PR Newswire | Jan 20, 2022 07:32AM EST

01/20 06:30 CST

WEBSTER REPORTS FOURTH QUARTER 2021 EARNINGS OF $1.20 PER DILUTED SHARE WATERBURY, Conn., Jan. 20, 2022

WATERBURY, Conn., Jan. 20, 2022 /PRNewswire/ -- Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A. and its HSA Bank division, today announced earnings applicable to common shareholders of $108.4 million, or $1.20 per diluted share, for the quarter ended December 31, 2021, compared to $57.7 million, or $0.64 per diluted share, for the quarter ended December 31, 2020. Earnings per diluted share would have been $1.31 for the quarter ended December 31, 2021, adjusting for a net $13.7 million ($10.1 million after tax) of merger related, strategic optimization, and debt prepayment expenses.

For the full year 2021, earnings applicable to common shareholders was $398.7 million, or $4.42 per diluted share, and includes $47.1 million ($39.1 million after tax) of merger related, strategic optimization, and debt prepayment expenses.

"We are very proud of our performance for the fourth quarter and full-year of 2021, as we achieved a record level of EPS and net income on both a quarterly and full-year basis," said John R. Ciulla, chairman and chief executive officer. "As we have secured all regulatory approvals, we look forward to closing our merger with Sterling. The combination will form a uniquely positioned commercial bank that will further the exceptional performance Webster's stakeholders have come to expect."

Highlights for the fourth quarter of 2021:

* Revenue of $316.9 million, an increase of 7.9 percent compared to the prior year. * Loan growth of 4.1 percent linked quarter, excluding Paycheck Protection Program (PPP) loans, led by commercial and residential which together increased 5.0 percent. * Current Expected Credit Loss (CECL) benefit of $15.0 million with a reserve decrease of $13.7 million compared to the prior quarter, resulting in an allowance coverage of 1.35 percent, or 1.37 percent excluding $0.2 billion of PPP loans. * Deposit decline of $0.2 billion or 0.6 percent linked quarter, with decreases of $239.7 million in money market deposits and $94.3 million in demand deposits. * Charges related to merger, strategic optimization initiatives, and debt prepayments totaled $13.7 million. * Net interest margin of 2.73 percent. * Efficiency ratio (non-GAAP) of 54.85 percent.

"Our financial performance is the result of a broad effort across our company," said Glenn MacInnes, executive vice president and chief financial officer. "We continued to generate robust loan growth, we were successful in deploying the meaningful liquidity our deposit growth generated, and measures of asset quality remained exceptionally strong. We approach our merger with Sterling with substantial momentum."

Line of Business performance compared to the fourth quarter of 2020

Commercial Banking

Webster's Commercial Banking segment serves businesses that have more than $2 million of revenue through our business banking, middle market, asset-based lending, equipment finance, commercial real estate, sponsor finance, and treasury services business units. Additionally, our Wealth group provides wealth management solutions to business owners, operators, and consumers within our targeted markets and retail footprint. As of December 31, 2021, Commercial Banking had $15.2 billion in loans and leases and $9.6 billion in deposit balances.

Commercial Banking Operating Results:

Percent

Three months ended December 31,Favorable/

(In thousands) 2021 2020 (Unfavorable)

Net interest income $151,767 $137,291 10.5 %

Non-interest income 31,304 25,523 22.7

Operating revenue 183,071 162,814 12.4

Non-interest expense 66,263 67,989 2.5

Pre-tax, pre-provision net revenue$116,808 $94,825 23.2



Percent

At December 31, Increase/

(In millions) 2021 2020 (Decrease)

Loans and leases $15,210 $14,573 4.4 %

Deposits 9,645 8,191 17.7

AUA / AUM (off balance sheet) 7,202 6,586 9.4

Pre-tax, pre-provision net revenue increased $22.0 million to $116.8 million in the quarter as compared to prior year. Net interest income increased $14.5 million to $151.8 million, primarily driven by loan and deposit growth. Non-interest income increased $5.8 million to $31.3 million, driven by a gain on loan sale and trust and investment service fees. Non-interest expense decreased $1.7 million to $66.3 million, primarily driven by lower support costs.

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. As of December 31, 2021, HSA Bank had $11.1 billion in total footings comprising $7.4 billion in deposit balances and $3.7 billion in assets under administration through linked investment accounts.

HSA Bank Operating Results:

Percent

Three months ended December 31,Favorable/

(In thousands) 2021 2020 (Unfavorable)

Net interest income $42,219 $40,495 4.3 %

Non-interest income 24,499 24,105 1.6

Operating revenue 66,718 64,600 3.3

Non-interest expense 34,155 34,750 1.7

Pre-tax, net revenue $32,563 $29,850 9.1



Percent

At December 31, Increase/

(Dollars in millions) 2021 2020 (Decrease)

Number of accounts (thousands) 2,992 2,953 1.3 %



Deposits $7,398 $7,120 3.9

Linked investment accounts (off balance sheet)3,719 2,853 30.3

Total footings $11,117 $9,973 11.5

Pre-tax net revenue increased $2.7 million to $32.6 million in the quarter as compared to prior year. Net interest income increased $1.7 million to $42.2 million, due to growth in deposits. Non-interest income increased $0.4 million to $24.5 million, primarily due to increased interchange revenue. Non-interest expense decreased $0.6 million to $34.2 million, primarily due to reduced occupancy, telephone, and postage costs.

Retail Banking

Retail Banking serves consumer and business banking customers primarily throughout southern New England and into Westchester County, New York. Retail Banking is comprised of the Consumer Lending and Small Business Banking (businesses that have less than $2 million of revenue) business units, as well as a distribution network consisting of 130 banking centers and 251 ATMs, a customer care center, and a full range of web and mobile-based banking services. As of December 31, 2021, Retail Banking had $7.1 billion in loans and $12.8 billion in deposit balances.

