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Investor Alert

press release

April 19, 2021, 6:50 a.m. EDT

Webster Reports First Quarter 2021 Earnings Of $1.17 Per Diluted Share

WATERBURY, Conn., April 19, 2021 /PRNewswire/ -- Webster Financial Corporation /zigman2/quotes/207965570/composite WBS +0.50% , the holding company for Webster Bank, N.A. and its HSA Bank division, today announced earnings applicable to common shareholders of $105.5 million, or $1.17 per diluted share, for the quarter ended March 31, 2021, compared to $36.0 million, or $0.39 per diluted share, for the quarter ended March 31, 2020. Earnings per diluted share would have been $1.25 for the quarter ended March 31, 2021, adjusting for $9.4 million ($6.9 million after tax) of charges related to strategic optimization initiatives.

"We continued to make meaningful progress on our strategic initiatives during a solid first quarter," said John R. Ciulla, chairman and chief executive officer. "Our focus remains on delivering for our customers, communities, bankers and shareholders."

Highlights for the first quarter of 2021:

  • Revenue of $300.5 million.

  • Loan growth of $0.4 billion, or 2.0 percent from a year ago, led by commercial and commercial real estate, which increased 7.9 percent.

  • Originated $533.0 million of second round Paycheck Protection Program (PPP) loans.

  • Results include a Current Expected Credit Loss (CECL) benefit of $25.8 million with a reserve decrease of $31.1 million compared to the prior quarter, resulting in an allowance coverage of 1.54 percent, or 1.64 percent excluding $1.3 billion of PPP loans.

  • Deposit growth of $4.0 billion, or 16.2 percent from a year ago, with growth of $1.8 billion in demand deposits and $719.0 million in HSA deposits.

  • Results include $9.4 million of charges related to strategic optimization initiatives.

  • Net interest margin of 2.92 percent.

  • Efficiency ratio (non-GAAP) of 58.5 percent.

"First quarter results were favorably impacted by positive credit trends and an improving economic outlook resulting in a meaningful release of loan reserve," said Glenn MacInnes, executive vice president and chief financial officer. "While near term our liquidity position results in net interest margin compression, it along with our strong capital level positions us well for future growth."

Line of Business performance compared to the first quarter of 2020

Effective January 1, 2021 Webster realigned certain of its business banking and investment services related operations from Retail Banking to Commercial Banking to deliver operational efficiencies and better serve its customers.  As a result $1.9 billion of loans, $2.2 billion of deposits, and $3.9 billion of assets under administration (off balance sheet) were moved from Retail Banking to Commercial Banking. Prior period results have been restated accordingly.

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 March 31, 2021, Commercial Banking had $14.4 billion in loans and leases and $8.4 billion in deposit balances.

Commercial Banking Operating Results:






Percent

Three months ended March 31,
Favorable/
(In thousands)
2021 2020
(Unfavorable)
Net interest income
$142,038
$117,584


20.8 %
Non-interest income
25,177
22,415


12.3

Operating revenue
167,215
139,999


19.4

Non-interest expense
64,836
65,220


0.6

Pre-tax, pre-provision net revenue
$102,379
$74,779


36.9














Percent


At March 31,
Increase/
(In millions)
2021 2020
(Decrease)
Loans and leases
$14,413
$13,681


5.4 %
Deposits
8,417
6,809


23.6

AUA / AUM (off balance sheet)
6,694
5,270


27.0

Pre-tax, pre-provision net revenue increased $27.6 million to $102.4 million in the quarter as compared to prior year. Net interest income increased $24.5 million to $142.0 million, primarily driven by PPP loan fee accretion and growth in loans and deposits. Non-interest income increased $2.8 million to $25.2 million driven by higher loan related fees and trust and investment service fees. Non-interest expense decreased $0.4 million to $64.8 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 March 31, 2021, HSA Bank had $10.6 billion in total footings comprising $7.5 billion in deposit balances and $3.1 billion in assets under administration through linked investment accounts.

