Webster Reports Second Quarter 2024 EPS of $1.03; Adjusted EPS of $1.26

Webster Financial Corporation (“Webster”) (NYSE: WBS), the holding company for Webster Bank, N.A., today announced net income available to common stockholders of $177.5 million, or $1.03 per diluted share, for the quarter ended June 30, 2024, compared to $230.8 million, or $1.32 per diluted share, for the quarter ended June 30, 2023.

Second quarter 2024 results include $49.9 million pre-tax ($38.7 million after tax), or $0.231 per diluted share, of net securities repositioning losses. Excluding this item, adjusted earnings per diluted share would have been $1.261 for the quarter ended June 30, 2024.

“Webster continues to generate steady balance sheet growth in a challenging environment,” said John R. Ciulla, chairman and chief executive officer. “Our ability to grow loans, deposits, and interest income is facilitated by the diversity of our asset generation and funding sources.”

Highlights for the second quarter of 2024:

• Revenue of $614.6 million.
• Period end loan and lease balance of $51.6 billion, up $0.5 billion or 0.9 percent from prior quarter; consisting of 81.0 percent commercial loans and leases, 19.0 percent consumer loans, and a loan to deposit ratio of 82.8 percent.
• Period end deposit balance of $62.3 billion, up $1.5 billion or 2.5 percent from prior quarter; core deposit growth of $0.7 billion from prior quarter.
• Provision for credit losses of $59.0 million.
• Return on average assets of 0.96 percent; adjusted 1.16 percent1.
• Return on average tangible common equity of 14.17 percent1; adjusted 17.15 percent1.
• Net interest margin of 3.32 percent, down 3 basis points from prior quarter.
• Common equity tier 1 ratio of 10.62 percent.
• Efficiency ratio of 46.22 percent1.
• Tangible common equity ratio of 7.18 percent1.

“Webster’s strong capital position, earnings power, and operating efficiency provide us unique opportunities in managing our business,” said Glenn MacInnes, executive vice president and chief financial officer. “Of note this quarter were a securities portfolio repositioning and the announcement of a private credit joint venture.”

1 See “Non-GAAP to GAAP Reconciliations” section beginning on page 19.

Commercial Banking

Webster’s Commercial Banking segment serves businesses that have more than $10 million of revenue through its regional banking, middle market, asset-based lending, equipment finance, commercial real estate, sponsor finance, private banking, and treasury services business units. At June 30, 2024, Commercial Banking had $40.3 billion in loans and leases and $15.5 billion in deposits, as well as a combined $2.9 billion in assets under administration and management.

Commercial Banking Operating Results:

 

 

 

Percent

 

Three months ended June 30,

Favorable/

(In thousands)

2024

2023

(Unfavorable)

Net interest income

$

337,588

$

359,378

(6.1

)%

Non-interest income

 

34,510

 

 

30,030

 

14.9

 

Operating revenue

 

372,098

 

 

389,408

 

(4.4

)

Non-interest expense

 

104,588

 

 

100,074

 

(4.5

)

Pre-tax, pre-provision net revenue

$

267,510

 

$

289,334

 

(7.5

)

 

 

 

 

 

 

 

Percent

 

At June 30,

Increase/

(In millions)

2024

2023

(Decrease)

Loans and leases

$

40,331

 

$

40,477

 

(0.4

)%

Deposits

 

15,464

 

 

16,033

 

(3.5

)

AUA / AUM (off balance sheet)

 

2,948

 

 

2,757

 

6.9

 

Pre-tax, pre-provision net revenue decreased $21.8 million, to $267.5 million, in the quarter as compared to prior year. Net interest income decreased $21.8 million, to $337.6 million, primarily driven by higher loan yields offset by higher deposit rates and lower deposit balances. Non-interest income increased $4.5 million, to $34.5 million, primarily driven by increases in cash management fees, customer interest rate hedging activities, and other income. Non-interest expense increased $4.5 million, to $104.6 million, primarily resulting from continued investments in talent, operational support, and technology.

Healthcare Financial Services

Webster’s Healthcare Financial Services segment is comprised of HSA Bank and the Ametros business. This segment offers consumer-directed healthcare solutions that include health savings accounts, health reimbursement arrangements, administration of medical insurance claim settlements, flexible spending accounts and commuter benefits. Accounts are distributed nationwide directly to employers and individual consumers, as well as through national and regional insurance carriers, benefit consultants, and financial advisors. At June 30, 2024, Healthcare Financial Services had $14.9 billion in total footings comprising $9.4 billion in deposits and $5.5 billion in assets under administration through linked investment accounts.

