Webster Financial Corporation · NYSE:WBS
Webster Financial — Investor Day (March 2023)
127 slides from Webster Financial's investor day presentation, Mar 2, 2023
Slide 1: Webster Financial Corporation 2023 Investor Day
WEBSTER FINANCIAL CORPORATION March 2, 2023 Webster Financial Corporation 2023 Investor Day
Slide 2: Forward-Looking Statements and Non-GAAP Financials
2WEBSTER FINANCIAL CORPORATION Forward-Looking Statements and Non-GAAP Financials Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward- looking statements c
Slide 3: Agenda
3WEBSTER FINANCIAL CORPORATION 8:30 – 8:50 am Agenda 8:50 – 9:10 am 9:10 – 9:20 am 9:20 – 9:50 am 9:50 – 10:10 am 10:10 – 10:30 am 10:30 – 10:50 am Strategic Overview and Culture John Ciulla, President and CEO Operational Update Luis Massiani, COO / Vikram Nafde, CIO Q&A Commercial Banking Chris Mot
Slide 4: Speakers
4WEBSTER FINANCIAL CORPORATION Elzbieta Cieslik Chief Audit Officer Also Attending: Vikram Nafde Chief Information Officer John Ciulla President and Chief Executive Officer Speakers Luis Massiani Chief Operating Officer Chris Motl President, Commercial Banking James Griffin Head of Consumer Banking
Slide 5: A Premier Commercial Bank
5WEBSTER FINANCIAL CORPORATION John Ciulla Chief Executive Officer Webster Financial Corporation A Premier Commercial Bank
Slide 6: Overview of Webster
6WEBSTER FINANCIAL CORPORATION ROATCE adjusted 22.9% LOANS $50B DEPOSITS $54B EFFICIENCY RATIOREGIONAL RANK by total assets COMMERCIAL loans / total loans 81% ASSETS $71B Note: Financial data as of and for the three month period ended 4Q 2022. ROATCE has been adjusted for merger related and strategi
Slide 7: Mission, Vision and Values
7WEBSTER FINANCIAL CORPORATION Webster Financial Corporation Mission To help businesses and investors, individuals and families achieve their financial goals To be the best-performing mid-sized bank by: Vision • Delivering top of market financial performance______________________________________ ___
Slide 8: Commitment to Culture
8WEBSTER FINANCIAL CORPORATION Commitment to Culture Key organizational values and behaviors identified Engaged leading organizational agencies to design culture activation program 15,000 hours+ Colleague time dedicated to culture- activation events 140 Live Sessions Culture activation sessions were
Slide 9: Relationship- and Expertise-Based Commercial Banking
9WEBSTER FINANCIAL CORPORATION Relationship- and Expertise-Based Commercial Banking • Preferred banking partner to sophisticated companies and sponsors with 18,000 clients in diverse and targeted segments • Service, expertise, and asset selection differentiate our commercial banking teams Local Pres
Slide 10: Complementary Deposit Gathering Platforms
10WEBSTER FINANCIAL CORPORATION Complementary Deposit Gathering Platforms Business Description Volume of Deposits Key Benefits $23.6B 44% of Total $2.9B 5% of Total ~$9B managed up to 75% available to Webster over time Consumer Bank / Commercial Bank $19.6B 36% of Total $7.9B 15% of Total • 200+ ban
Slide 11: Commercial and Consumer Banking Lines of Business
11WEBSTER FINANCIAL CORPORATION Commercial Banking Consumer Banking Middle Market / EF Commercial Real Estate Sponsor & Specialty Asset Based Lending Public Sector Finance Business Banking Mortgage Warehouse Private Banking Mortgage / Consumer Lending Small Business Loan Balance ($B) $7.8 $15.4 $8.0
Slide 12: Exceptional Financial Performance
12WEBSTER FINANCIAL CORPORATION Exceptional Financial Performance FY22 Consensus and Merger Targets at Announcement Webster 4Q22 Webster Consensus Sterling Consensus Webster + Sterling Targets at Announcement ROAA (Adjusted) 1.08% 1.25% 1.40% 1.61% ROATCE (Adjusted) 13% 14% 17% 23% CET1 11.9% 11.9%
Slide 13: Operational Update
13WEBSTER FINANCIAL CORPORATION Operational Update Luis Massiani Chief Operating Officer
Slide 14: Key Takeaways
14WEBSTER FINANCIAL CORPORATION 01 Business line initiatives drive outcomes02 03 Priorities guided by strategic management framework Differentiated and growing funding profile 04 Scale in technology 05 Integration on track and will be completed in 2023 Key Takeaways
Slide 15: Strategic Priorities
WEBSTER FINANCIAL CORPORATION 15 Strategic Priorities Corporate Citizenship Operational EffectivenessValues-Driven Culture Growth Drivers Risk Management Expand Technology Capabilities
Slide 16: Webster's Strategic Management Framework
WEBSTER FINANCIAL CORPORATION Webster’s Strategic Management Framework 16 Overarching Goal Allocate capital and resources to support strategies that create value for clients and sustainably grow economic profits over time Performance Objective To be the best-performing mid- sized bank measured by: 1
Slide 17: Corporate Priorities
