Webster Financial Corporation (“Webster”) (NYSE: WBS), the
holding company for Webster Bank, N.A., today announced net income
available to common stockholders of $177.5 million, or $1.03 per
diluted share, for the quarter ended June 30, 2024, compared to
$230.8 million, or $1.32 per diluted share, for the quarter ended
June 30, 2023.
Second quarter 2024 results include $49.9 million pre-tax ($38.7
million after tax), or $0.231 per diluted share, of net securities
repositioning losses. Excluding this item, adjusted earnings per
diluted share would have been $1.261 for the quarter ended June 30,
2024.
“Webster continues to generate steady balance sheet growth in a
challenging environment,” said John R. Ciulla, chairman and chief
executive officer. “Our ability to grow loans, deposits, and
interest income is facilitated by the diversity of our asset
generation and funding sources.”
Highlights for the second quarter of 2024:
- Revenue of $614.6 million.
- Period end loan and lease balance of $51.6 billion, up $0.5
billion or 0.9 percent from prior quarter; consisting of 81.0
percent commercial loans and leases, 19.0 percent consumer loans,
and a loan to deposit ratio of 82.8 percent.
- Period end deposit balance of $62.3 billion, up $1.5 billion or
2.5 percent from prior quarter; core deposit growth of $0.7 billion
from prior quarter.
- Provision for credit losses of $59.0 million.
- Return on average assets of 0.96 percent; adjusted 1.16
percent1.
- Return on average tangible common equity of 14.17 percent1;
adjusted 17.15 percent1.
- Net interest margin of 3.32 percent, down 3 basis points from
prior quarter.
- Common equity tier 1 ratio of 10.62 percent.
- Efficiency ratio of 46.22 percent1.
- Tangible common equity ratio of 7.18 percent1.
“Webster’s strong capital position, earnings power, and
operating efficiency provide us unique opportunities in managing
our business,” said Glenn MacInnes, executive vice president and
chief financial officer. “Of note this quarter were a securities
portfolio repositioning and the announcement of a private credit
joint venture.”
1 See “Non-GAAP to GAAP Reconciliations” section beginning on
page 19.
Commercial Banking
Webster’s Commercial Banking segment serves businesses that have
more than $10 million of revenue through its regional banking,
middle market, asset-based lending, equipment finance, commercial
real estate, sponsor finance, private banking, and treasury
services business units. At June 30, 2024, Commercial Banking had
$40.3 billion in loans and leases and $15.5 billion in deposits, as
well as a combined $2.9 billion in assets under administration and
management.
Commercial Banking Operating Results:
Percent
Three months ended June 30,
Favorable/
(In thousands)
2024
2023
(Unfavorable)
Net interest income
$
337,588
$
359,378
(6.1
)%
Non-interest income
34,510
30,030
14.9
Operating revenue
372,098
389,408
(4.4
)
Non-interest expense
104,588
100,074
(4.5
)
Pre-tax, pre-provision net revenue
$
267,510
$
289,334
(7.5
)
Percent
At June 30,
Increase/
(In millions)
2024
2023
(Decrease)
Loans and leases
$
40,331
$
40,477
(0.4
)%
Deposits
15,464
16,033
(3.5
)
AUA / AUM (off balance sheet)
2,948
2,757
6.9
Pre-tax, pre-provision net revenue decreased $21.8 million, to
$267.5 million, in the quarter as compared to prior year. Net
interest income decreased $21.8 million, to $337.6 million,
primarily driven by higher loan yields offset by higher deposit
rates and lower deposit balances. Non-interest income increased
$4.5 million, to $34.5 million, primarily driven by increases in
cash management fees, customer interest rate hedging activities,
and other income. Non-interest expense increased $4.5 million, to
$104.6 million, primarily resulting from continued investments in
talent, operational support, and technology.
Healthcare Financial Services
Webster’s Healthcare Financial Services segment is comprised of
HSA Bank and the Ametros business. This segment offers
consumer-directed healthcare solutions that include health savings
accounts, health reimbursement arrangements, administration of
medical insurance claim settlements, flexible spending accounts and
commuter benefits. Accounts are distributed nationwide directly to
employers and individual consumers, as well as through national and
regional insurance carriers, benefit consultants, and financial
advisors. At June 30, 2024, Healthcare Financial Services had $14.9
billion in total footings comprising $9.4 billion in deposits and
$5.5 billion in assets under administration through linked
investment accounts.
Healthcare Financial Services Operating Results:
Percent
Three months ended June 30,
Favorable/
(In thousands)
2024
2023
(Unfavorable)
Net interest income
$
91,664
$
75,421
21.5
%
Non-interest income
27,465
23,023
19.3
Operating revenue
119,129
98,444
21.0
Non-interest expense
51,267
42,643
(20.2
)
Pre-tax, net revenue
$
67,862
$
55,801
21.6
At June 30,
Percent
(Dollars in millions)
2024
2023
Increase
Number of accounts (thousands)
3,337
3,177
5.0
%
Deposits
$
9,392
$
8,208
14.4
Linked investment accounts (off balance
sheet)
5,522
4,123
33.9
Total footings
$
14,914
$
12,331
20.9
Pre-tax net revenue increased $12.1 million, to $67.9 million,
in the quarter as compared to prior year. The increase in pre-tax
net revenue was partially attributable to the addition of Ametros
in the first quarter of 2024. Net interest income increased $16.3
million, to $91.7 million, primarily due to $11.3 million from
Ametros and an increase in net deposit spread coupled with deposit
growth at HSA Bank. Non-interest income increased $4.5 million, to
$27.5 million, primarily due to $5.4 million from Ametros, offset
by a decrease of $0.9 million from HSA Bank. The decrease in HSA
Bank was the net result of lower customer account fees partially
offset by higher interchange revenue. Non-interest expense
increased $8.7 million, to $51.3 million, primarily due to $11.3
million from Ametros. HSA Bank expenses were $2.6 million lower as
lower occupancy expense was offset by higher compensation and
benefits expense, and service contract expense related to account
growth.