Healthcare Financial Services Operating Results:

 

 

 

Percent

 

Three months ended June 30,

Favorable/

(In thousands)

2024

2023

(Unfavorable)

Net interest income

$

91,664

$

75,421

21.5

%

Non-interest income

 

27,465

 

 

23,023

 

19.3

 

Operating revenue

 

119,129

 

 

98,444

 

21.0

 

Non-interest expense

 

51,267

 

 

42,643

 

(20.2

)

Pre-tax, net revenue

$

67,862

 

$

55,801

 

21.6

 

 

 

 

 

 

 

 

 

 

At June 30,

Percent

(Dollars in millions)

2024

2023

Increase

Number of accounts (thousands)

 

3,337

 

 

3,177

 

5.0

%

 

 

 

 

Deposits

$

9,392

 

$

8,208

 

14.4

 

Linked investment accounts (off balance sheet)

 

5,522

 

 

4,123

 

33.9

 

Total footings

$

14,914

 

$

12,331

 

20.9

 

Pre-tax net revenue increased $12.1 million, to $67.9 million, in the quarter as compared to prior year. The increase in pre-tax net revenue was partially attributable to the addition of Ametros in the first quarter of 2024. Net interest income increased $16.3 million, to $91.7 million, primarily due to $11.3 million from Ametros and an increase in net deposit spread coupled with deposit growth at HSA Bank. Non-interest income increased $4.5 million, to $27.5 million, primarily due to $5.4 million from Ametros, offset by a decrease of $0.9 million from HSA Bank. The decrease in HSA Bank was the net result of lower customer account fees partially offset by higher interchange revenue. Non-interest expense increased $8.7 million, to $51.3 million, primarily due to $11.3 million from Ametros. HSA Bank expenses were $2.6 million lower as lower occupancy expense was offset by higher compensation and benefits expense, and service contract expense related to account growth.

Consumer Banking

Webster’s Consumer Banking segment serves consumer and business banking customers primarily throughout southern New England and the New York metro and suburban markets. Consumer Banking is comprised of the consumer lending and business banking business units, as well as a distribution network consisting of 196 banking centers and 347 ATMs, a customer care center, and a full range of web and mobile-based banking services. Additionally, Webster Investments provides investment services to consumers and small business owners within Webster’s targeted markets and retail footprint. At June 30, 2024, Consumer Banking had $11.2 billion in loans and $27.1 billion in deposits, as well as $8.0 billion in assets under administration.

Consumer Banking Operating Results:

 

 

 

Percent

 

Three months ended June 30,

Favorable/

(In thousands)

2024

2023

(Unfavorable)

Net interest income

$

202,679

$

228,683

(11.4

)%

Non-interest income

 

24,392

 

 

31,102

 

(21.6

)

Operating revenue

 

227,071

 

 

259,785

 

(12.6

)

Non-interest expense

 

115,905

 

 

119,388

 

2.9

 

Pre-tax, pre-provision net revenue

$

111,166

 

$

140,397

 

(20.8

)

 

 

 

 

 

 

 

 

 

At June 30,

Percent

(In millions)

2024

2023

Increase

Loans

$

11,239

 

$

11,124

 

1.0

%

Deposits

 

27,108

 

 

26,191

 

3.5

 

AUA (off balance sheet)

 

7,976

 

 

7,848

 

1.6

 

Pre-tax, pre-provision net revenue decreased $29.2 million, to $111.2 million, in the quarter as compared to prior year. Net interest income decreased $26.0 million, to $202.7 million, primarily driven by higher rates paid on deposits, partially offset by loan and deposit growth. Non-interest income decreased $6.7 million, to $24.4 million, primarily driven by lower deposit service fees and loan related fees. Non-interest expense decreased $3.5 million, to $115.9 million, primarily driven by reduced occupancy and technology expenses.

Consolidated financial performance:

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

• Net interest income was $572.3 million compared to $583.8 million.
• Net interest margin was 3.32 percent compared to 3.35 percent. The yield on interest-earning assets increased by 33 basis points, and the cost of interest-bearing liabilities increased by 39 basis points.
• Average interest-earning assets totaled $68.9 billion and decreased by $1.2 billion, or 1.8 percent.
• Average loans and leases totaled $51.4 billion and increased by $0.3 billion, or 0.5 percent.
• Average deposits totaled $61.7 billion and increased by $3.1 billion, or 5.4 percent.

Quarterly provision for credit losses:

• The provision for credit losses was $59.0 million in the quarter, contributing to a $27.9 million increase in the allowance for credit losses on loans and leases from the prior quarter. The provision also contributed to a decrease in the reserve on unfunded loan commitments of $2.0 million. The provision for credit losses was $45.5 million in the prior quarter, and $31.5 million a year ago.
• Net charge-offs were $33.1 million, compared to $37.5 million in the prior quarter, and $20.3 million a year ago. The ratio of net charge-offs to average loans and leases was 0.26 percent, compared to 0.29 percent in the prior quarter, and 0.16 percent a year ago.
• The allowance for credit losses on loans and leases represented 1.30 percent of total loans and leases, compared to 1.26 percent at March 31, 2024, and 1.22 percent at June 30, 2023. The allowance represented 181 percent of nonperforming loans and leases at June 30, 2024, compared to 226 percent at March 31, 2024, and 287 percent at June 30, 2023.

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

• Total non-interest income was $42.3 million compared to $89.4 million, a decrease of $47.1 million. Total non-interest income includes a $49.9 million net loss on the sale of investment securities. Excluding this item, total non-interest income increased $2.8 million. The increase is primarily attributable to the addition of Ametros and an increase in other income, partially offset by lower deposit and loan servicing fees.

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

• Total non-interest expense was $326.0 million compared to $344.1 million, an decrease of $18.1 million. Total non-interest expense in the year ago period includes $40.8 million of Sterling merger charges. Excluding those charges, total non-interest expense increased $22.7 million. The increase is primarily attributable to the addition of Ametros, higher compensation, increases in performance-based incentive accruals, and investments in technology.

