Webster Reports Third Quarter 2023 EPS of $1.28; Adjusted EPS of $1.55

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
	-0.55	-1.06%	51.55	52.56	51.35	51.43	1,185,802	23:03:00

Webster Financial (NYSE:WBS)
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Webster Financial Corporation ("Webster") (NYSE: WBS), the holding company for Webster Bank, N.A. and its HSA Bank division, today announced net income available to common stockholders of $222.3 million, or $1.28 per diluted share, for the quarter ended September 30, 2023, compared to $229.8 million, or $1.31 per diluted share, for the quarter ended September 30, 2022.

Third quarter 2023 results include $61.6 million pre-tax ($45.1 million after tax), or $0.271 per diluted share, of charges related to the merger with Sterling Bancorp on January 31, 2022 ("the merger"). Excluding these charges, adjusted earnings per diluted share would have been $1.551 for the quarter ended September 30, 2023.

"Our results this quarter illustrate the strength of Webster, both in terms of our earnings power and sound risk and operating profile," said John R. Ciulla, president and chief executive officer. "During the quarter we completed our core systems conversion which marks a significant milestone in the completion of our integration. We continue to be well positioned for the current operating environment."

Highlights for the third quarter of 2023:

Revenue of $677.5 million.
Period end loans and leases balance of $50.1 billion, down $1.5 billion or 3.0 percent from prior quarter; 80.4 percent commercial loans and leases, 19.6 percent consumer loans, and a loan to deposit ratio of 83.0 percent.
Period end deposits balance of $60.3 billion, up $1.6 billion or 2.7 percent from prior quarter.
Provision for credit losses totaled $36.5 million.
Return on average assets of 1.23 percent; adjusted 1.48 percent1.
Return on average tangible common equity of 17.51 percent1; adjusted 20.96 percent1.
Net interest margin of 3.49 percent, up 14 basis points from prior quarter.
Common equity tier 1 ratio of 11.15 percent.
Efficiency ratio of 41.75 percent1.
Tangible common equity ratio of 7.22 percent1.

"During the quarter, we further enhanced our liquidity position, while improving both net interest income and net interest margin," said Glenn MacInnes, executive vice president and chief financial officer.

1 See reconciliations to GAAP financial measures beginning on page 19.

Line of Business performance compared to the third quarter of 2022

Commercial Banking

Webster’s Commercial Banking segment serves businesses that have more than $2 million of revenue through its business banking, middle market, asset-based lending, equipment finance, commercial real estate, sponsor finance, private banking, and treasury services business units. At September 30, 2023, Commercial Banking had $40.3 billion in loans and leases and $19.4 billion in deposits, as well as a combined $2.7 billion in assets under administration and management.

Commercial Banking Operating Results:

Percent

Three months ended September 30,

Favorable/

(In thousands)

2023

2022

(Unfavorable)

Net interest income

$391,399

$333,554

17.3

Non-interest income

30,605

40,497

(24.4

)

Operating revenue

422,004

374,051

12.8

Non-interest expense

110,306

102,415

(7.7

)

Pre-tax, pre-provision net revenue

$311,698

$271,636

14.7

Percent

At September 30,

Increase/

(In millions)

2023

2022

(Decrease)

Loans and leases

$40,261

$38,493

4.6

Deposits

19,411

20,828

(6.8

)

AUA / AUM (off balance sheet)

2,727

2,121

28.5

Pre-tax, pre-provision net revenue increased $40.1 million, to $311.7 million, in the quarter as compared to prior year. Net interest income increased $57.8 million, to $391.4 million, primarily driven by loan growth and the impact of the higher rate environment. Non-interest income decreased $9.9 million, to $30.6 million, driven by decreases in loan servicing related income, cash management fees, syndication fees, interest rate hedging activities, and prepayment penalties. Non-interest expense increased $7.9 million, to $110.3 million, primarily resulting from continued investments in technology and talent to support balance sheet growth.

HSA Bank

Webster’s HSA Bank division offers a comprehensive consumer-directed healthcare solution that includes health savings accounts, health reimbursement arrangements, flexible spending accounts and commuter benefits. Health savings 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 September 30, 2023, HSA Bank had $12.3 billion in total footings comprising $8.2 billion in deposits and $4.1 billion in assets under administration through linked investment accounts.

HSA Bank Operating Results:

Percent

Three months ended September 30,

Favorable/

(In thousands)

2023

2022

(Unfavorable)

Net interest income

$77,669

$58,567

32.6

Non-interest income

20,799

25,842

(19.5

)

Operating revenue

98,468

84,409

16.7

Non-interest expense

39,870

36,725

(8.6

)

Pre-tax, net revenue

$58,598

$47,684

22.9

Percent

At September 30,

Increase/

(Dollars in millions)

2023

2022

(Decrease)

Number of accounts (thousands)

3,186

3,133

1.7

Deposits

$8,230

$7,889

4.3

Linked investment accounts (off balance sheet)

4,095

3,233

26.7

Total footings

$12,325

$11,122

10.8

Pre-tax net revenue increased $10.9 million, to $58.6 million, in the quarter as compared to prior year. Net interest income increased $19.1 million, to $77.7 million, primarily due to an increase in net deposit spread and growth in deposits. Non-interest income decreased $5.0 million, to $20.8 million, primarily due to lower customer account service fees. Non-interest expense increased $3.1 million, to $39.9 million, primarily due to higher compensation and benefits expense, service contract expense related to account growth, and the continued investment in our user experience build out.

