Webster Financial Corporation

Good morning. Welcome to the Webster Financial Corporation third quarter 2022 earnings call. Please note this event is being recorded. I would now like to introduce Webster's Director of Investor Relations, Emlyn Harmon, to introduce the call. Mr. Harmon, please go ahead.

Good morning. Before we begin, I remind you that the comments made by management may include the forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, subject to the safe harbor rules. Please review the forward-looking disclaimer in safe harbor language in today's press release and presentation for more information about risks and uncertainty which may affect us. The presentation accompanying management's remarks can be found on the company's investor relations website at investors.websterbank.com. I'll now turn the call over to Webster Financial CEO, John Ciula.

Thanks, Edwin. Good morning, everyone, and thank you for joining us for our third quarter earnings call. I'm going to provide remarks financial performance, strategic execution, and merger integration before turning it over to Glenn to review our financials in more detail. The third quarter results announced today reflect the strong progress we've made in creating a high-performing and differentiated company through solid execution on integration activities and a laser focus on delivering for our clients. We are one unified Webster growing across a diverse set of business lines, realizing revenue and cost energies, supporting the communities in an expanded footprint, delivering financial results that meet or exceed the target metrics we set forth when we announced the MOP 18 months ago. Our financial performance this quarter was stronger than last. On an adjusted basis, we generated diluted EPS of $1.46 versus $1.29 last quarter, net income available to common shareholders, $257 million versus $229 last quarter, and PPNR went up from $371 million from $316 million. The potential of the company we have created is evident in our results. On an adjusted basis, we produced a return on assets in excess of 1.5% and a return on tangible common equity of nearly 21%. Our efficiency ratio was 41% in the quarter and over 400 basis point improvement. These results exceed the full-year 2022 proformas we provided when we first announced our merger in April 2021. We are surpassing loan growth expectations without expanding our risk tolerances. We're proactively optimizing the balance sheet. We've continued to generate solid fee income. We've done an excellent job of maintaining client service levels, adding and retaining clients and talent, all while executing on the integration plan. Given the positioning of our balance sheet, the NIMA expanded 23 basis points to 3.5%. Loans grew meaningfully this quarter, driven by a set of industries, asset classes, and geographies. Several of our major loan categories grew significantly, including CNI, CRE, and residential mortgage. Deposits also grew just under 2%. While executing on cost synergies and approaching an efficiency ratio of 40%, continue to make investments in the company. We have said from the outset that Webster post-MOE is a great story. We have been adding to commercial verticals. Since the merger closed, we had the opportunity to add middle market bankers in our core footprint and have added to our national ABL team. We will continue to look for and make investments in colleagues and businesses that can grow our differentiated commercial business lines and that will generate the payments, fees, and loans that and we look to maximize economic profit over time. We will also continue to invest in technology that enhances the colleague and client experience. As we operate in an uncertain macro environment, we continue to execute on asset growth while staying disciplined and prudent in risk-solving, underwriting, and portfolio management activities. Our credit metrics remain remarkably strong with lower MPLs and MPAs, lower commercial classified loans, and lower delinquencies, all compared to prior quarter, on both a percentage of portfolio and absolute basis. While you will see that net charge-offs were elevated from prior quarter at a reported 25 basis points annualized, approximately $13 million of the net charge-offs resulted from proactive balance sheet management and optimization through the sale of more than $500 million worth of loans that were either no longer strategic or had suboptimal risk-return metrics. Absent those portfolio actions, the net charge-off rate would be an annualized 13 basis points, more in line with Q2, and still below our five-year range of 16 to 19 basis points. A quick recap on integration, as I've touched on a number of the items in the integration slide already. We continue to integrate subledgers and systems underlying our core infrastructure, quarter, we combined our commercial credit risk management system and rolled out consolidated commercial pricing tools, and we continued our corporate real estate consolidation, where we are now 50% complete. Major milestones we anticipate in the fourth quarter include the consolidation of cloud data centers, the transition of our consumer wealth and investment services operations to a third-party provider, and by year end, all of our colleagues will have completed cultural activation sessions establishing a common foundation for our organization, and aligning colleagues on strategy, expected behaviors, and most importantly, the strong values that are at the foundation of Webster Bank. With that, I'm going to turn it over to Glenn to review our financial performance for the quarter.