a percentage of total revenue		24.77				25.54				26.14				25.50				21.12
Asset quality:
Allowance for credit losses on loans and leases	$	307,945			$	328,351			$	359,431			$	369,811			$	358,522
Nonperforming assets		123,497				152,808				170,314				167,314				178,381
Allowance for credit losses on loans and leases / total loans and leases		1.43	%			1.54	%			1.66	%			1.69	%			1.64	%
Net charge-offs (recoveries) / average loans and leases (annualized)		(0.02)				0.10				0.17				0.21				0.30
Nonperforming loans and leases / total loans and leases		0.56				0.71				0.78				0.74				0.79
Nonperforming assets / total loans and leases plus OREO		0.57				0.72				0.79				0.77				0.82
Allowance for credit losses on loans and leases / nonperforming loans and leases		255.05				218.29				213.94				227.39				207.17
Other ratios:
Tangible equity (non-GAAP)		8.35	%			8.30	%			8.35	%			8.19	%			8.14	%
Tangible common equity (non-GAAP)		7.91				7.85				7.90				7.75				7.69
Tier 1 risk-based capital (a)		12.28				12.55				11.99				11.88				11.82
Total risk-based capital (a)		13.68				14.08				13.59				13.47				13.42
Common equity tier 1 risk-based capital (a)		11.65				11.89				11.35				11.23				11.17
Shareholders' equity / total assets		9.86				9.84				9.92				9.76				9.71
Net interest margin		2.82				2.92				2.83				2.88				2.99
Efficiency ratio (non-GAAP)		56.64				58.46				60.27				59.99				60.04
Equity and share related:
Common equity	$	3,184,668			$	3,127,891			$	3,089,588			$	3,074,653			$	3,029,742
Book value per common share		35.15				34.60				34.25				34.09				33.59
Tangible book value per common share (non-GAAP)		28.99				28.41				28.04				27.86				27.40
Common stock closing price		53.34				55.11				42.15				26.41				28.61
Dividends declared per common share		0.40				0.40				0.40				0.40				0.40
Common shares issued and outstanding		90,594				90,410				90,199				90,204				90,194
Weighted-average common shares outstanding - Basic		90,027				89,809				89,645				89,630				89,485
Weighted-average common shares outstanding - Diluted		90,221				90,108				89,915				89,738				89,570

(a) Presented as preliminary for June 30, 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 as of June 30, 2021 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)		June 30, 2021				March 31, 2021				June 30, 2020
Assets:
Cash and due from banks	$	193,430			$	160,703			$	198,680
Interest-bearing deposits		1,386,463				1,210,958				104,444
Securities:
Available for sale		3,262,893				3,313,980				3,183,624
Held to maturity, net		5,623,243				5,567,785				5,476,817
Total securities, net		8,886,136				8,881,765				8,660,441
Loans held for sale		4,335				17,262				46,446
Loans and Leases:
Commercial		8,417,719				8,437,487				8,546,769
Commercial real estate		6,410,672				6,338,056				6,207,314
Residential mortgages		4,856,302				4,668,945				4,921,573
Consumer		1,790,308				1,856,895				2,126,861
Total loans and leases		21,475,001				21,301,383				21,802,517
Allowance for credit losses on loans and leases		(307,945)				(328,351)				(358,522)
Loans and leases, net		21,167,056				20,973,032				21,443,995
Federal Home Loan Bank and Federal Reserve Bank stock		76,874				77,674				94,495
Premises and equipment, net		215,716				220,982				258,392
Goodwill and other intangible assets, net		558,485				559,617				558,367
Cash surrender value of life insurance policies		570,380				567,298				557,325
Deferred tax asset, net		78,268				80,235				77,145
Accrued interest receivable and other assets		616,609				509,511				708,887
Total Assets	$	33,753,752			$	33,259,037			$	32,708,617
Liabilities and Shareholders' Equity:
Deposits:
Demand	$	6,751,373			$	6,680,114			$	6,193,757
Health savings accounts		7,323,421				7,455,181				6,786,845
Interest-bearing checking		3,843,725				3,792,309				3,280,125
Money market		3,442,319				3,015,565				2,686,650
Savings		5,471,584				5,304,532				4,742,573
Certificates of deposit		2,014,544				2,234,133				2,666,047
Total deposits		28,846,966				28,481,834				26,355,997
Securities sold under agreements to repurchase and other borrowings		507,124				498,378				1,688,805
Federal Home Loan Bank advances		138,444				138,554				523,321
Long-term debt		565,297				566,480				570,029
Accrued expenses and other liabilities		366,216				300,863				395,686
Total liabilities		30,424,047				29,986,109				29,533,838
Preferred stock		145,037				145,037				145,037
Common shareholders' equity		3,184,668				3,127,891				3,029,742
Total shareholders' equity		3,329,705				3,272,928				3,174,779
Total Liabilities and Shareholders' Equity	$	33,753,752			$	33,259,037			$	32,708,617

