WBS - Earnings call transcript Q3 2021 | Webster Financial Corporation

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Operator

Good morning, and welcome to Webster Financial Corporation Third Quarter 2021 Earnings Call. Please note this event is being recorded. I would now like to introduce Webster's Director of Investor Relations, Kristen Manginelli to introduce the call. Ms. Manginelli, please go ahead.

Kristen Manginelli

Sherry. you, Thank welcome. and Good morning, Earlier this Western release announce a we Corporation’s third issued Financial press quarter to morning, XXXX earnings.

today, third presentation On regarding Relations website. on call we some Investor provide the brief the the company's company's have quarter slides Today's earnings. been posted will comments

Harbor to Before our Litigation and meaning the of want Private Securities remarks, release Safe to the more XXXX, you and which that the within today's we risks rule. made forward-looking by Ciulla. now subject statements forward-looking Act begin Reform are of comments management Harbor Safe I John remind disclaimer uncertainties CEO, I'll Please review and the may include introduce language the in and Webster's may and information press affect us. for Chairman presentation about

John Ciulla

a Good performance update and for provide our and here Glenn I supply earnings Sterling, seen clients, you inflation will loan presentation, and activity and Webster's for the we've improving questions. Thanks, from With increased progress respect schedule have operational been order business to and process end merger strengthening we we with execution with strong target. and the efficiencies and the are Credit remarks. transformational working our internal and rates his will chain and demand also teams for respect quality status for remarkably achieve the planning thank enhancements activity, quarter. strategic see MacInnes our at to Sterling, with joining should our prepare remained of challenges, more economic higher labor an for we will on continue in Related and with on benefit to for call. merger to all whole. And fourth the savings coupled our activities. Glenn COVID, Kristen. as revenue quarter on third the Webster. cost closing collaboratively interest services. for morning Glenn integration to of the significant confidence in which review take Webster XXXX industry across and continued impact make consumer detail our products of organization, Despite the industry our our CFO, I design, higher remain to has expectations anticipated your project, our and provide and for in banking diligently in and Waterbury, quarter I'll and

we on position in after application. In transaction banks. to August, from We shareholders our primary the of received regulator, our the are received shortly regulatory both we final close and approval approvals a the OCC

final larger With While complimentary, remain the there teams we on the book. will loan we’re with and no And can banking at customer combined overlap. balance that or diversified requests, both forthcoming. I communities colleagues, the is and the of opportunities announcement. during for information at diligence clients, due through we outstanding regulators during will certainty will organizations and quarter. that deal the two no and about that very shareholders to fourth with are from an the commercial footprint more we that virtually strong team benefit say receive and approvals, provide our the fact for no excited banks a Based a our more branch confident the respect on are than sheet combination were The strategic we timing them communications is our rationale have planning hopefully approval the merger, the integration

five do and focused business. a unique is XXXX Financial Webster and midsize that bank creating a nationally and easy with and customer in creating commercially were customer recognized excelled customer both Interestingly, satisfaction, differentiated diverse leaders banks as among week, last businesses Greenwich, are services growing profile. an CX Sterling to We Leaders. have environment Coalition by loyalty, Greenwich for that the funding

bank for market on Slide begin financial experience I'll remain banking. X, report recognized our the Specifically, commercial, was strong. middle in customer each financial metrics

We customers deepening all and across our relationships new organically and execute banking business lines continue adding existing activities, on to geographies. fundamental

quarter Despite balances linked grew loan by by net PPP, to increase us growth NIM Excluding enabled loan the interest compression, annualized. XX% income when compared X%, to quarter. strong last

were Our in earnings QX share adjusted per $X.XX.

$XXX while includes Tangible to related pre-tax our adjusted common $X.X X.X% initiatives. Third equity charges was and quarter than performance grew year strategic decreased X.X%. in X%, QX ago. a expenses higher merger a Total year million is and ago, net million the higher by revenue of than

efficiency a ago. more basis points decrease improved from Our of to year XXX than ratio XX%, a

adjusted nearly XX%. quarter on was common was and common XX%, third return return equity tangible on adjusted Our the

Our provision resulted with a strong quarter. loan be metrics driven in Credit $X reserve solid in continuing growth of build $X million lows. remained by key cycle quality to was million the and asset near quality

now by excluding loans purchase As increase net verticals. estate, million than charge-offs grew on year growth by loans loan less ago. Recession. X.X% lower in Consumer $XXX up XX.X%, reflected our primarily XX% all points a $X.X on the NPLs real deposits grew and Overall ago. banking in and or in ago. million, as a costs of Great year-over-year Retail or all the year. to lowest and from a to of banking from from prior percentage X% commercial continue of million the with And total are were business, to Slide ago, than quarter, XX% municipalities percentage deposits totaled very year and since year solidly $XXX I'm $XXX declined than all Retail of residential grew ago. and business represent of linked X, deposits XX% lines small loans quarter. loan now driven across X, ago, well, quarter. second decline year all up stronger XX.X% total Commercial PPP, from linked liquidity compared the deposit from across compared X to clients declined loan CDs continued sponsoring and NPLs, or mortgage deposits a more X.X% XX% deposits a market and commercial and business This X%. total fundings strong refinance at during of Slide activities geographies. commercial total deposits for up led The a better Core were the basis basis from Loan million a quarter were X.X% a driven flat banking to drove to costs excess grew activity I’m quarter. mortgage decline X.X% grew middle from and year loans consumer billion among in XX% is consumer ago, classified and X $XXX before and specialty, is quarter Deposit year ago, a driven lines. business year-over-year, of year a and while commercial growing have respectively. of points million with $X.X $XXX growth its portfolio, originations, by originations, year from billion point banking quarter