Quarterly income taxes compared to the second quarter of 2023:

• Income tax expense was $47.9 million compared to $62.6 million, and the effective tax rate was 20.9 percent compared to 21.0 percent.

Investment securities:

• Total investment securities, net were $16.4 billion, compared to $16.3 billion at March 31, 2024, and $14.7 billion at June 30, 2023. The carrying value of the available-for-sale portfolio included $772.2 million of net unrealized losses, compared to $758.5 million at March 31, 2024, and $883.0 million at June 30, 2023. The carrying value of the held-to-maturity portfolio does not reflect $964.5 million of net unrealized losses, compared to $897.2 million at March 31, 2024, and $877.3 million at June 30, 2023.

Loans and leases:

• Total loans and leases were $51.6 billion, compared to $51.1 billion at March 31, 2024, and $51.6 billion at June 30, 2023. Compared to March 31, 2024, commercial real estate loans increased by $408.3 million, residential mortgages increased by $58.1 million, commercial loans and leases increased by $23.4 million, and consumer loans decreased by $15.1 million.
• Compared to a year ago, commercial loans and leases decreased by $1.7 billion, commercial real estate loans increased by $1.6 billion, residential mortgages increased by $144.1 million, and consumer loans decreased by $88.5 million.
• Loan originations for the portfolio were $3.0 billion, compared to $2.5 billion in both the prior quarter, and a year ago. In addition, $0.8 million of residential loans were originated for sale in the quarter, compared to $2.9 million in the prior quarter, and $5.7 million a year ago.

Asset quality:

• Total nonperforming loans and leases were $368.8 million, or 0.72 percent of total loans and leases, compared to $283.6 million, or 0.56 percent of total loans and leases, at March 31, 2024, and $218.9 million, or 0.42 percent of total loans and leases, at June 30, 2023.
• Past due loans and leases were $166.3 million, compared to $125.2 million at March 31, 2024, and $51.4 million at June 30, 2023. The increase from prior quarter is driven primarily by commercial non-mortgage, partially offset by commercial real estate and residential mortgages.

Deposits and borrowings:

• Total deposits were $62.3 billion, compared to $60.7 billion at March 31, 2024, and $58.7 billion at June 30, 2023. Core deposits to total deposits1 were 87.5 percent, compared to 88.6 percent at March 31, 2024, and 87.6 percent at June 30, 2023. The loan to deposit ratio was 82.8 percent, compared to 84.1 percent at March 31, 2024, and 87.9 percent at June 30, 2023.
• Total borrowings were $4.0 billion, compared to $4.9 billion at March 31, 2024, and $5.6 billion at June 30, 2023.

Capital:

• The return on average common stockholders’ equity and the return on average tangible common stockholders’ equity1 were 8.40 percent and 14.17 percent, respectively, compared to 11.38 percent and 18.12 percent, respectively, in the second quarter of 2023.
• The tangible equity1 and tangible common equity1 ratios were 7.56 percent and 7.18 percent, respectively, compared to 7.62 percent and 7.23 percent, respectively, at June 30, 2023. The common equity tier 1 ratio was 10.62 percent at June 30, 2024, compared to 10.65 percent at June 30, 2023.
• Book value and tangible book value per common share1 were $49.74 and $30.82, respectively, compared to $46.15 and $29.69, respectively, at June 30, 2023.

1 See “Non-GAAP to GAAP Reconciliations” section beginning on page 19.

Webster Financial Corporation (NYSE:WBS) is the holding company for Webster Bank, N.A. Webster is a leading commercial bank in the Northeast that provides a wide range of digital and traditional financial solutions across three differentiated lines of business: Commercial Banking, Consumer Banking and Healthcare Financial Services, one of the country’s largest providers of employee benefits and administration of medical insurance claim settlements solutions. Headquartered in Stamford, CT, Webster is a values-driven organization with $77 billion in assets. Its core footprint spans the northeastern U.S. from New York to Massachusetts, with certain businesses operating in extended geographies. Webster Bank is a member of the FDIC and an equal housing lender. For more information about Webster, including past press releases and the latest annual report, visit the Webster website at www.websterbank.com.

Conference Call

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

Forward-Looking Statements

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

Non-GAAP Financial Measures

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

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

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

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

Refer the tables on page 19 for Non-GAAP to GAAP reconciliations.

WEBSTER FINANCIAL CORPORATION Selected Financial Highlights (unaudited)

At or for the Three Months Ended

(In thousands, except per share data)

June 30,2024

March 31,2024



December 31,2023



September 30,2023



June 30,2023






















 

Income and performance ratios:

Net income

$

181,633

$

216,323

$

185,393

$

226,475

$

234,968

Net income available to common stockholders

177,471

212,160

181,230

222,313

230,806

Earnings per diluted common share

1.03

1.23

1.05

1.28

1.32

Return on average assets (annualized)

0.96

%

1.15

%

1.01

%

1.23

%

1.23

%

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

14.17

16.30

14.49

17.51

18.12

Return on average common stockholders’ equity (annualized)

8.40

10.01

9.03

11.00

11.38

Non-interest income as a percentage of total revenue

6.88

14.89

10.05

13.34

13.28

Asset quality:

Allowance for credit losses on loans and leases

$

669,355

$

641,442

$

635,737

$

635,438

$

628,911

Nonperforming assets

374,884

289,254

218,600

218,402

222,215

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

1.30

%

1.26

%

1.25

%

1.27

%

1.22

%

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

0.26

0.29

0.27

0.23

0.16

Nonperforming loans and leases / total loans and leases

0.72

0.56

0.41

0.43

0.42

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

0.73

0.57

0.43

0.44

0.43

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

181.48

226.17

303.39

295.48

287.35

Other ratios:

Tangible equity (1)

7.56

%

7.54

%

8.12

%

7.62

%

7.62

%

Tangible common equity (1)

7.18

7.15

7.73

7.22

7.23

Tier 1 risk-based capital (2)

11.13

11.08

11.62

11.64

11.16

Total risk-based capital (2)

13.28

13.21

13.72

13.79

13.25

Common equity tier 1 risk-based capital (2)

10.62

10.57

11.11

11.12

10.65

Stockholders’ equity / total assets

11.46

11.49

11.60

11.21

11.18

Net interest margin

3.32

3.35

3.42

3.49

3.35

Efficiency ratio (1)

46.22

45.25

43.04

41.75

42.20

Equity and share related:

Common equity

$

8,525,289

$

8,463,519

$

8,406,017

$

7,915,222

$

7,995,747

Book value per common share

49.74

49.07

48.87

46.00

46.15

Tangible book value per common share (1)

30.82

30.22

32.39

29.48

29.69

Common stock closing price

43.59

50.77

50.76

40.31

37.75

Dividends declared per common share

0.40

0.40

0.40

0.40

0.40

Common shares issued and outstanding

171,402

172,464

172,022

172,056

173,261

Weighted-average common shares outstanding - Basic

169,675

170,445

170,415

171,210

172,739

Weighted-average common shares outstanding - Diluted

169,937

170,704

170,623

171,350

172,803

 


(1) See "Non-GAAP to GAAP Reconciliations" section beginning on page 19.



(2) Presented as preliminary for June 30, 2024, and actual for the remaining periods.

WEBSTER FINANCIAL CORPORATIONConsolidated Balance Sheets (unaudited)

(In thousands)

June 30,2024

March 31,2024


June 30,2023

Assets:

Cash and due from banks

$

346,868

$

322,041

$

283,623

Interest-bearing deposits

1,188,785

1,223,187

1,077,136

Investment securities:











Available-for-sale

7,808,874

8,601,141

7,759,341

Held-to-maturity, net

8,637,654

7,679,891

6,943,784

Total investment securities, net

16,446,528

16,281,032

14,703,125

Loans held for sale

248,137

239,763

10,963

Loans and leases:











Commercial

19,492,433

19,469,014

21,217,411

Commercial real estate

22,277,813

21,869,502

20,661,071

Residential mortgages

8,284,297

8,226,154

8,140,182

Consumer

1,518,922

1,533,972

1,607,384

Total loans and leases

51,573,465

51,098,642

51,626,048

Allowance for credit losses on loans and leases

(669,355)

(641,442)

(628,911)

Loans and leases, net

50,904,110

50,457,200

50,997,137

Federal Home Loan Bank and Federal Reserve Bank stock

348,263

381,451

407,968

Premises and equipment, net

417,700

423,128

426,310

Goodwill and other intangible assets, net

3,242,193

3,250,909

2,852,117

Cash surrender value of life insurance policies

1,241,367

1,237,828

1,239,077

Deferred tax assets, net

354,482

341,292

377,588

Accrued interest receivable and other assets

2,099,673

2,003,862

1,663,199

Total assets

$

76,838,106

$

76,161,693

$

74,038,243

Liabilities and Stockholders' Equity:

Deposits:











Demand

$

9,996,274

$

10,212,509

$

11,157,390

Health savings accounts

8,474,857

8,603,184

8,206,844

Interest-bearing checking

9,509,202

9,498,036

8,775,975

Money market

19,559,083

18,615,031

16,189,678

Savings

6,965,774

6,881,663

7,131,587

Certificates of deposit

5,861,431

5,928,773

4,743,204

Brokered certificates of deposit

1,910,071

1,008,547

2,542,854

Total deposits

62,276,692

60,747,743

58,747,532

Securities sold under agreements to repurchase and other borrowings

239,524

361,886

243,580

Federal Home Loan Bank advances

2,809,843

3,659,930

4,310,371

Long-term debt

912,743

914,520

1,052,258

Accrued expenses and other liabilities

1,790,036

1,730,116

1,404,776

Total liabilities

68,028,838

67,414,195

65,758,517

Preferred stock

283,979

283,979

283,979

Common stockholders' equity

8,525,289

8,463,519

7,995,747

Total stockholders’ equity

8,809,268

8,747,498

8,279,726

Total liabilities and stockholders' equity

$

76,838,106

$

76,161,693

$

74,038,243

WEBSTER FINANCIAL CORPORATIONConsolidated Statements of Income (unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands, except per share data)

2024

2023

2024

2023

Interest income:

Interest and fees on loans and leases

$

798,097

$

771,973

$

1,590,142

$

1,488,329

Interest on investment securities

160,827

109,319

308,412

208,569

Loans held for sale

5,593

421

5,675

437

Other interest and dividends

11,769

51,683

23,907

66,989

Total interest income

976,286

933,396

1,928,136

1,764,324

Interest expense:

Deposits

361,263

251,466

697,234

401,670

Borrowings

42,726

98,101

90,866

183,542

Total interest expense

403,989

349,567

788,100

585,212

Net interest income

572,297

583,829

1,140,036

1,179,112

Provision for credit losses

59,000

31,498

104,500

78,247

Net interest income after provision for loan and lease losses

513,297

552,331

1,035,536

1,100,865

Non-interest income:

Deposit service fees

41,027

45,418

83,616

90,854

Loan and lease related fees

19,334

20,528

39,101

43,533

Wealth and investment services

8,556

7,391

16,480

13,978

Cash surrender value of life insurance policies

6,359

6,293

12,305

13,021

(Loss) on sale of investment securities, net

(49,915)

(48)

(59,741)

(16,795)

Other income

16,937

9,792

49,890

15,549

Total non-interest income

42,298

89,374

141,651

160,140

Non-interest expense:

Compensation and benefits

186,850

173,305

375,390

346,505

Occupancy

15,103

20,254

34,542

40,425

Technology and equipment

45,303

51,815

91,139

96,181

Marketing

4,107

5,160

8,388

8,636

Professional and outside services

14,066

29,385

27,047

61,819

Intangible assets amortization

8,716

9,193

17,910

18,690

Deposit insurance

15,065

13,723

39,288

26,046

Other expenses

36,811

41,254

68,240

78,254

Total non-interest expense

326,021

344,089

661,944

676,556

Income before income taxes

229,574

297,616

515,243

584,449

Income tax expense

47,941

62,648

117,287

128,477

Net income

181,633

234,968

397,956

455,972

Preferred stock dividends

(4,162)

(4,162)

(8,325)

(8,325)

Net income available to common stockholders

$

177,471

$

230,806

$

389,631

$

447,647

 


Weighted-average common shares outstanding - Diluted

169,937

172,803

170,351

172,839

Earnings per common share:

Basic

$

1.03

$

1.32

$

2.27

$

2.57

Diluted

1.03

1.32

2.26

2.57

WEBSTER FINANCIAL CORPORATIONFive Quarter Consolidated Statements of Income (unaudited)

Three Months Ended

(In thousands, except per share data)

June 30,2024

March 31,2024



December 31,2023



September 30,2023



June 30,2023

Interest income:

Interest and fees on loans and leases

$

798,097

$

792,045

$

789,423

$

793,626

$

771,973

Interest on investment securities

160,827

147,585

128,924

113,395

109,319

Loans held for sale

5,593

82

280

17

421

Other interest and dividends

11,769

12,138

14,520

23,751

51,683

Total interest income

976,286

951,850

933,147

930,789

933,396

Interest expense:

Deposits

361,263

335,971

325,793

293,955

251,466

Borrowings

42,726

48,140

36,333

49,698

98,101

Total interest expense

403,989

384,111

362,126

343,653

349,567

Net interest income

572,297

567,739

571,021

587,136

583,829

Provision for credit losses

59,000

45,500

36,000

36,500

31,498

Net interest income after provision for loan and lease losses

513,297

522,239

535,021

550,636

552,331

Non-interest income:

Deposit service fees

41,027

42,589

37,459

41,005

45,418

Loan and lease related fees

19,334

19,767

21,362

19,966

20,528

Wealth and investment services

8,556

7,924

7,767

7,254

7,391

Cash surrender value of life insurance policies

6,359

5,946

6,587

6,620

6,293

(Loss) on sale of investment securities, net

(49,915)

(9,826)

(16,825)

-

(48)

Other income

16,937

32,953

7,465

15,537

9,792

Total non-interest income

42,298

99,353

63,815

90,382

89,374

Non-interest expense:

Compensation and benefits

186,850

188,540

184,914

180,333

173,305

Occupancy

15,103

19,439

18,478

18,617

20,254

Technology and equipment

45,303

45,836

46,486

55,261

51,815

Marketing

4,107

4,281

5,176

4,810

5,160

Professional and outside services

14,066

12,981

18,804

26,874

29,385

Intangible assets amortization

8,716

9,194

8,618

8,899

9,193

Deposit insurance

15,065

24,223

58,725

13,310

13,723

Other expenses

36,811

31,429

36,020

54,474

41,254

Total non-interest expense

326,021

335,923

377,221

362,578

344,089

Income before income taxes

229,574

285,669

221,615

278,440

297,616

Income tax expense

47,941

69,346

36,222

51,965

62,648

Net income

181,633

216,323

185,393

226,475

234,968

Preferred stock dividends

(4,162)

(4,163)

(4,163)

(4,162)

(4,162)

Net income available to common stockholders

$

177,471

$

212,160

$

181,230

$

222,313

$

230,806

 


Weighted-average common shares outstanding - Diluted

169,937

170,704

170,623

171,350

172,803

Earnings per common share:

Basic

$

1.03

$

1.23

$

1.05

$

1.29

$

1.32

Diluted

1.03

1.23

1.05

1.28

1.32

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

Three Months Ended June 30,

2024

2023

(Dollars in thousands)

Average balance

Interest

Yield/rate

Average balance


Interest

Yield/rate

Assets:

Interest-earning assets:

Loans and leases

$

51,434,799

$

808,309

6.23

%

$

51,184,715

$

782,557

6.06

%

Investment securities (1)