WEBSTER FINANCIAL CORPORATION 17 Corporate Priorities Balance Sheet Management and Diversification • Use our diversified asset generation and deposit gathering capabilities to build a balanced business mix and efficient balance sheet • Fund loan growth through organic deposit generation to maintain
Slide 18: Investing in Our Businesses to Drive Value
WEBSTER FINANCIAL CORPORATION Investing in Our Businesses to Drive Value for Clients and Economic Profit 18 Continue to scale the business by expanding verticals, investing in our talent, and further expansion of Sponsor & Specialty and other national business lines Invest in products and solutions
Slide 19: Best-in-Class Deposit Franchises
WEBSTER FINANCIAL CORPORATION 19 38% 32% 13% 5% 12% Best-in-Class Deposit Franchises 4Q22 Funding Mix 3-5%Consumer Lines of Business represent $51.1B or 83% of Funding Base Growth driven by Small Business, Mass Affluent, and Digital initiatives Vertical and relationship-based deposits tied to operat
Slide 20: interLINK Tech-Enabled Deposit Gathering Platform
WEBSTER FINANCIAL CORPORATION 20 50+ IDIs 1 Estimated based on publicly known administered deposits of market participants. Tech-Enabled Core Deposit Gathering Platform Complementary to Our Differentiated Channels Strategically Aligned; Complementary Capabilities • interLINK is a tech-enabled deposi
Slide 21: Technology Strategic Themes
WEBSTER FINANCIAL CORPORATION Technology Strategic Themes Webster Technology & Data Strategy Exceptional Business Value Delivery1 1 Superior Technology Experience2 2 Robust Foundational & Data Services3 3 Efficient Operating Model44 Best-in-Class Talent & Culture5 5 Safe & Resilient Environment6 6 C
Slide 22: Technology Focus Areas
WEBSTER FINANCIAL CORPORATION Technology Focus Areas 22 Accelerate business growth, through differentiated technology solutions, increased speed to market for new products, and the flexibility, and adaptability to enable business strategies to meet market demands Outcomes Integrate infrastructure, p
Slide 23: Integration on Track and Complete in Mid-'23
WEBSTER FINANCIAL CORPORATION Integration on Track and Complete in Mid-’23 Deposits and Remaining Loan System Conversion Mid 2023 • Completed rebranding activities • Culture activation program • Aligned job architecture and titles • Corporate real estate consolidation • Consumer investment platform
Slide 24: Commercial Banking
24WEBSTER FINANCIAL CORPORATION Commercial Banking Chris Motl President, Commercial Banking
Slide 25: Key Takeaways
25WEBSTER FINANCIAL CORPORATION 01 Our national businesses provide asset diversification and the opportunity to deliver accelerated growth and performance outcomes02 03 The Commercial Bank maintains a strong and deeply rooted business within Webster’s core franchise markets By attracting and retaini
Slide 26: Performance Profile
26WEBSTER FINANCIAL CORPORATION LOANSEFFICIENCY RATIO NON-INTEREST INCOME REGIONAL RANK by total assets NET INTEREST INCOME PPNR Performance Profile NON-INTEREST INCOME 25% $171M$1.19B $171M$1.12B DEPOSI S CLIENTS 18K PPNR/FTE $1.71M $40.1B 9.6B Information as of and full-year ending 12/31/2022. Not
Slide 27: A Track Record of Strong Performance
27WEBSTER FINANCIAL CORPORATION $175 $326 $383 $374 $435 $50 $89 $103 $102 $104 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Operating Revenue Operating Expense A Track Record of Strong Performance PPNR $125 $237 $280 $272 $331 Note: Merger with Sterling occurred on February 1, 2022. Q4 2021 represents L
Slide 28: Our Proven Strategy
28WEBSTER FINANCIAL CORPORATION Offering full suite of banking solutions tailored to meet our Commercial clients’ needs Serving clients of increasing sophistication Consistent track record of year over year growth and profitability Our Proven Strategy Solution Oriented Expanding Capabilities Nationa
Slide 29: Scalable Coverage and Personalized Solutions
29WEBSTER FINANCIAL CORPORATION Scalable Coverage and Personalized Solutions INVESTING IN PROCESS & TECHNOLOGY EXTENSIVE PRODUCT SET REGIONAL & NATIONAL COVERAGE MODEL • Local & regional coverage in core franchise, predominately C&I businesses • National coverage with deep industry expertise (Instit
Slide 30: Commercial Business Segments: Regional and National
30WEBSTER FINANCIAL CORPORATION Webster’s Commercial Business Segments Include both Regional and National Coverage Models Regional National 61% 39%Contribution1 Expansion Strategy Local expansion targeting in and surrounding footprint opportunities leveraging Webster franchise National expansion thr
Slide 31: Regional Segments Serve Clients Locally
31WEBSTER FINANCIAL CORPORATION Our Regional Segments Serve Clients Locally; Predominantly within Webster’s Franchise Footprint Middle Market Commercial Real Estate Verticals Business Banking Private Banking Total Loans ($B) $6.3 $14.7 $0.6 $1.9 $0.6 $24.2 / 60% Deposits ($B) $3.9 $3.5 $7.7 $2.6 $0.
