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WATERBURY, Conn.--(BUSINESS WIRE)--July 19, 2000--Webster Financial Corporation (Nasdaq:WBST), holding company for Webster Bank, today reported an 18 percent increase in earnings per share for the second quarter ended June 30, 2000.
Net income for the quarter rose to a record $28.1 million or $.66 per diluted share, compared to $25.4 million or $.56 per diluted share for the quarter ended June 30, 1999. Excluding an extraordinary after-tax item of $1.1 million, operating earnings were $27 million, or $.63 per diluted share. Prior period financial data have been restated to reflect the December 1999 merger with New England Community Bancorp, Inc., which was accounted for using the pooling of interests method of accounting.
"Webster today is a leading Connecticut-based financial services provider. Our results demonstrate continuing progress toward our strategic objectives of achieving a commercial bank like structure and increasing income from fee-based services, while maintaining high asset quality and managing expenses," said James C. Smith, Webster chairman and chief executive officer. "Our acquisition of Mechanics Savings Bank, completed late in the quarter, serves to reinforce our strong market share in Hartford County."
Second Quarter Financial Highlights
Net interest margin (net interest income as a percentage of average earnings assets) was 3.29 percent in the quarter, compared to 3.36 percent in the second quarter of 1999 and 3.22 percent in the first quarter of 2000. The net interest margin has been stable because rising retail interest rate spreads have offset higher borrowing costs.
Total noninterest income for the quarter increased 36 percent to $30.7 million, compared to $22.6 million for the same period in 1999. Excluding income from gains on the sale of securities and loans and a one-time life insurance benefit, total noninterest income increased 38 percent to $26.3 million from $19.0 million in the year-ago period due to revenue related to trust and investment services, revenue from expanded insurance operations and income from fee-based services.
Return on average shareholders' equity for the second quarter was 18.0 percent, up from 16.9 percent in the second quarter of 1999, while cash return on average shareholders' equity rose to 20.4 percent from 18.5 percent in the year-ago period. Both measures exclude the impact of the extraordinary item.
Asset quality remained strong in the quarter with nonaccrual assets amounting to 0.42 percent of total assets compared to 0.44 percent of total assets in the year-ago quarter and 0.40 percent of total assets in the first quarter. The allowance for loan losses as a percent of nonaccrual loans was 204 percent, up from 191 percent a year earlier and 186 percent in the first quarter. Allowances for nonaccrual assets as a percent of nonaccrual assets were 185 percent, up from 166 percent in the year-ago quarter and remained unchanged from the first quarter.
Commercial and consumer loan originations increased 28 percent to $283.9 million for the quarter, compared to $221.7 million in the second quarter of 1999. Deposits, which expanded by $734 million in the quarter as a result of purchase transactions, grew internally by $74.8 with approximately 75 percent of that increase attributable to low-cost core deposits.
Webster has repurchased 4.5 million shares of common stock related to the acquisition of MECH Financial Inc. of the 5 million shares authorized and expects to complete the repurchase program in the third quarter. Webster had 49.1 million common shares outstanding at June 30, 2000, having issued 7.8 million common shares to MECH shareholders. Shareholders equity increased $187 million from the first quarter to $787.2 million, primarily due to the issuance of Webster common stock to MECH shareholders and reported earnings.
Recent News Highlights
In late June, Webster completed its acquisition of Hartford-based MECH Financial, Inc., the holding company for Mechanics Savings Bank, significantly enhancing Webster's franchise in Hartford County, where it ranks a strong second in deposit market share. With the addition of Mechanics, Webster has more than $11 billion in assets, ranking it as the fifth largest New England based bank. The acquisition is expected to contribute positively to Webster's earnings per share in 2001. Webster accounted for the transaction under the purchase accounting method.
During the quarter, Webster announced the launch of Webster Financial Advisors, an organization that combines Webster's investment management, trust and private banking expertise for high net worth clients. Webster Financial Advisors also provides institutional services to Connecticut business owners and not-for-profit organizations.
