Exhibit 99.1

 

Media Contact				Investor Contact
Bob Guenther 203-578-2391				Terry Mangan 203-578-2318
rguenther@websterbank.com				tmangan@websterbank.com

WEBSTER REPORTS 2011 FOURTH QUARTER RESULTS

Net Income Grows by 63 Percent over Prior Year

WATERBURY, Conn., January 19, 2012 – Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today announced net income available to common shareholders of $39.6 million, or $.43 per diluted share, for the quarter ended December 31, 2011 compared to $41.4 million, or $.45 per diluted share, for the quarter ended September 30, 2011 and $24.3 million, or $.29 per diluted share, for the quarter ended December 31, 2010.

Highlights for the quarter or at December 31 include:

Significant improvement in asset quality as evidenced by a 19.5 percent reduction in nonperforming assets and a 12.2 percent decline in commercial classified loans, both from September 30, and reductions of 36.0 percent and 34.0 percent from a year ago.

Combined growth in commercial non-mortgage and commercial real estate loans of $239.8 million or 5.9 percent from September 30, and $491.3 million or 13.0 percent from a year ago.

Growth of $319.1 million or 6.7 percent in transaction account deposits from September 30 and $641.0 million or 14.5 percent from a year ago, which represent 37.0 percent of total deposits compared to 34.8 percent in the third quarter and 32.4 percent a year ago.

Net interest income was down $0.7 million in the quarter, and net interest margin was 3.39 percent compared to 3.49 percent in the third quarter and 3.42 percent a year ago.

Noninterest expense before one time costs of $125.3 million compared to $119.7 million in the third quarter and $128.2 million a year ago. The 2011 fourth quarter included $5.6 million in higher compensation expense tied to stock valuation, a significant portion of which was driven by Webster’s rising stock price in the quarter.

Provision for loan losses of $2.5 million compared to $5.0 million in the third quarter and $15.0 million a year ago, reflective of continued improvement in asset quality.

Webster Chairman and Chief Executive Officer James C. Smith said, “Fourth quarter results cap a year of meaningful, across-the-board progress for Webster, with particularly strong

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improvement in credit metrics. Among our strategic priorities, higher transaction balances are funding business loan growth, and our emphasis on relationship banking over account acquisition is producing more value for our clients. We are winning business banking customers across our footprint. Still, we have much to do to sustain our progress and improve financial performance in 2012, with special emphasis on improving the ratio of expenses to revenue.”

Prior period information

 

•

Certain previously reported information has been corrected to reflect the deferral of certain commercial loan fees. Comparisons to prior periods in this press release reflect this correction.

Net interest income

 

•

Net interest income was $141.0 million for the quarter compared to $141.7 million in the third quarter.

 

•

Net interest margin was 3.39 percent compared to 3.49 percent in the third quarter; the yield on interest-earning assets declined 14 basis points, primarily on securities, and the cost of funds declined 5 basis points, each as compared to the third quarter.

 

•

Average interest-earning assets grew by 2.4 percent from September 30, 2011 and totaled $17.0 billion compared to $16.6 billion in the third quarter.

Provision for loan losses

 

•

The Company recorded a provision of $2.5 million in the quarter compared to $5.0 million in the third quarter and $15.0 million a year ago, reflective of continued improvement in asset quality trends.

 

•

Net charge-offs were $26.4 million in the quarter compared to $28.9 million for the third quarter and $33.7 million a year ago.

 

•

The allowance for loan losses represented 124 percent of nonperforming loans compared to 116 percent in the prior quarter.

Webster President and Chief Operating Officer Jerry Plush noted, “The continued favorable trend in all asset quality measures enabled us to record provision expense well below net charge-offs this quarter while maintaining even stronger coverage ratios. The emphasis we have placed in reducing nonperforming loan, OREO and classified asset levels has resulted in

 

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reduced provision and other workout related expenses compared to prior quarters. While we believe that further improvement in classified asset levels is likely in future periods and may favorably influence provision expense, the provision necessary each quarter will be dependent on economic outcomes and the level of risk inherent in continued loan growth.”

Noninterest income

 

•

Total noninterest income decreased $2.4 million compared to the third quarter, of which $2.8 million occurred in deposit service fees. This decline in deposit services fees reflects Federal Reserve Board rules implementing the Durbin Amendment in the Dodd-Frank Act that took effect on October 1, 2011.

Noninterest expense

 

•

Total noninterest expense increased $3.4 million compared to the third quarter. Included in noninterest expense is $1.2 million of net one time costs in the fourth quarter and $3.5 million of such costs in the third quarter.

 

•

The $5.6 million increase in noninterest expense apart from one time costs compared to the third quarter is primarily the result of a $6.2 million increase in compensation and benefits. This increase in compensation and benefits is primarily the result of compensation tied to stock valuation, including increases of $3.4 million in cash award plan expense and $2.2 million in deferred compensation. Volatility around cash award plan expense should be less in future quarters given the maturity of a portion of the plan during the fourth quarter. In addition, included in noninterest expense was $0.1 million in gains on foreclosed and repossessed assets compared to $0.7 million of such gains in the third quarter.

