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WATERBURY, Conn.--(BUSINESS WIRE)--Jan. 19, 2000--Webster Financial Corporation (Nasdaq: WBST), holding company for Webster Bank, today reported net operating earnings of $102.2 million, or $2.25 per diluted share, for 1999, compared to $97 million or $2.10 per diluted share for 1998. Excluding the estimated effects of the acquisition of New England Community Bancorp, Inc.'s pooled results, Webster's pro forma net operating earnings were $2.45 per diluted share for 1999 compared to $2.25 for the previous year. Because the acquisition was completed on Dec. 1, 1999, the positive effects of the merger will begin to be fully realized in 2000.
Net income for the year was $95.4 million, or $2.10 per diluted share, compared to $78 million or $1.69 a share, for all of 1998. The 1999 results include a nonrecurring after-tax acquisition related expense of $6.8 million resulting from the NECB merger, which was accounted for as a pooling of interests. Nonrecurring items in 1998 consisted of after-tax, acquisition-related expenses of $15.8 million and a $3.2 million income tax charge. Prior period financial data have been restated to reflect the NECB pooling.
For the fourth quarter ended Dec. 31, 1999, Webster reported net operating earnings of $26.4 million, or $0.58 per diluted share, compared to $27.3 million, or $0.60 per diluted share, for the previous year. Excluding the estimated effects of NECB's pooled results, net operating earnings on a pro forma basis were $0.62 per diluted share for the 1999 quarter, compared to $0.64 per diluted share for the 1998 period. Net operating earnings include after-tax gains on the sale of securities of $0.03 per diluted share in the 1999 quarter and $0.06 per diluted share in the 1998 quarter. Net income for the 1999 quarter was $19.6 million, or $0.43 per diluted share, compared to $24.1 million, or $0.53 per diluted share, for the 1998 period. Nonrecurring items include the after-tax, acquisition-related expense of $6.8 million resulting from the NECB acquisition in the 1999 quarter and a $3.2 million income tax charge in the 1998 period.
"Webster broke through as a leading Connecticut based financial services provider in 1999. We made significant progress in our transition to a more commercial bank-like balance sheet and have extended and strengthened our franchise," said James C. Smith, Webster chairman and chief executive officer. "Last year, Webster completed or announced four acquisitions, as well as the purchase of 10 branches from out-of-state banks. All the while we have kept our focus on building strong customer relationships."
Webster Financial also announced today that it is increasing its regular quarterly cash dividend to $0.14 per common share from $0.12 per common share. The dividend is payable on Feb. 15, 2000 to shareholders of record on Feb. 1, 2000. This is the 50th consecutive quarterly cash dividend and the ninth dividend increase since Webster first paid a dividend in 1987. "Webster's strong results make it possible for us to increase the dividend while continuing to build shareholders' equity and support future growth," Smith said.
Webster successfully completed the acquisitions of New England Community Bancorp, Village Bancorp and Maritime Bank & Trust in 1999. Webster also announced definitive agreements to acquire Mechanics Savings Bank as well as branch offices of Chase Manhattan Bank and FleetBoston.
Financial Highlights
Return on average shareholders' equity, before acquisition-related and other non-recurring tax items, was 16.42 percent in 1999, up from 15.95 percent in the previous year. Webster had 45.1 million common shares outstanding at Dec. 31, 1999.
Interest rate spread (the difference between the average yield on interest-earning assets and the average rate paid on interest-bearing liabilities) was 3.23 percent in the fourth quarter in 1999, up from 3.00 percent in the fourth quarter of the previous year.
Income from fee-based services in the fourth quarter increased 42 percent to $24.4 million from $17.1 million in the year-ago period, due in part to expanded product offerings, including insurance, trust and investment services, to Webster's growing customer base. For the 1999 quarter, income from fee-based services reached 24 percent of total revenue.
Income tax expense for the fourth quarter decreased to $9.8 million, compared to $18.6 million for the year-ago period. The decrease in income taxes in 1999 was due to a lower effective tax rate resulting from Webster's formation of a passive investment corporation. Tax expense for 1998 includes a charge to income taxes of $3.2 million for the formation of a passive investment corporation.