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 Small Business Banking business units, as well as a distribution network consisting of 199 banking centers and 350 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 September 30, 2023, Consumer Banking had $9.8 billion in loans and $23.6 billion in deposits, as well as $7.6 billion in assets under administration.

Consumer Banking Operating Results:

Percent

Three months ended September 30,

Favorable/

(In thousands)

2023

2022

(Unfavorable)

Net interest income

$195,315

$195,748

(0.2

Non-interest income

26,886

33,842

(20.6

)

Operating revenue

222,201

229,590

(3.2

)

Non-interest expense

105,703

109,588

3.5

Pre-tax, pre-provision net revenue

$116,498

$120,002

(2.9

)

At September 30,

Percent

(In millions)

2023

2022

Increase

Loans

$9,808

$9,302

5.4

Deposits

23,624

23,859

(1.0

)

AUA (off balance sheet)

7,615

7,369

3.3

Pre-tax, pre-provision net revenue decreased $3.5 million, to $116.5 million, in the quarter as compared to prior year. Net interest income decreased $0.4 million, to $195.3 million, primarily driven by a slight decrease in deposits, partially offset by continued loan growth. Non-interest income decreased $7.0 million, to $26.9 million, driven by lower net investment services income, which was attributable to an outsourcing model adopted in the fourth quarter of 2022, and lower deposit and loan servicing related fees, partially offset by other miscellaneous income. Non-interest expense decreased $3.9 million, to $105.7 million, primarily driven by the impact of outsourcing the consumer investment services platform, coupled with lower technology expenses.

Consolidated financial performance:

Quarterly net interest income compared to the third quarter of 2022:

Net interest income was $587.1 million compared to $551.0 million.
Net interest margin was 3.49 percent compared to 3.54 percent. The yield on interest-earning assets increased by 153 basis points, and the cost of interest-bearing liabilities increased by 169 basis points.
Average interest-earning assets totaled $67.1 billion and increased by $5.0 billion, or 8.0 percent.
Average loans and leases totaled $50.9 billion and increased by $4.7 billion, or 10.1 percent.
Average deposits totaled $59.6 billion and increased by $5.6 billion, or 10.4 percent.

Quarterly provision for credit losses:

The provision for credit losses was $36.5 million in the quarter, reflecting a $6.5 million increase in the allowance for credit losses on loans and leases from prior quarter. The provision also reflects an increase in the reserves on unfunded loan commitments of $0.7 million. The provision for credit losses was $31.5 million in the prior quarter, and $36.5 million a year ago.
Net charge-offs were $29.3 million, compared to $20.3 million in the prior quarter, and $28.5 million a year ago. The ratio of net charge-offs to average loans and leases was 0.23 percent, compared to 0.16 percent in the prior quarter, and 0.25 percent a year ago.
The allowance for credit losses on loans and leases represented 1.27 percent of total loans and leases, compared to 1.22 percent at June 30, 2023, and 1.20 percent at September 30, 2022. The allowance represented 295 percent of nonperforming loans and leases at September 30, 2023, compared to 287 percent at June 30, 2023, and 274 percent at September 30, 2022.

Quarterly non-interest income compared to the third quarter of 2022:

Total non-interest income was $90.4 million compared to $113.6 million, a decrease of $23.2 million. The decrease primarily reflects lower prepayment and other loan related servicing fees, lower client deposit fees, the outsourcing of the consumer investment services platform, and lower client hedging activity. Total non-interest income for the third quarter of 2022 includes a net $0.3 million related to a gain on the early termination of repurchase agreements partially offset by a loss on the sale of investment securities.

Quarterly non-interest expense compared to the third quarter of 2022:

Total non-interest expense was $362.6 million compared to $330.1 million, an increase of $32.5 million. Total non-interest expense includes a net $61.6 million of merger charges, compared to a net $26.7 million of merger and strategic initiatives and a $10.5 million donation to the Webster Bank Charitable Foundation a year ago. Excluding those charges, total non-interest expense increased $8.1 million. The increase reflects general inflationary impacts, including employee compensation and benefits expense, investments in technology, including the HSA and interLINK acquisitions, and higher deposit insurance expense, offset by expense benefits from the merger and outsourcing of the consumer investments services platform.

Quarterly income taxes compared to the third quarter of 2022:

Income tax expense was $52.0 million compared to $64.1 million, and the effective tax rate was 18.7 percent compared to 21.5 percent. The lower effective tax rate in the current period reflects the impact of higher merger related charges compared to the 2022 period, as well as the recognition of a $3.3 million net discrete benefit during the quarter attributable to 2022 tax return true-up adjustments.

Investment securities:

Total investment securities, net were $14.5 billion, compared to $14.7 billion at June 30, 2023, and $14.6 billion at September 30, 2022. The carrying value of the available-for-sale portfolio included $1.1 billion of net unrealized losses, compared to $883.0 million at June 30, 2023, and $941.8 million at September 30, 2022. The carrying value of the held-to-maturity portfolio does not reflect $1.2 billion of net unrealized losses, compared to $877.3 million at June 30, 2023, and $855.9 million at September 30, 2022.

