WBS - Earnings call transcript Q1 2020 | Webster Financial Corporation

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Operator

Good morning and welcome to Webster Financial Corporation’s first quarter 2020 earnings call.

I will now introduce Webster’s Director of Investor Relations, Terry Mangan. Please go ahead.

Terry Mangan

Thank you Rob. Welcome to Webster. recorded. being is conference This

operations, Also, those expectations this provisions of the Harbor Actual differ forward-looking results statements with Webster might financial has results based in projections includes the Private about the forward-looking these forward-looking of condition, of financial Act on to within business Securities statements. and respect performance. projected current Safe statements Webster��s presentation from and and Litigation XXXX events. materially Reform future

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

Webster’s and Ciulla. introduce now John President CEO, I’ll

John Ciulla

Terry. everyone. morning earnings Webster’s you joining call. for Good Thanks first quarter Thank

morning a I and information review pandemic. line and performance COVID-XX Glenn modified MacInnes call have of bank. across on performance related We the a financial this COVID-XX the some the business result additional CFO also provide and for will of I the as activities business will quarter.

review financial most pandemic; and including, current our Glenn our impacted profile After I key crisis; portfolio to the portfolio metrics one, of with portfolio directly portfolio credit into two, the industries XXXX will three, our heading complete remarks, by a the credit comparison exposure and our review industry and prepared I of by had exposures. we a

Chad Jason both Glenn to the this of Jason your Credit and the Officer, during and in presentation. Chief After will President, discussion, Bank questions. Soto credit portion me responding will me join join HSA Our Wilkins

family ones in that those and by healthy the and the know and want loved the are want has thoughts. crisis Bank we times. hope uncertain, I you safe, your been whose in you to has I our I that fact all of that Webster health to impacted First, are let challenging, and unprecedented acknowledge living

over our bankers, two my each is the The by for amazing. taken Webster communities going truly but the last care every remarkable our customers during and thanks and their this end contributions I’m each challenging time. of today way of entire start months to to usually have thanking am bankers Webster team. banker remarks with so other, I our I proud

and out and individuals programs officials. resulting and regulators, the and local banking be entire Webster and banks, publicly want part this the has ground, businesses individually to on the to also need. in Treasury, have creative actions of I swift, and to to bank timely the solution acknowledge and Each Bank the of and listened rallied to help economic industry health state impactful legislators, rolled what’s crisis collectively the fallout. reached and to out happening bold, those

When you the has with Slide Consistent you the see during way Depression to founding organization its can best. values-based safety support since turn our pandemic X, at of very XXXX, operated priority. and Webster our we number in Great one our employees, customers, communities action immediately we The outset was took the our the serve. at to the is employees and of our

the financially lobbies families service with had meet our drive-through bank pandemic. and being employees open We set-up onsite safety to at-home our and of to to moved moving a be and needs. creating hours only. essential to employees modified buildings available ensure or safer, customers of customers’ We We activities included need to in established who work, by distanced socially remote impacted branch the those our thereby XX% appointment a swiftly by program whose ATM This for work been for execute no-interest workforce operations. our while to loan our

those including We because as of because are line health had increased bankers home loved have paid kids home time pay, those of front added risk, or or on future school those daily who XXX% PTO of We’ve of take of and all ones to a benefit. of workers our to care quarantine, closures. employees higher the illness, the at pay

We have the FTE our augmented during workforce have by support assistance and and crisis, not we our single the expanded pandemic. reduced a to employees employee programs during our

adversely relating industry we led Great placed customers, we our For increased residential immediately Recession, we program mortgage loan customers, our mortgages. payments, customers SBA impacted foreclosure moratorium just and with by waived program. participation CD and we’ve of Lending Street during withdrawals, loans, worked We the our fees as availability the and funds the amount Paycheck on with through of Program foreclosures in Fed’s the through the on Protection to withdrawal banking COVID-XX our modification Main Webster-owned for by a early of deferral avoidance the and

related we undertaken what Here programs. activities principal are some have we’ve to government points data both done through as and

representing borrowers modified $X.X of commercial have of million loans, home $XXX billion small representing million of and $XXX close balances, X,XXX of That’s and business or X.X% roughly over mortgages residential As and and approximately portfolio. loans, our funded outstandings, home total small loan equity XXX equities. of of to of XX, or borrowers units we mortgage April approximately business commercial XX% roughly portfolio XX% over the XXX

one funded should stopped able experienced Paycheck Program, of Thursday, challenges the more the we process SBA accepting on approximately million, applications we last next many banks, the representing had need. technology When week. all help accepting in X,XXX to clients SBA-approved day than by loans, be over despite most business and we which With respect applications and, Protection started to were $XXX

the applications be has it which additional approval to applications those and process, funding opens will looks begin internally and when submitting have now up for the later continued like it week. process SBA this We will

larger worked our commercial the help prepared Street the the Main customers and to industry loan Fed’s through programs to our With Fed program, Lending with have respect organizations these directly crisis. to we with to be utilize

philanthropy to support dollars repositioned we our impacted budget those amount communities, by and For most COVID-XX our pandemic. have increased of the XXXX the

We Way to in across United Feeding Red to than footprint Cross, provide donations $XXX,XXX needs. and made have urgent thus basic our America, more American far the

turn to on now our X. I’ll highlights Slide financial

and Webster’s and to to increased a share strong first the adoption environments. and the per Pre-provision significantly priorities any CECL, revenue walk $XXX quarter our lower the strategic was through compared driven up operating through provision expenses. commitment to continue $X.XX in of net a you on $X.XX increase of slight QX quarter. economic total from first in million year’s primarily The resulted and weakening execution I the quarter revenue process decline slight ultimate rate forward impact in resulting Glenn of by interest results outlook, and all from underlying ongoing our were of CECL in provision an a and demonstrate the modestly XXXX Earnings QX, number. prior from environment. $X.XX assumptions decline will a in

Our respect that the CECL consistent process and the pandemic. with with and reflect requirements the included portfolio thoughtful the the of behaviors of strong, onset judgment In the appropriate controls to conservativism this in process is amount the to quarter, environment and of our of accounting process. uncertainty

X% Tangible prior from year. book share per value increased common

improvement XX% led QX. strong, and of million increase which our in to expenses decrease X.XX% credit XX of a metrics a in March deteriorated X.XX%, in forward economic pandemic. the while reflecting quarter with the equity The with first build revenue was reported $XX common combination in Our total and slight each efficiency forecast reserve onset on conditions slight was on quarter. equity ratio, return remained the common return tangible in significantly the the was of

Deposits over of increased inflow note, a grew driven year, we Also billion. as HSA strong million of Slide organic deposits, and augmented in represents from XX% growth on year $XXX in the up X CRE footings $X.X commercial total a XX% approximately loans ago. saw a presents or in reduction from March, revolver loan transaction at and X% more and prepayment deposit ago, activity. deposits growth was was by public by grew XX% year. year total by of deposits year than almost portfolio growth commercial trends. X.X% bank in loans draw the year HSA Loan and ago, downs $XXX now funds, a during HSA XX% in from Strong million for the grew of and

to few to X, a speaking each will business. of I minutes Turning spend lines of Slide our three

balances, the emergence of pandemic. the the quarter, partially revolver Prepayments activity linked to lion’s nearly the were transaction and the draws, and in quarter net the second linked X% share economic due quarter loan a were half of XX.X% which which the includes sponsor drove specialty saw quarter commercial while growth up ago, loans $XXX aforementioned banking, from the CRE year-over-year of increase. year the attributable revolver In and in lower million lower the in to draws. drove

into a quarter usage, year up and banking XX% Normalizing by depositing smartly, some approximately revolver were ago, driven from largely up quarter. draws for in deposits DDA. the commercial X% were in Deposits the revolver linked XX% of

volumes the by Expenses was technology. driven despite income and banking X.X% investment PP&R rate flat and pressure. up relatively year-over-year commercial Loan people in year-over-year. in in net drove a quarter deposit X% increase Commercial year-over-year, interest were in banking

appropriately a tell infrastructure. business such from new in pandemic, cautious segments technology software segments the material with are we are impact and in not you closed underwriting adverse activities, can I experiencing new quality meaningful, While that high we quarter the that as

on deal infrastructure best In close. XX% we basis, the April technology a after million risk where a our agency of efforts held largest deal fact, in we $XXX just over early closed

we concluded months. new great XXX,XXX Turning accounts first to Slide X, in XX the HSA successful make for a another XXX,XXX continuing progress. opened we over to total are quarter as opened last accounts of We new Bank

to In up to material new accounts the impact while administration. to quarter. decision NA million custodial were $X.X no addition, to accounts deposits in by in-source the increased the employers two of in was we billion. previously X,XXX tied wholesale There reported partners quarter $X.X X.X% over the to related account added X.X% movement

overall X.X% compared data. rate growth our of was Bank’s the rate X.X% consistently note rate One point to low of and the when an that HSA rate funded The of declined by reflective percentage market was XXXX X.X%. our XXXX to In market growth industry indicated as in the flat both during growth three report year-over-year, was accounts deposit compared the quarter, accounts year-end industry to account the of unfunded funded is percentage growth slowed that account HSA rate Devenir marginally year. important points first

sales as we We several employers good from to start year a perspective quarter. had large in the a the signed

partnership our make choices. major healthcare enable a Jellyvision announced further smart also that informed We and will with customers to

partnerships jumbo strong with market. growth, Blue Shield especially all are employer Financial Cross and of the partnerships Blue capable We uniquely of These also Principle launched Group. delivering Michigan within

accounts, HSA have you yesterday seasoned may in to acquire we representing Farm that $XXX agreement announced as million an approximately portfolio addition, Bank’s signed In seen, deposits. we State of