HSA Bank Operating Results:






Percent

Three months ended March 31,
Favorable/
(In thousands)
2021 2020
(Unfavorable)
Net interest income
$42,109
$42,673


(1.3) %
Non-interest income
27,005
26,383


2.4

Operating revenue
69,114
69,056


0.1

Non-interest expense
36,250
37,078


2.2

Pre-tax, net revenue
$32,864
$31,978


2.8














Percent


At March 31,
Increase/
(Dollars in millions)
2021 2020
(Decrease)
Number of accounts (thousands)
3,040
3,119


(2.5) %








Deposits
$7,455
$6,736


10.7

Linked investment accounts (off balance sheet)
3,118
1,855


68.1

Total footings
$10,574
$8,591


23.1

Pre-tax net revenue increased $0.9 million to $32.9 million in the quarter as compared to prior year. Net interest income decreased $0.6 million to $42.1 million, due to a decline in deposit spreads partially offset by a 10.7 percent growth in deposits.  Non-interest income increased $0.6 million to $27.0 million, due primarily to increases in investment and notional account fees. Non-interest expense decreased $0.8 million to $36.3 million, primarily due to reduced travel 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 148 banking centers and 280 ATMs, a customer care center, and a full range of web and mobile-based banking services. As of March 31, 2021, Retail Banking had $6.9 billion in loans and $12.6 billion in deposit balances.

Retail Banking Operating Results:






Percent

Three months ended March 31,
Favorable/
(In thousands)
2021 2020
(Unfavorable)
Net interest income
$88,813
$81,199


9.4 %
Non-interest income
16,071
18,443


(12.9)

Operating revenue
104,884
99,642


5.3

Non-interest expense
76,124
80,290


5.2

Pre-tax, pre-provision net revenue
$28,760
$19,352


48.6














Percent


At March 31,
Increase/
(In millions)
2021 2020
(Decrease)
Loans
$6,888
$7,211


(4.5) %
Deposits
12,611
10,873


16.0

Pre-tax, pre-provision net revenue increased $9.4 million to $28.8 million in the quarter as compared to prior year. Net interest income increased $7.6 million to $88.8 million, driven by PPP loan fee accretion and deposit growth, partially offset by lower consumer loan balances. Non-interest income decreased $2.4 million to $16.1 million resulting from lower deposit-related service charges and fee income from mortgage banking activities, partially offset by higher loan servicing fee income. Non-interest expense decreased $4.2 million to $76.1 million driven by lower employee-related, occupancy, and marketing expenses.

Consolidated financial performance:

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

  • Net interest income was $223.8 million compared to $230.8 million.

  • Net interest margin was 2.92 percent compared to 3.23 percent. The yield on interest-earning assets declined by 76 basis points, and the cost of interest-bearing liabilities declined by 48 basis points.

  • Average interest-earning assets totaled $31.1 billion and grew by $2.3 billion, or 7.9 percent.

  • Average loans totaled $21.5 billion and grew by $1.2 billion, or 5.7 percent.

  • Average deposits totaled $28.3 billion and grew by $4.2 billion, or 17.4 percent.

Quarterly provision for credit losses:

  • The provision for credit losses reflects a $25.8 million benefit in the quarter, contributing to a $31.1 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 $1 million benefit in the prior quarter and an expense of $76.0 million a year ago.

  • Net charge-offs were $5.3 million, compared to $9.4 million in the prior quarter and $7.8 million a year ago. The ratio of net charge-offs to average loans on an annualized basis was 0.10 percent, compared to 0.17 percent in the prior quarter and 0.15 percent a year ago.

  • The allowance for credit losses on loans and leases represented 1.54 percent of total loans at March 31, 2021, compared to 1.66 percent at December 31, 2020 and 1.60 percent at March 31, 2020. Excluding $1.3 billion of risk free PPP loans, the coverage ratio was 1.64 percent at March 31, 2021, compared to 1.76 percent at December 31, 2020. The allowance represented 218 percent of nonperforming loans at March 31, 2021 compared to 214 percent at December 31, 2020 and 206 percent at March 31, 2020.

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

  • Total non-interest income was $76.8 million compared to $73.4 million, an increase of $3.4 million. This primarily reflects an increase of $2.9 million due to fair value adjustments; $1.5 million in miscellaneous fee income; $1.8 million in loan and lease fees primarily related to higher syndication fees; and $0.6 million in HSA fee income driven primarily by higher account service fees. These increases were partially offset by a $2.3 million decrease in deposit service fees driven by lower overdraft and service related fees and a $1.2 million decrease in the mark to market on customer derivatives and swap related fees.