Turning XX% integration basis, Total an transaction the X% of to provides excluding deposits Slide timeline. or grew year-over-year. and core on X% a year-over-year the overview HSA X footings TPA balances. grew Bank, total

at from track, As I collaboratively to to close on beyond. be tirelessly team discussed the activities for earlier, banks and with position and both working integration success continue merger us

and the combine We begin operations are successfully the approval. necessary we companies shortly two prepared after received to

merger I perspective. April, that success is our bringing element in recognized shared companies from together these cultural both a Jack As in of announcement Kopnisky in critical two and a

will reflects aligned clear integration established management banks As bring that, strength guiding that and that combined review. I'll cultural to together a working the and is from over expect in of financial values turn Glenn ensure behaviors and a what colleagues The new framework that such, for the we combination. executive terms both view our now performance. team and provides our the purpose we've on it to the to the of organization, culture With

Glenn MacInnes

good of sheet begin John, solid on our Average growth, by results quarter. credit loan everyone. performance I'll another securities and September XX. strategic XX% total increased assets Securities X. Thanks, of strong We $XX initiatives. execution million represented with and evidenced our at continued Slide merger favorable linked on average balance morning, reported quarter

billion duration million the of totaled weighted quarter. purchased securities, in around and prior with Purchases a $XXX we quarter X.X million, of yield five XXX paid in of a yield down Securities matured years. the During up X.XX% from had or a approximately called, X.XX%.

loans Fed forgiveness. quarter, increase commercial mortgages, in offset Our billion estate $X.X commercial average at billion, million driven by deposit. growth $XXX held or loan an and totaled increased an cash by balance partially quarter, and residential X.X% PPP primarily $X.X the Average driven of real increase by linked C&I, linked

QX, remaining fee the $XX we fees million. totaled loans PPP $XXX During totaled were quarter the of on $XXX differed In million, PPP accretion, the loans forgiveness million. million deferred and remaining and $XX PPP recognize

prior XX. grew loan Slide X.XX%, The GAAP to X XX tangible of grew to and year commercial higher sheet $X.X a were deposit XX, costs, adjustment or X.X%, loans to Excluding tangible balance driven year PPP, and result value and deposits prior equity Average common commercial decreased from a Tier by grew quarter loans compared mortgage excess increased quarter book by highlights The or in loans September linked basis basis from X% in borrowings down X $XXX average total products, September common grew ratio average retail or transaction continued points of as available to billion deposit ratio million ago. income was decline $XXX XX assets growth offset or X.X% reported at equity quarter. X.X% growth. and points Borrowings while partially result was a our year. Average at linked CDs. million represent XX.XX%. to liquidity. common. of $X to $XXX increase as billion linked was performance And X.X%. million, ratio flat a QX, X.X% increased XX% to The The residential X% X.X%,

was accretion. partially net increase an declined X.X% of Fed, growth to return resulting statement. a adjusted X, per X During average common a by $X.X common provided income was fee equity. linked income our the XX.X% due points primarily net fee offset $X lower securities. by reported merger to accretion, tangible a related yield XX.X% basis, an On to deposits PPP prior $X.XX basis, interest available our $XX million On an which on income increased the by and initiatives. PPP of quarter, adjusted common quarter, by to strategic from we NIM driven on in a equity million excess we after tax offset loan basis million and at higher quarter, on Slide held recognized and charges share, adjusted in return On or partially

PPP linked Excluding quarter. flat was fees, liquidity approximately NIM excess and third quarter

securities other compensation, into reflects we The on million liquidity reduction and as rate in Adjusted million. HSA $XXX adjustments well This technology HSA $XX million announced million. result fixed million related initiatives, in This by a by driven loans. $X.X was expenses. previously million TPA of fee year, prior $X.X adjustments and partially $X higher increase PPP on a quarter, fees, $XX million As sheet, in value balance of more to income due due customer on non-interest a efficiency in recorded closure expense. income service investments, fair higher in portfolio. $X fees in This result a increase from costs, by was decline million $X.X from compares income. grew investments, loans the fee derivative, QX, increase in and higher on long expense holding year. $X.X and and QX. net million million increased This fees deployed increased deposit in TPA offset funding million. income decline primarily in mortgage performance This in fair to which by $X.X revenue offset partially compared reflective Pre was banking growth, $X of ago. excess our declined the partially direct linked million million fee year net was $X.X prior $X.X investment was revenue. and related in yield to The an of income. revenue by was million million Non-interest non-interest income banking and declines million in of value revenue, lower $X Versus increase mortgage HSA to based resulting prior lower $XXX seasonal lower non-interest fees to prior $X.X by in expense provision $X loan Compared and year decline as interest quarter, in a a to $XXX account, exit million driven million $X.X compensation million prior in increased of cost occupancy on million fee year, $X.X accretion, of the interchange loan of was and direct income as offset lower