Consumer Banking
Webster’s Consumer Banking segment serves consumer and business
banking customers primarily throughout southern New England and the
New York metro and suburban markets. Consumer Banking is comprised
of the consumer lending and business banking business units, as
well as a distribution network consisting of 196 banking centers
and 347 ATMs, a customer care center, and a full range of web and
mobile-based banking services. Additionally, Webster Investments
provides investment services to consumers and small business owners
within Webster’s targeted markets and retail footprint. At June 30,
2024, Consumer Banking had $11.2 billion in loans and $27.1 billion
in deposits, as well as $8.0 billion in assets under
administration.
Consumer Banking Operating Results:
Percent
Three months ended June 30,
Favorable/
(In thousands)
2024
2023
(Unfavorable)
Net interest income
$
202,679
$
228,683
(11.4
)%
Non-interest income
24,392
31,102
(21.6
)
Operating revenue
227,071
259,785
(12.6
)
Non-interest expense
115,905
119,388
2.9
Pre-tax, pre-provision net revenue
$
111,166
$
140,397
(20.8
)
At June 30,
Percent
(In millions)
2024
2023
Increase
Loans
$
11,239
$
11,124
1.0
%
Deposits
27,108
26,191
3.5
AUA (off balance sheet)
7,976
7,848
1.6
Pre-tax, pre-provision net revenue decreased $29.2 million, to
$111.2 million, in the quarter as compared to prior year. Net
interest income decreased $26.0 million, to $202.7 million,
primarily driven by higher rates paid on deposits, partially offset
by loan and deposit growth. Non-interest income decreased $6.7
million, to $24.4 million, primarily driven by lower deposit
service fees and loan related fees. Non-interest expense decreased
$3.5 million, to $115.9 million, primarily driven by reduced
occupancy and technology expenses.
Consolidated financial
performance:
Quarterly net interest income compared to the second quarter
of 2023:
- Net interest income was $572.3 million compared to $583.8
million.
- Net interest margin was 3.32 percent compared to 3.35 percent.
The yield on interest-earning assets increased by 33 basis points,
and the cost of interest-bearing liabilities increased by 39 basis
points.
- Average interest-earning assets totaled $68.9 billion and
decreased by $1.2 billion, or 1.8 percent.
- Average loans and leases totaled $51.4 billion and increased by
$0.3 billion, or 0.5 percent.
- Average deposits totaled $61.7 billion and increased by $3.1
billion, or 5.4 percent.
Quarterly provision for credit losses:
- The provision for credit losses was $59.0 million in the
quarter, contributing to a $27.9 million increase in the allowance
for credit losses on loans and leases from the prior quarter. The
provision also contributed to a decrease in the reserve on unfunded
loan commitments of $2.0 million. The provision for credit losses
was $45.5 million in the prior quarter, and $31.5 million a year
ago.
- Net charge-offs were $33.1 million, compared to $37.5 million
in the prior quarter, and $20.3 million a year ago. The ratio of
net charge-offs to average loans and leases was 0.26 percent,
compared to 0.29 percent in the prior quarter, and 0.16 percent a
year ago.
- The allowance for credit losses on loans and leases represented
1.30 percent of total loans and leases, compared to 1.26 percent at
March 31, 2024, and 1.22 percent at June 30, 2023. The allowance
represented 181 percent of nonperforming loans and leases at June
30, 2024, compared to 226 percent at March 31, 2024, and 287
percent at June 30, 2023.
Quarterly non-interest income compared to the second quarter
of 2023:
- Total non-interest income was $42.3 million compared to $89.4
million, a decrease of $47.1 million. Total non-interest income
includes a $49.9 million net loss on the sale of investment
securities. Excluding this item, total non-interest income
increased $2.8 million. The increase is primarily attributable to
the addition of Ametros and an increase in other income, partially
offset by lower deposit and loan servicing fees.
Quarterly non-interest expense compared to the second quarter
of 2023:
- Total non-interest expense was $326.0 million compared to
$344.1 million, an decrease of $18.1 million. Total non-interest
expense in the year ago period includes $40.8 million of Sterling
merger charges. Excluding those charges, total non-interest expense
increased $22.7 million. The increase is primarily attributable to
the addition of Ametros, higher compensation, increases in
performance-based incentive accruals, and investments in
technology.
Quarterly income taxes compared to the second quarter of
2023:
- Income tax expense was $47.9 million compared to $62.6 million,
and the effective tax rate was 20.9 percent compared to 21.0
percent.
Investment securities:
- Total investment securities, net were $16.4 billion, compared
to $16.3 billion at March 31, 2024, and $14.7 billion at June 30,
2023. The carrying value of the available-for-sale portfolio
included $772.2 million of net unrealized losses, compared to
$758.5 million at March 31, 2024, and $883.0 million at June 30,
2023. The carrying value of the held-to-maturity portfolio does not
reflect $964.5 million of net unrealized losses, compared to $897.2
million at March 31, 2024, and $877.3 million at June 30,
2023.
Loans and leases:
- Total loans and leases were $51.6 billion, compared to $51.1
billion at March 31, 2024, and $51.6 billion at June 30, 2023.
Compared to March 31, 2024, commercial real estate loans increased
by $408.3 million, residential mortgages increased by $58.1
million, commercial loans and leases increased by $23.4 million,
and consumer loans decreased by $15.1 million.
- Compared to a year ago, commercial loans and leases decreased
by $1.7 billion, commercial real estate loans increased by $1.6
billion, residential mortgages increased by $144.1 million, and
consumer loans decreased by $88.5 million.
- Loan originations for the portfolio were $3.0 billion, compared
to $2.5 billion in both the prior quarter, and a year ago. In
addition, $0.8 million of residential loans were originated for
sale in the quarter, compared to $2.9 million in the prior quarter,
and $5.7 million a year ago.
Asset quality:
- Total nonperforming loans and leases were $368.8 million, or
0.72 percent of total loans and leases, compared to $283.6 million,
or 0.56 percent of total loans and leases, at March 31, 2024, and
$218.9 million, or 0.42 percent of total loans and leases, at June
30, 2023.
- Past due loans and leases were $166.3 million, compared to
$125.2 million at March 31, 2024, and $51.4 million at June 30,
2023. The increase from prior quarter is driven primarily by
commercial non-mortgage, partially offset by commercial real estate
and residential mortgages.
