WBS - Earnings call transcript Q4 2021 | Webster Financial Corporation

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Operator

Good morning, and welcome to the Webster Financial Corporation Fourth Quarter 2021 Earnings Conference Call. [Operator Instructions] 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. Mrs. Manginelli, please go ahead.

Kristen Manginelli

Daryl. you, Thank welcome. and Good morning, Earlier this Webster release announce a we Corporation's fourth issued Financial press quarter to morning, XXXX earnings.

today, fourth 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 rules. 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

Good for will XXXX. and through while and here I your earnings you of Webster's strategic for Thanks, take which dynamic and continued our and financial on after to quarter are performance year a the thank and MacInnes joining I review call. Glenn Kristen. also fourth morning, Glenn provide merger delivered our status CFO, year update strategic Waterbury in Sterling, snowy environment challenges pandemic. Webster. quarter with will strong and performance impending a economic We XXXX I for navigating was questions. the our transformational a the initiatives full

to very looking continue more see for macro for continued demand accelerate. confidence economic robust outlook is interest to lending benefit. to which well the rate we trend has activity expanding XXXX, with and environment a activity positioned in to business our from services we are and promising, strengthening ahead and The footprint, products our move including we consumer As for respect across clients

the the our management both Our to of merger the backdrop continue we risk XXXX. the we the the progress trajectory complement business also we the enhancements credit make With reflect significant revenue are quality as our internal Overall, which respect on integrate of companies. to ongoing about throughout despite continued we of impact the transformational into surrounding pandemic, head organization, efficiencies optimistic will our solid project, process. uncertainty and metrics X operational the economic as and

the side, business all enhanced lines experiences On targeted customer investments. digital we revenue across technology through

modestly in production largely While expense. expenses by with fell the fourth reflecting we XXXX above accruals, XXXX, reducing quarter our When and compensation strong bankers. was incentive core occupancy target, significant our XQ progress delta made compensation by driven compared

than permanently year-over-year, X. and our XX, fact, reserve to more reduced In materially and Sterling with square cost close on We plan structure. we by reduced our our and we overall approval December footage XX% operating on federal real estate merger for February received

planning strong the together. reflects performance. our process report with Slide is begin bring overview X an ready integration on complete, I'll we strong Our organizations these X are the and to of financial quarter, which

Our per $X.XX were adjusted $X.XX, ago. year up earnings share a QX in from

merger initiatives. Our million charges our fourth of pretax and performance $XX.X net related the to strategic includes quarter

tangible common adjusted was was quarter the equity equity fourth on return on Our and return XX.X%. XX.X% common adjusted

demonstrating a linked balances revenue adjusted X% ago. equity QX annualized. by PPP, is X%, X.X% Excluding and in decreased common operating XX% was million strong year Total leverage. than quarter adjusted grew higher Tangible loan a ago, higher grew $XXX than while expenses by year

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

as a year portfolio to net classified now as charge-offs loan improved build a of and our asset for growth. commercial tied Our a net million from X. both on all provision release quality credit to is and $XX I'm Underlying solid, ago. NPLs, Slide loans percentage the a was conditions benefit of continue was improve. reserve million $XX The forecast economic provision metrics

line. business led residential loan or from of Commercial billion XX% growth costs fundings increased basis full from $XXX ago, production. by client to year our year year, $X.X loan ago, PPP, improved compared billion year with And Excluding million banking deposits driven up year on growth or loans XX%. to XXXX a from and XXXX the represent to Banking, conforming $X.X solidly in billion sheet by and XX% a decreased year $X.X $X.X million to for grew demand. and from were every to of total activity to and grew sponsor grew a year total of specialty, our grew decline, business up real Core was by bankers cost CDs reflecting the deposit million our record continue million GAAP decision billion, of Slide year-over-year a deposits a On loans Consumer in loan the accelerating and loan XX% PPNR X.X% ago X, a $XXX full ago. verticals. a across nearly prior basis, compared and again improving balance from I'm driven late points commercial quarter originations ago, $XXX year expertise over our $XXX X.X% ago. our year the estate, On Commercial now robust deposits. mortgage commercial growth X% Deposits all you'll as Slide see X. X highlights. by financial total