Also in the quarter, Webster acquired Follis, Wylie & Lane, a privately owned Hamden-based insurance agency. Webster's second insurance agency acquisition of the year, Follis, Wylie & Lane wrote $10 million in premiums in 1999 and had revenues of $1 million.
As part of its continuing transformation into a diversified financial services provider, Webster is implementing a reconfigured organizational structure intended to increase efficiency and speed decision making. As a result, the number of officers reporting to the chairman and chief executive officer has been reduced from ten to five. President William T. Bromage has assumed additional operational responsibilities, including human resources and marketing.
Peter K. Mulligan had been promoted to senior executive vice president. In his new position, Mulligan has overall responsibility for all of Webster's retail operations, including consumer and small business banking, consumer finance including mortgages, investments and insurance. Mulligan earlier held the title of executive vice president, having joined Webster in 1995 with responsibility for consumer and small business banking.
Executive Vice President Mark Tarmy, Chief Information Officer, was given the additional responsibility for consumer loan servicing and all deposit operations.
Connecticut-based Webster Bank provides business and consumer banking, mortgage, insurance, trust and investment services through more than 110 banking offices, 200 ATMs and the Internet (www.websterbank.com). Webster's online mortgage subsidiary at www.nowlending.com on the Worldwide Web originates low-cost mortgages across the United States.
For more information on Webster, including past press releases and the latest Annual Report, visit the Webster Bank website at www.websterbank.com.
Conference Call
A conference call covering this announcement will be held today, Wednesday, July 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.
Webster Financial Corporation
Consolidated Statements of Condition (unaudited)
June 30, December 31,
(Dollars in thousands) 2000 1999
Assets:
Cash and due from depository
institutions $ 265,999 $ 245,783
Interest-bearing deposits 1,415 37,838
Securities:
Trading, at fair value 77,633 50,854
Available for sale, at
fair value 2,963,175 2,700,585
Held to maturity,
(fair value: $267,769
in 2000; $300,282 in 1999) 287,829 315,462
Loans receivable:
Residential loans 4,268,372 3,898,943
Commercial and industrial loans 1,081,667 915,035
Commercial real estate loans 887,016 741,168
Home equity loans 563,454 492,684
Other consumer loans 105,881 47,064
Allowance for loan losses (86,199) (72,658)
Loans receivable, net 6,820,191 6,022,236
Accrued interest receivable 67,593 58,918
Premises and equipment, net 109,975 103,403
Foreclosed properties, net 4,118 4,909
Intangible assets 302,037 138,829
Cash surrender value of life
insurance 169,702 148,252
Prepaid expenses and other assets 118,661 104,675
Total assets $ 11,188,328 $ 9,931,744
Liabilities and Shareholders' Equity:
Deposits:
Checking and NOW $ 1,598,534 $ 1,375,692
Savings and MMDAs 1,959,661 1,719,562
Certificates of deposit 3,446,987 3,095,837
Total deposits 7,005,182 6,191,091
Borrowed funds 3,023,381 2,788,445
Accrued expenses and other
liabilities 173,014 116,964
Total liabilities 10,201,577 9,096,500
Corporation-obligated
mandatorily redeemable
capital securities of
subsidiary trusts 150,000 150,000
Preferred stock of subsidiary
corporation 49,577 49,577
Shareholders' equity 787,174 635,667
Total liabilities and
shareholders' equity $ 11,188,328 $ 9,931,744
Consolidated Statements of Income (unaudited)
Three months ended Six months ended
June 30, June 30,
(Dollars in thousands,
except per share data) 2000 1999 2000 1999
Interest income:
Loans $120,652 $106,752 $237,133 $211,044
Securities and
interest-bearing deposits 54,294 53,061 107,456 108,795
Total interest income 174,946 159,813 344,589 319,839