Income taxes

 

•

The Company recorded $13.8 million of income tax expense in the quarter on the $54.2 million of pre-tax income applicable to continuing operations in the period. The effective tax rate for the quarter was 25.5 percent compared to 27.4 percent for the third quarter, while the effective rate for all of 2011 was 28.0 percent. The lower rates in the fourth and third quarters reflect tax benefits specific to each of $1.9 million and $1.6 million, respectively.

 

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Investment securities

 

•

Total investment securities were $5.8 billion at December 31, 2011 compared to $5.6 billion at September 30, 2011. The carrying value of the available for sale portfolio included $25.3 million in net unrealized gains compared to net unrealized gains of $30.0 million at September 30, while the carrying value of the held to maturity portfolio does not reflect $156.8 million in net unrealized gains compared to net unrealized gains of $155.7 million at September 30.

Loans

 

•

Total loans were $11.2 billion at December 31, 2011 compared to $11.1 billion at September 30, 2011 and are reflective of strong growth in commercial, commercial real estate and residential mortgages. In the quarter, commercial non-mortgage and commercial real estate loans increased by $119.9 million and $120.0 million, respectively, while equipment finance, asset based lending and residential development loans declined by $43.6 million, $56.9 million and $11.4 million, respectively. Residential mortgage loans increased by $69.6 million, while consumer loans in the continuing portfolio declined by $14.9 million and consumer loans in the liquidating portfolio declined by $7.3 million.

 

•

Originations for the fourth quarter were $971.7 million compared to $716.2 million in the third quarter, an increase of 35.7 percent. Originations for the fourth quarter consisted of $275.2 million in commercial non-mortgage, $23.9 million in equipment finance, $39.5 million in asset based lending, $294.3 million in commercial real estate, $1.7 million in residential development, $205.2 million in residential and $131.9 million in consumer. Total originations for the year were $2.9 billion compared to $2.5 billion in 2010.

Asset quality

 

•

Total nonperforming loans declined to $188.1 million, or 1.68 percent of total loans, at December 31, 2011 compared to $221.0 million, or 2.00 percent, at September 30, 2011. Included in nonperforming loans were paying loans totaling $32.4 million at December 31 compared to $55.8 million at September 30. Also included in nonperforming loans are $5.1 million in consumer liquidating loans compared to $5.5 million at September 30.

 

•

Past due loans declined to $61.7 million at December 31 compared to $64.1 million at September 30. Past due loans for the continuing portfolios were $57.1 million at December 31 compared to $59.5 million at September 30. Past due loans for the liquidating portfolio were $4.5 million at December 31 compared to $4.7 million at September 30.

 

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•

Other real estate owned (OREO) declined to $5.0 million compared to $18.9 million at September 30.

Deposits and borrowings

 

•

Total deposits were $13.7 billion at December 31, 2011 compared to $13.6 billion at September 30, 2011. Increases of $181.0 million in demand, $138.1 million in interest-bearing checking and $58.7 million in savings deposits were offset by declines of $204.8 million in money market deposits and $102.9 million in certificates of deposit. Core to total deposits and loans to deposits were 79 percent and 82 percent, respectively, compared to 78 percent and 81 percent at September 30.

 

•

Total borrowings were $3.0 billion at December 31 compared to $2.5 billion at September 30. The increase in borrowings funded growth in loans and investment securities in the quarter. Borrowings represented 16 percent of total assets at December 31 compared to 14 percent at September 30.

Capital

 

•

The tangible common equity and Tier 1 common equity to risk-weighted assets ratios were 7.00 percent and 11.00 percent, respectively, as of December 31.

***

Webster Financial Corporation is the holding company for Webster Bank, National Association. With $19 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust and investment services through 168 banking offices, 473 ATMs, telephone banking, mobile banking, and the Internet. Webster Bank owns the asset based lending firm Webster Business Credit Corporation; the equipment finance firm Webster Capital Finance Corporation; and provides health savings account trustee and administrative services through HSA Bank, a division of Webster Bank. Member FDIC and 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.

***

 

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Conference Call

A conference call covering Webster’s fourth quarter earnings announcement will be held today, Thursday, January 19, at 9:00 a.m. (Eastern) and may be heard through Webster’s Investor Relations website at www.wbst.com, or in listen-only mode by calling 1-877-407-8289 or 201-689-8341 internationally. The call will be archived on the website and available for future retrieval.

Forward-Looking Statements

This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”). Forward-looking statements can be identified by words such as “believes,” “anticipates,” “expects,” “intends,” “targeted,” “continue,” “remain,” “will,” “should,” “may,” “plans,” “estimates,” and similar references to future periods; however, such words are not the exclusive means of identifying such statements. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, and other financial items; (ii) statements of plans, objectives, and expectations of Webster or its management or Board of Directors; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Forward-looking statements are based on Webster’s current expectations and assumptions regarding its business, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Webster’s actual results may differ materially from those contemplated by the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to: (1) local, regional, national, and international economic conditions and the impact they may have on us and our customers and our assessment of that impact; (2) volatility and disruption in national and international financial markets; (3) government intervention in the U.S. financial system; (4) changes in the level of non-performing assets and charge-offs; (5) changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (6) adverse conditions in the securities markets that lead to impairment in the value of securities in our investment portfolio; (7) inflation, interest rate, securities market, and monetary fluctuations; (8) the timely development and acceptance of new products and services and perceived overall value of these products and services by customers; (9) changes in consumer spending, borrowings, and savings habits; (10) technological changes; (11) the ability to increase market share and control expenses; (12) changes in the competitive environment among banks, financial holding companies, and other financial service providers; (13) the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities, and insurance) with which we and our subsidiaries must comply, including those under the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III update to the Basel Accords that is under development; (14) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters; (15) the costs and effects of legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews; and (16) our success at managing the risks involved in the foregoing items and (17) 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 heading “Risk Factors.” 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.