for with our integration we I as our and core transaction real overview as income X is value to able expenses $X.XX year-over-year for as a even this earlier. achieve estate $XXX of growth mentioned of EPS footprint, We Slide tangible share Webster, operating of per Sterling. net and were an our year strong and the full million $X.XX. merger provides Our book record reduced timeline of

company to approach a operating merger We legal are date. as the excited we begin combined as

positioned brand over on months. XX I'll operating experience Glenn to With and detailed more detailed optimizing over clients customer a to consolidate We've conversion to focus during primary the plan the new Sterling have X. the We next begun on plan convert plan Webster a that, the organization we With February call to one now the in we financial the close. all upon are and a legacy review. integration, immediately integration as operations to place, for to turn fully begin and customers welcoming Webster

Glenn MacInnes

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

securities million billion we Average a totaled cash down offset linked of average balances the linked X.XX%. purchased real estate and consumer loan partially and residential a yield portfolio. into loans quarter of a was quarter, matured million deployed called, or approximately growth and X.X X.X% forgiveness Securities and Average $X.X loan $XXX liquidity at of $X.X During primarily paid This Fed held totaled years. billion the X.XX% increased C&I, securities weighted quarter, in mortgages. driven by of yield a by $XXX or as lower duration with increases the decrease $X.X billion, commercial with we balances. in PPP approximately loan

the recognized from PPP were In deferred deferred was Remaining at loans accretion, During PPP year-end million. million $XX $X totaled million, we down $X.X balances and outstanding $XXX which fee on of fees totaled QX, $XXX prior million. PPP million quarter, quarter. forgiveness

or grew book or or grew increased residential growth X.X%. The $XXX loans transactional or average business you driven X.X% was from in were some CDs. million in mortgage by up ago, basis XX.X%, to a while quarter and grew continued million XX.XX%. prior X.X% seasonal and while line X.XX%, were grew decreased X.X% HSA decline business common basis, $XXX X total commercial ratio points Average value on linked million X to income trends, $XXX commercial period-end X.X% were X% year $XXX basis, available XX. effectively XX% quarter. linked equity QX XX by grew year-over-year. X% year-over-year was The to basis a respectively. Loan-to-deposit ratio X.X%. reduction quarter partially year. increased which down to performance PPP, on offset and Excluding and deposits X GAAP To a consumer deposits our X% higher-cost million Average banking million tangible $XXX loans grew increase ratio a small Average in or grew from give flat commercial and and year. a reported Tier to linked footings The loans points and highlights common common. tangible December adjustments equity funds Slide XX.X% HSA prior on XX.X% public and from deposits borrowings deposits, core

adjusted quarter, PPP to net our lower common down in $XX a after-tax in on fee to continued a million growth. lower XX reduction the income return Slide driven quarter. income point return recognized fee NIM. improvement to an offset related On a common core interest by million This X and our we PPP basis X, XX.X% a of Net was securities share tangible by $XXX $X Net by our charges a income XX.X% per by result million equity of a accretion available linked on a margin yield partially basis adjusted provide During reported resulting strategic and $X.XX merger million equity. On statement. or decreased basis, common initiatives. net was on we of average offset interest and points X.XX%, lower from loan basis accretion X point portfolio, the was linked $X.X quarter,

a partially and and increases to income million noninterest temporary direct increase $XXX reflective $XX.X Compared largely in in an increase expenses. $XXX increased This reduced driven Adjusted performance-based million gain fees. related realized medical adjustments by to quarter, grew a of in noninterest expenses, reflects as Versus million million year, net costs. $X and of Noninterest prior $X.X prior in prior linked expense declined resulting to value income lower fair offset $X.X $X loan occupancy in prior our increase year. in seasonal due to and as interest This QX. service As of $XXX well variance gains were revenue million compensation. funding and QX and driven previously Pre-provision million wealth investments, compared staffing million. prior initiatives, BOLI an from quarter-over-quarter quarter compares on strong highlighted growth expense loan. compensation factors deposit by increased commercial year, noninterest efficiency other the income and management increased million in million by announced year, costs, in higher which $X.X was the primarily the net income sale to an on