Retail Banking Operating Results:

Percent

Three months ended December 31, Favorable/

(In thousands) 2021 2020 (Unfavorable)

Net interest income $93,749 $85,404 9.8 %

Non-interest income 17,323 18,064 (4.1)

Operating revenue 111,072 103,468 7.3

Non-interest expense 74,310 79,687 6.7

Pre-tax, pre-provision net revenue$36,762 $23,781 54.6



Percent

At December 31, Increase/

(In millions) 2021 2020 (Decrease)

Loans $7,062 $7,068 (0.1) %

Deposits 12,802 12,024 6.5

Pre-tax, pre-provision net revenue increased $13.0 million to $36.8 million in the quarter as compared to prior year. Net interest income increased $8.3 million to $93.7 million, driven by deposit balance growth and lower interest paid on deposits, partially offset by lower loan balances. Non-interest income decreased $0.7 million to $17.3 million, resulting from lower mortgage banking fee income, partially offset by higher deposit service fees, loan servicing income, and credit card and merchant services fees. Non-interest expense decreased $5.4 million to $74.3 million, driven by lower employee-related, occupancy, technology and equipment, and marketing expenses.

Consolidated financial performance:

Quarterly net interest income compared to the fourth quarter of 2020:

* Net interest income was $226.8 million compared to $216.9 million. * Net interest margin was 2.73 percent compared to 2.83 percent. The yield on interest-earning assets declined by 24 basis points, and the cost of interest-bearing liabilities declined by 14 basis points. * Average interest-earning assets totaled $33.5 billion and grew by $2.6 billion, or 8.4 percent. * Average loans and leases totaled $21.9 billion and grew by $0.2 billion, or 0.8 percent. * Average deposits totaled $30.1 billion and grew by $2.9 billion, or 10.7 percent.

Quarterly provision for credit losses:

* The provision for credit losses reflects a $15.0 million benefit in the quarter, contributing to a $13.7 million decrease in the allowance for credit losses on loans and leases. The decrease in the allowance reflects a stable economic outlook and favorable credit quality trends. The provision for credit losses reflected an expense of $7.8 million in the prior quarter compared to a benefit of $1.0 million a year ago. * Net (recoveries) were $(1.2) million, compared to net charge-offs of $0.9 million in the prior quarter and $9.4 million a year ago. The ratio of net (recoveries) charge-offs to average loans on an annualized basis was (0.02) percent, compared to 0.02 percent in the prior quarter and 0.17 percent a year ago. * The allowance for credit losses on loans and leases represented 1.35 percent of total loans at December 31, 2021, compared to 1.46 percent at September 30, 2021 and 1.66 percent at December 31, 2020. Excluding $0.2 billion of risk free PPP loans, the coverage ratio was 1.37 percent at December 31, 2021, compared to 1.49 percent at September 30, 2021 excluding $0.4 billion of risk free PPP loans, and 1.76 percent at December 31, 2020 excluding $1.3 billion of risk free PPP loans. The allowance represented 274 percent of nonperforming loans at December 31, 2021 compared to 309 percent at September 30, 2021 and 214 percent at December 31, 2020.

Quarterly non-interest income compared to the fourth quarter of 2020:

* Total non-interest income was $90.1 million compared to $76.8 million, an increase of $13.3 million. This primarily reflects an increase of $12.5 million in Other primarily due to realized gains and fair value adjustments on direct investments and a gain on the sale of a commercial loan; $2.8 million in deposit service fees driven by higher levels of transactional fees across all three business lines; and $1.3 million primarily due to increased investment activity. These increases were partially offset by a $3.4 million decrease in mortgage banking activities which is in line with our strategic choice to originate loans for portfolio along with lower spreads on loans originated for sale.

Quarterly non-interest expense compared to the fourth quarter of 2020:

* Total non-interest expense was $189.9 million compared to $219.5 million, a decrease of $29.6 million. Total non-interest expense includes a net $13.7 million of merger, strategic initiative, and debt prepayment charges compared to $38.3 million of strategic initiatives a year ago. Excluding those charges, total non-interest expense decreased $5.0 million driven by the benefits of our strategic initiatives partially offset by higher performance-based compensation and medical claims.

Quarterly income taxes compared to the fourth quarter of 2020:

* Income tax expense was $31.0 million compared to $15.1 million, and the effective tax rate was 21.8 percent compared to 20.1 percent. The higher effective tax rate in the quarter primarily reflects the effects of increased pre-tax income in 2021 compared to 2020, partially offset by the recognition of a higher level of net discrete tax benefits during the period compared to a year ago.

Investment securities:

* Total investment securities, net were $10.4 billion, compared to $9.4 billion at September 30, 2021 and $8.9 billion at December 31, 2020. The carrying value of the available-for-sale portfolio included $7.2 million of net unrealized gains, compared to $44.7 million at September 30, 2021 and $92.5 million at December 31, 2020. The carrying value of the held-to-maturity portfolio does not reflect $82.6 million of net unrealized gains, compared to $152.9 million at September 30, 2021 and $267.2 million at December 31, 2020.

Loans:

* Total loans were $22.3 billion, compared to $21.6 billion at both September 30, 2021 and December 31, 2020. Compared to September 30, 2021, commercial loans (excluding PPP loans) increased by $601.6 million, residential mortgages increased by $245.4 million, and commercial real estate loans increased by $80.5 million while consumer loans decreased by $52.1 million, and PPP loans decreased by $183.9 million. * Compared to a year ago, commercial loans (excluding PPP loans) increased by $1.0 billion, residential mortgages increased by $0.6 billion, and commercial real estate loans increased by $0.3 billion, while consumer loans decreased by $0.3 billion. PPP loans totaled $0.2 billion at December 31, 2021. * Loan originations for the portfolio were $2.553 billion, compared to $1.987 billion in the prior quarter and $1.804 billion a year ago. In addition, $42 million of residential loans were originated for sale in the quarter, compared to $57 million in the prior quarter and $125 million a year ago.