 

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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. Specifically, we provide measures based on what we believe are our operating earnings on a consistent basis and exclude non-core operating items which affect the GAAP reporting of results of operations. 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.

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WEBSTER FINANCIAL CORPORATION

Selected Financial Highlights (unaudited)

 

 

		At or for the Three Months Ended
(In thousands, except per share data)		Dec. 31, 2011				Sept. 30, 2011 (d)				June 30, 2011 (d)				March 31, 2011 (d)				Dec. 31, 2010 (d)
Net income and performance ratios (annualized):
Net income attributable to Webster Financial Corp.		$	40,384			$	42,231			$	34,184			$	34,580			$	31,957
Net income available to common shareholders			39,591				41,400				33,353				33,749				24,347
Net income per diluted common share			0.43				0.45				0.36				0.36				0.29
Return on average shareholders’ equity			8.67	%			9.12	%			7.43	%			7.72	%			6.97	%
Return on average tangible equity			12.21				12.88				10.54				11.09				9.92
Return on average assets			0.88				0.94				0.76				0.77				0.72
Income and performance ratios, (annualized), from continuing operations:
Income from continuing operations attributable to Webster Financial Corp.		$	40,384			$	42,231			$	34,184			$	32,585			$	31,863
Net income available to common shareholders			39,591				41,400				33,353				31,754				24,253
Net income from continuing operations per diluted common share			0.43				0.45				0.36				0.34				0.30
Return on average shareholders’ equity			8.67	%			9.12	%			7.43	%			7.28	%			6.95	%
Return on average tangible equity			12.21				12.88				10.54				10.45				9.89
Return on average assets			0.88				0.94				0.76				0.72				0.72
Noninterest income as a percentage of total revenue			23.05				23.98				24.69				23.86				24.73
Efficiency ratio (a)			65.83				62.22				65.02				67.49				68.32
Asset quality:
Allowance for loan losses		$	233,487			$	257,352			$	281,243			$	297,948			$	321,665
Nonperforming assets			193,047				239,945				250,084				290,349				301,804
Allowance for loan losses / total loans			2.08	%			2.33	%			2.55	%			2.71	%			2.92	%
Net charge-offs / average loans (annualized)			0.95				1.05				0.79				1.22				1.24
Nonperforming loans / total loans			1.68				2.00				2.07				2.38				2.48
Nonperforming assets / total loans plus OREO			1.72				2.17				2.27				2.63				2.73
Allowance for loan losses / nonperforming loans			124.14				116.43				123.22				113.78				117.58
Other ratios (annualized):
Tangible capital ratio			7.16	%			7.29	%			7.42	%			7.24	%			6.97	%
Tangible common equity ratio			7.00				7.13				7.26				7.08				6.80
Tier 1 risk-based capital ratio (c)			12.96				13.09				12.94				12.69				12.12
Total risk-based capital (c)			14.52				14.65				14.51				14.27				13.99
Tier 1 common equity / risk-weighted assets (c)			11.00				11.06				10.79				10.53				9.92
Shareholders’ equity / total assets			9.86				10.08				10.27				10.08				9.81
Interest rate spread			3.36				3.45				3.44				3.42				3.38
Net interest margin			3.39				3.49				3.48				3.46				3.42
Share and equity related:
Common equity		$	1,816,835			$	1,807,309			$	1,800,192			$	1,782,211			$	1,740,296
Book value per common share			20.74				20.65				20.57				20.37				19.97
Tangible book value per common share			14.57				14.47				14.38				14.17				13.73
Common stock closing price			20.39				15.30				21.02				21.43				19.70
Dividends declared per common share			0.05				0.05				0.05				0.01				0.01
Common shares issued and outstanding			87,600				87,507				87,532				87,474				87,160
Basic shares (average)			87,097				87,046				86,986				86,896				78,663
Diluted shares (average)			90,929				91,205				92,184				92,554				82,766

Footnotes:

 

(a)	Calculated using SNL’s methodology - noninterest expense (excluding foreclosed property expenses, intangible amortization, goodwill impairments, and other charges) as a percentage of net interest income (FTE basis) plus noninterest income (excluding gain/loss on securities and other charges).

(b)	For purposes of the yield computation, unrealized gains (losses) on securities available for sale are excluded from the average balance.

(c)	The ratios presented are projected for the three month reporting period ending December 31, 2011 and actual, subject to the correction noted in footnote (d), for the remaining reporting periods presented.

(d)	Certain previously reported information has been corrected to reflect the deferment of certain commercial loan fees.

