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 STRONG 2012 SECOND QUARTER EARNINGS

Net Income Grows by 22 Percent over Prior Year

WATERBURY, Conn., July 13, 2012 – Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today announced net income available to common shareholders of $40.6 million, or $.44 per diluted share, for the quarter ended June 30, 2012 compared to $38.3 million, or $.42 per diluted share, for the quarter ended March 31, 2012 and $33.4 million, or $.36 per diluted share, for the quarter ended June 30, 2011.

Highlights for the quarter or at June 30 include:

Combined growth in commercial and commercial real estate loans of $222.6 million or 4.2 percent from March 31, and $467.2 million or 9.2 percent from a year ago.

Growth of $176.0 million or 3.3 percent in transaction account deposits from March 31 and $673.5 million or 14.0 percent from a year ago, which represent 39.2 percent of total deposits compared to 38.0 percent at March 31 and 35.0 percent a year ago.

Net interest income increased $1.0 million compared to the first quarter and $3.5 million from a year ago; net interest margin was 3.32 percent compared to 3.36 percent in the first quarter and 3.48 percent a year ago.

Core noninterest income increased $0.8 million in the quarter and $0.3 million from a year ago reflecting expanded revenues from corporate finance products in franchise activities.

Noninterest expense before one time costs of $123.9 million compared to $126.6 million in the first quarter and $126.0 million a year ago; continued achievement of positive operating leverage as core revenue grew 1.0 percent and core expenses declined 1.9 percent from the first quarter.

Continued improvement in asset quality as evidenced by a 5.8 percent reduction in nonperforming assets and a 12.0 percent decline in commercial classified loans, both from March 31, and reductions of 30.6 percent and 36.2 percent from a year ago.

Provision for loan losses of $5.0 million compared to $4.0 million in the first quarter and $5.0 million a year ago, reflective of continued portfolio growth and asset quality improvement.

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Webster Chairman and Chief Executive Officer James C. Smith said, “Webster turned in a solid second quarter by most any measure. Loan growth, asset quality, operating efficiency, and earnings all showed meaningful improvement as the southern New England economy continues to recover.”

Net interest income

 

•

Net interest income was $144.4 million for the quarter compared to $143.4 million in the first quarter.

 

•

Net interest margin was 3.32 percent compared to 3.36 percent in the first quarter as the yield on interest-earning assets declined 6 basis points, primarily on securities, and the cost of funds declined 2 basis points.

 

•

Average interest-earning assets grew by 1.8 percent from the first quarter and totaled $17.8 billion compared to $17.5 billion in the first quarter.

Webster President and Chief Operating Officer Jerry Plush noted, “Loan originations were 69 percent higher than a year ago and totaled over $1 billion in the quarter. We ended the quarter with strong loan pipelines, which should bode well for the balance of the year. Our emphasis on growing transaction accounts continues to pay off as demand and interest-bearing checking deposits now represent almost 40 percent of total deposits. The growth in our loan portfolio, coupled with an increase in lower cost transaction deposits, enabled us to grow net interest income in a challenging interest rate environment.”

Provision for loan losses

 

•

The Company recorded a provision of $5.0 million in the quarter compared to $4.0 million in the first quarter and $5.0 million a year ago.

 

•

Net charge-offs were $16.5 million in the quarter compared to $27.2 million for the first quarter and $21.7 million a year ago.

 

•

The allowance for loan losses represented 117 percent of nonperforming loans compared to 118 percent in the prior quarter.

Noninterest income

 

•

Total noninterest income increased $3.4 million compared to the first quarter. Included in noninterest income in the second quarter is $2.5 million of securities gains.

 

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•

The $0.8 million increase in core noninterest income compared to the first quarter reflects an increase of $1.0 million in corporate finance products revenue included in other income. Direct investment income was $1.3 million higher as the first quarter included write-downs of $0.8 million. Deposit service fees increased $0.4 million compared to the first quarter while loan fees and mortgage banking decreased $1.3 million and $0.8 million, respectively. The lower loan fees were due in part to fewer prepayment penalties and a mortgage servicing right impairment of $0.3 million in the quarter.

Noninterest expense

 

•

Total noninterest expense decreased $0.6 million compared to the first quarter. Included in noninterest expense are net one time costs of $3.2 million in the second quarter and $1.2 million in the first quarter. Included in net one time costs in the second quarter is $2.5 million in debt prepayment expense in connection with the prepayment of $49.0 million in FHLB advances.

 

•

Total noninterest expense excluding one time costs decreased $2.7 million from the first quarter and $2.0 million from a year ago. The decrease compared to the first quarter is driven by a reduction of $5.0 million in compensation and benefits offset by an increase of $1.0 million in marketing and additional expense in technology. Gains on foreclosed and repossessed assets were $0.7 million in both the second and the first quarters.

Income taxes

 

•

The Company recorded $18.3 million of income tax expense in the quarter on the $59.6 million of pre-tax income applicable to continuing operations in the period. The effective tax rate for the quarter was 30.7 percent compared to 29.9 percent for the first quarter, which included $0.5 million of tax benefits specific to that period.

Investment securities

 

•

Total investment securities were $6.2 billion at both June 30, 2012 and March 31, 2012. The carrying value of the available for sale portfolio included $46.7 million in net unrealized gains compared to net unrealized gains of $43.4 million at March 31, while the carrying value of the held to maturity portfolio does not reflect $158.4 million in net unrealized gains compared to net unrealized gains of $154.9 million at March 31.