 

WEBSTER FINANCIAL CORPORATION Consolidated Statements of Income (unaudited)
		Three Months Ended June 30,								Six Months Ended June 30,
(In thousands, except per share data)		2021				2020				2021				2020
Interest income:
Interest and fees on loans and leases	$	185,919			$	196,521			$	376,455			$	412,708
Interest and dividends on securities		45,586				55,570				90,533				113,678
Loans held for sale		53				184				144				359
Total interest income		231,558				252,275				467,132				526,745
Interest expense:
Deposits		5,094				18,805				11,533				46,648
Borrowings		5,612				9,063				10,983				24,889
Total interest expense		10,706				27,868				22,516				71,537
Net interest income		220,852				224,407				444,616				455,208
Provision for credit losses		(21,500)				40,000				(47,250)				116,000
Net interest income after provision for loan and lease losses		242,352				184,407				491,866				339,208
Non-interest income:
Deposit service fees		41,439				35,839				81,908				78,409
Loan and lease related fees		7,862				6,968				16,175				13,464
Wealth and investment services		10,087				7,102				19,490				15,841
Mortgage banking activities		1,319				4,205				3,961				7,098
Increase in cash surrender value of life insurance policies		3,603				3,624				7,136				7,204
Gain on investment securities, net		-				-				-				8
Other income		8,392				2,338				20,789				11,430
Total non-interest income		72,702				60,076				149,459				133,454
Non-interest expense:
Compensation and benefits		97,754				99,731				205,354				201,618
Occupancy		14,010				14,245				29,660				28,730
Technology and equipment		27,124				27,468				55,640				55,305
Marketing		3,227				3,286				5,731				6,788
Professional and outside services		21,025				6,158				30,801				11,821
Intangible assets amortization		1,132				962				2,271				1,924
Loan workout expenses		327				392				721				885
Deposit insurance		3,749				5,015				7,705				9,740
Other expenses		18,680				19,327				37,127				38,609
Total non-interest expense		187,028				176,584				375,010				355,420
Income before income taxes		128,026				67,899				266,315				117,242
Income tax expense		33,991				14,802				64,202				25,946
Net income		94,035				53,097				202,113				91,296
Preferred stock dividends and other		(2,480)				(2,368)				(5,028)				(4,530)
Earnings applicable to common shareholders	$	91,555			$	50,729			$	197,085			$	86,766
Weighted-average common shares outstanding - Diluted		90,221				89,570				90,164				90,391
Earnings per common share:
Basic	$	1.02			$	0.57			$	2.19			$	0.96
Diluted		1.01				0.57				2.19				0.96

 

