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WATERBURY, Conn.--(BUSINESS WIRE)--Oct. 20, 1999--Webster Financial Corporation (Nasdaq:WBST), holding company for Webster Bank, today reported record net income of $24.2 million, or $.63 per diluted share, for the third quarter ended Sept. 30, 1999, an increase of 20 percent compared to $20.1 million, or $.52 per diluted share, for the third quarter of 1998. There were no acquisition related or special charges in either period.
Consistent with the trend of recent quarters, the earnings improvement is due primarily to increases in net interest income and revenue from fee-based services. Noninterest income, excluding gains on sales of securities and loans, increased 41 percent to $21.2 million from $15 million in the year-ago period due to increased revenue from trust and investment management services and insurance services, and from expanded product offerings to Webster's growing customer base.
"As banking in New England undergoes unprecedented consolidation, Webster's strategic transformation as a leading financial services provider continues to gain momentum, " said chairman and chief executive officer James C. Smith. "Our record results clearly demonstrate that by building strong customer relationships, Webster is steadily increasing shareholder value. Our acquisition of New England Community Bancorp later this quarter will further enhance our commercial banking capabilities while strengthening and extending our Connecticut franchise."
Webster Financial also announced today that it has declared a regular quarterly cash dividend of $.12 per common share. The dividend is payable on Nov. 15, 1999, to shareholders of record on Nov. 1, 1999. This is the 49th consecutive quarterly dividend since Webster first paid a dividend in 1987. In April, Webster increased its regular quarterly cash dividend to $.12 cents per common share from $.11 per common share, its eighth dividend increase.
Third Quarter Financial Highlights
Return on average shareholders' equity for the third quarter was 17.1 percent, up from 14.7 percent in the third quarter of 1998.
Interest rate spread (the difference between the average yield on interest-earning assets and the average rate paid on interest-bearing liabilities) was 3.10 percent in the third quarter, up from 3.07 percent in the second quarter of 1999 and 2.61 percent in the third quarter of 1998.
"We are seeing the positive effects of the diversification of our revenue stream and are pleased by the sizeable increase in revenue from fee-based services." said John V. Brennan, chief financial officer.
Loan originations totaled $410 million for the quarter, up from $396 million in the year ago period. For the nine-month period ended Sept. 30, 1999, loan originations totaled $1.4 billion, up from $1.1 billion in the first nine months of 1998.
The allowance for loan losses as a percent of nonaccrual loans was 195 percent, up from 193 percent a year earlier. Allowances for nonaccrual assets as a percent of nonaccrual assets were 166 percent, up from 159 percent.
Income tax expense for the third quarter was $10.9 million, compared to $8.5 million for the year-ago period. Webster recorded a reduction in income tax expense of $1 million and $2.5 million in the 1999 and 1998 quarters, respectively, related to net tax benefits from prior acquisitions.
Webster reported a loss on the sale of securities of $939,000 in the third quarter of 1999, compared to a gain of $1.1 million in the year-ago-period.
Webster had 38 million common shares outstanding at Sept. 30, 1999. Book value per common share increased to $15.05.
Recent News Highlights:
In July, Webster Bank formed its own investment services operation -- Webster Investment Services, Inc., a wholly owned, broker-dealer subsidiary of Webster Bank. Webster Investment Services, Inc. offers mutual funds and fixed and variable annuities, in addition to individual securities transactions as requested by customers. Earlier, the bank received National Association of Securities Dealers, Inc. (NASD) approval to operate its own investment services program. Webster Investment Services, Inc. has chosen BHC Securities as its clearing broker to provide operating systems and trading support.
Also in July, Mark J. Tarmy joined Webster as executive vice president and chief information officer. In this role, Tarmy manages all aspects of Webster's Information Systems Group, including strategic technology planning, enterprise wide systems and telecommunications facilities. Prior to joining Webster, Tarmy was chief technology officer/COO at Thomson Securities Information Services.
In August, Webster was named to the Standard & Poor's MidCap 400 Index of mid-size market capitalization stocks. The S&P MidCap 400 Index measures the performance of the mid-size company segment of the U.S. stock market with $1 billion to $4 billion in market capitalization. The index is used by more than 95 percent of U.S. mutual fund managers and pension plan sponsors. Some $20 billion is indexed to the S&P MidCap 400.
In September, William T. Bromage was promoted to the newly created position of senior executive vice president. In his new position, Bromage will continue to have responsibility for Webster's commercial banking activities and he will assume interim responsibility for corporate development, including mergers and acquisitions, and for the corporation's Best Practices initiative.