Deposits and borrowings:
- Total deposits were $62.3 billion, compared to $60.7 billion at
March 31, 2024, and $58.7 billion at June 30, 2023. Core deposits
to total deposits1 were 87.5 percent, compared to 88.6 percent at
March 31, 2024, and 87.6 percent at June 30, 2023. The loan to
deposit ratio was 82.8 percent, compared to 84.1 percent at March
31, 2024, and 87.9 percent at June 30, 2023.
- Total borrowings were $4.0 billion, compared to $4.9 billion at
March 31, 2024, and $5.6 billion at June 30, 2023.
Capital:
- The return on average common stockholders’ equity and the
return on average tangible common stockholders’ equity1 were 8.40
percent and 14.17 percent, respectively, compared to 11.38 percent
and 18.12 percent, respectively, in the second quarter of
2023.
- The tangible equity1 and tangible common equity1 ratios were
7.56 percent and 7.18 percent, respectively, compared to 7.62
percent and 7.23 percent, respectively, at June 30, 2023. The
common equity tier 1 ratio was 10.62 percent at June 30, 2024,
compared to 10.65 percent at June 30, 2023.
- Book value and tangible book value per common share1 were
$49.74 and $30.82, respectively, compared to $46.15 and $29.69,
respectively, at June 30, 2023.
1 See “Non-GAAP to GAAP Reconciliations” section beginning on
page 19.
Webster Financial Corporation (NYSE:WBS) is the holding
company for Webster Bank, N.A. Webster is a leading commercial bank
in the Northeast that provides a wide range of digital and
traditional financial solutions across three differentiated lines
of business: Commercial Banking, Consumer Banking and Healthcare
Financial Services, one of the country’s largest providers of
employee benefits and administration of medical insurance claim
settlements solutions. Headquartered in Stamford, CT, Webster is a
values-driven organization with $77 billion in assets. Its core
footprint spans the northeastern U.S. from New York to
Massachusetts, with certain businesses operating in extended
geographies. 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 2024
earnings announcement will be held today, Tuesday, July 23, 2024 at
9:00 a.m. Eastern Time. To listen to the live call, please dial
888-330-2446, or 240-789-2732 for international callers. The
passcode is 8607257. The webcast, along with related slides, will
be available via Webster’s Investor Relations website at
investors.websterbank.com. A replay of the conference call will be
available for one week via the website listed above, beginning at
approximately 12:00 noon (Eastern) on July 23, 2024. To access the
replay, dial 800-770-2030, or 609-800-9909 for international
callers. The replay conference ID number is 8607257.
Forward-Looking
Statements
This release contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995.
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,
these words are not the exclusive means of identifying such
statements. Examples of forward-looking statements include, but are
not limited to: projections of revenues, expenses, expense savings,
income or loss, earnings or loss per share, and other financial
items; statements of plans, objectives, and expectations of Webster
or its management or Board of Directors; statements of future
economic performance; and 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 Webster’s actual results to differ from those discussed in
any forward-looking statements include, but are not limited to:
Webster’s ability to successfully execute its business plan and
strategic initiatives, and manage any risks or uncertainties;
continued regulatory changes or other mitigation efforts taken by
government agencies in response to volatility in the banking
industry, including due to the bank failures in 2023; volatility in
Webster’s stock price due to investor sentiment and turmoil in the
banking industry; local, regional, national, and international
economic conditions, and the impact they may have on Webster or its
customers; volatility and disruption in national and international
financial markets, including as a result of geopolitical conflict;
the impact of unrealized losses in Webster’s available-for-sale
securities portfolio; changes in laws and regulations, or existing
laws and regulations that Webster becomes subject to, including
those concerning banking, taxes, dividends, securities, insurance,
and healthcare administration, with which Webster and its
subsidiaries must comply; adverse conditions in the securities
markets that could lead to impairment in the value of Webster’s
securities portfolio; inflation, monetary fluctuations, and changes
in interest rates, including the impact of such changes on economic
conditions, customer behavior, funding costs, and Webster’s loans
and leases and securities portfolios; possible changes in
governmental monetary and fiscal policies, including, but not
limited to, the Federal Reserve policies in connection with
continued inflationary pressures and the impact of the 2024 U.S.
presidential election; the timely development and acceptance of new
products and services, and the perceived value of those products
and services by customers; changes in deposit flows, consumer
spending, borrowings, and savings habits; Webster’s ability to
implement new technologies and maintain secure and reliable
information and technology systems; the effects of any
cybersecurity threats, attacks or events, or fraudulent activity,
including those that involve Webster’s third-party vendors and
service providers; performance by Webster’s counterparties and
third-party vendors; Webster’s ability to increase market share and
control expenses; changes in the competitive environment among
banks, financial holding companies, and other traditional and
non-traditional financial service providers; Webster’s ability to
maintain adequate sources of funding and liquidity; changes in loan
demand or real estate values; changes in the mix of loan
geographies, sectors, or types and the level of nonperforming
assets, charge-offs, and delinquencies; changes in estimates of
future reserve requirements based upon periodic review under
relevant regulatory and accounting requirements; insufficient
allowance for credit losses; the effect of changes in accounting
policies and practices applicable to Webster, including the impacts
of recently adopted accounting guidance; legal and regulatory
developments, including the resolution of legal proceedings or
regulatory or other governmental inquiries, and the results of
regulatory examinations or reviews; Webster’s ability to navigate
any environmental, social, governmental, and sustainability
concerns of different stakeholders and activists that may arise
from its business activities; Webster’s ability to assess and
monitor the effect of artificial intelligence on its business and
operations; unforeseen events, such as pandemics or natural
disasters, and any governmental or societal responses thereto; and
the other factors that are described in Webster’s Annual Report on
Form 10-K for the year ended December 31, 2023, and Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K. Any
forward-looking statement made by Webster in this release speaks
only as of the date on which it is made. Factors or events that
could cause Webster’s actual results to differ may emerge from time
to time, and it is not possible for Webster to predict all of them.
Webster 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, return on average tangible common
stockholders’ equity, and other performance ratios, in each case as
adjusted, is included in the accompanying selected financial
highlights table.
