Earnings
Conference Call
Second Quarter 2022
July 21, 2022
WEBSTER FINANCIAL CORPORATION
Second Quarter 2022 Highlights
REPORTEDADJUSTED
- Reported results include merger/initiative related charges of $66.5 million pre-tax
- Adjusted results highlight strong performance
- Loan growth in diverse segments
- Maintaining low deposit costs
- Loan to deposit ratio of 86%
- Efficiency ratio of 45% as synergies materialize
- Return on tangible common equity of 18.5%
- Balance sheet well positioned for rising rates
- 59% of loan portfolio is floating or periodic
- Strong capital position; provides optionality
- CET1 of 11.0%
- TCE of 7.7%
- Repurchased $100 million WBS shares
Note: Adjusted results are non-GAAP. See non-GAAP reconciliation on pages 8 and 30 through 31.
$249.4M
PPNR
$178.1M
NET INCOME AVAILABLE TO COMMON
$1.00
DILUTED EPS
1.10%
ROAA
9.09%
ROACE
14.50%
ROATCE
$315.9M
PPNR
$228.6M
NET INCOME AVAILABLE TO COMMON
$1.29
DILUTED EPS
1.41%
ROAA
11.66%
ROACE
18.45%
ROATCE
WEBSTER FINANCIAL CORPORATION | 2 |
Merger Integration Update
- Continued progress on key integration milestones, with a sharp focus on executing "business as usual"
- On track for key merger deliverables, including 8% to 10% loan growth, $60 million in full year expense saves in 2022, and mid-2023 systems conversion
- No meaningful loss of front-line colleagues or clients
Second Quarter 2022 Accomplishments
• Consolidated mortgage servicing, treasury, and payroll | |
systems | |
• | Finalized structure of executive management |
• | Achieved ~25% of planned corporate real estate |
Performance Targets
ROTCEAdjusted Efficiency
High teens % | Mid-40% |
Net Expense
Savings
Pre-tax Merger
Cost Saves
$120mm
consolidation, on track to consolidate 45% of total |
corporate square footage by year end |
• Established office of corporate responsibility to oversee |
community engagement, philanthropy, and sustainability |
Next Steps
- System integrations continue, with progress on core integration execution milestones on track to deliver for our clients
- Culture activation rolled out to entirety of employees in 2H22
- Consolidation of credit risk management platforms
WEBSTER FINANCIAL CORPORATION | 3 |
WBS 2Q22 Net Income Available to Common
GAAP to Adjusted Reconciliation
($ in millions) | Pre-Tax | After Tax | EPS | |||||
Reported (GAAP) | $ | 237.1 | $ | 178.1 | $ | 1.00 | ||
Strategic initiatives 1 | (0.1) | (0.1) | - | |||||
Merger related 2 | 66.6 | 50.6 | 0.29 | |||||
Adjusted (non-GAAP) | $ | 303.6 | $ | 228.6 | $ | 1.29 | ||
Impact of merger related and strategic initiative adjustments:
- $66.5 million of pre-tax income
- $50.5 million of after tax income
- Impact of the above on EPS is $0.29 per share
- Strategic initiatives pre-tax charges is comprised of compensation & benefits of $(0.3) million and occupancy of $0.2 million.
- Merger related charges is comprised of occupancy of $31.0 million, compensation & benefits of $24.1 million, and other miscellaneous expenses of $11.5 million.
WEBSTER FINANCIAL CORPORATION | 4 |
Balance Sheet - End of Period
Increase / (Decrease)
($ in millions) | 2Q22 | 1Q22 | 2Q21 | |||||
Securities | $ | 15,187 | $ | 79 | $ | 6,300 | ||
Interest-bearing deposits | 607 | 55 | (779) | |||||
Commercial loans (excluding PPP) | 36,620 | 1,733 | 22,637 | |||||
PPP loans | 43 | (42) | (803) | |||||
Consumer loans | 8,984 | 419 | 2,338 | |||||
Total loans | $ | 45,647 | $ | 2,110 | $ | 24,172 | ||
Total assets | $ | 67,595 | $ | 2,464 | $ | 33,841 | ||
Transactional deposits | $ | 23,124 | $ | (27) | $ | 12,529 | ||
HSA deposits | 7,778 | (27) | 454 | |||||
All other deposits | 22,175 | (1,225) | 11,247 | |||||
Total deposits | $ | 53,077 | $ | (1,279) | $ | 24,230 | ||
Borrowings | 5,331 | 3,723 | 4,120 | |||||
Common equity | $ | 7,714 | $ | (179) | $ | 4,529 | ||
Total liabilities and equity | $ | 67,595 | $ | 2,464 | $ | 33,841 | ||
Key Ratios: | Favorable / (Unfavorable) | |||||||
Loans / total deposits | 86.0 % | (591) bps | (1,156) bps | |||||
Transactional & HSAs / total deposits | 58.2 % | 127 bps | (390) bps | |||||
Common Equity Tier 1 1 | 11.04 % | (41) bps | (62) bps | |||||
Tangible common equity 2 | 7.68 % | (58) bps | (23) bps | |||||
Tangible book value / common share 2 | $ | 28.31 | $ | (0.63) | $ | (0.68) |
- Represents the estimated common equity tier 1 ("CET1") ratio for the current period inclusive of CECL regulatory capital transition provisions.
- See non-GAAP reconciliation on pages 30 through 31.
Key Observations
- Securities portfolio:
- AFS $8.6 billion, 2.20% yield, duration of 3.7 years
- HTM $6.5 billion, 2.25% yield, duration of 4.8 years
- Loan balances:
- LQ commercial loan growth of $1.7 billion or 4.8%
- LQ consumer loan growth of $0.4 billion or 4.9%
- Loan-to-depositratio of 86%
- HSA represents 15% of total deposits
- Borrowings composed of:
- $1.1 billion long-term debt
- $1.7 billion in Fed Funds and repurchase agreements
- $2.5 billion FHLB advances
- Capital ratios remain strong
- Quarterly tangible book value per common share declined as a net result of the impact of merger charges on earnings, capital actions, and the incremental impact to AOCI due to higher rates
WEBSTER FINANCIAL CORPORATION | 5 |
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Webster Financial Corporation published this content on 21 July 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 July 2022 11:43:04 UTC.