Webster Reports First Quarter 2024 EPS of $1.23; Adjusted EPS of $1.35

Share Name	Share Symbol	Market	Type
Webster Financial Corporation	NYSE:WBS	NYSE	Common Stock

	Price Change	% Change	Share Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	-0.78	-1.40%	55.04	56.14	54.77	55.69	689,968	21:35:22

Webster Financial (NYSE:WBS)
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Webster Financial Corporation ("Webster") (NYSE: WBS), the holding company for Webster Bank, N.A., today announced net income available to common stockholders of $212.2 million, or $1.23 per diluted share, for the quarter ended March 31, 2024, compared to $216.8 million, or $1.24 per diluted share, for the quarter ended March 31, 2023.

First quarter 2024 results include $13.2 million pre-tax ($20.8 million after tax), or $0.121 per diluted share, of net charges related to an increase in the FDIC special assessment estimate, Ametros acquisition expenses, securities repositioning, a net gain on sale of mortgage servicing rights ("MSRs"), and a discrete tax adjustment. Excluding these items, adjusted earnings per diluted share would have been $1.351 for the quarter ended March 31, 2024.

"We reported solid results in the first quarter, including an adjusted return on assets of 1.26 percent and an adjusted return on tangible common equity of 17.85 percent," said John R. Ciulla, chairman and chief executive officer. "We also enhanced our distinctive deposit franchise with the close of the Ametros acquisition, which expands our expertise in healthcare financial services."

Highlights for the first quarter of 2024:

Revenue of $667.1 million.
Period end loan and lease balance of $51.1 billion, up $0.4 billion or 0.7 percent from prior quarter; consisting of 80.9 percent commercial loans and leases, 19.1 percent consumer loans, and a loan to deposit ratio of 84.1 percent.
Period end deposit balance of $60.7 billion, down $36.5 million or 0.1 percent from prior quarter; core deposit growth of $1.5 billion from prior quarter.
Provision for credit losses of $45.5 million.
Return on average assets of 1.15 percent; adjusted 1.26 percent1.
Return on average tangible common equity of 16.30 percent1; adjusted 17.85 percent1.
Net interest margin of 3.35 percent, down 7 basis points from prior quarter.
Common equity tier 1 ratio of 10.51 percent.
Efficiency ratio of 45.25 percent1.
Tangible common equity ratio of 7.15 percent1.

"Webster generated strong deposit growth in key businesses this quarter, including HSA Bank and Ametros," said Glenn MacInnes, executive vice president and chief financial officer. "Our funding profile and overall balance sheet strength puts us in a unique position to deliver for our clients.”

Line of Business performance compared to the first quarter of 2023

Effective January 1, 2024, Webster realigned certain of its business banking operations and related accounts from Commercial Banking to Consumer Banking to deliver operational efficiencies and better serve its customers. As a result, $1.5 billion of loans and $2.2 billion of deposits were moved from Commercial Banking to Consumer Banking. Prior period results have been recast accordingly.

Commercial Banking

Webster’s Commercial Banking segment serves businesses that have more than $10 million of revenue through its regional banking, middle market, asset-based lending, equipment finance, commercial real estate, sponsor finance, private banking, and treasury services business units. At March 31, 2024, Commercial Banking had $39.9 billion in loans and leases and $16.1 billion in deposits, as well as a combined $3.0 billion in assets under administration and management.

Commercial Banking Operating Results:

Percent

Three months ended March 31,

Favorable/

(In thousands)

2024

2023

(Unfavorable)

Net interest income

341,942

360,293

(5.1

Non-interest income

34,280

33,720

1.7

Operating revenue

376,222

394,013

(4.5

)

Non-interest expense

106,225

98,833

(7.5

)

Pre-tax, pre-provision net revenue

269,997

295,180

(8.5

)

Percent

At March 31,

Increase/

(In millions)

2024

2023

(Decrease)

Loans and leases

39,883

40,127

(0.6

Deposits

16,075

16,287

(1.3

)

AUA / AUM (off balance sheet)

3,017

2,670

13.0

Pre-tax, pre-provision net revenue decreased $25.2 million, to $270.0 million, in the quarter as compared to prior year. Net interest income decreased $18.4 million, to $341.9 million, primarily driven by lower deposit balances and higher rates paid on deposits. Non-interest income increased $0.6 million, to $34.3 million, primarily driven by increases in cash management fees and interest rate hedging activities, partially offset by lower net loan servicing income. Non-interest expense increased $7.4 million, to $106.2 million, primarily resulting from continued investments in talent, operational support, and technology to support balance sheet growth.

Healthcare Financial Services

Webster established a Healthcare Financial Services segment this quarter, which is comprised of HSA Bank and the newly acquired Ametros business. This segment offers consumer-directed healthcare solutions that include health savings accounts, health reimbursement arrangements, administration of medical insurance claim settlements, flexible spending accounts and commuter benefits. Accounts are distributed nationwide directly to employers and individual consumers, as well as through national and regional insurance carriers, benefit consultants, and financial advisors. At March 31, 2024, Healthcare Financial Services had $14.7 billion in total footings comprising $9.5 billion in deposits and $5.2 billion in assets under administration through linked investment accounts.