Asset quality:

* Total nonperforming loans were $109.8 million, or 0.49 percent of total loans, compared to $101.8 million, or 0.47 percent of total loans, at September 30, 2021 and $168.0 million, or 0.78 percent of total loans, at December 31, 2020. As of December 31, 2021, $60.3 million of nonperforming loans were contractually current. * Past due loans were $21.9 million, compared to $17.1 million at September 30, 2021 and $32.9 million at December 31, 2020.

Deposits and borrowings:

* Total deposits were $29.8 billion, compared to $30.0 billion at September 30, 2021 and $27.3 billion at December 31, 2020. Core deposits to total deposits were 94.0 percent, compared to 93.7 percent at September 30, 2021 and 90.9 percent at December 31, 2020. The loan to deposit ratio was 74.6 percent, compared to 71.9 percent at September 30, 2021 and 79.2 percent at December 31, 2020. * Total borrowings were $1.2 billion, compared to $1.3 billion at September 30, 2021 and $1.7 billion at December 31, 2020.

Capital:

* The return on average common shareholders' equity and the return on average tangible common shareholders' equity were 13.35 percent and 16.23 percent, respectively, compared to 7.51 percent and 9.31 percent, respectively, in the fourth quarter of 2020. * The tangible equity and tangible common equity ratios were 8.39 percent and 7.97 percent, respectively, compared to 8.35 percent and 7.90 percent, respectively, at December 31, 2020. The common equity tier 1 risk-based capital ratio was 11.72 percent, compared to 11.35 percent at December 31, 2020. * Book value and tangible book value per common share were $36.36 and $30.22, respectively, compared to $34.25 and $28.04, respectively, at December 31, 2020.

Webster Financial Corporation is the holding company for Webster Bank, National Association and its HSA Bank division. With $34.9 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust, and investment services through 130 banking centers and 251 ATMs. Webster also provides mobile and Internet banking. Webster Bank owns the asset-based lending firm Webster Business Credit Corporation; the equipment finance firm Webster Capital Finance Corporation; and HSA Bank, a division of Webster Bank, which provides health savings account trustee and administrative services. 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 fourth quarter 2021 earnings announcement will be held today, Thursday, January 20, 2022 at 9:00 a.m. Eastern Time. To listen to the live call, please dial 877-407-8289, or 201-689-8341 for international callers. The webcast, along with related slides, will be available on the Webster website (www.wbst.com). A replay of the conference call will be available for one week via the website listed above, beginning at approximately 11:00 a.m. (Eastern) on January 20, 2022. To access the replay, dial 877-660-6853, or 201-612-7415 for international callers. The replay conference ID number is 13725763.

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

Investor ContactKristen Manginelli, 203-578-2307kmanginelli@websterbank.com

Forward-Looking Statements

This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"). Forward-looking statements can be identified by words such as "believes," "anticipates," "expects," "intends," "targeted," "continue," "remain," "will," "should," "may," "plans," "estimates," and similar references to future periods; however, such words are not the exclusive means of identifying such statements. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, and other financial items; (ii) statements of plans, objectives, and expectations of Webster or its management or Board of Directors; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Forward-looking statements are based on Webster's current expectations and assumptions regarding its business, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Webster's actual results may differ materially from those contemplated by the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to: (1) our ability to complete the merger with Sterling Bancorp and realize the anticipated benefits of the merger; (2) our ability to successfully execute our business plan and strategic initiatives, and manage any risks or uncertainties; (3) our ability to successfully achieve the anticipated cost reductions and operating efficiencies from our completed branch consolidations and other strategic initiatives, including process automation, organization simplification, and spending reductions, and avoid any higher than anticipated costs or delays in the ongoing implementation; (4) local, regional, national, and international economic conditions and the impact they may have on us and our customers; (5) volatility and disruption in national and international financial markets; (6) the potential adverse effects of the ongoing novel coronavirus (COVID-19) pandemic and any governmental or societal responses thereto, or other unusual and infrequently occurring events; (7) changes in the level of nonperforming assets and charge-offs; (8) changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (9) adverse conditions in the securities markets that lead to impairment in the value of our investment securities; (10) inflation, changes in interest rates (including the replacement of LIBOR as an interest rate benchmark), and monetary fluctuations; (11) the timely development and acceptance of new products and services and the perceived value of those products and services by customers; (12) changes in deposit flows, consumer spending, borrowings, and savings habits; (13) our ability to implement new technologies and maintain secure and reliable technology systems; (14) the effects of any cyber threats, attacks or events or fraudulent activity; (15) performance by our counterparties and vendors; (16) our ability to increase market share and control expenses; (17) changes in the competitive environment among banks, financial holding companies, and other financial services providers; (18) changes in laws and regulations (including those concerning banking, taxes, dividends, securities, insurance, and healthcare) with which we and our subsidiaries must comply; (19) the effect of changes in accounting policies and practices applicable to us, including impacts of recently adopted accounting guidance; (20) legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews; (21) our ability to appropriately address social, environmental, and sustainability concerns that may arise from our business activities; and (22) 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 Operation." 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 and other performance ratios, as adjusted, is included in the accompanying selected financial highlights table.

We believe that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, our performance trends and financial position. We utilize these measures for internal planning and forecasting purposes. We, as well as securities analysts, investors, and other interested parties, also use these measures to compare peer company operating performance. We believe that our presentation and discussion, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting our business and allows investors to view performance in a manner similar to management. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results, and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.