Loans and leases:

Total loans and leases were $50.1 billion, compared to $51.6 billion at June 30, 2023, and $47.8 billion at September 30, 2022. Compared to June 30, 2023, commercial loans and leases decreased by $1.5 billion, commercial real estate loans decreased by $77.8 million, residential mortgages increased by $88.3 million, and consumer loans decreased by $22.4 million.
Compared to a year ago, commercial loans and leases increased by $80.5 million, commercial real estate loans increased by $1.7 billion, residential mortgages increased by $610.5 million, and consumer loans decreased by $147.4 million.
Loan originations for the portfolio were $1.5 billion, compared to $2.5 billion in the prior quarter, and $5.1 billion a year ago. In addition, $1.5 million of residential loans were originated for sale in the quarter, compared to $5.7 million in the prior quarter, and $1.5 million a year ago.

Asset quality:

Total nonperforming loans and leases were $215.1 million, or 0.43 percent of total loans and leases, compared to $218.9 million, or 0.42 percent of total loans and leases, at June 30, 2023, and $209.5 million, or 0.44 percent of total loans and leases, at September 30, 2022.
Past due loans and leases were $70.9 million, compared to $51.4 million at June 30, 2023, and $46.4 million at September 30, 2022.

Deposits and borrowings:

Total deposits were $60.3 billion, compared to $58.7 billion at June 30, 2023, and $54.0 billion at September 30, 2022. Core deposits to total deposits1 were 87.6 percent at both September 30, 2023, and June 30, 2023, compared to 95.2 percent at September 30, 2022. The loan to deposit ratio was 83.0 percent, compared to 87.9 percent at June 30, 2023, and 88.5 percent at September 30, 2022.
Total borrowings were $3.0 billion, compared to $5.6 billion at June 30, 2023, and $5.9 billion at September 30, 2022.

Capital:

The return on average common stockholders’ equity and the return on average tangible common stockholders’ equity1 were 11.00 percent and 17.51 percent, respectively, compared to 11.78 percent and 18.62 percent, respectively, in the third quarter of 2022.
The tangible equity1 and tangible common equity1 ratios were 7.62 percent and 7.22 percent, respectively, compared to 7.70 percent and 7.27 percent, respectively, at September 30, 2022. The common equity tier 1 ratio was 11.15 percent, compared to 10.80 percent at September 30, 2022.
Book value and tangible book value per common share1 were $46.00 and $29.48, respectively, compared to $43.32 and $27.69, respectively, at September 30, 2022.

1 See reconciliations to GAAP financial measures beginning on page 19.

***

Webster Financial Corporation (NYSE:WBS) is the holding company for Webster Bank, N.A. and its HSA Bank Division. 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 its HSA Bank division, one of the country's largest providers of employee benefits solutions. Headquartered in Stamford, CT, Webster is a values-driven organization with $73 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 third quarter 2023 earnings announcement will be held today, Thursday, October 19, 2023 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 October 19, 2023. To access the replay, dial 800-770-2030, or 647-362-9199 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, 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 integrate the operations of Webster and Sterling Bancorp and realize the anticipated benefits of the merger, including validation of Webster's recently completed core conversion and any issues that may arise therefrom; Webster's ability to successfully execute its business plan and strategic initiatives, and manage any risks or uncertainties; any continuation of the recent turmoil in the banking industry, including the associated impact of any regulatory changes or other mitigation efforts taken by government agencies in response; volatility in Webster's stock price due to investor sentiment, including in light of the recent 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; unforeseen events, such as pandemics or natural disasters, and any governmental or societal responses thereto; 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, 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; the impact of a potential U.S. federal government shutdown; the replacement of, and transition from, the London Interbank Offered Rate (LIBOR) to the Secured Overnight Financing Rate (SOFR) as the primary interest rate benchmark; 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 technology systems; the effects of any cyber 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 level of non-performing 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; Webster's inability to remediate the material weaknesses in its internal control related to ineffective information technology general controls (ITGCs); 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 any environmental, social, governmental, and sustainability concerns that may arise from its business activities; and the other factors that are described in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q under the headings “Risk Factors” and “Management Discussion and Analysis of Financial Condition and Results of Operations.” Any forward-looking statement made by the Company in this release speaks only as of the date on which it is made. Factors or events that could cause the Company’s actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

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, ROATCE, 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 a complete understanding of factors and trends affecting its business and allows investors to view performance in a manner similar to management.

These non-GAAP measures should not be considered a substitute for GAAP basis measures and results, and 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.