Slide 32: Differentiated National Businesses
32WEBSTER FINANCIAL CORPORATION Sponsor & Specialty ABL & Commercial Services1 Public Sector Finance Mortgage Warehouse Equipment Finance Total Loans ($B) $8.0 $2.2 $3.7 $0.6 $1.5 $16.0 / 40% Deposits ($B) $1.0 $0.3 $0.1 $0.0 $0.0 $1.4 / 7% PPNR ($M) / % $225 / 20.1% $62 / 5.6% $32 / 2.9% $10 / 0.9%
Slide 33: Commercial Real Estate Growth Outlook
33WEBSTER FINANCIAL CORPORATION Growth Outlook C O M M E R C I A L R E A L E S T A T E Diversified Segment for Growth and Expansion +54% YoY Origination Growth $18.7M Average Origination Size $5.2B New Originations • Significant industry, product, and geographic experience • Reliable client experien
Slide 34: Commercial & Industrial: Local Delivery
34WEBSTER FINANCIAL CORPORATION $0.4 $0.5 $0.7 $0.7 $0.8 $1.5 $1.8 $2.5 Pennsylvania Northeast Other New Jersey Massachusetts Connecticut New York (ex NYC) NYC Loan Balances1 ($B) +12% YoY Origination Growth2 #1 Top SBA Bank in New England3 59 Net Promoter Score4 C O M M E R C I A L & I N D U S T R
Slide 35: Sponsor & Specialty Finance
35WEBSTER FINANCIAL CORPORATION $2.3 $1.8 $1.3 $0.9 $0.7 $0.5 $0.4 Differentiated Verticals Loans ($B) +137% YoY Origination Growth 131 Total Sponsor Relationships S P O N S O R & S P E C I A L T Y F I N A N C E Highly Valued Partners with Deep Vertical Expertise • Long and enduring relationships •
Slide 36: Public Sector Finance
36WEBSTER FINANCIAL CORPORATION +198% YoY Origination Growth Aa2/Aa3 Moody’s Weighted Average Portfolio Rating $10.3M Average Deal Size1 P U B L I C S E C T O R F I N A N C E Expanding Segment Serving Municipalities • Leverage multiple delivery channels • Seamless client experience • Viable alternat
Slide 37: Treasury Management: Amplifying Capabilities
37WEBSTER FINANCIAL CORPORATION SEAMLESS CLIENT DELIVERY EXPANDING PRODUCT OFFERING ADVANCING DIGITAL CAPABILITIES • Offer consistent client experience through both banker and digital channels • Expanding voice of customer capabilities for ongoing client engagement • Align sales, service, and implem
Slide 38: Treasury Management: Deepening Client Relationships
38WEBSTER FINANCIAL CORPORATION T R E A S U R Y M A N A G E M E N T Deepening Client Relationships & Expanding Capabilities $22.2 $22.0 $14.7 $8.9 PxV Revenue Mix ($M, %) 33%Liquidity Payments 32% Receivables 22% Digital 13% $8.2 $8.4 $8.3 $8.6 $9.0 $16.4 $16.6 $16.4 $17.0 $17.9 Q4 21 Q1 22 Q2 22 Q3
Slide 39: Long-Term Performance Objectives
39WEBSTER FINANCIAL CORPORATION Long-Term Performance Objectives Continued geographic and vertical expansion Enhance products and digital capabilities +11% tech investment Invest in our talent +6% growth in new hires Performance Targets 2022 Results 3-Year Planning Horizon (CAGR) Loans $ 40.1B +7 –
Slide 40: Consumer Banking
40WEBSTER FINANCIAL CORPORATION Consumer Banking James Griffin Head of Consumer Banking
Slide 41: Key Takeaways
41WEBSTER FINANCIAL CORPORATION A modern retail bank model with a clear path for profitable growth Key Takeaways 01 Targeted investment in high-value segments & digital channels02 03 Diverse funding solutions through banking centers, relationship managers in high- opportunity segments, and digital c
Slide 42: Performance Profile
42WEBSTER FINANCIAL CORPORATION LOANSEFFICIENCY RATIO 49% BANKING CENTERSDEPOSIT BETA PPNR Performance Profile 201 DEPOSITS PPNR/FTE $329K AVERAGE DEPOSITS PER BANKING CENTER $113M $414M $9.6B $23.6B Information as of 12/31/2022. Note: Merger with Sterling occurred on February 1, 2022. Q1 2022 inclu
Slide 43: Consumer Deposit Segments and Channels
43WEBSTER FINANCIAL CORPORATION Banking Center Digital Banking Small Business Mass Affluent Mass Market BrioDirect Deposit Balances $4.1B $13.7B $4.8B $0.9B Typical Client Small to mid-sized growth clients with up to $2M in credit needs Clients with up to $3M in liquid assets Clients with less than
Slide 44: High-Quality Consumer Lending Business
44WEBSTER FINANCIAL CORPORATION $7.6B $1.6B $32M Product Mix 82.8%Residential Home Equity 16.9% Unsecured 0.3% Business Overview • Strong partnership with branch network • Proven inside/outside sales team coverage model • Efficient correspondent channel • Nearly 80% of clients exceed 740 FICO and ov
Slide 45: A Track Record of Strong Performance
45WEBSTER FINANCIAL CORPORATION $119 $165 $210 $230 $236 $75 $96 $107 $110 $114 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Operating Revenue Operating Expense A Track Record of Strong Performance PPNR $44 $69 $103 $120 $122 Note: Merger with Sterling occurred on February 1, 2022. Q4 2021 represents Leg
Slide 46: Our Delivery Model
46WEBSTER FINANCIAL CORPORATION Our Delivery Model Personalized Advice & Service Excellence Full Service Financial Solutions Powerful & Easy-to-use Digital Tools Value Creation Strategic and cultural shift toward segmentation to serve the unique needs of clients and build an opportunity-based delive
Slide 47: Deposit Opportunities