Webster believes that providing certain non-GAAP financial
measures provides investors with information useful in
understanding its financial performance, performance trends, and
financial position. Webster utilizes these measures for internal
planning and forecasting purposes. Webster, as well as securities
analysts, investors, and other interested parties, also use these
measures to compare peer company operating performance. Webster
believes that its presentation and discussion, together with the
accompanying reconciliations, provides additional clarity of
factors and trends affecting its business and allows investors to
view performance in a manner similar to management.
The efficiency ratio, which represents the costs expended to
generate a dollar of revenue, is calculated excluding certain
non-operational items. The return on average tangible common
stockholders’ equity (ROATCE) represents net income available to
common stockholders, adjusted for the tax-effected amortization of
intangible assets, as a percentage of average stockholders’ equity
less average preferred stock and average goodwill and net
intangible assets. The tangible equity ratio represents
stockholders’ equity less goodwill and net intangible assets
divided by total assets less goodwill and net intangible assets.
The tangible common equity ratio represents stockholders’ equity
less preferred stock and goodwill and net intangible assets divided
by total assets less goodwill and net intangible assets. Tangible
book value per common share represents stockholders’ equity less
preferred stock and goodwill and net intangible assets divided by
common shares outstanding at the end of the period. Core deposits
reflect total deposits less certificates of deposit and brokered
certificates of deposit. Adjusted pre-tax net income, adjusted net
income available to common stockholders, adjusted diluted earnings
per share (EPS), adjusted ROATCE, and adjusted return on average
assets (ROAA) are calculated excluding a net loss on sale of
investment securities, which has been tax-effected.
These non-GAAP measures should not be considered a substitute
for GAAP basis measures and results, and Webster strongly
encourages investors to review its 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.
Refer the tables on page 19 for Non-GAAP to GAAP
reconciliations.
WEBSTER FINANCIAL CORPORATION Selected
Financial Highlights (unaudited)
At or for the Three Months Ended (In
thousands, except per share data) June 30,2024 March
31,2024 December 31,2023 September 30,2023 June 30,2023
Income and performance ratios: Net income
$
181,633
$
216,323
$
185,393
$
226,475
$
234,968
Net income available to common stockholders
177,471
212,160
181,230
222,313
230,806
Earnings per diluted common share
1.03
1.23
1.05
1.28
1.32
Return on average assets (annualized)
0.96
%
1.15
%
1.01
%
1.23
%
1.23
%
Return on average tangible common stockholders' equity (annualized)
(1)
14.17
16.30
14.49
17.51
18.12
Return on average common stockholders’ equity (annualized)
8.40
10.01
9.03
11.00
11.38
Non-interest income as a percentage of total revenue
6.88
14.89
10.05
13.34
13.28
Asset quality: Allowance for credit losses on loans
and leases
$
669,355
$
641,442
$
635,737
$
635,438
$
628,911
Nonperforming assets
374,884
289,254
218,600
218,402
222,215
Allowance for credit losses on loans and leases / total loans and
leases
1.30
%
1.26
%
1.25
%
1.27
%
1.22
%
Net charge-offs / average loans and leases (annualized)
0.26
0.29
0.27
0.23
0.16
Nonperforming loans and leases / total loans and leases
0.72
0.56
0.41
0.43
0.42
Nonperforming assets / total loans and leases plus other real
estate owned and repossessed assets
0.73
0.57
0.43
0.44
0.43
Allowance for credit losses on loans and leases / nonperforming
loans and leases
181.48
226.17
303.39
295.48
287.35
Other ratios: Tangible equity (1)
7.56
%
7.54
%
8.12
%
7.62
%
7.62
%
Tangible common equity (1)
7.18
7.15
7.73
7.22
7.23
Tier 1 risk-based capital (2)
11.13
11.08
11.62
11.64
11.16
Total risk-based capital (2)
13.28
13.21
13.72
13.79
13.25
Common equity tier 1 risk-based capital (2)
10.62
10.57
11.11
11.12
10.65
Stockholders’ equity / total assets
11.46
11.49
11.60
11.21
11.18
Net interest margin
3.32
3.35
3.42
3.49
3.35
Efficiency ratio (1)
46.22
45.25
43.04
41.75
42.20
Equity and share related: Common equity
$
8,525,289
$
8,463,519
$
8,406,017
$
7,915,222
$
7,995,747
Book value per common share
49.74
49.07
48.87
46.00
46.15
Tangible book value per common share (1)
30.82
30.22
32.39
29.48
29.69
Common stock closing price
43.59
50.77
50.76
40.31
37.75
Dividends declared per common share
0.40
0.40
0.40
0.40
0.40
Common shares issued and outstanding
171,402
172,464
172,022
172,056
173,261
Weighted-average common shares outstanding - Basic
169,675
170,445
170,415
171,210
172,739
Weighted-average common shares outstanding - Diluted
169,937
170,704
170,623
171,350
172,803
(1) See "Non-GAAP to GAAP Reconciliations" section beginning
on page 19. (2) Presented as preliminary for June 30, 2024, and
actual for the remaining periods.