Nonaccrual assets as a percentage of total assets increased to 0.44 percent at Dec. 31, 1999 from 0.37 percent a year earlier, due primarily to acquisitions completed in 1999. The allowance for loan losses as a percent of nonaccrual loans was 190.69 percent. Allowances for nonaccrual assets as a percent of nonaccrual assets were 167.5 percent.
1999 Acquisitions and Announcements
In December, Webster completed its acquisition of Windsor, Connecticut-based New England Community Bancorp, Inc., a multi-bank holding company with approximately $800 million in assets, three Connecticut subsidiary banks and one New Hampshire bank. The merger was originally announced in June.
Also in December, Webster announced that it had reached a definitive agreement to acquire MECH Financial, Inc. (Nasdaq: MECH), the holding company for Mechanics Savings Bank. Mechanics is a state chartered Hartford-based savings bank with $1.1 billion in assets and 16 branch offices in the capital region. Webster intends to account for the transaction under the purchase method of accounting, allowing the corporation to repurchase up to five million shares of its common shares in the open market.
In November, Webster announced that it had reached definitive agreements to purchase four former BankBoston branches that are being divested as a result of the Fleet-BankBoston merger and six Chase Manhattan branches that are being sold as part of that company's decision to focus its activities on Fairfield County.
In May, Webster completed its acquisition of Ridgefield-based Village Bancorp, Inc., the holding company for Village Bank & Trust Company. Predominately a Fairfield County state-chartered commercial bank, Village had assets of $235 million and banking offices in Ridgefield, Danbury (2), New Milford, Wilton and Westport.
In April, Webster completed its acquisition of Essex-based Maritime Bank & Trust, a state-chartered commercial bank with assets of $100 million and offices in Essex, Old Saybrook and Old Lyme.
Additional 1999 Highlights
In October, Webster's Internet mortgage lender, formerly doing business as discountmortgages.com, upgraded its technology platform and was renamed nowlending.com. Nowlending.com allows more of the application process to be completed on-line and offers loan approvals with a 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.
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.
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.
In early March, Webster Bank signed as its advertising spokesman Connecticut Head Basketball Coach Jim Calhoun, whose team went on to capture the NCAA national championship. For the next three years, Calhoun will appear in television, radio, print and direct-mailing advertising for the bank.
In the first quarter, Standard & Poor's raised Webster Financial Corporation's senior debt rating and long-term and short-term credit ratings. The corporation's senior debt rating was raised to investment grade to BBB- from BB+. Credit ratings for Webster's subsidiaries --Webster Bank, Webster Preferred Capital Corporation and Webster Capital Trust 1 -- were also raised.
Also in the first quarter, the credit rating agencies of Fitch IBCA and Duff & Phelps issued ratings on the corporation's senior debt and raised long-term and short-term credit ratings for Webster subsidiaries. Both agencies' senior debt ratings were issued as investment grade, BBB. The upgrades were based on Webster's solid capital levels, strong funding profile, improved financial performance, and relatively low-risk but evolving loan portfolio.
Pro forma for pending merger and branch purchase activity, Webster Bank has $11 billion in assets and operates through a network of more than 125 banking offices and 200 ATMs, in addition to telephone, video, Web and PC banking.
Webster is also a leading, full-service commercial and mortgage lender in Connecticut. Webster Trust, the bank's trust and investment management subsidiary, is one of the leading bank trust companies based in Connecticut. Webster's insurance subsidiary, Damman Insurance Associates, is one of the largest agencies in the state.
Webster's Nowlending subsidiary found at www.nowlending.com on the Worldwide Web, originates low-cost mortgages over the Internet for customers across the United States.
For more information on Webster visit www.websterbank.com.
Conference Call
A conference call covering this announcement will be held today,
Wednesday, Jan. 19, at 9:30 a.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.
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.
Click here to download financial tables.
