WBS - Earnings call transcript Q3 2017 | Webster Financial Corporation

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Operator

Good morning, and welcome to Webster Financial Corporation's Third Quarter 2017 Results Conference Call. This conference is being recorded. Also, this presentation includes forward-looking statements within the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995 with respect to Webster's financial condition, results of operations, and business and financial performance. Webster has based these forward-looking statements on current expectations and projections about future events. Actual results may differ materially from those projected in the forward-looking statements.

Webster uncertainties, to other in Commission, materially statement contained risks, cause that the including concerning with the is results filings third containing actual differ in release our information Form assumptions, and our factors and could forward-looking the X-K Additional Securities public earnings Exchange for Financial's from XXXX. those quarter Smith, your introduce CEO and now Chairman host, Jim Webster. I'll of Please go sir. ahead,

Jim Smith

John President, XXXX Ciulla; everyone. morning, Thanks joining earnings Good I call. quarter review to then, President, will Glenn Diana. quarter. you, Thank us will CFO, Webster's for questions. and Chad Maclnnes; And third join take the HSA Wilkins, Bank

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earnings to of capital. John his know earned and forward it going report. Ciulla all strong banker earnings demonstrable earnings and are for my our Webster quarterly So and John had strategies and last chosen wish value to say are segments, and lead I value I elect, am that and once economic again differentiated record over strategic profit we our and overtime. maximize net and call for profit making that quality, in every revenue positive the efficiency President turn as invest earnings I we shareholder as credit that and this CEO committed income, economic leadership progress, reported solid is of continually ratio Webster results the exceeded once calls pleased and again reported to that We as I will John in customers and below it team of cost to so. now XX%,

John Ciulla

us I board forward our thank for have morning great to beginning words. Jim in a lead me you has to bank our that the like those kind also over day. January. the opportunity career. strong talented, of and employee Good to about with extraordinary of in working and new role alongside iconic entire Webster look and you to should Thank behalf want to developing Jim, Webster every brilliant, by the of to industry shown differentiates all work at would very much, thanking everyone. to team have for us and start I opportunity made they publicly an I contributions financial XX-year Every confidence ethical very and was I'm like and executive base services acknowledge the the given the giving our on executive excited Jim leader Jim.

of a leadership, is succession announced to chosen initiatives. the as month's remains for execution last we strive in our strategy the same, transition excellence our in continue While

residential. and in net basis bank ago quarter loan increase past average a increase strengthened to September needs beta business, X% the X.X% accompanied the businesses revenue exceeded point Slide our average year-over-year fed just XX% us. shareholders' of net for more aligning results. XX%. return set Return customers. on, as leverage market in an our over basis under increase Slide offset the of and financial the and in consecutive HSA clear second year-over-year cost commercial comprehensive XX% decade. strategies over operating XXXX growth of positive has objectives and with optimizing priorities quarter. the XX, the $XXX billion Credit of annualized highlights per maximize A common banking opportunity than I growth. As efficiency against our of in X.X% XX remained year non-mortgage quarter, resulted quarter the activities, was our banking common the than a ratio expenses we Jim of We've X% shareholders' the average our a was growth XX% been in tangible continued of our of X. partially commercial the Loans income share funds X. third to growing led mentioned in Total produced refined X.X% great deposit turn the by loans differentiated pre-tax its income, deposit earlier, million expanding stated earnings trends on management income, reached net clients $X.X grew most at stable, aggressively and interest the to Within to of highlights are of of with an XXnd past positive XX% HSA over a have on we pre-provision just CRE basis. strategic Webster capital of what relative Record and at equity executing Loan by yielding the under ahead profit namely, further net leading basis for X% economic is below turn further on Webster's by to strong lower I'll revenue and year positions strategic strategic for commercial, its wealth Among framework sixth volume. C&I which XX year-over-year, by of and compared grew were consecutive developed and been is XX that made leading I'll revenue, set robust quarter year-over-year the margin, point levels have Led interest review, led time and all linked quarter review transforming now designed of year and a on further. the our of our now equity drove the less growth consecutive which franchise, of rate. even community quarter. growth points rate to these charge-off progress net in

loan All billion bank funded was deposits. just in over the year savings under and by wide account of $X of growth the growth health past fully transactional

a enabled well to rate XX strong of environment. quarters. a Periodic us XX% loans Our has maintain loans deposit for to ratio growth total us rising rate deposit XX% represent loan positioning and consecutive in under floating

solid grew respectively, non-interest Turning and quarter X. where banking in ago, and and points. by an XX fundings year points XX versus increases current exceptionally a we $XXX,XXX PPNR prior had loans to million performance income on than the reported in year-over-year syndication despite a new the performance on Commercial portfolio Yield Commercial of X% quarter. from strong fees of X% quarter. supporting X% and year-over-year year Slide commercial X% business produced revenue the slightly in the increased competitive line linked the environment basis improving less $X yield