Earlier this month, Webster's Internet mortgage lender, formerly doing business as discountmortgages.com, was upgraded and renamed as nowlending.com. Nowlending.com allows more of the application process to be completed on-line and offers loan approvals with rate lock within 24 hours and complete disclosure of all fees. Since its inception in 1996, nowlending.com has processed nearly $1 billion in mortgage applications.
NECB Acquisition
Pending regulatory and shareholder approvals, Webster expects to close on its acquisition of New England Community Bancorp, Inc. (Nasdaq: NECB) later this quarter. NECB is a Windsor, Conn.-based multi-bank holding company with three subsidiary Connecticut banks, one New Hampshire bank and a mortgage company. New England Community Bancorp's banking subsidiaries are state-chartered commercial banks with total assets of approximately $800 million, and 18 banking offices. The New England Community Mortgage Corporation recorded $160 million in loan originations in 1998.
With the addition of NECB, Webster will have approximately $10 billion in assets. The acquisition is expected to contribute positively to Webster's earnings per share in the first year. Webster expects to account for the transaction as a pooling of interests.
Webster Financial Corporation, headquartered in Waterbury, Conn., is the holding company for Webster Bank, which was founded in 1935. Webster Bank delivers consumer, commercial, mortgage, insurance, and trust and investment management services to individuals, families and businesses through a network of 115 banking offices, three commercial banking centers, two insurance offices, and 180 ATMs, in addition to telephone banking, video banking and PC banking. Total assets at Sept. 30, 1999, were $9 billion, total deposits were $5.6 billion and total loans were $5.4 billion.
Webster Bank has the number one or number two deposit market share in its primary markets of Hartford, New Haven and Litchfield counties. Webster is also a full-service commercial lender and the second-largest mortgage lender in Connecticut.
Webster Trust, the bank's trust and investment management subsidiary, is a leading Connecticut-based trust company. Webster's insurance subsidiary, Damman Insurance Associates, is one of the largest agencies in the state. Webster's www.nowlending.com subsidiary originates low-cost mortgages over the Internet for customers across the United States.
Conference Call
The third quarter earnings conference call will be held on Oct. 20, 1999 at 1 p.m., Eastern Time and may be heard through Webster's investor relations website at www.wbst.com. The call will be archived on the website and available for future retrieval.
For more information on Webster, including past press releases and the latest Annual Report, visit the Webster Bank website at www.websterbank.com.
Statements in this press release regarding Webster Financial Corporation's business that are not historical facts are "forward looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statement, see "Forward Looking Statements" in the Company's Annual Report for the most recently ended fiscal year. -0-
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WEBSTER FINANCIAL CORPORATION
Consolidated Statements of Condition (unaudited)
----------------------------------------------------------------------
September 30, September 30,
(Dollars in thousands) 1999 1998
----------------------------------------------------------------------
Assets:
Cash and due from depository institutions $ 170,200 $ 127,795
Interest-bearing deposits 785 8,728
Securities:
Trading, at fair value 63,146 97,849
Available for sale, at fair value 2,529,198 3,150,556
Held to maturity, (fair value:$315,143
in 1999; $444,726 in 1998) 327,523 439,836
Loans receivable:
Residential loans 3,788,183 3,793,405
Commercial real estate loans 498,897 386,138
Commercial and industrial loans 666,240 314,868
Home equity loans 456,371 450,654
Other consumer loans 41,343 43,820
Allowance for loan losses (62,785) (57,000)
------------- ----------
Loans receivable, net 5,388,249 4,931,885
Accrued interest receivable 60,002 55,863
Premises and equipment, net 88,567 79,372
Foreclosed properties, net 5,338 6,153
Intangible assets 135,126 81,037
Cash surrender value of life insurance 146,285 139,146