Healthcare Financial Services Operating Results:

Percent

Three months ended March 31,

Favorable/

(In thousands)

2024

2023

(Unfavorable)

Net interest income

86,138

71,730

20.1

Non-interest income

31,061

24,067

29.1

Operating revenue

117,199

95,797

22.3

Non-interest expense

52,127

43,700

(19.3

)

Pre-tax, net revenue

65,072

52,097

24.9

At March 31,

Percent

(Dollars in millions)

2024

2023

Increase

Number of accounts (thousands)

3,344

3,172

5.4

Deposits

9,474

8,273

14.5

Linked investment accounts (off balance sheet)

5,194

3,776

37.6

Total footings

14,668

12,049

21.7

Pre-tax net revenue increased $13.0 million, to $65.1 million, in the quarter as compared to prior year. The increase in pre-tax net revenue was partially attributable to the acquisition of Ametros in the quarter. Net interest income increased $14.4 million, to $86.1 million, primarily due to $5.7 million from Ametros and an increase in net deposit spread, and deposit growth at HSA Bank. Non-interest income increased $7.0 million, to $31.1 million, primarily due to $4.6 million from Ametros, as well as higher account fees and interchange fees at HSA Bank. Non-interest expense increased $8.4 million, to $52.1 million, primarily due to $7.3 million from Ametros, coupled with higher compensation and benefits expense, and service contract expense related to account growth at HSA Bank.

Consumer Banking

Webster's Consumer Banking segment serves consumer and business banking customers primarily throughout southern New England and the New York metro and suburban markets. Consumer Banking is comprised of the consumer lending and business banking business units, as well as a distribution network consisting of 196 banking centers and 347 ATMs, a customer care center, and a full range of web and mobile-based banking services. Additionally, Webster Investments provides investment services to consumers and small business owners within Webster's targeted markets and retail footprint. At March 31, 2024, Consumer Banking had $11.2 billion in loans and $26.9 billion in deposits, as well as $8.1 billion in assets under administration.

Consumer Banking Operating Results:

Percent

Three months ended March 31,

Favorable/

(In thousands)

2024

2023

(Unfavorable)

Net interest income

205,777

234,604

(12.3

Non-interest income

33,978

27,636

22.9

Operating revenue

239,755

262,240

(8.6

)

Non-interest expense

120,121

116,555

(3.1

)

Pre-tax, pre-provision net revenue

119,634

145,685

(17.9

)

At March 31,

Percent

(In millions)

2024

2023

Increase

Loans

11,209

10,777

4.0

Deposits

26,914

25,708

4.7

AUA (off balance sheet)

8,125

7,750

4.8

Pre-tax, pre-provision net revenue decreased $26.1 million, to $119.6 million, in the quarter as compared to prior year. Net interest income decreased $28.8 million, to $205.8 million, primarily driven by higher rates paid on deposits, partially offset by loan and deposit growth. Non-interest income increased $6.3 million, to $34.0 million, primarily driven by a net gain on sale of MSRs, partially offset by lower deposit service fees and loan related fees. Non-interest expense increased $3.6 million, to $120.1 million, primarily driven by higher compensation and operational support expenses, partially offset by decreases in technology costs and professional services expenses.

Consolidated financial performance:

Quarterly net interest income compared to the first quarter of 2023:

Net interest income was $567.7 million compared to $595.3 million.
Net interest margin was 3.35 percent compared to 3.66 percent. The yield on interest-earning assets increased by 51 basis points, and the cost of interest-bearing liabilities increased by 87 basis points.
Average interest-earning assets totaled $68.1 billion and increased by $2.0 billion, or 3.1 percent.
Average loans and leases totaled $50.9 billion and increased by $0.8 billion, or 1.7 percent.
Average deposits totaled $60.6 billion and increased by $5.8 billion, or 10.5 percent.

Quarterly provision for credit losses:

The provision for credit losses was $45.5 million in the quarter, contributing to a $5.7 million increase in the allowance for credit losses on loans and leases from prior quarter. The provision also contributed to a decrease in the reserve on unfunded loan commitments of $0.2 million. The provision for credit losses was $36.0 million in the prior quarter, and $46.7 million a year ago.
Net charge-offs were $37.5 million, compared to $34.0 million in the prior quarter, and $24.5 million a year ago. The ratio of net charge-offs to average loans and leases was 0.29 percent, compared to 0.27 percent in the prior quarter, and 0.20 percent a year ago.
The allowance for credit losses on loans and leases represented 1.26 percent of total loans and leases, compared to 1.25 percent at December 31, 2023, and 1.21 percent at March 31, 2023. The allowance represented 226 percent of nonperforming loans and leases at March 31, 2024, compared to 303 percent at December 31, 2023, and 332 percent at March 31, 2023.

Quarterly non-interest income compared to the first quarter of 2023:

Total non-interest income was $99.4 million compared to $70.8 million, an increase of $28.6 million. Total non-interest income includes a $9.8 million loss on the sale of investment securities and an $11.7 million net gain on the sale of MSRs, compared to a $16.7 million loss on the sale of investment securities a year ago. Excluding those items, total non-interest income increased $10.0 million. The increase is primarily attributable to the addition of Ametros and BOLI events.

Quarterly non-interest expense compared to the first quarter of 2023:

Total non-interest expense was $335.9 million compared to $332.5 million, an increase of $3.4 million. Total non-interest expense includes $11.9 million related to an increase to the FDIC special assessment estimate and $3.1 million of Ametros acquisition expenses, compared to $29.4 million of Sterling merger charges a year ago. Excluding those charges, total non-interest expense increased $17.8 million. The increase is primarily attributable to the addition of Ametros and higher performance-based incentive accruals.

Quarterly income taxes compared to the first quarter of 2023:

Income tax expense was $69.3 million compared to $65.8 million, and the effective tax rate was 24.3 percent compared to 23.0 percent. The higher effective tax rate in the current period reflects the recognition of a $10.9 million discrete expense for an out-of-period adjustment, impacting the effective tax rate in the current period by 3.8 percentage points.

