WBS - Earnings call transcript Q1 2018 | Webster Financial Corporation

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Operator

Good morning, and welcome to the Webster Financial Corporation’s First Quarter 2018 Earnings Call. I will now introduce Webster’s Director of Investor Relations, Terry Mangan. Please go ahead sir.

Terry Mangan

Thank you, Donna. Welcome to Webster Financial Corporation’s First Quarter 2018 Results Conference Call. recorded. being is conference This operations, Also, this provision of the Harbor results statements with financial includes the Private forward-looking of conditions, of financial Act to within business Securities and respect performance. Safe Webster’s presentation and Litigation XXXX Reform based on current these future projections expectations statements forward-looking has and about Webster events. materially projected may in Actual statements. forward-looking differ results the from those

Financial’s those containing Additional I’ll President and public Ciulla, our contained results to actual Webster. that could information cause is Securities the concerning of risks, with release of John Form CEO statements differ filings uncertainties, the in from and assumptions, in including XXXX. forward-looking and quarter introduce first Webster our other factors Commission, for the materially now Exchange earnings X-K

John Ciulla

Webster’s Glenn and will Call. X. XXXX Thanks, Terry, I’ll First Chad Bank take and Quarter questions. MacInnes the on quarter I begin good CFO, will then review HSA us to Wilkins, President, Slide to Earnings join morning, and Welcome everyone.

has lower quarter a interest share value profit our the fourth rate. at tax to results, Ongoing optimizing and of driving profit net As along evidenced tangible growing capital reflects expense economic and increased and and value for and income customers year expanding Webster. in X.X% Banking of ago. by federal banking, continue priorities; Commercial are our book strategic of and In of earned QX, levels time. quality disciplined HSA economic PPNR, a diluted our the progress reported maximize credit for earnings of $X.XX per Bank, aggressively share transforming over first we consecutive execution our from Webster’s revenue on We’ve per record of of make momentum, create which cost all excess quarter management community meaningful stable with now benefit

XX our growth. led point of growth year-over-year interest consecutive loan a and XXth revenue the in to net Continued increase quarter basis margin year-over-year

fund to are a over from increased loans quarter low balance of XX% consecutive asset In operating floating cost sheet a with as leverage. deposits. while We in loan increased able benefit sensitive ago, our from revenues to resulting duration fourth expenses rate X% year continue we commercial total positive than less QX,

consecutive XX% ratio efficiency was the below third for quarter. Our

grew assets The from Asset aspects funding year to were stable at benefited and rates, remain higher We points at are cycle rate The non-performing yield than the our transformation borrowings. quality more and on XX% on reset basis balance ago. loans sheet is as QX periodically. over X.X% as charge-offs Deposits of floating to Slide reduce remains LIBOR positive in allowing overall lows. higher Webster’s year-over-year evident portfolio XX $XX past a loans than year further are us billion growth particularly loan X.

at I’ll of a commercial on growth Our as XX% strong in ratio now deposit business expense has Slide deposit the end revenue Banking’s to we Commercial loan resulted X%. a Year-over-year of QX. technology. of growth X% outpaced level on of XX%. beginning X.X% lower growth of better Year-over-year XX% and growth X%, or in This line basis with banking growth than slightly and positive X. of continue turn to resulted the annualized leverage of quarter payoffs. by linked people growth PPNR in operating nearly was and fundings driven loan over loan strong invest was performance an

horizon XX%. first of growth XXXX, quarter in annual our target performance growth loan muted payoffs planning loan XXXX supports elevated While

days loan as all $XXX were driver of up which or strength billion was ago. the growth the a market Continued million businesses, Specialty XX banking growth in differentiated across billion The basis commercial or basis Commercial market C&I middle $X.X of our net portfolio in XX% from and and increased loan the saw $X.X loan Banking’s With geographies. XX. year less, the we middle XX yield points commercial total QX at of quarter. balances March primary Sponsor solid points portfolio XX% pipeline XX Year-over-year in our business the remains from resetting includes

growth overall average deposit asset to compared stable. rate an drive metrics contributed in higher quarter. margins loan which resulted in interest income the activity, compared the investor year’s in quality in also interest increase income. net prior growth coupled client services to year-over-year Commercial contributed increase lift helped significant to with Solid prior pre-activity when in hedging income revenue bank non-interest Increased trends, with of Treasury year. non-interest when a to remains first XX% quarter X% Consistent in