was $X.XX the increase Slide a over XX, the of per benefit million result the we an Our share, rate is net initiatives. adjusted income linked of adjusted tax and The strategic an $XX XXX our net loan $X.XX have loss million On in or on update of provided provision quarter. quarter. was XX.X%, points an increase quarter prior of $XXX basis an

do forward. run quarterly in square driven expense our strategic in by We million partially offset anticipate reduction driven quality $X both of run and this not savings, FTE our on which by a rate was fourth and increase million approximately was growth, quarter, accruals The are the have In XX% primarily pleased performance-based to achieved $XX in by was rate revenue occupancy expenses progress incentive going tied we and to credit loan initiatives. in footage.

for for in on also various initiatives employers including new new business. experience HSA commercial support our a with consumers, along to other launch we initiatives digital We a will the experience second technology, in the bank. In quarter, delivered of digital growth onboarding

strategic will our begin Sterling. We capitalize continue as on integration we with initiatives to

quarter, loss Slide results under Turning review benefit loan reported for I'll a million. we fourth of net $XX quarter the the XX. to CECL. provision In our of allowance

Our $XX and in a the than trends. as million, XX loans X.XX%. improvement offset excluding in points, by in asset offsets with growth, down total XX highlights year key performance residential commercial were the a $XXX from reflecting from asset basis $X million allowance partial XX left net loan result PPP of basis of million mortgage. increased was the trends concentrated loans, coverage upper million our Slide metrics was which adding of benefits The quality credit continued ago. in was our real NPLs for macroeconomic percent The C&I outlook. $XX more in QX. quality of down allowance reserves points quality strong increases Nonperforming are and loans estate ratio,

we realized million In quarter. terms of net right, $X.X net recovery in the charge-offs, upper a the in

basis the full its points For decreased since year, QX loans. capital strong year and in net commercial recorded XXX which million capital from charge-offs, the in level is loans $XX classified Commercial well-capitalized lowest highlights we full XX exceed left million substantial levels total XXXX. our Slide lower by $X levels. Regulatory amounts. ratios of represented

I'll $X.X of over billion. exceeds that, billion. by by closing $X XX.XX% more John capitalized ratio for things capital equity back Tier our X to than capitalized XX.XX% risk-based Likewise With exceeds of remarks. Tier levels Our common turn well well levels X

John Ciulla

It's at Glenn. here been year eventful Thanks, a Webster. uniquely

England, strong in a impacted the delivered merger by In XXXX, also third satisfaction Sterling. outstanding performance, we a ago, was work. we managed addition great the high initiatives year year, year once all, that a top pandemic, again a internal by to asset for rapid the growth, through level Webster perform work outlined performance all for being and perspective. a executing broadly New our during with generate number a of quality share and and to at experience volume on a such to from and can lender you place parties announcing we and I Throughout while the want give of Throughout our to for challenge it continuing to for service thank the bankers special of loan customer particularly we've a bankers. to recognized SBA Today, dollar period market-leading reflecting by been I outstanding change. customer our

Finally, clients, colleagues, express is This merger. a enthusiastic I transformative and benefit shareholders. to of banks' the pending I will close that communities want am greatly our both how about transaction again

bank We businesses. commercial our institution, Bank a are a consumer banking base creating combined includes unique and and that funding financial a with differentiated HSA

have national a and and range We generation growing industry growing with banking a a commercial franchise of deep broad capabilities, asset through geographic specialization footprint. particularly regional

robust economically highly a have We footprint. and dense core

both on needs. questions. and organizations, clients Daryl, ability and to sophistication all of take our and the are we while have within We draw to talent With scale, outstanding growing optimal sheet are be from nimble the and to prepared to size that, responsive the having our Glenn to I meet clients' balance