Investment securities:

Total investment securities, net were $16.3 billion, compared to $16.0 billion at December 31, 2023, and $14.9 billion at March 31, 2023. The carrying value of the available-for-sale portfolio included $758.5 million of net unrealized losses, compared to $708.7 million at December 31, 2023, and $766.4 million at March 31, 2023. The carrying value of the held-to-maturity portfolio does not reflect $897.2 million of net unrealized losses, compared to $810.2 million at December 31, 2023, and $742.8 million at March 31, 2023.

Loans and leases:

Total loans and leases were $51.1 billion, compared to $50.7 billion at December 31, 2023, and $50.9 billion at March 31, 2023. Compared to December 31, 2023, commercial loans and leases decreased by $303.1 million, commercial real estate loans increased by $711.8 million, residential mortgages decreased by $1.8 million, and consumer loans decreased by $34.3 million.
Compared to a year ago, commercial loans and leases decreased by $1.3 billion, commercial real estate loans increased by $1.4 billion, residential mortgages increased by $224.6 million, and consumer loans decreased by $101.9 million.
Loan originations for the portfolio were $2.5 billion, compared to $3.2 billion in the prior quarter, and $3.3 billion a year ago. In addition, $2.9 million of residential loans were originated for sale in the quarter, compared to $3.4 million in the prior quarter, and $2.5 million a year ago.

Asset quality:

Total nonperforming loans and leases were $283.6 million, or 0.56 percent of total loans and leases, compared to $209.5 million, or 0.41 percent of total loans and leases, at December 31, 2023, and $185.0 million, or 0.36 percent of total loans and leases, at March 31, 2023.
Past due loans and leases were $125.2 million, compared to $46.6 million at December 31, 2023, and $44.2 million at March 31, 2023. The increase from prior quarter is driven primarily by commercial real estate.

Deposits and borrowings:

Total deposits were $60.7 billion, compared to $60.8 billion at December 31, 2023, and $55.3 billion at March 31, 2023. Core deposits to total deposits1 were 88.6 percent at March 31, 2024, compared to 86.1 percent at December 31, 2023, and 91.8 percent at March 31, 2023. The loan to deposit ratio was 84.1 percent, compared to 83.5 percent at December 31, 2023, and 92.1 percent at March 31, 2023.
Total borrowings were $4.9 billion, compared to $3.9 billion at December 31, 2023, and $9.9 billion at March 31, 2023.

Capital:

The return on average common stockholders’ equity and the return on average tangible common stockholders’ equity1 were 10.01 percent and 16.30 percent, respectively, compared to 10.94 percent and 17.66 percent, respectively, in the first quarter of 2023.
The tangible equity1 and tangible common equity1 ratios were 7.54 percent and 7.15 percent, respectively, compared to 7.55 percent and 7.15 percent, respectively, at March 31, 2023. The common equity tier 1 ratio was 10.51 percent, compared to 10.42 percent at March 31, 2023.
Book value and tangible book value per common share1 were $49.07 and $30.22, respectively, compared to $45.85 and $29.47, respectively, at March 31, 2023.

1 See "Non-GAAP to GAAP Reconciliations" section beginning on page 18.

Webster Financial Corporation (NYSE:WBS) is the holding company for Webster Bank, N.A. Webster is a leading commercial bank in the Northeast that provides a wide range of digital and traditional financial solutions across three differentiated lines of business: Commercial Banking, Consumer Banking and Healthcare Financial Services, one of the country's largest providers of employee benefits and administration of medical insurance claim settlements solutions. Headquartered in Stamford, CT, Webster is a values-driven organization with $76 billion in assets. Its core footprint spans the northeastern U.S. from New York to Massachusetts, with certain businesses operating in extended geographies. Webster Bank is a member of the FDIC and an equal housing lender. For more information about Webster, including past press releases and the latest annual report, visit the Webster website at www.websterbank.com.

Conference Call

A conference call covering Webster’s first quarter 2024 earnings announcement will be held today, Tuesday, April 23, 2024 at 9:00 a.m. Eastern Time. To listen to the live call, please dial 888-330-2446, or 240-789-2732 for international callers. The passcode is 8607257. The webcast, along with related slides, will be available via Webster's Investor Relations website at investors.websterbank.com. A replay of the conference call will be available for one week via the website listed above, beginning at approximately 12:00 noon (Eastern) on April 23, 2024. To access the replay, dial 800-770-2030, or 609-800-9909 for international callers. The replay conference ID number is 8607257.