Prepaid expenses and other assets 82,633 45,466
------------- ----------
Total assets $ 8,997,052 $ 9,163,686
============= ==========
Liabilities and Shareholders' Equity:
Deposits:
Checking and NOW $ 1,082,449 $ 1,102,833
Savings and MMDAs 1,576,125 1,221,493
Certificates of deposit 2,905,436 3,297,045
------------- ----------
Total Deposits 5,564,010 5,621,371
Borrowed funds 2,555,355 2,654,126
Accrued expenses and other liabilities 105,327 122,696
------------- ----------
Total liabilities 8,224,692 8,398,193
------------- ----------
Corporation-obligated mandatorily redeemable
capital securities of subsidiary trusts 150,000 150,000
Preferred stock of subsidiary corporation 49,577 49,577
Shareholders' Equity 572,783 565,916
------------- ----------
Total liabilities and shareholders' equity $ 8,997,052 $ 9,163,686
============= ==========
Consolidated Statements of Income (unaudited)
Three months ended Nine months ended
September 30, September 30,
1999 1998 1999 1998
(Dollars in thousands,
except per share data)
Interest income:
Loans $ 99,666 $ 95,056 $288,560 $287,949
Securities and
interest-bearing deposits 48,173 57,227 150,701 183,161
---------- -------- -------- ----------
Total interest income 147,839 152,283 439,261 471,110
---------- -------- -------- ----------
Interest expense:
Deposits 45,649 55,465 141,135 169,158
Borrowings 33,566 37,175 98,827 119,261
---------- -------- -------- ----------
Total interest expense 79,215 92,640 239,962 288,419
---------- -------- -------- ----------
Net interest income 68,624 59,643 199,299 182,691
Provision for loan losses 2,100 1,500 6,200 5,300
---------- -------- -------- ----------
Net interest income after
provision for loan losses 66,524 58,143 193,099 177,391
---------- -------- -------- ----------
Noninterest income:
Fees and service charges 17,432 12,039 44,375 31,104
Gain on sale of loans
and loan servicing, net 353 235 1,792 2,800
Gain (loss) on sale
of securities, net (939) 1,143 2,480 11,269
Other noninterest income 3,804 2,977 11,660 8,357
---------- -------- -------- ----------
Total noninterest income 20,650 16,394 60,307 53,530
---------- -------- -------- ----------
Noninterest expenses:
Salaries and employee
benefits 24,088 19,640 66,484 58,396
Occupancy expense
of premises 4,288 4,251 13,059 12,018
Furniture and
equipment expenses 5,070 4,352 14,551 12,990
Intangible amortization 3,840 2,512 9,450 7,174
Marketing expenses 2,134 1,837 6,484 5,866
Other operating expenses 7,979 8,659 26,055 26,288
---------- -------- -------- ----------
47,399 41,251 136,083 122,732
Acquisition-related expenses - - - 17,400
Capital securities expense 3,661 3,692 10,984 11,046
Dividends on preferred stock
of subsidiary corporation 1,037 1,037 3,113 3,113
---------- -------- -------- ----------
Total noninterest expenses 52,097 45,980 150,180 154,291
---------- -------- -------- ----------
Income before income taxes 35,077 28,557 103,226 76,630
Income taxes 10,924 8,474 34,095 27,426
------------------------------ ----------
Net income $ 24,153 $ 20,083 $ 69,131 $ 49,204
============================== ==========
Net income per common share
before acquisition-
related expenses:
Basic $0.64 $0.53 $1.86 $1.64
Diluted $0.63 $0.52 $1.83 $1.61
Net income per common share
after acquisition-
related expenses:
Basic $0.64 $0.53 $1.86 $1.30
Diluted $0.63 $0.52 $1.83 $1.27
----------------------------------------------------------------------
Selected Financial Highlights (unaudited)
----------------------------------------------------------------------
At or for the three At or for the nine
months ended months ended
September 30, September 30,
(Dollars in thousands,
except per share data) 1999 1998 1999 1998
----------------------------------------------------------------------
Operating and Performance
Ratios (annualized):
-------------------------
Return on average
shareholders'
equity before
acquisition-related
expenses 17.13 % 14.68 % 16.85 % 15.77 %
Return on average
shareholders'
equity after
acquisition-
related expenses 17.13 14.68 16.85 12.44
Cash return on
average shareholders'
equity (a) 19.30 15.94 18.58 13.66
Return on
average assets
before acquisition
-related expenses 1.08 0.88 1.03 0.89
Return on
average assets
after acquisition-
related expenses 1.08 0.88 1.03 0.70
Noninterest expenses/