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

  • Total non-interest expense was $188.0 million compared to $178.8 million, an increase of $9.2 million. This primarily reflects strategic optimization initiative charges of $9.4 million: $2.0 million in compensation and benefits; $2.6 million in occupancy; and $4.8 million in professional and outside services. Excluding these charges, non-interest expense was flat when compared to the first quarter a year ago.

Quarterly income taxes compared to the first quarter of 2020:

  • Income tax expense was $30.2 million compared to $11.1 million and the effective tax rate was 21.8 percent compared to 22.6 percent.

  • The lower effective tax rate in the quarter reflects the recognition of net discrete tax benefits during the period, partially offset by the effects of increased pre-tax income in 2021 compared to 2020.

Investment securities:

  • Total investment securities were $8.9 billion, compared to $8.9 billion at December 31, 2020 and $8.5 billion at March 31, 2020. The carrying value of the available-for-sale portfolio included $51.3 million of net unrealized gains, compared to $92.5 million at December 31, 2020 and $3.1 million of net unrealized gains at March 31, 2020. The carrying value of the held-to-maturity portfolio does not reflect $162.6 million of net unrealized gains, compared to $267.2 million at December 31, 2020 and $156.3 million of net unrealized gains at March 31, 2020.

Loans:

  • Total loans were $21.3 billion, compared to $21.6 billion at December 31, 2020 and $20.9 billion at March 31, 2020. Compared to December 31, 2020, commercial real estate loans increased by $15.4 million while commercial loans decreased by $140.4 million, residential mortgages decreased by $113.1 million, and consumer loans decreased by $101.8 million.

  • Compared to a year ago, commercial real estate loans increased by $215.6 million while commercial loans, excluding PPP loans, decreased by $436.6 million, consumer loans decreased by $354.7 million and residential mortgages decreased by $322.6 million. PPP loans totaled $1.3 billion at March 31, 2021.

  • Loan originations for the portfolio were $1.807 billion ($1.274 billion excluding PPP loan originations), compared to $1.804 billion in the prior quarter and $1.195 billion a year ago. In addition, $81 million of residential loans were originated for sale in the quarter, compared to $125 million in the prior quarter and $60 million a year ago.

Asset quality:

  • Total nonperforming loans were $150.4 million, or 0.71 percent of total loans, compared to $168.0 million, or 0.78 percent of total loans, at December 31, 2020 and $162.3 million, or 0.78 percent of total loans, at March 31, 2020. Total paying nonperforming loans were $53.2 million, compared to $59.7 million at December 31, 2020 and $61.9 million at March 31, 2020.

  • Past due loans were $20.4 million, compared to $32.9 million at December 31, 2020 and $37.0 million at March 31, 2020.

Deposits and borrowings:

  • Total deposits were $28.5 billion, compared to $27.3 billion at December 31, 2020 and $24.5 billion at March 31, 2020. Core deposits to total deposits were 92.2 percent, compared to 90.9 percent at December 31, 2020 and 87.8 percent at March 31, 2020. The loan to deposit ratio was 74.8 percent, compared to 79.2 percent at December 31, 2020 and 85.2 percent at March 31, 2020.

  • Total borrowings were $1.2 billion, compared to $1.7 billion at December 31, 2020 and $3.6 billion at March 31, 2020.

Capital:

  • The return on average common shareholders' equity and the return on average tangible common shareholders' equity were 13.65 percent and 16.79 percent, respectively, compared to 4.75 percent and 5.95 percent, respectively, in the first quarter of 2020.

  • The tangible equity and tangible common equity ratios were 8.30 percent and 7.85 percent, respectively, compared to 8.14 percent and 7.67 percent, respectively, at March 31, 2020. The common equity tier 1 risk-based capital ratio was 11.89 percent, compared to 10.95 percent at March 31, 2020.

  • Book value and tangible book value per common share were $34.60 and $28.41, respectively, compared to $32.66 and $26.46, respectively, at March 31, 2020.

Webster Financial Corporation is the holding company for Webster Bank, National Association and its HSA Bank division. With $33.3 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust, and investment services through 148 banking centers and 280 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 first quarter 2021 earnings announcement will be held today, Monday, April 19, 2021 at 8:30 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 April 19, 2021. To access the replay, dial 877-660-6853 or 201-612-7415, for international callers. The replay conference ID number is 13718870.