 

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Loans

 

•

Total loans were $11.5 billion at June 30, 2012 compared to $11.3 billion at March 31, 2012 and are reflective of continued growth in commercial, commercial real estate and residential mortgages. In the quarter, commercial and commercial real estate loans increased by $97.0 million and $125.6 million, respectively. Residential mortgage loans increased by $30.4 million while consumer loans declined by $25.2 million.

 

•

Loan originations for portfolio in the second quarter were $973.0 million compared to $790.8 million in the first quarter and $643.3 million a year ago. Originations for the second quarter consisted of $393.0 million in commercial, $261.0 million in commercial real estate, $162.0 million in residential and $157.0 million in consumer.

 

•

In addition to loan originations for portfolio, $198.3 million of residential loans were originated and sold with servicing retained in the quarter compared to $131.4 million in the first quarter and $47.1 million a year ago.

Asset quality

 

•

Total nonperforming loans declined to $169.2 million, or 1.47 percent of total loans, at June 30, 2012 compared to $178.3 million, or 1.58 percent, at March 31, 2012. Included in nonperforming loans were paying loans totaling $17.0 million at June 30 compared to $18.1 million at March 31. Also included in nonperforming loans are $4.5 million in consumer liquidating loans compared to $3.9 million at March 31.

 

•

Past due loans increased to $65.9 million at June 30 compared to $60.0 million at March 31. Past due loans for the continuing portfolios were $61.5 million at June 30 compared to $54.7 million at March 31. Past due loans for the liquidating portfolio were $4.4 million at June 30 compared to $5.3 million at March 31.

 

•

Other real estate owned (OREO) totaled $4.4 million compared to $6.0 million at June 30.

 

4

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Deposits and borrowings

 

•

Total deposits were $14.0 billion at June 30, 2012 compared to $13.9 billion at March 31, 2012. Increases of $119.9 million in demand, $56.1 million in interest-bearing checking and $15.3 million in savings deposits were offset by declines of $110.9 in money market and $51.0 million in certificates of deposit. Core to total deposits and loans to deposits were 81 percent and 83 percent, respectively, compared to 80 percent and 81 percent at March 31.

 

•

Total borrowings were $3.2 billion at June 30 compared to $3.1 billion at March 31. Borrowings represented 16 percent of total assets at both June 30 and March 31.

Capital

 

•

The tangible common equity and Tier 1 common equity to risk-weighted assets ratios were 7.22 percent and 10.95 percent, respectively, at June 30, 2012 compared to 7.14 percent and 10.96 percent, respectively, at March 31, 2012.

 

•

Book value and tangible book value per common share were $21.65 and $15.53, respectively, at June 30 compared to $21.24 and $15.10, respectively, at March 31.

 

•

Return on average shareholders’ equity and return on average tangible equity were 8.49 percent and 11.81 percent, respectively, at June 30 and 8.17 percent and 11.46 percent, respectively, at March 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 167 banking offices, 464 ATMs, 290 of which are owned by Webster and 174 of which are branded, 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 second quarter earnings announcement will be held today, Friday, July 13, 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 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)		June 30, 2012				March 31, 2012				Dec. 31, 2011				Sept. 30, 2011				June  30, 2011
Income and performance ratios, (annualized):
Net income available to common shareholders		$	40,625			$	38,323			$	39,591			$	41,400			$	33,353
Net income per diluted common share			0.44				0.42				0.43				0.45				0.36
Return on average shareholders’ equity			8.49	%			8.17	%			8.50	%			8.96	%			7.27	%
Return on average tangible equity			11.81				11.46				11.97				12.67				10.31
Return on average assets			0.85				0.81				0.86				0.92				0.74
Noninterest income as a percentage of total revenue			24.70				23.48				23.05				23.98				24.69
Efficiency ratio			63.75				65.63				65.83				62.22				65.02
Asset quality:
Allowance for loan losses		$	198,757			$	210,288			$	233,487			$	257,352			$	281,243
Nonperforming assets			173,621				184,218				193,047				239,945				250,084
Allowance for loan losses / total loans			1.72	%			1.86	%			2.08	%			2.33	%			2.55	%
Net charge-offs / average loans (annualized)			0.58				0.96				0.95				1.05				0.79
Nonperforming loans / total loans			1.47				1.58				1.68				2.00				2.07
Nonperforming assets / total loans plus OREO			1.50				1.63				1.72				2.17				2.27
Allowance for loan losses / nonperforming loans			117.44				117.96				124.14				116.43				123.22
Other ratios (annualized):
Tangible equity ratio			7.38	%			7.29	%			7.18	%			7.32	%			7.46	%
Tangible common equity ratio			7.22				7.14				7.03				7.16				7.29
Tier 1 risk-based capital ratio (b)			12.80				12.86				13.05				13.04				12.89
Total risk-based capital (b)			14.06				14.12				14.61				14.60				14.47
Tier 1 common equity / risk-weighted assets (b)			10.95				10.96				11.08				11.01				10.74
Shareholders’ equity / total assets			9.94				9.90				9.86				10.08				10.27
Interest rate spread			3.29				3.33				3.36				3.45				3.44
Net interest margin			3.32				3.36				3.39				3.49				3.48
Share and equity related:
Common equity		$	1,902,609			$	1,866,003			$	1,816,835			$	1,807,330			$	1,800,215
Book value per common share			21.65				21.24				20.74				20.65				20.57
Tangible book value per common share			15.53				15.10				14.57				14.47				14.38
Common stock closing price			21.66				22.67				20.39				15.30				21.02
Dividends declared per common share			0.10				0.05				0.05				0.05				0.05
Common shares issued and outstanding			87,885				87,849				87,600				87,507				87,532
Basic shares (average)			87,291				87,216				87,097				87,046				86,986
Diluted shares (average)			91,543				91,782				90,929				91,205				92,184

Footnotes:

 

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

(b)	The ratios presented are projected for June 30, 2012 and actual for the remaining periods presented.