WEBSTER FINANCIAL CORPORATION Five Quarter Consolidated Statements of Income (unaudited)
		Three Months Ended
(In thousands, except per share data)		June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020
Interest income:
Interest and fees on loans and leases	$	185,919			$	190,536			$	189,010			$	188,001			$	196,521
Interest and dividends on securities		45,586				44,947				46,874				51,009				55,570
Loans held for sale		53				91				181				229				184
Total interest income		231,558				235,574				236,065				239,239				252,275
Interest expense:
Deposits		5,094				6,439				8,651				12,598				18,805
Borrowings		5,612				5,371				10,485				7,385				9,063
Total interest expense		10,706				11,810				19,136				19,983				27,868
Net interest income		220,852				223,764				216,929				219,256				224,407
Provision for credit losses		(21,500)				(25,750)				(1,000)				22,750				40,000
Net interest income after provision for loan and lease losses		242,352				249,514				217,929				196,506				184,407
Non-interest income:
Deposit service fees		41,439				40,469				38,345				39,278				35,839
Loan and lease related fees		7,862				8,313				9,095				6,568				6,968
Wealth and investment services		10,087				9,403				8,820				8,255				7,102
Mortgage banking activities		1,319				2,642				4,110				7,087				4,205
Increase in cash surrender value of life insurance policies		3,603				3,533				3,662				3,695				3,624
Other income		8,392				12,397				12,731				10,177				2,338
Total non-interest income		72,702				76,757				76,763				75,060				60,076
Non-interest expense:
Compensation and benefits		97,754				107,600				122,754				104,019				99,731
Occupancy		14,010				15,650				28,024				14,275				14,245
Technology and equipment		27,124				28,516				29,122				27,846				27,468
Marketing		3,227				2,504				3,485				3,852				3,286
Professional and outside services		21,025				9,776				11,380				9,223				6,158
Intangible assets amortization		1,132				1,139				1,147				1,089				962
Loan workout expenses		327				394				261				612				392
Deposit insurance		3,749				3,956				4,372				4,204				5,015
Other expenses		18,680				18,447				18,985				18,876				19,327
Total non-interest expense		187,028				187,982				219,530				183,996				176,584
Income before income taxes		128,026				138,289				75,162				87,570				67,899
Income tax expense		33,991				30,211				15,118				18,289				14,802
Net income		94,035				108,078				60,044				69,281				53,097
Preferred stock dividends and other		(2,480)				(2,548)				(2,329)				(2,391)				(2,368)
Earnings applicable to common shareholders	$	91,555			$	105,530			$	57,715			$	66,890			$	50,729
Weighted-average common shares outstanding - Diluted		90,221				90,108				89,915				89,738				89,570
Earnings per common share:
Basic	$	1.02			$	1.18			$	0.64			$	0.75			$	0.57
Diluted		1.01				1.17				0.64				0.75				0.57

 