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 successfully execute our business plan and strategic initiatives, and manage our risks; (2) local, regional, national, and international economic conditions and the impact they may have on us and our customers; (3) volatility and disruption in national and international financial markets; (4) the potential adverse effects of the ongoing novel coronavirus (COVID-19) pandemic and any governmental or societal responses thereto, including the deployment and efficacy of COVID-19 vaccines, or any other unusual and infrequently occurring events; (5) changes in the level of nonperforming assets and charge-offs; (6) changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (7) adverse conditions in the securities markets that lead to impairment in the value of our investment securities; (8) inflation, changes in interest rate, and monetary fluctuations; (9) the timely development and acceptance of new products and services and the perceived value of those products and services by customers; (10) changes in deposit flows, consumer spending, borrowings, and savings habits; (11) our ability to implement new technologies and maintain secure and reliable technology systems; (12) the effects of any cyber threats, attacks or events or fraudulent activity; (13) performance by our counterparties and vendors; (14) our ability to increase market share and control expenses; (15) changes in the competitive environment among banks, financial holding companies, and other financial services providers; (16) our ability to successfully achieve the anticipated cost reductions from branch consolidations and any higher than anticipated costs or delays in implementing the consolidation plan; (17) changes in laws and regulations (including those concerning banking, taxes, dividends, securities, insurance, and healthcare) with which we and our subsidiaries must comply, including recent and potential legislative and regulatory changes in response to the COVID-19 pandemic such as the CARES Act and the rules and regulations that may be promulgated thereunder; (18) the effect of changes in accounting policies and practices applicable to us, including changes in our allowance for loan and lease losses and other impacts of recently adopted accounting guidance regarding the recognition of credit losses; (19) legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews; (20) our ability to appropriately address social, environmental, and sustainability concerns that may arise from our business activities; and (21) 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 CORPORATIONSelected Financial Highlights (unaudited)


At or for the Three Months Ended
(In thousands, except per share data)
March 31, 2021


December 31, 2020


September 30, 2020


June 30, 2020


March 31, 2020




















Income and performance ratios:


















Net income $ 108,078

$ 60,044

$ 69,281

$ 53,097

$ 38,199
Earnings applicable to common shareholders
105,530


57,715


66,890


50,729


36,021
Earnings per diluted common share
1.17


0.64


0.75


0.57


0.39
Return on average assets
1.31 %

0.73 %

0.84 %

0.65 %

0.50 %
Return on average tangible common shareholders' equity (non-GAAP)
16.79


9.31


10.91


8.47


5.95
Return on average common shareholders' equity
13.65


7.51


8.80


6.79


4.75
Non-interest income as a percentage of total revenue
25.54


26.14


25.50


21.12


24.12




















Asset quality:


















Allowance for credit losses on loans and leases $ 328,351

$ 359,431

$ 369,811

$ 358,522

$ 334,931
Nonperforming assets
152,808


170,314


167,314


178,381


169,120
Allowance for credit losses on loans and leases / total loans and leases
1.54 %

1.66 %

1.69 %

1.64 %

1.60 %
Net charge-offs / average loans and leases (annualized)
0.10


0.17


0.21


0.30


0.15
Nonperforming loans and leases / total loans and leases
0.71


0.78


0.74


0.79


0.78
Nonperforming assets / total loans and leases plus OREO
0.72


0.79


0.77


0.82


0.81
Allowance for credit losses on loans and leases / nonperforming loans and leases
218.29


213.94


227.39


207.17


206.37




















Other ratios:


















Tangible equity (non-GAAP)
8.30 %

8.35 %

8.19 %

8.14 %

8.14 %
Tangible common equity (non-GAAP)
7.85


7.90


7.75


7.69


7.67
Tier 1 risk-based capital (a)
12.55


11.99


11.88


11.82


11.60
Total risk-based capital (a)
14.09


13.59


13.47


13.42


13.10
Common equity tier 1 risk-based capital (a)
11.89


11.35


11.23


11.17


10.95
Shareholders' equity / total assets
9.84


9.92


9.76


9.71


9.76
Net interest margin
2.92


2.83


2.88


2.99


3.23
Efficiency ratio (non-GAAP)
58.46


60.27


59.99


60.04


58.03




















Equity and share related:


