WEBSTER FINANCIAL CORPORATIONSelected Financial Highlights (unaudited)

At or for the Three Months Ended

(In thousands, except per share data)

September 30, 2023

June 30, 2023

March 31, 2023

December 31, 2022

September 30, 2022

Income and performance ratios: Net income $

226,475

234,968

221,004

244,751

233,968

Net income available to common stockholders

222,313

230,806

216,841

240,588

229,806

Earnings per diluted common share

1.28

1.32

1.24

1.38

1.31

Return on average assets (annualized)

1.23

1.23

1.22

1.40

1.38

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

17.51

18.12

17.66

19.93

18.62

Return on average common stockholders’ equity (annualized)

11.00

11.38

10.94

12.54

11.78

Non-interest income as a percentage of total revenue

13.34

13.28

10.62

14.50

17.10

Asset quality: Allowance for credit losses on loans and leases $

635,438

628,911

613,914

594,741

574,325

Nonperforming assets

218,402

222,215

186,551

206,136

211,627

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

1.27

1.22

1.21

1.20

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

0.23

0.16

0.20

0.17

0.25

Nonperforming loans and leases / total loans and leases

0.43

0.42

0.36

0.41

0.44

Nonperforming assets / total loans and leases plus OREO

0.44

0.43

0.37

0.41

0.44

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

295.48

287.35

331.81

291.84

274.12

Other ratios: Tangible equity (1)

7.62

7.62

7.55

7.79

7.70

Tangible common equity (1)

7.22

7.23

7.15

7.38

7.27

Tier 1 risk-based capital (2)

11.67

11.16

10.93

11.23

11.35

Total risk-based capital (2)

13.82

13.25

12.99

13.25

13.38

Common equity tier 1 risk-based capital (2)

11.15

10.65

10.42

10.71

10.80

Stockholders’ equity / total assets

11.21

11.18

11.08

11.30

11.33

Net interest margin

3.49

3.35

3.66

3.74

3.54

Efficiency ratio (1)

41.75

42.20

41.64

40.27

41.17

Equity and share related: Common equity $

7,915,222

7,995,747

8,010,315

7,772,207

7,542,431

Book value per common share

46.00

46.15

45.85

44.67

43.32

Tangible book value per common share (1)

29.48

29.69

29.47

29.07

27.69

Common stock closing price

40.31

37.75

39.42

47.34

45.20

Dividends declared per common share

0.40

0.40

Common shares issued and outstanding

172,056

173,261

174,712

174,008

174,116

Weighted-average common shares outstanding - Basic

171,210

172,739

172,766

172,522

173,868

Weighted-average common shares outstanding - Diluted

171,350

172,803

172,883

172,699

173,944

(1) See "Reconciliations to GAAP Financial Measures" section beginning on page 20. (2) Presented as preliminary for September 30, 2023, and actual for the remaining periods. WEBSTER FINANCIAL CORPORATIONConsolidated Balance Sheets (unaudited) (In thousands)

September 30, 2023

June 30,2023 September 30,2022 Assets: Cash and due from banks $

406,300

283,623

286,487

Interest-bearing deposits

1,766,431

1,077,136

326,638

Securities: Available-for-sale

7,653,391

7,759,341

8,085,044

Held-to-maturity, net

6,875,772

6,943,784

6,505,838

Total securities, net

14,529,163

14,703,125

14,590,882

Loans held for sale

46,267

10,963

898

Loans and Leases: Commercial

19,691,486

21,217,411

19,610,953

Commercial real estate

20,583,254

20,661,071

18,862,619

Residential mortgages

8,228,451

8,140,182

7,617,955

Consumer

1,584,955

1,607,384

1,732,348

Total loans and leases

50,088,146

51,626,048

47,823,875

Allowance for credit losses on loans and leases

(635,438

)

(628,911

)

(574,325

)

Loans and leases, net

49,452,708

50,997,137

47,249,550

Federal Home Loan Bank and Federal Reserve Bank stock

306,085

407,968

373,044

Premises and equipment, net

431,698

426,310

434,721

Goodwill and other intangible assets, net

2,843,217

2,852,117

2,721,040

Cash surrender value of life insurance policies

1,242,648

1,239,077

1,230,641

Deferred tax asset, net

478,926

377,588

369,737

Accrued interest receivable and other assets

1,627,408

1,663,199

1,468,928

Total Assets $

73,130,851

74,038,243

69,052,566

Liabilities and Stockholders' Equity: Deposits: Demand $

11,410,063

11,157,390

13,849,812

Health savings accounts

8,229,889

8,206,844

7,889,310

Interest-bearing checking

8,826,265

8,775,975

9,203,220

Money market

17,755,198

16,189,678

11,156,579

Savings

6,622,833

7,131,587

9,340,372

Certificates of deposit

5,150,139

4,743,204

2,311,484

Brokered certificates of deposit

2,337,380

2,542,854

258,110

Total deposits

60,331,767

58,747,532

54,008,887

Securities sold under agreements to repurchase and other borrowings

157,491

243,580

1,265,414

Federal Home Loan Bank advances

1,810,218

4,310,371

3,510,717

Long-term debt (1)

1,050,539

1,052,258

1,074,844

Accrued expenses and other liabilities

1,581,635

1,404,776

1,366,294

Total liabilities

64,931,650

65,758,517

61,226,156

Preferred stock

283,979

283,979

Common stockholders' equity

7,915,222

7,995,747

7,542,431

Total stockholders’ equity

8,199,201

8,279,726

7,826,410

Total Liabilities and Stockholders' Equity $

73,130,851

74,038,243

69,052,566

(1) The classification of debt as long-term is based on the initial terms of greater than one year as of the date of issuance. WEBSTER FINANCIAL CORPORATIONConsolidated Statements of Income (unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands, except per share data)