WEBSTER FINANCIAL
CORPORATIONConsolidated Balance Sheets (unaudited) (In thousands) June 30,2024 March 31,2024
June 30,2023
Assets: Cash and due from banks
$
346,868
$
322,041
$
283,623
Interest-bearing deposits
1,188,785
1,223,187
1,077,136
Investment securities: Available-for-sale
7,808,874
8,601,141
7,759,341
Held-to-maturity, net
8,637,654
7,679,891
6,943,784
Total investment securities, net
16,446,528
16,281,032
14,703,125
Loans held for sale
248,137
239,763
10,963
Loans and leases: Commercial
19,492,433
19,469,014
21,217,411
Commercial real estate
22,277,813
21,869,502
20,661,071
Residential mortgages
8,284,297
8,226,154
8,140,182
Consumer
1,518,922
1,533,972
1,607,384
Total loans and leases
51,573,465
51,098,642
51,626,048
Allowance for credit losses on loans and leases
(669,355)
(641,442)
(628,911)
Loans and leases, net
50,904,110
50,457,200
50,997,137
Federal Home Loan Bank and Federal Reserve Bank stock
348,263
381,451
407,968
Premises and equipment, net
417,700
423,128
426,310
Goodwill and other intangible assets, net
3,242,193
3,250,909
2,852,117
Cash surrender value of life insurance policies
1,241,367
1,237,828
1,239,077
Deferred tax assets, net
354,482
341,292
377,588
Accrued interest receivable and other assets
2,099,673
2,003,862
1,663,199
Total assets $
76,838,106
$
76,161,693
$
74,038,243
Liabilities and Stockholders' Equity: Deposits:
Demand
$
9,996,274
$
10,212,509
$
11,157,390
Health savings accounts
8,474,857
8,603,184
8,206,844
Interest-bearing checking
9,509,202
9,498,036
8,775,975
Money market
19,559,083
18,615,031
16,189,678
Savings
6,965,774
6,881,663
7,131,587
Certificates of deposit
5,861,431
5,928,773
4,743,204
Brokered certificates of deposit
1,910,071
1,008,547
2,542,854
Total deposits
62,276,692
60,747,743
58,747,532
Securities sold under agreements to repurchase and other borrowings
239,524
361,886
243,580
Federal Home Loan Bank advances
2,809,843
3,659,930
4,310,371
Long-term debt
912,743
914,520
1,052,258
Accrued expenses and other liabilities
1,790,036
1,730,116
1,404,776
Total liabilities
68,028,838
67,414,195
65,758,517
Preferred stock
283,979
283,979
283,979
Common stockholders' equity
8,525,289
8,463,519
7,995,747
Total stockholders’ equity
8,809,268
8,747,498
8,279,726
Total liabilities and stockholders' equity $
76,838,106
$
76,161,693
$
74,038,243
WEBSTER FINANCIAL CORPORATIONConsolidated Statements of Income
(unaudited) Three Months Ended June 30, Six Months
Ended June 30, (In thousands, except per
share data)
2024
2023
2024
2023
Interest income: Interest and fees on loans and leases
$
798,097
$
771,973
$
1,590,142
$
1,488,329
Interest on investment securities
160,827
109,319
308,412
208,569
Loans held for sale
5,593
421
5,675
437
Other interest and dividends
11,769
51,683
23,907
66,989
Total interest income
976,286
933,396
1,928,136
1,764,324
Interest expense: Deposits
361,263
251,466
697,234
401,670
Borrowings
42,726
98,101
90,866
183,542
Total interest expense
403,989
349,567
788,100
585,212
Net interest income
572,297
583,829
1,140,036
1,179,112
Provision for credit losses
59,000
31,498
104,500
78,247
Net interest income after provision for loan and lease
losses
513,297
552,331
1,035,536
1,100,865
Non-interest income: Deposit service fees
41,027
45,418
83,616
90,854
Loan and lease related fees
19,334
20,528
39,101
43,533
Wealth and investment services
8,556
7,391
16,480
13,978
Cash surrender value of life insurance policies
6,359
6,293
12,305
13,021
(Loss) on sale of investment securities, net
(49,915)
(48)
(59,741)
(16,795)
Other income
16,937
9,792
49,890
15,549
Total non-interest income
42,298
89,374
141,651
160,140
Non-interest expense: Compensation and benefits
186,850
173,305
375,390
346,505
Occupancy
15,103
20,254
34,542
40,425
Technology and equipment
45,303
51,815
91,139
96,181
Marketing
4,107
5,160
8,388
8,636
Professional and outside services
14,066
29,385
27,047
61,819
Intangible assets amortization
8,716
9,193
17,910
18,690
Deposit insurance
15,065
13,723
39,288
26,046
Other expenses
36,811
41,254
68,240
78,254
Total non-interest expense
326,021
344,089
661,944
676,556
Income before income taxes
229,574
297,616
515,243
584,449
Income tax expense
47,941
62,648
117,287
128,477
Net income
181,633
234,968
397,956
455,972
Preferred stock dividends
(4,162)
(4,162)
(8,325)
(8,325)
Net income available to common stockholders $
177,471
$
230,806
$
389,631
$
447,647
Weighted-average common shares outstanding - Diluted
169,937
172,803
170,351
172,839
Earnings per common share: Basic
$
1.03
$
1.32
$
2.27
$
2.57
Diluted
1.03
1.32
2.26
2.57
WEBSTER FINANCIAL CORPORATIONFive Quarter Consolidated
Statements of Income (unaudited) Three Months Ended
(In thousands, except per share data)
June 30,2024 March 31,2024 December 31,2023 September
30,2023 June 30,2023
Interest income: Interest and fees on
loans and leases
$
798,097
$
792,045
$
789,423
$
793,626
$
771,973
Interest on investment securities
160,827
147,585
128,924
113,395
109,319
Loans held for sale
5,593
82
280
17
421
Other interest and dividends
11,769
12,138
14,520
23,751
51,683
Total interest income
976,286
951,850
933,147
930,789
933,396
Interest expense: Deposits
361,263
335,971
325,793
293,955
251,466
Borrowings
42,726
48,140
36,333
49,698
98,101
Total interest expense
403,989
384,111
362,126
343,653
349,567
Net interest income
572,297
567,739
571,021
587,136
583,829
Provision for credit losses
59,000
45,500
36,000
36,500
31,498
Net interest income after provision for loan and lease
losses
513,297
522,239
535,021
550,636
552,331
Non-interest income: Deposit service fees
41,027
42,589
37,459
41,005
45,418
Loan and lease related fees
19,334
19,767
21,362
19,966
20,528
Wealth and investment services
8,556
7,924
7,767
7,254
7,391
Cash surrender value of life insurance policies
6,359
5,946
6,587
6,620
6,293
(Loss) on sale of investment securities, net
(49,915)
(9,826)
(16,825)
-
(48)
Other income
16,937
32,953
7,465
15,537
9,792
Total non-interest income