Common equity $ 3,127,891

$ 3,089,588

$ 3,074,653

$ 3,029,742

$ 2,945,205
Book value per common share
34.60


34.25


34.09


33.59


32.66
Tangible book value per common share (non-GAAP)
28.41


28.04


27.86


27.40


26.46
Common stock closing price
55.11


42.15


26.41


28.61


22.90
Dividends declared per common share
0.40


0.40


0.40


0.40


0.40
Common shares issued and outstanding
90,410


90,199


90,204


90,194


90,172
Weighted-average common shares outstanding - Basic
89,809


89,645


89,630


89,485


90,936
Weighted-average common shares outstanding - Diluted
90,108


89,915


89,738


89,570


91,206




















(a) Presented as projected for March 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 as of March 31, 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 CORPORATIONConsolidated Balance Sheets (unaudited)
(In thousands)
March 31, 2021


December 31, 2020


March 31, 2020
Assets:









Cash and due from banks $ 160,703

$ 193,501

$ 198,458
Interest-bearing deposits
1,210,958


69,603


69,482
Securities:









Available for sale
3,313,980


3,326,776


3,016,631
Held to maturity
5,568,093


5,568,188


5,486,206
Total securities
8,882,073


8,894,964


8,502,837
Allowance for credit losses on investment securities held-to-maturity
(308)


(299)


(312)
Securities, net
8,881,765


8,894,665


8,502,525
Loans held for sale
17,262


14,012


22,448
Loans and Leases:









Commercial
8,437,487


8,577,898


7,565,947
Commercial real estate
6,338,056


6,322,637


6,122,474
Residential mortgages
4,668,945


4,782,016


4,991,512
Consumer
1,856,895


1,958,664


2,211,591
Total loans and leases
21,301,383


21,641,215


20,891,524
Allowance for credit losses on loans and leases
(328,351)


(359,431)


(334,931)
Loans and leases, net
20,973,032


21,281,784


20,556,593
Federal Home Loan Bank and Federal Reserve Bank stock
77,674


77,594


141,327
Premises and equipment, net
220,982


226,743


268,420
Goodwill and other intangible assets, net
559,617


560,756


559,328
Cash surrender value of life insurance policies
567,298


564,195


554,231
Deferred tax asset, net
80,235


81,286


80,318
Accrued interest receivable and other assets
509,511


626,551


701,744
Total Assets $ 33,259,037

$ 32,590,690

$ 31,654,874











Liabilities and Shareholders' Equity:









Deposits:









Demand $ 6,680,114

$ 6,155,592

$ 4,883,436
Health savings accounts
7,455,181


7,120,017


6,736,178
Interest-bearing checking
3,792,309


3,652,763


3,007,069
Money market
3,015,565


2,940,215


2,477,304
Savings
5,304,532


4,979,031


4,418,689
Certificates of deposit
2,234,133


2,487,818


2,891,161
Brokered certificates of deposit
-


-


100,000
Total deposits
28,481,834


27,335,436


24,513,837
Securities sold under agreements to repurchase and other borrowings
498,378


995,355


1,262,749
Federal Home Loan Bank advances
138,554


133,164


1,773,399
Long-term debt
566,480


567,663


571,212
Accrued expenses and other liabilities
300,863


324,447


443,435
Total liabilities
29,986,109


29,356,065


28,564,632
Preferred stock
145,037


145,037


145,037
Common shareholders' equity
3,127,891


3,089,588


2,945,205
Total shareholders' equity
3,272,928


3,234,625


3,090,242
Total Liabilities and Shareholders' Equity $ 33,259,037

$ 32,590,690

$ 31,654,874











 

WEBSTER FINANCIAL CORPORATIONConsolidated Statements of Income (unaudited)






Three Months Ended March 31,
(In thousands, except per share data)








2021


2020
Interest income:













Interest and fees on loans and leases







$ 190,536

$ 216,187
Interest and dividends on securities








44,947


58,108
Loans held for sale








91


175
Total interest income








235,574


274,470
Interest expense:













Deposits








6,439


27,843
Borrowings








5,371


15,826
Total interest expense








11,810


43,669
Net interest income








223,764


230,801
Provision for credit losses








(25,750)