Our quarter or linked the per of quarter. CECL million $X.XX is quarter. income down was provision an The from expense of million. of an increase reflects prior adjusted XX.X%, $X.XX rate basis share, $X.X adjusted result in points share net The per an $XX net in tax XX

As credit you This and of see was we linked as balance Slide core evidenced in non-interest strong quarter million X, performance revenue compensation, growth a $X related sheet reported expense. result by primarily and on the quality. increase

million deliver $XXX on core initiatives in of are by Any to reflective compensation. in the slide our year, standalone of to expect variability performance remain end range be to on would QX. the and cost execution based We this our of The savings track expenses related initiatives. complete the of the strategic

made Over integration six in synergies a ability months our incremental on to of the on with and progress last remain basis. our cost XX% plans Sterling, we've meaningful combined deliver confident

review XX, total of quarter, ratio The and flat the losses our increase in results allowance PPP reported we an CECL. coverage I'll million. third Turning reserves $X million allowance. for the of the In expense million remained excluding with the $XXX loan quarter provision under $X loans at X.XX% allowance a Slide

substantial basis $X key related million million loans from QX each commercial credit Non-performing strong loan loans look metrics, we declined Slide quality our residential basis as XX highlights performance. consumer quality XX $XX down QX. and points, left from recorded upper quarter, consumer. $X in the basis quarter trends. declines. Year-to-date, for for quality right $XXX,XXX credit well charges lower ago. year in capital charge-offs ratios we XX reflecting increased million QX, XX have XXXX. percent million XXX upper Net capitalized $X and the in to a in at of $X.X in levels As million in growth, net Commercial loans classified loans. in asset in reserves macroeconomic on NPLs is from million our established trend due QX the total of our since levels. strong Slide net which including recoveries highlights the and to track and lowest charge-off, residential $X and the left exceed from points and commercial Commercial, level linked were for are commercial capital a mortgage represent by points we $XXX,XXX amount. to total net Regulatory recorded

income PPP equity on Net Tier expect be by levels than in $X exceeds value to by X fourth income. due loan Likewise, interest the more capitalized we Tier non-reoccurring capital quarter, range and lower $X XX.XX% customer quarter, primarily Non-interest direct ratio common PPP is to $X million decline of result exceeds respect of based risk billion. linked X X.X%. growth to well XX.XX% as income billion. average fair to capitalized quarter, net linked Our core decline well will With marks excluding $X.X the investment X% derivatives. million of the will around loans

I'll rate As turn remarks. to With indicated and to $XXX tax performance will variability the over be expenses level. John, our it based to in range that, core would for similar compensation, QX be earlier, related be will closing back million. of Any

John Ciulla

our third building execution Webster's value, differentiated profits maximizing Glenn. strong capital continued disciplined focus process Thanks our and through quarter economic allocation businesses. on franchise and long-term demonstrate results in

committed for the clients, will its Webster same to continues and successful colleagues. communities, and continue their a new preparing deliver the serving Webster clients, remain colleagues to shareholders time Our integration. at while for

all thank dedication other. Sherry, say our colleagues our take each and prepared want Lastly, customers for are to commitment our their to I a to big you to With of and questions. I Glenn values to to that and

Operator

with [Operator Instructions] Chris KBW. McGratty Please you. proceed. from Thank first is question Our

Chris McGratty

morning. good Hey,

John Ciulla

Chris. morning, Good

Chris McGratty

me the on in book. securities Let the you deployment start with quarter the on

What the more of redeploying a of peers seen lot thoughts a in the in into more terms cash aggressive into be merger You've are deploying little portfolio? your investment your cash.

Glenn MacInnes

Good to we had morning, have the average about $X.X at we balance Fed the deploy begun quarter, In and Sure. some of an of Chris. that. billion

we $X we're as So billion speak. below

I a we think and that on so, deployment securities billion. expect of combination would both $X would you of end And growth with quarter the quarter before loan probably average about

Chris McGratty

have a buyback and Okay. of Great. a lot you're the buyback? And then Once maybe capital. a just capital you potential talk closes, about question guys the generating magnitude the John, lot capital. can and of you deal a of on

John Ciulla

deploy out profits I I the can repurchase which about say we each $XXX mean, transaction, we sort combination to capital of target lot excess of XX.X always for the showed Sure. what generate maximize we like know capital what we'd lot also talked to year. pro -- stock put would of we have is cash capital a I say, there. for forma a And the announcement think first. excess of plug CETX then this million pro I company a when ratio. in we areas will Clearly, capital the We've generate where and and a forma economic is

be where loans, that's then acquiring portfolios buybacks. we first allocation I we businesses, deployment. if accelerate we'll have we'll capital our significant look our certainly, growth, capacity repurchase. into But can the at choice. for capital deploying appropriate stock So loan we in of And, But look think or and again, find dividends commercial areas at differentiated of