Consolidated Statements of Condition (unaudited)
(Dollars in thousands)
December 31, December 31,
1999 1998
Assets:
Cash and due from depository
institutions $ 245,783 $ 213,142
Interest-bearing deposits 37,838 17,819
Securities:
Trading, at fair value 50,854 91,114
Available for sale, at
fair value 2,700,585 3,164,886
Held to maturity, (fair
value:$300,282 in 1999;
$410,196 in 1998) 315,462 406,829
Loans receivable:
Residential loans 3,898,943 3,880,319
Commercial real estate loans 741,168 616,204
Commercial and industrial loans 915,035 548,734
Home equity loans 492,684 458,981
Other consumer loans 47,064 68,081
Allowance for loan losses (72,658) (65,201)
Loans receivable, net 6,022,236 5,507,118
Accrued interest receivable 58,918 60,647
Premises and equipment, net 103,403 93,256
Foreclosed properties, net 4,909 5,162
Intangible assets 138,829 83,227
Cash surrender value of life insurance 148,252 141,059
Prepaid expenses and other assets 104,675 51,770
Total assets $ 9,931,744 $ 9,836,029
Liabilities and Shareholders'
Equity:
Deposits:
Checking and NOW $ 1,375,692 $ 1,321,070
Savings and MMDAs 1,719,562 1,582,424
Certificates of deposit 3,095,837 3,409,480
Total Deposits 6,191,091 6,312,974
Borrowed funds 2,788,445 2,575,608
Accrued expenses and other
liabilities 116,964 121,416
Total liabilities 9,096,500 9,009,998
Corporation-obligated mandatorily
redeemable capital securities of
subsidiary trusts 150,000 150,000
Preferred stock of subsidiary
corporation 49,577 49,577
Shareholders' equity 635,667 626,454
Total liabilities and
shareholders' equity $ 9,931,744 $ 9,836,029
Consolidated Statements of Income (unaudited)
Three months ended Twelve months ended
December 31, December 31,
(Dollars in thousands,
except per share data) 1999 1998 1999 1998
Interest income:
Loans $113,642 $106,660 $435,326 $430,636
Securities and
interest-bearing
deposits 50,132 59,444 210,466 251,601
Total interest income 163,774 166,104 645,792 682,237
Interest expense:
Deposits 50,596 56,794 203,805 241,181
Borrowings 36,640 37,200 138,474 158,445
Total interest expense 87,236 93,994 342,279 399,626
Net interest income 76,538 72,110 303,513 282,611
Provision for loan losses 2,322 1,611 9,000 8,103
Net interest income after
provision for loan losses 74,216 70,499 294,513 274,508
Noninterest income:
Fees and service charges 19,257 13,099 66,936 47,250
Gain on sale of loans and
loan servicing, net 330 1,389 4,434 5,754
Gain (loss) on sale of
securities, net 1,835 4,242 4,248 17,015
Other noninterest income 5,159 4,051 17,012 12,619
Total noninterest income 26,581 22,781 92,630 82,638
Noninterest expenses:
Salaries and employee
benefits 28,463 22,361 106,493 92,506
Occupancy expense
of premises 5,637 4,964 20,892 19,068
Furniture and equipment
expenses 6,251 4,871 22,302 19,335
Intangible amortization 3,976 2,565 13,780 10,033
Marketing expenses 2,618 1,044 9,584 7,392