We close or transaction third quarter. that in expect the second to

In able response pandemic with quality home work from XX/X our the support consistent HSA three were to customer service maintaining metrics. meet of than to to quickly and to and in less weeks, XX% we of Webster, continuing all and staff transition

the working through FSA partnerships Store, our critical, via time such we may are as Bluebook. customers to closely Rx, Good directly and Healthcare capabilities deployed pandemic our we Blink Advocate, Cost at including addition, Health, HSA or a particularly In support be when have Medical services eHealth,

political chances Medicare We even than of a are near All they for the the were term year and solution legislative and remote HSA landscape feel that healthcare the for remains industry national more ago. current favorable a

have Cigna, and never Our relationship partner with technology our been partner, stronger. largest WEX, HSA our

have business banking. Many Non-interest mortgage result pandemic. the active with I’m for revenue. the households we’ve led as loans our crossed while grew community X%. the to see given leading and X. higher grew up way that continuing tremendous bank and banking, X%, at loans our Deposits by to digitally community the trend was as the customers of self-service safe investment X% on expect. standard continuing employees channels business quarter customers Page we in transitioned again provide service keeping by clients first of done time, year-over-year XX% Total customer services a by a income more banking X% and job In

and centers, so team, the including banking for As community you in say our along the our many and and customer focusing with communities resources the of of enough on executing community been in all the can PPP banking outreach our our I are on our help working loan We’ve the about last across way bank will customers. program, and can’t imagine, diligently from the those quarter bankers, first several during customers have delivered support, over weeks. which

of comments management. I’d a couple turn Before I like related over it to to to capital make Glenn,

internal on and, focused other bank execution are priority. we remains a transactions, than M&A First, completely opportunistic HSA low

assist in a us in the have customers the support recovery our and We country. position financial to enabling capital strong

morning, we X per us. share. of in a approved our QX announced until we a repurchase $X.XX onset not this modest of of approximately the this behind additional Also, As shares quarterly has repurchasing board dividend before do the shares pandemic, after early million pandemic is anticipate

I’ll for to now review. Glenn turn it financial the over

Glenn MacInnes

Slide Thanks John. I’ll average our balance begin X. sheet with on

some million commercial $XX represent with increase Commercial quarter by in led in real strong $X increase to prior the a than commercial in result estate or $XXX offset XX% was basis, On Growth reduction estate Consumer by million A commercial total real performance a our year-over-year was XX% loans primarily year. billion. residential grew loan equity. loans now the Average in million of linked compared loans linked mortgages loans X.X% grew payoffs. home more of a of driven business. $XXX in was originations and quarter.

On the combined seasonal HSA inflow cost side, and billion last of have as low The HSA well as XX funded a of now cost points. XX% in reduction increased than our government loan term $XXX deposits of growth basis deposit and short with $X.X a deposits borrowings. year and transactional total deposits million QX from represent more

and repurchases, of equity linked is capital, to reduction adjustment common equity in reflective in reductions common of one X regard of $XX the also modest Tier result share approximately modest as a a the common repurchases million share reflective and ratios tangible quarter $XX equity With and Likewise, million CECL, average are the quarter. day CECL asset growth. of in

to in well Even in and regulatory excluding basis favorably elected capital regulatory have to phase-in XX capitalized of capital, treatment, XX on ratios strong impacts the very well capital phase We the remain impact CECL would ratios which in points. our excess our levels. by

from our This million is prior quarter lower three as in statement our net was basis a and loan QX summarizes earnings. $X QX, loan basis lower of to income points interest interest drivers the offset quarterly points income X by Slide a environment. Net costs. four lower nine of effect from due growth from margin, points which lower by partially by offset versus was borrowing basis was flat to was deposit rate yield reflected and points benefit basis lower which XX costs,

partial interchange. from was million million income due seasonal Thirty-one quarter year, growth prior rates market $X.X Versus earning result increase million of $XX interest year. as increased the income million. $X.X growth. net offset declined of $XX to account a linked lower of the in from a HSA fee million Non-interest and with prior income decline million asset $X.X increased and

$XXX expense which mark-to-market Reported declined quarter client and million reflects less as million In prior increase on higher mark-to-market activity grew The and on increased addition, a revenue. syndication mortgage X% from in linked prior was of our hedging year. well decline income banking year offset in $X.X hedging revenue. swap than non-interest from as non-interest by activity the modestly

of quarter $X prior for $X losses more year. from revenue net will decreased for $XX I million, credit Provision million million was million detail in which increased explain from and the Pre-provision shortly. QX $XXX

in our to QX. ratio improved a from and slight to increase in reflecting decrease efficiency compared expense, XX.X% was non-interest XX.X% a The rate in XX.X% in tax and revenue effective QX, XX% modest

the to Turning results quarter review Slide will adoption XX, of first CECL our and our I allowance.

million, coverage at X.XX%. in XX% walk, one allowance day the adoption we ratio increase of the was resulting starting As in look a CECL the $XX a

of growth a came $X.X primarily million a the the provision recorded included prepayment million our $XXX categories our million from commercial result fourth million net loans $XX of in and bringing Loan in X.X%. provision during funded charge-offs. remaining and of draws slower The was growth QX pipeline. March, loan had $XXX from activity, line allowance million, or coverage quarter. $XXX the as quarter, in During we million strong quarter to $XX We

closed The reviewing a accomplished sectors, and prices, loan perform housing This of economic GDP, and granular modification on pandemic. it provision outlook, second risk of qualitative migration our April, decline of early XX%, risk by higher the our potential assessment portfolio is participating At in how rating books in the credit we was through our with loans XX% half and just XXXX. quarter GDP programs, and including review. unemployment a the based under a of a reflective will outlook and bottoms-up the unemployment included time nearly recovery in beginning peaking second

risk review loan programs; impact decline our quarter, government updated on outlook second, second into refine will of unemployment assessment projected Initial our could are April update stimulus the quarter be areas: our XX% our variables; of move second in peaking exceed we would higher of GDP more the to an the be near macroeconomic As severe sectors three we of programs an critical third, assessment modification first the portfolio. forecasts and with on as economic XX%. and

of the making difficult pandemic duration said, quarter year. to over provision being severity in by project the the the provision second areas will All of it pandemic. and the will be heavily and are more impact in driven the our remainder how the still these developing, second expected of That quarter the

in resulting average the points. left $XXX loans. to for X.X%. million XX-quarter points quarter. allowance credit million in in XXX of and our the increase. XX the prior lower compares from QX upper C&I to coverage losses represented at basis ratio effects Commercial asset slightly environment. quality $X.X a of basis $X the increased increased QX. loans a XX, Slide upper loans right Non-performing current represented metrics million, left The commercial Net the classified This March in in million to the highlights XXX the totaled increased key charge-offs of total $XX of from of

highlights key liquidity our metrics. Slide XX

to provide of sources ratio to with deposit strong advantage. QX a in our us maintained More diverse continue than XX%. deposit $X.X billion competitive loan has of core gathering Our favorable growth deposit

funded predominantly CDs a percent of core brokerage deposits at total than deposit are with XX. half March We representing less

sources remain over our borrowing capacity billion XX. intact, $X addition, of totaling In March at secured

capital our metrics. key highlights XX Slide

the Our is X billion, common regulatory Tier well by the capital capitalized Tier capital ratios exceeds equity The by risk-based capitalized for well XX% ratio levels while million. ratio $X of exceed $XXX substantial X amounts. excess

we provide you QX, makes environment growth. expect to assets unprecedented range loan I can of earning over this a formal time. difficult X% it to is average driven primarily by guidance The What at grow in tell

come We expect growth, interest Paycheck result to a deposit costs since QX lower and to Program income to net rates QX’s lower modestly likely given be borrowing will average and of Non-interest mark non-interest have asset flat likely as yields, income loan level. recognized will volume, market as in and QX. flat offset expense be by down the flat we to be somewhat be Protection to down QX,

Our X.X will lower QX. buybacks count be in to shares share average about completed million on due

a turn to I’ll back over of that, our With things credit John profile. review for

John Ciulla

you Glenn. Webster’s as credit, that lending up crisis. involved know and I’m execution our Credit served I in and of Chief deeply Thanks the financial as credit grew commercial in Officer Many during Risk

and I’m As framework The portfolio selection, risk to of underwriting credit the I’ve has have nearly loan been the billion we dozen credit built purposefully with today and have years many reporting. $XX over we management, thoughtfully built. last respect portfolio said times, proud that risk

this the our risk ultimate can by to outcome I’m credit of be will and proud say underwriting that always duration have professionals business credit determined and management crisis, guidelines predict I depth which of put we very been never of true who first. line I performance, and our of While the

on Q&A. be ago with our Credit from and will joined five today I he As Capital, phone, Jason Chief for Officer, us the mentioned available who us Soto, GE is years earlier,

through We’ll we’ll this and now posted the questions any that respond the credit Q&A. to morning we credit the walk with general slides deck, earnings during