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WEBSTER FINANCIAL CORPORATION

Consolidated Balance Sheets (unaudited)

 

 

(In thousands)		December 31, 2011				September 30, 2011 (d)				December 31, 2010 (d)
Assets:
Cash and due from banks		$	195,957			$	168,776			$	159,849
Interest-bearing deposits			96,062				87,240				52,811
Investment securities:
Trading, at fair value			—				—				11,554
Available for sale, at fair value			2,874,764				2,500,151				2,413,776
Held to maturity			2,973,727				3,106,013				3,072,453
Total securities			5,848,491				5,606,164				5,497,783
Loans held for sale			57,391				28,266				52,224
Loans:
Commercial			2,860,597				2,841,242				2,814,495
Commercial real estate			2,384,889				2,276,295				2,196,989
Residential mortgages			3,219,889				3,150,286				3,147,492
Consumer			2,760,029				2,782,263				2,859,221
Total loans			11,225,404				11,050,086				11,018,197
Allowance for loan losses			(233,487	)			(257,352	)			(321,665	)
Loans, net			10,991,917				10,792,734				10,696,532
Prepaid FDIC premiums			37,946				42,424				57,548
Federal Home Loan Bank and Federal Reserve Bank stock			143,874				143,874				143,874
Premises and equipment, net			147,379				148,274				157,724
Goodwill and other intangible assets, net			545,577				546,974				551,164
Cash surrender value of life insurance policies			307,039				305,901				298,149
Deferred tax asset, net			105,665				98,588				107,029
Accrued interest receivable and other assets			237,042				254,796				259,194
Total Assets		$	18,714,340			$	18,224,011			$	18,033,881
Liabilities and Equity:
Deposits:
Demand		$	2,473,693			$	2,292,673			$	2,216,987
Interest-bearing checking			2,578,520				2,440,464				2,194,239
Money market			2,021,056				2,225,841				2,460,918
Savings			3,748,121				3,689,377				3,586,732
Certificates of deposit			2,715,583				2,818,527				3,071,030
Brokered certificates of deposit			119,052				119,052				78,879
Total deposits			13,656,025				13,585,934				13,608,785
Securities sold under agreements to repurchase and other short-term borrowings			1,164,706				1,220,905				1,091,477
Federal Home Loan Bank advances			1,252,609				760,964				768,005
Long-term debt			552,589				554,478				582,837
Accrued expenses and other liabilities			242,637				255,905				203,898
Total liabilities			16,868,566				16,378,186				16,255,002
Webster Financial Corporation shareholders’ equity			1,845,774				1,836,248				1,769,235
Noncontrolling interests			—				9,577				9,644
Total equity			1,845,774				1,845,825				1,778,879
Total Liabilities and Equity		$	18,714,340			$	18,224,011			$	18,033,881

See Selected Financial Highlights for footnotes.

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WEBSTER FINANCIAL CORPORATION

Consolidated Statements of Operations (unaudited)

 

 

		Three Months Ended December								Twelve Months Ended December
(In thousands, except per share data)		2011				2010 (d)				2011				2010 (d)
Interest income:
Interest and fees on loans and leases		$	121,223			$	122,621			$	486,883			$	493,244
Interest and dividends on securities			51,260				51,652				211,605				214,433
Loans held for sale			370				433				1,235				970
Total interest income			172,853				174,706				699,723				708,647
Interest expense:
Deposits			17,268				23,787				80,808				112,629
Borrowings			14,576				13,892				55,147				58,747
Total interest expense			31,844				37,679				135,955				171,376
Net interest income			141,009				137,027				563,768				537,271
Provision for loan losses			2,500				15,000				22,500				115,000
Net interest income after provision for loan losses			138,509				122,027				541,268				422,271
Noninterest income:
Deposit service fees			24,286				25,026				102,795				108,977
Loan related fees			4,896				4,532				20,237				20,286
Wealth and investment services			5,759				6,652				26,421				24,925
Mortgage banking activities			1,094				2,222				4,905				4,169
Increase in cash surrender value of life insurance policies			2,609				2,650				10,360				10,517
Net gain on investment securities			—				2,295				2,024				22,387
Other income			3,602				1,639				10,300				9,964
Total noninterest income			42,246				45,016				177,042				201,225
Noninterest expense:
Compensation and benefits			68,146				63,941				262,647				245,343
Occupancy			13,125				13,871				53,866				55,634
Technology and equipment expense			15,054				16,044				60,721				62,855
Marketing			4,540				4,317				18,456				18,968
Professional and outside services			2,835				4,515				11,203				14,721
Intangible assets amortization			1,397				1,397				5,588				5,588
Foreclosed and repossessed asset expenses			730				1,319				3,050				5,616
Foreclosed and repossessed asset (gains) write-downs			(63	)			48				(306	)			5,157
Loan workout expenses			1,956				2,228				7,547				9,830
Deposit insurance			4,756				5,407				20,927				24,535
Other expenses			12,864				15,117				55,896				56,251
			125,340				128,204				499,595				504,498
Debt prepayment penalties			5,203				—				5,203				—
Write-down for expedited asset disposition			1,187				—				6,260				—
Contract termination and severance			2,485				646				5,100				1,832
Branch and facility optimization			1,689				4,307				5,004				4,307
Preferred stock redemption costs			423				—				423				—
Costs for warrant registration			—				—				350				—
Provision (benefit) for litigation and settlements			(9,755	)			—				(9,523	)			22,476
Loan repurchase and unfunded commitment reserve benefit, net			—				—				(1,436	)			—
Fraud (recovery) loss			—				(5,195	)			—				5,861
Total noninterest expense			126,572				127,962				510,976				538,974
Income from continuing operations before income taxes			54,183				39,081				207,334				84,522
Income tax expense			13,799				7,219				57,951				12,358
Income from continuing operations			40,384				31,862				149,383				72,164
Income from discontinued operations, net of tax			—				94				1,995				94
Consolidated net income			40,384				31,956				151,378				72,258
Less: Net (loss) income attributable to noncontrolling interests			—				(1	)			(1	)			3
Net income attributable to Webster Financial Corp.			40,384				31,957				151,379				72,255
Preferred stock dividends			(793	)			(3,469	)			(3,286	)			(18,086	)
Preferred stock accretion and accounting adjustments			—				(4,141	)			—				(6,830	)
Net income available to common shareholders		$	39,591			$	24,347			$	148,093			$	47,339
Diluted shares (average)			90,929				82,766				91,688				82,172
Net income per common share available to common shareholders:
Basic
Income from continuing operations		$	0.45			$	0.31			$	1.67			$	0.60
Net income			0.45				0.31				1.69				0.60
Diluted
Income from continuing operations			0.43				0.29				1.59				0.57
Net income			0.43				0.29				1.61				0.57