average assets 2.32 2.02 2.24 2.20
Noninterest expenses/
average assets (b) 1.94 1.70 1.89 1.64
Efficiency ratio (c) 54.26 59.37 55.21 58.44
Efficiency ratio (b) 48.90 52.91 49.68 52.04
Shareholders' equity/
total assets 6.37 6.18 6.37 6.18
Interest rate spread 3.10 % 2.61 % 3.02 % 2.59 %
Net interest margin 3.25 % 2.79 % 3.16 % 2.76 %
Loan originations:
Residential $ 230,471 $ 239,229 $ 833,706 $ 770,420
Commercial 109,753 96,501 318,295 189,284
Consumer 70,029 59,903 198,914 177,534
Asset Quality:
-------------------
Nonaccrual loans $ 32,273 $ 29,579 $ 32,273 $ 29,579
Nonaccrual
assets, net 37,611 35,734 37,611 35,734
Allowance for
loan losses 62,784 57,000 62,784 57,000
Allowances for
nonaccrual assets 63,046 57,312 63,046 57,312
Net loan
charge-offs 685 1,104 2,163 10,421
Nonaccrual assets/
total assets 0.42 % 0.39 % 0.42 % 0.39 %
Allowance for loan
losses/nonaccrual
loans 194.54 192.70 194.54 192.70
Allowances for
nonaccrual assets/
nonaccrual assets 166.47 159.00 166.47 159.00
Share Related:
---------------------
Book value per
common share $ 15.05 $ 14.91 $ 15.05 $ 14.91
Tangible book value
per common share $ 11.50 $ 12.78 $ 11.50 $ 12.78
Common stock
closing price $ 25.50 $ 24.38 $ 25.50 $ 24.38
Dividend declared
per common share $ 0.12 $ 0.11 $ 0.35 $ 0.32
Common shares
issued and
outstanding 38,066,359 37,943,394 38,066,359 37,943,394
Basic shares 37,950,170 38,011,104 37,124,146 37,952,903
Diluted shares 38,509,362 38,663,761 37,719,340 38,650,302
(a) Net income, excluding tax effected intangible amortization,
divided by average shareholders' equity.
(b) Excludes acquisition-related, intangible amortization, capital
securities, preferred dividend, foreclosed property expenses and
non-recurring charges.
(c) Excludes acquisition-related, intangible amortization, foreclosed
property expenses and non-recurring charges.
Retail and Wholesale Interest Rate Spreads (unaudited)
-----------------------------------------------------------------------
Three months ended, September June March December September
1999 1999 1999 1998 1998
-----------------------------------------------------------------------
Interest rate spread
Total interest-
earning assets 6.99 % 6.95 %6.98 % 7.07 % 7.04 %
Total interest-
bearing liabilities 3.89 3.88 4.07 4.25 4.43
----------- ------ ----- ----------- ------
Interest rate spread 3.10 % 3.07 %2.91 % 2.82 % 2.61 %
Net interest margin 3.25 3.20 3.03 2.96 2.79
Retail interest
rate spread
Yield on loans 7.39 % 7.34 %7.40 % 7.56 % 7.60 %
Rate on deposits 3.26 3.34 3.50 3.69 3.87
----------- ------ ----- ----------- ------
Spread 4.13 % 4.00 %3.90 % 3.87 % 3.73 %
=========== ====== ===== =========== ======
Wholesale interest
rate spread
Yield on
securities 6.28 % 6.31 %6.34 % 6.40 % 6.27 %
Rate on borrowings 5.31 5.16 5.27 5.48 5.70
----------- ------ ----- ----------- ------
Spread 0.97 % 1.15 %1.07 % 0.92 % 0.57 %
=========== ====== ===== =========== ======
Consolidated Average Statements of Condition (unaudited)
----------------------------------------------------------------------
Three months ended September 30, 1999
----------------------------------------------------------------------
Fully tax
Average equivalent
(Dollars in thousands) balance Interest yield/rate
----------------------------------------------------------------------
Assets:
Interest-earning assets:
Loans $5,379,609 $99,666 7.39 %
Securities and interest-
bearing deposits 3,067,914 48,173 6.28
----------- -------- -------
Total interest-earning
assets 8,447,523 147,839 6.99
--------
Noninterest-earning assets 517,026
-----------
Total assets $8,964,549
===========
Liabilities and Shareholders'
Equity:
Interest-bearing
liabilities:
Interest-bearing deposits $5,132,699 $45,649 3.53 %
Noninterest-bearing
deposits 478,669 - -
Federal Home Loan
Bank advances 1,558,666 21,138 5.38
Repurchase agreements and
other borrowings 910,146 11,513 5.02
Senior notes 40,000 915 9.15
----------- -------- -------
Total interest-bearing
liabilities 8,120,180 79,215 3.89
--------
Noninterest-bearing
other liabilities 130,298
-----------
Total liabilities 8,250,478
Capital securities and
preferred stock of
subsidiary corporation 150,000
Shareholders' Equity 564,071
-----------
Total liabilities and
shareholders' equity $8,964,549
===========
Net interest income $68,624
========