76,000
Net interest income after provision for loan and lease losses








249,514


154,801
Non-interest income:













Deposit service fees








40,469


42,570
Loan and lease related fees








8,313


6,496
Wealth and investment services








9,403


8,739
Mortgage banking activities








2,642


2,893
Increase in cash surrender value of life insurance policies








3,533


3,580
Gain on investment securities, net








-


8
Other income








12,397


9,092
Total non-interest income








76,757


73,378
Non-interest expense:













Compensation and benefits








107,600


101,887
Occupancy








15,650


14,485
Technology and equipment








28,516


27,837
Marketing








2,504


3,502
Professional and outside services








9,776


5,663
Intangible assets amortization








1,139


962
Loan workout expenses








394


493
Deposit insurance








3,956


4,725
Other expenses








18,447


19,282
Total non-interest expense








187,982


178,836
Income before income taxes








138,289


49,343
Income tax expense








30,211


11,144
Net income








108,078


38,199
Preferred stock dividends and other








(2,548)


(2,178)
Earnings applicable to common shareholders







$ 105,530

$ 36,021















Weighted-average common shares outstanding - Diluted








90,108


91,206















Earnings per common share:













Basic







$ 1.18

$ 0.40
Diluted








1.17


0.39















WEBSTER FINANCIAL CORPORATIONFive Quarter Consolidated Statements of Income (unaudited)


Three Months Ended
(In thousands, except per share data)
March 31, 2021


December 31, 2020


September 30, 2020


June 30, 2020


March 31, 2020
Interest income:

















Interest and fees on loans and leases $ 190,536

$ 189,010

$ 188,001

$ 196,521

$ 216,187
Interest and dividends on securities
44,947


46,874


51,009


55,570


58,108
Loans held for sale
91


181


229


184


175
Total interest income
235,574


236,065


239,239


252,275


274,470
Interest expense:

















Deposits
6,439


8,651


12,598


18,805


27,843
Borrowings
5,371


10,485


7,385


9,063


15,826
Total interest expense
11,810


19,136


19,983


27,868


43,669
Net interest income
223,764


216,929


219,256


224,407


230,801
Provision for credit losses
(25,750)


(1,000)


22,750


40,000


76,000
Net interest income after provision for loan and lease losses
249,514


217,929


196,506


184,407


154,801
Non-interest income:

















Deposit service fees
40,469


38,345


39,278


35,839


42,570
Loan and lease related fees
8,313


9,095


6,568


6,968


6,496
Wealth and investment services
9,403


8,820


8,255


7,102


8,739
Mortgage banking activities
2,642


4,110


7,087


4,205


2,893
Increase in cash surrender value of life insurance policies
3,533


3,662


3,695


3,624


3,580
Gain on investment securities, net
-


-


-


-


8
Other income
12,397


12,731


10,177


2,338


9,092
Total non-interest income
76,757


76,763


75,060


60,076


73,378
Non-interest expense:

















Compensation and benefits
107,600


122,754


104,019


99,731


101,887
Occupancy
15,650


28,024


14,275


14,245


14,485
Technology and equipment
28,516


29,122


27,846


27,468


27,837
Marketing
2,504


3,485


3,852


3,286


3,502
Professional and outside services
9,776


11,380


9,223


6,158


5,663
Intangible assets amortization
1,139


1,147


1,089


962


962
Loan workout expenses
394


261


612


392


493
Deposit insurance
3,956


4,372


4,204


5,015


4,725
Other expenses
18,447


18,985


18,876


19,327


19,282
Total non-interest expense
187,982


219,530


183,996


176,584


178,836
Income before income taxes
138,289


75,162


87,570


67,899


49,343
Income tax expense
30,211


15,118


18,289


14,802


11,144
Net income
108,078


60,044


69,281


53,097


38,199
Preferred stock dividends and other
(2,548)


(2,329)


(2,391)


(2,368)


(2,178)
Earnings applicable to common shareholders $ 105,530

$ 57,715

$ 66,890

$ 50,729

$ 36,021



















Weighted-average common shares outstanding - Diluted
90,108


89,915


89,738


89,570


91,206



















Earnings per common share:

