WEBSTER FINANCIAL CORPORATIONSelected Financial Highlights (unaudited)

At or for the Three Months Ended

(In thousands, except per share data) December 31, September 30, June 30, March 31, December 31, 2021 2021 2021 2021 2020

Income and performance ratios:

Net income $ 111,038 $ 95,713 $ 94,035 $ 108,078 $ 60,044

Earnings applicable to common shareholders 108,426 93,171 91,555 105,530 57,715

Earnings per diluted common share 1.20 1.03 1.01 1.17 0.64

Return on average assets 1.26 % 1.10 % 1.12 % 1.31 % 0.73 %

Return on average tangible common shareholders' equity^(non-GAAP) 16.23 14.16 14.26 16.79 9.31

Return on average common shareholders' equity 13.35 11.61 11.63 13.65 7.51

Non-interest income as a percentage of total revenue 28.44 26.73 24.77 25.54 26.14

Asset quality:

Allowance for credit losses on loans and leases $ 301,187 $ 314,922 $ 307,945 $ 328,351 $ 359,431

Nonperforming assets 112,590 104,209 123,497 152,808 170,314

Allowance for credit losses on loans and leases / total loans and leases 1.35 % 1.46 % 1.43 % 1.54 % 1.66 %

Net charge-offs (recoveries) / average loans and leases (annualized) (0.02) 0.02 (0.02) 0.10 0.17

Nonperforming loans and leases / total loans and leases 0.49 0.47 0.56 0.71 0.78

Nonperforming assets / total loans and leases plus OREO 0.51 0.48 0.57 0.72 0.79

Allowance for credit losses on loans and leases / nonperforming loans and 274.36 309.44 255.05 218.29 213.94leases

Other ratios:

Tangible equity^(non-GAAP) 8.39 % 8.12 % 8.35 % 8.30 % 8.35 %

Tangible common equity ^(non-GAAP) 7.97 7.71 7.91 7.85 7.90

Tier 1 risk-based capital ^(a) 12.32 12.39 12.30 12.55 11.99

Total risk-based capital ^(a) 13.64 13.79 13.70 14.08 13.59

Common equity tier 1 risk-based capital ^(a) 11.72 11.77 11.66 11.89 11.35

Shareholders' equity / total assets 9.85 9.57 9.86 9.84 9.92

Net interest margin 2.73 2.80 2.82 2.92 2.83

Efficiency ratio ^(non-GAAP) 54.85 54.84 56.64 58.46 60.27

Equity and share related:

Common equity $ 3,293,288 $ 3,241,152 $ 3,184,668 $ 3,127,891 $ 3,089,588

Book value per common share 36.36 35.78 35.15 34.60 34.25

Tangible book value per common share^(non-GAAP) 30.22 29.63 28.99 28.41 28.04

Common stock closing price 55.84 54.46 53.34 55.11 42.15

Dividends declared per common share 0.40 0.40 0.40 0.40 0.40

Common shares issued and outstanding 90,584 90,588 90,594 90,410 90,199

Weighted-average common shares outstanding - Basic 90,052 90,038 90,027 89,809 89,645

Weighted-average common shares outstanding - Diluted 90,284 90,232 90,221 90,108 89,915

(a) Presented as preliminary for December 31, 2021 and actual for the remainingperiods. In accordance with regulatory capital rules, the Company elected anoption to delay the estimated impact of CECL on its regulatory capital for twoyears followed by a three year transition period ending December 31, 2024. As aresult, capital ratios and amounts for all periods presented exclude the impactof the increased allowance for credit losses on loans, held-to-maturity debtsecurities and unfunded loan commitments attributed to the adoption of CECL.

WEBSTER FINANCIAL CORPORATIONConsolidated Balance Sheets (unaudited)

(In thousands) December 31, September 30, December 31, 2021 2021 2020

Assets:

Cash and due from banks $ 137,385 $ 161,369 $ 193,501

Interest-bearing deposits 324,185 2,442,790 69,603

Securities:

Available for sale 4,234,854 3,410,443 3,326,776

Held to maturity, net 6,198,125 5,986,308 5,567,889

Total securities, net 10,432,979 9,396,751 8,894,665

Loans held for sale 4,694 24,969 14,012

Loans and Leases:

Commercial 8,576,786 8,159,127 8,577,898

Commercial real estate 6,603,180 6,522,679 6,322,637

Residential mortgages 5,412,905 5,167,527 4,782,016

Consumer 1,678,858 1,731,002 1,958,664

Total loans and leases 22,271,729 21,580,335 21,641,215

Allowance for credit losses on loans and leases (301,187) (314,922) (359,431)

Loans and leases, net 21,970,542 21,265,413 21,281,784

Federal Home Loan Bank and Federal Reserve Bank stock 71,836 75,936 77,594

Premises and equipment, net 204,557 209,573 226,743

Goodwill and other intangible assets, net 556,242 557,360 560,756

Cash surrender value of life insurance policies 572,305 572,368 564,195

Deferred tax asset, net 109,405 96,489 81,286

Accrued interest receivable and other assets 531,469 571,240 626,551

Total Assets $ 34,915,599 $ 35,374,258 $ 32,590,690

Liabilities and Shareholders' Equity:

Deposits:

Demand $ 7,060,488 $ 7,154,835 $ 6,155,592

Health savings accounts 7,397,582 7,329,405 7,120,017

Interest-bearing checking 4,182,497 4,181,825 3,652,763

Money market 3,718,953 3,958,700 2,940,215

Savings 5,689,739 5,517,189 4,979,031

Certificates of deposit 1,797,770 1,884,373 2,487,818

Total deposits 29,847,029 30,026,327 27,335,436

Securities sold under agreements to repurchase and other borrowings 674,896 655,871 995,355