(c)	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)		June 30, 2012				March 31, 2012				June 30, 2011 (c)
Assets:
Cash and due from banks		$	197,229			$	173,027			$	196,181
Interest-bearing deposits			73,598				77,921				57,863
Investment securities:
Available for sale, at fair value			3,153,580				3,144,867				2,143,072
Held to maturity			3,076,226				3,079,654				3,123,510
Total securities			6,229,806				6,224,521				5,266,582
Loans held for sale			89,228				59,615				21,650
Loans:
Commercial			2,985,993				2,888,977				2,846,699
Commercial real estate			2,551,427				2,425,797				2,223,477
Residential mortgages			3,300,617				3,270,213				3,139,408
Consumer			2,701,960				2,727,163				2,802,907
Total loans			11,539,997				11,312,150				11,012,491
Allowance for loan losses			(198,757	)			(210,288	)			(281,243	)
Loans, net			11,341,240				11,101,862				10,731,248
Prepaid FDIC premiums			27,062				32,507				46,546
Federal Home Loan Bank and Federal Reserve Bank stock			142,595				142,595				143,874
Premises and equipment, net			137,420				141,088				152,009
Goodwill and other intangible assets, net			542,783				544,180				548,370
Cash surrender value of life insurance policies			312,117				309,556				303,258
Deferred tax asset, net			79,011				81,676				92,127
Accrued interest receivable and other assets			257,660				245,594				243,173
Total Assets		$	19,429,749			$	19,134,142			$	17,802,881
Liabilities and Equity:
Deposits:
Demand		$	2,611,297			$	2,491,442			$	2,323,266
Interest-bearing checking			2,863,076				2,806,950				2,477,625
Money market			1,934,137				2,045,090				2,081,503
Savings			3,850,549				3,835,180				3,773,417
Certificates of deposit			2,595,816				2,646,783				2,939,648
Brokered certificates of deposit			119,052				119,052				121,068
Total deposits			13,973,927				13,944,497				13,716,527
Securities sold under agreements to repurchase and other short-term borrowings			1,203,378				1,268,589				1,079,866
Federal Home Loan Bank advances			1,529,102				1,352,466				403,131
Long-term debt			472,928				474,318				566,677
Accrued expenses and other liabilities			318,866				199,330				197,949
Total liabilities			17,498,201				17,239,200				15,964,150
Webster Financial Corporation shareholders’ equity			1,931,548				1,894,942				1,829,154
Noncontrolling interests			—				—				9,577
Total equity			1,931,548				1,894,942				1,838,731
Total Liabilities and Equity		$	19,429,749			$	19,134,142			$	17,802,881

See Selected Financial Highlights for footnotes.

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WEBSTER FINANCIAL CORPORATION

Consolidated Statements of Operations (unaudited)

 

 

		Three Months Ended June								Six Months Ended June
(In thousands, except per share data)		2012				2011				2012				2011
Interest income:
Interest and fees on loans and leases		$	121,379			$	122,395			$	242,120			$	244,338
Interest and dividends on securities			52,597				53,527				105,465				107,371
Loans held for sale			657				177				1,155				599
Total interest income			174,633				176,099				348,740				352,308
Interest expense:
Deposits			15,102				21,841				31,158				44,610
Borrowings			15,153				13,345				29,836				26,624
Total interest expense			30,255				35,186				60,994				71,234
Net interest income			144,378				140,913				287,746				281,074
Provision for loan losses			5,000				5,000				9,000				15,000
Net interest income after provision for loan losses			139,378				135,913				278,746				266,074
Noninterest income:
Deposit service fees			23,719				26,095				47,082				51,435
Loan related fees			3,565				5,590				8,434				10,033
Wealth and investment services			7,249				7,454				14,470				14,176
Mortgage banking activities			3,624				1,234				8,007				2,487
Increase in cash surrender value of life insurance policies			2,561				2,576				5,078				5,109
Net gain on investment securities			2,537				1,647				2,537				2,024
Other income			4,098				1,593				5,731				4,841
Total noninterest income			47,353				46,189				91,339				90,105
Noninterest expense:
Compensation and benefits			63,587				65,592				132,206				132,604
Occupancy			12,578				12,856				25,460				27,591
Technology and equipment expense			16,021				15,134				31,603				30,526
Marketing			5,094				4,252				9,194				9,772
Professional and outside services			3,387				2,813				6,079				5,243
Intangible assets amortization			1,397				1,397				2,794				2,794
Foreclosed and repossessed asset expenses			176				710				643				1,594
Foreclosed and repossessed asset (gains) write-downs			(670	)			794				(1,334	)			479
Loan workout expenses			2,201				1,779				4,025				3,579
Deposit insurance			5,723				5,918				11,432				11,699
Other expenses			14,443				14,716				28,433				28,640
			123,937				125,961				250,535				254,521
Debt prepayment penalties			2,515				—				3,649				—
Write-down for expedited asset disposition			—				5,073				—				5,073
Contract termination and severance			727				1,060				727				1,060
Branch and facility optimization			—				859				81				1,132
Costs for warrant registration			—				350				—				350
Provision for litigation and settlements			—				194				—				486
Loan repurchase and unfunded commitment reserve benefit, net			—				(1,436	)			—				(1,436	)
Total noninterest expense			127,179				132,061				254,992				261,186
Income from continuing operations before income taxes			59,552				50,041				115,093				94,993
Income tax expense			18,312				15,857				34,915				28,225
Income from continuing operations			41,240				34,184				80,178				66,768
Income from discontinued operations, net of tax			—				—				—				1,995
Consolidated net income			41,240				34,184				80,178				68,763
Less: Net loss attributable to noncontrolling interests			—				—				—				(1	)
Net income attributable to Webster Financial Corp.			41,240				34,184				80,178				68,764
Preferred stock dividends			(615	)			(831	)			(1,230	)			(1,662	)
Net income available to common shareholders		$	40,625			$	33,353			$	78,948			$	67,102
Diluted shares (average)			91,543				92,184				91,669				92,368
Net income per common share available to common shareholders:
Basic
Income from continuing operations		$	0.46			$	0.38			$	0.90			$	0.75
Net income			0.46				0.38				0.90				0.77
Diluted
Income from continuing operations			0.44				0.36				0.86				0.70
Net income			0.44				0.36				0.86				0.72