HSA increased in Revenue growth resulting strong its Turning substantial and clearly of Bank’s X. to revenue nearly leverage results demonstrate XX% year from ago a was XX% net operating grow. QX XX%. Slide expense pretax ability growth to while

XX% long-term profitability fast-growing are We increase income, this in deposit and activities sales from interest remains ago rates. of low people. year Bank’s driving basis and the invest XX% XX the of average was these of points increased long result while service, cost, led a continuing to balances customer benefits increased in deposits. in at by business evidencing as net a HSA interest growth deposits cost higher technology, which flat Revenue duration

by or grown a footings over or Our while XX% than than X.X accounts have billion increased more year million from have more X XXX,XXX XX%. by ago,

growth XX,XXX earnings broader with were prior New This industry trends. we less January which generally year. our in QX call slowdown in consistent in on accounts XXX,XXX discussed is of QX than

accounts that accounts our we was strongest relationship over performance This It our for of average more and profitable to just an where compared employer sales our in to New and management account industry growth unfunded of worth XX%. investments. HSA channel in account focused productive activities total and are have director results Bank. X% is noting

we the holders focused growing growth and to on balances. employer on employers remains educate our HSA while account of Our to account continue strategy large relationships strategic and value partnerships their direct

due balances growth driven Moving Total to deposit net improved as in mortgage total to was overall by of in X% of of growth coupled fees. grew year-over-year swaps balances deposit income X% business grew offset and services, strong income deposit loan significant Slide year-over-year, primarily growth reduction growth end credit and in balances primarily business growth banking X. spreads deposits. fee with by period PPNR loan expenses. with coupled by year-over-year. growth by value-added spreads X% in debit such XX% largely Community The and interest drove A treasury driven banking by growth and investment Banking deposit continued optimization delivered combination cards, X% fees loans, of in in

over XX% continue along to revenue growth driven X% under in reduction of its Assets roadmap center leverage. XX% I’ll active make Community coupled XX% the XX% With by in including square call in of positive banking growth With production sales year-over-year. transformation footage grew over banking X%, over Banking turn progress households of community year-over-year. mobile in expense and of revenue growth administration to primarily resulting that, delivered year-over-year, growth Glenn. operating new under with total by a a growth banking investment X%,

Glenn MacInnes

a million grew provides which Deposits X Webster’s This or or was of grew HSA’s representing increase. our quarter year. than of by Average compares quarter. highlights billion represent growth X% year X.X%, million Slide to X.X% of of Versus and deposits excess average at C&I trends. million decline in loans deposits sheet. balance led $XXX XX.X% or period deposit growth of X.X% two $XXX growth industry led a funded Bank of of strongest growth and The of XX% Bank was the seasonally being borrowings. the and John. Thanks, now reduction in This assets. three X.X% almost by prior loan linked quarter. $XXX the the years Borrowings XX% was with in $X.X with more quarters QX XX% increased linked all end HSA This ago the to year continues ago.

common by million of net $XXX in Non-interest Bank. income annual strategic XX.X% Common income Our to points. Taking interest remains and contributing quarter year. million $XX and asset growth non-interest $XXX loan-to-deposit QX from was hires Total of prior NII interest On prior year-over-year our basis, cost record increase equity quarter for basis $X QX, result earnings. a in XX.X% increases. growth strong. from XX% NIM solid interest Year-over-year X linked point margin equity a year. XX revenue income, prior primarily in $X.X linked basis in and of which in of linked X.X% grew Tier-X common The billion industry. earning revenue Tangible quarterly the the ratio a with increase by $X.X posted to XX.X% quarter Adjusting million. QX exceeded million. PPNR HSA growth expense favorable over XX statement increased or year. increased together ratios million of and Slide factors $X grew was along led peers one-time led was net merit remained of and increased from summarizes million reflects equity regional tangible and increases growth relative

loan stable $XX in reflects provision the new compensation. XX% of equity-based includes effective reflecting from quality. QX tax benefits loan rate loss of XX% Federal growth credit Our million was tax rate QX’s and