42,298
99,353
63,815
90,382
89,374
Non-interest expense: Compensation and benefits
186,850
188,540
184,914
180,333
173,305
Occupancy
15,103
19,439
18,478
18,617
20,254
Technology and equipment
45,303
45,836
46,486
55,261
51,815
Marketing
4,107
4,281
5,176
4,810
5,160
Professional and outside services
14,066
12,981
18,804
26,874
29,385
Intangible assets amortization
8,716
9,194
8,618
8,899
9,193
Deposit insurance
15,065
24,223
58,725
13,310
13,723
Other expenses
36,811
31,429
36,020
54,474
41,254
Total non-interest expense
326,021
335,923
377,221
362,578
344,089
Income before income taxes
229,574
285,669
221,615
278,440
297,616
Income tax expense
47,941
69,346
36,222
51,965
62,648
Net income
181,633
216,323
185,393
226,475
234,968
Preferred stock dividends
(4,162)
(4,163)
(4,163)
(4,162)
(4,162)
Net income available to common stockholders $
177,471
$
212,160
$
181,230
$
222,313
$
230,806
Weighted-average common shares outstanding - Diluted
169,937
170,704
170,623
171,350
172,803
Earnings per common share: Basic
$
1.03
$
1.23
$
1.05
$
1.29
$
1.32
Diluted
1.03
1.23
1.05
1.28
1.32
WEBSTER FINANCIAL CORPORATIONConsolidated Average Balances,
Interest, Yields and Rates, and Net Interest Margin on a Fully
Tax-equivalent Basis (unaudited) Three Months Ended June
30,
2024
2023
(Dollars in thousands) Average
balance Interest Yield/rate Average balance
Interest Yield/rate
Assets: Interest-earning assets:
Loans and leases
$
51,434,799
$
808,309
6.23
%
$
51,184,715
$
782,557
6.06
%
Investment securities (1)
16,382,215
164,930
3.86
14,780,257
116,027
2.99
Federal Home Loan and Federal Reserve Bank stock
336,342
5,166
6.18
513,559
6,675
5.21
Interest-bearing deposits
483,947
6,603
5.40
3,528,824
45,008
5.05
Loans held for sale
222,080
5,593
10.07
96,537
421
1.74
Total interest-earning assets
68,859,383
$
990,601
5.65
%
70,103,892
$
950,688
5.32
%
Non-interest-earning assets
7,076,950
6,128,636
Total assets $
75,936,333
$
76,232,528
Liabilities and Stockholders' Equity:
Interest-bearing liabilities: Demand deposits
$
10,156,691
$
-
-
%
$
11,375,059
$
-
-
%
Health savings accounts
8,528,476
3,206
0.15
8,250,766
3,090
0.15
Interest-bearing checking, money market and savings
35,012,709
264,009
3.03
31,768,511
178,707
2.26
Certificates of deposit and brokered deposits
8,017,223
94,048
4.72
7,173,552
69,669
3.90
Total deposits
61,715,099
361,263
2.35
58,567,888
251,466
1.72
Securities sold under agreements to repurchase and other
borrowings
198,324
1,114
2.22
215,874
63
0.11
Federal Home Loan Bank advances
2,429,653
33,727
5.49
6,724,139
88,556
5.21
Long-term debt (1)
913,608
7,885
3.55
1,061,526
9,482
3.68
Total borrowings
3,541,585
42,726
4.82
8,001,539
98,101
4.87
Total interest-bearing liabilities
65,256,684
$
403,989
2.49
%
66,569,427
$
349,567
2.10
%
Non-interest-bearing liabilities
1,945,912
1,267,803
Total liabilities
67,202,596
67,837,230
Preferred stock
283,979
283,979
Common stockholders' equity
8,449,758
8,111,319
Total stockholders' equity
8,733,737
8,395,298
Total liabilities and stockholders' equity $
75,936,333
$
76,232,528
Tax-equivalent net interest income
586,612
601,121
Less: Tax-equivalent adjustments
(14,315)
(17,292)
Net interest income $
572,297
$
583,829
Net interest margin
3.32
%
3.35
%
(1) For the purposes of average yield/rate and margin
computations, unsettled trades on investment securities, unrealized
gains (losses) on available-for-sale investment securities, and
basis adjustments on long-term debt from de-designated fair value
hedges are excluded.
WEBSTER FINANCIAL
CORPORATIONConsolidated Average Balances, Interest, Yields and
Rates, and Net Interest Margin on a Fully Tax-equivalent Basis
(unaudited) Six Months Ended June 30,
2024
2023
(Dollars in thousands) Average
balance Interest Yield/rate Average balance
Interest Yield/rate
Assets: Interest-earning assets:
Loans and leases
$
51,186,608
$
1,610,173
6.23
%
$
50,642,963
$
1,508,100
5.93
%
Investment securities (1)
16,312,782
318,575
3.75
14,707,157
222,001
2.89
Federal Home Loan and Federal Reserve Bank stock
340,167
9,518
5.63
486,617
11,585
4.80
Interest-bearing deposits
528,174
14,389
5.39
2,221,119
55,404
4.96
Loans held for sale
117,749
5,675
9.64
50,838
437
1.72
Total interest-earning assets
68,485,480
$
1,958,330
5.62
%
68,108,694
$
1,797,527
5.21
%
Non-interest-earning assets
7,149,069
6,176,650
Total assets
$
75,634,549
$
74,285,344
Liabilities and Stockholders' Equity:
Interest-bearing liabilities: Demand deposits
$
10,369,552
$
-
-
%
$
11,999,028
$
-
-
%
Health savings accounts
8,567,058
6,397
0.15
8,271,493
6,117
0.15
Interest-bearing checking, money market and savings
34,534,198
513,659
2.99
30,816,229
301,755
1.97
Certificates of deposit and brokered deposits
7,669,424
177,178
4.65
5,607,711
93,798
3.37
Total deposits
61,140,232
697,234
2.29
56,694,461
401,670
1.43
Securities sold under agreements to repurchase and other
borrowings
234,570
3,222
2.72
563,517
7,890
2.78
Federal Home Loan Bank advances
2,559,642
71,094
5.49
6,201,884
156,682
5.02
Long-term debt (1)
947,269
16,550
3.60
1,066,859
18,970
3.67
Total borrowings
3,741,481
90,866
4.85
7,832,260
183,542
4.68
Total interest-bearing liabilities
64,881,713
$
788,100
2.44
%
64,526,721
$
585,212
1.82
%
Non-interest-bearing liabilities
2,005,971
1,452,640
Total liabilities
66,887,684
65,979,361
Preferred stock
283,979
283,979
Common stockholders' equity
8,462,886
8,022,004
Total stockholders' equity
8,746,865
8,305,983
Total liabilities and stockholders' equity $
75,634,549
$
74,285,344
Tax-equivalent net interest income
1,170,230
1,212,315
Less: Tax-equivalent adjustments
(30,194)
(33,203)
Net interest income $
1,140,036
$
1,179,112
Net interest margin
3.33
%
3.50
%
(1) For the purposes of average yield/rate and margin
computations, unsettled trades on investment securities, unrealized
gains (losses) on available-for-sale investment securities, and
basis adjustments on long-term debt from de-designated fair value
hedges are excluded.