WEBSTER FINANCIAL CORPORATION Consolidated Average Balances, Interest, Yields and Rates, and Net Interest Margin on a Fully Tax-equivalent Basis (unaudited)
		Three Months Ended June 30,
		2021																2020
(Dollars in thousands)		Average balance				Interest				Yield/rate								Average balance			Interest		Yield/rate
Assets:
Interest-earning assets:
Loans and leases	$	21,413,439			$	186,681				3.46	%						$	21,608,914		$	197,317		3.63	%
Investment securities (a)		8,834,859				46,582				2.13								8,579,213			56,465		2.69
Federal Home Loan and Federal Reserve Bank stock		77,292				382				1.98								108,962			865		3.19
Interest-bearing deposits (b)		1,270,121				347				0.11								99,467			5		0.02
Loans held for sale		8,898				53				2.37								24,266			184		3.03
Total interest-earning assets		31,604,609			$	234,045				2.95	%							30,420,822		$	254,836		3.35	%
Non-interest-earning assets		1,901,412																2,062,534
Total Assets	$	33,506,021															$	32,483,356
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Demand deposits	$	6,774,206			$	-				-	%						$	5,823,655		$	-		-	%
Health savings accounts		7,446,735				1,650				0.09								6,846,210			2,604		0.15
Interest-bearing checking, money market and savings		12,365,074				1,603				0.05								10,390,143			6,462		0.25
Certificates of deposit		2,114,889				1,841				0.35								2,869,471			9,739		1.36
Total deposits		28,700,904				5,094				0.07								25,929,479			18,805		0.29
Securities sold under agreements to repurchase and other borrowings		500,638				860				0.68								1,577,881			980		0.25
Federal Home Loan Bank advances		138,483				534				1.52								839,830			3,748		1.77
Long-term debt (a)		565,874				4,218				3.22								570,679			4,335		3.31
Total borrowings		1,204,995				5,612				1.93								2,988,390			9,063		1.23
Total interest-bearing liabilities		29,905,899			$	10,706				0.14	%							28,917,869		$	27,868		0.39	%
Non-interest-bearing liabilities		288,716																410,119
Total liabilities		30,194,615																29,327,988
Preferred stock		145,037																145,037
Common shareholders' equity		3,166,369																3,010,331
Total shareholders' equity		3,311,406																3,155,368
Total Liabilities and Shareholders' Equity	$	33,506,021															$	32,483,356
Tax-equivalent net interest income						223,339															226,968
Less: tax-equivalent adjustments						(2,487)															(2,561)
Net interest income					$	220,852														$	224,407
Net interest margin										2.82	%												2.99	%
(a) For purposes of yield/rate computation, 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)
		Six Months Ended June 30,
		2021																2020
(Dollars in thousands)		Average balance				Interest				Yield/rate								Average balance			Interest		Yield/rate
Assets:
Interest-earning assets:
Loans and leases	$	21,447,192			$	377,969				3.51	%						$	20,966,857		$	414,235		3.93	%
Investment securities (a)		8,862,314				92,859				2.13								8,449,480			114,873		2.77
Federal Home Loan and Federal Reserve Bank stock		77,461				619				1.61								117,663			2,116		3.62
Interest-bearing deposits (b)		976,873				523				0.11								83,887			196		0.46
Loans held for sale		11,610				144				2.48								23,281			359		3.08
Total interest-earning assets		31,375,450			$	472,114				3.01	%							29,641,168		$	531,779		3.59	%
Non-interest-earning assets		1,941,640																1,996,765
Total Assets	$	33,317,090															$	31,637,933
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Demand deposits	$	6,606,464			$	-				-	%						$	5,170,280		$	-		-	%
Health savings accounts		7,448,943				3,257				0.09								6,803,784			5,900		0.17
Interest-bearing checking, money market and savings		12,181,295				3,323				0.06								10,053,559			18,865		0.38
Certificates of deposit		2,242,250				4,953				0.45								2,968,514			21,883		1.48
Total deposits		28,478,952				11,533				0.08								24,996,137			46,648		0.38
Securities sold under agreements to repurchase and other borrowings		511,622				1,495				0.58								1,437,403			4,710		0.65
Federal Home Loan Bank advances		137,143				1,047				1.52								1,082,865			10,617		1.94
Long-term debt (a)		566,462				8,441				3.22								560,964			9,562		3.66
Total borrowings		1,215,227				10,983				1.87								3,081,232			24,889		1.62
Total interest-bearing liabilities		29,694,179			$	22,516				0.15	%							28,077,369		$	71,537		0.51	%
Non-interest-bearing liabilities		339,949																386,118
Total liabilities		30,034,128																28,463,487
Preferred stock		145,037																145,037
Common shareholders' equity		3,137,925																3,029,409
Total shareholders' equity		3,282,962																3,174,446