16,382,215

164,930

3.86

14,780,257

116,027

2.99

Federal Home Loan and Federal Reserve Bank stock

336,342

5,166

6.18

513,559

6,675

5.21

Interest-bearing deposits

483,947

6,603

5.40

3,528,824

45,008

5.05

Loans held for sale

222,080

5,593

10.07

96,537

421

1.74

Total interest-earning assets

68,859,383

$

990,601

5.65

%

70,103,892

$

950,688

5.32

%

Non-interest-earning assets

7,076,950

6,128,636

Total assets

$

75,936,333

$

76,232,528

Liabilities and Stockholders' Equity:

Interest-bearing liabilities:

Demand deposits

$

10,156,691

$

-

-

%

$

11,375,059

$

-

-

%

Health savings accounts

8,528,476

3,206

0.15

8,250,766

3,090

0.15

Interest-bearing checking, money market and savings

35,012,709

264,009

3.03

31,768,511

178,707

2.26

Certificates of deposit and brokered deposits

8,017,223

94,048

4.72

7,173,552

69,669

3.90

Total deposits

61,715,099

361,263

2.35

58,567,888

251,466

1.72

 


Securities sold under agreements to repurchase and other borrowings

198,324

1,114

2.22

215,874

63

0.11

Federal Home Loan Bank advances

2,429,653

33,727

5.49

6,724,139

88,556

5.21

Long-term debt (1)

913,608

7,885

3.55

1,061,526

9,482

3.68

Total borrowings

3,541,585

42,726

4.82

8,001,539

98,101

4.87

Total interest-bearing liabilities

65,256,684

$

403,989

2.49

%

66,569,427

$

349,567

2.10

%

Non-interest-bearing liabilities

1,945,912

1,267,803

Total liabilities

67,202,596

67,837,230

 


Preferred stock

283,979

283,979

Common stockholders' equity

8,449,758

8,111,319

Total stockholders' equity

8,733,737

8,395,298

Total liabilities and stockholders' equity

$

75,936,333

$

76,232,528

Tax-equivalent net interest income

586,612

601,121

Less: Tax-equivalent adjustments

(14,315)

(17,292)

Net interest income

$

572,297

$

583,829

Net interest margin

3.32

%

3.35

%

 


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




 

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

Six Months Ended June 30,

2024

2023

(Dollars in thousands)

Average balance

Interest

Yield/rate

Average balance


Interest

Yield/rate

Assets:

Interest-earning assets:

Loans and leases

$

51,186,608

$

1,610,173

6.23

%

$

50,642,963

$

1,508,100

5.93

%

Investment securities (1)

16,312,782

318,575

3.75

14,707,157

222,001

2.89

Federal Home Loan and Federal Reserve Bank stock

340,167

9,518

5.63

486,617

11,585

4.80

Interest-bearing deposits

528,174

14,389

5.39

2,221,119

55,404

4.96

Loans held for sale

117,749

5,675

9.64

50,838

437

1.72

Total interest-earning assets

68,485,480

$

1,958,330

5.62

%

68,108,694

$

1,797,527

5.21

%

Non-interest-earning assets

7,149,069

6,176,650

Total assets

$

75,634,549

$

74,285,344

Liabilities and Stockholders' Equity:

Interest-bearing liabilities:

Demand deposits

$

10,369,552

$

-

-

%

$

11,999,028

$

-

-

%

Health savings accounts

8,567,058

6,397

0.15

8,271,493

6,117

0.15

Interest-bearing checking, money market and savings

34,534,198

513,659

2.99

30,816,229

301,755

1.97

Certificates of deposit and brokered deposits

7,669,424

177,178

4.65

5,607,711

93,798

3.37

Total deposits

61,140,232

697,234

2.29

56,694,461

401,670

1.43

 


Securities sold under agreements to repurchase and other borrowings

234,570

3,222

2.72

563,517

7,890

2.78

Federal Home Loan Bank advances

2,559,642

71,094

5.49

6,201,884

156,682

5.02

Long-term debt (1)

947,269

16,550

3.60

1,066,859

18,970

3.67

Total borrowings

3,741,481

90,866

4.85

7,832,260

183,542

4.68

Total interest-bearing liabilities

64,881,713

$

788,100

2.44

%

64,526,721

$

585,212

1.82

%

Non-interest-bearing liabilities

2,005,971

1,452,640

Total liabilities

66,887,684

65,979,361

 


Preferred stock

283,979

283,979

Common stockholders' equity

8,462,886

8,022,004

Total stockholders' equity

8,746,865

8,305,983

Total liabilities and stockholders' equity

$

75,634,549

$

74,285,344

Tax-equivalent net interest income

1,170,230

1,212,315

Less: Tax-equivalent adjustments

(30,194)

(33,203)

Net interest income

$

1,140,036

$

1,179,112

Net interest margin

3.33

%

3.50

%

 


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

WEBSTER FINANCIAL CORPORATIONFive Quarter Loans and Leases (unaudited)

(Dollars in thousands)

June 30,2024

March 31,2024



December 31,2023



September 30,2023



June 30,2023

Loans and leases (actual):