Basic $ 1.18

$ 0.64

$ 0.75

$ 0.57

$ 0.40
Diluted
1.17


0.64


0.75


0.57


0.39

 

WEBSTER FINANCIAL CORPORATIONConsolidated Average Balances, Interest, Yields and Rates, and Net Interest Margin on a Fully Tax-equivalent Basis (unaudited)


Three Months Ended March 31,


2021






2020
(Dollars in thousands)
Average balance


Interest


Yield/rate






Average balance

Interest
Yield/rate
Assets:























Interest-earning assets:























Loans and leases $ 21,481,320

$ 191,288


3.57 %




$ 20,324,799
$ 216,918
4.24 %
Investment securities (a)
8,890,075


46,277


2.12






8,319,747

58,408
2.85
Federal Home Loan and Federal Reserve Bank stock
77,632


237


1.24






126,364

1,251
3.98
Interest-bearing deposits (b)
680,367


176


0.10






68,307

191
1.11
Loans held for sale
14,351


91


2.54






22,297

175
3.14
Total interest-earning assets
31,143,745

$ 238,069


3.08 %





28,861,514
$ 276,943
3.84 %
Non-interest-earning assets
1,982,315














1,930,996





Total Assets $ 33,126,060













$ 30,792,510






























Liabilities and Shareholders' Equity:























Interest-bearing liabilities:























Demand deposits $ 6,436,858

$ -


- %




$ 4,516,906
$ -
- %
Health savings accounts
7,451,175


1,607


0.09






6,761,358

3,296
0.20
Interest-bearing checking, money market and savings
11,995,473


1,720


0.06






9,716,974

12,403
0.51
Certificates of deposit
2,371,026


3,112


0.53






3,067,557

12,144
1.59
Total deposits
28,254,532


6,439


0.09






24,062,795

27,843
0.47

























Securities sold under agreements to repurchase and other borrowings
522,728


635


0.49






1,296,925

3,730
1.14
Federal Home Loan Bank advances
135,787


513


1.51






1,325,899

6,869
2.05
Long-term debt (a)
567,058


4,223


3.23






551,250

5,227
4.00
Total borrowings
1,225,573


5,371


1.82






3,174,074

15,826
2.00
Total interest-bearing liabilities
29,480,105

$ 11,810


0.16 %





27,236,869
$ 43,669
0.64 %
Non-interest-bearing liabilities
391,752














362,116





Total liabilities
29,871,857














27,598,985






























Preferred stock
145,037














145,037





Common shareholders' equity
3,109,166














3,048,488





Total shareholders' equity
3,254,203














3,193,525





Total Liabilities and Shareholders' Equity $ 33,126,060













$ 30,792,510





Tax-equivalent net interest income




226,259













233,274


Less: tax-equivalent adjustments




(2,495)













(2,473)


Net interest income



$ 223,764












$ 230,801


Net interest margin








2.92 %










3.23 %

























(a) For purposes of the yield/rate computation, unrealized gain (loss) balances on securities available for sale and senior fixed-rate notes hedges are excluded.
(b) Interest-bearing deposits is a component of cash and cash equivalents.

 

WEBSTER FINANCIAL CORPORATIONFive Quarter Loan and Lease Balances (unaudited)
(Dollars in thousands)
March 31, 2021


December 31, 2020


September 30, 2020


June 30, 2020


March 31, 2020
Loan and Lease Balances (actual):

















Commercial non-mortgage $ 7,530,066

$ 7,687,300

$ 7,722,838

$ 7,606,245

$ 6,385,619
Asset-based lending
907,421


890,598


889,711


940,524


1,180,328
Commercial real estate
6,338,056


6,322,637


6,307,567


6,207,314


6,122,474
Residential mortgages
4,668,945


4,782,016


4,885,821


4,921,573


4,991,512
Consumer
1,856,895


1,958,664


2,046,086


2,126,861


2,211,591
Total Loan and Lease Balances
21,301,383


21,641,215


21,852,023


21,802,517


20,891,524
Allowance for credit losses on loans and leases
(328,351)


(359,431)


(369,811)


(358,522)


(334,931)
Loans and Leases, net $ 20,973,032

$ 21,281,784

$ 21,482,212

$ 21,443,995

$ 20,556,593



















Loan and Lease Balances (average):

