Federal Home Loan Bank advances 10,997 113,334 133,164

Long-term debt 562,931 564,114 567,663

Accrued expenses and other liabilities 381,421 628,423 324,447

Total liabilities 31,477,274 31,988,069 29,356,065

Preferred stock 145,037 145,037 145,037

Common shareholders' equity 3,293,288 3,241,152 3,089,588

Total shareholders' equity 3,438,325 3,386,189 3,234,625

Total Liabilities and Shareholders' Equity $ 34,915,599 $ 35,374,258 $ 32,590,690

WEBSTER FINANCIAL CORPORATIONConsolidated Statements of Income (unaudited)

Three Months Ended December 31, Twelve Months Ended December 31,

(In thousands, except per share data) 2021 2020 2021 2020

Interest income:

Interest and fees on loans and leases $ 189,985 $ 189,010 $ 762,713 $ 789,719

Interest and dividends on securities 45,990 46,874 179,885 211,561

Loans held for sale 45 181 246 769

Total interest income 236,020 236,065 942,844 1,002,049

Interest expense:

Deposits 4,027 8,651 20,131 67,897

Borrowings 5,211 10,485 21,624 42,759

Total interest expense 9,238 19,136 41,755 110,656

Net interest income 226,782 216,929 901,089 891,393

Provision for credit losses (15,000) (1,000) (54,500) 137,750

Net interest income after provision for loan and lease losses 241,782 217,929 955,589 753,643

Non-interest income:

Deposit service fees 40,544 38,345 162,710 156,032

Loan and lease related fees 9,602 9,095 36,658 29,127

Wealth and investment services 10,111 8,820 39,586 32,916

Mortgage banking activities 733 4,110 6,219 18,295

Increase in cash surrender value of life insurance policies 3,627 3,662 14,429 14,561

Gain on investment securities, net - - - 8

Other income 25,521 12,731 63,770 34,338

Total non-interest income 90,138 76,763 323,372 285,277

Non-interest expense:

Compensation and benefits 109,283 122,754 419,989 428,391

Occupancy 13,256 28,024 55,346 71,029

Technology and equipment 28,750 29,122 112,831 112,273

Marketing 2,599 3,485 12,051 14,125

Professional and outside services 9,360 11,380 47,235 32,424

Intangible assets amortization 1,118 1,147 4,513 4,160

Loan workout expenses 244 261 1,168 1,758

Deposit insurance 4,234 4,372 15,794 18,316

Other expenses 21,009 18,985 76,173 76,470

Total non-interest expense 189,853 219,530 745,100 758,946

Income before income taxes 142,067 75,162 533,861 279,974

Income tax expense 31,029 15,118 124,997 59,353

Net income 111,038 60,044 408,864 220,621

Preferred stock dividends and other (2,612) (2,329) (10,177) (9,147)

Earnings applicable to common shareholders $ 108,426 $ 57,715 $ 398,687 $ 211,474

Weighted-average common shares outstanding - Diluted 90,284 89,915 90,206 90,151

Earnings per common share:

Basic $ 1.20 $ 0.64 $ 4.43 $ 2.35

Diluted 1.20 0.64 4.42 2.35

WEBSTER FINANCIAL CORPORATIONFive Quarter Consolidated Statements of Income (unaudited)

Three Months Ended

(In thousands, except per share data) December 31, September 30, June 30, March 31, December 31, 2021 2021 2021 2021 2020

Interest income:

Interest and fees on loans and leases $ 189,985 $ 196,273 $ 185,919 $ 190,536 $ 189,010

Interest and dividends on securities 45,990 43,362 45,586 44,947 46,874

Loans held for sale 45 57 53 91 181

Total interest income 236,020 239,692 231,558 235,574 236,065

Interest expense:

Deposits 4,027 4,571 5,094 6,439 8,651

Borrowings 5,211 5,430 5,612 5,371 10,485

Total interest expense 9,238 10,001 10,706 11,810 19,136

Net interest income 226,782 229,691 220,852 223,764 216,929

Provision for credit losses (15,000) 7,750 (21,500) (25,750) (1,000)

Net interest income after provision for loan and lease losses 241,782 221,941 242,352 249,514 217,929

Non-interest income:

Deposit service fees 40,544 40,258 41,439 40,469 38,345

Loan and lease related fees 9,602 10,881 7,862 8,313 9,095

Wealth and investment services 10,111 9,985 10,087 9,403 8,820

Mortgage banking activities 733 1,525 1,319 2,642 4,110

Increase in cash surrender value of life insurance policies 3,627 3,666 3,603 3,533 3,662

Other income 25,521 17,460 8,392 12,397 12,731

Total non-interest income 90,138 83,775 72,702 76,757 76,763

Non-interest expense:

Compensation and benefits 109,283 105,352 97,754 107,600 122,754

Occupancy 13,256 12,430 14,010 15,650 28,024

Technology and equipment 28,750 28,441 27,124 28,516 29,122

Marketing 2,599 3,721 3,227 2,504 3,485

Professional and outside services 9,360 7,074 21,025 9,776 11,380

Intangible assets amortization 1,118 1,124 1,132 1,139 1,147

Loan workout expenses 244 203 327 394 261

Deposit insurance 4,234 3,855 3,749 3,956 4,372

Other expenses 21,009 18,037 18,680 18,447 18,985

Total non-interest expense 189,853 180,237 187,028 187,982 219,530

Income before income taxes 142,067 125,479 128,026 138,289 75,162

Income tax expense 31,029 29,766 33,991 30,211 15,118

Net income 111,038 95,713 94,035 108,078 60,044

Preferred stock dividends and other (2,612) (2,542) (2,480) (2,548) (2,329)