As of common shareholders. record reported income a level result, we net to available

increase a improvement prior of of improvement efficiency against PPNR reflects calculations basis in The driven grew Banking performance. grew shown reform. Our This in million, a NII basis points year. Slide drivers point volume. average $XX.X loan the to when income. Details rate growth due $X to of a as and or and hedging ratio the deposit million higher XX. despite by chart versus of details in a XX% lower deposit Slide additional quarter, a Funds XX.X% XX million of XX% XXX the $XX.X on X client benefit due Commercial yield by provides year are PPNR an includes basis result in more point revenue beta of XX $X.X PPNR XX% a beta the and than from The loan rate. equates to growth point loan basis FTE rate and on primarily Fed measured efficiency was the X in ratio waterfall tax ago million, cost. the increase

which a total improved grew came XX.X%. million. provides NII, deposit point three loan result on basis yield primarily as the XX assets, strong XX from cost The increased increased increase HSA to liabilities by linked X and Community basis had and points in just Bank, half decreased This the had was while points. securities significant Banking improved points X.XX%. performance yield XX.X% or detail month deposit million average reflects The an PPNR additional quarter which XX grew of deposits in $X.X basis quarter was under The basis spreads our on while which Linked yield PPNR month a increase Just beneficial by growth XX increase rates This a points. reflects by spreads. in basis $X.X was point to growth driven X Slide LIBOR average NIM improvement portfolio performance. XX in to X.XX%. the the portfolio adjustment. earning FTE interest interest-bearing deposits of X.XX%, basis lower with one

Both was reflecting in quarter in HSA million increase $X.X our HSA growth million we $X of XX%. account non-interest Compared a for interchange million trends. XX Slide linked accounts. revenue cost year-over-year of Bank million primarily highlights linked seasonal one-time increased or quarter number details HSA reflect and quarter QX, Adjusting deposits point Interchange XX items. $X.X cost asset fees. over million strategic The the non-interest $X.X increases. $X.X million, year, of million increase and the increase. a XX%. expense represents quality hires Slide lowest in $X.X Portfolio On increased million remains income Net revenue declined point the had a the and key highlights quality over increases HSA our year-over-year a of by liabilities. in of reflects charge-offs Linked increase Bank. merit annual basis Bank’s the level in of to $X.X million stable. ten funding Bank led years. to XX in metrics. primarily increase $X.X overall increase had or higher primarily quarter prior linked Slide by the basis of fees side, account one seasonal X of cost by and with $X.X

outlook for represents loss basis XXX points our lease to allowance QX Our provides million loan is now compared of QX. and total $XXX loans. and XX for Slide

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

grow to to flat. relatively interest X% X% total average expect earning securities as We stay assets approximately

XX be basis to basis points. quarter hike hike X NIM in expected X XX the effect full expect to basis in a incorporates Fed point We June. an and of This up point March

low. to – expect current spread funds Fed higher betas if be end this We to and deposit at of range remain LIBOR the maintains its remains

ratio earning is our $X to driven higher commercial to NIM be million increase million we and QX to and efficiency anticipate a our retail four million closure by efficiency and we announced below and assets expect related million. banking likely Given of million do of income be ratio. is between the expectations, $X approximately our $X $XX expect which Non-interest to XX%. centers, $X.X activity We to previously not NII charge in part

be will charge-offs and quality. mix, net by portfolio growth, provision portfolio Our driven loan our

tax to approximately We non-FTE on basis rate a expect our be XX%.

our diluted turn we be things average XX.X John. QX’s shares. With that, Lastly, to count expect level similar share to of back I’ll to over million

John Ciulla

Glenn. you, Thank

Before XXXX I our outstanding bankers. and take Webster a questions, just minute for we acknowledge almost it open to up like HSA and

provide to they customer results every the and and We they work, reflect dedication performance commitment and the day. outstanding are with very this that the service hard pleased obviously quarter’s

to I that, open so, I their questions. work. And employees our all for for to thank opportunity it And will of an with take great up want

Operator

is from ahead. [Operator Instructions] Please Steven Alexopoulos J.P. Our first question coming Morgan. of go

Steven Alexopoulos

good wanted or Hey, I items Maybe for everybody. fees in loan to looking were or something? morning increasing at XX quarter-over-quarter, one-time loan there? BPS the any unusual Glenn, there yields maybe elevated start,

Glenn MacInnes

primarily Steve, one or it’s all by month LIBOR. month three driven No,

Steven Alexopoulos

Okay.