X% investor CRE total of commercial deposits selective current year-over-year balances of more are deposits result our Deposits of grew of As and and I growth elevated approach our quarter, by the and lending, and and Commercial Bank. are market offset loans posted C&I in the commercial. fact respectively. linked performance growth This quarter sponsor banking middle X.X% below of year-over-year mentioned market based loan stories XX.X% encompasses than asset the was there numbers better loan earlier, and as and specialty prepayments now seven-tenths that in headline partially X.X% Commercial the which year-over-year two XX% transactional linked market. declined declined X% percentage a levels a as within

continue We and expansion, to our rollout the progress treasury activities, of make capabilities, and industry broadening build-out a segment of markets geographic the products of on capital enhanced services.

performance an Total the X, HSA pleased year. XX% grew relating delivered financial growth impact accounts adjusted we by we X% JPM and the Much deposit off. year-over-year quarter were the number and to is quarter. increased growth at with lead the total. HSA development, an new are our last grew and XX% in Accounts as billion investments initiative our the accounts. XX% operational a up XX%. from now Slide Turning continue as Total recently customer progress to and the $X was year. in to number investors driven quarter, XX% undertaken to seasoned of capabilities. year-over-year revenue of opportunity in-depth a improvement another spreads. Investments maximize teams including to and several and ended XX% heavily in sales We Compared year, XX% to enhancements, positioning in service year the grew extraordinary result and total improve for really Bank income to reflecting strong of same sales quarter linked a PPNR invest performance. of product we the the similar order XXXX at have professionals the deposits methodology. period and last XQ footings as compared ago deposits and When market XXX,XXX a in acquisition, grew XX% market those prior In the ahead, which strong percentage competitive of over seasonal of employer and grew grew interest excellence, Bank improved relationships strategy to recruited new sales as up we related up our footings to exceed key wins initiatives, added generated paying increase

X% in grew year-over-year. by growth per value Moving Yield Loan high X, and business yields and on Community points X% by average grown to quarter balance basis loans X% checking had by XX% strong balances X% by Deposits improved improve respectively. driven Slide by with basis account. overall overall. new mortgage growth points Banking year-over-year the customers portfolio XX year-over-year with XX helping loans grew a PPNR of loans and

Investment continues cost as With in X% spreads. of past just growth loan basis expense line year. which the the grew up Community well administration tight transformational improved along Revenues management progress from prior in driven consistent Banking leverage to its primarily assets deposits year. by quarter. is delivered Importantly, balances, deposit year-over-year under strategy, in the with also four operating as grew and by optimization Community Banking positive and roadmap. for were points X%

are digital footage. X% reporting invest We our in optimizing Year-over-year, banking continue center square banking physical the while we in reduction a infrastructure to footprint.

XX% a quarter. in record digital from Continued Self business last relationships improving high. on global account accounts a focus overall balances banking over high while were grew active as checking value transactions reached active growth XX%, by per average growth by X% premier the checking on in service drove year. while customers, accounts percentage Focus of XX% consumer total digitally in total households a drove transactions delivery

total Our respectively. promise, $XXX continues Boston as reached expansion million to million $XXX loans show deposits attributable and and

late are now business overall turn lines across Glenn. and breakeven increase. We to floor all over on continues year track next the still for to I'll activity

Glenn Maclnnes

$XX mortgages $XX The quarter million decline On categories. highlights loans commercial grew in estate. you, basis, commercial CRE. average by Linked commercial Year-over-year of $XXX pay million. investor quarter, downs Thank estate decline residential as was $XX offset by other in commercial provides $XXX average This a average which consumer X.X% in real a in Webster's in loans in growth grew million. X.X% Slide of million, of $XXX million consumer X growth consumer was balance John. partially offset of commercial average million reflected average $XX loans grew million. of linked non-mortgage real sheet. decline Year-over-year reflects grew loans a

in as million As grew million government HSA $XXX of in the with quarter are of banking seasonal $XX deposits short-term deposits million. comparisons $XXX The Keeping asset in growth $XXX Linked by increased mind demand $XXX was was pay Year-over-year borrowings. business. down in that highlighted, of broad by driven based comparisons seasonal this growth. in $XX grew earning linked deposits. million total million account to nature business, money openings. quarter HSA relevant not increases of to growth total enabling loans year-over-year. increase $XXX due quarter Average deposits as our growth Deposit million market us deposits million the outpaced led $XXX and year-over-year in our billion average million and linked strength and growth $X.X representing

of rate repos fourth at a asset points. in over two today its ratio basis XX% we have Over $XXX years. resulted million the totaling the to past a funding This quarter XXX level blended basis points. In have borrowings in XX average $XXX of year long-term at a of XXX maturing a decreased rate borrowing million by approximately lowest

strong liquidity asset position borrowing Given let and will profile our to we off. our likely sensitivity roll this