2023

2022

2023

2022

Interest income: Interest and fees on loans and leases $

793,626

525,960

2,281,955

1,303,774

Interest and dividends on securities

137,146

91,569

412,704

237,297

Loans held for sale

454

Total interest income

930,789

617,569

2,695,113

1,541,144

Interest expense: Deposits

293,955

37,492

695,625

57,350

Borrowings

49,698

29,074

233,240

51,883

Total interest expense

343,653

66,566

928,865

109,233

Net interest income

587,136

551,003

1,766,248

1,431,911

Provision for credit losses

36,500

36,531

114,747

237,619

Net interest income after provision for loan and lease losses

550,636

514,472

1,651,501

1,194,292

Non-interest income: Deposit service fees

41,005

50,807

131,859

150,019

Loan and lease related fees

19,966

26,769

63,499

77,355

Wealth and investment services

7,254

11,419

21,232

33,260

Mortgage banking activities

230

616

Cash surrender value of life insurance policies

6,620

7,718

19,641

22,694

(Loss) on sale of investment securities, net

(2,234

)

(16,795

)

(2,234

)

Other income

15,495

19,071

30,856

56,894

Total non-interest income

90,382

113,636

250,522

338,604

Non-interest expense: Compensation and benefits

180,333

173,983

526,838

545,641

Occupancy

18,617

23,517

59,042

93,725

Technology and equipment

55,261

45,283

151,442

142,182

Marketing

4,810

3,918

13,446

10,868

Professional and outside services

26,874

21,618

88,693

91,041

Intangible assets amortization

8,899

8,511

27,589

23,700

Loan workout expenses

579

580

1,759

1,992

Deposit insurance

13,310

8,026

39,356

19,996

Other expenses

53,895

44,635

130,969

118,938

Total non-interest expense

362,578

330,071

1,039,134

1,048,083

Income before income taxes

278,440

298,037

862,889

484,813

Income tax expense

51,965

64,069

180,442

85,281

Net income

226,475

233,968

682,447

399,532

Preferred stock dividends

(4,162

)

(4,162

)

(12,487

)

(11,756

)

Net income available to common stockholders $

222,313

229,806

669,960

387,776

Weighted-average common shares outstanding - Diluted

171,350

173,944

172,326

165,813

Earnings per common share: Basic $

1.29

1.31

3.85

2.32

Diluted

1.28

1.31

3.85

2.32

WEBSTER FINANCIAL CORPORATIONFive Quarter Consolidated Statements of Income (unaudited)

Three Months Ended

(In thousands, except per share data)

September 30, 2023

June 30, 2023

March 31, 2023

December 31, 2022

September 30, 2022

Interest income: Interest and fees on loans and leases $

793,626

771,973

716,356

642,784

525,960

Interest and dividends on securities

137,146

161,002

114,556

100,804

91,569

Loans held for sale

421

Total interest income

930,789

933,396

830,928

743,593

617,569

Interest expense: Deposits

293,955

251,466

150,204

81,202

37,492

Borrowings

49,698

98,101

85,441

60,016

29,074

Total interest expense

343,653

349,567

235,645

141,218

66,566

Net interest income

587,136

583,829

595,283

602,375

551,003

Provision for credit losses

36,500

31,498

46,749

43,000

36,531

Net interest income after provision for loan and lease losses

550,636

552,331

548,534

559,375

514,472

Non-interest income: Deposit service fees

41,005

45,418

45,436

48,453

50,807

Loan and lease related fees

19,966

20,528

23,005

25,632

26,769

Wealth and investment services

7,254

7,391

6,587

7,017

11,419

Mortgage banking activities

129

Cash surrender value of life insurance policies

6,620

6,293

6,728

6,543

7,718

(Loss) on sale of investment securities, net

(48

)

(16,747

)

(4,517

)

(2,234

)

Other income

15,495

9,663

5,698

18,962

19,071

Total non-interest income

90,382

89,374

70,766

102,179

113,636

Non-interest expense: Compensation and benefits

180,333

173,305

173,200

177,979

173,983

Occupancy

18,617

20,254

20,171

20,174

23,517

Technology and equipment

55,261

51,815

44,366

44,202

45,283

Marketing

4,810

5,160

3,476

5,570

3,918

Professional and outside services

26,874

29,385

32,434

26,489

21,618

Intangible assets amortization

8,899

9,193

9,497

8,240

8,511

Loan workout expenses

579

574

606

580

Deposit insurance

13,310

13,723

12,323

6,578

8,026

Other expenses

53,895

40,680

36,394

58,552

44,635

Total non-interest expense

362,578

344,089

332,467

348,390

330,071

Income before income taxes

278,440

297,616

286,833

313,164

298,037

Income tax expense

51,965

62,648

65,829

68,413

64,069

Net income

226,475

234,968

221,004

244,751

233,968

Preferred stock dividends

(4,162

)

(4,162

)

(4,163

)

(4,163

)

(4,162

)

Net income available to common stockholders $

222,313

230,806

216,841

240,588

229,806

Weighted-average common shares outstanding - Diluted

171,350

172,803

172,883

172,699

173,944

Earnings per common share: Basic $

1.29

1.32

1.24

1.38

1.31

Diluted

1.28

1.32

1.24

1.38

1.31

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

Three Months Ended September 30,

2023

2022

(Dollars in thousands)

Average balance

Interest

Yield/rate

Average balance

Interest

Yield/rate

Assets: Interest-earning assets: Loans and leases $

50,912,188

804,930

6.20

46,229,678

532,062

4.52

Investment securities (1)