So number, was it okay. a clean

Glenn MacInnes

Yes.

Steven Alexopoulos

did questions few customers What’s a pace of growth? the for account Bank, then, driving you And slower in on And maybe HSA quarter? overall the major any lose Chad. the

Chad Wilkins

yields first we channel on industry We quarter have signed that really Yes, the related. trend are more our Steve. segments it’s morning, did Good And, year. than focused – and more of is in in we employers the and actually yields but down and the the and rest are and segment in the there new down employers and are last across we portfolio every channel.

reflect looked of said, and Mercer some have slowdown the That Debonair, you we the all and are a of in access if are them to industry. some on, So, they those so out road. sort Family studies that customers Foundation, their Kaiser employees the down at now employers there,

So eventually HSA they holders. account become will

we So we the are doing are focused are at going we to think we what keep doing on things. – right

Steven Alexopoulos

So, low growth is Chad, that normal? for the mean new does new double-digit accounts

Chad Wilkins

what but – that, see medical and Cadillac just at rates, right look think in employment studies, rates are No. you they cost that. not those look the like I’d again, study things like growth reflects, time, recent you we increases say I at fluctuate impacted they if when most Tax, decreases and over things ratios, the economy, the year and by the

I And the and so high of those some employees had in things of HSA plans half of change couple only really we’ve and that a last employers we plan. HSAs and pretty over so fact good on about have in are the time, eligible point about only years is bullish health are XX% this think in deductible tailwinds still

so going committed So, sales, get are things after and believe that to. and we the we the are on in our focusing customer opportunity right can we targets experience, to doing are we the in be of we in investing terms investing think we

Steven Alexopoulos

looking range? year year-over-year is PPNR, you revenue that walk sharper Okay. can XX% which if the this ability low change keep there And over in in at and is for the double-digit spread expense and increase account you up the will revenue to remarkable, the about through talk past any then,

Glenn MacInnes

Let Glenn. me Chad. start, it’s Steve,

points. and Bank rising to XX% FTP were environment. basis the seeing prior the are up Bank in that, at to rate if In you rate is some from you of benefit provided HSA HSA so, year, the And a XX look

that XX%. strip just rates So would PPNR as hold below growth constant if you the to be and out, example, said, were an

is that significant. So

deductible. is reached of revenue driver is up a that’s in have you QX volume, quarter, seasonal from for in quarter if not had the prior the swipes million – and most spike not from reflective other the in that’s million is HSA and of QX interchange go and to The because X about that quarter key $X.X which the people

are are to driven something then add know, by I they look the at volume year-over-year, want you So that’s to spenders. that? their those using you that if And Chad, all account growth. if HSAs don’t

Chad Wilkins

add continuous we’ve been efficiency are only where The I’d of – investing been operational see thing excellence improvement. we’ve starting some the that and gains to is, in we

You invest that are which happy But growth year-over-year, prior X% of continuing our we’ve about are we is investments the pretty just, see to expense to starting we years. still down about. came are in we benefits the see made

Steven Alexopoulos

to we expect in quarters expectation XX% XX% for Okay. case had just Glenn, ago should that? few or year. spoken, range this the that’s upside still a you Do PPNR think to you the about

Glenn MacInnes

In the HSA?

Steven Alexopoulos

Bank. HSA in just Yes,

Glenn MacInnes

I we think yesterday. think plus thinking said is So, that are – in we I still XX

when So, that he there pointed out, looked, we now, has still and HSA. right think year-over-year so. is I Steve, for But back I we gone industry five and generally, still think some feel particularly as put to respect out ins is volatility are years about Day, we good the Investor the with given feel targets there we sat we’ve where and about pretty but good in down, and Chad outs,

Steven Alexopoulos

for Thanks my questions. Terrific. taking Okay.

Glenn MacInnes

Thanks, Steve.

Operator

you. Thank

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

Jared Shaw

good Hi, morning.