Chris McGratty

to change your prior you pro quarter, growth. think can night. that the loan digit double you last think view results I Sterling's said forma Any comments? do And company last Okay. supported on

John Ciulla

Could terms we'll a sticks double the balance going approaching as last have loan growth of guidance is to in that fewer quarters, back not to the And but funny, normal we outperform a we market think demand. loan with it's can payoffs to we couple digit which I achieve. higher I X% larger that? think is sheet, we've XX% the holds, We're achievable. still think in seen prudent absolutely Chris, still combined so company growth, have

Chris McGratty

Great, thank you.

John Ciulla

Thank you.

Operator

is next Stephens. Matthew from proceed. Breese Our with Please question

Matthew Breese

morning. Good

delta table comp. performance sounds quarter. fourth set expenses, that on the And happen we that obviously, it on driven could Just based by the again for the like was

for a is consider good outline this just you could based quarter? So us performance was what to fourth comp that range quarter? for And the

Glenn MacInnes

so -- the third up bit of on Yeah, based in quarter was performance. Matt, it's a think a Glenn, there true I our

So would third I at At somewhere it spiked $X.X and up million the anything, in be $X quarter. between most. it expect to fourth in the million quarter

Matthew Breese

Okay.

Glenn MacInnes

push Sorry, forward. pull I wouldn't it forward, or it

Matthew Breese

Okay. just on about the growth. of you long-term over you're how you then talk But optimistic very obviously, And feel to it and about next pipeline, do months? the strength maybe could health the loan six three

John Ciulla

I'm Matt, more getting Yeah, bullish.

fact back lines. labor seen of to the invest. before reticent uncertainty, pretty in haven't of is a fourth third sort a significant one following of to quarter we of still quarter lot the years, our I And we several obviously, chain second pipeline, you tick And has issues for liquidity. and Utilization, to a into saw you these maybe all strongest that across going excess good and last supply around up been last demand, there. are us. then, that's the business we normal issues, with our little talked the and their kind saw and But think obviously, companies good see loan a time needed some of deploy individuals people quarter

people up in pick start If, could fact, ABL little So conversion and the to a like tailwind. bit. see a cycle be we that businesses on to asset in start

we and And up. lot I'm again, in pent activity. of So seen utilizations up But I there's there. out a lot bullish, are of we haven't still seeing liquidity think getting line a more tick

the thinking next still third we're second into quarter I'm cranking be to of going So, kind year. we as get and

Matthew Breese

growth? sheet. going the just might us from Boston of slower just for on markets, just be to -- it's get there? growth kind us that new business digit there? all? last you lines? Could on question, business market York, Got get intend combined are it's big, to How these nothing near tough a basis the balance get bigger that to areas mean, sense it. In double niche to loan in maybe lines growth are considering you it much I just give a up banks Or and to walk through for some And follow on change adding the a national then Could you a it’s some for order basis. combined New you historically maybe loan the to bringing them or traditionally need at you of

John Ciulla

Sure.

BAU. of to I think really XX% our X% our current assumptions

specialized it doesn't to in -- So out local continue the likely all we're of national businesses and gate.

we've of a It lot we've geographies, lot of across gives like so, a it And gives lot We businesses, discussions, of franchises. us the gives all us done a done levers. us national it diligence. diversity some

plan now. have go business to right competitive short next I opportunities us, significant and our think, lines over that's in we business, the loan the position, at don't significant deeper will X% our our some of geographies profits that will as businesses. then the generate the in adjustments the obviously each as not risk of businesses so know businesses niche really get included -- look and smaller accelerate maybe growth answer think, to some do And maintain XX% in the or make I But we're dynamics, is, I And that know, year, that on that focused are your economic and to the at we we're in look can currently. we forward. us return all it's move we you combined think on where will in to executing short-term. trajectory. But for businesses how any we and there Jack, question can you lines think that bigger strategic But are the we And bank we of

Matthew Breese

it my questions. leave I'll for taking there. Great. Thanks

John Ciulla

you. Thank

Operator

Vandervliet with Brock UBS. Please from is question proceed. next Our

Brock Vandervliet

morning. Good you. Thank

John Ciulla

Brock. Hey,

Brock Vandervliet

aspects in just loan a of growth. couple on Hey, zeroing

thinking that some covered sponsor also, in And and those What you and terms two you think C&I. you talk are CRE, slowdown? specialty in especially the in timeframe, areas? maybe I about residential, strength could seasonal of QX the you noted