14,686,798

119,997

3.09

15,039,510

93,561

2.40

Federal Home Loan and Federal Reserve Bank stock

355,495

7,619

8.50

326,860

1,875

2.28

Interest-bearing deposits

1,187,096

16,132

5.32

585,807

3278

2.19

Loans held for sale

6,756

1.03

580

n/m

Total interest-earning assets

67,148,333

948,695

5.49

62,182,435

630,816

3.96

Non-interest-earning assets

6,459,493

5,823,755

Total Assets $

73,607,826

68,006,190

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

11,335,734

13,590,667

Health savings accounts

8,235,632

3,126

0.15

7,854,425

1,146

0.06

Interest-bearing checking, money market and savings

32,673,899

214,891

2.61

29,798,562

33,808

0.45

Certificates of deposit and brokered deposits

7,342,757

75,938

4.10

2,716,885

2,538

0.37

Total deposits

59,588,022

293,955

1.96

53,960,539

37,492

0.28

Securities sold under agreements to repurchase and other borrowings

170,256

0.12

1,369,126

6,242

1.78

Federal Home Loan Bank advances

2,945,136

40,196

5.34

2,402,596

13,814

2.25

Long-term debt (1)

1,051,380

9,452

3.70

1,075,683

9,018

3.47

Total borrowings

4,166,772

49,698

4.72

4,847,405

29,074

2.38

Total interest-bearing liabilities

63,754,794

343,653

2.14

58,807,944

66,566

0.45

Non-interest-bearing liabilities

1,482,563

1,108,202

Total liabilities

65,237,357

59,916,146

Preferred stock

283,979

283,979

Common stockholders' equity

8,086,490

7,806,065

Total stockholders' equity

8,370,469

8,090,044

Total Liabilities and Stockholders' Equity $

73,607,826

68,006,190

Tax-equivalent net interest income

605,042

564,250

Less: Tax-equivalent adjustments

(17,906

)

(13,247

)

Net interest income $

587,136

551,003

Net interest margin

3.49

3.54

(1) For the purposes of average yield/rate and margin computations, unsettled trades on investment securities and unrealized gain (loss) balances on securities available-for-sale and senior fixed-rate notes hedges are excluded. WEBSTER FINANCIAL CORPORATIONConsolidated Average Balances, Interest, Yields and Rates, and Net Interest Margin on a Fully Tax-equivalent Basis (unaudited)

Nine Months Ended September 30,

2023

2022

(Dollars in thousands)

Average balance

Interest

Yield/rate

Average balance

Interest

Yield/rate

Assets: Interest-earning assets: Loans and leases $

50,733,691

2,313,030

6.02

42,125,526

1,317,941

4.14

Investment securities (1)

14,700,296

341,998

2.95

14,548,116

246,788

2.22

Federal Home Loan and Federal Reserve Bank stock

442,429

19,204

5.80

252,559

4,768

2.52

Interest-bearing deposits

1,872,657

71,536

5.04

623,866

4,711

1.00

Loans held for sale

35,982

454

1.68

12,160

0.80

Total interest-earning assets

67,785,055

2,746,222

5.30

57,562,227

1,574,281

3.60

Non-interest-earning assets

6,271,968

5,448,419

Total Assets $

74,057,023

63,010,646

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

11,775,500

12,758,489

Health savings accounts

8,259,408

9,243

0.15

7,809,082

3,358

0.06

Interest-bearing checking, money market and savings

31,442,258

516,646

2.20

27,887,362

48,992

0.23

Certificates of deposit and brokered deposits

6,192,415

169,736

3.66

2,649,328

5,000

0.25

Total deposits

57,669,581

695,625

1.61

51,104,261

57,350

0.15

Securities sold under agreements to repurchase and other borrowings

430,989

7,940

2.43

1,006,391

9,876

1.29

Federal Home Loan Bank advances

5,104,372

196,878

5.09

1,198,754

17,034

1.87

Long-term debt (1)

1,061,643

28,422

3.68

1,017,120

24,973

3.40

Total borrowings

6,597,004

233,240

4.69

3,222,265

51,883

2.16

Total interest-bearing liabilities

64,266,585

928,865

1.93

54,326,526

109,233

0.27

Non-interest-bearing liabilities

1,462,723

1,043,313

Total liabilities

65,729,308

55,369,839

Preferred stock

283,979

268,202

Common stockholders' equity

8,043,736

7,372,605

Total stockholders' equity

8,327,715

7,640,807

Total Liabilities and Stockholders' Equity $

74,057,023

63,010,646

Tax-equivalent net interest income

1,817,357

1,465,048

Less: Tax-equivalent adjustments

(51,109

)

(33,137

)

Net interest income $

1,766,248

1,431,911

Net interest margin

3.49

3.35

(1) For the purposes of average yield/rate and margin computations, unsettled trades on investment securities and unrealized gain (loss) balances on securities available-for-sale and senior fixed-rate notes hedges are excluded. WEBSTER FINANCIAL CORPORATIONFive Quarter Loans and Leases (unaudited) (Dollars in thousands)