Operator

McGratty first Our with Chris from has question line come Instructions] of [Operator KBW. the

ChrisMcGratty

heading and was Clearly, us direction, pro be right are we your maybe XXXX? I combined announced more of too Can merger and the Sterling bit in asked the rate kind update you organic I'll in just growth about question askked numbers ask growth John, about when the forma the thinking are company. how the of little a should the bumpy. on

John Ciulla

time of out general that as the put now. because ago throw I'll April, kind we And it at respect the there seems thought sticking long to Sure. look with guidance the a out marketplace that was, of XXth we're on of we all in it assumptions to the like still those

obviously, strong did have really in quarter. had So loan growth we fourth We a the record originations.

couple record annual doable, for couple payoffs. a competitive good loan mortgage loan had consumer We is total little a a I the more also more also more business we Sterling areas of had loan solid taking a consideration with is growth But confidence, confidence. into think economic better our continually years next but environment, environment core to improving target, couple more think volatile. other still and growth, a X% XX% bit of warehouse of where demand,

I So a organization growth dial the think X% years. next combined into net still expectations from couple an we of as asset to growth XX% over perspective,

Chris McGratty

And then strong position position, be, in you've great. the do given That's capital would X% the getting capital that think to XX% using I to how follow-up past? about the you're versus potentially a about buyback talked that my in,

John Ciulla

in are capital, I are respect to executives both mean think on sides alignment. I involved that Yes. all of with the

original of in We sort onetime $XXX share show million we as the a do have definitely capital on to model. But expenses. million our to excess in wanted buyback capital, we usage of $XXX million some lines. products we growth, Obviously, we depending $XXX modeled of our because at kind all ratio, opportunistic portfolio horizontal of our payout acquisitions, to differentiated then shares. to we conditions, depending our some deploying back market look first organic dividend buy of for on prioritize time, kind and business capital opportunity have We

on right and respect So make always table. to at are kind think it's we share we're the and the opportunistic, We're with but I to still of be as it, decisions Chris, buybacks. going disciplined be economic looking

Chris McGratty

Okay.

but XXX conclusion? momentum growth. on that a still in table, given fair perhaps maybe So the full Is a not the

John Ciulla

Sure.

Operator

Vandervliet from questions the Our of line UBS. come . next Brock with

Brock Vandervliet

Just pro on could forma One, review warehouse size portfolio merger. following the the basis. of up if a you just mortgage the on

looking potential you pretty rates smartly lot to activity you here, up potential in mortgage In to are addition, having growth of a especially at loan as sell how look more have would with smaller refi you choked off you Second, as likely we about that forward, think loans agency a a Or like headwind, going of looking as are continue those those? driver? portfolio to been?

John Ciulla

number Glenn thing on give warehouse. the while the Yes. I'll the looks up general you mortgage

don't sense, ton and we bomb of been really we're separate to draw which There that commercial take on are activities is the or in credit incremental have do than So aren't of we've lending the to the or what asset levers. probably in business and any love don't continue going February either XX on, any in lines geographies activities to conditions going to them. X of pricing kind a love bad We consumer we're or we full And and more think now volatile, consistent. too classes risk expanded having risky, make organizations one speed. throw to give both too right we means

in confidence have beginning good being in grow relates the the to So in applies, at diversification conditions decisions really which gives accelerator the the is XX% say, months, And of to said metrics. we activities saying, down what return be single next, at of XX market into what then to would the in areas one economic off, are do, on the our strategic we've redeploy to of And market the these a is Having are, we'll dependent mortgage XX backing all looking we're we and too are growth. return depending we'll what as risk capital where and most make in. I say us we or the we dynamics or warehouse, roadshows all non-deal able course of some deployment "Hey, geographic where is risk that really right make metrics not it lines X% first, and at as we'll of involved generate areas is, terms as favorable the on really the it and us not most difference." loans the business putting every over that of capital generate Brock, small what are, so diversification obviously to profit, to for or can are those always

I So I classes. pro worry mortgage the to growth our loan or getting net balance about if any like have of something or don't sheet don't will any asset kind us cranking have we stop there. think concern the on warehouse of aren't numbers things from that view size even forma

sit we road. where of the and kind we'll capital the make allocation that's So decisions down further appropriate

Brock Vandervliet

Got it.

the And as there appreciate C&I Or been been? rate yet? utilization quick I is color. kind Okay. a it's that Has any where stuck of the lift just still in follow-up.