See Selected Financial Highlights for footnotes.

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WEBSTER FINANCIAL CORPORATION

Five Quarter Consolidated Statements of Operations (unaudited)

 

 

		Three Months Ended
(In thousands, except per share data)		June 30, 2012				March 31, 2012				Dec. 31, 2011				Sept. 30, 2011				June 30, 2011
Interest income:
Interest and fees on loans and leases		$	121,379			$	120,741			$	121,223			$	121,322			$	122,395
Interest and dividends on securities			52,597				52,868				51,260				52,974				53,527
Loans held for sale			657				498				370				266				177
Total interest income			174,633				174,107				172,853				174,562				176,099
Interest expense:
Deposits			15,102				16,056				17,268				18,930				21,841
Borrowings			15,153				14,683				14,576				13,947				13,345
Total interest expense			30,255				30,739				31,844				32,877				35,186
Net interest income			144,378				143,368				141,009				141,685				140,913
Provision for loan losses			5,000				4,000				2,500				5,000				5,000
Net interest income after provision for loan losses			139,378				139,368				138,509				136,685				135,913
Noninterest income:
Deposit service fees			23,719				23,363				24,286				27,074				26,095
Loan related fees			3,565				4,869				4,896				5,308				5,590
Wealth and investment services			7,249				7,221				5,759				6,486				7,454
Mortgage banking activities			3,624				4,383				1,094				1,324				1,234
Increase in cash surrender value of life insurance policies			2,561				2,517				2,609				2,642				2,576
Net gain on investment securities			2,537				—				—				—				1,647
Other income			4,098				1,633				3,602				1,857				1,593
Total noninterest income			47,353				43,986				42,246				44,691				46,189
Noninterest expense:
Compensation and benefits			63,587				68,619				68,146				61,897				65,592
Occupancy			12,578				12,882				13,125				13,150				12,856
Technology and equipment expense			16,021				15,582				15,054				15,141				15,134
Marketing			5,094				4,100				4,540				4,144				4,252
Professional and outside services			3,387				2,692				2,835				3,125				2,813
Intangible assets amortization			1,397				1,397				1,397				1,397				1,397
Foreclosed and repossessed asset expenses			176				467				730				726				710
Foreclosed and repossessed asset (gains) write-downs			(670	)			(664	)			(63	)			(722	)			794
Loan workout expenses			2,201				1,824				1,956				2,012				1,779
Deposit insurance			5,723				5,709				4,756				4,472				5,918
Other expenses			14,443				13,990				12,864				14,392				14,716
			123,937				126,598				125,340				119,734				125,961
Debt prepayment penalties			2,515				1,134				5,203				—				—
Write-down for expedited asset disposition			—				—				1,187				—				5,073
Contract termination and severance			727				—				2,485				1,555				1,060
Branch and facility optimization			—				81				1,689				2,183				859
Preferred stock redemption costs			—				—				423				—				—
Costs for warrant registration			—				—				—				—				350
Provision (benefit) for litigation and settlements			—				—				(9,755	)			(254	)			194
Loan repurchase and unfunded commitment reserve benefit, net			—				—				—				—				(1,436	)
Total noninterest expense			127,179				127,813				126,572				123,218				132,061
Income from continuing operations before income taxes			59,552				55,541				54,183				58,158				50,041
Income tax expense			18,312				16,603				13,799				15,927				15,857
Income from continuing operations			41,240				38,938				40,384				42,231				34,184
Income from discontinued operations, net of tax			—				—				—				—				—
Consolidated net income			41,240				38,938				40,384				42,231				34,184
Less: Net loss attributable to noncontrolling interests			—				—				—				—				—
Net income attributable to Webster Financial Corp.			41,240				38,938				40,384				42,231				34,184
Preferred stock dividends			(615	)			(615	)			(793	)			(831	)			(831	)
Net income available to common shareholders		$	40,625			$	38,323			$	39,591			$	41,400			$	33,353
Diluted shares (average)			91,543				91,782				90,929				91,205				92,184
Net income per common share available to common shareholders:
Basic
Income from continuing operations		$	0.46			$	0.44			$	0.45			$	0.48			$	0.38
Net income			0.46				0.44				0.45				0.48				0.38
Diluted
Income from continuing operations			0.44				0.42				0.43				0.45				0.36
Net income			0.44				0.42				0.43				0.45				0.36

See Selected Financial Highlights for footnotes.