WEBSTER FINANCIAL CORPORATIONFive Quarter
Loans and Leases (unaudited) (Dollars in
thousands) June 30,2024 March 31,2024 December
31,2023 September 30,2023 June 30,2023
Loans and leases
(actual): Commercial non-mortgage
$
18,021,758
$
17,976,128
$
18,214,261
$
18,058,524
$
19,499,160
Asset-based lending
1,470,675
1,492,886
1,557,841
1,632,962
1,718,251
Commercial real estate
22,277,813
21,869,502
21,157,732
20,583,254
20,661,071
Residential mortgages
8,284,297
8,226,154
8,227,923
8,228,451
8,140,182
Consumer
1,518,922
1,533,972
1,568,295
1,584,955
1,607,384
Loans and leases
51,573,465
51,098,642
50,726,052
50,088,146
51,626,048
Allowance for credit losses on loans and leases
(669,355)
(641,442)
(635,737)
(635,438)
(628,911)
Loans and leases, net $
50,904,110
$
50,457,200
$
50,090,315
$
49,452,708
$
50,997,137
Loans and leases (average): Commercial non-mortgage
$
17,995,654
$
18,235,402
$
18,181,417
$
18,839,776
$
19,220,435
Asset-based lending
1,473,175
1,523,616
1,588,350
1,663,481
1,756,051
Commercial real estate
22,186,566
21,403,765
20,764,834
20,614,334
20,518,355
Residential mortgages
8,252,397
8,225,151
8,240,390
8,200,938
8,067,349
Consumer
1,527,007
1,550,484
1,577,349
1,593,659
1,622,525
Loans and leases $
51,434,799
$
50,938,418
$
50,352,340
$
50,912,188
$
51,184,715
WEBSTER FINANCIAL CORPORATIONFive Quarter Nonperforming Assets
and Past Due Loans and Leases (unaudited) (Dollars in thousands) June 30,2024 March
31,2024 December 31,2023 September 30,2023 June 30,2023
Nonperforming loans and leases: Commercial non-mortgage
$
210,906
$
203,626
$
134,617
$
121,067
$
109,279
Asset-based lending
29,791
34,915
35,090
10,350
9,450
Commercial real estate
96,337
14,323
11,314
31,004
47,972
Residential mortgages
11,345
8,407
5,591
27,312
26,751
Consumer
20,457
22,341
22,932
25,320
25,417
Total nonperforming loans and leases $
368,836
$
283,612
$
209,544
$
215,053
$
218,869
Other real estate owned and repossessed assets:
Commercial non-mortgage
$
5,013
$
5,540
$
8,954
$
2,687
$
2,152
Residential mortgages
-
-
-
662
662
Consumer
1,035
102
102
-
532
Total other real estate owned and repossessed assets
$
6,048
$
5,642
$
9,056
$
3,349
$
3,346
Total nonperforming assets $
374,884
$
289,254
$
218,600
$
218,402
$
222,215
Past due 30-89 days: Commercial non-mortgage (1)
$
134,794
$
15,365
$
7,071
$
38,875
$
32,074
Commercial real estate
10,284
72,999
9,002
3,491
1,970
Residential mortgages
13,008
17,580
21,047
16,208
10,583
Consumer
8,185
6,824
9,417
12,016
6,718
Total past due 30-89 days $
166,271
$
112,768
$
46,537
$
70,590
$
51,345
Past due 90 days or more and accruing
9
12,460
52
138
29
Total past due loans and leases $
166,280
$
125,228
$
46,589
$
70,728
$
51,374
(1) In July 2024, $117.9 million of the commercial
non-mortgage loans and leases past due 30-89 days were paid
current.