Forward-Looking Statements

This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “believes,” “anticipates,” “expects,” “intends,” “targeted,” “continue,” “remain,” “will,” “should,” “may,” “plans,” “estimates,” and similar references to future periods. However, these words are not the exclusive means of identifying such statements. Examples of forward-looking statements include, but are not limited to: projections of revenues, expenses, expense savings, income or loss, earnings or loss per share, and other financial items; statements of plans, objectives, and expectations of Webster or its management or Board of Directors; statements of future economic performance; and statements of assumptions underlying such statements. Forward-looking statements are based on Webster's current expectations and assumptions regarding its business, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Webster’s actual results may differ materially from those contemplated by the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. Factors that could cause Webster's actual results to differ from those discussed in any forward-looking statements include, but are not limited to: Webster's ability to successfully execute its business plan and strategic initiatives, and manage any risks or uncertainties; continued regulatory changes or other mitigation efforts taken by government agencies in response to volatility in the banking industry, including due to the bank failures in 2023; volatility in Webster's stock price due to investor sentiment, including in light of the bank failures of 2023 and related turmoil in the banking industry; local, regional, national, and international economic conditions, and the impact they may have on Webster or its customers; volatility and disruption in national and international financial markets, including as a result of geopolitical conflict; the impact of unrealized losses in our available-for-sale securities portfolio; changes in laws and regulations, or existing laws and regulations that Webster becomes subject to, including those concerning banking, taxes, dividends, securities, insurance, and healthcare administration, with which Webster and its subsidiaries must comply; adverse conditions in the securities markets that could lead to impairment in the value of Webster's securities portfolio; inflation, monetary fluctuations, the possibility of a recession, and changes in interest rates, including the impact of such changes on economic conditions, customer behavior, funding costs, and Webster's loans and leases and securities portfolios; possible changes in governmental monetary and fiscal policies, including, but not limited to, the Federal Reserve policies in connection with continued inflationary pressures and the ability of the U.S. Congress to increase the U.S. statutory debt limit as needed, as well as the impact of the 2024 U.S. presidential election; the impact of a potential U.S. federal government shutdown; the timely development and acceptance of new products and services, and the perceived value of those products and services by customers; changes in deposit flows, consumer spending, borrowings, and savings habits; Webster's ability to implement new technologies and maintain secure and reliable information and technology systems; the effects of any cybersecurity threats, attacks or events, or fraudulent activity, including those that involve Webster's third-party vendors and service providers; performance by Webster's counterparties and third-party vendors; Webster's ability to increase market share and control expenses; changes in the competitive environment among banks, financial holding companies, and other traditional and non-traditional financial service providers; Webster's ability to maintain adequate sources of funding and liquidity; changes in the mix of loan geographies, sectors, or types and the level of nonperforming assets and charge-offs; changes in estimates of future reserve requirements based upon periodic review under relevant regulatory and accounting requirements; the effect of changes in accounting policies and practices applicable to Webster, including the impacts of recently adopted accounting guidance; legal and regulatory developments, including the resolution of legal proceedings or regulatory or other governmental inquiries, and the results of regulatory examinations or reviews; Webster's ability to appropriately address and environmental, social, governmental, and sustainability concerns that may arise from our business activities; Webster's ability to assess and monitor the effect of artificial intelligence on our business and operations; unforeseen events, such as pandemics or natural disasters, and any governmental or societal responses thereto; and the other factors that are described in Webster's Annual Report on Form 10-K for the year ended December 31, 2023, and Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Any forward-looking statement made by Webster in this release speaks only as of the date on which it is made. Factors or events that could cause Webster's actual results to differ may emerge from time to time, and it is not possible for Webster to predict all of them. Webster undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Non-GAAP Financial Measures

In addition to results presented in accordance with GAAP, this press release contains certain non-GAAP financial measures. A reconciliation of net income, return on average tangible common stockholders' equity, and other performance ratios, in each case as adjusted, is included in the accompanying selected financial highlights table.

Webster believes that providing certain non-GAAP financial measures provides investors with information useful in understanding its financial performance, performance trends, and financial position. Webster utilizes these measures for internal planning and forecasting purposes. Webster, as well as securities analysts, investors, and other interested parties, also use these measures to compare peer company operating performance. Webster believes that its presentation and discussion, together with the accompanying reconciliations, provides additional clarity of factors and trends affecting its business and allows investors to view performance in a manner similar to management.

The efficiency ratio, which represents the costs expended to generate a dollar of revenue, is calculated excluding certain non-operational items. The return on average tangible common stockholders' equity (ROATCE) represents net income available to common stockholders, adjusted for the tax-effected amortization of intangible assets, as a percentage of average stockholders’ equity less average preferred stock and average goodwill and net intangible assets. The tangible equity ratio represents stockholders’ equity less goodwill and net intangible assets divided by total assets less goodwill and net intangible assets. The tangible common equity ratio represents stockholders’ equity less preferred stock and goodwill and net intangible assets divided by total assets less goodwill and net intangible assets. Tangible book value per common share represents stockholders’ equity less preferred stock and goodwill and net intangible assets divided by common shares outstanding at the end of the period. Core deposits reflect total deposits less certificates of deposit and brokered certificates of deposit. Adjusted pre-tax net income, adjusted net income available to common stockholders, adjusted diluted earnings per share (EPS), adjusted ROATCE, and adjusted return on average assets (ROAA) are calculated excluding an FDIC special assessment estimate, Ametros acquisition expenses, loss on sale of investment securities, and net gain on sale of mortgage servicing rights, each of which have been tax-effected, and a discrete tax adjustment.

These non-GAAP measures should not be considered a substitute for GAAP basis measures and results, and Webster strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.

Refer the tables on page 18 for Non-GAAP to GAAP reconciliations.

WEBSTER FINANCIAL CORPORATIONSelected Financial Highlights (unaudited)

At or for the Three Months Ended

(In thousands, except per share data)

March 31, 2024

December 31, 2023

September 30, 2023

June 30, 2023

March 31, 2023

Income and performance ratios: Net income

216,323

185,393

226,475

234,968

221,004

Net income available to common stockholders

212,160

181,230

222,313

230,806

216,841

Earnings per diluted common share

1.23

1.05

1.28

1.32

1.24

Return on average assets (annualized)

1.15

1.01

1.23

1.22

Return on average tangible common stockholders' equity (annualized) (1)

16.30

14.49

17.51

18.12

17.66

Return on average common stockholders’ equity (annualized)

10.01

9.03

11.00

11.38

10.94

Non-interest income as a percentage of total revenue

14.89

10.05

13.34

13.28

10.62

Asset quality: Allowance for credit losses on loans and leases

641,442

635,737

635,438

628,911

613,914

Nonperforming assets

289,254

218,600

218,402

222,215

186,551

Allowance for credit losses on loans and leases / total loans and leases

1.26

1.25

1.27

1.22

1.21

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

0.29

0.27

0.23

0.16

0.20

Nonperforming loans and leases / total loans and leases

0.56

0.41

0.43

0.42

0.36

Nonperforming assets / total loans and leases plus other real estate owned and repossessed assets