47WEBSTER FINANCIAL CORPORATION Deposit Opportunities Mass Affluent Robust, primary client base seeking personalized advice BrioDirect Alternative funding source through a nationwide high-yield savings offering Small Business Stable, non-rate sensitive book looking for integrated solutions Acquisiti
Slide 48: Digital Sales Enablement
48WEBSTER FINANCIAL CORPORATION Digital Sales Enablement Continued investment in client-facing digital tools is a critical component toward achieving sustainable, top-line revenue-driven profitable growth Cost Savings Profitability Top-line Growth Transform the distribution model • End-to-end digita
Slide 49: Long-Term Performance Objectives
49WEBSTER FINANCIAL CORPORATION Long-Term Performance Objectives Digital Onboarding and End-to-End Servicing Platform Modernize and Scale Consumer Lending Evolve Physical Distribution Model Performance Targets 2022 Results 3-Year Planning Horizon (CAGR) Loans $ 9.6B + 2 – 4% Deposits $ 23.6B + 3 – 5
Slide 50: HSA Bank
50WEBSTER FINANCIAL CORPORATION HSA Bank Chad Wilkins President, HSA Bank
Slide 51: Key Takeaways
51WEBSTER FINANCIAL CORPORATION Key Takeaways 01 Deepen engagement and penetration within customer base02 03 Maximize customer acquisition by exceeding expectations and delivering value Invest in an enhanced customer experience ecosystem to drive positive outcomes
Slide 52: HSA Bank Overview
52WEBSTER FINANCIAL CORPORATION HSA Bank Overview Vision Mission A world where everyone is confidently engaged with their health and wealth We help individuals, employers, and partners simplify complex health and wealth decisions. We do this by delivering personalized insights, experiences, and solu
Slide 53: Performance Profile
53WEBSTER FINANCIAL CORPORATION DEPOSITSEFFICIENCY RATIO AUA Performance Profile ACCOUNTHOLDERS 3M $7.9B45% PTNR $171M $11.3B COLLEAGUES 606 EMPLOYERS 30K PTNR/FTE $283K Information as of 12/31/2022
Slide 54: A Track Record of Strong Performance
54WEBSTER FINANCIAL CORPORATION $67 $71 $76 $85 $91 $34 $36 $37 $37 $41 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Operating Revenue Operating Expense A Track Record of Strong Performance PTNR $33 $35 $39 $48 $50 ($ in millions)
Slide 55: Market Landscape
55WEBSTER FINANCIAL CORPORATION Market Landscape Privately Insured Americans Estimated HSA Covered Lives Total HSAs 182M 67M 33M Strong Market Demand1 • 80% of employers offer HSAs • 63% of employers offer FSAs (37M) • 16% of employers offer HRAs (15M+) • 113M+ Americans benefit 2a 2b 2c 1ECFC Benef
Slide 56: HSA Market Growth
56WEBSTER FINANCIAL CORPORATION $44 $50 $58 $64 $71 $80 $89 $10 $16 $24 $34 $35 $43 $53 $54 $66 $82 $98 $106 $123 $142 2018 2019 2020 2021 2022 (est) 2023 (est) 2024 (est) Deposits Investments HSA Market Growth Investments 16% CAGR `21-24 Deposits 12% CAGR `21-24 Total HSA Assets ($B) Source: Deveni
Slide 57: Winning in a Complex Ecosystem
57WEBSTER FINANCIAL CORPORATION Winning in a Complex Ecosystem Requirements • Comprehensive product suite • Seamless data/system integrations • Flawless service • Simple and connected experience • Measurable success HSA Bank is poised to deliver above market expectations Customers require broader &
Slide 58: Consumers Are Not Prepared for Healthcare in Retirement
58WEBSTER FINANCIAL CORPORATION Consumers are not prepared for healthcare in retirement Consumers are confused about their options to save $600,000401k HSA $100,000 $100,000 … … .. -$24,000 (federal taxes)… … .. $76,000 For healthcare … … … … … ..… .. $100,000 For healthcare vs. Consumers are not op
Slide 59: Customer Profiles: Behavior as Growth Driver
59WEBSTER FINANCIAL CORPORATION In aggregate, HSAB accounts carry a $2,612 average deposit balance 68% $474 Average deposit balance 25% $7,956 Average deposit balance 7% $4,018 Average deposit balance SPENDER SAVER INVESTOR • Help Spenders save more and/or optimize spending • Help Savers understand
Slide 60: Driving Outcomes by Leveraging Our Strengths
60WEBSTER FINANCIAL CORPORATION PREPARED AWARE OPTIMIZED Driving Outcomes by Leveraging Our Strengths More than HSAs Leadership Experience Engagement Reimagining and Investing • Employer Experience • Bend Acquisition • CRM + Marketing Cloud • Journey Builders 14.5 Million Emails 1600 Strategic Accou
Slide 61: Customer Engagement Ecosystem
61WEBSTER FINANCIAL CORPORATION Customer Engagement Ecosystem • Personalized • Automated • Scalable • Adaptive • Innovative INVESTMENT CRITERIA Employer Portal Consumer Platform CRM + Marketing Cloud Artificial Intelligence Data Warehouse Product Suite EXPERIENCE POWERED BY OUTCOMES • Maximized Savi
Slide 62: Long-Term Performance Objectives
62WEBSTER FINANCIAL CORPORATION Long-Term Performance Objectives Performance Targets 2022 Results 3-Year Planning Horizon (CAGR) Accounts 3M + 6 – 8% Deposits $ 7.9B 10%+ AUA $ 11.3B 15%+ Pre-Tax Net Revenue $ 171M + 15 – 17% Performance Objectives • Build products, demonstrate outcomes, and own bes
Slide 63: Risk Management
63WEBSTER FINANCIAL CORPORATION Risk Management Daniel Bley Chief Risk Officer
Slide 64: Key Takeaways