and NIM solid prior higher related earnings expense Tier growth Our increased expansion lower loan factors ending of interest income quarter X.X% and at expense. higher medium statement Key of as to non-interest The for net income tenth by share from expense X of included ratios performance CAGR X.X% summarizes and for both per the income. growth contributing medium $XX.XX bank and supported X increased is value of common equity drivers common quarter of the legal by per improved the U.S. year equity branch net ratio two-year earnings quarter's the consecutive in for led and revenue optimization share Slide tangible at over and record the XX and book tangible well. as prior and the June reporting XX%. a deposit XX hedging quarter non-interest below substantially include expense seasonally client XX% HSA Bank northeast to September XX.X% and record our a QX loan income

million time net rates. PPNR of first Taken to three and highest floating of basis XX.X% in XXX detail together, $X $XX.X a the After linked points $XXX periodic achieved levels higher margin in basis interest net X.X% points million increased expansion which from net income loan income. short-term, million for was Slide we provision after-tax The driven interest increased quarterly record year by our quarterly yields our interest increased market expense pre-tax exceed history. X additional provides ago five level over to years. and benefiting NIM to from and quarter. on

banking XX, details funding while days million. in low the one portfolio than XX% securities is from final mix point and the each seven non-interest XX The loan partially the NIM premium saw portfolio another this of an overall increases is seen light to $X.X blue. cost. in hedging beige volume $XX.X in quarters highlighted in September data prepayment portfolio. aggregate. highlights XX quarter. a revenue client which one This million the linked almost other key non-interest of before basis revenues, Modest This income fees in the to $X.X negative led by higher the decreases amortization decrease $X.X contributed other our banking expense to and declined expense million by including result as a categories highlighted each related second borrowing point X,XX,XXX which improvement Mortgage other three was due was Slide application increase As deposit or higher reset increase basis spreads in reset the reached the XX and income other a reductions strategic optimization reflects main in XX This points, days. in higher Occupancy in was The We yields. quarter did and banking down compensation basis our largely lower have expense incurred medical for decreased million. basis in sales loan increased expense of deductibles. of was annual in benefit Higher their XX and in expense pay offset less multiple cost. resets and increase employee group XX% and from of impact $X.X commercial deposit of which at million almost was expense an had least a yield as as primarily an increase we in less NIM $X.X points billion accounted portfolio driver and XX The to seasonally maturity. decrease offset than points portfolio primarily in three increase, in CRE which of center hires promotion $X.X basis of higher less categories legal increased loan across quarter. benefits. million and in of an yields trend Slide

key XX.X% efficiency ratio efficiency decline performance, fluctuate lowest by continued including of efficiency level X.X% of an is revenue revenue the the in This and X.X%. the since quarter's for given ratio XXXX. naturally ratio The improved expense and to will growth driven Our our quarter each expense strategies. investment of fourth

decline stable the the $X below X% by million the of summary below slightly $X.XX% remained in pay upper metrics. the in on For and highlighted A reflects at new And returns $X.X loans classified $X accrual efficiency the $XX million Commercial top of right net please Non-performing key five-year loans the million to average commercial additional downs, non-accruals. provision detail exceeded commercial charge-offs left quality decreased in X.XX%. and in Slide total XX. net of relatively Slide XX our million. loans bottom loans. in $XX.X remained highlights million our charge-offs, left of ratio asset refer and exceeding

loan a at our points. loss As allowance million our XXX increased remained result, to and $XXX.X basis coverage

and basis our outlook of average five continue provides to compared be to below charge-offs Slide our year XX of QX. Lastly for net annualized XX XX points. basis QX points

X%. to We be range expect of X% the average loan growth in to

interest We also assets expect X%. grow average X% to earning to

be one to Fed rate up December. basis points. This projection a mid incorporates basis three We point hike to expect NIM XX in

As million. to result, $X between to net and a be level. income $X we likely Non-interest expect million increase quarter's around third is interest income

XX%. We expect efficiency ratio around the be to

as Our part low driven as our historically net we've quality. levels mind that provision been charge-offs. is in at portfolio mix, loan growth, Bear in by of portfolio and charge-offs, well

average XX.X We expect approximately with to to rate it's I basis an than tax say been count want before you what back, turning our pleasure work a years. to approximately past XX% be less diluted shares. to on our non-FDE Jim share million expect it we six the over be

learned all you. a have lot We from

have well us and on positioned done Thank you have I you all you. Webster. congratulate You for

Jim Smith

Glenn, thank much. you very

contributions your I CFO and should as terrific moves your forward. a Webster your You're all and important I leadership appreciate commitment and value

all analysis initiated history. our Webster for to honor we with and into the over many New bankers today my XXs. at look value our I'll ever many in call, and work the marks excited of today. confidence the hands I've rather thank I time relationships event up Day can thoughtful encouragement calls leading the and you with City. it minded, and calls from on as of so value I'm for built the of closely and been regional be seeing me Webster investors Webster's our November we lead of CEO. as support your last than and late knowing York undermine more your constrained open to developed of tell forward in Investor earnings Webster's back Wednesday we be creation. you pressures So community that eye analysts this these and on growth learned Xth by It's you exceptionally now quarterly how than future, exciting strong XX for your to I much about an a strategies clear appreciate I bank to our future Webster, I with questions. long-term want are invest years. for I in And near-term that the cherish differentiated to guided for in at the an now constructive will Webster