0.57

0.43

0.44

0.43

0.37

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

226.17

303.39

295.48

287.35

331.81

Other ratios: Tangible equity (1)

7.54

8.12

7.62

7.55

Tangible common equity (1)

7.15

7.73

7.22

7.23

7.15

Tier 1 risk-based capital (2)

11.01

11.62

11.64

11.16

10.93

Total risk-based capital (2)

13.13

13.72

13.79

13.25

12.99

Common equity tier 1 risk-based capital (2)

10.51

11.11

11.12

10.65

10.42

Stockholders’ equity / total assets

11.49

11.60

11.21

11.18

11.08

Net interest margin

3.35

3.42

3.49

3.35

3.66

Efficiency ratio (1)

45.25

43.04

41.75

42.20

41.64

Equity and share related: Common equity

8,463,519

8,406,017

7,915,222

7,995,747

8,010,315

Book value per common share

49.07

48.87

46.00

46.15

45.85

Tangible book value per common share (1)

30.22

32.39

29.48

29.69

29.47

Common stock closing price

50.77

50.76

40.31

37.75

39.42

Dividends declared per common share

0.40

0.40

Common shares issued and outstanding

172,464

172,022

172,056

173,261

174,712

Weighted-average common shares outstanding - Basic

170,445

170,415

171,210

172,739

172,766

Weighted-average common shares outstanding - Diluted

170,704

170,623

171,350

172,803

172,883

(1) See "Non-GAAP to GAAP Reconcilations" section beginning on page 18. (2) Presented as preliminary for March 31, 2024, and actual for the remaining periods. WEBSTER FINANCIAL CORPORATIONConsolidated Balance Sheets (unaudited) (In thousands)

March 31, 2024

December 31, 2023

March 31, 2023

Assets: Cash and due from banks

322,041

429,323

201,683

Interest-bearing deposits

1,223,187

1,286,472

2,232,388

Investment securities: Available-for-sale

8,601,141

8,959,729

7,798,977

Held-to-maturity, net

7,679,891

7,074,588

7,063,223

Total investment securities, net

16,281,032

16,034,317

14,862,200

Loans held for sale

239,763

6,541

210,724

Loans and leases: Commercial

19,469,014

19,772,102

20,775,337

Commercial real estate

21,869,502

21,157,732

20,513,738

Residential mortgages

8,226,154

8,227,923

8,001,563

Consumer

1,533,972

1,568,295

1,635,885

Total loans and leases

51,098,642

50,726,052

50,926,523

Allowance for credit losses on loans and leases

(641,442

)

(635,737

)

(613,914

)

Loans and leases, net

50,457,200

50,090,315

50,312,609

Federal Home Loan Bank and Federal Reserve Bank stock

381,451

326,882

584,724

Premises and equipment, net

423,128

429,561

431,432

Goodwill and other intangible assets, net

3,250,909

2,834,600

2,861,310

Cash surrender value of life insurance policies

1,237,828

1,247,938

1,233,994

Deferred tax assets, net

341,292

369,212

315,525

Accrued interest receivable and other assets

2,003,862

1,890,088

1,597,806

Total assets

76,161,693

74,945,249

74,844,395

Liabilities and Stockholders' Equity: Deposits: Demand

10,212,509

10,732,516

12,007,387

Health savings accounts

8,603,184

8,287,889

8,272,507

Interest-bearing checking

9,498,036

8,994,095

8,560,750

Money market

18,615,031

17,662,826

14,203,858

Savings

6,881,663

6,642,499

7,723,198

Certificates of deposit

5,928,773

5,574,048

3,855,406

Brokered certificates of deposit

1,008,547

2,890,411

674,373

Total deposits

60,747,743

60,784,284

55,297,479

Securities sold under agreements to repurchase and other borrowings

361,886

458,387

306,154

Federal Home Loan Bank advances

3,659,930

2,360,018

8,560,461

Long-term debt

914,520

1,048,820

1,071,413

Accrued expenses and other liabilities

1,730,116

1,603,744

1,314,594

Total liabilities

67,414,195

66,255,253

66,550,101

Preferred stock

283,979

283,979

Common stockholders' equity

8,463,519

8,406,017

8,010,315

Total stockholders’ equity

8,747,498

8,689,996

8,294,294

Total liabilities and stockholders' equity

76,161,693

74,945,249

74,844,395

WEBSTER FINANCIAL CORPORATIONConsolidated Statements of Income (unaudited)

Three Months Ended March 31,

(In thousands, except per share data)

2024

2023

Interest income: Interest and fees on loans and leases

792,045

716,356

Interest on investment securities

147,585

99,250

Loans held for sale

Other interest and dividends

12,138

15,306

Total interest income

951,850

830,928

Interest expense: Deposits

335,971

150,204

Borrowings

48,140

85,441

Total interest expense

384,111

235,645

Net interest income

567,739

595,283

Provision for credit losses

45,500

46,749

Net interest income after provision for loan and lease losses

522,239

548,534

Non-interest income: Deposit service fees

42,589

45,436

Loan and lease related fees

19,767

23,005

Wealth and investment services

7,924

6,587

Cash surrender value of life insurance policies

5,946

6,728

(Loss) on sale of investment securities

(9,826

)

(16,747

)