64WEBSTER FINANCIAL CORPORATION Key Takeaways 01 Risk culture aligned with core values02 03 Comprehensive risk framework strengthened by merger Well-positioned to meet heightened regulatory standards
Slide 65: Integrated, Forward-Looking Approach
65WEBSTER FINANCIAL CORPORATION Integrated, Forward-Looking Approach • Risk appetite aligned with strategy • Robust risk governance with effective and credible challenge • Defined risk tolerance limits and metrics monitored at Board and management level • Robust risk management framework with embedd
Slide 66: Risk Culture as the Foundation
66WEBSTER FINANCIAL CORPORATION Risk Culture as the Foundation • Risk culture rooted in Webster’s core values • Intense respect for the role of the regulators. Transparent and proactive relationship • Compensation plans consider quality of risk management • Rewarding transparency and self-identifica
Slide 67: Top Initiatives: Risk Elements and Initiatives
67WEBSTER FINANCIAL CORPORATION Top Initiatives • Risk programs consistent with OCC heightened standard expectations by June 2024. No fundamental changes required to Risk Management framework. • Continue integration and enhancement of risk management systems and processes. • Governance Risk & Compli
Slide 68: Credit Risk Management
68WEBSTER FINANCIAL CORPORATION Credit Risk Management Jason Soto Chief Credit Risk Officer
Slide 69: Key Takeaways
69WEBSTER FINANCIAL CORPORATION Key Takeaways 01 Disciplined and collaborative underwriting, augmented when appropriate02 03 Risk profile trended positively in 2022 Targeted originations with conservative deal structures 04 Proactively managing office portfolio 05 Prime consumer portfolio with limit
Slide 70: Processes Enhanced to Manage Emerging Market Risks
70WEBSTER FINANCIAL CORPORATION Strong Processes Were Enhanced to Manage Emerging Market Risks Normal Course Enhanced • Credit & Sales alignment • Synthesized credit culture • Focus on higher-rated loans • Emphasis on existing customers • Guidelines by product/segment • Tiered approval authorities •
Slide 71: 2022 Loan Growth Diverse and Higher-Rated
71WEBSTER FINANCIAL CORPORATION 2022 Loan Growth was Diverse & Weighted Towards Higher-Rated Segments Outstanding Balances Commercial Loans: Weighted Average Risk Rating & Portfolio Ratings Composition • Originations focused on higher quality borrowers / segments and increased volume with known Priv
Slide 72: Problem Loan Metrics Improved in 2022
72WEBSTER FINANCIAL CORPORATION Highlights Problem Loan Metrics Improved Meaningfully in 2022 Criticized & Classified Loan Trends; % of Commercial Loans*Non-Performing Loans & Net Charge Offs (NCOs) • Non-performing loans were at a 5-quarter low of 0.41% and well below the pre- pandemic level of ~0.
Slide 73: CRE Weighted Towards Multifamily and Industrial
73WEBSTER FINANCIAL CORPORATION CRE is Weighted Towards Multifamily & Industrial and Concentrated in NY • Average portfolio LTV range of 55%; Average amortizing DSCR ~1.6x • Multifamily and Industrial represent ~50% of portfolio and accounted for ~75% of loan balance growth in 2022 • Traditional Off
Slide 74: Traditional Office Exposure
74WEBSTER FINANCIAL CORPORATION Traditional Office Exposure Is 7% of Total CRE and 3% of Total Loans • Origination LTV: ~53% (almost no originations in 2022) • Current Debt Service Coverage Ratio (DSCR): 1.91x • Criticized / Classified rate: 6.6%/1.8% • Non-Accruals: 1.3% • Class A vs. Class B: ~50/
Slide 75: C&I Well-Diversified by Industry and Risk Ratings
75WEBSTER FINANCIAL CORPORATION 20% 18% 17% 13% 9% 7% 6% 6% 4% Finance Other Services Public Administration Manufacturing Transportation and Public Utilities Wholesale Communications Healthcare C&I Is Well-Diversified by Industry, Collateral Type, and Risk Ratings 1 Consists primarily of Communicati
Slide 76: Sponsor Portfolio Diversified with Focused Strategy
76WEBSTER FINANCIAL CORPORATION Sponsor Portfolio Has Been Diversified and Has a Focused Strategy Composition & Asset Quality by Segment HighlightsFinancial Metrics by Segment Segment SLR TLR FCCR LTV Tech & Infrastructure (T&I) 4.1x 4.4x 3.0x 28% Healthcare (HC) 4.0x 4.4x 2.2x 32% Generalist 4.2x 4
Slide 77: Consumer Lending to Prime Borrowers
77WEBSTER FINANCIAL CORPORATION Consumer Lending Is to Prime Borrowers and Is Well Collateralized • Residential lending (1st mortgage) comprised 82% of the Consumer portfolio • Essentially no unsecured lending • Exposure is largely within footprint with CT, MA, and NY comprising 83% of the total Con
Slide 78: Corporate Responsibility
78WEBSTER FINANCIAL CORPORATION Corporate Responsibility Marissa Weidner Chief Corporate Responsibility Officer
Slide 79: Key Takeaways
79WEBSTER FINANCIAL CORPORATION Key Takeaways 01 Community engagement is embedded in our business model02 03 Community Investment Strategy drives equity in the communities we serve Webster is invested in Corporate Responsibility
Slide 80: Community Investment Strategy Priorities