Interest expense:
Deposits 52,087 50,853 102,069 103,661
Borrowings 43,828 32,519 87,217 67,051
Total interest expense 95,915 83,372 189,286 170,712
Net interest income 79,031 76,441 155,303 149,127
Provision for loan losses 3,200 2,268 5,400 4,433
Net interest income after
provision for loan losses 75,831 74,173 149,903 144,694
Noninterest income:
Fees and service charges 14,218 11,850 26,761 22,116
Trust and investment
services 4,861 1,786 8,729 3,365
Insurance commissions 3,502 1,550 7,224 3,668
Gain on sale of loans and
loan servicing, net 336 1,536 943 3,098
Gain on sale of securities,
net 2,908 2,036 5,958 3,918
Increase in cash surrender
value of life insurance 2,003 1,889 3,962 3,729
Other noninterest income 2,835 1,923 4,671 4,252
Total noninterest income 30,663 22,570 58,248 44,146
Noninterest expenses:
Salaries and employee
benefits 30,533 25,404 59,516 50,234
Occupancy expense of
premises 5,445 5,146 11,078 10,250
Furniture and equipment
expenses 6,248 5,356 12,740 10,508
Intangible amortization 4,283 3,228 8,158 5,845
Marketing expenses 2,601 2,406 4,799 4,703
Professional services
expenses 1,847 3,193 3,483 5,270
Capital securities expense 3,615 3,662 7,231 7,323
Dividends on preferred stock
of subsidiary corporation 1,038 980 2,076 2,000
Other operating expenses 8,994 8,897 17,072 17,785
Total noninterest expenses 64,604 58,272 126,153 113,918
Income before income taxes 41,890 38,471 81,998 74,922
Income taxes 13,783 13,121 27,080 25,599
Net income $ 28,107 $ 25,350 $ 54,918 $ 49,323
Net income per common share:
Basic $0.66 $0.57 $1.28 $1.12
Diluted $0.66 $0.56 $1.26 $1.10
Selected Financial Highlights (unaudited)
At or for the Three At or for the Six
Months Ended June 30, Months Ended June 30,
(Dollars in thousands,
except per share data) 2000 1999 2000 1999
Operating and Performance
Ratios (annualized):
GAAP earnings (a) $ 28,107 $ 25,350 $ 54,918 $ 49,322
Return on average
shareholders' equity 18.72 % 16.86 % 18.24 % 16.30%
Return on average
shareholders' equity
before non-recurring
income (b) 17.99 16.86 17.87 16.30
Return on average assets 1.10 1.04 1.09 1.01
Return on average assets
before non-recurring
income (b) 1.06 1.04 1.07 1.01
Cash earnings $ 31,679 $ 29,489 $ 61,654 $ 56,374
Cash return on average
shareholders' equity (c) 21.10 % 18.48 % 20.48 17.71%
Cash return on average
shareholders' equity
before non recurring income 20.37 18.48 20.11 17.71
Noninterest expenses /
average assets 2.54 2.40 2.50 2.34
Noninterest expenses /
average assets (e) 2.19 2.07 2.16 2.03
Efficiency ratio (f) 56.91 57.60 57.43 57.77
Efficiency ratio (e) 52.53 52.73 52.90 52.78
Shareholders' equity /
total assets 7.04 6.42 7.04 6.42
Interest-rate spread 3.18 3.23 3.14 3.16
Net interest margin 3.29 3.36 3.26 3.30
Loan originations:
Residential $ 187,520 $ 365,619 $ 349,770 $ 729,462
Commercial 196,156 149,764 329,467 284,376
Consumer 87,766 71,953 163,998 135,903
Asset Quality:
Nonaccrual loans $ 42,318 $ 37,582 $ 42,318 $ 37,622
Nonaccrual assets, net 46,436 43,163 46,436 43,163
Allowance for loan losses 86,199 71,661 86,199 71,661
Allowances for nonaccrual
assets 86,431 71,887 86,431 71,887
Net loan charge-offs 2,541 1,272 3,023 1,621
Nonaccrual assets /
total assets 0.42 % 0.44 % 0.42 0.44%
Allowance for loan losses /
nonaccrual loans 203.69 190.68 203.69 190.68
Allowances for nonaccrual
assets / nonaccrual assets 185.20 165.68 185.20 165.68
Share Related:
Book value per common share $ 16.03 $ 14.00 $ 16.03 $ 14.00
Tangible book value per
common share 9.88 10.82 9.88 $ 10.82
Common stock closing price 22.19 27.13 22.19 27.13
Dividend declared per
common share $ 0.16 $ 0.12 $ 0.30 $ 0.23
Common shares issued and
outstanding 49,096,964 45,233,355 49,096,964 45,233,355
Basic shares 42,381,243 44,410,558 42,963,488 44,052,908
Diluted shares 42,851,477 45,243,654 43,449,533 44,869,582
(a) Net income applying General Accepted Accounting Principles.