Operator

for Thank Instructions]. questions. you. [Operator is open floor now The

first coming JPMorgan. Alexopoulos from ahead. Our question is go Steven Please of

Steven Alexopoulos

wanted below this fourth I stay to the efficiency ratio, it's you're start see quarter guidance XX% to XX% around I see the on quarter. nice it in and in the the to expecting

investment Given particularly business; the could guys point you're the around spend around think HSA you you it maintain where now at XX%? a do in

Glenn Maclnnes

Steve, I this Yes, think Glenn. is

will and instance will be range We in gearing be seasonality for we're HSA. for up there and that the fourth in quarter

so contact And will things with be associated there expenses that. volume call like collateral center

you'll So some see pops.

also business. We in continue the invest to

So well. But around of you'll we would I see some as that be expect think generally to that.

Steven Alexopoulos

momentum And in changed helpful. to you something that's business? guys is customer demand this on have seem the the on nice you bank, then just Okay, have or side, investment HSA

Chad Wilkins

Good morning, Steve.

Steven Alexopoulos

morning. Good

Chad Wilkins

Chad. Yes, is this

our investors are pretty The love a the thing I years market we has also that. continuing and our the over exception of of product of and couple improved and rest slightly I taking to -- think a balance part terms investors of we makes investment of an The we the strong, a close. increasing in our sweeps percentage higher advantage both. we little portfolio it's add that been bit the are that and they that's the carry functionality of is with than and I'd say competitive last HSA savers of then what so is last investors, think

haul. of spent the to really folks save encouraging lot a for we time So long

Steven Alexopoulos

a you're that I last change question And Glenn, a margin quarter you for the that better quarter know and in had you're That's of quarter? to the Okay. indicated bit, looking looking now would my bit expect thank what final flat you for and for helpful now fourth up you pressure on in Glenn the NIM little Chad.

Glenn Maclnnes

since look XX-year the the up and three the up. also slightly of swap end I spoke. quarter, where month the the are we think at second XX-year if time were at up is month is we I rates and LIBOR the one last Actually

Steven Alexopoulos

Okay.

essentially? portfolio of just securities pressure So

Glenn Maclnnes

that's saw in so amortization -- quarter has impact Well QX the you about saw the you to up the stable. relatively go thinking fourth a but QX million amortization that's negative $X.X that we're

Steven Alexopoulos

role congrats Okay, forward the you luck. great. and of to CEO And officially Day. Thanks best seeing the Look on Investor guys. John Jim at

Jim Smith

very you Steve. Thank much,

John Ciulla

Thanks, Steve.

Operator

you. Thank

is KBW. next coming from Please ahead. Our Collyn Gilbert go of question

Collyn Gilbert

feels Steve's earnings in -- of on calls on follow-up like the XX been that but probably comments, calls To heard more most that -- intro the think I've -- I was I've earnings one emotional my

Jim Smith

I think Collyn. you add

Collyn Gilbert

I to I'm don't as to and of looking anyway new John in know. positive continue. don't forward know. well. I aging obviously But we're congratulations the momentum luck the Jim best role,

So a down on -- -- of could drill growth little maybe John we just so the if anyway movement buckets. bit some loan the the within

elevated paydowns of Can so bit frame had know what of So what's in kind little we've CRE I but guess finance I trends? your is outlook equipment that sort a growth talk quarter now or seen just you maybe been commercial this it's little maybe those in just loan and declined. was three the have and decline quarters that balances you where there a some bit of cited about going for on

John Ciulla

sure. Sure,

the and business in on We capital our competitive of equipment some consolidated in our middle market trends Collyn. model. we change business think return the risk a landscape return and of finance disciplined remain lot dynamics equipment the I strategic, were internally terms very business there finance respect our in with of to that with

is the would So peers. against say I the balances planned in competitive the being equipment finance us our than decline less market rather in

I estate is mentioned. story this as real the commercial think real I quarter

loans, take Bank and of year-over-year banks so growth. but mentioned a we particularly both those outperformed Glenn level significantly and both real factors. due and We commercial you both the in data, include look C&I banks it's think all our estate total had trailed Webster commercial both our in quarter, the of commercial we I fewer the we large at if have line in C&I transactions estate If number of loan small loans, to you prepays. marketplace, commercial HX and as you business higher on business really real have HX in are benchmarks of and outperformed our linked commercial There HX banking and

was and think respect had and have quarter $XXX year prepayments the I risk dynamics. ago quoted he I we quarter, This with we which to million from think been market a in about relative the XX% structure the return to selective similar up more

really pipeline has the going at Joe mentioned look ratio of into up of slightly issued what year almost And on about make we the think our that term proceeds, the the that and we Savage to with lower this seeing calls of sheets his at last the higher structured fourth same with attribute that that Wrang we're and $XXX call want really of the it. year prospects. entrants we XX% you more XX% is track LTVs, move rate is continues year we're selective market quarter-over-quarter; higher sheets customers others people, end he keeps quarter. this point we're into fact important a only, versus towards I longer guidelines and we definitely underwriting that I of entry less the had term last hit heard winning opportunity if of so both in wins to covenant same more the to Bill new what have, that same market his the packages, that to You've periods and being winning and million activity were interest a staff -- But

we're slower is And than that have that be very, CRE growing it of XX% growth. to growth as lot as well maintain when the will fact said episodic the to significantly confidence a very is rate proud of think some been that. of we I contributor we've a and of market So still C&I able I