Other income

32,953

5,757

Total non-interest income

99,353

70,766

Non-interest expense: Compensation and benefits

188,540

173,200

Occupancy

19,439

20,171

Technology and equipment

45,836

44,366

Marketing

4,281

3,476

Professional and outside services

12,981

32,434

Intangible assets amortization

9,194

9,497

Deposit insurance

24,223

12,323

Other expenses

31,429

37,000

Total non-interest expense

335,923

332,467

Income before income taxes

285,669

286,833

Income tax expense

69,346

65,829

Net income

216,323

221,004

Preferred stock dividends

(4,163

)

(4,163

)

Net income available to common stockholders

212,160

216,841

Weighted-average common shares outstanding - Diluted

170,704

172,883

Earnings per common share: Basic

1.23

1.24

Diluted

1.23

1.24

WEBSTER FINANCIAL CORPORATIONFive Quarter Consolidated Statements of Income (unaudited)

Three Months Ended

(In thousands, except per share data)

March 31, 2024

December 31, 2023

September 30, 2023

June 30, 2023

March 31, 2023

Interest income: Interest and fees on loans and leases

792,045

789,423

793,626

771,973

716,356

Interest on investment securities

147,585

128,924

113,395

109,319

99,250

Loans held for sale

280

421

Other interest and dividends

12,138

14,520

23,751

51,683

15,306

Total interest income

951,850

933,147

930,789

933,396

830,928

Interest expense: Deposits

335,971

325,793

293,955

251,466

150,204

Borrowings

48,140

36,333

49,698

98,101

85,441

Total interest expense

384,111

362,126

343,653

349,567

235,645

Net interest income

567,739

571,021

587,136

583,829

595,283

Provision for credit losses

45,500

36,000

36,500

31,498

46,749

Net interest income after provision for loan and lease losses

522,239

535,021

550,636

552,331

548,534

Non-interest income: Deposit service fees

42,589

37,459

41,005

45,418

45,436

Loan and lease related fees

19,767

21,362

19,966

20,528

23,005

Wealth and investment services

7,924

7,767

7,254

7,391

6,587

Cash surrender value of life insurance policies

5,946

6,587

6,620

6,293

6,728

(Loss) on sale of investment securities

(9,826

)

(16,825

)

(48

)

(16,747

)

Other income

32,953

7,465

15,537

9,792

5,757

Total non-interest income

99,353

63,815

90,382

89,374

70,766

Non-interest expense: Compensation and benefits

188,540

184,914

180,333

173,305

173,200

Occupancy

19,439

18,478

18,617

20,254

20,171

Technology and equipment

45,836

46,486

55,261

51,815

44,366

Marketing

4,281

5,176

4,810

5,160

3,476

Professional and outside services

12,981

18,804

26,874

29,385

32,434

Intangible assets amortization

9,194

8,618

8,899

9,193

9,497

Deposit insurance

24,223

58,725

13,310

13,723

12,323

Other expenses

31,429

36,020

54,474

41,254

37,000

Total non-interest expense

335,923

377,221

362,578

344,089

332,467

Income before income taxes

285,669

221,615

278,440

297,616

286,833

Income tax expense

69,346

36,222

51,965

62,648

65,829

Net income

216,323

185,393

226,475

234,968

221,004

Preferred stock dividends

(4,163

)

(4,163

)

(4,162

)

(4,162

)

(4,163

)

Net income available to common stockholders

212,160

181,230

222,313

230,806

216,841

Weighted-average common shares outstanding - Diluted

170,704

170,623

171,350

172,803

172,883

Earnings per common share: Basic

1.23

1.05

1.29

1.32

1.24

Diluted

1.23

1.05

1.28

1.32

1.24

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

Three Months Ended March 31,

2024

2023

(Dollars in thousands)

Average balance

Interest

Yield/rate

Average balance

Interest

Yield/rate

Assets: Interest-earning assets: Loans and leases

50,938,418

801,864

6.24

50,095,192

725,543

5.80

Investment securities (1)

16,243,349

153,645

3.64

14,633,245

105,974

2.79

Federal Home Loan and Federal Reserve Bank stock

343,992

4,352

5.09

459,375

4,910

4.34

Interest-bearing deposits

572,401

7,786

5.38

898,884

10,396

4.63

Loans held for sale

13,418

2.45

4,630

1.39

Total interest-earning assets

68,111,578

967,729

5.59

66,091,326

846,839

5.08

Non-interest-earning assets

7,221,187

6,225,199

Total assets

75,332,765

72,316,525

Liabilities and Stockholders' Equity: Interest-bearing liabilities: Demand deposits

10,582,416

12,629,928

Health savings accounts

8,605,640

3,191

0.15

8,292,450

3,027

0.15

Interest-bearing checking, money market and savings

34,055,685

249,650

2.95

29,853,370

123,048

1.67

Certificates of deposit and brokered deposits

7,321,625

83,130

4.57

4,024,472

24,129

2.43

Total deposits

60,565,366

335,971

2.23

54,800,220

150,204

1.11

Securities sold under agreements to repurchase and other borrowings

270,818

2,108

3.08

915,023

7,827

3.42

Federal Home Loan Bank advances

2,689,632

37,367

5.50

5,673,826

68,126

4.80

Long-term debt (1)

980,926

8,665

3.64

1,072,252

9,488

3.65

Total borrowings

3,941,376

48,140

4.88

7,661,101

85,441

4.48

Total interest-bearing liabilities

64,506,742

384,111

2.39

62,461,321

235,645

1.52

Non-interest-bearing liabilities

2,066,031

1,639,528

Total liabilities

66,572,773

64,100,849

Preferred stock

283,979

283,979

Common stockholders' equity

8,476,013

7,931,697

Total stockholders' equity

8,759,992

8,215,676

Total liabilities and stockholders' equity

75,332,765

72,316,525

Tax-equivalent net interest income

583,618

611,194

Less: Tax-equivalent adjustments

(15,879

)