WEBSTER FINANCIAL CORPORATIONFive Quarter Changes in
the Allowance for Credit Losses on Loans and Leases (unaudited)
Three Months Ended (Dollars in
thousands) June 30,2024 March 31,2024 December
31,2023 September 30,2023 June 30,2023
ACL on loans and leases,
beginning balance $
641,442
$
635,737
$
635,438
$
628,911
$
613,914
Provision
61,041
43,194
34,300
35,839
35,249
Charge-offs: Commercial portfolio
33,356
38,461
28,794
27,360
21,945
Consumer portfolio
1,418
1,330
6,878
3,642
1,085
Total charge-offs
34,774
39,791
35,672
31,002
23,030
Recoveries: Commercial portfolio
360
553
396
292
1,024
Consumer portfolio
1,286
1,749
1,275
1,398
1,754
Total recoveries
1,646
2,302
1,671
1,690
2,778
Total net charge-offs
33,128
37,489
34,001
29,312
20,252
ACL on loans and leases, ending balance $
669,355
$
641,442
$
635,737
$
635,438
$
628,911
ACL on unfunded loan commitments, ending balance
22,456
24,495
24,734
23,040
22,366
ACL, ending balance $
691,811
$
665,937
$
660,471
$
658,478
$
651,277
Three Months Ended (In
thousands, except per share data) June 30,2024 March
31,2024 December 31,2023 September 30,2023 June 30,2023
Efficiency ratio: Non-interest expense
$
326,021
$
335,923
$
377,221
$
362,578
$
344,089
Less: Foreclosed property activity
(364)
(330)
(96)
(492)
(432)
Intangible assets amortization
8,716
9,194
8,618
8,899
9,193
Operating lease depreciation
560
663
900
1,146
1,639
FDIC special assessment estimate
-
11,862
47,164
-
-
Merger related expenses (1)
-
3,139
30,679
61,625
40,840
Adjusted non-interest expense
$
317,109
$
311,395
$
289,956
$
291,400
$
292,849
Net interest income
$
572,297
$
567,739
$
571,021
$
587,136
$
583,829
Add: Tax-equivalent adjustment
14,315
15,879
17,830
17,906
17,292
Non-interest income
42,298
99,353
63,815
90,382
89,374
Other income (2)
7,802
7,626
5,099
3,614
5,035
Less: Operating lease depreciation
560
663
900
1,146
1,639
(Loss) on sale of investment securities, net
(49,915)
(9,826)
(16,825)
-
(48)
Net gain on sale of mortgage servicing rights
-
11,655
-
-
-
Adjusted income
$
686,067
$
688,105
$
673,690
$
697,892
$
693,939
Efficiency ratio
46.22
%
45.25
%
43.04
%
41.75
%
42.20
%
ROATCE: Net income
$
181,633
$
216,323
$
185,393
$
226,475
$
234,968
Less: Preferred stock dividends
4,162
4,163
4,163
4,162
4,162
Add: Intangible assets amortization, tax-effected
6,886
7,263
6,808
7,030
7,262
Adjusted net income
$
184,357
$
219,423
$
188,038
$
229,343
$
238,068
Adjusted net income, annualized basis
$
737,428
$
877,692
$
752,152
$
917,372
$
952,272
Average stockholders' equity
$
8,733,737
$
8,759,992
$
8,312,798
$
8,370,469
$
8,395,298
Less: Average preferred stock
283,979
283,979
283,979
283,979
283,979
Average goodwill and other intangible assets, net
3,246,940
3,090,751
2,838,770
2,847,560
2,856,581
Average tangible common stockholders' equity
$
5,202,818
$
5,385,262
$
5,190,049
$
5,238,930
$
5,254,738
Return on average tangible common stockholders' equity
14.17
%
16.30
%
14.49
%
17.51
%
18.12
%
(1) Merger related expenses include Ametros acquisition
expenses for the three months ended March 31, 2024. 2023 periods
primarily include charges related to the merger with Sterling. (2)
Other income includes the taxable-equivalent of net income
generated from low income housing tax-credit investments.
(In thousands, except per share
data) June 30,2024 March 31,2024 December 31,2023
September 30,2023 June 30,2023
Tangible equity:
Stockholders' equity
$
8,809,268
$
8,747,498
$
8,689,996
$
8,199,201
$
8,279,726
Less: Goodwill and other intangible assets, net
3,242,193
3,250,909
2,834,600
2,843,217
2,852,117
Tangible stockholders' equity
$
5,567,075
$
5,496,589
$
5,855,396
$
5,355,984
$
5,427,609
Total assets
$
76,838,106
$
76,161,693
$
74,945,249
$
73,130,851
$
74,038,243
Less: Goodwill and other intangible assets, net
3,242,193
3,250,909
2,834,600
2,843,217
2,852,117
Tangible assets
$
73,595,913
$
72,910,784
$
72,110,649
$
70,287,634
$
71,186,126
Tangible equity
7.56
%
7.54
%
8.12
%
7.62
%
7.62
%
Tangible common equity: Tangible stockholders' equity
$
5,567,075
$
5,496,589
$
5,855,396
$
5,355,984
$
5,427,609
Less: Preferred stock
283,979
283,979
283,979
283,979
283,979
Tangible common stockholders' equity
$
5,283,096
$
5,212,610
$
5,571,417
$
5,072,005
$
5,143,630
Tangible assets
$
73,595,913
$
72,910,784
$
72,110,649
$
70,287,634
$
71,186,126
Tangible common equity
7.18
%
7.15
%
7.73
%
7.22
%
7.23
%
Tangible book value per common share: Tangible common
stockholders' equity
$
5,283,096
$
5,212,610
$
5,571,417
$
5,072,005
$
5,143,630
Common shares outstanding
171,402
172,464
172,022
172,056
173,261
Tangible book value per common share $
30.82
$
30.22
$
32.39
$
29.48
$
29.69
Core deposits: Total deposits
$
62,276,692
$
60,747,743
$
60,784,284
$
60,331,767
$
58,747,532
Less: Certificates of deposit
5,861,431
5,928,773
5,574,048
5,150,139
4,743,204
Brokered certificates of deposit
1,910,071
1,008,547
2,890,411
2,337,380
2,542,854
Core deposits $
54,505,190
$
53,810,423
$
52,319,825
$
52,844,248
$
51,461,474
Three Months EndedJune 30, 2024 Adjusted
ROATCE: Net income $
181,633
Less: Preferred stock dividends
4,162
Add: Intangible assets amortization, tax-effected
6,886
Loss on sale of investment securities, net, tax-effected
38,694
Adjusted net income $
223,051
Adjusted net income, annualized basis $
892,204
Average stockholders' equity $
8,733,737
Less: Average preferred stock
283,979
Average goodwill and other intangible assets, net
3,246,940
Average tangible common stockholders' equity $
5,202,818
Adjusted return on average tangible common stockholders'
equity
17.15
%
Adjusted ROAA: Net income $
181,633
Add: Loss on sale of investment securities, net, tax-effected
38,694
Adjusted net income $
220,327
Adjusted net income, annualized basis $
881,308
Average assets $
75,936,333
Adjusted return on average assets
1.16
%
GAAP to adjusted reconciliation: Three Months
Ended June 30, 2024 (In millions, except
per share data) Pre-Tax Income Net Income
Availableto CommonStockholders Diluted EPS Reported
(GAAP) $
229.6
$
177.5
$
1.03
Loss on sale of investment securities, net
49.9
38.7
0.23
Adjusted (non-GAAP) $
279.5
$
216.2
$
1.26
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240722156158/en/
Media Contact Alice Ferreira, 203-578-2610
acferreira@websterbank.com
Investor Contact Emlen Harmon, 212-309-7646
eharmon@websterbank.com
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