(b) Excluding income from a one-time life insurance benefit of $1.1 million.
(c) Net income, excluding intangible amortization, divided by average shareholders' equity.
(d) Net income, excluding intangible amortization and income from a one-time life insurance benefit of $1.1 million, divided by
average shareholders' equity.
(e) Excludes acquisition-related, intangible amortization, capital securities, preferred dividend, foreclosed property expenses and
non-recurring charges.
(f) Excludes acquisition-related, intangible amortization, foreclosed property expenses and non-recurring charges.
Retail and Wholesale Interest Rate Spreads (unaudited) Three months ended,
June March December September June
2000 2000 1999 1999 1999
Interest-rate spread
Total interest-earning
assets (a) 7.32 % 7.21 % 7.14 % 7.05 % 7.02 %
Total interest-bearing
liabilities 4.14 4.11 3.91 3.80 3.79
Interest-rate spread 3.18 % 3.10 % 3.23 % 3.25 % 3.23 %
Net interest margin 3.29 3.22 3.34 3.36 3.36
Retail interest-rate spread
Yield on loans 7.79 % 7.68 % 7.57 % 7.44 % 7.46 %
Rate on deposits 3.25 3.27 3.23 3.15 3.25
Spread 4.54 % 4.41 % 4.34 % 4.29 % 4.21 %
Wholesale interest-rate spread
Yield on securities(a) 6.46 % 6.35 % 6.32 % 6.27 % 6.30 %
Rate on borrowings 6.13 5.85 5.57 5.28 5.15
Spread 0.33 % 0.50 % 0.75 % 0.99 % 1.15 %
Consolidated Average Statements of Condition (unaudited)
Three months ended June 30, 2000
Fully tax
Average equivalent
(Dollars in thousands) balance Interest yield/rate
Assets:
Interest-earning assets:
Loans $6,206,383 $120,652 7.79 %
Securities and interest-bearing
deposits 3,234,130 54,294 6.46 (a)
Total interest-earning assets 9,440,513 174,946 7.32
Noninterest-earning assets 748,840
Total assets $10,189,353
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits $5,710,483 $52,087 3.67 %
Noninterest-bearing deposits 728,820 - -
Federal Home Loan Bank advances 1,991,351 30,250 6.11
Repurchase agreements and
other borrowings 844,559 12,663 6.03
Senior notes 39,561 915 9.25
Total interest-bearing
liabilities 9,314,774 95,915 4.14
Noninterest-bearing other
liabilities 74,523
Total liabilities 9,389,297
Capital securities and preferred
stock of subsidiary corporation 199,577
Shareholders' Equity 600,479
Total liabilities and
shareholders' equity $10,189,353
Net interest income $79,031
Interest-rate spread 3.18 %
Net interest margin 3.29 %
(a) For purposes of this computation, unrealized gains(losses) are
excluded from the average rate calculations.