John Ciulla

fact, been, was There reviewing just as a I matter has of that.

was utilization, and So usage, really small, good general I pretty overall was increase inventory. of up The know is I capital ABL up a working it it's year, a asset in XX%. loan cycles, a had last portends of utilization which say, point for but think, from us, our well building of both commercial to driver for slightly. linked which relatively, low I'd rest quarter not around much significantly back growth, conversion a which but And

the a to up quite overall, levels. utilization would C&I not low utilization I say ago, back is year pre-pandemic So from materially line

Operator

Laurie Our with Point. of next Hunsicker line questions Compass come from the

Laurie Hunsicker

you if ex at about restructure thinking the you be what with think pro margin guys’ other and like layering restructuring plus that it should looking How that? at about sticking forma, Sterling us can we PPP the Just looks in doing? we any look you're theme help your debt of

Glenn MacInnes

Glenn. So Laurie, it's

context to that. Let me give some you

for X.XX% at probably we're that I if I on basis, sort anyway. margin, quarter the think fourth on about starting at NIM we when look our of combined point so of at And look a a

still disclosures we've are you I through working in things We on that. of assumptions the like with the the that accretion on marks line announcement. and through that still made we're most working -- tell we're and can But generally

double asset-sensitive. are in an call. organizations sense that. very this XXXX. July both we But hikes say We we're update one is XX-plus benefit are XXXX, that on one will you the basis, is looking on full meaning about out our in the really X% and double things On increases book, of if And give annual the an to probably rate in one the earnings course, give asset you May, But mean, that And at during loan X in of dynamic QX with there -- a looking a that one forecasting a which is on little full percent and just know impact, December. we income, net of the benefit of it's to sensitivity, we December, that you getting that floating get in at that don't in more periodic. look year you rate our in so basis, respect interest have and one year than we X I is, about of

asset driving against floors there so what's generally, that's the But that. are sensitivity. some And

least other And said to for it XX% third goes the we're first And third about I for deposit currently probably XX the beta. move. The we're forecasting then assumption, like is of the XX%, point XX%, at the to at course, for beta basis closer on -- up move.

that asset sense gives about of standpoint. sensitivity how an we're you some thinking from hope it I So

Laurie Hunsicker

helpful. very Yes. Very,

us terms accretion give on margin, is working dollars. either but Just either a that to number you going were in of said question. look what like that it, quick income in know I you you anything still through your can

Glenn MacInnes

X. we through working to as legal we non-PCD the mix as closer day we're No, speak, PCD, get

earnings. So we'll to give we you an on update QX that get as

Laurie Hunsicker

going to you refresh forma what pro intangibles, like? that's on do then look And a Okay. have

Glenn MacInnes

thing. Same

our make that. as and marks we related stuff all it's like So

Laurie Hunsicker

it. Got

was your And from hoping then little loans, nonperformers sale. comment a the standpoint the the on rate charge-off pre-loan you they quarter. pretty there looks in and how selling some looking cleanup credit, just the that that? quarter can both bit at They've anything on sort And up CRE. STL commercial their just And like STL, can terms or another of that sharply give Is just had then of mention how in It substandard C&I are around is book? special Okay. of been you X.X%. of the your us fourth you obviously approaching C&I just

John Ciulla

Sure, It's Laurie. which No, I taking think your think at without up opportunistic loss right. nonstrategic characterization is of Sterling the and significant asset is in clean I of sales sort assets, prudent.