80WEBSTER FINANCIAL CORPORATION Support Affordable Housing & Homeownership • Deepen our commitment to multifamily lending best practices • Expand support for CRA- eligible residential lending • Fund a Down Payment Assistance program • Monitor economic impact metrics in communities we serve Invest in
Slide 81: Community Investment Commitments
81WEBSTER FINANCIAL CORPORATION Community Investment Commitments $6.5B Total 3-year plan representing a 20% increase $1.35B LMI Residential Lending $1B Multifamily Lending $2.1B Small Business Lending $15M Grants / Contributions $1.3B Community Development Lending $825M Qualified Investments 30,000+
Slide 82: Building an ESG Program
82WEBSTER FINANCIAL CORPORATION Steps we are taking to build our program… • Establishing quantitative framework with specific goals and objectives for short, mid- and long-term • Implementing quarterly reporting to track progress • Leveraging multichannel and multitouch approach to communicate our s
Slide 83: Community Investment & Engagement
83WEBSTER FINANCIAL CORPORATION Community Investment & Engagement Provide innovative community engagement solutions and continue execution against Community Investment Strategy ESG Continue building our program establishing formal goals and onboard new ESG platform to enable effective management of
Slide 84: Accomplishments and Next Steps
84WEBSTER FINANCIAL CORPORATION ✓ Announced $6.5B Community Investment Strategy ✓ Launched 3 Advisory Councils in primary markets (CT, MA, NY and RI) ✓ Hired Community Liaison Officers focused on CRA-eligible residential lending ✓ Launched Webster Connect Checking ✓ Launched Webster Finance Labs and
Slide 85: Human Resources, Culture, and DEIB
85WEBSTER FINANCIAL CORPORATION Human Resources, Culture, and DEIB Javier Evans Chief Human Resources Officer
Slide 86: Key Takeaways
86WEBSTER FINANCIAL CORPORATION Key Takeaways 01 We provide our LOBs with key talent to fuel their future growth02 03 We are firmly committed to our values and culture We promote an inclusive workplace where colleagues can be their true authentic self
Slide 87: Human Resources Vision
87WEBSTER FINANCIAL CORPORATION Continue to position Webster Financial Corporation as a “Best-in-Class” employer and deliver a premier colleague experience Human Resources Vision Attracting, retaining, and developing talent Fostering a diverse, equitable, and inclusive workplace Offering contemporar
Slide 88: Culture and Colleague Engagement
88WEBSTER FINANCIAL CORPORATION Culture and Colleague Engagement The key to our success is our strong culture built upon our values • Accountability • Agility • Collaboration • Excellence • Integrity • Respect COLLEAGUE XPERIENCE A Great Place to Work
Slide 89: Diversity, Equity, Inclusion & Belonging
89WEBSTER FINANCIAL CORPORATION Diversity, Equity, Inclusion & Belonging DEIB Strategy We create a workplace that reflects the communities we serve and where every colleague feels empowered to bring their true authentic selves to work every dayBusiness Resource Groups • African and Caribbean Heritag
Slide 90: 2023 Key Priorities
90WEBSTER FINANCIAL CORPORATION Core Conversion Support core conversion by providing a comprehensive approach for all product, process, and systems training. DEIB Continue to drive diversity throughout the bank (hiring, BRGs, career development, etc.) and enhance DEIB quarterly scorecard. HR Transfo
Slide 91: Financial Outlook
91WEBSTER FINANCIAL CORPORATION Financial Outlook Glenn MacInnes Chief Financial Officer
Slide 92: Key Takeaways
92WEBSTER FINANCIAL CORPORATION Key Takeaways 01 Active interest rate risk management to ensure sustainable long-term performance02 03 Maximizing Economic Profit through the allocation of capital to highest risk adjusted returns Leverage strong funding and liquidity diversity to support high-return
Slide 93: Maximize Economic Profit Over Time
93WEBSTER FINANCIAL CORPORATION Maximize Economic Profit Over Time • Allocate capital to highest-potential opportunities • Focus on risk-adjusted returns in businesses with secular growth opportunities, attractive competitive dynamics, and synergies with existing business lines • Return considerable
Slide 94: A Track Record of Strong Performance
94WEBSTER FINANCIAL CORPORATION $575 $579 $608 $664 $709 $304 $301 $292 $293 $302 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 A Track Record of Strong Performance GAAP Reported PPNR $127.1 $138.5 $249.4 $334.6 $356.2 Pro Forma / Adjusted $271.5 $277.2 $315.9 $371.4 $406.6 Operating Revenue Operating Exp
Slide 95: Business Line PPNR Trends
95WEBSTER FINANCIAL CORPORATION Business Line PPNR Trends Effective execution of our corporate strategies allows our diverse and complementary business segments to deliver incremental returns across economic cycles As we strategically allocate and redeploy capital to the highest-performing business
Slide 96: Building Momentum Since Closing the Merger
96WEBSTER FINANCIAL CORPORATION Building Momentum Since Closing the Merger $43.3B $49.8B 1/31/22 12/31/22 Loan Growth $6.4B +15% $53.9B $54.1B 1/31/22 12/31/22 Deposit Growth +$0.1B Earnings per Share -$0.14 $1.38 $1.24 $1.60 1Q22 4Q22 Efficiency Ratio 48.7% 40.3% 1Q22 4Q22 -840bps GAAP $1.52 ADJ. $
