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.