John Ciulla

our and in time. origination actually one had commercial quite funding Yeah, real biggest of some estate quarters its

dynamic there's originations we downs, But that estate kind fewer the we commercial activity net pay So of and about of and downs had in obviously there. and the again, pay always benefited quarter talk in growth. real the

we of see to of and couple kind our of mortgage been You'll moving. seasonality where have most the of had Brock, are but people the categories, activity most lot continue marketplace the fourth have quarter winter. growth commercial so given think loan in bit, and just the a interest come strong rates, where influx, helped. quarters in exposure, residential of in that's We our is given Connecticut's little that'll a the slow a residential just and of of do beneficiary which we dynamics

lower would So, funded residential say to our convert prior needle the fundings and continue that quarter. fourth growth pipelines much, we into to the loan moves be anticipate ultimately, so expect slightly can I quarter. which commercial are robust for in you never the originations loans significant our than the to really And,

Brock Vandervliet

to in expense you just could kind there? your kind But and goal remarks. prepared and from Okay. kind if here chord and for connect of the the on in this review operating us your we of saw QX, how we for And between you Glenn, QX get of touched

Glenn MacInnes

of And was performance drivers one bigger it. on I based of this the I kind compensation. did think Yeah, hit

around timing driver I other seasonal, I more efficiency was the said, That again, subject based comfortable But, that are just And like largest feel excludes any when feel things will it and and that, that mailing that of that things transit, all things that hit together, are that so amortization we based. still million that. number. performance like and like million. we'll marketing, to comp. drive its or And on pull it's variability whether sort $XXX $XXX like There campaigns

Brock Vandervliet

it. Got

Okay, thank you.

John Ciulla

Brock. Thanks,

Operator

Our with Please David next question proceed. is Chiaverini Wedbush. from

David Chiaverini

about see environment? key you Starting couple of with on yield a Hey, was you how I'm the talk touch but growth, third wanted quarter. driver pricing. spoke PPP X, you. Slide the the X.X% loan thanks. can to for And about the questions loan I the on to I increased in pricing pricing, loans, But that. assuming on A

John Ciulla

you. the Sure, hear biggest Yeah, fees XX loans David, wasn't really on prepaying. yield of pricing. it's deferred were good increase other from The acceleration. on of acceleration in It PPP drivers points to was on the basis and quarter-over-quarter kind on

So I'll give a good yields quarter, up held sense, the in origination standpoint, a quarter, you well in an sign. prior pretty is actually of from terms which our

So X.X% to range we're they the kind X%. to kind price. sponsor Xs business on X% approaching And on that in banking, specialty from good real deals, range a from estate, lot in X% seeing degradation of of not for and anywhere around mid commercial and quality yields high a middle market of somewhere

coupons originations a see which over the the on didn't and a competitive in the those last for several our depending we plus are us. much on mix quarters, was So, degradation market

Glenn MacInnes

versus look Dave, if I more, little I the you quarter a If yield basically say the mean, at so can just the flat. second third is quarter,

PPP, flat. for was think quarter, adjust second was like in yield you the on And XXX. the third I total It XXX. book it quarter the out If was the basically

David Chiaverini

Got Thanks period? pipeline it. that. enrollment as for And there the about the to shifting into HAS, we head you talk then open can

John Ciulla

year in in as a activity, employer good channels. growth we've Yeah, has particularly market, about, been to direct sure. the selling around our had and We've talked

less little quickly. healthcare bit have a Our grown partners

I'd The approach encouraging couple we a more customers. what most whole disruption, slow, that's process. last existing -- accounts of industry for enrollment to employers. and the now. employment everything is as year that customer a Our has waned of to and a fairly dynamics, that right lot XX% we talk in bit signed And up obviously about of this years with new kind your changing wildcard actually of think good, it pipeline period, of of the matter that enrollment last little slowed really going in year say we is kind with this hiring, obviously, amount acquisition looks the always And quarter our of that account We is XX% pandemic, period. through our new more the from less less been year. larger every of And with bit. kind come the

enrollment with would a that for to So selling existing better with we opening account what new onboarding period. the positive more pretty and good we're is, see customers, from and us hoping changing of customers, robust a say season market should retention the employment a normalized new I

you So don't we're sight. when we line it to enthusiastic fourth And in really about any see the of we right numbers, because now. start to start I'm quarter have And give reticent a enrollment. we'll obviously, talking

David Chiaverini

Great very Thanks to hear. much.

John Ciulla

you. Thank

Operator

next is with the Please Steven question from Duong Our Markets. Capital RBC proceed.