See Selected Financial Highlights for footnotes.

---

WEBSTER FINANCIAL CORPORATION

Five Quarter Consolidated Statements of Operations (unaudited)

 

 

		Three Months Ended
		Dec. 31,				Sept. 30,				June 30,				March 31,				Dec. 31,
(In thousands, except per share data)		2011				2011 (d)				2011 (d)				2011 (d)				2010 (d)
Interest income:
Interest and fees on loans and leases		$	121,223			$	121,322			$	122,395			$	121,943			$	122,621
Interest and dividends on securities			51,260				52,974				53,527				53,844				51,652
Loans held for sale			370				266				177				422				433
Total interest income			172,853				174,562				176,099				176,209				174,706
Interest expense:
Deposits			17,268				18,930				21,841				22,769				23,787
Borrowings			14,576				13,947				13,345				13,279				13,892
Total interest expense			31,844				32,877				35,186				36,048				37,679
Net interest income			141,009				141,685				140,913				140,161				137,027
Provision for loan losses			2,500				5,000				5,000				10,000				15,000
Net interest income after provision for loan losses			138,509				136,685				135,913				130,161				122,027
Noninterest income:
Deposit service fees			24,286				27,074				26,095				25,340				25,026
Loan related fees			4,896				5,308				5,590				4,443				4,532
Wealth and investment services			5,759				6,486				7,454				6,722				6,652
Mortgage banking activities			1,094				1,324				1,234				1,253				2,222
Increase in cash surrender value of life insurance policies			2,609				2,642				2,576				2,533				2,650
Net gain on investment securities			—				—				1,647				377				2,295
Other income			3,602				1,857				1,593				3,248				1,639
Total noninterest income			42,246				44,691				46,189				43,916				45,016
Noninterest expense:
Compensation and benefits			68,146				61,897				65,592				67,012				63,941
Occupancy			13,125				13,150				12,856				14,735				13,871
Technology and equipment expense			15,054				15,141				15,134				15,392				16,044
Marketing			4,540				4,144				4,252				5,520				4,317
Professional and outside services			2,835				3,125				2,813				2,430				4,515
Intangible assets amortization			1,397				1,397				1,397				1,397				1,397
Foreclosed and repossessed asset expenses			730				726				710				884				1,319
Foreclosed and repossessed asset (gains) write-downs			(63	)			(722	)			794				(315	)			48
Loan workout expenses			1,956				2,012				1,779				1,800				2,228
Deposit insurance			4,756				4,472				5,918				5,781				5,407
Other expenses			12,864				14,392				14,716				13,924				15,117
			125,340				119,734				125,961				128,560				128,204
Debt prepayment penalties			5,203				—				—				—				—
Write-down for expedited asset disposition			1,187				—				5,073				—				—
Contract termination and severance			2,485				1,555				1,060				—				646
Branch and facility optimization			1,689				2,183				859				273				4,307
Preferred stock redemption costs			423				—				—				—				—
Costs for warrant registration			—				—				350				—				—
Provision (benefit) for litigation and settlements			(9,755	)			(254	)			194				292				—
Loan repurchase and unfunded commitment reserve benefit, net			—				—				(1,436	)			—				—
Fraud recovery			—				—				—				—				(5,195	)
Total noninterest expense			126,572				123,218				132,061				129,125				127,962
Income from continuing operations before income taxes			54,183				58,158				50,041				44,952				39,081
Income tax expense			13,799				15,927				15,857				12,368				7,219
Income from continuing operations			40,384				42,231				34,184				32,584				31,862
Income from discontinued operations, net of tax			—				—				—				1,995				94
Consolidated net income			40,384				42,231				34,184				34,579				31,956
Less: Net (loss) income attributable to noncontrolling interests			—				—				—				(1	)			(1	)
Net income attributable to Webster Financial Corp.			40,384				42,231				34,184				34,580				31,957
Preferred stock dividends			(793	)			(831	)			(831	)			(831	)			(3,469	)
Preferred stock accretion and accounting adjustments			—				—				—				—				(4,141	)
Net income available to common shareholders		$	39,591			$	41,400			$	33,353			$	33,749			$	24,347
Diluted shares (average)			90,929				91,205				92,184				92,554				82,766
Net income per common share available to common shareholders:
Basic
Income from continuing operations		$	0.45			$	0.47			$	0.38			$	0.37			$	0.31
Net income			0.45				0.47				0.38				0.39				0.31
Diluted
Income from continuing operations			0.43				0.45				0.36				0.34				0.29
Net income			0.43				0.45				0.36				0.36				0.29

See Selected Financial Highlights for footnotes.