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WEBSTER FINANCIAL CORPORATION

Five Quarter Interest Rate Spreads and Margin (unaudited)

 

 

		Three Months Ended
		June 30, 2012				March 31, 2012				December 31, 2011				September 30, 2011				June 30, 2011
Interest rate spread
Yield on interest-earning assets			4.00	%			4.06	%			4.13	%			4.27	%			4.33	%
Cost of interest-bearing liabilities			0.71				0.73				0.77				0.82				0.89
Interest rate spread			3.29	%			3.33	%			3.36	%			3.45	%			3.44	%
Net interest margin			3.32	%			3.36	%			3.39	%			3.49	%			3.48	%

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

 

 

Three Months Ended June 30,		2012												2011 (c)
(Dollars in thousands)		Average balance				Interest				Fully tax- equivalent yield/rate				Average balance				Interest				Fully tax- equivalent yield/rate
Assets:
Interest-earning assets:
Loans		$	11,420,721			$	121,379				4.23	%		$	10,991,890			$	122,395				4.44	%
Investment securities (a)			6,122,745				55,497				3.65				5,244,359				56,395				4.34
Loans held for sale			68,362				657				3.85				14,814				177				4.78
Federal Home Loan and Federal Reserve Bank stock			142,595				881				2.48				143,874				832				2.32
Interest-bearing deposits			67,480				32				0.19				212,172				123				0.23
Total interest-earning assets			17,821,903				178,446				4.00				16,607,109				179,922				4.33
Noninterest-earning assets			1,383,932												1,313,712
Total assets		$	19,205,835											$	17,920,821
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Deposits:
Demand			2,554,873			$	—				—	%		$	2,225,819			$	—				—	%
Savings, interest checking, and money market			8,676,206				5,285				0.24				8,675,135				9,554				0.44
Certificates of deposit			2,732,024				9,817				1.45				3,122,527				12,287				1.58
Total deposits			13,963,103				15,102				0.43				14,023,481				21,841				0.62
Securities sold under agreements to repurchase and other short-term borrowings			1,210,234				5,360				1.75				891,344				3,777				1.68
Federal Home Loan Bank advances			1,447,347				4,426				1.21				403,223				3,295				3.23
Long-term debt			473,602				5,367				4.53				568,868				6,273				4.41
Total borrowings			3,131,183				15,153				1.92				1,863,435				13,345				2.85
Total interest-bearing liabilities			17,094,286				30,255				0.71				15,886,916				35,186				0.89
Noninterest-bearing liabilities			197,224												188,395
Total liabilities			17,291,510												16,075,311
Noncontrolling interests			—												9,577
Webster Financial Corp. shareholders’ equity			1,914,325												1,835,933
Total liabilities and equity		$	19,205,835											$	17,920,821
Tax-equivalent net interest income							148,191												144,736
Less: tax-equivalent adjustment							(3,813	)											(3,823	)
Net interest income						$	144,378											$	140,913
Interest rate spread											3.29	%											3.44	%
Net interest margin											3.32	%											3.48	%

See Selected Financial Highlights for footnotes.

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WEBSTER FINANCIAL CORPORATION

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

 

 

Six Months Ended June 30,		2012												2011 (c)
(Dollars in thousands)		Average balance				Interest				Fully tax- equivalent yield/rate				Average balance				Interest				Fully tax- equivalent yield/rate
Assets:
Interest-earning assets:
Loans		$	11,348,027			$	242,120				4.25	%		$	11,025,481			$	244,338				4.43	%
Investment securities (a)			6,042,040				111,177				3.71				5,322,767				113,239				4.29
Loans held for sale			60,034				1,155				3.85				25,792				599				4.64
Federal Home Loan and Federal Reserve Bank stock			143,073				1,757				2.47				143,874				1,663				2.33
Interest-bearing deposits			72,457				62				0.17				137,156				157				0.23
Total interest-earning assets			17,665,631				356,271				4.03				16,655,070				359,996				4.33
Noninterest-earning assets			1,389,005												1,324,594
Total assets		$	19,054,636											$	17,979,664
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Deposits:
Demand		$	2,495,035			$	—				—	%		$	2,193,967			$	—				—	%
Savings, interest checking, and money market			8,652,127				11,079				0.26				8,659,127				20,137				0.47
Certificates of deposit			2,771,113				20,079				1.46				3,116,638				24,473				1.58
Total deposits			13,918,275				31,158				0.45				13,969,732				44,610				0.64
Securities sold under agreements to repurchase and other short-term borrowings			1,188,392				9,794				1.63				942,745				7,339				1.55
Federal Home Loan Bank advances			1,353,782				8,990				1.31				478,474				6,650				2.76
Long-term debt			490,359				11,052				4.51				575,188				12,635				4.39
Total borrowings			3,032,533				29,836				1.95				1,996,407				26,624				2.66
Total interest-bearing liabilities			16,950,808				60,994				0.72				15,966,139				71,234				0.90
Noninterest-bearing liabilities			208,279												192,356
Total liabilities			17,159,087												16,158,495
Noncontrolling interests			—												9,606
Webster Financial Corporation shareholders’ equity			1,895,549												1,811,563
Total liabilities and equity		$	19,054,636											$	17,979,664
Tax-equivalent net interest income							295,277												288,762
Less: tax-equivalent adjustment							(7,531	)											(7,688	)
Net interest income						$	287,746											$	281,074
Interest rate spread											3.31	%											3.43	%
Net interest margin											3.34	%											3.47	%