Slide for discussion. on Starting see an outline XX, this you’ll

will portfolios, granular loan some what pre-Great you of most then our the to by of provide the every Recession on I you’ll comparison impacted context I’ll and billion our will slide and to Jason each a of portfolios, our directly As hope those segments exposure briefly each the on with to I key clear loans. I’ll get a loan COVID-XX I’ll current portfolios have through provide and believe and sense--have detail, I key provide mentioned, clear securities be allowing be with pandemic. I Jason without we view XXXX walk then highlight our concise reading a so with what takeaways. in to but hopefully metrics, $XX I comment

clear, XX the update seen through line outstandings reported. this in this from risk, the been most first our to each not want categories be other represent at that - at loan we of will these have X/XX, draw this these doesn’t capture transparent wanted Many they disclosure think with attempts the a and are industry to reporting categories, order are are Slide sectors, in Jason we by moment. that of as the of This disclosure, impacted pandemic. the but that all activity which banks risk. ratings modification, the including obviously you’ve loans to loans most I in impacted has make are simply

fact, a revolver little I In rated, these want provide so to and context limited been see modification here that you’ll there. draw and of pass activity, are loans there’s XX%

our is and loan basis. an segments Ninety-four percent, modest pass is this slide total as said, our absolute X% most portfolio. that on or takeaway maybe to are key The on X% direct these categories, of rated I exposure in representing relative both

not as discretionary recurring as cyclical fortunate been basis we’ve the pushed strategies so cash on less sectors energy, transportation, focused long hard are We flows, focuses. a with really over on have, on our retail term, like industries relative

pharmacy more provide in letting this In before XX% loan as and category, CRE, X% than investor are our in loans of make broadly are that some is those grocery-anchored. I quality you’ll Jason The or retail those other represents point defined non-discretionary of see context high want mostly to portfolio.

his looking about years, with For retail Bill non-discretionary. always who have he’s those for heard you Wrang exposure over me XX talk of

and our additional for pocket the cash struggling Mino of group, so record that XX% of of large tell often XX exposure unbelievable confidence an and followed managing dominion, retail have ABL and Warren and with are borrowing lot you got base I’ll in that fully years group have working credits in been a that is secured where an also retail. been they retail I’ve here that exposure, entire track even within we’ve I’ve

Jason, make to turn you of it there. maybe to I’ll a over comments couple

Jason Soto

good the of That Revolver has in last the Great, thank update John, slide couple provide so to on of draws last you and requests To everyone. late week, to information commercial of seeing of weeks. versus $XXX earlier, morning beyond sectors late as have the as are last an mentioned $X.XX been $XXX on pace John the modestly million. up we’re versus activity week, clearly these the just roughly total said, modifications these modification sectors. $XXX modification Modifications million billion overall are up in million million. slowed as $XXX

It’s straight that current in the by that more many their is capture impacted tied borrowers companies the to of these to effect being believe so exposure a bit top-down the ripple the using otherwise sectors The may bottoms-up the of approach environment. feeling we’re hard identify for environment. granular impacted that current sector, to have reality revenue portion more we to the all be that a may of with a approach reason and or

the relationships. need up potential the the common we this, to Based are those handle accounts a in review reached borrowers. to pass values, near impact direct the majority on owner the out in have good and to weekly XX% and that updates. We rated have modifications that will and many exposure liquidity. of that I sponsor loan accommodation have level By created believe We and capital, of that support, term. may have a to junior we say and the have over to low where XX% a on framework reviewed I rate portfolio borrowers requested also have to of call roll borrowers the some the exposure, of we’ve

to of way. that to Assuming start prudent we’re economy will a our the recover, a we see of these XXXX, will part optimistic activity majority we do resumption them in and borrowers certainly throughout support

John Ciulla

Jason. Thanks

have being an only now. regulated outcomes, report credit tell Turning the these and slides risk This that years transitioned since purposeful but that portfolio in a to slides reason The use Recession. during were Great credit earlier is many Not the right OCC for are think are the portfolio these predict ultimate manage talked so performance class underwrite, what Great prediction dynamics but as the had we a Recession never XX, can the asset by or ahead I’ll Again, execution we had bank. commercial strategic light I the the that important Page during you promise the in to different, into is are way next is our downturn, people three on entering we credit is loss one next I I XXXX. years about I our demonstrate seen than earlier. shifts of proxy we where when different we portfolio few in so today XXXX, three like vastly only

loans. slide over last disciplined exceptions. originated, banking very on product. out-of-market equity of loan guidelines and have majority a losses years. loans, The takeaway come portfolio and on and mortgage comparing unsecured loans, we we virtually longer in-market few do loans and have We here that no of underwriting unsecured even originate mortgages the business and banking portfolios We that non-centrally equity with banking the business key consumer centrally not XX Moreover, correspondent and overwhelming underwrite been loans, originate internally, this home business from everything is no we underwritten, home and from small performance broker out-of-market

have focused we comments, a less on Recession exposure that in as discretionary with in it same development banking a portfolio XX, aviation discrete the portfolios. our is cyclical equipment result. losses portfolio here since earlier and verticals minimal in areas the Page Consistent and outsized businesses, my shows Great those We a for finance. and had can our see analysis you commercial On residential

on than made loans. same Another and in loans point portfolios that key the times I about the C&I our level specialty this in several when over leverage point at in within a nature or performed business better have fact the our bank, sponsor leverage commercial general other slide the is asked earnings of calls our

sponsor our represent of plus XXXX represent are absolute XXXX. they represented of capital larger an in roughly portfolios percentage While as basis, on leverage that the represented they today I’ll roughly in percentage Tier loans you the and remind and X C&I same they they same reserves loan that

critical is slide. XX, On this Page a

You’ve heard of talk Recession. during me Great capital geography our losses about the the

is from securities instruments Here, you quality. can higher rated Today, in sensitive or Great category the during investment portfolio. portfolio Again, in see the only crisis learned in our $X.X and trust was portfolios, single of us XXXX, strategy the securities sensitive is nature and of the loan XX% lessons credit but compared to our in biggest this losses of those for XX% financial not was billion credit the write-downs preferred that shift today a purposeful higher Recession. during

that will ability monitor you not the I that depth not be your I a to tell and could overall but going can team the portfolios, eliminated industry the correlated after at drove but segment or tell before, that other in losses of pivoted our can are credit surveillance there what was is portfolio, ability XX natural on we’ve risk media, three activities time portfolio and quality our that to light that those slides Again, blow quickly over reduce up like that losses, you can’t the to contractors loan duration, you’ve have things certain the emphasis over The there’s to specific losses? look question across we’ve able these of have, done portfolios is, in have advertising-based to traditional and our tell hidden the it portfolios we’re make highest ahead years time, depending so you decisions last I and or in on years that. risk management we

learned we’ve been Great about that did some hidden is and would hope take aren’t how our the on My heart than confidence higher risk three downturn. the fact slides of provide that that the been to lessons have building and thoughtful last it portfolio we during perspective during there pockets those Recession, much I

On Slide truth the where bank and we have sponsor midsized an book straightforward, portfolio with, obviously, is in see a the expertise. industry it’s typical overview there of we’ll a just XX, portfolio,

a see $XX the see breakdown the where and here of exposures reside. the in carets high billion, can on You level right, you’ll those

the of For slides. of and prime mortgages are which finance, pocket consumer I includes billion these on small the $X consumer $X.X and that then speak home loans, finance, lending will each residential to portfolio, equity following club. a billion of in-market

commercial includes performance encapsulates is Wrang had CRE a also great It estate investor in asset here, also the Recession. book, some commercial it over as and real owner-occupied even majority CRE, of businesses. Our market our of run secured middle as estate well commercial it banking years Great our data center-like during real who owner-occupied has real business CRE loans and investor technology estate infrastructure, comprised banking XX for by Bill

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On it Page turn to not a - you’ll the the supplemental don’t which information I here. in detailed investment see now of please securities breakdown portfolio, XX will - cover

at portfolio mortgage, mortgage and modest updated Credit prime, surprisingly, when our to that deferral modest that has a payment level is and the I on portfolio. and performance, key is had not portfolio requests told billion modification only you scores today. and outstanding, date On this this on of residential origination we’ve for both XX, high slide $X takeaway with quality, in-market, centrally high a FICO LTVs, Page underwritten been

in-market, loans pretty XX% equity seen X - we today. this to On on same much in down the these end home this close book position. crisis. strong Page We the - on activities much mortgages far portion I highlight thus LTV interestingly of into - any metrics prime, first home story caret lien draw unfunded portfolio, a there X as and that one of to - the origination, also portfolio want of is XX, equities, through updated when and even effectively slightly of have improved and the draw at FICO manage not defensive