September 30, 2023

June 30, 2023

March 31, 2023

December 31, 2022

September 30, 2022

Loans and Leases (actual): Commercial non-mortgage $

18,058,524

19,499,160

19,014,810

18,663,164

17,807,234

Asset-based lending

1,632,962

1,718,251

1,760,527

1,821,642

1,803,719

Commercial real estate

20,583,254

20,661,071

20,513,738

19,619,145

18,862,619

Residential mortgages

8,228,451

8,140,182

8,001,563

7,963,420

7,617,955

Consumer

1,584,955

1,607,384

1,635,885

1,697,055

1,732,348

Loans and Leases

50,088,146

51,626,048

50,926,523

49,764,426

47,823,875

Allowance for credit losses on loans and leases

(635,438

)

(628,911

)

(613,914

)

(594,741

)

(574,325

)

Loans and Leases, net $

49,452,708

50,997,137

50,312,609

49,169,685

47,249,550

Loans and Leases (average): Commercial non-mortgage $

18,839,776

19,220,435

18,670,917

18,024,771

16,780,780

Asset-based lending

1,663,481

1,756,051

1,790,992

1,780,874

1,811,073

Commercial real estate

20,614,334

20,518,355

19,970,326

19,234,292

18,503,077

Residential mortgages

8,200,938

8,067,349

7,995,327

7,819,415

7,384,704

Consumer

1,593,659

1,622,525

1,667,630

1,715,513

1,750,044

Loans and Leases $

50,912,188

51,184,715

50,095,192

48,574,865

46,229,678

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

September 30, 2023

June 30, 2023

March 31, 2023

December 31, 2022

September 30, 2022

Nonperforming loans and leases: Commercial non-mortgage $

121,067

109,279

86,537

89,416

80,002

Asset-based lending

10,350

9,450

20,046

25,115

Commercial real estate

31,004

47,972

35,832

41,580

49,054

Residential mortgages

27,312

26,751

25,096

25,613

25,563

Consumer

25,320

25,417

28,105

27,136

29,782

Total nonperforming loans and leases $

215,053

218,869

185,020

203,791

209,516

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

2,687

2,152

153

Residential mortgages

662

662

2,024

Consumer

532

716

243

Total other real estate owned and repossessed assets $

3,349

3,346

1,531

2,345

2,111

Total nonperforming assets $

218,402

222,215

186,551

206,136

211,627

Past due 30-89 days: Commercial non-mortgage $

38,875

32,074

9,645

20,248

17,440

Asset-based lending

5,921

Commercial real estate

3,631

1,970

17,115

26,147

6,050

Residential mortgages

16,208

10,583

10,710

11,385

12,577

Consumer

12,016

6,718

6,110

9,194

9,656

Total past due 30-89 days $

70,730

51,345

43,580

72,895

45,723

Past due 90 days or more and accruing

138

602

770

711

Total past due loans and leases $

70,868

51,374

44,182

73,665

46,434

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

For the Three Months Ended

(Dollars in thousands)

September 30, 2023

June 30, 2023

March 31, 2023

December 31, 2022

September 30, 2022

ACL on loans and leases, beginning balance $

628,911

613,914

594,741

574,325

571,499

Adoption of ASU No. 2022-02

5,873

Provision

35,839

35,249

37,821

40,649

31,352

Charge-offs: Commercial portfolio

27,360

21,945

26,410

21,499

31,356

Consumer portfolio

3,642

1,085

1,098

1,193

1,453

Total charge-offs

31,002

23,030

27,508

22,692

32,809

Recoveries: Commercial portfolio

292

1,024

1,574

895

1,413

Consumer portfolio

1,398

1,754

1,413

1,564

2,870

Total recoveries

1,690

2,778

2,987

2,459

4,283

Total net charge-offs

29,312

20,252

24,521

20,233

28,526

ACL on loans and leases, ending balance $

635,438

628,911

613,914

594,741

574,325

ACL on unfunded loan commitments, ending balance

23,040

22,366

26,051

27,707

25,329

Total ACL, ending balance $

658,478

651,277

639,965

622,448

599,654

WEBSTER FINANCIAL CORPORATIONReconciliations to GAAP Financial Measures The Company evaluates its business based on certain ratios that utilize non-GAAP financial measures. The Company believes the use of these non-GAAP financial measures provides additional clarity in assessing the results and financial position of the Company. Other companies may define or calculate supplemental financial data differently. The efficiency ratio, which measures the costs expended to generate a dollar of revenue, is calculated excluding certain non-operational items. Return on average tangible common stockholders' equity (ROATCE) measures the Company’s 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 express total deposits less certificates of deposit and brokered certificates of deposit. Adjusted net income available to common stockholders, adjusted diluted earnings per share (EPS), adjusted ROATCE, and adjusted return on average assets (ROAA) are calculated by excluding after tax merger-related expenses. See the tables below for reconciliations of these non-GAAP financial measures with financial measures defined by GAAP. At or for the Three Months Ended (In thousands, except per share data)

September 30, 2023

June 30,2023 March 31,2023 December 31,2022 September 30,2022 Efficiency ratio: Non-interest expense $

362,578

344,089

332,467

348,390

330,071

Less: Foreclosed property activity

(492

)

(432

)

(262

)

(80

)

(393

)

Intangible assets amortization

8,899

9,193

9,497

8,240

8,511

Operating lease depreciation

1,146

1,639

1,884

2,021

2,115

Strategic initiatives and other (1)