See Selected Financial Highlights for footnotes.

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WEBSTER FINANCIAL CORPORATION

Five Quarter Loan Balances (unaudited)

 

 

(Dollars in thousands)		June 30, 2012				March 31, 2012				Dec. 31, 2011				Sept. 30, 2011				June 30, 2011
Loan Balances (actuals):
Continuing Portfolio:
Commercial non-mortgage		$	2,069,127			$	1,972,205			$	1,932,542			$	1,812,685			$	1,787,920
Equipment financing			417,654				446,585				474,804				518,369				578,117
Asset based lending			499,212				470,187				453,251				510,188				480,662
Commercial real estate			2,518,392				2,389,206				2,345,241				2,225,250				2,170,279
Residential development			33,035				36,591				39,648				51,045				53,198
Residential mortgages			3,300,616				3,270,212				3,219,888				3,150,285				3,139,407
Consumer			2,565,654				2,585,685				2,612,476				2,627,385				2,641,102
Total continuing			11,403,690				11,170,671				11,077,850				10,895,207				10,850,685
Allowance for loan losses			(171,860	)			(180,413	)			(203,612	)			(227,477	)			(243,543	)
Total continuing, net			11,231,830				10,990,258				10,874,238				10,667,730				10,607,142
Liquidating Portfolio:
National Construction Lending Center (NCLC)			1				1				1				1				1
Consumer			136,306				141,478				147,553				154,878				161,805
Total liquidating portfolio			136,307				141,479				147,554				154,879				161,806
Allowance for loan losses			(26,897	)			(29,875	)			(29,875	)			(29,875	)			(37,700	)
Total liquidating, net			109,410				111,604				117,679				125,004				124,106
Total Loan Balances (actuals)			11,539,997				11,312,150				11,225,404				11,050,086				11,012,491
Allowance for loan losses			(198,757	)			(210,288	)			(233,487	)			(257,352	)			(281,243	)
Loans, net		$	11,341,240			$	11,101,862			$	10,991,917			$	10,792,734			$	10,731,248
Loan Balances (average):
Continuing Portfolio:
Commercial non-mortgage		$	2,008,778			$	1,970,656			$	1,868,885			$	1,798,644			$	1,747,658
Equipment financing			430,882				458,111				495,667				551,732				621,447
Asset based lending			480,574				474,264				492,982				497,426				472,837
Commercial real estate			2,453,430				2,336,576				2,254,970				2,185,662				2,154,215
Residential development			35,422				38,401				49,182				51,051				54,757
Residential mortgages			3,296,306				3,253,199				3,186,885				3,145,086				3,133,742
Consumer			2,576,521				2,598,758				2,622,378				2,635,911				2,641,621
Total continuing			11,281,913				11,129,965				10,970,949				10,865,512				10,826,277
Allowance for loan losses			(182,117	)			(201,592	)			(219,566	)			(247,551	)			(255,412	)
Total continuing, net			11,099,796				10,928,373				10,751,383				10,617,961				10,570,865
Liquidating Portfolio:
NCLC			1				1				1				1				1
Consumer			138,807				145,367				151,422				158,161				165,612
Total liquidating portfolio			138,808				145,368				151,423				158,162				165,613
Allowance for loan losses			(26,897	)			(29,875	)			(29,875	)			(29,875	)			(37,700	)
Total liquidating, net			111,911				115,493				121,548				128,287				127,913
Total Loan Balances (average)			11,420,721				11,275,333				11,122,372				11,023,674				10,991,890
Allowance for loan losses			(209,014	)			(231,467	)			(249,441	)			(277,426	)			(293,112	)
Loans, net		$	11,211,707			$	11,043,866			$	10,872,931			$	10,746,248			$	10,698,778

See Selected Financial Highlights for footnotes.