Collyn Gilbert

out range mean then mentioned, obviously, seeing the all think about two at going sort mean X% I we the you got you're of bank? do growth And XX%, can sort what dynamics with year look in you've loan tie given that to in just hold you at is some together, Okay. the just it, of that but comfortable you think I over C&I it or the total as general, next we initaitives of

John Ciulla

the this Yes and at Conference. I Investor said last

slowness credit growth just we and remain to slower the pulling over with annualized we're HX the to long-term. is quarters XX% because at we're and a that disciplined growth to we couple still where respect a reasonable market data execution. are be levers we see that loan the the rate underlying could But you suggests think going there's think I look if going that

I think XX% could but quarter given momentum we those into in grow you loans us can quarter the out long-term numbers, same over comfortable third that a I'm that range. not the see safely hitting

Collyn Gilbert

thinking going that NIM. fourth I obiovusly and in the Okay, then be okay but into in quarter mean would that the unfold what costs the of yields guidances the kind NIM seeing gave seems just to is? that's increase NIM next how continue. where helpful should on affecting premium of you're dynamic and of just know also How the gradual outpacing the I funding higher you asset it stays longer-term if it are year sort rate

Glenn Maclnnes

and you thinking December tell there case and that Yes, increase impact so increase I curve is what's can we're were not what XXXX two right moved a can context and but increases then tell the you a and in of give some I XXXX. rates that you a the now December includes forward base then

which Fed's little different three is a and the three in outlook XXXX than XXXX. in So

based forward So of off ours curve. the is

one So, have going quarter-over-quarter we'd be that flat that If NIM to if see I up into exactly three out rates at strip or I where be increase go point one they plus X basis into were to were are we'd to and I XXXX. and look just today like quarter-over-quarter. XXXX

Collyn Gilbert

Okay, okay.

Glenn Maclnnes

depend driven our that book going assets and earnings the to based so be market of XX% rates on lot -- loan our short-term which is it's going of that and short-term book to a that's by I and highlighted are Fed. assets So the

Collyn Gilbert

Okay, that’s some fourth first dynamics okay you of business move just update end of of kind into the your question one on you outlook quarter. helpful see and kind just can us just the then your into the of is into the give for for Chad onboarding an and into how, fourth as Chad. the going the some quarter and what folding quarter into the of year you last

Chad Wilkins

Collyn. great, Yes,

that existing accounts stable that from sets consistently of employers from for our new have existing growth XX% we're comes employers. about our from new that XX% year-over-year. attrition funding growth That I think our talking important trending when employers enrollements been about it's are our about most expectations trends, rates, from all rerirate trends

terms is wins view. the In and employer that employer large by number and in so even more year-over-year so up pipeline addition our of opportunities new of encouraged the number of opportunities size the we're of

see quarter the growth head we're leads seeing as that into of XXXX. we believe the range us we to in into and as All will currently same fourth this

Operator

Thank you.

Chiaverini Securities. Our coming ahead. Wedbush from next David question of go Please is

David Chiaverini

have Hi, thanks a the I ratio. efficiency on follow-up

is in of see improvement HSA which investing With efficiency the you the continue enough to good in to in the do and you're strong generating -- there the guidance. growth the despite XX% ratio the continue business fourth quarter quarter believe outlook lower

John Ciulla

is a I it take in I’ll where we been and heard at us state all primary think in -- the to we're HSA bank absolutely we're I our us capture aggressively to the we of that best not to ratio over investments Chad to beginning clearly our period efficiency and investing and best mean share of making objective turn that balancing understand time assumptions you aggressively and the with need chance necessary investments to give success. continue we've we're those grow

context put know unequivocally we're holding additional investments I want back. that. So if I say would we to Chad all you without making don't the anything on

Chad Wilkins

order consistency and investing order business. our the investing leverage. when management show the drive to in just as rather in our going to you I in business John then all question advance just quality get growth new improve than are, improvements to we business We our totally actually seeing as we this we and I and we've to we're that relationship efficiency the it's are why and in agree operating thought well we improve and gotten one investment to in needed refreshing our consistently say teams

based that. our optimistic on very about we're future So

Jim Smith

add I just that our David quarter-over-quarter at where I and pretty the if commercial between the implies $X in it's between could if $X gave highlight. And it at business much split of guidance million I I think would you look increase somewhere and if million HSA that look expenses and you

is the In the under commercial cash and commercial in expense HSA enhanced management and there investments investments occurring underwriting HSA platform addition to side in platform. seasonal the in