Other operating expenses 10,263 10,034 43,114 41,247
57,208 45,839 216,165 189,581
Acquisition-related
expenses 9,500 - 9,500 20,993
Capital securities expense 3,661 3,662 14,645 14,708
Dividends on preferred stock
of subsidiary corporation 1,038 1,038 4,151 4,151
Total noninterest
expenses 71,407 50,539 244,461 229,433
Income before income taxes 29,390 42,741 142,682 127,713
Income taxes 9,760 18,631 47,332 49,694
Net income $ 19,630 $ 24,110 $ 95,350 $ 78,019
Net income per common share
before acquisition-
related and other
non-recurring expenses:
Basic $0.59 $0.61 $2.29 $2.14
Diluted $0.58 $0.60 $2.25 $2.10
Net income per common share
after acquisition-
related and other
non-recurring expenses:
Basic $0.44 $0.53 $2.14 $1.72
Diluted $0.43 $0.53 $2.10 $1.69
Selected Financial Highlights (unaudited)
At or for the Three At or for the Year
Months Ended December 31, Ended December 31,
(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 16.44 % 17.26 % 16.42 % 15.95 %
Return on average
shareholders' equity
after acquisition-
related expenses 12.21 15.24 15.33 12.82
Cash return on average
shareholders' equity (a) 14.22 16.25 17.06 13.96
Cash Earnings (a) $ 22,855 25,717 $ 106,125 84,940
Return on average
assets before acquisition-
related expenses 1.08 1.10 1.05 0.96
Return on average assets
after acquisition-
related expenses 0.80 0.97 0.98 0.77
Noninterest expenses /
average assets 2.93 2.04 2.51 2.28
Noninterest expenses /
average assets (b) 2.17 1.74 2.07 1.78
Efficiency ratio (c) 56.91 53.11 56.98 57.82
Efficiency ratio (b) 52.27 47.89 52.13 52.31
Shareholders' equity /
total assets 6.40 6.37 6.40 6.37
Interest rate spread 3.23 % 3.00 % 3.19 % 2.83 %
Net interest margin 3.34 % 3.09 % 3.32 % 2.97 %
Loan originations:
Residential $ 188,383 $ 311,319 $1,168,228 $1,230,408
Commercial 207,955 187,315 634,396 491,984
Consumer 60,950 48,838 269,910 238,520
Asset Quality:
Nonaccrual loans $ 38,102 $ 30,719 $ 38,102 $ 30,719
Nonaccrual assets, net 43,286 35,881 43,286 35,881
Allowance for loan
losses 72,658 65,201 72,658 65,201
Allowances for nonaccrual
assets 72,908 65,408 72,908 65,408
Net loan charge-offs 1,706 3,701 4,243 17,124
Nonaccrual assets /
total assets 0.44 % 0.37 % 0.44 % 0.37 %
Allowance for loan
losses / nonaccrual
loans 190.69 212.25 190.69 212.25
Allowances for
nonaccrual assets /
nonaccrual assets 167.47 181.25 167.47 181.25
Share Related:
Book value per
common share $ 14.09 $ 14.02 $ 14.09 $ 14.02
Tangible book value
per common share $ 11.02 $ 12.16 $ 11.02 $ 12.16
Common stock closing
price $ 23.56 $ 27.44 $ 23.56 $ 27.44
Dividend declared per
common share $ 0.12 $ 0.11 $ 0.47 $ 0.44
Common shares issued
and outstanding 45,103,770 44,690,319 45,103,770 44,690,319
Basic shares 45,108,608 45,080,634 44,553,859 45,275,165
Diluted shares 45,882,093 45,798,417 45,393,488 46,117,541
(a) Net income, excluding tax-effected intangible amortization.