Glenn MacInnes

morning. Good

John Ciulla

morning, Good Jared.

Jared Shaw

any So, interchange. on comfortable commentary growth your really with become the Hey, usage or you up function the in as change on are just seeing a interchange customer? volume seeing following the is more behavior just HSA? customer growth system in that you more HSA the more of there people per with Are customers in

Glenn MacInnes

make of are – expenditures, – to debit is, to things I the card that impact to continue their for Jared we a couple work folks all think right. using interchange. Well, One we there that the sure is try

expenses. medical for pay can you that ways multiple is there So

easy use try we that. really them make to to to So help it for them

quarter-to-quarter – think well. this that the other it say, Right, right. influence some so, a year. thing base, on and from might spend And the medical in have it’s I is, a productive have Another rise pretty we account I’d flu season heavy as

our look unfunded is X% So it’s which this at year accounts, you year-over-year. at down

productive So, we very as have accounts compared good to industry. just the

Jared Shaw

this were on and we side, guess as a Okay, utilization bit driven the going Is expect that balance prepayment by quarter of a originations or loan utilization go to rest lower if I those we are from thanks. pay good. is the fourth growth let’s so higher commercial should take and prepayments through trends, maybe year-over-year, but And down then, the the downs quarter, quarters? how unchanged growth

John Ciulla

today? that happen including originations prepays. have benefited five the originations, XXXX to it’s XX% prepayment business the slipping would from me reflection probably that we into had say and a the John. into into the lower will heading and and not How over in over first prepays. that payoffs you it’s think because say fourth it had the to first a were did some planned are XXXX fourth the business utilization-driven, pay-offs over and XX% It’s not some year really level In the quarter, Hey, talking and had I we quarter, first that and you’ve predict commercial from we and is slippage in in estate of we the happened originations about Jared, other then but related fact quarter that of payoffs, we of in our that, of we very slowed of activity quarter-to-quarter estate higher for growth range, of were it’s quarter, XXXX. again a because us quarter higher and borrower banking commercial commercial is real and difficult M&A is the what real I heard our in long-term things transactional one annualized throughout XX% so years

be. harder happen at it’s still XX% So, target. going our think where be annualized XX% think It’s three commercial the bank will the set is what I it next still would to over But don’t XX%. quarters. target right our predict loan target I to I new

Jared Shaw

for then, And thanks. Okay, maybe Glenn.

want actually growth and that and what’s Could the see to go what’s I in to now HSA, as that should we we do you at borrowing – guess, portfolio we the keep Or zero? some go Just of liquidity the looking continued duration borrowings the of expectation available? the forward?

Glenn MacInnes

No.

duration want you on we go So, borrowings. would are the much I be assets, $X.X gets our I one think, on guidance billion. wouldn’t $X.X about year to which we probably that of side, about billion, below think X% And

Jared Shaw

Okay, you. great. Thank

Operator

Thank you.

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

Collyn Gilbert

morning Good Thanks. guys.

in of, on within on to in what’s but if than around because some this little Cree. growth, yields, curious other quarter? just from going question a of is the we you a the like little because dynamics it bit it a side, the And look quarter specifically jump as maybe the fourth we geographically, give are fourth function Investor just like banks? on origination there? the on commercial trend follow-up color growth Jared’s bit that the good loan deck more John, it us Is some if to in showing as coming a that can driven what you on origination seeing you just your Just Or saw big it’s slide specifically less seems quarter are at what than different yields

John Ciulla

Collyn, mostly mix yields spreads are It’s different with and stories. the the and

stable Our over much have remained spreads the last several pretty quarters.

fortunately are moved flattened we spreads for credit what out. it’s on that risk much hasn’t and getting paid really the So,

in and yields driving towards the month was lot higher compression, We benefit just of past. and specialty and LIBOR our have the portfolio spread business because the LIBOR the tied to are which higher one skewed whole We sponsor is a about we’ve saw tends as but talked month higher not really quarter to of much mix yields. seeing in so of three