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WEBSTER FINANCIAL CORPORATION

Five Quarter Nonperforming Assets (unaudited)

 

 

(Dollars in thousands)		June 30, 2012				March 31, 2012				Dec. 31, 2011				Sept. 30, 2011				June 30, 2011
Nonperforming loans:
Continuing Portfolio:
Commercial non-mortgage		$	29,271			$	31,547			$	27,884			$	39,386			$	46,327
Equipment financing			5,862				4,868				7,154				8,439				11,313
Asset based lending			262				1,475				1,880				5,126				3,650
Commercial real estate			23,457				25,131				32,197				42,461				38,794
Residential development			5,982				6,140				6,762				16,611				16,173
Residential mortgages			77,336				79,110				82,052				79,285				82,189
Consumer			22,616				26,098				25,059				24,228				24,674
Nonperforming loans - continuing portfolio			164,786				174,369				182,988				215,536				223,120
Liquidating Portfolio:
Consumer			4,460				3,896				5,091				5,492				5,116
Nonperforming loans - liquidating portfolio			4,460				3,896				5,091				5,492				5,116
Total nonperforming loans		$	169,246			$	178,265			$	188,079			$	221,028			$	228,236
Other real estate owned and repossessed assets:
Continuing Portfolio:
Commercial		$	917			$	2,051			$	1,961			$	12,961			$	13,577
Repossessed equipment			721				674				123				1,421				2,115
Residential			2,271				2,648				1,947				3,343				4,772
Consumer			466				580				805				1,021				725
Total continuing			4,375				5,953				4,836				18,746				21,189
Liquidating Portfolio:
NCLC			—				—				132				171				659
Total liquidating			—				—				132				171				659
Total other real estate owned and repossessed assets		$	4,375			$	5,953			$	4,968			$	18,917			$	21,848
Total nonperforming assets		$	173,621			$	184,218			$	193,047			$	239,945			$	250,084

See Selected Financial Highlights for footnotes.

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WEBSTER FINANCIAL CORPORATION

Five Quarter Past Due Loans (unaudited)

 

 

(Dollars in thousands)		June 30, 2012				March 31, 2012				Dec. 31, 2011				Sept. 30, 2011				June 30, 2011
Past due 30-89 days:
Accruing loans:
Continuing Portfolio:
Commercial non-mortgage		$	6,479			$	6,938			$	4,619			$	7,428			$	8,568
Equipment financing			1,665				4,099				4,800				5,054				7,155
Asset based lending			—				—				—				—				—
Commercial real estate			3,152				1,101				1,766				2,969				4,670
Residential development			—				—				—				664				500
Residential mortgages			26,966				22,915				24,361				23,730				18,631
Consumer			22,163				19,592				20,847				18,867				18,989
Past Due 30-89 days - continuing portfolio			60,425				54,645				56,393				58,712				58,513
Liquidating Portfolio:
Consumer			4,377				5,263				4,538				4,653				6,134
Past Due 30-89 days - liquidating portfolio			4,377				5,263				4,538				4,653				6,134
Accruing loans past due 90 days or more			1,074				43				724				764				1,417
Total past due loans		$	65,876			$	59,951			$	61,655			$	64,129			$	66,064

See Selected Financial Highlights for footnotes.

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WEBSTER FINANCIAL CORPORATION

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

 

 

		For the Three Months Ended
(Dollars in thousands)		June 30, 2012				March 31, 2012				Dec. 31, 2011				Sept. 30, 2011				June 30, 2011
Beginning balance		$	210,288			$	233,487			$	257,352			$	281,243			$	297,948
Provision			5,000				4,000				2,500				5,000				5,000
Charge-offs continuing portfolio:
Commercial non-mortgage			5,164				14,994				6,684				11,311				4,911
Equipment financing			165				634				55				551				413
Asset based lending			512				—				2,150				3,317				450
Commercial real estate			1,066				5,848				7,768				3,377				3,765
Residential development			—				—				453				—				—
Residential mortgages			3,948				3,115				2,548				2,591				2,951
Consumer			8,122				6,487				7,551				8,874				8,843
Charge-offs continuing portfolio			18,977				31,078				27,209				30,021				21,333
Charge-offs liquidating portfolio:
NCLC			4				—				7				61				16
Consumer			3,227				3,564				3,958				3,734				5,049
Charge-offs liquidating portfolio			3,231				3,564				3,965				3,795				5,065
Total charge-offs			22,208				34,642				31,174				33,816				26,398
Recoveries continuing portfolio:
Commercial non-mortgage			957				886				1,215				858				1,150
Equipment financing			1,115				2,348				1,161				2,240				1,579
Asset based lending			721				914				195				273				171
Commercial real estate			34				1,069				96				36				406
Residential development			12				31				5				—				—
Residential mortgages			126				118				135				357				96
Consumer			2,453				1,932				1,721				998				1,079
Recoveries continuing portfolio			5,418				7,298				4,528				4,762				4,481
Recoveries liquidating portfolio:
NCLC			10				23				177				17				23
Consumer			249				122				104				146				189
Recoveries liquidating portfolio			259				145				281				163				212
Total recoveries			5,677				7,443				4,809				4,925				4,693
Total net charge-offs			16,531				27,199				26,365				28,891				21,705
Ending balance		$	198,757			$	210,288			$	233,487			$	257,352			$	281,243

See Selected Financial Highlights for footnotes.

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WEBSTER FINANCIAL CORPORATION

Reconciliations to GAAP Financial Measures

 

The Company evaluates its business based on the following ratios that utilize tangible equity, a non-GAAP financial measure. Return on average tangible equity measures the Company’s earnings contribution as a percentage of average shareholders’ equity less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities on intangible assets. The tangible equity ratio represents total ending shareholders’ equity less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities divided by total assets less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities on intangible assets. The tangible common equity ratio represents ending common shareholders’ equity less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities divided by total assets less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities on intangible assets. Tangible book value per common share represents ending common shareholders’ equity less goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities on intangible assets divided by ending common shares outstanding.