huge, us, we ended like, on portfolio. X $XX loan up billion that For NPL have obviously, going commercial loans a

get don't in we pleased, older really we NPLs significant. a we were been obviously, recovery consumer our to adequate them at we that's sold bunch a and the NPL kind So quite anything able reserves. actually, of down loans came frankly, And we for. have And consumer because see significantly price there we've of sold

is this that think not seeing material. don't We're we So trending. tick-up negative any

rating risk risk strong. weighted overall Our really rating average portfolio is the in and

C&I. pandemic good think sectors structural with about the of or forms, in many of in is. environment. being there's almost we weakness out whether any this very silly in said operated hopefully, But I've how in So obviously, people But having careful thinking industries, asset quality see it's come, strength we we're any really as I kind the

Webster the I on values and office, people is But We're on low on have term, other conservative the think everybody it see office. very they both work long sides, underwriting. and focused to loan how side. Sterling think I and

about good CRE really the and C&I feel board we both So across banks. in

Operator

with the Matthew Breese from come of line questions Next Stephens.

Matthew Breese

you that revenue the the intend the you X next over deal. synergies Page from presentation, unlock Sterling On XX mentioned to months, of

You hoping also balance flesh the just and alluding P&L those out impacts I that bit and X are facilities. you're sheet was a what little to? of the mentioned items consolidation you could

John Ciulla

together, the guidance the revenue as it's -- level. you more on to a quantifying months working first a cost synergies over earnings XX give the in can you X banks a kind and high bit call. through going we're detail We're we still of bring more Matt, side, the the lot combined through walk the lot Glenn I and for quarter next think

on leave opportunities. we've I've seen opportunities XX, like benefiting we've I'll XXXX respect we're already levels. always -- forecast. respect road on, benefits. our our some to a said, something larger us the We've things on blockchain. larger great things wealth, as -- across that's Sterling We're others. able there. going in got forward with and HSA So it opportunities if got to just of hold invest, some the the There's we're and Obviously, that that We've customers more of momentum April got from, HSA, our commercial a you to as pipeline mentioned lot there. will, stuff and across quantifying and exciting good in economic with None you with helping of is selling cross-sell both we pretty and the banks of revenue kind on companies HSA investment saw fee map digital with banking service, a both to do

you to quarter. provide information more able kind those be in activities around we'll the first economic So of

Matthew Breese

Understood.

Okay.

Glenn MacInnes

context And more be you I might Matt, of on a we're give how able this. little to thinking

look we our at million. So they operating quarter, core about both for $XXX organizations to the fourth combine expense and in

fourth based quarter. starting So that's the basically on our point

that, said of XX% sort $XXX And we we we say million the time believe that that's over can base. the or of And that, at X-year achieve I continue achievable -- the to could you core sort the announcement, thought so annualize of and you combined then organization. for the as know, we And that's think period.

come out. you'd X expect to that -- years, that So over

we We that's and to that going we’d first now also X, we or time, of moved calendar to in And sort said full thought on thought close XX% we October at the $XX the February get time were year. we of million announced, at X. the about

And that a so year least slide out little standpoint. from at calendar a

really And XXXX, that in about good remaining $XX about we'll we And XXXX. million XX%, feel of XX%. estimate probably get so the now in or again, getting we

X well the can going sort of take going seasonality operating core sort data number. expenses of sort how to as is in the the a to The what there's get target XXXX those and would quarterly expense you and is thing points, I be are of expense So our XXXX, sense for of roll out. say only as

to you're that. So see going

see And higher little out in quarter, quarter the include then first and a always always see none taxes thing is point then see like to any of HSA. core on I inflation of the would other sort impact that. these in it you You ramping temporary you things us base. the the up of that And where for fourth expense FICO

year something quarter how a reflect course, but that's well. that. of things additional be all non-PCD, lot as on midyear something like more a we're if that decide And lift-out like day, at. the like the intangible you so taking well make to we're in At as that, do able to decide of question, about And end the the could expect And do and PCD, And provide have thinking that there's rest the investments to the that. as Laurie an look course, on to But our will we we'll first XXXX. of radar. earnings asked earnings nothing call we clarity expenses of as on impact any the business, the we keenly that a CDIs, then something or then, lastly,

John Ciulla

increases on we to results think Yes. to wouldn't I will I other put I the line. be benefit wage could -- more that a top rate on would a also interest point, But we be over mentioned costs, didn't in obviously, that mean finer And if pressures the inflationary will time, inflation, that headwind. extent think that, genuine say Glenn

So ROA with we confident growth the feel to pretty the environment, able deliver on targets, ROATC those. respect loan we'll regardless that to delivering be targets, targets, the of

Matthew Breese

Understood.