Total Liabilities and Shareholders' Equity	$	33,317,090															$	31,637,933
Tax-equivalent net interest income						449,598															460,242
Less: tax-equivalent adjustments						(4,982)															(5,034)
Net interest income					$	444,616														$	455,208
Net interest margin										2.87	%												3.11	%
(a) For purposes of yield/rate computation, 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)		June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020
Loan and Lease Balances (actual):
Commercial non-mortgage	$	7,473,758			$	7,530,066			$	7,687,300			$	7,722,838			$	7,606,245
Asset-based lending		943,961				907,421				890,598				889,711				940,524
Commercial real estate		6,410,672				6,338,056				6,322,637				6,307,567				6,207,314
Residential mortgages		4,856,302				4,668,945				4,782,016				4,885,821				4,921,573
Consumer		1,790,308				1,856,895				1,958,664				2,046,086				2,126,861
Total Loan and Lease Balances		21,475,001				21,301,383				21,641,215				21,852,023				21,802,517
Allowance for credit losses on loans and leases		(307,945)				(328,351)				(359,431)				(369,811)				(358,522)
Loans and Leases, net	$	21,167,056			$	20,973,032			$	21,281,784			$	21,482,212			$	21,443,995
Loan and Lease Balances (average):
Commercial non-mortgage	$	7,545,398			$	7,650,367			$	7,662,828			$	7,683,879			$	7,318,814
Asset-based lending		937,580				896,093				874,221				922,653				1,030,928
Commercial real estate		6,365,830				6,303,765				6,363,776				6,260,114				6,136,091
Residential mortgages		4,738,859				4,720,703				4,821,199				4,914,368				4,946,746
Consumer		1,825,772				1,910,392				2,007,226				2,089,726				2,176,335
Total Loan and Lease Balances		21,413,439				21,481,320				21,729,250				21,870,740				21,608,914
Allowance for credit losses on loans and leases		(332,522)				(364,358)				(375,080)				(363,552)				(340,050)
Loans and Leases, net	$	21,080,917			$	21,116,962			$	21,354,170			$	21,507,188			$	21,268,864
WEBSTER FINANCIAL CORPORATION Five Quarter Nonperforming Assets and Past Due Loans and Leases (unaudited)
(Dollars in thousands)		June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020
Nonperforming loans and leases:
Commercial non-mortgage	$	57,831			$	60,103			$	71,499			$	75,080			$	75,340
Asset-based lending		2,403				2,430				2,622				3,789				138
Commercial real estate		12,687				13,743				21,222				8,784				15,889
Residential mortgages		21,467				42,708				41,033				41,498				46,500
Consumer		26,353				31,437				31,629				33,485				35,187
Total nonperforming loans and leases	$	120,741			$	150,421			$	168,005			$	162,636			$	173,054
Other real estate owned and repossessed assets:
Commercial non-mortgage	$	-			$	102			$	175			$	175			$	272
Residential mortgages		1,934				1,695				1,544				3,899				3,081
Consumer		822				590				590				604				1,974
Total other real estate owned and repossessed assets	$	2,756			$	2,387			$	2,309			$	4,678			$	5,327
Total nonperforming assets	$	123,497			$	152,808			$	170,314			$	167,314			$	178,381
Past due 30-89 days:
Commercial non-mortgage	$	3,154			$	7,395			$	8,918			$	3,821			$	13,959
Asset-based lending		-				-				1,175				-				-
Commercial real estate		1,679				699				3,003				329				2,363
Residential mortgages		4,690				5,241				10,623				9,291				15,445
Consumer		8,829				7,036				8,720				8,349				7,857
Total past due 30-89 days		18,352				20,371				32,439				21,790				39,624
Past due 90 days or more and accruing		25				50				445				-				198
Total past due loans and leases	$	18,377			$	20,421			$	32,884			$	21,790			$	39,822
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)		June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020
Beginning balance	$	328,351			$	359,431			$	369,811			$	358,522			$	334,931
Provision		(21,574)				(25,759)				(992)				22,753				40,003
Charge-offs:
Commercial non-mortgage		431				1,164				7,876				12,085				15,294
Asset-based lending		-				-				-				10				-
Commercial real estate		163				5,157				688				1,399				-
Residential mortgages		1,105				380				105				546				194
Consumer		1,703				2,594				2,673				1,717				2,586
Total charge-offs		3,402				9,295				11,342				15,757				18,074
Recoveries:
Commercial non-mortgage		824				209				232				1,978				271
Asset-based lending		2				1,424				33				-				10
Commercial real estate		10				3				3				47				2
Residential mortgages		782				1,158				190				521				83
Consumer		2,952				1,180				1,496				1,747				1,296
Total recoveries		4,570				3,974				1,954				4,293				1,662
Total net charge-offs (recoveries)		(1,168)				5,321				9,388				11,464				16,412
Ending balance	$	307,945			$	328,351			$	359,431			$	369,811			$	358,522