Slide 97: Adjusted Returns Reflect Organizational Momentum
97WEBSTER FINANCIAL CORPORATION Adjusted Returns Reflect Organizational Momentum $139M $356M $277M $407M 1Q22 4Q22 PPNR -1.36% 19.93% 17.01% 22.92% 1Q22 4Q22 -0.12% 1.40% 1.37% 1.61% 1Q22 4Q22 ROAA ROATCE Reported Pro Forma/ Adjusted Reported Adjusted 2022 Adj. Target at Announcement: 1.40% 2022 Adj
Slide 98: Interest Rate Risk Positioning
98WEBSTER FINANCIAL CORPORATION • Our goal is to position the balance sheet to provide sustainable returns in various rate environments • We reduced our asset sensitivity over the course of 2022 via changes in asset composition including loan mix and extended securities duration, and employing costl
Slide 99: Near-term NIM Drivers
99WEBSTER FINANCIAL CORPORATION Near-term NIM Drivers Near-term NIM Protection From Repricing of Fixed Rate Assets • ~$9B of fixed rate loan cash flows to be redeployed in the next 24 months • Runoff yield ~3.65% reinvested under forecasted yield of ~5.50% • ~$3B of investment securities reinvested
Slide 100: Strong Liquidity and Funding Profile
100WEBSTER FINANCIAL CORPORATION Strong Liquidity and Funding Profile • Diverse funding provides flexibility and positions the company for growth • Webster has a long-term target loan-to- deposit ratio of 90-95% • Webster maintains ample borrowing capacity • 28% of loan assets provide operating liqu
Slide 101: Strong Capital Position
101WEBSTER FINANCIAL CORPORATION Strong Capital Position • Strong capital position provides ample flexibility for growth and strategic capital actions • Webster employs a disciplined approach to managing capital, balancing capital efficiency and adequacy to maximize shareholder value within Webster’
Slide 102: Disciplined Capital Management
102WEBSTER FINANCIAL CORPORATION Disciplined Capital Management • ~25% of excess capital generated • Return capital to shareholders through quarterly dividends • ~40% of excess capital generated • Engage in opportunistic investments and/or inorganic growth, or • Return capital to shareholders throug
Slide 103: Long-Term Impact of Strategic Initiatives
103WEBSTER FINANCIAL CORPORATION Recap of the Long-Term Impact of Strategic Initiatives across Our Business Lines Commercial Banking Consumer Banking HSA Bank Lending Initiatives: • Expand differentiated verticals through investments in talent and new hires • Targeted growth in Fund Banking and Publ
Slide 104: Full-Year 2023 Outlook
104WEBSTER FINANCIAL CORPORATION Full-Year 2023 Outlook Outlook assumes no material changes to the regulatory environment or macro environment / rate assumptions Loan Growth • Expect period-end loan growth to be 6% to 8% • Diverse growth across segments Deposit Growth • Deposit growth of 4% to 5% ex
Slide 105: Long-Term Performance Objectives
105WEBSTER FINANCIAL CORPORATION Long-Term Performance Objectives Performance Targets 2022 Results 3-year Planning Horizon (CAGR) Loans $ 49.8B + 7 – 9% Deposits $ 54.1B + 7 – 9% Net interest income (Pro Forma / Adjusted) $ 2.1B + 10 – 12%* Pre-Provision Net Revenue (Pro Forma / Adjusted) $ 1.4B + 1
Slide 106: Closing Remarks and Q&A
106WEBSTER FINANCIAL CORPORATION Closing Remarks and Q&A John Ciulla Chief Executive Officer
Slide 107: Strategic Priorities
107WEBSTER FINANCIAL CORPORATION Strategic Priorities Corporate Citizenship Operational EffectivenessValues-Driven Culture Growth Drivers Risk Management Expand Technology Capabilities
Slide 108: Appendix
108WEBSTER FINANCIAL CORPORATION Appendix
Slide 109: Awards and Recognition
109WEBSTER FINANCIAL CORPORATION Awards and Recognition Forbes: 2022 40 Best Employers in Connecticut Forbes: 2022 Best-in-State Banks and Credit Unions Newsweek: 2022 Most Trusted Companies in the United States Greenwich Coalition: 2021 Greenwich CX Leader in the U.S. Commercial Middle Market Banki
Slide 110: Executive Bio – Daniel Bley
110WEBSTER FINANCIAL CORPORATION Executive Bio – Daniel Bley Daniel H. Bley is Executive Vice President, Chief Risk Officer of Webster Bank, a leading commercial bank with more than $70 billion in assets. He is responsible for managing the Bank’s enterprise risk functions, including operating, compl
Slide 111: Executive Bio – Elzbieta Cieslik
111WEBSTER FINANCIAL CORPORATION Executive Bio – Elzbieta Cieslik Elzbieta Cieslik is Executive Vice President and Chief Audit Officer for Webster Bank,, a leading commercial bank with more than $70 billion in assets, where she is responsible for Internal Audit. Prior to joining Webster, Elzbieta wa
Slide 112: Executive Bio – John Ciulla
112WEBSTER FINANCIAL CORPORATION Executive Bio – John Ciulla John R. Ciulla is President and Chief Executive Officer (CEO) of Webster Bank and Webster Financial Corporation, a leading commercial bank with more than $70 billion in assets. John joined Webster in 2004 as senior vice president for Middl
Slide 113: Executive Bio – Javier Evans