Interest rate spread 3.10 %
=======
Net interest margin 3.25 %
=======
Three months ended September 30, 1998
----------------------------------------------------------------------
Fully tax
Average equivalent
(Dollars in thousands) balance Interest yield/rate
----------------------------------------------------------------------
Assets:
Interest-earning assets:
Loans $4,982,028 $95,056 7.60 %
Securities and interest-
bearing deposits 3,651,738 57,227 6.27
------------ --------- -------
Total interest-earning
assets 8,633,766 152,283 7.04
---------
Noninterest-earning assets 483,426
-----------
Total assets $9,117,192
===========
Liabilities and Shareholders'
Equity:
Interest-bearing
liabilities:
Interest-bearing deposits $5,314,678 $55,465 4.14 %
Noninterest-bearing
deposits 404,984 - -
Federal Home Loan
Bank advances 1,473,172 21,415 5.69
Repurchase agreements and
other borrowings 1,042,378 14,845 5.57
Senior notes 40,000 915 9.15
---------- --------- ------
Total interest-bearing
liabilities 8,275,212 92,640 4.43
---------
Noninterest-bearing
other liabilities 95,042
----------
Total liabilities 8,370,254
Capital securities and
preferred stock of
subsidiary corporation 199,577
Shareholders' Equity 547,361
----------
Total liabilities and
shareholders' equity $9,117,192
==========
Net interest income $59,643
=========
Interest rate spread 2.61 %
========
Net interest margin 2.79 %
========
Consolidated Average Statements of Condition (unaudited)
----------------------------------------------------------------------
Nine months ended September 30, 1999
----------------------------------------------------------------------
Fully tax
Average equivalent
(Dollars in thousands) balance Interest yield/rate
----------------------------------------------------------------------
Assets:
Interest-earning
assets:
Loans 5,220,141 $288,560 7.38 %
Securities and interest-
bearing deposits 3,183,005 150,701 6.31
------------- ---------- ---------
Total interest-
earning assets 8,403,146 439,261 6.97
----------
Noninterest-
earning assets 545,269
=============
Total assets $ 8,948,415
=============
Liabilities and
Shareholders' Equity:
Interest-bearing
liabilities:
Interest-bearing
deposits $ 5,129,444 $141,135 3.67 %
Noninterest-bearing
deposits 471,405 - -
Federal Home Loan
Bank advances 1,548,625 61,361 5.30
Repurchase agreements
and other borrowings 928,815 34,721 5.00
Senior notes 40,000 2,745 9.15
------------- ---------- ---------
Total interest-
bearing liabilities 8,118,289 239,962 3.95
----------
Noninterest-bearing
other liabilities 133,200
-------------
Total liabilities 8,251,489
Capital securities and
preferred stock of
subsidiary corporation 150,000
Shareholders' Equity 546,926
-------------
Total liabilities and
shareholders' equity $ 8,948,415
=============
Net interest income $199,299
==========
Interest rate spread 3.02 %
=========
Net interest margin 3.16 %
=========
Nine months ended September 30, 1998
---------------------------------------------------------------------
Fully tax
Average equivalent
(Dollars in thousands) balance Interest yield/rate
---------------------------------------------------------------------
Assets:
Interest-earning
assets:
Loans $ 4,843,275 $287,949 7.92 %
Securities and interest-
bearing deposits 4,031,668 183,161 6.06
----------- --------- ---------
Total interest-
earning assets 8,874,943 471,110 7.07
---------
Noninterest-
earning assets 477,399
===========
Total assets $ 9,352,342
===========
Liabilities and
Shareholders' Equity:
Interest-bearing
liabilities:
Interest-bearing
deposits $ 5,373,033 $169,158 4.19 %
Noninterest-bearing
deposits 397,847 - -
Federal Home Loan
Bank advances 1,625,423 70,582 5.73
Repurchase agreements
and other borrowings 1,082,213 45,934 5.60
Senior notes 40,000 2,745 9.15
----------- --------- ---------
Total interest-
bearing liabilities 8,518,516 288,419 4.48
---------
Noninterest-bearing
other liabilities 122,983
-----------
Total liabilities 8,641,499
Capital securities and
preferred stock of
subsidiary corporation 183,277
Shareholders' Equity 527,566
-----------
Total liabilities and
shareholders' equity $ 9,352,342
===========
Net interest income $182,691
=========
Interest rate spread 2.59 %
=========
Net interest margin 2.76 %
=========
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