So have that regional as we're and -- occurring we're sticking to well. bank in the our in so HSA. also strategic the investments we there's the Bank outline and along in highlighted occurring and investing investments Commercial There's lines right

David Chiaverini

follow-up you HSA out market. there opportunities any on HSA do see Great and a then the acquisition the in

John Ciulla

Sure you I'll start Chad then and if have any.

looking part but obviously always any we're looking to economics are around but only strategy portfolio the it of terms of so expand not disciplined our our market also We and in it is products very enhance market to is, share the opportunity. of presence

very on are the So going the we us but and answer is business for ability also really aware the much what's we grow positive of in organically. very and are our in marketplace, confident looking around opportunities about to

Operator

you. Thank

ahead. Our question is from Mark Fitzgibbon coming go next Sandler Please O'Neill. of

Mark Fitzgibbon

that new your best were some comments luck let retirement made in John Good all of over echo me for Jim and first help congrats morning of your role. on and your thank years the the you and before

Jim Smith

Thanks Mark.

John Ciulla

Thanks, Mark.

Mark Fitzgibbon

deposits might HSA thoughts surprisingly if stayed a we any on if low actually see couple question First XX and have on points your I rates could. pressure Chad, deposit when what on basis those.

Chad Wilkins

the we've the driver on it when service main consulting the to really operations. rates aren't capabilities the employers the it's your both consumers. we the talked we the pressure Yes, that and I And employers any before fact with the and deposit seen talked the haven't to think about

primary expect we some and a till talk see significant the and head as market we amount haven't far So, those pricing any so don't and the more XXXX in to then rate are about we we into rates see increases. drivers seen pressure and I

Glenn Maclnnes

about to on I data. I see If battle we deposit the of the these to the the think is is our as opposed can that datas Yes. Mark most And of add that on most bank business the service color days. running HSA total half the rates what of -- some historic the are at fees

at XXXX, our So the to a look that. data was last they're book about across half when you time here increase the historic there going whole rate back running

is, we've our so cycle And low so see of is regional still business half. a the up the we there think up bit complete money you are that but of that have down could market don't acceleration little the in the at in some elasticsity datas XXXX but so been because say some running CD of deposits be we since about an pressure HSA The little end there think history bit, a spectrum. a rates picked that's take eventually we road probably we

Mark Fitzgibbon

market X% bumping Glenn heard following out there the Connecticut then that on in seeing into another yesterday in And bank just that approching up that we'd guys from Connecticut money they're are you rates market much.

Jim Smith

And deposits most to actually I pretty out and rates mentioned will saw market. think the run giving sometimes far, on it the the or that and by in deposit have single in to we that aren't not either somewhere so our they're you stopped rate. we the centers FDIC and a We When Mittan, gained what cost people mean their able talked and that market. I at the I into even we the hasn't advertised use ask our to aggressive but may giving don't be may run grow greater that deposits banking came we a we fact on us recent the depending you market they're spotty HSA rates four on may only increased Mittan, grew geographically that it it's autonomy of specials Mark data in or as more it's into to in we bank, pricing what based. smartly share and tell he you our points. advertised see basis we rates higher you if is bank competitive But focus being from deposits level

a really far competition said so broad So, our change to rate good as high Gelnn haven't we and seen based in so have strategies. enough

Mark Fitzgibbon

even you more of but contemplating Okay. Bank front are And transactions being the consolidation then Community closed wondered know branches on self-service branch John eight of I XX% you locations. with I in this branch the the quarter

John Ciulla

disciplined. time you've this say Jim Mark, I long time been a and heard I we've think think over pretty and for

constantly and and size, our efficiency, banking number, are network reviewing We location, for center scope.

squarefootage we've plans banking over our more that said have in know time. we're our more is reduce network means we entire likely centers. of the probably to the what to fewer no more quarter close -- to centers that branch we over long-term So but banking is goal than immediate the And

Mark Fitzgibbon

curious out. you into have I'm And unique will situation then if play insight budget Connecticut question any the in last how

John Ciulla

question any toughest of far. That's the from you so

been problems every But Boston continue well there growth right that as and years deposits so sort think on a many a involved a now there significant resolution visit but to that solved. I of We've I be budget frustrated to that a matter we're and in only in at as of view executive there's loans framework this in glad a end there's there's meaning came the our we've and Jim solution of potential whether it's working We have bullish of so the the seemed together New to as to bipartisan the state Hartford a of a order. news come people way. my you I night diversified know in be York the outside but positive as a that budget. of up in of and to and so grow that obviously operating of not last while we As won't out saw do on seeing, that structural as to after get the Philadelphia. Connecticut's in some Connecticut, is budget with in up which to that will -- on an own year significant so also realization able said we polarization without because so our has least needs legislature We're haven't think the don't will we've year state are be encouraging CBIA a know fact said problem be of you if we're that there being change lot momentum believe chair this unfunded

in to will going cautiously what's on optimistic question we specific happen the are there that be improvement. Connecticut So is I think