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performance we been the yet. expectations. portfolio performance diversity in seen have time it or this got obviously FICO strong are meets seen with We’ve geographic been the in improving, and that you If and over exceeds good we’ve the small have and watch club, We’ll scores credit we not lending portfolio in deteriorate at the portfolio have closely. it, involved look

is by cycles. many little diversified team $X.X The detail limited billion and top On you see we our line to it, the overall underweight the very management and meaningful on CRE we’ve years real next hurdles. portfolio in same retail when The hotel XX% volatile CRE and are little the total chart the provide page. targeted investor estate good XX, the regulatory more within been and this our at last in years growth with is and business in portfolio, well exposure, we’ve on concentration through the as Page had commercial peers over led compared exposure very that I’ll bank, compared commercial exposure. to representing of in sectors, few more there for majority discretionary

did We XX have ago. years we office exposure than less as well

retail largest the next do and On on exposures largest part let’s a portfolio. our dive of the page, our deep

a growing we’ve financing projects and targeted industrial, of investor markets. multi-family in Focusing office on CRE, strategy strong had selectively

be times six Bill institutional on partners I and sponsors with out performed with It mentioned, more during We withstand equity came call estate It volatility. and XX to exceptionally this real a for solutions portfolio. more experienced downturn. already, but I time. partner more who tough sufficient I to last It’s an quality us of with credit cushion years, manages think lower the than yielding during well resilient apologize, tends on portfolio. Wrang, As provide well of this AETNA, structured

two origination It’s the value about discipline very competitive years also you in a real very loan through and we despite loan of at competing of good will the about Overall, we quality and environment, we’re metrics, reaching be surprisingly, to talking a talking is to debt with really which but crisis value strong the our and XX% last chart managing highly steady not look lending brings updated this loans to bottom whatever times. been in translated statistics, tends the and service coverage asset average out estate estate us, real portfolio to portfolio are few an aggressively strong they’ve that ratio over portfolio, not here nearly well. we’re been loans, about this serve XX% us really we’ve into customers If feel so there, portfolio.

business technology, are input finance you’ll as represent which and and in segments. and such and On services lower and with software, retail originated which companies, ABL well the our correlated diversified. middle sponsor our in in banking. meaningful businesses feel time a and maintained collaterally market good focused risk our business, Page finance, those portfolios, is have includes in see so infrastructure portfolio, and C&I construction broader core diversified as portfolio, over XX, which categories in we and we’ve could industry exposure communications, sponsor portion primarily we as businesses of balanced This de-emphasized focused, leverage are equipment broad concentrations Most

we’ll more talk two sponsor a and XX, I’ll leverage Page little on these and in provide pages, about ask specialty context. last Jason and On color to

important or always sure loans. a talk third Only I’m that fully and leveraged of business that we the is and specialty billion our sponsor of something. One about, not is things understood, is that is $X.X

here leveraged regulatory four qualify leverage, total acquisition that leveraged on reporting at so three is definitions, loans of industry not which and are leveraged to and does our generally origination financing two-thirds a loans. sponsor full by as based portfolio We’re senior specialty specific

and in and the presentation, has sponsor lending of you Most when are over XX%. this I and at book, been earlier XXXX with saw performance even as through the Motl arrived strong backed leveraged We’ve companies and the C&I, since our overall Chris a in bank, line to in leveraged loans cycle. been

We we’re protectable, meaningfully book markets this flow. to of that end predictable make shifted time have cash sure that non-cyclical lending have streams to recurring, over

transactions to and susceptible to be less the tech crisis underlying particular almost the companies, infrastructure and portfolio grown again, the has and companies You’ll see because that XX% seem to from - software, of about well. the that’s of as these this one-third of nature

benefit segments medical the less less we from At where away same Healthcare seek vertical demographic that routine is support protectable some will shifted that trends. another and to flow perspective. a predictable we’ve cash are defined from from services time,

being leverage book the half a versus is turn capital leverage general X% a Jason lending. Slide on leveraged something our between risk. less only the The and turn less on the shows on covenant-light, that’s we’re The market. last covenant-light. markets. originating little almost little on is when covenants deals page do I This what before call, those talked ago metrics We’ve we broader to and the inside have a deals maintained comparative year in XX% slide market we loan are and earnings turn the about that this with specialty let discipline a On and loans, leveraged are sponsor are we have, that - cover a I’ll turn an and average, of market turns I we leverage where almost context provide sponsor non-leverages still XX, the market, is specialty over inside a to two a leverage a broader half about talked and

loan to We very non-leveraged saw and value time, downturn. that’s help to both deals and On between enterprise look XX% service XX% us to is at charge the resources - the having cases the the value over cash ratios a our and XX% to we for borrowers’ greater on X.X during deep that or relationships most debt a ability have XXXX coverage in leveraged - strong have management financial average When have loan with sponsor, beneath that of junior with average, times. financial worked crisis. profile and the XX% equity significant through with debt, we in than crises, through to sponsors us, with a we fixed long

fill maybe point can finer something might some those, Jason, I missed? in or of have a you put on

Jason Soto

to John, look say Yes, I increased of I only direct important. which two-thirds, the we guess five hit the percentage over we’ve about think deals all I about that is four of years, really key points. done half the is thing or would from think you last the we’ve

think particularly and and in moving well the and been grown. losses, you just bank, add, very been away disciplined I guess it mentioned, smaller some we’ve that credits clear strategy deliberate, between I I’d probably not has business also and our we’ve areas sponsor the as credit. been we’ve about credit cyclical but has restaurants, thing in traditional leverage very our collaborative of only is and last lines culture it been We’ve the parameters like from the had where at historical speaks as as the also media here to underwriting

over exposure only tech deal the There’s less revenue has one talk recurring models, than example, and revenue. largest that XX% revenue For about book recurring book, which infrastructure, of book. XX% in in where of which again that is that the the of almost has XX% represents business in we recurring sponsor financing segment half

being the their revenue are so and thesis more those is bullet-proof, those that deals outside parameters, that just software our smarter installed, depends end about competitive on dynamics, the right? will businesses, Again, efficient to services be serve once and making we expect that leaders customers in come but really pass. markets not sticky. it’s say the will It those our commercial customers deals the generally provided and If be

John Ciulla

it. I Jason, Thanks appreciate

shareholders, call Crawford, dedication this Thursday. virtual go The John of I’d Smith, like Before board our to occur Jim the of of and from which insights, departures Webster’s following Chairman, and Lead Q&A, acknowledge to former directors will Director direction, annual our meeting we our into friends. many to that influence personal and both to will helped so Jim proud to what are continue them to is have me, the organization this and future. over John given us today make They mentors Webster and have I’m years it to

the were I little I a longer bit appreciate hope they patience helpful. in going morning, comments this and everyone’s

happy it up open I’m Rob, questions. that, With for to

Operator

instructions] [Operator

first the with of question Morgan. proceed questions. Alexopoulos Please with Our from JP your comes Steven line

Steven Alexopoulos

everyone. good morning Hey,

John Ciulla

Morning Steve.

Steven Alexopoulos

of economic that, the worse start model the called should assumptions reserve reserve, XQ you guys we on given to how reserve some just seeing see than assumptions in in in look we the a the on similar change a outlook To COVID-XX be bit now working, in XQ, CECL how is XQ the and coming? impact given out appears are saw based a Glenn, to what like in they’re you

Glenn MacInnes

back scenarios as granular and a and No, comments estimate as we an just we don’t did let me I bottoms-up then modeled and result our is see in that. my indicated. say, that, about--first up CECL I build, of multiple talked of losses a

and and a shock more over one the XQ second years. depend on expected will the in reserves duration on or two next the less severity quarter of economy our think I our and provision

were we of we have the programs, of as the that own where see in modification our assess evaluate it couple don’t programs QX. next Additionally, the and near over and I impact stimulus then to anywhere weeks. loan But we’ll

John Ciulla

of have the of we’re the losses the we and life all with give you, knowledge too. all for is we filters look so the on then on respect to credits, at me portfolio to results out the at going our like in context, I approach is borrowers, because and with third reaching it’s a the and party, that our what try lifetime have, process, to loan have in and determine all assess we best looking portfolio. we we’re of peers we economy we’re many data, us of our the our models we let bottoms-up to obviously the through seeing, and doing time, use outlook commercial hard the it’s at forward giving--you what with you the best applicability know, obviously, for and performance, information that that Steve, portfolio we know at it we’re and as what losses, hard look do, our with

that, revise on other I programs and provisions what or will how and and in impact or the economic if of day, or think is somehow think will Glenn time, at made of forward banks much will reverse depth good we the outlook I the of on the and indications no mitigate to based the QX time. future forecast help continue to helped, offset of influence some the over point severity really stimulus the the and course, miraculously the that release think end of provisions a What point. provisions, have we’ll of either is, additional better magnitude also to maybe that happen at start additional I have that fiscal in depending

the what will of the be But the I we think forecast really quarter. approach second as on macroeconomic it’s based end

Steven Alexopoulos

that you you do you see as John, color impacted in all guys? I to but on there’s the at look us most you’re specific giving lot which those just to the see XX, slide, you the the terms risk specific which a is Webster, of on maybe through appreciate credit, to sectors can unpack specific walk we if helpful do most exposures, risky, of less but on being and Slide which really