Earnings applicable to common shareholders $ 108,426 $ 93,171 $ 91,555 $ 105,530 $ 57,715

Weighted-average common shares outstanding - Diluted 90,284 90,232 90,221 90,108 89,915

Earnings per common share:

Basic $ 1.20 $ 1.03 $ 1.02 $ 1.18 $ 0.64

Diluted 1.20 1.03 1.01 1.17 0.64

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

Three Months Ended December 31,

2021 2020

(Dollars in thousands) Average balance Interest Yield/rate Average balance Interest Yield/rate

Assets:

Interest-earning assets:

Loans and leases $ 21,902,101 $ 190,698 3.43 % $ 21,729,250 $ 189,829 3.44 %

Investment securities ^(a) 10,267,103 46,903 1.89 8,923,336 48,124 2.22

Federal Home Loan and Federal Reserve Bank stock 72,972 315 1.71 85,535 484 2.25

Interest-bearing deposits ^(b) 1,214,479 456 0.15 102,011 24 0.09

Loans held for sale 8,302 45 2.15 25,777 181 2.80

Total interest-earning assets 33,464,957 $ 238,417 2.84 % 30,865,909 $ 238,642 3.08 %

Non-interest-earning assets 1,915,632 2,000,217

Total Assets $ 35,380,589 $ 32,866,126

Liabilities and Shareholders' Equity:

Interest-bearing liabilities:

Demand deposits $ 7,185,323 $ - - % $ 6,213,119 $ - - %

Health savings accounts 7,320,585 1,057 0.06 7,012,813 1,557 0.09

Interest-bearing checking, money market and savings 13,627,473 1,819 0.05 11,469,937 2,400 0.08

Certificates of deposit 1,985,900 1,151 0.23 2,519,845 4,694 0.74

Total deposits 30,119,281 4,027 0.05 27,215,714 8,651 0.13

Securities sold under agreements to repurchase and other borrowings 604,555 824 0.53 1,073,014 623 0.23

Federal Home Loan Bank advances 38,810 169 1.71 313,354 5,622 7.02

Long-term debt ^(a) 563,505 4,218 3.22 568,237 4,240 3.24

Total borrowings 1,206,870 5,211 1.78 1,954,605 10,485 2.17

Total interest-bearing liabilities 31,326,151 $ 9,238 0.12 % 29,170,319 $ 19,136 0.26 %

Non-interest-bearing liabilities 642,527 456,586

Total liabilities 31,968,678 29,626,905

Preferred stock 145,037 145,037

Common shareholders' equity 3,266,874 3,094,184

Total shareholders' equity 3,411,911 3,239,221

Total Liabilities and Shareholders' Equity $ 35,380,589 $ 32,866,126

Tax-equivalent net interest income 229,179 219,506

Less: tax-equivalent adjustments (2,397) (2,577)

Net interest income $ 226,782 $ 216,929

Net interest margin 2.73 % 2.83 %

(a) For purposes of the yield/rate computation, unsetttled trades andunrealized gain (loss) balances on securities available for sale and seniorfixed-rate notes hedges are excluded.

(b) Interest-bearing deposits is a component of cash and cash equivalents.

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

Twelve Months Ended December 31,

2021 2020

(Dollars in thousands) Average balance Interest Yield/rate Average balance Interest Yield/rate

Assets:

Interest-earning assets:

Loans and leases $ 21,584,872 $ 765,682 3.55 % $ 21,385,702 $ 792,929 3.71 %

Investment securities ^(a) 9,228,743 183,630 2.03 8,647,322 215,151 2.56

Federal Home Loan and Federal Reserve Bank stock 76,015 1,224 1.61 102,943 3,200 3.11

Interest-bearing deposits^(b) 1,379,081 1,875 0.14 93,011 246 0.26

Loans held for sale 10,705 246 2.30 25,902 769 2.97

Total interest-earning assets 32,279,416 $ 952,657 2.97 % 30,254,880 $ 1,012,295 3.37 %

Non-interest-earning assets 1,955,330 2,012,900

Total Assets $ 34,234,746 $ 32,267,780

Liabilities and Shareholders' Equity:

Interest-bearing liabilities:

Demand deposits $ 6,897,464 $ - - % $ 5,698,399 $ - - %

Health savings accounts 7,390,702 5,777 0.08 6,893,996 9,530 0.14

Interest-bearing checking, money market and savings 12,843,843 6,936 0.05 10,689,634 25,248 0.24

Certificates of deposit 2,105,809 7,418 0.35 2,760,561 33,119 1.20

Total deposits 29,237,818 20,131 0.07 26,042,590 67,897 0.26

Securities sold under agreements to repurchase and other borrowings 543,286 3,040 0.56 1,292,571 5,941 0.46

Federal Home Loan Bank advances 108,216 1,708 1.58 730,125 18,767 2.57

Long-term debt ^(a) 565,271 16,876 3.22 564,919 18,051 3.45

Total borrowings 1,216,773 21,624 1.84 2,587,615 42,759 1.68

Total interest-bearing liabilities 30,454,591 $ 41,755 0.14 % 28,630,205 $ 110,656 0.39 %

Non-interest-bearing liabilities 441,391 439,084

Total liabilities 30,895,982 29,069,289

Preferred stock 145,037 145,037

Common shareholders' equity 3,193,727 3,053,454

Total shareholders' equity 3,338,764 3,198,491

Total Liabilities and Shareholders' Equity $ 34,234,746 $ 32,267,780

Tax-equivalent net interest income 910,902 901,639

Less: tax-equivalent adjustments (9,813) (10,246)

Net interest income $ 901,089 $ 891,393

Net interest margin 2.84 % 3.00 %

(a) For purposes of the yield/rate computation, unsettled trades and unrealizedgain (loss) balances on securities available for sale and senior fixed-ratenotes hedges are excluded.