Democrats the are they're are think forward. last business step will sure better reported footing the make Hartford going stays on something done trying positive to I solvent that we between and night good Republicans discussions that make get sure even and

Operator

you. Thank

Our Jared next is Please question aehad. go Shaw of coming Securities. Fargo from Wells

Jared Shaw

just and I you back Webster my think the expense ago call for Jim bring. thinking and first would I was to talking that conference were about XX years YXK what

time that a think congratulations amazing and you John it's we've you've well great on over congratulations of on where when really career, So and come come that a deserved where over promotion. time

John Ciulla

Thanks, Jared. Appreicated.

Jared Shaw

look you Eastern A Massachusetts the you're lot the is you that fully C&I hiring or of to market on my commercial you how feel and of when side. questions hear stocked were asked there growth at but that much how you coming from still are that interested look do when at

John Ciulla

Market seeing of still and out of Specialty both businesses. core growth there question. good sort has a which We're of Group of That's out and our specialty of sponsored group our a robust Middle regional our sponsor and concentration out Boston

for and hire opportunities grow to those continue We competencies areas. both and staff in to look

particular with have Boston markets whether York it's in of as for been a sources sponsor two companies So, footprints. outside relationships significant equity private those C&I us leveraging mentioned and corporations of I New with or growth earlier in there those

in identify people We'll to where core industry and caliber to we hire continue think can we sectors competencies right expand be areas. if will the those impactful. We find if we look we

Jared Shaw

Okay, the quarter, duration assuming look matching that up you're the And duration when at this residential with longer then I'm mortgage side. on in HSA great the the the thanks. you growth

going you an should to Now, sensitive and growth is forward, position. the you neutral in sheet maybe the of more balance Glenn, sensitive keep or take do we become that offset then asset that to interest to sort HSA as asset feel enough versus expect rate see still you be

Glenn Maclnnes

now we're think position. sensitive a I we'll to eventually move but nuetual more asset

be the as back and would more we as begin more So bring to become think timing add then we will rates rise eventually to the I neutral asset sensistivty.

Jared Shaw

on replacing that XX-year? Are your you you are they orginated? all those put Are mortgages of

Glenn Maclnnes

they But very right to jumbo. standpoint. an life similar from a deposit have They our duration HSA are average

Jared Shaw

thank Great, you and congratulations much very again.

John Ciulla

you. Thank

Operator

you. Thank

ahead. question coming from of Matthew Please Jaffray. Breese is go Piper Our next

Matthew Breese

Just follow-ups potential XX% on a you portfolio. more couple noted I wanted of loan that or overall growth for the growth to clarify the just just is side long the for forward long-term commerical outlook

John Ciulla

It is, that Collyn's was I commercial to about in to -- response Glenn think specific guided question

Glenn Maclnnes

X%. to X%

John Ciulla

and to linked quarter growth X% so. X% loan

Glenn Maclnnes

basis. X% on to X% implies total that So a

John Ciulla

Right.

Matthew Breese

Got it.

on X% a year to basis? X% multiple So

John Ciulla

But on some that's driven. runoff HELOC, on launch I market there. equity Yes, think on we've seen unsecured,

Matthew Breese

for the is concerns we've just I then mean much metrics driven much that And the recent driven, rate really seen credit just around competitive just for the this to it some is how to presented fitting quarter you? that the or a Okay. quarter curious loans not and you fourth how and is slowdown being of for properties buckets get wanted or being sense there strategic right

Glenn Maclnnes

been the there really terms opportunities and what slow overall our always and we in Yes, specifically clearly think from a landscape players, there or that are world period to I I'm are there terms to being of market in with start what And of of and we've say as some risk are debt respect commercial in growth on term, are little us But doing. sticking banks think the aggressive only. that realestate. four double for funds sort fewer them excited real sort to duration, for call because estate our away CRE new going meaning out a of whammy just last to underwriting commercial and winning knitting pricing first commercial participating has of bit in investor transaction fewer competitive and I being mentioned coupled real sort of fact more competitors lower time quarters relative of of five I the the structure, loan of are us guidelines so our and interest driven with us over the the estate

Matthew Breese

growth. Got it, about think the there nice HSA in okay. were and top-line And as then expense just thinking we business of improvements some efficiency

over a that what get to as the next we As extent efficiency ratio you investment call having improve the five you years, of you phase. it through multiyear especially think something cycle think can HSA about

Jim Smith

XX% they see some Sorry rate starting have I but impact leverage I John well think quarter don't think up highlighted PPNR you're some as we HSA a of quarter the the good have guidance did as environment. a off ratio on for operating specific very of the efficiency to of and the the with pay

when points in the look spread prior at So XX and that's year up you big business it's factor the just well basis this volume. over a as as

factor volume So that and service if charge. you is look at multi the revenue also in we of increase the get a accounts