The efficiency ratio, which measures the costs expended to generate a dollar of revenue, is calculated excluding foreclosed property expense, amortization of intangibles, gain or loss on securities, and other non-recurring items. Accordingly, this is also a non-GAAP financial measure.

See the tables below for reconciliations of these non-GAAP financial measures with financial measures defined by GAAP for the three months ended June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011, and June 30, 2011. The Company believes the use of these non-GAAP financial measures provides additional clarity in assessing the results of the Company. Other companies may define or calculate supplemental financial data differently.

 

		Three Months Ended
(Dollars in thousands)		June 30, 2012				March 31, 2012				Dec. 31, 2011				Sept. 30, 2011				June 30, 2011
Reconciliation of average shareholders’ equity to average tangible shareholders’ equity
Average shareholders’ equity		$	1,914,325			$	1,876,774			$	1,863,691			$	1,848,666			$	1,835,956
Average goodwill			(529,887	)			(529,887	)			(529,887	)			(529,887	)			(529,887	)
Average intangible assets (excluding mortgage servicing rights)			(13,576	)			(14,973	)			(16,368	)			(17,771	)			(19,163	)
Average related deferred tax liabilities			4,862				5,362				5,729				6,220				6,707
Average tangible shareholders’ equity		$	1,375,724			$	1,337,276			$	1,323,165			$	1,307,228			$	1,293,613
Reconciliation of period-end shareholders’ equity to period-end tangible shareholders’ equity
Shareholders’ equity		$	1,931,548			$	1,894,942			$	1,845,774			$	1,836,269			$	1,829,154
Goodwill			(529,887	)			(529,887	)			(529,887	)			(529,887	)			(529,887	)
Intangible assets (excluding mortgage servicing rights)			(12,896	)			(14,293	)			(15,690	)			(17,086	)			(18,483	)
Related deferred tax liabilities			4,618				5,119				5,492				5,980				6,469
Tangible shareholders’ equity		$	1,393,383			$	1,355,881			$	1,305,689			$	1,295,276			$	1,287,253
Reconciliation of period-end common shareholders’ equity to period-end tangible common shareholders’ equity
Common shareholders’ equity		$	1,902,609			$	1,866,003			$	1,816,835			$	1,807,330			$	1,800,215
Goodwill			(529,887	)			(529,887	)			(529,887	)			(529,887	)			(529,887	)
Intangible assets (excluding mortgage servicing rights)			(12,896	)			(14,293	)			(15,690	)			(17,086	)			(18,483	)
Related deferred tax liabilities			4,618				5,119				5,492				5,980				6,469
Tangible common shareholders’ equity		$	1,364,444			$	1,326,942			$	1,276,750			$	1,266,337			$	1,258,314
Reconciliation of period-end assets to period-end tangible assets
Assets		$	19,429,749			$	19,134,142			$	18,714,340			$	18,224,011			$	17,802,881
Goodwill			(529,887	)			(529,887	)			(529,887	)			(529,887	)			(529,887	)
Intangible assets (excluding mortgage servicing rights)			(12,896	)			(14,293	)			(15,690	)			(17,086	)			(18,483	)
Related deferred tax liabilities			4,618				5,119				5,492				5,980				6,469
Tangible assets		$	18,891,584			$	18,595,081			$	18,174,255			$	17,683,018			$	17,260,980
Book value per common share
Common shareholders’ equity		$	1,902,609			$	1,866,003			$	1,816,835			$	1,807,330			$	1,800,215
Ending common shares issued and outstanding (in thousands)			87,885				87,849				87,600				87,507				87,532
Book value per share of common stock		$	21.65			$	21.24			$	20.74			$	20.65			$	20.57

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WEBSTER FINANCIAL CORPORATION

Reconciliations to GAAP Financial Measures (continued)

 

 

		Three Months Ended
(Dollars in thousands)		June 30, 2012				March 31, 2012				Dec. 31, 2011				Sept. 30, 2011				June 30, 2011
Tangible book value per common share
Tangible common shareholders’ equity		$	1,364,444			$	1,326,942			$	1,276,750			$	1,266,337			$	1,258,314
Ending common shares issued and outstanding (in thousands)			87,885				87,849				87,600				87,507				87,532
Tangible book value per common share		$	15.53			$	15.10			$	14.57			$	14.47			$	14.38
Reconciliation of noninterest expense to noninterest expense used in the efficiency ratio
Noninterest expense		$	127,179			$	127,813			$	126,572			$	123,218			$	132,061
Foreclosed property expense			(176	)			(467	)			(730	)			(726	)			(710	)
Amortization of intangibles			(1,397	)			(1,397	)			(1,397	)			(1,397	)			(1,397	)
Other expense			(2,572	)			(551	)			(1,169	)			(2,762	)			(6,894	)
Noninterest expense used in the efficiency ratio		$	123,034			$	125,398			$	123,276			$	118,333			$	123,060
Reconciliation of income to income used in the efficiency ratio
Net interest income before provision		$	144,378			$	143,368			$	141,009			$	141,685			$	140,913
Fully taxable-equivalent adjustment			3,813				3,718				4,011				3,798				3,823
Noninterest income			47,353				43,986				42,246				44,691				46,189
Less: Net gain on investment securities			(2,537	)			—				—				—				(1,647	)
Income used in the efficiency ratio		$	193,007			$	191,072			$	187,266			$	190,174			$	189,278