---

WEBSTER FINANCIAL CORPORATION

Five Quarter Interest Rate Spreads and Margin (unaudited)

 

 

		Three Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
		2011				2011 (d)				2011 (d)				2011 (d)				2010 (d)
Interest rate spread
Yield on interest-earning assets			4.13	%			4.27	%			4.33	%			4.33	%			4.33	%
Cost of interest-bearing liabilities			0.77				0.82				0.89				0.91				0.95
Interest rate spread			3.36	%			3.45	%			3.44	%			3.42	%			3.38	%
Net interest margin			3.39	%			3.49	%			3.48	%			3.46	%			3.42	%

Consolidated Average Balances, Yields, and Rates Paid (unaudited)

 

 

Three Months Ended December 31,		2011												2010 (d)
										Fully tax-												Fully tax-
		Average								equivalent				Average								equivalent
(Dollars in thousands)		balance				Interest				yield/rate				balance				Interest				yield/rate
Assets:
Interest-earning assets:
Loans		$	11,122,372			$	121,223				4.31	%		$	10,898,554			$	122,621				4.46	%
Investment securities (b)			5,638,172				54,414				3.88				5,267,983				54,716				4.19
Loans held for sale			35,321				370				4.18				39,913				433				4.34
Federal Home Loan and Federal Reserve Bank stock			143,874				831				2.29				143,874				761				2.10
Interest-bearing deposits			86,156				26				0.12				59,880				36				0.24
Total interest-earning assets			17,025,895				176,864				4.13				16,410,204				178,567				4.33
Noninterest-earning assets			1,371,923												1,367,699
Total assets		$	18,397,818											$	17,777,903
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Deposits:
Demand			2,364,594			$	—				—	%		$	1,985,664			$	—				—	%
Savings, interest checking, and money market			8,420,850				6,302				0.30				8,368,949				10,769				0.51
Certificates of deposit			2,899,642				10,966				1.50				3,181,917				13,018				1.62
Total deposits			13,685,086				17,268				0.50				13,536,530				23,787				0.70
Securities sold under agreements to repurchase and other short-term borrowings			1,212,019				4,450				1.44				1,086,312				3,728				1.34
Federal Home Loan Bank advances			854,539				4,151				1.90				513,943				3,782				2.88
Long-term debt			553,684				5,975				4.32				583,920				6,382				4.37
Total borrowings			2,620,242				14,576				2.20				2,184,175				13,892				2.51
Total interest-bearing liabilities			16,305,328				31,844				0.77				15,720,705				37,679				0.95
Noninterest-bearing liabilities			221,096												214,492
Total liabilities			16,526,424												15,935,197
Noncontrolling interests			7,703												9,649
Webster Financial Corp. shareholders’ equity			1,863,691												1,833,058
Total liabilities and equity		$	18,397,818											$	17,777,904
Tax-equivalent net interest income							145,020												140,888
Less: tax-equivalent adjustment							(4,011	)											(3,861	)
Net interest income						$	141,009											$	137,027
Interest rate spread											3.36	%											3.38	%
Net interest margin											3.39	%											3.42	%

See Selected Financial Highlights for footnotes.

---

WEBSTER FINANCIAL CORPORATION

Consolidated Average Balances, Yields, and Rates Paid (unaudited)

 

 

Twelve Months Ended December 31,		2011												2010 (d)
										Fully tax-												Fully tax-
		Average								equivalent				Average								equivalent
(Dollars in thousands)		balance				Interest				yield/rate				balance				Interest				yield/rate
Assets:
Interest-earning assets:
Loans		$	11,054,100			$	486,883				4.40	%		$	10,904,698			$	493,244				4.52	%
Investment securities (b)			5,407,867				223,568				4.16				5,254,314				225,918				4.32
Loans held for sale			28,144				1,235				4.39				21,758				970				4.46
Federal Home Loan and Federal Reserve Bank stock			143,874				3,318				2.31				142,896				2,983				2.09
Interest-bearing deposits			112,232				216				0.19				151,756				389				0.26
Total interest-earning assets			16,746,217				715,220				4.28				16,475,422				723,504				4.40
Noninterest-earning assets			1,335,374												1,382,429
Total assets		$	18,081,591											$	17,857,851
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Deposits:
Demand		$	2,278,419			$	—				—	%		$	1,789,161			$	—				—	%
Savings, interest checking, and money market			8,534,333				33,747				0.40				8,458,169				49,251				0.58
Certificates of deposit			3,031,835				47,061				1.55				3,490,017				63,378				1.82
Total deposits			13,844,587				80,808				0.58				13,737,347				112,629				0.82
Securities sold under agreements to repurchase and other short-term borrowings			1,053,323				16,173				1.54				899,203				15,900				1.77
Federal Home Loan Bank advances			569,987				14,352				2.52				567,711				17,628				3.11
Long-term debt			565,331				24,622				4.36				586,546				25,219				4.30
Total borrowings			2,188,641				55,147				2.52				2,053,460				58,747				2.86
Total interest-bearing liabilities			16,033,228				135,955				0.85				15,790,807				171,376				1.09
Noninterest-bearing liabilities			202,205												184,264
Total liabilities			16,235,433												15,975,071
Noncontrolling interests			9,119												9,643
Webster Financial Corporation shareholders’ equity			1,837,039												1,873,137
Total liabilities and equity		$	18,081,591											$	17,857,851
Tax-equivalent net interest income							579,265												552,128
Less: tax-equivalent adjustment							(15,497	)											(14,857	)
Net interest income						$	563,768											$	537,271
Interest rate spread											3.43	%											3.31	%
Net interest margin											3.47	%											3.36	%