Commercial non-mortgage $ 7,650,367

$ 7,662,828

$ 7,683,879

$ 7,318,814

$ 6,005,501
Asset-based lending
896,093


874,221


922,653


1,030,928


1,085,624
Commercial real estate
6,303,765


6,363,776


6,260,114


6,136,091


5,996,728
Residential mortgages
4,720,703


4,821,199


4,914,368


4,946,746


5,013,888
Consumer
1,910,392


2,007,226


2,089,726


2,176,335


2,223,058
Total Loan and Lease Balances
21,481,320


21,729,250


21,870,740


21,608,914


20,324,799
Allowance for credit losses on loans and leases
(364,358)


(375,080)


(363,552)


(340,050)


(269,273)
Loans and Leases, net $ 21,116,962

$ 21,354,170

$ 21,507,188

$ 21,268,864

$ 20,055,526

WEBSTER FINANCIAL CORPORATIONFive Quarter Nonperforming Assets and Past Due Loans and Leases (unaudited)
(Dollars in thousands)
March 31, 2021


December 31, 2020


September 30, 2020


June 30, 2020


March 31, 2020
Nonperforming loans and leases:

















Commercial non-mortgage $ 60,103


71,499


75,080


75,340


74,077
Asset-based lending
2,430


2,622


3,789


138


137
Commercial real estate
13,743


21,222


8,784


15,889


12,901
Residential mortgages
42,708


41,033


41,498


46,500


42,393
Consumer
31,437


31,629


33,485


35,187


32,785
Total nonperforming loans and leases $ 150,421

$ 168,005

$ 162,636

$ 173,054

$ 162,293



















Other real estate owned and repossessed assets:

















Commercial non-mortgage $ 102


175


175


272


121
Residential mortgages
1,695


1,544


3,899


3,081


4,480
Consumer
590


590


604


1,974


2,226
Total other real estate owned and repossessed assets $ 2,387

$ 2,309

$ 4,678

$ 5,327

$ 6,827
Total nonperforming assets $ 152,808

$ 170,314

$ 167,314

$ 178,381

$ 169,120

Past due 30-89 days:

















Commercial non-mortgage $ 7,395

$ 8,918

$ 3,821

$ 13,959

$ 8,200
Asset-based lending
-


1,175


-


-


-
Commercial real estate
699


3,003


329


2,363


2,217
Residential mortgages
5,241


10,623


9,291


15,445


11,814
Consumer
7,036


8,720


8,349


7,857


14,666
Total past due 30-89 days
20,371


32,439


21,790


39,624


36,897
Past due 90 days or more and accruing
50


445


-


198


75
Total past due loans and leases $ 20,421

$ 32,884

$ 21,790

$ 39,822

$ 36,972

 

WEBSTER FINANCIAL CORPORATIONFive Quarter Changes in the Allowance for Credit Losses on Loans and Leases (unaudited)


For the Three Months Ended
(Dollars in thousands)
March 31, 2021


December 31, 2020


September 30, 2020


June 30, 2020


March 31, 2020
Beginning balance $ 359,431

$ 369,811

$ 358,522

$ 334,931

$ 209,096
Adoption of ASU No. 2016-13
-


-


-


-


57,568
Provision
(25,759)


(992)


22,753


40,003


76,085
Charge-offs:

















Commercial non-mortgage
1,164


7,876


12,085


15,294


5,544
Asset-based lending
-


-


10


-


-
Commercial real estate
5,157


688


1,399


-


30
Residential mortgages
380


105


546


194


1,511
Consumer
2,594


2,673


1,717


2,586


3,076
Total charge-offs
9,295


11,342


15,757


18,074


10,161
Recoveries:

















Commercial non-mortgage
209


232


1,978


271


558
Asset-based lending
1,424


33


-


10


3
Commercial real estate
3


3


47


2


3
Residential mortgages
1,158


190


521


83


235
Consumer
1,180


1,496


1,747


1,296


1,544
Total recoveries
3,974


1,954


4,293


1,662


2,343
Total net charge-offs
5,321


9,388


11,464


16,412


7,818
Ending balance $ 328,351

$ 359,431

$ 369,811

$ 358,522

$ 334,931



















 

WEBSTER FINANCIAL CORPORATIONReconciliations to GAAP Financial Measures