Consolidated Average Statements of Condition (unaudited)
Three months ended June 30, 1999
Fully tax
Average equivalent
(Dollars in thousands) balance Interest yield/rate
Assets:
Interest-earning assets:
Loans $5,741,107 $106,752 7.46 %
Securities and
interest-bearing deposits 3,376,054 53,061 6.30 (a)
Total interest-earning assets 9,117,161 159,813 7.02
Noninterest-earning assets 591,485
Total assets $9,708,646
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits $5,644,104 $50,853 3.62 %
Noninterest-bearing deposits 623,460 - -
Federal Home Loan Bank advances 1,442,516 18,871 5.25
Repurchase agreements and other
borrowings 1,049,493 12,733 4.87
Senior notes 40,000 915 9.15
Total interest-bearing
liabilities 8,799,573 83,372 3.79
Noninterest-bearing other
liabilities 107,982
Total liabilities 8,907,555
Capital securities and preferred
stock of subsidiary corporation 199,577
Shareholders' Equity 601,514
Total liabilities and
shareholders' equity $9,708,646
Net interest income $76,441
Interest-rate spread 3.23 %
Net interest margin 3.36 %
(a) For purposes of this computation, unrealized gains(losses) are
excluded from the average rate calculations.
Consolidated Average Statements of Condition (unaudited)
Six months ended June 30, 2000
Fully tax
Average equivalent
(Dollars in thousands) balance Interest yield/rate
Assets:
Interest-earning assets:
Loans 6,142,498 $ 237,133 7.74 %
Securities and
interest-bearing deposits 3,233,577 107,456 6.40(a)
Total interest-earning assets 9,376,075 344,589 7.27
Noninterest-earning assets 715,871
Total assets $ 10,091,946
Liabilities and Shareholders'
Equity:
Interest-bearing liabilities:
Interest-bearing deposits $ 5,602,559 $ 102,069 3.66 %
Noninterest-bearing deposits 688,273 - -
Federal Home Loan Bank advances 1,885,583 56,065 5.98
Repurchase agreements and
other borrowings 1,004,509 29,322 5.87
Senior notes 39,780 1,830 9.20
Total interest-bearing
liabilities 9,220,704 189,286 4.13
Noninterest-bearing other
liabilities 69,443
Total liabilities 9,290,147
Capital securities and preferred
stock of subsidiary corporation 199,577
Shareholders' Equity 602,222
Total liabilities and
shareholders' equity $10,091,946
Net interest income $ 155,303
Interest rate spread 3.14 %
Net interest margin 3.26 %
(a) For purposes of this computation, unrealized gains (losses) are excluded from the average rate calculations.
Consolidated Average Statements of Condition (unaudited)
Six months ended June 30, 1999
Fully tax
Average equivalent
(Dollars in thousands) balance Interest yield/rate
Assets:
Interest-earning assets:
Loans $ 5,658,585 $ 211,044 7.52 %
Securities and
interest-bearing deposits 3,452,349 108,795 6.32(a)
Total interest-earning assets 9,110,934 319,839 7.04
Noninterest-earning assets 613,343
Total assets $ 9,724,277
Liabilities and Shareholders'
Equity:
Interest-bearing liabilities:
Interest-bearing deposits $ 5,620,149 $ 103,661 3.72 %
Noninterest-bearing deposits 607,862 - -
Federal Home Loan Bank advances 1,573,512 41,131 5.27
Repurchase agreements and
other borrowings 982,855 24,090 4.94
Senior notes 40,000 1,830 9.15
Total interest-bearing
liabilities 8,824,378 170,712 3.88
Noninterest-bearing other
liabilities 95,151
Total liabilities 8,919,529
Capital securities and preferred
stock of subsidiary corporation 199,577
Shareholders' Equity 605,171
Total liabilities and
shareholders' equity $ 9,724,277
Net interest income $ 149,127
Interest rate spread 3.16 %
Net interest margin 3.30 %
(a) For purposes of this computation, unrealized gains (losses) are excluded from the average rate calculations.
CONTACT: Webster Financial Corporation, Waterbury
Media: Michael G. Bazinet, 203-578-2391
mbazinet@websterbank.com
Jim Kalach, 203-578-2461
jkalach@websterbank.com
Investors: James M. Sitro, 203-578-2399
jsitro@websterbank.com