Commercial non-mortgage

$

18,021,758

$

17,976,128

$

18,214,261

$

18,058,524

$

19,499,160

Asset-based lending

1,470,675

1,492,886

1,557,841

1,632,962

1,718,251

Commercial real estate

22,277,813

21,869,502

21,157,732

20,583,254

20,661,071

Residential mortgages

8,284,297

8,226,154

8,227,923

8,228,451

8,140,182

Consumer

1,518,922

1,533,972

1,568,295

1,584,955

1,607,384

Loans and leases

51,573,465

51,098,642

50,726,052

50,088,146

51,626,048

Allowance for credit losses on loans and leases

(669,355)

(641,442)

(635,737)

(635,438)

(628,911)

Loans and leases, net

$

50,904,110

$

50,457,200

$

50,090,315

$

49,452,708

$

50,997,137

Loans and leases (average):

Commercial non-mortgage

$

17,995,654

$

18,235,402

$

18,181,417

$

18,839,776

$

19,220,435

Asset-based lending

1,473,175

1,523,616

1,588,350

1,663,481

1,756,051

Commercial real estate

22,186,566

21,403,765

20,764,834

20,614,334

20,518,355

Residential mortgages

8,252,397

8,225,151

8,240,390

8,200,938

8,067,349

Consumer

1,527,007

1,550,484

1,577,349

1,593,659

1,622,525

Loans and leases

$

51,434,799

$

50,938,418

$

50,352,340

$

50,912,188

$

51,184,715

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

(Dollars in thousands)

June 30,2024

March 31,2024



December 31,2023



September 30,2023



June 30,2023

Nonperforming loans and leases:

Commercial non-mortgage

$

210,906

$

203,626

$

134,617

$

121,067

$

109,279

Asset-based lending

29,791

34,915

35,090

10,350

9,450

Commercial real estate

96,337

14,323

11,314

31,004

47,972

Residential mortgages

11,345

8,407

5,591

27,312

26,751

Consumer

20,457

22,341

22,932

25,320

25,417

Total nonperforming loans and leases

$

368,836

$

283,612

$

209,544

$

215,053

$

218,869

Other real estate owned and repossessed assets:

Commercial non-mortgage

$

5,013

$

5,540

$

8,954

$

2,687

$

2,152

Residential mortgages

-

-

-

662

662

Consumer

1,035

102

102

-

532

Total other real estate owned and repossessed assets

$

6,048

$

5,642

$

9,056

$

3,349

$

3,346

Total nonperforming assets

$

374,884

$

289,254

$

218,600

$

218,402

$

222,215

Past due 30-89 days:

Commercial non-mortgage (1)

$

134,794

$

15,365

$

7,071

$

38,875

$

32,074

Commercial real estate

10,284

72,999

9,002

3,491

1,970

Residential mortgages

13,008

17,580

21,047

16,208

10,583

Consumer

8,185

6,824

9,417

12,016

6,718

Total past due 30-89 days

$

166,271

$

112,768

$

46,537

$

70,590

$

51,345

Past due 90 days or more and accruing

9

12,460

52

138

29

Total past due loans and leases

$

166,280

$

125,228

$

46,589

$

70,728

$

51,374

 


(1) In July 2024, $117.9 million of the commercial non-mortgage loans and leases past due 30-89 days were paid current.

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

Three Months Ended

(Dollars in thousands)

June 30,2024

March 31,2024



December 31,2023



September 30,2023



June 30,2023

ACL on loans and leases, beginning balance

$

641,442

$

635,737

$

635,438

$

628,911

$

613,914

Provision

61,041

43,194

34,300

35,839

35,249

Charge-offs:






















Commercial portfolio

33,356

38,461

28,794

27,360

21,945

Consumer portfolio

1,418

1,330

6,878

3,642

1,085

Total charge-offs

34,774

39,791

35,672

31,002

23,030

Recoveries:






















Commercial portfolio

360

553

396

292

1,024

Consumer portfolio

1,286

1,749

1,275

1,398

1,754

Total recoveries

1,646

2,302

1,671

1,690

2,778

Total net charge-offs

33,128

37,489

34,001

29,312

20,252

ACL on loans and leases, ending balance

$

669,355

$

641,442

$

635,737

$

635,438

$

628,911

ACL on unfunded loan commitments, ending balance

22,456

24,495

24,734

23,040

22,366

ACL, ending balance

$

691,811

$

665,937

$

660,471

$

658,478

$

651,277

Three Months Ended

(In thousands, except per share data)

June 30,2024

March 31,2024



December 31,2023



September 30,2023



June 30,2023

Efficiency ratio:

Non-interest expense

$

326,021

$

335,923

$

377,221

$

362,578

$

344,089

Less: Foreclosed property activity

(364)

(330)

(96)

(492)

(432)

Intangible assets amortization

8,716

9,194

8,618

8,899

9,193

Operating lease depreciation

560

663

900

1,146

1,639

FDIC special assessment estimate

-

11,862

47,164

-

-

Merger related expenses (1)

-

3,139

30,679

61,625

40,840

Adjusted non-interest expense

$

317,109

$

311,395

$

289,956

$

291,400

$

292,849

Net interest income

$

572,297

$

567,739

$

571,021

$

587,136

$

583,829

Add: Tax-equivalent adjustment

14,315

15,879

17,830

17,906

17,292

Non-interest income

42,298

99,353

63,815

90,382

89,374

Other income (2)

7,802

7,626

5,099

3,614

5,035

Less: Operating lease depreciation

560

663

900

1,146

1,639

(Loss) on sale of investment securities, net

(49,915)