Steven Duong

good goes morning, the Hey, your just points say, subsequent first the beta. about on rate for XX, XX everyone basis in overall we spoke Can sensitivity with Slide points share well? analysis? XX just your and into deposit Glenn, What deposit curious guys. you Hey, beta the basis as

Glenn MacInnes

up I'll that on back see Yeah. end Thanks, question. the Good and OR. say rising basis lag. was as XX, it of X.X% matter between have we XX. Page a our it is a points indicates the refer short as PPP we're in lowered is, high XX to the XX we to But lower did environment, deposit where factor to you Steven. fact And beta, sensitivity and even as our That assuming rate XX,

be to we basis fact, be XX%. as standpoint, basis like that point, of full think we'd modeling what that not XX, closer XX, that And our then the to XX until XX at come now least first we lift the closer say basis and we XX%. back. to start points will point, say, the So probably is first the It's well. beta third points in say, beta second at a from And has the by we'd beta that XXX

So there be a says you is that And there mean, of is back lag see first to built the into there. That this to XX. moves. a in is wild for two school I a it's closer on card. thought Page it's zero what going

additive that like would to anything asset So be sensitivity. our

Steven Duong

just before. be that here we've amount doesn't given liquidity that. And to wrestle you everyone's want to that where in I the seem I is No, system, just something sense it after backed up? all get that's more kind it Yeah. down chasing little bit? we're And the Or to going Fed the do deposit. merger, John, guess, process slow the been regulators with then, appreciate something trying think a I on a of just the overall, of never the that is

John Ciulla

We I And to clear discussions all had We've have dialogue don't think sight timing. regulators. earlier, with and we it's really of line various the backed said up. good as

the deal announced look historic we a can what well still if April, say, of in on mergers, at in So, zone. you we're timelines kind we comfortable

So we don't behind that think sort could the scenes of transaction. there's this derail that anything

answered to application, I like the of questions. thing just only and the we've think want merits is, the our say transaction so, itself, And all we really it's We the timing. so

Steven Duong

I appreciate it. Thank you.

Operator

Our next Compass Hunsicker Please Laurie with from proceed. is Point. question

Laurie Hunsicker

think and about how just just morning. I'm wondering we the leverage dumps could S&S your comment that. in Good could if you on

that? terms are that So, quarter, loan grow of sense is in where growth it's $XXX your projection? almost going plans of million to to come linked your where the a Is

John Ciulla

framework we've one making leveraged why reasons think the whether that our does I the the we lending, grow terms a the as it. entire continue it's business demonstrated it concentration of within transaction enterprise be in But low at a book short in that loan we is because and activities of Laurie, sponsor a not, so room average level, you the time That's or the specialty. that over some kind has know, a regulatorily appropriate very this it has terrific that of originations, it's think give running and book. best and remain high us business approach profitable, also What's reliant think we're interesting will in relatively to more Yeah, from given management is framework that to risk disciplined really and life. sure

of So and times good a originations lot lot you a see payoffs. of

And we'll long-term. once accelerate growth to there we I see merger, the it So we be close outsized over think, will is think you again, to I half don't disproportionate can. of able what about concentration was, our the the there point growth

committee our overall respect We a us, concerned risk position now with right exposure. where the infrastructure, certainly is risk in our are not regulators,

Laurie Hunsicker

Okay.

follow So up. sorry, just to

when would about XX-XX? shat forward? percentage growth $X.X like you billion, do think $X.X same way, think the asked Is how to your be about to that So piece leverage going so billion, different you a stay your you the maybe going that around of Or, that?

John Ciulla

Yeah, I think at I'm that not look it we sure way.

I regulatory that think very There definition. fit some are we highly risk leverage are they look at graded, actually our rating. overall deals and risk

and we're whatever book. capital overall at is still of right and sponsor on billion running as enterprise percentage loan comfortable $XX now, portfolio. think rooms. X we of I specialty some Tier of look kind it a have billion reserves, our kind we $X.X think And, So with We

room. got $XX we've look if be. So And loan prudent risk to think, you'd billion I throughout and running we've will a managers continue been portfolio, to significant forward

Laurie Hunsicker

of great, what on booked you strategic that? $X the exactly gain that Okay, helpful. clarify Thanks. just Can the million, was you initiatives

Glenn MacInnes

of made it is it’s loan One Laurie, on banking like are by tied the our we rate two second then, that And retention things initiatives of an sort there to employees. the some higher that core things. Yeah, platform we That was Glenn. of reversal and system. was was And a on estimate are severance had driven that liabilities. a

we until the so decisions, So given paused some final of the on MOE, make what's those, really we million. of that's sort driving those $X

Laurie Hunsicker

broken forward? Obviously, we how going down Got line about that forward? got that How line should separately. the we merger And about should think think it. then, you've going

Glenn MacInnes

That line being…

Laurie Hunsicker

was Are quarter of Just initiative million. as your we last is $X.X closed it line? the strategic already – quarter. you’ve So last branch got

Glenn MacInnes

once based for achieve should after indicated, as $XXX million -- you fourth sorry, efficiency the the quarter, we’ll an our think we I'm expenses. comp we don't achieve I --

see off. mean, shouldn't expect You to real I that’s trade anything.

Laurie Hunsicker

That makes sense.