143

11,617

Merger related

61,625

40,840

29,373

45,790

25,536

Non-interest expense $

291,400

292,849

291,975

292,276

282,685

Net interest income $

587,136

583,829

595,283

602,375

551,003

Add: Tax-equivalent adjustment

17,906

17,292

15,911

13,991

13,247

Non-interest income

90,382

89,374

70,766

102,179

113,636

Other income (2)

3,614

5,035

4,311

4,814

11,186

Less: Operating lease depreciation

1,146

1,639

1,884

2,021

2,115

(Loss) on sale of investment securities, net

(48

)

(16,747

)

(4,517

)

(2,234

)

Other (3)

2,548

Income $

697,892

693,939

701,134

725,855

686,643

Efficiency ratio

41.75

42.20

41.64

40.27

41.17

Return on average tangible common stockholders' equity: Net income $

226,475

234,968

221,004

244,751

233,968

Less: Preferred stock dividends

4,162

4,162

4,163

4,162

Add: Intangible assets amortization, tax-effected

7,030

7,262

7,503

6,510

6,724

Adjusted income $

229,343

238,068

224,344

247,098

236,530

Adjusted income, annualized basis $

917,372

952,272

897,376

988,392

946,120

Average stockholders' equity $

8,370,469

8,395,298

8,215,676

7,960,900

8,090,044

Less: Average preferred stock

283,979

283,979

Average goodwill and other intangible assets, net

2,847,560

2,856,581

2,849,673

2,716,981

2,725,200

Average tangible common stockholders' equity $

5,238,930

5,254,738

5,082,024

4,959,940

5,080,865

Return on average tangible common stockholders' equity

17.51

18.12

17.66

19.93

18.62

(1) Strategic initiatives and other for the three months ended September 30, 2022, primarily includes a contribution to the Webster foundation of $10.5 million (presented within Other non-interest expense on the Consolidated Statements of Income). (2) Other income includes the taxable equivalent of net income generated from low income housing tax-credit investments. (3) Other for the three months ended September 30, 2022, includes of a gain related to the early termination of repurchase agreements. WEBSTER FINANCIAL CORPORATIONReconciliations to GAAP Financial Measures (continued)

At or for the Three Months Ended

(In thousands, except per share data)

September 30, 2023

June 30, 2023

March 31, 2023

December 31, 2022

September 30, 2022

Tangible equity: Stockholders' equity $

8,199,201

8,279,726

8,294,294

8,056,186

7,826,410

Less: Goodwill and other intangible assets, net

2,843,217

2,852,117

2,861,310

2,713,446

2,721,040

Tangible stockholders' equity $

5,355,984

5,427,609

5,432,984

5,342,740

5,105,370

Total assets $

73,130,851

74,038,243

74,844,395

71,277,521

69,052,566

Less: Goodwill and other intangible assets, net

2,843,217

2,852,117

2,861,310

2,713,446

2,721,040

Tangible assets $

70,287,634

71,186,126

71,983,085

68,564,075

66,331,526

Tangible equity

7.62

7.62

7.55

7.79

7.70

Tangible common equity: Tangible stockholders' equity $

5,355,984

5,427,609

5,432,984

5,342,740

5,105,370

Less: Preferred stock

283,979

283,979

Tangible common stockholders' equity $

5,072,005

5,143,630

5,149,005

5,058,761

4,821,391

Tangible assets $

70,287,634

71,186,126

71,983,085

68,564,075

66,331,526

Tangible common equity

7.22

7.23

7.15

7.38

7.27

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

5,072,005

5,143,630

5,149,005

5,058,761

4,821,391

Common shares outstanding

172,056

173,261

174,712

174,008

174,116

Tangible book value per common share $

29.48

29.69

29.47

29.07

27.69

Core deposits: Total deposits $

60,331,767

58,747,532

55,297,479

54,054,340

54,008,887

Less: Certificates of deposit

5,150,139

4,743,204

3,855,406

2,729,332

2,311,484

Brokered certificates of deposit

2,337,380

2,542,854

674,373

1,431,617

258,110

Core deposits $

52,844,248

51,461,474

50,767,700

49,893,391

51,439,293

Three months ended September 30, 2023

Adjusted ROATCE: Net income $

226,475

Less: Preferred stock dividends

4,162

Add: Intangible assets amortization, tax-effected

7,030

Merger related, tax-effected

45,116

Adjusted income $

274,459

Adjusted income, annualized basis $

1,097,836

Average stockholders' equity $

8,370,469

Less: Average preferred stock

283,979

Average goodwill and other intangible assets, net

2,847,560

Average tangible common stockholders' equity $

5,238,930

Adjusted return on average tangible common stockholders' equity

20.96

Adjusted ROAA: Net income $

226,475

Add: Merger related, tax-effected

45,116

Adjusted income $

271,591

Adjusted income, annualized basis $

1,086,364

Average assets $

73,607,826

Adjusted return on average assets

1.48

GAAP to adjusted reconciliation: Three months ended September 30, 2023 (In millions, except per share data) Pre-Tax Income Net Income Available to Common Stockholders Diluted EPS Reported (GAAP) $

278.4

222.3

1.28

Merger related

61.6

45.1

0.27

Adjusted (non-GAAP) $

340.0

267.4

1.55

View source version on businesswire.com: https://www.businesswire.com/news/home/20231019626804/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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