Collyn Gilbert

that thinking lowering in about views know us the in relates just of of firm you And an being competitive as I and your the update a away year come helpful. that’s you update increased guys savings, it Glenn, give are banks. of to risk through on that time, It that. return line lot it can okay, Can pricing. us like you then, of we on holding competed sounded the talked John, as just, kind an tax to there were sort about up how discretions sit or not give thresholds your the Okay, today? we about perhaps at that you the earlier

John Ciulla

I is, a feel just we like which are deposit the in pricing, like rise. cost would deposit over probably we are in Yes, say place to point time where exact feel closer time, the we probably in same we market will

Just we that said the have as reform earlier, that had said over you tax time, would impact.

have that seen risk we and or we our creeped time strike are been deposit loan appropriate our firm know, are to don’t we’ve add. and the what reasonable out that’s pricing to able Collyn, our driving customers really pricing and or hold anything expect shareholder we value to not want we also our through to customer. far, to I if pricing. have on in bargain We metrics them with creating it been sure yet to either with be make the but into have deal get taking right reasonable haven’t returns, paid want pricing. through for an to performance. you Every financial deposit there, seen and But we providing able we We so we are Glenn, loan anything

Glenn MacInnes

we think that’s now. right I are where Well, exactly

Collyn Gilbert

to to Okay, question we of just could account cyclical given you growth Act. you the I year-over-year in level you okay, just as that’s then, volatility for the account the that’s do last context happen or putting what or – And was – you on good helpful. HSA that kind Chad, am of just color a know I mentioned see the have HSA, curious, growth, with Cadillac economic lowest trends.

of the an Just industry as it growth from is quarter, trying this the mean, as put to account that historically low in standpoint? into I or dipped that year-over-year XX% past so

Chad Wilkins

I I’ll that go Collyn. don’t back a that. my and of head, look at have off top the take answer have to

John Ciulla

follow-up. Let’s

Chad Wilkins

Yes, let’s rather that with follow-up than.

Collyn Gilbert

okay. Okay,

you don’t given point and comments, then, a kind this, rattled employer you you to the still necessarily think, to in by that ramp there get of the this with change or and the approach early price the are the of answer of change outlook. know employees maybe see cycle to to sort comfortable or I I you the employer incentives or where Okay, way Would the of adoption the but you up of to are rate too any kind relationship? kind your

John Ciulla

one I’d Yes, the that is, drive a that pulling to of the to reach we little are growth. price think the it’s leverage better say, industry, value when We that of and in on not their you educating the think of right need. were that the at doing I We things friction point. try pick making know they employers things for working and to making and and tools, plans, sure consumers right employees our the with sure giving healthcare retirement saving there the

I am some our And that’s our into really groups, so, been in I portfolio rates. with look due growth. have hitting to in that done targeted happy difference education where seen you we’ve we’ve is part of growth, at – we’ve And balance a control the deposit messaging we and pretty hard think if where balance fact growth given account the done the XX%

particularly So is really rates education. in better, a feel in influence I – lack good growth that of working doing I and this things just by is harder real think industry understanding there we could

seeing So we up. we doing are rates catch to kind are focus the doing see think I are to that to want really that going we results we and right to enrollment I of and that on begin all believe believe we will the and are things the I back XXX.

Collyn Gilbert

Okay.

the fourth you it, you of jumped huge just HSA guys on Slide obvious or say helpful. account – to of drive that said it’s the did I was cover per What a apologize footings whatever, XXXX quarter. Okay, if X the but thing, that an the then, increase? And you that’s XXXX or Bank, deck, jump when from

John Ciulla

deposit main account well. – rates accounts our behind one I total assets down kind unfunded thing of the outpacing growth are the are percent has our growth drivers is this then, two-fold. rates our are One come It’s our outpacing and think as and that rates of growth quarter.

go account if per we average that’s So, balance are up, seeing your question. our

Collyn Gilbert

Okay.

It’s yes. just like… Okay,

Glenn MacInnes

Collyn, from per up to account from it’s just prior XXXX are prior the I so want Hey footings sure, and $XX $XXX make Glenn. year.

Collyn Gilbert

Okay.

Glenn MacInnes

I so sure, to out. – think that’s think I as normal that pointed seasoning just Chad want seasoning I make

Collyn Gilbert

Okay, up $XX, oh, right – Right, read that got wrong. it.

Okay, my apologies.