See Selected Financial Highlights for footnotes.

---

WEBSTER FINANCIAL CORPORATION

Five Quarter Loan Balances (unaudited)

 

 

		Dec. 31,				Sept. 30,				June 30,				March 31,				Dec. 31,
(Dollars in thousands)		2011				2011 (d)				2011 (d)				2011 (d)				2010 (d)
Loan Balances (actuals):
Continuing Portfolio:
Commercial non-mortgage		$	1,932,542			$	1,812,685			$	1,787,920			$	1,704,362			$	1,649,172
Equipment financing			474,804				518,369				578,117				643,388				710,925
Asset based lending			453,251				510,188				480,662				483,027				454,398
Commercial real estate			2,345,241				2,225,250				2,170,279				2,159,211				2,137,315
Residential development			39,648				51,045				53,198				56,109				59,674
Residential mortgages			3,219,888				3,150,285				3,139,407				3,150,268				3,147,491
Consumer			2,612,476				2,627,385				2,641,102				2,642,533				2,682,645
Total continuing			11,077,850				10,895,207				10,850,685				10,838,898				10,841,620
Allowance for loan losses			(203,612	)			(227,477	)			(243,543	)			(258,140	)			(278,665	)
Total continuing, net			10,874,238				10,667,730				10,607,142				10,580,758				10,562,955
Liquidating Portfolio:
National Construction Lending Center (NCLC)			1				1				1				1				1
Consumer			147,553				154,878				161,805				169,035				176,576
Total liquidating portfolio			147,554				154,879				161,806				169,036				176,577
Allowance for loan losses			(29,875	)			(29,875	)			(37,700	)			(39,808	)			(43,000	)
Total liquidating, net			117,679				125,004				124,106				129,228				133,577
Total Loan Balances (actuals)			11,225,404				11,050,086				11,012,491				11,007,934				11,018,197
Allowance for loan losses			(233,487	)			(257,352	)			(281,243	)			(297,948	)			(321,665	)
Loans, net		$	10,991,917			$	10,792,734			$	10,731,248			$	10,709,986			$	10,696,532
Loan Balances (average):
Continuing Portfolio:
Commercial non-mortgage		$	1,868,885			$	1,798,644			$	1,747,658			$	1,686,222			$	1,565,198
Equipment finance			495,667				551,732				621,447				688,767				733,611
Asset based lending			492,982				497,426				472,837				488,181				488,639
Commercial real estate			2,254,970				2,185,662				2,154,215				2,144,018				2,048,659
Residential development			49,182				51,051				54,757				58,152				62,223
Residential mortgages			3,186,885				3,145,086				3,133,742				3,158,754				3,124,899
Consumer			2,622,378				2,635,911				2,641,621				2,662,454				2,693,191
Total continuing			10,970,949				10,865,512				10,826,277				10,886,548				10,716,420
Allowance for loan losses			(219,566	)			(247,551	)			(255,412	)			(280,589	)			(288,003	)
Total continuing, net			10,751,383				10,617,961				10,570,865				10,605,959				10,428,417
Liquidating Portfolio:
NCLC			1				1				1				1				1,246
Consumer			151,422				158,161				165,612				172,929				180,888
Total liquidating portfolio			151,423				158,162				165,613				172,930				182,134
Allowance for loan losses			(29,875	)			(29,875	)			(37,700	)			(39,808	)			(43,000	)
Total liquidating, net			121,548				128,287				127,913				133,122				139,134
Total Loan Balances (average)			11,122,372				11,023,674				10,991,890				11,059,478				10,898,554
Allowance for loan losses			(249,441	)			(277,426	)			(293,112	)			(320,397	)			(331,003	)
Loans, net		$	10,872,931			$	10,746,248			$	10,698,778			$	10,739,081			$	10,567,551

See Selected Financial Highlights for footnotes.