(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)
December September June March December
Three months ended, 1999 1999 1999 1999 1998
Interest rate spread
Total interest-earning
assets 7.14 % 7.05 % 7.02 % 7.06 % 7.15 %
Total interest-bearing
liabilities 3.91 3.80 3.79 3.98 4.15
Interest rate spread 3.23 % 3.25 % 3.23 % 3.08 % 3.00 %
Net interest margin 3.34 3.36 3.36 3.24 3.09
Retail interest rate
spread
Yield on loans 7.57 % 7.44 % 7.46 % 7.59 % 7.65 %
Rate on deposits 3.23 3.15 3.25 3.46 3.59
Spread 4.34 % 4.29 % 4.21 % 4.13 % 4.06 %
Wholesale interest
rate spread
Yield on securities 6.32 % 6.27 % 6.30 % 6.34 % 6.39 %
Rate on borrowings 5.57 5.28 5.15 5.26 5.48
Spread 0.75 % 0.99 % 1.15 % 1.08 % 0.91 %
Consolidated Average Statements of Condition (unaudited)
Three months ended
December 31, 1999 1998
(Dollars in thousands)
Fully tax Fully tax
Average equivalent Average equivalent
balance Interest yield/rate balance Interest yield/rate
Assets:
Interest-
earning
assets:
Loans $5,987,112 $ 113,642 7.57 % $5,531,064 $106,660 7.65 %
Securities
and interest-
bearing
deposits 3,173,573 50,132 6.32 3,735,076 59,444 6.39
Total interest-
earning
assets 9,160,685 163,774 7.14 9,266,140 166,104 7.15
Noninterest-
earning
assets 602,956 638,680
Total
assets $9,763,641 $9,904,820
Liabilities and Shareholders' Equity:
Interest-
bearing
liabilities:
Interest-
bearing
deposits $5,621,272 $50,596 3.57 % $5,670,289 $56,794 3.97 %
Noninterest-
bearing
deposits 592,762 - - 605,146 - -
Federal Home
Loan Bank
advances 1,583,239 21,457 5.38 1,746,148 24,323 5.53
Securities
sold under
agreements
to repurchase
and other
borrowings 985,016 14,268 5.75 908,096 11,962 5.23
Senior notes 40,000 915 9.15 40,000 915 9.15
Total interest-
bearing
liabilities 8,822,289 87,236 3.91 8,969,679 93,994 4.15
Noninterest-
bearing other
liabilities 98,807 102,704
Total
liabilities 8,921,096 9,072,383
Capital
securities
and preferred
stock of
subsidiary
corporation 199,577 199,577
Shareholders'
Equity 642,968 632,860
Total
liabilities and
shareholders'
equity $9,763,641 $9,904,820
Net interest
income $ 76,538 $ 72,110
Interest rate
spread 3.23% 3.00 %
Net interest
margin 3.34% 3.09 %
Consolidated Average Statements of Condition (unaudited)
Twelve months ended
December 31, 1999 1998
(Dollars in thousands)
Fully tax Fully tax
Average equivalent Average equivalent
balance Interest yield/rate balance Interest yield/rate
Assets:
Interest-earning
assets:
Loans 5,802,453 $435,326 7.50% $ 5,416,531 $430,636 7.95%
Securities
and
interest-
bearing
deposits 3,342,188 210,466 6.30 4,098,608 251,601 6.15
Total
interest-
earning
assets 9,144,641 645,792 7.06 9,515,139 682,237 7.16
Noninterest-
earning
assets 600,483 564,689
Total
assets $ 9,745,124 $ 10,079,828
Liabilities and
Shareholders'
Equity:
Interest-
bearing
liabilities:
Interest-
bearing
deposits $ 5,618,130 $203,805 3.63% $ 5,844,122 $241,181 4.13%
Noninterest-
bearing
deposits 608,135 - - 552,457 - -
Federal
Home Loan
Bank
advances 1,585,458 84,498 5.33 1,675,789 96,140 5.74
Securities
sold under
agreements
to repurchase
and other
borrowings 978,581 50,316 5.14 1,049,520 58,645 5.59
Senior
notes 40,000 3,660 9.15 40,000 3,660 9.15
Total
interest-
bearing
liabilities 8,830,304 342,279 3.88 9,161,888 399,626 4.33
Noninterest-
bearing
other
liabilities 93,252 109,993
Total
liabilities 8,923,556 9,271,881
Capital
securities
and preferred
stock of
subsidiary
corporation 199,577 199,577
Shareholders'
Equity 621,991 608,370
Total
liabilities and
shareholders'
equity $ 9,745,124 $ 10,079,828
Net
interest
income $ 303,513 $282,611
Interest
rate
spread 3.19% 2.83%
Net
interest
margin 3.32% 2.97%
*T
CONTACT: Webster Contacts:
Media: Michael G. Bazinet, 203-578-2391
mbazinet@websterbank.com
Investors: James M. Sitro, 203-578-2399
jsitro@websterbank.com