John Ciulla

let obviously, on Jason, good he’s for us. I’ll and a Yes, because perspective it

they’re with chance believe most store do that brand - aren’t sponsor they’ll on of at risk. restaurants corner there’s for be but some the names, broader--those part, at think survival so look have I I are obviously broader backed high a impacted. restaurants probably portfolio good the we restaurants we

We for a to say so about are perspective, little very from I probably restaurants, relatively directly said non-discretionary small. and what hotel leisure about me, impacted. retail, I think the that little have have I most I exposure would oil that’s and travel very gas, those think might that although we

Jason, want provide color? some I know to don’t if you

Jason Soto

to exposure size losses. say sponsor we portfolio, last Yes, a that also and actually portfolio on portfolio and relatively we is is years. parts we’ve less been exposure hold the of--you I’d working haven’t to. over have date it’s material know, comment sure. a other average the in the substantively that taken couple echo Happy most of our I restaurants. in that small Luckily that down than would

about. got we’ve be who a concerned far So locations borrowers multiple would I but diversified geographically, that��s are--have of portfolio part that certainly the

sectors I’m things We’ve A like business or the we assume will I lot a and already those, other services on conferences put in the of of to guess have moment a some talked of, routine recover. retail. like healthcare dentists, a and again things you ton host large that that physical the gatherings we’re of is focused that that support like about also is companies that collateralized. most on, at pressure advertising-based, which of don’t seeing of and lot few therapy, that, but services, optometrists,

definitely some pockets looking that we’re at. are There

focus to change this. on after things could perhaps little start You focus about that are think a in even behavior on. [indiscernible] that bit will I Those I areas consumer the the

Steven Alexopoulos

to seemed slow you for year-over-year it Okay, new at footing we the thank one a you. growth normal business? the That’s for and Chad, helpful. industry. squeeze look and I account Maybe Is HSA if could if HSA, in in this for

John Ciulla

Chad, directly? you to want

Chad Wilkins

Steve. not a I say Yes, thanks it’s normal. would new

last we’re through--you as do industry. think in well medical that of grow for are HSAs several [indiscernible] downturns costs in employers in economic on. in the the seen to I’ve plans significantly talked looking there’s tend a to quarters, slowness or we’ve as opportunity some seen I and because more related think they to so tailwinds we’ve going [indiscernible] the multiple to that an reduce recession, do some, over know, I one subsiding

with there the benefits seen go you’ve throughout ongoing look and/or the attention year impact that. a of employers on so impact, think bid to paying is current close one, plans, as, impacting to plans potential to we’re I as some folks out to we furloughs regard look pandemic

in the the quarter. the the haven’t any slowdown of yet other some in We seen some quarter of RFP in first impact than volumes perhaps end

Steven Alexopoulos

good. my for questions. very right, All taking Thanks

John Ciulla

Thanks Steve.

Operator

question is line next from of with The KBW. Gilbert proceed question. Please Collyn with the your

Collyn Gilbert

Just how a the guys. that reserve guys sort put but in forward, looks to could quarter, [indiscernible]. it us - that of Obviously was question how morning Can XXX, a loan this you just reserve. it added build look you we bit growth trying you go? way at some it so what just a that you’re why XXX it the came good and on million help maybe little us context, dollar sitting you know, if like that thinking reserve going into are it’s the for understand about you at for Thanks, framing did where

Glenn MacInnes

said commercial so growth most side, the comments, and on it’s that’s so a than had quarter, what grows we’re the the depending at profile the lower risk the reserve. the was million, my I for the Yes, we so in will portfolio drive little the total quarter, reserves as of on in of so prepared $XXX up why portfolio, that that

Collyn Gilbert

Okay.

John Ciulla

ahead? Collyn--go Yes

Collyn Gilbert

ahead, John. go No,

John Ciulla

as across to and we think migration spoke I as across Jason tried was told GDP I more any we and say, $X.X think and loan then of losses with put tried did actual portfolio I give to, down, the billion to models on We that do was used. underlying come chose, and our potential house hard and our billion. portfolio except of very we a bottoms-up, what risk Looked securities on we and to unemployment portfolio say, level life really it’s review, just of economic at performance modification really prices day to $XX loan variables qualitative the going our the you, know over pencils using time, really rating the that up well. context he to--using we Q-factors, activity, our a Glenn

tried change move and this, are requirements portfolio, about I it’s the feel the current forward, a and meet apples-to-apples that risk will obviously view down the our what on think conservative it portfolio good based and We in our banks in and at the part with behavioral the at about also of earlier. change, look to forecast, a economic based we an on really pencils you is hard to of take all comparison. as what some the doing, good actual the economy, forward so other and of elements CECL, their approach some happens the we do we when of will put looking potential think really [indiscernible] them models

good really through. we walk I as I What can portfolio you about tell feel is our

issue indication to Our CECL like literally we’re get ahead have. we is now, see. all appropriate an We not we feel some the right number information of that don’t that’s trying the given

Collyn Gilbert

you answer, that, have but so you the hard but slides you and long a two, quarter sort they the guys of afloat and this the next question you duration fantastic, sense of can COVID that’s majority if of Okay, just they the modify? the anecdotally, they’re heads offered just to thinking duration customers, or this were Then much how operating or withstand about goes--I’m and carry and Is get how this--of stay where this guys can through detail, Do the is question this. what stay something their to trying are, obviously experience. helpful. [indiscernible]--you a thank is of know, for sense the of

John Ciulla

draws, tough well. we sense the interesting. showed and question, but is, XX, mean, then you very as made of let had sense--I X/XX then the modifications think and at--I it Jason comment important Obviously you a I’ll We activity was what also--on documents, we made point. the as that’s slowed, told April line which and Jason we a a comment Yes, is here that if verbally the look

number modification defensive That’s and slowed time. of actually over a number positive of sign. the draws So the requests line

even three for his that or banks I’m period We’re hit terms it opportunity working the The to PPP they kind those a so is time that borrowers, we for to their and six-month opportunity there programs, Regulators being the borrowers opening get capital market, that banks. that t banks deferrals yet, to and position, greater our I if think another some of being into do a payment modification modifications and there’s given program give lot the and which the out like through lot given start do that capital management parameters borrowers. liquidity if individuals and are have that it, checks with modify isn’t get giving just you from flexibility is actually - Lending lot I sense additional coming the what bridges, of program three view, make of able end a a can’t with Main we larger a the up over time, at within this. support can the months, families, bank’s in reasonable There’s think Street of America hasn’t again, of would re-funded, with coming of period. we is operating Webster, our have good all of general and by we a can of

of haven’t - of I’m anecdotal answer next an sponsors get be view. That’s don’t together a is companies, I’m providing giving borrowers right support. say, is me two says, is our banks the an can supportive, asking can just my anecdotal, you that done. we and lot their working months, seen this Everybody I out there a be financial government feeling supportive if in of anecdotal That’s question, that the you’re

Jason, add? you if else know I have don’t anything to

Jason Soto

unemployment stimulus, you’ve No, I in PPP. terms the hit of all benefits, right the think points

perhaps is been support. we’ve break modifications could could once effect, some into seeing some and is requests by do business, we’re evidence the generally has down, side evidence to months three if extend of six about PPP type of What third have on two-thirds to went of six further consumer seen I the I modification As actually I doing the the and that would the virus so withdraw borrowers line impact think you small we’ve ability that of business, that of further. a banking, up obviously months, been three business to our been up been some goes months. On to three so it’s all has about months, on so we almost if say

that it’s to more and side, been two-thirds balances, to payment of covenants is the three and commercial related, base. borrowing On up months, six

the between now to it been I of impact. timing that withstand kind lot right like programs a borrowers plus benefit the six those of can at of that feels look our three this months we’ve granting, of the and modifications programs, stimulus

Collyn Gilbert

leave that the will I’ll it great. sure ask thanks everyone that’s so I’m have, else I Okay, there. guys. questions

John Ciulla

Thanks Collyn, stay safe.