(b) Interest-bearing deposits is a component of cash and cash equivalents.

WEBSTER FINANCIAL CORPORATIONFive Quarter Loan and Lease Balances (unaudited)

(Dollars in thousands) December 31, September 30, June 30, March 31, December 31, 2021 2021 2021 2021 2020

Loan and Lease Balances (actual):

Commercial non-mortgage $ 7,509,538 $ 7,172,345 $ 7,473,758 $ 7,530,066 $ 7,687,300

Asset-based lending 1,067,248 986,782 943,961 907,421 890,598

Commercial real estate 6,603,180 6,522,679 6,410,672 6,338,056 6,322,637

Residential mortgages 5,412,905 5,167,527 4,856,302 4,668,945 4,782,016

Consumer 1,678,858 1,731,002 1,790,308 1,856,895 1,958,664

Total Loan and Lease Balances 22,271,729 21,580,335 21,475,001 21,301,383 21,641,215

Allowance for credit losses on loans and leases (301,187) (314,922) (307,945) (328,351) (359,431)

Loans and Leases, net $ 21,970,542 $ 21,265,413 $ 21,167,056 $ 20,973,032 $ 21,281,784

Loan and Lease Balances (average):

Commercial non-mortgage $ 7,304,985 $ 7,280,258 $ 7,545,398 $ 7,650,367 $ 7,662,828

Asset-based lending 1,010,874 956,535 937,580 896,093 874,221

Commercial real estate 6,575,865 6,510,100 6,365,830 6,303,765 6,363,776

Residential mortgages 5,309,127 5,036,329 4,738,859 4,720,703 4,821,199

Consumer 1,701,250 1,755,291 1,825,772 1,910,392 2,007,226

Total Loan and Lease Balances 21,902,101 21,538,513 21,413,439 21,481,320 21,729,250

Allowance for credit losses on loans and leases (317,848) (308,279) (332,522) (364,358) (375,080)

Loans and Leases, net $ 21,584,253 $ 21,230,234 $ 21,080,917 $ 21,116,962 $ 21,354,170

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

(Dollars in thousands) December 31, September 30, June 30, March 31, December 31, 2021 2021 2021 2021 2020

Nonperforming loans and leases:

Commercial non-mortgage $ 63,553 $ 40,774 $ 57,831 $ 60,103 $ 71,499

Asset-based lending 2,114 2,139 2,403 2,430 2,622

Commercial real estate 5,058 15,972 12,687 13,743 21,222

Residential mortgages 15,591 19,327 21,467 42,708 41,033

Consumer 23,462 23,558 26,353 31,437 31,629

Total nonperforming loans and leases $ 109,778 $ 101,770 $ 120,741 $ 150,421 $ 168,005

Other real estate owned and repossessed assets:

Commercial non-mortgage $ - $ - $ - $ 102 $ 175

Residential mortgages 2,276 1,759 1,934 1,695 1,544

Consumer 536 680 822 590 590

Total other real estate owned and repossessed assets $ 2,812 $ 2,439 $ 2,756 $ 2,387 $ 2,309

Total nonperforming assets $ 112,590 $ 104,209 $ 123,497 $ 152,808 $ 170,314

Past due 30-89 days:

Commercial non-mortgage $ 9,340 $ 5,537 $ 3,154 $ 7,395 $ 8,918

Asset-based lending - - - - 1,175

Commercial real estate 921 821 1,679 699 3,003

Residential mortgages 3,561 3,447 4,690 5,241 10,623

Consumer 5,576 7,158 8,829 7,036 8,720

Total past due 30-89 days 19,398 16,963 18,352 20,371 32,439

Past due 90 days or more and accruing 2,507 107 25 50 445

Total past due loans and leases $ 21,905 $ 17,070 $ 18,377 $ 20,421 $ 32,884

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

For the Three Months Ended

(Dollars in thousands) December 31, September 30, June 30, March 31, December 31, 2021 2021 2021 2021 2020

Beginning balance $ 314,922 $ 307,945 $ 328,351 $ 359,431 $ 369,811

Provision (14,980) 7,898 (21,574) (25,759) (992)

Charge-offs:

Commercial non-mortgage 708 1,706 431 1,164 7,876

Commercial real estate 91 17 163 5,157 688

Residential mortgages 35 88 1,105 380 105

Consumer 1,347 1,965 1,703 2,594 2,673

Total charge-offs 2,181 3,776 3,402 9,295 11,342

Recoveries:

Commercial non-mortgage 159 137 824 209 232

Asset-based lending 21 - 2 1,424 33

Commercial real estate 927 5 10 3 3

Residential mortgages 145 672 782 1,158 190

Consumer 2,174 2,041 2,952 1,180 1,496

Total recoveries 3,426 2,855 4,570 3,974 1,954

Total net charge-offs (recoveries) (1,245) 921 (1,168) 5,321 9,388

Ending balance $ 301,187 $ 314,922 $ 307,945 $ 328,351 $ 359,431

WEBSTER FINANCIAL CORPORATIONReconciliations to GAAP Financial Measures

The Company evaluates its business based on certain ratios that utilizenon-GAAP financial measures. The Company believes the use of these non-GAAPfinancial measures provides additional clarity in assessing the results andfinancial position of the Company. Other companies may define or calculatesupplemental financial data differently.