(15,911

)

Net interest income

567,739

595,283

Net interest margin

3.35

3.66

(1) For the purposes of average yield/rate and margin computations, unsettled trades on investment securities, unrealized gains (losses) on available-for-sale investment securities, and basis adjustments on long-term debt from de-designated fair value hedges are excluded. WEBSTER FINANCIAL CORPORATIONFive Quarter Loans and Leases (unaudited) (Dollars in thousands)

March 31, 2024

December 31, 2023

September 30, 2023

June 30, 2023

March 31, 2023

Loans and leases (actual): Commercial non-mortgage

17,976,128

18,214,261

18,058,524

19,499,160

19,014,810

Asset-based lending

1,492,886

1,557,841

1,632,962

1,718,251

1,760,527

Commercial real estate

21,869,502

21,157,732

20,583,254

20,661,071

20,513,738

Residential mortgages

8,226,154

8,227,923

8,228,451

8,140,182

8,001,563

Consumer

1,533,972

1,568,295

1,584,955

1,607,384

1,635,885

Loans and leases

51,098,642

50,726,052

50,088,146

51,626,048

50,926,523

Allowance for credit losses on loans and leases

(641,442

)

(635,737

)

(635,438

)

(628,911

)

(613,914

)

Loans and leases, net

50,457,200

50,090,315

49,452,708

50,997,137

50,312,609

Loans and leases (average): Commercial non-mortgage

18,235,402

18,181,417

18,839,776

19,220,435

18,670,917

Asset-based lending

1,523,616

1,588,350

1,663,481

1,756,051

1,790,992

Commercial real estate

21,403,765

20,764,834

20,614,334

20,518,355

19,970,326

Residential mortgages

8,225,151

8,240,390

8,200,938

8,067,349

7,995,327

Consumer

1,550,484

1,577,349

1,593,659

1,622,525

1,667,630

Loans and leases

50,938,418

50,352,340

50,912,188

51,184,715

50,095,192

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

March 31, 2024

December 31, 2023

September 30, 2023

June 30, 2023

March 31, 2023

Nonperforming loans and leases: Commercial non-mortgage

203,626

134,617

121,067

109,279

86,537

Asset-based lending

34,915

35,090

10,350

9,450

Commercial real estate

14,323

11,314

31,004

47,972

35,832

Residential mortgages

8,407

5,591

27,312

26,751

25,096

Consumer

22,341

22,932

25,320

25,417

28,105

Total nonperforming loans and leases

283,612

209,544

215,053

218,869

185,020

Other real estate owned and repossessed assets: Commercial non-mortgage

5,540

8,954

2,687

2,152

153

Residential mortgages

662

Consumer

102

102

532

716

Total other real estate owned and repossessed assets

5,642

9,056

3,349

3,346

1,531

Total nonperforming assets

289,254

218,600

218,402

222,215

186,551

Past due 30-89 days: Commercial non-mortgage

15,365

7,071

38,875

32,074

9,645

Commercial real estate

72,999

9,002

3,491

1,970

17,115

Residential mortgages

17,580

21,047

16,208

10,583

10,710

Consumer

6,824

9,417

12,016

6,718

6,110

Total past due 30-89 days

112,768

46,537

70,590

51,345

43,580

Past due 90 days or more and accruing

12,460

138

602

Total past due loans and leases

125,228

46,589

70,728

51,374

44,182

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

For the Three Months Ended

(Dollars in thousands)

March 31, 2024

December 31, 2023

September 30, 2023

June 30, 2023

March 31, 2023

ACL on loans and leases, beginning balance

635,737

635,438

628,911

613,914

594,741

Adoption of ASU No. 2022-02

5,873

Provision

43,194

34,300

35,839

35,249

37,821

Charge-offs: Commercial portfolio

38,461

28,794

27,360

21,945

26,410

Consumer portfolio

1,330

6,878

3,642

1,085

1,098

Total charge-offs

39,791

35,672

31,002

23,030

27,508

Recoveries: Commercial portfolio

553

396

292

1,024

1,574

Consumer portfolio

1,749

1,275

1,398

1,754

1,413

Total recoveries

2,302

1,671

1,690

2,778

2,987

Total net charge-offs

37,489

34,001

29,312

20,252

24,521

ACL on loans and leases, ending balance

641,442

635,737

635,438

628,911

613,914

ACL on unfunded loan commitments, ending balance

24,495

24,734

23,040

22,366

26,051

Total ACL, ending balance

665,937

660,471

658,478

651,277

639,965

WEBSTER FINANCIAL CORPORATIONNon-GAAP to GAAP Reconciliations

At or for the Three Months Ended

(In thousands, except per share data)

March 31, 2024

December 31, 2023

September 30, 2023

June 30, 2023

March 31, 2023

Efficiency ratio: Non-interest expense

335,923

377,221

362,578

344,089

332,467

Less: Foreclosed property activity

(330

)

(96

)

(492

)

(432

)

(262

)

Intangible assets amortization

9,194

8,618

8,899

9,193

9,497

Operating lease depreciation

663

900

1,146

1,639

1,884

FDIC special assessment estimate

11,862

47,164

Merger related expenses (1)

3,139

30,679

61,625

40,840

29,373

Non-interest expense

311,395

289,956

291,400

292,849

291,975

Net interest income

567,739

571,021

587,136

583,829

595,283

Add: Tax-equivalent adjustment

15,879

17,830

17,906

17,292

15,911

Non-interest income

99,353

63,815

90,382

89,374

70,766

Other income (2)