 

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)		June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020
Efficiency ratio:
Non-interest expense (GAAP)	$	187,028			$	187,982			$	219,530			$	183,996			$	176,584
Less: Foreclosed property activity (GAAP)		(137)				91				(836)				(201)				(217)
Intangible assets amortization (GAAP)		1,132				1,139				1,147				1,089				962
Strategic initiatives (non-GAAP)		1,138				9,441				38,265				4,786				-
Merger related (non-GAAP)		17,047				-				-				-				-
Non-interest expense (non-GAAP)	$	167,848			$	177,311			$	180,954			$	178,322			$	175,839
Net interest income (GAAP)	$	220,852			$	223,764			$	216,929			$	219,256			$	224,407
Add: Tax-equivalent adjustment (non-GAAP)		2,487				2,495				2,577				2,635				2,561
Non-interest income (GAAP)		72,702				76,757				76,763				75,060				60,076
Other (non-GAAP)		309				277				291				297				293
Loss on hedge terminations (GAAP)		-				-				3,680				-				-
Customer derivative fair value adjustment (GAAP)		-				-				-				-				5,511
Income (non-GAAP)	$	296,350			$	303,293			$	300,240			$	297,248			$	292,848
Efficiency ratio (non-GAAP)		56.64	%			58.46	%			60.27	%			59.99	%			60.04	%
Return on average tangible common shareholders' equity:
Net income (GAAP)	$	94,035			$	108,078			$	60,044			$	69,281			$	53,097
Less: Preferred stock dividends (GAAP)		1,969				1,969				1,969				1,968				1,969
Add: Intangible assets amortization, tax-effected (GAAP)		894				900				906				860				760
Income adjusted for preferred stock dividends and intangible assets amortization (non-GAAP)	$	92,960			$	107,009			$	58,981			$	68,173			$	51,888
Income adjusted for preferred stock dividends and intangible assets amortization, annualized basis (non-GAAP)	$	371,840			$	428,036			$	235,924			$	272,692			$	207,552
Average shareholders' equity (non-GAAP)	$	3,311,406			$	3,254,203			$	3,239,221			$	3,205,330			$	3,155,368
Less: Average preferred stock (non-GAAP)		145,037				145,037				145,037				145,037				145,037
Average goodwill and other intangible assets (non-GAAP)		559,032				560,173				561,303				560,959				558,835
Average tangible common shareholders' equity (non-GAAP)	$	2,607,337			$	2,548,993			$	2,532,881			$	2,499,334			$	2,451,496
Return on average tangible common shareholders' equity (non-GAAP)		14.26	%			16.79	%			9.31	%			10.91	%			8.47	%
Tangible equity:
Shareholders' equity (GAAP)	$	3,329,705			$	3,272,928			$	3,234,625			$	3,219,690			$	3,174,779
Less: Goodwill and other intangible assets (GAAP)		558,485				559,617				560,756				561,902				558,367
Tangible shareholders' equity (non-GAAP)	$	2,771,220			$	2,713,311			$	2,673,869			$	2,657,788			$	2,616,412
Total assets (GAAP)	$	33,753,752			$	33,259,037			$	32,590,690			$	32,994,443			$	32,708,617
Less: Goodwill and other intangible assets (GAAP)		558,485				559,617				560,756				561,902				558,367
Tangible assets (non-GAAP)	$	33,195,267			$	32,699,420			$	32,029,934			$	32,432,541			$	32,150,250
Tangible equity (non-GAAP)		8.35	%			8.30	%			8.35	%			8.19	%			8.14	%
Tangible common equity:
Tangible shareholders' equity (non-GAAP)	$	2,771,220			$	2,713,311			$	2,673,869			$	2,657,788			$	2,616,412
Less: Preferred stock (GAAP)		145,037				145,037				145,037				145,037				145,037
Tangible common shareholders' equity (non-GAAP)	$	2,626,183			$	2,568,274			$	2,528,832			$	2,512,751			$	2,471,375
Tangible assets (non-GAAP)	$	33,195,267			$	32,699,420			$	32,029,934			$	32,432,541			$	32,150,250
Tangible common equity (non-GAAP)		7.91	%			7.85	%			7.90	%			7.75	%			7.69	%
Tangible book value per common share:
Tangible common shareholders' equity (non-GAAP)	$	2,626,183			$	2,568,274			$	2,528,832			$	2,512,751			$	2,471,375
Common shares outstanding		90,594				90,410				90,199				90,204				90,194
Tangible book value per common share (non-GAAP)	$	28.99			$	28.41			$	28.04			$	27.86			$	27.40
Core deposits:
Total deposits	$	28,846,966			$	28,481,834			$	27,335,436			$	26,920,553			$	26,355,997
Less: Certificates of deposit		2,014,544				2,234,133				2,487,818				2,570,440				2,666,047
Core deposits (non-GAAP)	$	26,832,422			$	26,247,701			$	24,847,618			$	24,350,113			$	23,689,950
(In millions, except per share data)
GAAP earnings adjusted for strategic optimization initiatives and merger related costs:
	Three months ended June 30, 2021
		Pre-Tax Income				Earnings Applicable to Common Shareholders				Diluted EPS
Reported (GAAP)	$	128.0			$	91.6			$	1.01
Facilities optimization		1.1				0.8				0.01
Merger related		17.1				16.8				0.19
Adjusted (non-GAAP)	$	146.2			$	109.2			$	1.21

 

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SOURCE Webster Financial Corporation

FAQ

What were Webster Financial Corporation's earnings for Q2 2021?

Webster Financial Corporation reported earnings of $91.6 million, or $1.01 per diluted share, for Q2 2021.

How did Webster Financial perform in terms of revenue in Q2 2021?

Webster Financial's revenue for Q2 2021 was $293.6 million.

What loan growth did Webster Financial achieve in Q2 2021?

Webster Financial reported a loan growth of 3.2% in Q2 2021, excluding PPP loans.

What was the deposit growth rate for Webster Financial in Q2 2021?

Webster Financial's deposits grew by $2.5 billion, or 9.5%, year-over-year in Q2 2021.

What is the stock symbol for Webster Financial Corporation?

The stock symbol for Webster Financial Corporation is WBS.