Okay.

the fast help a it little maybe XXX two last looks question, September. was June, in can thinking should so you be How if Just is like you in we quarters, Sterling XXX rolled now in. gone, margin bit is can forward that help margin, at If looking I'm margin? there? us on we ex-PPP give so and Any the then part PPP most for about your forma pro

Glenn MacInnes

QX of give offset then the to from our and run but as does color PPP because it's QX me on let well. the off, -- first, see some what excess by we right, sort Yeah, you're deployment some of of cash you

I have some down. the well think offset PPP So it, quarter. have a be bit think And have X the of the see if basis you'll you cash. on of and to basis into the X deployment we say to room more about on securities our coming -- by closer by compression as a points primarily would little then as, that'll result the portfolio And you going offset deposits, deployment expect QX, deposit fourth points of left as you'll in

all basis things I backs into would PPP. interest on X the the you sort million So, don't have NIM. obviously gave you guidance that of quarter that of sort of and fourth like the the into expect as you into $X quarter, compression net income, then considered on point first a And get down benefit

net well of that but than core that, excess should deployment cash, core, offset lose margin. you more for on ex-PPP interest meaning the which you bode So

Laurie Hunsicker

just last sorry, I’m Okay. question. one

what an terms you you're yet As for interest Sterling? thinking we in number accretion margin, have of with net about do think about

Glenn MacInnes

No.

Laurie Hunsicker

Okay.

John Ciulla

yet. the it at today, given we're we mean, I tenure in when announced and think No, we where sort I And of marks to XXX. we is made Yeah. were, forth. where transaction April the haven't closer went back the

up. bit think dip were, to rates second made during announcement, quarter, of when that to we where very though we're And close the all we of so, I the trued there a sort has in be was back but a

Laurie Hunsicker

Right. Thank you.

Glenn MacInnes

Thanks, Laurie.

Operator

Wells from Please question is Jared proceed. next Fargo with Securities. Our Shaw

Jared Shaw

everybody, morning. good Hey,

John Ciulla

Hey, Jared.

Jared Shaw

market, great yet. going seeing you And taking the bringing really flat? overall seeing utilization side, especially isn't I guess are the most market with terms trends growth rates I that share? I guess, success in are sticking loan so, with or new growth mean, on, back where being to there if you of a in customers

John Ciulla

trading peoples of this this citizens trading like that market, there interesting, it’s middle a of and the sponsor said and one this word as and the taking advantages of think offices, been hasn't our including sponsors, from a equity I And engaged of And really as lot Webster, that activity property. investors, of they're sponsors a -- of capture specialty who business good taking of markets, real I'm described and we're advantage. of to hugging Yeah, traditional number market activities, in from mergers, are I've commercial much have well family is of Jared or taking and before, advantage a growth use Sterling or our estate taking their acquisitions, done We're times, to Because capital this private I commercial sure with us. customers. market, job I've economic in banks, is and particularly real sponsors. estate seeing lot

I we've good in more franchise this business quarter, business example, So, to strong share. winning when than I a at our look Westchester from Boston got we're And job doing for County. of banking think fair a banking,

the I ground are credits So that's our with really on fighting good quickly. where well think folks around products, turning

where kind gaining share think be of that's so growth. we might through And I

and business. based other sponsors, a over commercial execution economic we our the demonstrated call the of acquisition an less the estate of we've and rather forward sponsor then estate, going have can it's go and are real the going acquisition investors, incumbent and and that on repositioning and we're or banks non-banks up than first new it's think we're up and saying those provide duration that a relationships depth we're on but activity. kind oftentimes, of specialty competitive. where second our piece we're one, commercial bank, only time, of I of real against against or period a financing call, surety to a transactions of Not we win the we're long with saying And property,

share don't market middle traditional So, I think gaining in market significant market, middle multi-generational companies. we're

back I gaining transactions. in that's activity we're pandemic think after more economic coming through the disproportionate the share

Jared Shaw

a side, you'll some looking a of credits to at credit I from more that's give I guess, should how a strong. supplemental day level? closes, the stayed about see ratio in also, thinking the in day additional market? And have very bit coverage flat. be allowance Thanks, shifting that, a credit you're one light how to surprised great over Okay. back the color. the Can to you I of color the us guess little the I when we one was credit progression guess, provision deal

John Ciulla

provision almost terms Glenn of growth as noted, the entire the balance robust sheet in was and mix. on related Yeah, to loans

so, the process. We we're very models. CECL in obviously rely our And disciplined on

change well. not you've forward forward, significant While disruption and in still as positive challenges chain going outlook, labor supply the got

of come think an quo, we a continues that continue what that to I model is, grow balance sort but for there's the And us significant able to So, we're sheet and status as opportunity down maintain strong to quality, asset over economy XXX And you'll see us. time adding show as the may bit. be for growth. will

we'll sure portfolio So, model, growth. loan continue make I we that's our their said, CECL there's know regimen of us the projected but a about strategically losses stick people we giving to process. think the kind life providing over as that of we're nothing lot in loan concern. of And, to of But the for

Jared Shaw

just all? how shows that on that's can still LIBOR? LIBOR Are transition, Or we've at bit potentially just under asset is some that that seen are finally the you little maybe And going? Glenn, then the comment data a SOFR for it me, Okay. spreads seeing then, And Thanks. better. you

Glenn MacInnes

from well positioned So LIBOR first we're a all, of standpoint.

and the have actually on be that. think part, a based to I for that is that spread SOFR This LIBOR, SOFR between going will based. up transaction most coming market probably we price think I the would

surprised if think that down be it. kind prices to top but I would spread of SOFR I without some of seen, So, to remains be everyone on

thinking the but we're that's to of right that, kind market yet seen now. we in what So, haven't determine enough

Jared Shaw

Great. Thanks a lot.