(9,826)

(16,825)

-

(48)

Net gain on sale of mortgage servicing rights

-

11,655

-

-

-

Adjusted income

$

686,067

$

688,105

$

673,690

$

697,892

$

693,939

Efficiency ratio

46.22

%

45.25

%

43.04

%

41.75

%

42.20

%

ROATCE:

Net income

$

181,633

$

216,323

$

185,393

$

226,475

$

234,968

Less: Preferred stock dividends

4,162

4,163

4,163

4,162

4,162

Add: Intangible assets amortization, tax-effected

6,886

7,263

6,808

7,030

7,262

Adjusted net income

$

184,357

$

219,423

$

188,038

$

229,343

$

238,068

Adjusted net income, annualized basis

$

737,428

$

877,692

$

752,152

$

917,372

$

952,272

Average stockholders' equity

$

8,733,737

$

8,759,992

$

8,312,798

$

8,370,469

$

8,395,298

Less: Average preferred stock

283,979

283,979

283,979

283,979

283,979

Average goodwill and other intangible assets, net

3,246,940

3,090,751

2,838,770

2,847,560

2,856,581

Average tangible common stockholders' equity

$

5,202,818

$

5,385,262

$

5,190,049

$

5,238,930

$

5,254,738

Return on average tangible common stockholders' equity

14.17

%

16.30

%

14.49

%

17.51

%

18.12

%

 


(1) Merger related expenses include Ametros acquisition expenses for the three months ended March 31, 2024. 2023 periods primarily include charges related to the merger with Sterling.


(2) Other income includes the taxable-equivalent of net income generated from low income housing tax-credit investments.




 





















 

(In thousands, except per share data)

June 30,2024

March 31,2024



December 31,2023



September 30,2023



June 30,2023

Tangible equity:

Stockholders' equity

$

8,809,268

$

8,747,498

$

8,689,996

$

8,199,201

$

8,279,726

Less: Goodwill and other intangible assets, net

3,242,193

3,250,909

2,834,600

2,843,217

2,852,117

Tangible stockholders' equity

$

5,567,075

$

5,496,589

$

5,855,396

$

5,355,984

$

5,427,609

Total assets

$

76,838,106

$

76,161,693

$

74,945,249

$

73,130,851

$

74,038,243

Less: Goodwill and other intangible assets, net

3,242,193

3,250,909

2,834,600

2,843,217

2,852,117

Tangible assets

$

73,595,913

$

72,910,784

$

72,110,649

$

70,287,634

$

71,186,126

Tangible equity

7.56

%

7.54

%

8.12

%

7.62

%

7.62

%

Tangible common equity:

Tangible stockholders' equity

$

5,567,075

$

5,496,589

$

5,855,396

$

5,355,984

$

5,427,609

Less: Preferred stock

283,979

283,979

283,979

283,979

283,979

Tangible common stockholders' equity

$

5,283,096

$

5,212,610

$

5,571,417

$

5,072,005

$

5,143,630

Tangible assets

$

73,595,913

$

72,910,784

$

72,110,649

$

70,287,634

$

71,186,126

Tangible common equity

7.18

%

7.15

%

7.73

%

7.22

%

7.23

%

Tangible book value per common share:

Tangible common stockholders' equity

$

5,283,096

$

5,212,610

$

5,571,417

$

5,072,005

$

5,143,630

Common shares outstanding

171,402

172,464

172,022

172,056

173,261

Tangible book value per common share

$

30.82

$

30.22

$

32.39

$

29.48

$

29.69

Core deposits:

Total deposits

$

62,276,692

$

60,747,743

$

60,784,284

$

60,331,767

$

58,747,532

Less: Certificates of deposit

5,861,431

5,928,773

5,574,048

5,150,139

4,743,204

Brokered certificates of deposit

1,910,071

1,008,547

2,890,411

2,337,380

2,542,854

Core deposits

$

54,505,190

$

53,810,423

$

52,319,825

$

52,844,248

$

51,461,474

Three Months EndedJune 30, 2024

Adjusted ROATCE:

Net income
$

181,633

Less: Preferred stock dividends

4,162

Add: Intangible assets amortization, tax-effected

6,886

Loss on sale of investment securities, net, tax-effected

38,694

Adjusted net income
$

223,051

Adjusted net income, annualized basis
$

892,204

Average stockholders' equity
$

8,733,737

Less: Average preferred stock

283,979

Average goodwill and other intangible assets, net

3,246,940

Average tangible common stockholders' equity
$

5,202,818

Adjusted return on average tangible common stockholders' equity

17.15

%

Adjusted ROAA:

Net income
$

181,633

Add: Loss on sale of investment securities, net, tax-effected

38,694

Adjusted net income
$

220,327

Adjusted net income, annualized basis
$

881,308

Average assets
$

75,936,333

Adjusted return on average assets

1.16

%

GAAP to adjusted reconciliation:

Three Months Ended June 30, 2024

(In millions, except per share data)

Pre-Tax Income

Net Income Availableto CommonStockholders

Diluted EPS

Reported (GAAP)

$

229.6

$

177.5

$

1.03

Loss on sale of investment securities, net

49.9

38.7

0.23

Adjusted (non-GAAP)

$

279.5

$

216.2

$

1.26

 

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