113WEBSTER FINANCIAL CORPORATION Executive Bio – Javier Evans Javier L. Evans is Executive Vice President, Chief Human Resources Officer at Webster Bank, a leading commercial bank with more than $70 billion in assets. He is responsible for the company’s overall HR operations, including compensation
Slide 114: Executive Bio – James Griffin
114WEBSTER FINANCIAL CORPORATION Executive Bio – James Griffin James M. Griffin is Executive Vice President, Head of Consumer Banking at Webster Bank, a leading commercial bank with more than $70 billion in assets. He is responsible for the Bank’s consumer banking strategy, consumer network, residen
Slide 115: Executive Bio – Glenn MacInnes
115WEBSTER FINANCIAL CORPORATION Executive Bio – Glenn MacInnes Glenn MacInnes is Executive Vice President, Chief Financial Officer of Webster Bank and Webster Financial Corporation, a leading commercial bank with more than $70 billion in assets. He is responsible for the overall financial managemen
Slide 116: Executive Bio – Luis Massiani
116WEBSTER FINANCIAL CORPORATION Executive Bio – Luis Massiani Luis Massiani is Executive Vice President, Chief Operating Officer of Webster Bank and of Webster Financial Corporation a leading commercial bank with more than $70 billion in assets. In his role, Luis is responsible for the operating in
Slide 117: Executive Bio – Chris Motl
117WEBSTER FINANCIAL CORPORATION Executive Bio – Chris Motl Chris Motl is President, Commercial Bank at Webster Bank, a leading commercial bank with more than $70 billion in assets. Chris leads all aspects of the Commercial Banking organization including Commercial Real Estate, Sponsor & Specialty F
Slide 118: Executive Bio – Vikram Nafde
118WEBSTER FINANCIAL CORPORATION Executive Bio – Vikram Nafde Vikram Nafde is Executive Vice President, Chief Information Officer of Webster Bank, a leading commercial bank with more than $70 billion in assets. He is responsible for the strategy and execution of all of Webster’s technology, cybersec
Slide 119: Executive Bio – Jason Soto
119WEBSTER FINANCIAL CORPORATION Executive Bio – Jason Soto Jason Soto is Executive Vice President, Chief Credit Risk Officer of Webster Bank, a leading commercial bank with more than $70 billion in assets. In his role, Jason has overall responsibility for credit execution including approvals, gover
Slide 120: Executive Bio – Marissa Weidner
120WEBSTER FINANCIAL CORPORATION Executive Bio – Marissa Weidner Marissa Weidner is Chief Corporate Responsibility Officer of Webster Bank, a leading regional commercial bank with more than $70 billion in assets. In her role, Marissa is responsible for the oversight and execution of a $6.5 billion C
Slide 121: Executive Bio – Charles Wilkins
121WEBSTER FINANCIAL CORPORATION Executive Bio – Charles Wilkins Charles L. Wilkins is Executive Vice President of Webster Bank and Head of HSA Bank where he is responsible for leading all aspects of the organization. Prior to joining Webster in 2014, he was CEO of Optum Financial Services, a divisi
Slide 122: 2023 Proxy Peer Group
122WEBSTER FINANCIAL CORPORATION 2023 Proxy Peer Group Company Name Ticker Webster Financial Corporation WBS BOK Financial Corporation BOKF Comerica Incorporated CMA Cullen/Frost Bankers, Inc. CFR First Citizens BancShares, Inc. FCNC.A First Horizon Corporation FHN F.N.B. Corporation FNB Huntington
Slide 123: Efficiency Ratio
123WEBSTER FINANCIAL CORPORATION Efficiency Ratio 4Q22 1Q22 Non-interest expense $ 348.4 $ 359.8 Less: Net foreclosed (income) (0.1) (0.1) Amortization of intangibles 8.2 6.4 Operating lease depreciation 2.0 1.6 Strategic initiatives and other 0.1 (4.1) Merger related 45.8 108.5 Non-interest expense
Slide 124: Earnings Per Share
124WEBSTER FINANCIAL CORPORATION Earnings Per Share 4Q22 1Q22 Pre-Tax After Tax EPS Pre-Tax After Tax EPS Reported (GAAP) $313.2 $240.6 $1.38 $(50.3) $(20.2) $(0.14) Merger related 45.8 33.6 0.20 108.5 79.7 0.54 Strategic initiatives and other 4.6 3.4 0.02 (4.1) (3.0) (0.02) Non-PCD provision - - -
Slide 125: Pre-Provision Net Revenue
125WEBSTER FINANCIAL CORPORATION Pre-Provision Net Revenue 4Q22 3Q22 2Q22 1Q22 4Q21 Reported (GAAP) $ 356.2 $ 334.6 $ 249.4 $ 138.5 $ 127.1 Strategic initiatives and other 4.7 11.6 (0.2) (4.1) 3.1 Merger-related expense 45.8 25.2 66.6 108.5 10.6 Pre-merger Sterling - - - 34.4 130.7 Pro Forma / Adjus
Slide 126: Return on Average Assets
126WEBSTER FINANCIAL CORPORATION Return on Average Assets 4Q22 1Q22 Reported Net income $ 244.8 $ (16.7) Annualized income $ 979.0 $ (67.0) Average assets $ 69,960 $ 54,809 Reported Return on Average Assets 1.40% -0.12% Adjusted Net income $ 244.8 $ (16.7) Add: Strategic initiatives and other, tax-e
Slide 127: Return on Average Tangible Common Stockholders' Equity
127WEBSTER FINANCIAL CORPORATION Return on Average Tangible Common Stockholders’ Equity 4Q22 1Q22 Reported Net income (loss) $ 244.8 $ (16.7) Less: Preferred stock dividends 4.2 3.4 Add: Intangible assets amortization, tax-effected 6.5 5.0 Adjusted income (loss) $ 247.1 $ (15.1) Adjusted income (los