Operator

Thank your from Chiaverini questions. is with line Wedbush of next question Securities. Please you. with proceed David the The

David Chiaverini

loans. Hi. I wanted leverage the about to ask

crisis, about sponsors a was in their the to financial you been mentioned how You how the much look how sense actually up then? step companies. their new support If contributed of by capital back companies, to faced have support sponsors much--do to support and we willing to they have challenges back

John Ciulla

I performance you, they’re talked credit don’t can have terms in than a a you ago, is you company, call in about can in I better was sort capital in that paradigm doing one, that many significant disservice and not a I what of our crisis. that at there lending equity not again lending if if of in XX, and the experience, it, is I that over tell valuable, be a best a but just think the platform if business sponsor one just and that keys equity a structure, going of remember if the from is some shift It the our of completely number, they I you, of and and migration XX% rating I tell that of anecdotally It guessed would risk this if actual is to loss. turn year our company secured cash temporary their capital sponsor had performers actually has we’re unless David, XX% portfolios. specialty but was makes what structure

through. to are that’s So promises, and sponsors during tend back that the can’t make relief think again, evidence duration, what saw those make good we crisis. I financial support, buying providing have liquidity, and comes it companies financial to we’ve businesses but we’re the sponsors additional seen and during providing capital with that’s Again anecdotal, any if who covenant good depth we the banks and and backing crisis, it

Jason Soto

for would a has all in support as the jump can out in investments the versus up, say equity that the dry on. you in I little you capital debt the to as of that with know, percentage I bit never disproportionate gone higher, these structures, of and know, so--and that’s so powder existing mind, there fact that’s don’t increase you that amount equity you had couple gone a level if been of private John, multiples the sitting that, well. have LBOs funds

to going a business have of short-term good that models, be there’s impact. that borrowers sort deep to lot are experiencing of think support incentive I

We little were us willing requests modification been with provide get access that have bit that. to gotten, a we’ve liquidity that a with seeing in some of already actually sponsors things like where put make-well of and the more some to equity, to

David Chiaverini

bit for follow-ups. return little of for or leveraged on of getting form consent from to it the in Are sponsors modifications contribution to one anything additional fees these loan touched you my just those You modifications? the either equity provide providing a in borrowers,

Jason Soto

are we additional equity. getting Yes, some

We access are right, getting let revolver guarantee. a more the in you a us dollars million couple give some cases for and that make-well, we’ll

helpful are a a obviously We’re in opportunity coming LIBOR floors different on that in, to taking substantial is way. the which portion in add

don’t We’re not--I we our help we’re this - can. position but on think big so through get fees, our where borrowers at improve our right also time, this is much focusing goal point to

John Ciulla

them, time, we’re close folks to is work the parties remind so and not Jason, outcome. purposes. relationships to answer, best Good That’s are that really right. I’d over the strong these work yes, these cross get answer you both and at with we to

David Chiaverini

for Then thing, Thanks acquisition, a process? competitive or a for has shifting Farm of to it in this curiosity, kind State recent out and bidding while, up been a sale? Was did the of put this that. was State for gears this the when HSA Farm works

Glenn MacInnes

been them. months It was a couple we’ve talking that to

capabilities competitive, more partnership it auction like or standpoint, them, As forward acquisition and price. to less struck them ability from our wasn’t looking landed working anything good forward. as which think that. on on We’ve far a an with we’re an going It I our very with

David Chiaverini

HSA additional acquisitions? And for your appetite

Glenn MacInnes

Sure.

John Ciulla

Yes, remains strong.

David Chiaverini

much. very Thanks

Operator

Fargo. questions. line proceed is next The Please from with the question Jared with of your Shaw Wells

Timur Braziler

This filling Hi, for good in morning. is Timur Jared. Braziler

coming SBA we’ve and lending, First, a of expect that was Webster it was we level of production, of the programs than what level we something or at the at peers. PPP out seen look of Was this a of onboard, some future limited Webster? level your participation this little what bit looking as from structural should smaller choice at

John Ciulla

or approved, business We points approximately borrower Webster question. got the numbers through, fully That’s let’s drive small sides few as and we of wanted we’ve Certainly both got we over of every plus a good to those XX% higher a We percentage few funding, that approvals. customer that. significantly on say, next could. help internal to applications XX% minus expect days

trying issues that automated XXX say organization a up to bit. some, the of and worked when Obviously were we’re the in to right to technical little make right that come etrans open say efficient. no, our again, go average, off up, close We’ve national the make we process we would we’re efforts, that kind through bit that almost answer in you’re points funds people gap we--at to at system. butt trailed that more a I although little point the yeoman’s is out on out it. we work sure going with repositioned I’d there to

Timur Braziler

the and then fee Okay, you average weighted book? PPP for that can did disclose was the loans you what

Glenn MacInnes

LF helps us. points, and between XX in I so the X%, think we’re we’re basically probably and that X range it at basis Timur, funding at PPP

Timur Braziler

current disclose not from reserving if sure and or Okay, I’m not, and club restaurant but lending this then can the for me, just the for last one you loans the portfolio?

John Ciulla

it I’ll and a No, does not again modeling. less a portfolio determination that on disclose our not to It’s although X% going that we’re disproportionately reserving loss impact anything based just make than the by of segment, to else. qualitative drive disproportionate have didn’t

Timur Braziler

you. helpful. Okay, that’s Thank

John Ciulla

Timur, Okay safe. be

Operator

of is with Our Hunsicker Laurie next from question Please line Point. questions. Compass with your the proceed

Laurie Hunsicker

Yes morning. hi, good

on the If you your billion total XX, know Just CRE, at you $XXX real wondered it Slide is start detail being you go the which we if total, XX% the that just how to back here, of detail way at that. is we mean, this slide, the the could so by obviously that estate around can I puts much $X.X of million. approximately? retail that looking if by really appreciate have gave great, us

know had--you know, how didn’t if you is actually estate. Just real much

John Ciulla

give Jason, ask probably top of does Jason not I then otherwise relatively and that the actually--I’ll first, you head, a have off rough but can estimate. the

Jason Soto

of that. collateralized properties and the hotels components XX%, was talked number, going it we the mentioned and as some to retail are include the characteristics talked about that the there multi-family and is think Yes, It’s office also of that motels, is be about not we retail, main does some of I CRE in in before. I so retail,

in real So There estate. call so, that the guess. the million small but my billion or call a is our the little sum little $XXX scattered may XXX. in be less that’s another bit the total hotels of restaurants, business, probably than a A

John Ciulla

and on construction related? And

Jason Soto

mostly That’s finance, A equipment that’d portion-- so good be trucking.

John Ciulla

[indiscernible]. Right

Jason Soto

trucking Right, of it. exposure. million type It’s $XXX probably million, $XXX

Laurie Hunsicker

Thanks. is and that? Okay, leisure in that’s travel Then helpful. your what primarily category,

Jason Soto

providers share one and rock most in types We less for climbing, they probably that of of--golf fitness travel in two travel lion’s have conference arcades, there. part, that’s leisure variety the types events, travel. of put shows, a support that those Yes, so It’s everything so on or do YMCAs. clubs, from that a goes borrowers conferences, little support that’s the or activities to facilities companies different

Laurie Hunsicker

up actually the thanks. helpful, or much half Slide XX? billion of of on leveraged a so Then that and how shows your Very roughly lending, of

Jason Soto

On Slide XX?

Laurie Hunsicker

I Of your a how lending? different asked how is much the guess way, billion, $X.X of leveraged billion $X.X much--maybe

Jason Soto

million. $XXX

Laurie Hunsicker

Okay, that’s great.

or details modifications, your the modified around of you and is total us so I all that how the of S&F, gave appreciate $X.X already? Okay, thanks. much Then also, book, billion of

Jason Soto

is leverage, excluding about S&F, XX%.

Laurie Hunsicker

Seventeen percent - okay.

Jason Soto

But than lower is leverage that.

Laurie Hunsicker

have multi-family that’s Okay, billion you $X of the real is on estate, Then of can And I that, you that? and your much commercial what’s the great. that just follow LTV question, last if call. how don’t off up with

Jason Soto

go Yes, ahead, chart, John. Sorry, right? you can see that on the

John Ciulla

ahead, Jason. go No,

Laurie Hunsicker

Did I I’m miss that? sorry.

Jason Soto

that and XX%. the is you which on in that chart, business, LTV apartments the roughly see CRE majority billion, is can the if the of focus you on XX% the Yes, it’s of line on $X.X the exposure, of

Laurie Hunsicker

Okay, great. Thank you.

John Ciulla

got Laurie. it, You

Operator

line proceed your the Please Our Haire with with of from Casey next is question questions. Jefferies.

Casey Haire

earning good guys. the Thanks, follow-up on, average morning A Glenn, growth. asset

second in here. X% think, I expecting, You’re the quarter

Glenn MacInnes

Right.

Casey Haire

is to to mean, going that be entirely is is XXX growth, question Just is, to to with you’re going roughly My it this be - more you booked X% core quarter growth that when there this move, half date PPP, the that going re-funds. the is composition any like along be I X% or program of doing the sounds it? and loan

Glenn MacInnes

No.

pull our of period lot growth we’ll get the came that a to second think I end, quarter. commercial so at into in

at I’d On PPP it, million. of average, so it, probably $XXX looked on side, if the about it’s you probably it’s say half about

John Ciulla

core that if pipeline, going transaction. slightly a tries in big infrastructure last the a also in seasonal Casey, than our what’s Yes get Generally we pipeline lower made to the I deal on anyway, to question it’s comment it’s April technology than clearly lower underlying, at but look on a is I this it’s year. closed been. low

your do more careful. as lending cutting so sure the probably and bit little I uncertainty, we’re you you a have make more I’ve other going more you work. you’re use your As shouldn’t and Obviously leverage a make underlying be lender said, that have that into to and the Obviously that fundamentals sure way, word, but pricing structure a work. bit need little to leverage, to

see-- you’d say would I Glenn’s right,

Glenn MacInnes

It’s probably about half.