Glenn MacInnes

like it’s - little X%. over So X%

Collyn Gilbert

Totally. Yes, got it. Got yes. it, got yes, it,

about Sorry that.

that’s okay, guys. Thanks Okay, I all had.

Glenn MacInnes

Collyn. Thanks,

John Ciulla

Thank you, Collyn.

Operator

you. Thank

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

David Chiaverini

of wanted I follow-up that questioning. to thanks. on last line Hi,

time So, accounts you the I you XX% think how less to growth. outpaced year-over-year had that last about committed mentioned XX% in growth roughly deposit the $XXX I in of than balances. loan HSA, the about memory XX% the mentioned

question applies? has that’s us you number is? can an account balance if that been is as the for years? what And is follow-up, a just, that average for percentage what open two Just us update First then, changed? still that’s remind typical And on

Glenn MacInnes

question, the the second the what of mix first question? spending by am balances and balance tier was materially – the I hasn’t changed percentage To the average sorry. –

David Chiaverini

So, it’s related seasoning. to

years So, what’s when the average say, these two that accounts old, at become, balance point?

Glenn MacInnes

and increments So, like $XXXX year, average is in up to of and a like $XXX David, $XXX goes it typically the the $XXX year. balance first then

that’s get you a on year average. if like that accounts, ten such So, $XXXX and

David Chiaverini

growth is deposit should the guys So, tailwind growth loan and slowing? of still a you get nice

Glenn MacInnes

to a plan there we to people, as earlier, and educate become as a in once we they a That’s start Chad’s exactly to benefits. And to deductible right. of realize saver, lot spender high – adopt to the people move are point from

John Ciulla

once are many new focused new all all we’ve thing deductible plan I investments high on wonderful making but adopted mentioned, or like a to can, an as is we as attracted relationship a think accounts not Chad thing is, employer, the as the attract HSA. the we to everybody critical

then that account So described. relationships, seasoning and organic portfolio, accounts all growth we of in within our we Glenn customer the have just have the our within

an is that organic there deposits So, just the time. by growth passage in happens of

Glenn MacInnes

little balance average a investment $X,XXX. have investor XX%, and $XX,XXX balances the of balance we total deposit an to go an you an at And has $XXXX Dave average committed a up they But $XXX. we which XX% average and that to move said now, spenders to our as you an had customers the spenders, were of memory, time of and of over a on basis right balance

you tailwind correctly So, thinking comment. as and as are far the

David Chiaverini

this so or the in think originated forward as Is most shifting the XX that. points a new the of the big points in in in hikes on first to basis two? seeing quarter. going than in net these the second higher XX and the quarter rate asset you or quarter margin, Great. occur, now basis sensitivity, of what And guidance NIM for jumps the the coming normal more phenomenon then of based kind Thanks is I interest expected, past temporary this

Glenn MacInnes

it’s of touched are the we key at I there, the think the is, it sort on second half look John going how and when of the behave. year, driver deposit to betas

see type deposit think quarter, And you in a we we increase deposit of obviously ten. second and but way is fourth of so, much seen – haven’t first quarters, movement our quarter, beta, we that into beta going, are from going the ten in

is I more average just think, was like But deposit mid-XXs. like going quarter-over-quarter our on it beta historical four.

rate that’s second going three four And pressure worth the with that probably to trend. days that to could assume of type some erosion you then is hike as along, NIM. if in June, So see in come points you to deposit

the quarter, beta. a the So beginning, beta show deposit three at deposit to is is I a normalized scenario, if four actual improvement The third down within that slowing points. I down, NIM wildcard quarter-over-quarter slowing basis NIM look I say to see base case

to three of So don’t you could extent add top the deposits to four move, that. on

David Chiaverini

additional that branch the a progresses you the about as to about branch then, consolidations in XX question footprint months? great the XX last $X.X over just are you or how next charge quarter. the mentioned second you the closings taking Do color. is have plans branch year thinking That’s And of my regarding million

Glenn MacInnes

all approach I moving said optimizes closure we could have along consistent a constantly make or more centers say if banking it mean banking reduce you to have can adding which we reduce consolidation, to branches, locations very certainly footage time, to the would core We’ve I evaluating that even efficient, over opportunities centers, we at and the tell footprint. closures, not or time, number square overall but footage. the don’t point identified reduce of but any necessarily will square continue this in other

David Chiaverini

much. very Thanks

Glenn MacInnes

Sure.