So, be time half it million. see break that quarter. the stepping expenses same as enrollment are fourth that up I the see the the on were is you're investments period the if down $X.X think starting think up you to slide at I And the you about of half to seasonal continues and other to in for

XX% expense bit see policy your first where then next couple along. a is third a But So at at as the look that's quarter leverage long little I this efficiency little below because think and XX% running ratio. the go quarter, way as everyone a orders the we you of in we're second higher saying operating to the start business is think onboarding I

down mid As meaning and should XXs we horizon more to in or over and three-year over that. there like that operating get down. volume a around to that to you go And expect somewhere leverage begin

Matthew Breese

it. Got

best congratulations you had luck. to Jim all I and John, That's both Okay. of

Jim Smith

Thank you.

John Ciulla

Thank you.

Operator

Thank you.

Deutsche is Please from ahead. question of next coming Our go David Bank. Rochester

David Rochester

mid-XXs. the morning does down for there good ratio on HSA comments specifically that Hey guys. Glenn going just the right to down your business on that's that's efficiency

just can those high overall in the So what are that terms case? you of you thinking XXs get in to for company,

Glenn Maclnnes

we’re investing mean, we hesitant that all opportunistically say it. think I I No because to in we’re as businesses see these

a investments invest that. to whether want gave obviously. XX% management hesitant of call going I I platform. one that we're we we The platform want leave depends in to we're will tough environment, to the commercial And data is some that a that on huge as flexibility So a We of have continue influence it all rate HSA fourth opportunistically and or the to see number opportunity lot say the for or It’s that that I’m factors deposit quarter, business to it's highlighted an albeit on I and XX%. those on the see same of things, way. XX% the underwriting doing guidance the cash the

we where So that’s are.

David Rochester

the next you already for, color in on of force in give or Okay. year the invest just seasonal the so, which that outside or the need you couple can And the over lot is in business ready in getting you be expanding HSA know adding done great? sales then been of an it have areas over you've further you us update guys think a functionality I additional that would platform, years the any specifically to there of which just ramp just past

John Ciulla

specifics. earlier my Sure David I in I'll more mentioned exactly my you mentioned but some you in Chad what comments give let

Chad Wilkins

David. Yes, thanks

transformational heavily and can all excellence The -- help to first consulting the our over improvements where we in operations. we to to invested some continue drive have where last we in I'd say year opportunities is our look the bringing of at operational

next make really some there continues coaching help XXXX. associated -- training but well have methodology we're acquisition positive accounts that our them. So team we put to through work continuing The hire is sales XXXX the into into sales team we as and with upgrade sure also with continue and ROIs into September team to to and some whole there of with new we folks in to those year, the opportunities talent the all continue we we're to of improving on

product investment capabilities just that capabilities, invest both well. new we as partner. product area in wealth then and own in some to and there's within And continue to in our new then functionality So our our

David Rochester

quarter, on I just what's Got just guide that you premium NIM that baked your then security think saw comments, quarter? next can quantify increase you real Glenn it. for into And this quick and

Glenn Maclnnes

be we into of like it’s relatively of CPR to the think think XX.X, quarter, had going the we’re costs. just will up flat. will probably going million to the for think and And So, be somewhere X.XX it's impact quarter, amortization the be CPRs fourth I below so relatively XX around We XX.X; amortization rate higher flat. an then

David Rochester

versus And are the in it. were rates, then now Got quarter? investment those where securities and where they

Glenn Maclnnes

portfolio manifest see the -- will we QX purchasing starting yields. total quarter, the in we For third we be XXX. the around around to We're at were rate at XXX. had and paydowns purchased that a think we of XXX

David Rochester

one Okay. and you’re then expecting levels bounce or bit Great. the back good expense quarter, a lines And on just those forward? one going occupancy this a other were last down pretty

Glenn Maclnnes

highlighted -- we But the highlighted second were in that the the quarter. second quarter, I The second quarter, they branch the non-reoccurring. closures was were items to have the eight occupancy related so was impact

David Rochester

Got it, okay.

that’s So going the good level forward.

Glenn Maclnnes

little a HSA along expense, of Yes and the expenses lines in bounced seasonality the seasonality back medical investments. in

David Rochester

it. working forward retirement Jim you John and Great, with even looking congrats and in right all to Appreciate you guys. career, thanks more. congrats on obviously luck to a great good

Jim Smith

Thank very much. you

John Ciulla

Thank you.

Operator

turn or floor like for Smith the time, to I any this Thank you. Mr. to At would comments. additional over closing back

Jim Smith

you, New a for Have see we Thank with you on for Wednesday, us great Webster's X will day. Day. Thank being York you today. in Investor hope November all Donna. We

Operator

Ladies and gentlemen, This teleconference. your thank for you participation. concludes today's

disconnect may this You at lines wonderful day. your and time a have

Webster Financial (WBS) 19 Oct 172017 Q3 Earnings call transcript