John Ciulla

some of and general and to from end about the quarter. we’ll lower had exactly, quarter, economic of a end program, level lot level got and that we the Yes, pay-downs, earning which but Then lending number a the uncertainty probably of we through at pay-downs, organic just We’ve decent I then always lower I’m will asked next of up. Main the I we’ll help will PPP, fundings thing Street see a year--the potentially growth. lower of anticipate, carry think last is do level do activity, say keep with asset the

Casey Haire

spot that, and piece for just the confirm BPs quarter. If if yields that, you NIM down asset, I know, Glenn? about Okay, where Can XX implying you’re you like and rates are in second it at X/XX, and deposit if earning costs together great. could--you the loan NII have a you then looks

Glenn MacInnes

I is going your about--and we’re basis will the on the XX. if at and about you second XX is NIM LIBOR XX and around one-month the rates a to probably this think range, outlook assuming points, looked three-month and at XX-year full trade our think is I quarter, probably into back [indiscernible] closer LIBOR come basis XX, that but the that quarter XX about points, you’ve is average, in, obviously think seen up in around we

basically and So offset income over it’s interest you you have flat if think at rate the by net look is go down, the so our to is pressure continues volumes, quarter quarter. continued loan but rate market net income, result interest I our flat, net

the think I your NIM is probably range. in estimate

Casey Haire

Okay, great.

PPP? risk regardless Just you floor not below that the TC carries weight, today, would I hurt to it not capital is last a go, would one, of management want zero what the on with to see X.X you does front, understand there PPP dip guys want you that ratio. but where did At

Glenn MacInnes

we’d be any very room of we mean, issue there. No, go have below it plenty it. X would think have would with low--I I It before

Casey Haire

it, you. Got thank

John Ciulla

you Thank Casey.

Operator

with Please with question next Matthew of questions. the line Stephens. Breese Our your proceed from is

Matthew Breese

Good morning.

John Ciulla

out Hey, weeks. of Matt, and good in a put good the pieces bunch last few credit morning you’ve whole

Matthew Breese

appreciate I that, thank you.

is point of of fees? there? Just to treating clarification. PPP, NII, through or on you average your loan Are going roll those one and the then the are life what How non-interest income,

Glenn MacInnes

XX about interest pop net any income. and roll loan, obviously months We’re and would right, of To NII. extent life assuming on forward, the the average NIM, that through it yes, pull there’s will

Matthew Breese

types Okay. looking the of away if Can right of granular I some finance at portfolio, know, from, love you and would equipment this how stay like of C&I have you it, much is through of more common you Then versus the some just if of active or aspects you just the is mentioned you equipment, that hear book. to underwrite us of walk now. XX that the that equipment to idle

John Ciulla

fleets buses, amount tell be that and - question, like it’s it’s that’s great and to now. and obviously things of can much disclosure tractor the a yellow of over other dollars, you used school we’ve Yes, things. beds billion a smaller lowered generally the portfolio because I metals

you I right now. into more don’t I anything to granular probably know, insight the Jason, add there? active Jason, have the stats don’t have of and types. you dormant a collateral we have think

Jason Soto

primarily more on are Yes, yellow But trucking, reduced you mostly charter details but and yes, working as have modifications construction, it’s that’s on iron and you at there’s seeing I bit we’ve know, auto be--you companies categories. primary hit certain what’s - just what’s that know, the - it’s some point, don’t transport trucking cranes, well then the It a this fair there major the that serving. depends whether buses, that but of It’s idle are the as buses. out. a little side, just markets breakdown. we’re on there, which they’re interesting It’s flat what it’s definitely amount,

John Ciulla

ticket those actual may believe of commercial the or sure activity said of the I small hit XXX this, so of not miss Matt, seeing there. borrowers, but in have think, we of I and that it’s about banking some said, I’m terms - what’s XXX happening modification, as finance, equipment kind I of Jason there are And units are

and amounts, So volume disclose for higher modification requests We’ll around. small but next in try more dollar equipment time finance.

Matthew Breese

little the on loans the nursing $XXX and portfolio. types of thing? bit hospitals C&I healthcare, just it’s $XXX Okay, is provide detail similar nursing, that type then roughly or of Can healthcare, healthcare skilled in another a a more in question you million CRE. homes, million whether on There there’s outpatient,

Jason Soto

You want me take to John? that,

John Ciulla

ahead, go Yes, Jason.

Jason Soto

whether skilled I’ll we’re living, senior probably what of million. category, what or got mostly lump It’s that living, I’d it’s $XXX memory assisted got, living facilities, care. we’ve about independent call nursing, into some the is sort same Then

and mentioned his high centers about think $XXX I double-A, of or another are borrowers, is data to triple-A borrowers, high really, real with pay contracts contracts. those John section before comments assets million, in with really XX take quality XX-year quality

properties owner-occupied midmarket more on it’s Then type side, the footprint. in

Matthew Breese

you. you questions. I my it, That’s okay. taking I appreciate had. all Got Thank

John Ciulla

Matt. Anytime,

Operator

Please with line proceed question. with The next Morgan of question is the from your Ken Zerbe Stanley.

Ken Zerbe

we that be V-shape assumptions or could get of down the going talk the Great, GDP unemployment goes that But probably actually so back if falls more recovery, as goes just you if--I difference about economic to recovery, given say, you magnitude go instead what’s reserve, as of through, thanks. move. I recovery, three very a XXXX we it’s GDP activity? the your if to much XX%, half depressed second a XX%, to type the a can guess quarters in magnitude very assume big initial not of maybe

John Ciulla

that much end we’ll What of being I’m into the some we not as qualitative quarter quantify overlay Ken. see as recovery assumptions the for up dire put this move more can I not probably I need so management sure might flow the say around underlying adjustment you that actually can we to if you, models. forward, the numbers, that is forth

the depth--? say--Glenn, most difference what would terms in I what’s in But of April--the recent terms of see we

Glenn MacInnes

the points go not GDP, back little another bit, XX For thinking recovery. but of probably just recovery then V-shape is basis a a stronger. in I’m lower it’s QX, not sure we’re much I’m sure--Ken, to

adjustments, from don’t knows over it granular and and ended think based to is precise that’s up monitoring recovery thinking John right our I now. mix and a then is second But of the we’re we’ve seeing very and will the making XXX toward what is it the anyone everything had scenarios of multiple closely, how XX the a next indicates, We’re really gradual year, answer a what--you our on. really behave portfolio, know, that and again losses, our we’re we days, something, model estimate that’s where half this looking on basis focused at multiple more model building as and of up. But customers and

John Ciulla

the so U time programs we L and of of all of see is. changes a wait Yes, the but until see--if and risk end all and whether those government V or go stimulus we’re that our into we what and our over of because but the a of kind because of rating a completely impact it’s or out strong in understand and modifications, an we’re to how to depending see to CECL, the and may to shape, trying kind to, we see our going Ken, of the see modeling impact I where get migration, said, period, stimulus, Glenn on to you’re to really and to it’s that going exactly may see fiscal to wait have variables we longer really out, where plays have have we recovery quarter figure

Ken Zerbe

the--say guess of what to just just Yes, impact saw that build trying the reserve matters was Got it’s if the decline, could it. to I I L-shape but this quarter. more less size GDP I’m an whether on recovery that have trying figure multiples to reserve. out you your

John Ciulla

V the be models the multiples one that I may think in more I that away look in we at multiples shock some than duration the of more more different our think a you or terms think not out, L, of depth I it’s of think particular you all respects. multiples, right? we some may quarter. if be in it’s depth towards the that think recovery, in going the or or impactful the if another I but ran, think--I issue, don’t if do an going end up a any U, from nature

Ken Zerbe

Thank you. great. Okay,

John Ciulla

Thank you.

Operator

Please The Horn the of line questions. with with question Bernard next Polaris from is Capital. proceed your

Bernard Horn

Hi, morning. good

couple the credit. and questions, detail explanations a Just and the to with respect great on way, the slides by all

Just might on funding, PPP, was the of program existing business? a to and you--what it are dealing incurring then I are additional that activities providing with and from XX XXX, points kind understand point like relationship did develop and that on XXX customers, additional basis fees are XX margin you either you those in mean, basis XXX other did you looks with on into or the earning, right, rate that those--I you

Glenn MacInnes

Bernie, morning. it’s Glenn, good

I X%, coupon we’ll The range is the little X%. PPLF, gets think your uniquely that be was. the you which X.X a we’re the set and fees up range for points higher with in then about probably--we about probably so have a than what funding and to between probably--maybe is this, XX basis

John Ciulla

the sliding program on then has depending about Right, size. interest and has the fees so rate, a it X%

we’re what have depending so been higher and increases doing, life I look think XX% what put levels $XXX,XXX. average our it your NIM, below all fees, kind at about together on of Those you of applications of the carry If that you is.