Operator

Thank you.

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

Matthew Breese

Good morning everybody.

John Ciulla

Matt. Good morning,

Matthew Breese

the I XX ten wanted and to yield going back just a now of just to color, or two the if is impacts longer-term from the to we Glenn, sense to curve conversation, I NIM flattening but see the XX appreciate get continue the the for spread points. basis

So points expectation that BPS. XX half XX, basis three Does slips back of the the another four that hurt that in year? to

Glenn MacInnes

that the significant. year, have might but it’s not the In some it half impact, of back

Matthew Breese

Okay.

Okay, one certain rationality are and in you in John, terms differences of and versus products pricing maybe you, talk not of your competitive across about dynamics footprint and or whether others? for any could the just then, geographies there

John Ciulla

see Sure. which player are say, about lot closely Maybe, our I week, we but It’s differentiation we examine been geographies. not would we we in overheated, multifamily actually, is really talked it and a York across just of don’t last a that New there. always pretty

There you liquidity of it but go launches. is not competitive be that, only may in non-bank obviously, certain only on I competitive. and Overall, commented the is geographies certain lenders from from are this one we of the there asset classes have know out sort a that around. there So not there banks, a if the landscape, consistent is new have lot say that

So, expanding. I would it’s competitive. not are say, Spreads

XXX, We probably Commercial contract XXX that are really deals L similar plus haven’t to estate spreads we low real middle plus cycling. relatively are credit but fortunate anymore, markets. they in the on seen L

So competitive.

think have we really But are have that we’ve over or we’ve developed good in we bunch I for also business looks more do expertise better we specialty given broader think at again that fortunate the the have only credit of so. it’s and last verticals years of not really a course dozen We and where and transactions the geographies selection. us, that, us sponsor industry

I my season So, say liquidity non-banks. irrationality haven’t Joe banks we I it’s the season. we don’t – still both But, is the really Savage, recession. very lot great But he silly a saw to from before say, we boss old of would think, and used that silly see There competitive. seen the

our better to a lines at maintain bit what us business we’ve clip I and last than been differentiated market. grow feel several risk to So, over the geographies I a years competitive to I discipline think and our selection have on and environment in enabled structure think at little has able been the

Matthew Breese

Understood.

one, Okay. could details if that? just talk to accounts the just on buy you And out wanted for I an deposits. First my last some a and little there about thought purchasing I and HSA application Tennessee saw opportunities bit

John Ciulla

I transaction, that’s they had through picked just small – think on a the Tennessee first Well, First was portfolio acquisition. an I up

think I are we So, in business. the

and a it. kind that at constantly material at we looking become So available has there, portfolio and up come Nothing – of we taken the picked anytime up. look are industry a but the we’ve

And basis to a so transaction. on investment we a we make sense growth in from participate and standpoint – it to from are them get evaluate going an case-by-case has a and to

at So, we expect have continue over years. and become few expect we’ll available. more as be a have come they there see look that There been to will to last more. several the I take

Glenn MacInnes

a will business that given alone. the choose model eventually to ones this that X% opposed as less going We the and to need in have market think may in rationalize that's than investment required seek partner, business to their share

Matthew Breese

many As what in those opportunities these share X% a life than I of how then the portfolios? mean, are for with pricing and follow-up, is existence less

John Ciulla

pronounced larger if was varies. you pricing Well, I portfolios, the pricing portfolios, reasonably mean, more to go I the higher. think,

that the Some you more business to in pricing. of you as of opposed arrangement some business – kind a with working of conveying deposit are the and are smaller out them ones

Matthew Breese

Understood.

That’s you. Okay. Thank all had. I

John Ciulla

Thanks.

Glenn MacInnes

you, Matt. Thank

Operator

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

Terry Mangan

this day. much Have great a Thank for you very joining morning. us

Operator

conference. This gentlemen, concludes and Ladies thank participation. you today’s for your

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

Webster Financial (WBS) 19 Apr 182018 Q1 Earnings call transcript