The efficiency ratio, which measures the costs expended to generate adollar of revenue, is calculated excluding certain non-operational items.Return on average tangible common shareholders' equity measures theCompany's net income available to common shareholders, adjusted for thetax-effected amortization of intangible assets, as a percentage of averageshareholders' equity less average preferred stock and average goodwill andintangible assets. The tangible equity ratio represents shareholders'equity less goodwill and intangible assets divided by total assets lessgoodwill and intangible assets. The tangible common equity ratio representsshareholders' equity less preferred stock and goodwill and intangibleassets divided by total assets less goodwill and intangible assets.Tangible book value per common share represents shareholders' equity lesspreferred stock and goodwill and intangible assets divided by common sharesoutstanding at the end of the period. Core deposits express total depositsless time deposits, including brokered time deposits. Adjusted dilutedearnings per share (EPS) is calculated by excluding after taxnon-operational items from reported earnings applicable to commonshareholders. See the tables below for reconciliations of these non-GAAPfinancial measures with financial measures defined by GAAP.

At or for the Three Months Ended

(In thousands, except per share data) December 31, September 30, June 30, March 31, December 31, 2021 2021 2021 2021 2020

Efficiency ratio:

Non-interest expense $ 189,853 $ 180,237 $ 187,028 $ 187,982 $ 219,530

Less: Foreclosed property activity (347) (142) (137) 91 (836)

Intangible assets amortization 1,118 1,124 1,132 1,139 1,147

Strategic initiatives 600 (4,011) 1,138 9,441 38,265

Merger related 10,560 9,847 17,047 - -

Debt prepayment costs 2,526 - - - -

Non-interest expense $ 175,396 $ 173,419 $ 167,848 $ 177,311 $ 180,954

Net interest income $ 226,782 $ 229,691 $ 220,852 $ 223,764 $ 216,929

Add: Tax-equivalent adjustment 2,397 2,434 2,487 2,495 2,577

Non-interest income 90,138 83,775 72,702 76,757 76,763

Other 431 327 309 277 291

Loss on hedge terminations - - - - 3,680

Income $ 319,748 $ 316,227 $ 296,350 $ 303,293 $ 300,240

Efficiency ratio 54.85 % 54.84 % 56.64 % 58.46 % 60.27 %

Return on average tangible common shareholders' equity:

Net income $ 111,038 $ 95,713 $ 94,035 $ 108,078 $ 60,044

Less: Preferred stock dividends 1,969 1,968 1,969 1,969 1,969

Add: Intangible assets amortization, tax-effected 883 888 894 900 906

Income adjusted for preferred stock dividends and intangible assets $ 109,952 $ 94,633 $ 92,960 $ 107,009 $ 58,981amortization

Income adjusted for preferred stock dividends and intangible assets $ 439,808 $ 378,532 $ 371,840 $ 428,036 $ 235,924amortization, annualized basis

Average shareholders' equity $ 3,411,911 $ 3,375,401 $ 3,311,406 $ 3,254,203 $ 3,239,221

Less: Average preferred stock 145,037 145,037 145,037 145,037 145,037

Average goodwill and other intangible assets 556,784 557,902 559,032 560,173 561,303

Average tangible common shareholders' equity $ 2,710,090 $ 2,672,462 $ 2,607,337 $ 2,548,993 $ 2,532,881

Return on average tangible common shareholders' equity 16.23 % 14.16 % 14.26 % 16.79 % 9.31 %

Tangible equity:

Shareholders' equity $ 3,438,325 $ 3,386,189 $ 3,329,705 $ 3,272,928 $ 3,234,625

Less: Goodwill and other intangible assets 556,242 557,360 558,485 559,617 560,756

Tangible shareholders' equity $ 2,882,083 $ 2,828,829 $ 2,771,220 $ 2,713,311 $ 2,673,869

Total assets $ 34,915,599 $ 35,374,258 $ 33,753,752 $ 33,259,037 $ 32,590,690

Less: Goodwill and other intangible assets 556,242 557,360 558,485 559,617 560,756

Tangible assets $ 34,359,357 $ 34,816,898 $ 33,195,267 $ 32,699,420 $ 32,029,934

Tangible equity 8.39 % 8.12 % 8.35 % 8.30 % 8.35 %

Tangible common equity:

Tangible shareholders' equity $ 2,882,083 $ 2,828,829 $ 2,771,220 $ 2,713,311 $ 2,673,869

Less: Preferred stock 145,037 145,037 145,037 145,037 145,037

Tangible common shareholders' equity $ 2,737,046 $ 2,683,792 $ 2,626,183 $ 2,568,274 $ 2,528,832

Tangible assets $ 34,359,357 $ 34,816,898 $ 33,195,267 $ 32,699,420 $ 32,029,934

Tangible common equity 7.97 % 7.71 % 7.91 % 7.85 % 7.90 %

Tangible book value per common share:

Tangible common shareholders' equity $ 2,737,046 $ 2,683,792 $ 2,626,183 $ 2,568,274 $ 2,528,832

Common shares outstanding 90,584 90,588 90,594 90,410 90,199

Tangible book value per common share $ 30.22 $ 29.63 $ 28.99 $ 28.41 $ 28.04

Core deposits:

Total deposits $ 29,847,029 $ 30,026,327 $ 28,846,966 $ 28,481,834 $ 27,335,436

Less: Certificates of deposit 1,797,770 1,884,373 2,014,544 2,234,133 2,487,818

Core deposits $ 28,049,259 $ 28,141,954 $ 26,832,422 $ 26,247,701 $ 24,847,618

(In millions, except per share data)

GAAP earnings adjusted for one-time charges:

Three months ended December 31, 2021

Pre-Tax Income Earnings Applicable to Diluted EPS Common Shareholders

Reported (GAAP) $ 142.1 $ 108.4 $ 1.20

Strategic initiatives 0.6 0.4 -

Merger related 10.6 7.8 0.09

Debt prepayment costs 2.5 1.9 0.02

Adjusted (non-GAAP) $ 155.8 $ 118.5 $ 1.31

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SOURCE Webster Financial Corporation