Okay.

one is HSA. on me a for X-parter Next just

you're about heavily recall Webster investing rate enrollment second any in The the a through being we quarter in And and cycle, given bit that first we one tape the on business. as I color infrastructure where also are the where think rewind little just of first account season. opening, for the progressing it is part of hiking is just HSA, time a sort last then just

So as been of the the underlying the of profitability better so has cycle for cycle HSA, built? much we that or next think infrastructure exceed because be hiking rate the already about subsidiary much could last

John Ciulla

Yes. second the first. mean, I'll one I take

more I answer yes. should have is think We move we the as operating leverage forward.

think I infrastructure. We've of in operations resilient. our are more kind invested

said, Glenn kind we've customer experience second bespoke the portal in on. more working a rolling through this we're of As quarter, been out

that kind as costs we with to be the to I there'll the do interest should of -- are if variable growth, rates there So more able while of value capture opportunities think be respect increase.

relates As it to this enrollment to it's early too tell. season,

account we last that respect for still What's year looking an us. new the to employers. continuing for that's environment a with of X Our interesting really last kind direct a in is you in of years, current bit satisfying over us with new account are similar existing reports we're muted where know dynamics enrollments to new do to and of better seeing similar And been in emphasis say, are that's employers, terms and we're X to growth. that to bringing employer

little XX% some bringing in is so convention partners our a accounts actually new came year of existing growth And and out, that lot we're not from and if employer to is employers. year to even XX% of existing bit across number of going and base. result the down our employment That customers. muted customer you Because as more in recall, hiring continued used a probably on going a be the

we'll have you more we about we still But look in kind flat I think to over at of right now. we last the think opportunity, means growth. obviously, a little more know, get when January. some But hiring insight a as January environment, organic hopefully, to if of year we period enrollment robust into it's the more full account have have that So bit only quarter

Matthew Breese

Understood.

join Consortium. for the Okay. USDF put they release would out Last month, a one me. Earlier Sterling this indicating press

mentioned Where impactful. when catalyst been has think and had blockchain to it's the most ecosystem a as certain been ecosystems, couldn't a effective, payments real-time You with HSA, you could where future. payments that I has help health real-time have this be care-related applied potential but in

be your I HSA-wise? that real-time had. payments just something a blockchain-enabled secondly, maybe all this one, on leg gives curious to could bank. So bank And the thoughts That's on competition you up

John Ciulla

smart a and question Great Matt. one, Yes.

that there be operate way we learn don't first economic and relationships far your And this So to and our are of respect payments, mortgage banks sort effective BSA/AML. way health to you obviously, where point, get there. have but you we with until completely tons mover of consumer folks think I information an think to we technology a also, sit separately to there cases to fine to too these we differentiate the about want care respect ahead the a effective we're think -- February to X, about are be think gone business a lot. And aware in to about of point, deploy XX-hour excited of into opportunities the you about be Sterling announcement, ourselves. do cheap both get to given the of And USDF with ecosystem to real-time lending, lending, obviously intimately use

now expectations row a us front of our a smart about thinking lot are This this. So we've gives people seat. got

nestled our care of We I more cases is use in opportunities be payment deployed we think kind built XXXX. in have because respect be be of the space will want But don't health that conservative. will the already to in forecast economics actually in with XXXX kind to right any we're of because exciting there. there one

yes. is answer the So

Operator

the next Casey come from questions line Haire Jefferies. Our of with

Casey Haire

wanted on I to capital. touch

Sterling guys XX% you So above CETX. both and you --

shape most you Could you to a give what ratio guys you X, in going is forma? you'll be to and to great refresh manage -- you pro day us are to important what capital-wise. legal as So just