Glenn MacInnes

be I could spread X.XX. X.XX your mean, to

John Ciulla

work haven’t on And non-customers, with your we have--we and denied. we both, customers versus question

Our customers. an the I and the yeoman’s remotely from as were applications unbelievable But money and both primarily--roughly you help help, people primary as XX% customers a we our to people and from did tell, in customers, job, received would of effort as many technology. focus accepted when from is we areas we other out, liked bringing from of leveraging working gave, the have we’ve ran helped haven’t applications stats albeit Bernie, to we unfortunately

Bernard Horn

more Would get that business mean, to I wondering with any into allows customer. provide just you them? if with do you it deeper the I’m opportunity to

John Ciulla

be right you’re the not to It’s I’m customers other care what over there frequent and you presumably it’s certainly a basis of this now. to CEOs try that’s non-customers, actually sure primary and have going should. making bank be our solution, our program Yes, if on talking concern But benefit an to of honest you. it does with I’m added Philosophically, with that part time. going take and about your and

be obviously customers to itself talk able as works through. program we’ll think to impact or non-customers I about the

Bernard Horn

Very helpful, thanks.

or with did market increase as the to on portfolio, of drops On X appreciation interest the portfolios? Slide in you was rates, major a the add securities result

Glenn MacInnes

referencing Slide X? you’re Bernie,

Bernard Horn

sorry. Thirty-six,

Glenn MacInnes

Thirty-six? Okay, add We yes. did the to portfolio.

in that our see can You period end. balance sheet

up we’re think quarter. I quarter million over $XXX

Bernard Horn

active I purchases, Okay, and so guess the--

Glenn MacInnes

sorry? I’m

Bernard Horn

because So you securities, actively rates it wasn’t increase dropped? purchased just the from additional

Glenn MacInnes

did. we Yes,

Bernard Horn

Okay, guess so the-- I

Glenn MacInnes

to in sensitivity-- or a they know, mean, to were duration, help part Go improve our asset I part ahead? in lengthen--you at six-year

John Ciulla

Early in the quarter.

Glenn MacInnes

Yes.

Bernard Horn

Yes, so whether can I are part has given answers that you’d loss outlook you you portfolio? how comment that hold that a my that rates so from guess on where interest loss change the question, a that swung might portfolio total partially they of low is securities next on from a are to--I which now, mean, gain, right to given your

John Ciulla

think I to early too Bernie-- it’s say,

Glenn MacInnes

Yes.

John Ciulla

the of terms way-- --in

Glenn MacInnes

could liquidity, we at of we’re arrive right risk-weighted doesn’t the interest risk so we like are our positioned lower those use standpoint. we capital rate portion lot it where it for now. where three from be. AFS to so these Obviously obviously securities, and like it asset we triangulate think up we think use manage We we either, and sensitivity, of sort so We a take I an

Bernard Horn

Okay. Last and question can you’re roll is the on forward CD you re-pricing what there? comment seeing

Glenn MacInnes

think--you longer promotional and come and moving pulled I lot in of money think programs you’re our up I think other their of funds, seeing over that response, Part on pausing is you’ve back into I customers know, not is locking CD so most markets, in of we’ve seen down. balances term. a a what

shortened, As a portfolio result, sensitivity. our asset CD again helps which our has

Bernard Horn

be comment on over or the next those three CDs amount any And two the of will re-pricing that quarters?

Glenn MacInnes

can that come I front don’t Bernie. me. on Yes, I have in you to of back that,

Bernard Horn

thanks of very much. do, Will my That takes questions. care

John Ciulla

Bernie. Thanks

Operator

Our next question comes from Wallace the line of with Raymond James. William

William Wallace

Morning guys.

John Ciulla

Hey, good morning.

William Wallace

if bit you give has ratings On and modifications migration that pass of you you little about how loans, talk wondering these within Slide modify just a number could didn’t already, I’m XX, changed as the the X/XX? if it risk category since the

John Ciulla

yet, rating looking your really you’re and to where necessarily and numbers, migration at draw you. pandemic. on me regulatory because guidance and based customers those a to it Yes, hasn’t warrant did update, been--let perspective you’re do I There revolver give are downgrade this modifications Jason Jason. the statement risk pages, general I’ll and will let that. There repeat much on are, reported modification then a through that We purely Jason don’t and hasn’t William, things right, specific for one and the process, COVID-related been that make going can temporary from

the you able all probably the indication calls second ratings I seen earnings, of and better think to a with on going when migration. for to of get quarter see haven’t all the be of banks much, actual We you’re

draw update XX? modification XX want do Page you Jason, revolver and those of stats to for as stats April

Jason Soto

XXX. to and to from only - up XXX up XXX sure Yes, from revolver XXX, draws modestly

rating the think sort impact we get we’ve risk risk an of reflect activity pandemic more through, the wait how expect. last, see, we’ve taking of so and to made the as we’re and that yes, reserve went terms as seen to migration sure, appropriate to the as captured Glenn but will modification we’ve that we potential long In I migration, and speak, rating a information

William Wallace

you’ll know these or [indiscernible]? it to cash impossible months start know it’s start you six flow so might like, point impossible Okay, it worry months exactly is I when to too is but at what what three even or to recoveries for it adjust, look about is the loans to

John Ciulla

don’t I No, thumb. rule of there’s a think

You saw in downgrades, we have quarter. higher the classifieds

that single or goes special ongoing or you every financial watch, metrics you’re you we’re further so every loan downgrade the approach once mention disciplined and single if a downgrade at just watching into We’re being trigger grade think substandard. new risk to portfolio, potentially to for it in the category,

we’ll and of we’re depending that. on that, and you saying that where are, do we just meaningful may So the given risk depth doing not I’m still a we yet see, downturn. duration migration rated the have seen

William Wallace

Okay, much. thank Appreciate very you it.

John Ciulla

you it. Thank William, appreciate

Operator

Mark proceed of with questions. line the from is question Piper with next Please your Fitzgibbon Our Sandler.

Mark Fitzgibbon

guys, morning, thank good on and all Hey for that you credit. detail

Just two quick questions.

on sense go margin, do margin. could commercial so First, will ultimately your you think into those comments your the I what portfolio I us the Glenn, and for you loan if outlook can a then missed just, you the of secondly, apologize, percentage give for clarify forbearance,

John Ciulla

wants we’ve to Mark, appreciate No gone the comment. Jason and time on and have there. I’ll in to crack if great this you call, hanging maybe so it’s call, another you see put a Okay. take a long then actually on

qualifies funded, so after whether receive the to trend, another authorize and if if interesting if so and gave duration, and in portfolio, through eligible look hard seen to of those we a and a there to April modifications. get verbally it’s statistics we’ve that. modifications the again fact--even We you us are they you up, revolver number and depth billion, don’t modifications, who be we loan, at this, could maybe going slightly So who’s the $XXX if very talked that What’s for predict, the uptick slower about an more ask if PPP know program, XX, at that looking everybody doesn’t the do come probably whole come people is, at that maybe look draws, not right? on they for

to it amount pace is amount of requests to we’re now, modifications. we’re have the But what with so doesn’t slowed draws see going fascinating sort of at seeing, modification like down trending, defensive portfolio the the and additional and that of in what’s of least look a in flurry respect

I particular upon by think borrower. independent by independent--under be it dependent will challenges circumstances

you if want accurate. know that’s don’t think I if me Correct to. Jason, you

Jason Soto

talked million Yes, we’ve net were revolver all I’d half seen say of that the down, seen that of first from--you we weeks, $XXX that’s so about and month XXX in know, draws in over the all an particular. sign. of the March, modification or through week almost a the actually been less is so back of business, we’ve bit the last the across has lines couple paid Again, encouraging last reductions

we may hard up, and of peg bottoms-up we weekly have do when discussion I tell exactly, on we’ve but a where modification but than so so for slow we is now, think numbers we information, seen this think that good going initial further think through, we exactly might we those might we to we some back approach down go have and wave we’re requests It’s very to the far. another update we updating it It what may more what we for we’re that as what you have feel and once to see can granted see more see. do end come

John Ciulla

granted or as books requested don’t of modifications business, our week. XX In XXX the had beginning, of commercial a $X been last commercial XX% XX% representing right, I modified, residential April at or had the billion About the borrowers billion portfolio, know X.X% million that’s granted and did Mark, funded book the I loan business combined, were been XXX or small book. of but prime of $X.X if and XX, and mortgage And borrowers reflecting April $X.X requested banking $XXX about had - in or million billion XX% on you $XXX modifications. about give--as business been call in banking, that’s

Mark Fitzgibbon

Thanks, margin Glenn? and on the then for the question

Glenn MacInnes

Sure. good Mark, morning.

far following forecast average assuming our as quarter. We’re the for the as second rate

around Fed on rate at basis basis a funds XX-year with rate average XX somewhere three-year We’re a around of LIBOR thinking XX points, one-month XX. basis points, a around points, LIBOR swap course of XX and probably

So that income flat somewhere that X.XX, X.XX, I say will it’s assumption, can be interest sort that quarter there. at again say over you net would of our assume quarter, around making

There to to be point. about be so it’s this and mix, XX we’ll XX it will points this think but basis early could depending at to pressure, that’s we where be on the tell continue margin hard

Mark Fitzgibbon

Thank you.

John Ciulla

safe Yes Mark, stay and well, please.

Operator

our Thank and you. time, this end answer session. At we’ve question of reached the

Now floor back management the I’ll for hand closing to remarks.

John Ciulla

you. credit morning and Well, our through opportunity well. giving much much so time as very spending appreciate an us this you with Thank we us to walk portfolio

keeping you our I and on helping communities employees here and on being focused We’re Thank of of phone. best all there out the part customers the you. solution the to our and wish and our safe,

Operator

you. will Thank This today’s conclude conference.

You lines at may for you participation. your disconnect this and your thank time,

Webster Financial (WBS) 21 Apr 202020 Q1 Earnings call transcript