John Ciulla

you. Thank

Operator

with Ken And our question Zerbe proceed. from is Morgan Stanley. Please final

Ken Zerbe

Alright. Great. Thanks.

I XXX recognize go the that misunderstanding to the a we But there we not sure little expenses, just And like merger to the can So do be just see about want XXX. back make feels may thinking actually that might right. if closes, here. it we're I

XXX that all amortization, doesn't all higher. from make the And go right, XXX you comp So it ahead, then, so are include performance -- we please. excluding would such the based that add should

Glenn MacInnes

call we we've based if X, that we the look Ken, from target. excluded based is amortization, you efficiency ratio the Slide an the time set even on reason

been feel up, it's we based the were now. XXX. be it has So But in we compensation. million, That's million confident were say that -- always out. would hitting million moved My if or understanding performance we all right that if comments And of the that. with things always we we $X see that been quality, credit in to $X.X how XXX. to that's that right loan some to like feel we'll But and had, whether But continue see say favorable be generally, growth, not we've of I now. have trends that that, X.X% the you that that range might expect think,

John Ciulla

months goals, of last performance of couple then terms the the performance. outperformed. and setting we've in we plan, at actually quarters, targets set And in the when significantly Ken, and revenue we're

And across pipeline of of which the delta. saying and in obviously, that banks and is this be significantly And So the lot quarter. fourth the there actually seen but we're to more be outperformed the up be plan a accrual. there extent we needs that that quarter, you've trues could some to not now, accruals, trajectory, could right based on there Glenn the

Ken Zerbe

if on it. top fees XXX, other Got of. things be the and of It would were part

John Ciulla

revenue. excess the see Exactly,

Ken Zerbe

Yeah, understood.

about? quarter. build Obviously, place you're standalone reserve a on of should at flat back you going the right of a the to also, reserve I be relatively sort for least then you or Webster just day Sterling post only that this the one feel question, your like mean, Okay. basis, guess, one But want just target, ACL And call at I the more level that do good other the where what the capture like sort of importantly, that is banks we of if near-term? to a it sort thinking you're deal, reserve.

Glenn MacInnes

ratio that's It's obviously Sterling at of is comfortable a coverage far on anyway. to similar I as feel the I -- think what fact, with growth. very look matter it. our outlook XXX, And as posted I loan think think we've as why we us,

outlook. So, by mix portfolio it's going a economic and to be driven

so for our loan provision primarily really drove it. was growth So, quarter that's and our growth what the by driven

on I and for we the had, of think GDP look on if forecast growth. bulk was loan XXXX provision for but a in you by our the quarter slide took we driven lower XXXX, the little

John Ciulla

your defaults then your The I've probability obviously, -- factors. Ken, always macroeconomic is, been given And through former look reserve you you've is careful, risk a and credit the your right, being reserve as your default, and loss rating, officer. got what

and to continue And I'd good a and we're performance. factors well, I continue to see for X.X. remind down right down. improve, very I basis qualitatively continue if at so management is at portfolio you there a think to a for growth on And right economic and larger quality the and good credit about when credit also level will room you Sure, concentrations portfolio, as credit us now. come feel there people, we is. look to the when certainly for across That down. see that From macro management good come And combined can Webster go perspective, our number the

outperform. particularly deliver our default. it's higher But, going now, with XX-years, by banking loss back specialty back definition, and look carry because think enterprise in able business given you I we've out to If and does been reliant, sponsor it commercial

more sponsor us a mix execution specialty, when see over is Now, they so and our in also more the provision. haven't have emerged robust you time,

we're at level number right macro down. improvement the now, So can the environment it. right that's that describe kind come to way of execution and continued But

Ken Zerbe

could asking building better if of that's be their just I in a number. to is guess understand. one that was why that it CECL what would day want future up. banks number it to I sort But refer thought I future comment, Yeah, as Other number? I What don't you environment?

John Ciulla

on the I at the one, say, that to is you're macro of which day will if risks credence that's can probably you the just and I that right. looking up could concentrations to and combined don't portfolio, There except mix on size legal some down right the intelligently sheet, think environment or balance to provide of correlated a I don't now. some billion speculate want originations, what think believe relief. bank I lower the $XX at it and then depending right and

Ken Zerbe

All you much. right. Thank very

John Ciulla

Thank you.

Operator

the like back to We management the would of over end to reached turn have for session. I question-and-answer closing conference remarks. our

John Ciulla

to Terrific. everyone I thank for day. in continued Have your Webster. interest want great a

Operator

does Thank This you. today's conclude conference.

and your disconnect lines may for participation. thank you You your

Webster Financial (WBS) 21 Oct 212021 Q3 Earnings call transcript