7,626

5,099

3,614

5,035

4,311

Less: Operating lease depreciation

663

900

1,146

1,639

1,884

(Loss) on sale of investment securities

(9,826

)

(16,825

)

(48

)

(16,747

)

Net gain on sale of mortgage servicing rights

11,655

Income

688,105

673,690

697,892

693,939

701,134

Efficiency ratio

45.25

43.04

41.75

42.20

41.64

ROATCE: Net income

216,323

185,393

226,475

234,968

221,004

Less: Preferred stock dividends

4,163

4,163

4,162

4,163

Add: Intangible assets amortization, tax-effected

7,263

6,808

7,030

7,262

7,503

Adjusted income

219,423

188,038

229,343

238,068

224,344

Adjusted income, annualized basis

877,692

752,152

917,372

952,272

897,376

Average stockholders' equity

8,759,992

8,312,798

8,370,469

8,395,298

8,215,676

Less: Average preferred stock

283,979

283,979

Average goodwill and other intangible assets, net

3,090,751

2,838,770

2,847,560

2,856,581

2,849,673

Average tangible common stockholders' equity

5,385,262

5,190,049

5,238,930

5,254,738

5,082,024

Return on average tangible common stockholders' equity

16.30

14.49

17.51

18.12

17.66

(1) Merger related expenses include Ametros acquisition expenses for the three months ended March 31, 2024. 2023 periods primarily include charges related to the merger with Sterling. (2) Other income includes the taxable equivalent of net income generated from low income housing tax-credit investments.

At or for the Three Months Ended

(In thousands, except per share data)

March 31, 2024

December 31, 2023

September 30, 2023

June 30, 2023

March 31, 2023

Tangible equity: Stockholders' equity

8,747,498

8,689,996

8,199,201

8,279,726

8,294,294

Less: Goodwill and other intangible assets, net

3,250,909

2,834,600

2,843,217

2,852,117

2,861,310

Tangible stockholders' equity

5,496,589

5,855,396

5,355,984

5,427,609

5,432,984

Total assets

76,161,693

74,945,249

73,130,851

74,038,243

74,844,395

Less: Goodwill and other intangible assets, net

3,250,909

2,834,600

2,843,217

2,852,117

2,861,310

Tangible assets

72,910,784

72,110,649

70,287,634

71,186,126

71,983,085

Tangible equity

7.54

8.12

7.62

7.55

Tangible common equity: Tangible stockholders' equity

5,496,589

5,855,396

5,355,984

5,427,609

5,432,984

Less: Preferred stock

283,979

283,979

Tangible common stockholders' equity

5,212,610

5,571,417

5,072,005

5,143,630

5,149,005

Tangible assets

72,910,784

72,110,649

70,287,634

71,186,126

71,983,085

Tangible common equity

7.15

7.73

7.22

7.23

7.15

Tangible book value per common share: Tangible common stockholders' equity

5,212,610

5,571,417

5,072,005

5,143,630

5,149,005

Common shares outstanding

172,464

172,022

172,056

173,261

174,712

Tangible book value per common share

30.22

32.39

29.48

29.69

29.47

Core deposits: Total deposits

60,747,743

60,784,284

60,331,767

58,747,532

55,297,479

Less: Certificates of deposit

5,928,773

5,574,048

5,150,139

4,743,204

3,855,406

Brokered certificates of deposit

1,008,547

2,890,411

2,337,380

2,542,854

674,373

Core deposits

53,810,423

52,319,825

52,844,248

51,461,474

50,767,700

Three months ended March 31, 2024

Adjusted ROATCE: Net income

216,323

Less: Preferred stock dividends

4,163

Add: Intangible assets amortization, tax-effected

7,263

FDIC special assessment estimate, tax-effected

8,917

Ametros acquisition expenses, tax-effected

2,360

Loss on sale of investment securities, tax-effected

7,386

Net (gain) on sale of mortgage servicing rights, tax-effected

(8,761

)

Discrete tax adjustment

10,929

Adjusted income

240,254

Adjusted income, annualized basis

961,016

Average stockholders' equity

8,759,992

Less: Average preferred stock

283,979

Average goodwill and other intangible assets, net

3,090,751

Average tangible common stockholders' equity

5,385,262

Adjusted return on average tangible common stockholders' equity

17.85

Adjusted ROAA: Net income

216,323

Add: FDIC special assessment estimate, tax-effected

8,917

Ametros acquisition expenses, tax-effected

2,360

Loss on sale of investment securities, tax-effected

7,386

Net (gain) on sale of mortgage servicing rights, tax-effected

(8,761

)

Discrete tax adjustment

10,929

Adjusted income

237,154

Adjusted income, annualized basis

948,616

Average assets

75,332,765

Adjusted return on average assets

1.26

GAAP to adjusted reconciliation:

Three months ended March 31, 2024

(In millions, except per share data)

Pre-Tax Income

Net Income Available to Common Stockholders

Diluted EPS

Reported (GAAP)

285.7

212.2

1.23

FDIC special assessment estimate

11.9

8.9

0.05

Ametros acquisition expenses

3.1

2.4

0.01

Loss on sale of investment securities

9.8

7.4

0.04

Net (gain) on sale of mortgage servicing rights

(11.7

)

(8.8

)

(0.05

)

Discrete tax adjustment

—

10.9

0.07

Adjusted (non-GAAP)

298.9

233.0

1.35

Note: Totals may not sum due to rounding.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240422264801/en/

Media Contact Alice Ferreira, 203-578-2610 acferreira@websterbank.com

Investor Contact Emlen Harmon, 212-309-7646 eharmon@websterbank.com

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