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WEBSTER FINANCIAL CORPORATION

Five Quarter Nonperforming Assets (unaudited)

 

 

		Dec. 31,				Sept. 30,				June 30,				March 31,				Dec. 31,
(Dollars in thousands)		2011				2011				2011				2011				2010
Nonperforming loans:
Continuing Portfolio:
Commercial non-mortgage		$	27,884			$	39,386			$	46,327			$	40,534			$	34,366
Equipment financing			7,154				8,439				11,313				16,602				20,482
Asset based lending			1,880				5,126				3,650				5,062				7,832
Commercial real estate			32,197				42,461				38,794				47,095				51,991
Residential development			6,762				16,611				16,173				17,300				15,477
Residential mortgages			82,052				79,285				82,189				95,750				99,128
Consumer			25,059				24,228				24,674				31,722				34,575
Nonperforming loans - continuing portfolio			182,988				215,536				223,120				254,065				263,851
Liquidating Portfolio:
NCLC			—				—				—				—				—
Consumer			5,091				5,492				5,116				7,802				9,722
Nonperforming loans - liquidating portfolio			5,091				5,492				5,116				7,802				9,722
Total nonperforming loans		$	188,079			$	221,028			$	228,236			$	261,867			$	273,573
Other real estate owned and repossessed assets:
Continuing Portfolio:
Commercial non-mortgage		$	1,961			$	12,961			$	13,577			$	19,959			$	20,033
Repossessed equipment			123				1,421				2,115				1,486				1,023
Asset based lending			—				—				—				—				—
Commercial real estate			—				—				—				—				—
Residential development			—				—				—				—				—
Residential			1,947				3,343				4,772				5,056				5,794
Consumer			805				1,021				725				978				937
Total continuing			4,836				18,746				21,189				27,479				27,787
Liquidating Portfolio:
NCLC			132				171				659				1,003				444
Consumer			—				—				—				—				—
Total liquidating			132				171				659				1,003				444
Total other real estate owned and repossessed assets		$	4,968			$	18,917			$	21,848			$	28,482			$	28,231
Total nonperforming assets		$	193,047			$	239,945			$	250,084			$	290,349			$	301,804

See Selected Financial Highlights for footnotes.

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WEBSTER FINANCIAL CORPORATION

Five Quarter Past Due Loans (unaudited)

 

 

		Dec. 31,				Sept. 30				June 30,				March 31,				Dec. 31,
(Dollars in thousands)		2011				2011				2011				2011				2010
Past due 30-89 days:
Accruing loans:
Continuing Portfolio:
Commercial non-mortgage		$	4,619			$	7,428			$	8,568			$	8,746			$	5,201
Equipment financing			4,800				5,054				7,155				10,520				7,937
Asset based lending			—				—				—				—				—
Commercial real estate			1,766				2,969				4,670				22,229				11,006
Residential development			—				664				500				—				194
Residential mortgages			24,361				23,730				18,631				19,080				21,513
Consumer			20,847				18,867				18,989				17,457				21,539
Past Due 30-89 days - continuing portfolio			56,393				58,712				58,513				78,032				67,390
Liquidating Portfolio:
NCLC			—				—				—				—				—
Consumer			4,538				4,653				6,134				5,966				6,128
Past Due 30-89 days - liquidating portfolio			4,538				4,653				6,134				5,966				6,128
Accruing loans past due 90 days or more			724				764				1,417				97				91
Total past due loans		$	61,655			$	64,129			$	66,064			$	84,095			$	73,609

See Selected Financial Highlights for footnotes.

---

WEBSTER FINANCIAL CORPORATION

Five Quarter Changes in the Allowance for Loan Losses (unaudited)

 

 

		For the Three Months Ended
		Dec. 31,				Sept. 30,				June 30,				March 31,				Dec. 31,
(Dollars in thousands)		2011				2011				2011				2011				2010
Beginning balance		$	257,352			$	281,243			$	297,948			$	321,665			$	340,341
Provision			2,500				5,000				5,000				10,000				15,000
Charge-offs continuing portfolio:
Commercial non-mortgage			6,684				11,311				4,911				10,611				4,955
Equipment financing			55				551				413				1,134				4,079
Asset based lending			2,150				3,317				450				500				1,500
Commercial real estate			7,768				3,377				3,765				7,169				5,466
Residential development			453				—				—				191				871
Residential mortgages			2,548				2,591				2,951				3,318				3,998
Consumer			7,551				8,874				8,843				10,354				9,732
Charge-offs continuing portfolio			27,209				30,021				21,333				33,277				30,601
Charge-offs liquidating portfolio:
NCLC			7				61				16				32				1,566
Consumer			3,958				3,734				5,049				4,634				5,004
Charge-offs liquidating portfolio			3,965				3,795				5,065				4,666				6,570
Total charge-offs			31,174				33,816				26,398				37,943				37,171
Recoveries continuing portfolio:
Commercial non-mortgage			1,215				858				1,150				487				824
Equipment financing			1,161				2,240				1,579				1,469				1,042
Asset based lending			195				273				171				929				94
Commercial real estate			96				36				406				—				—
Residential development			5				—				—				—				—
Residential mortgages			135				357				96				67				284
Consumer			1,721				998				1,079				1,086				971
Recoveries continuing portfolio			4,528				4,762				4,481				4,038				3,215
Recoveries liquidating portfolio:
NCLC			177				17				23				61				194
Consumer			104				146				189				127				86
Recoveries liquidating portfolio			281				163				212				188				280
Total recoveries			4,809				4,925				4,693				4,226				3,495
Total net charge-offs			26,365				28,891				21,705				33,717				33,676
Ending balance		$	233,487			$	257,352			$	281,243			$	297,948			$	321,665

See Selected Financial Highlights for footnotes.