Glenn MacInnes

it's if of pro And look target at Casey, equity today -- the we million be we're common ratio And where closer are the X, Glenn. to sure. Yes, to $XXX at I about a excess of looking we point. and your Tier at years looking were capital X ratio we you XX.X%. to a think the announcement, over course forma, that at probably time implies said

that. are. Now there we But that's against onetime where some charges will be

John Ciulla

the I and out And question I of first heard. gate answered too, you the don't know as Casey, of if --

buybacks take a throughout asset had model into we're our capital last first apply growth, and we an model prize earnings we've into conditions of call, and on capital differentiated but going our obviously, And It's at think is market put complementary opportunities roadshow think for continue disciplined I then We management organic to wanted dividend And capital $XXX products that definitely our right in time. clearly conditions, our because portfolio to here, effective businesses, to and stock we'll on we meaning at purchases. said to disciplined as about the where repurchase and be we're to in the capital. table. use going stock we million the making approach look the approach economic deploy given in opportunistic. non-deal in every capital, to same the excess have decision market is

Casey Haire

as you where update money in grow portfolio the this, yields just missed appetite quarter? continue I nicely the I new what's today the if in can outlined to fourth stepped securities But level you apologies the that an guys but And And [X.XX] to that? us up quarter. give to our then Understood. mean, Okay. fourth that. had versus

Glenn MacInnes

Yes.

And couple total we're XX%, ago, a of XX%. size years at I our at all-time assets. high we're think of So a going back XX%

it to particularly the will consolidation, come -- the And it XXs. so down I and low with don't back see

One of the portfolio Casey, is, will things we most the will for AFS. Sterling be the part, booked do, as

excess took -- it, be AFS, we're that we thought $X.X will say, We that portfolio down about well. have and will give at of XX-XX, optionality as flip investment Fed the billion. actions prudent. holding excess the that so give drew we us will liquidity flow. will we significant And cash liquidity, And was sort the our us those given on we that that still But

If $XXX quarter it's is, $XXX you look say, and about at our Sterling’s a million portfolio, investment million.

flow have and cash So loan sides cash it. significant you we on then flow still have the top on there, of both

but took did the We we on preserved what on you a So we balance more we sheet, I purchased, little a also optionality think this. lot say, X.X forward. going years of duration

Casey Haire

for just loan the last in? where today? But are Okay. I at haven't obviously, XXX are lower. overall, impact. the money But Great. yields, stripped that on me And specifically, those out PPP they XXX, was where -- And know commercial I coming new the

John Ciulla

market. start yields of we've mix me continuing I we're depending In our the say, from credit yields, in on the competitive obviously, loans. spread a see perspective, would got pretty to let significant variability

more -- X.XX%. they're you And have, and down so specialty we you estate from spreads, commercial a at in I'd marginally. business origination when quarter, look about perspective, But say I'll we our real year-over-year coupon institutional think X%, the the our in give X.XX% at grade sponsor to closer a like

we're on from. commercial we thinking. blended some obviously, those increases again, originations X.XX% on could by in So we a real -- material C&I a and were where delay floating, see we which with what is think, a significant rate origination driven, I is estate basis, cost loans our deposit obviously, increases, our in yield But in in lift of loan get and percentage are a they would say come yields commercial largely

Operator

this the questions at time. would over John back further for closing turn call like Ciulla no comments. any are There to to I

John Ciulla

the I today. everybody's reiterate, and and great future. on lot sides really are Thank this on a so you there the excited both very in of we much, about appreciate company I joining participation together morning announcements banks be just the know Thanks putting to and Daryl. people interest us. excited I for X these call. are great can And

Operator

We teleconference. participation. today's conclude your appreciate does This

of this at Enjoy your day. may your You lines disconnect the rest time.

Webster Financial (WBS) 20 Jan 222021 Q4 Earnings call transcript