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WATERBURY, Conn., Oct 15, 2002 (BUSINESS WIRE) -- Webster Financial Corporation
(Nasdaq: WBST), the holding company for Webster Bank, today reported a 15
percent increase in operating earnings for the third quarter ended September 30,
2002 to $40.4 million or $.84 per diluted share, compared to $35.0 million or
$.70 per diluted share for the year-ago period.
For the first nine months of 2002, operating earnings increased 18 percent to
$120.6 million or $2.46 per diluted share, compared to $102.3 million or $2.06
per diluted share in the year-ago period. Operating earnings are defined as net
income excluding non-recurring items.
"Webster's execution of its strategic plan for growth has produced another
strong quarter for our shareholders," said James C. Smith, Webster chairman and
chief executive officer. "Our core results continue to be positive and reflect
underlying strength in many of our businesses despite the challenging economic
environment. We generated continuing earnings growth in the quarter, completed
the strategic acquisition of an asset-based lending business and garnered
continuing success with our de novo branch expansion plan."
The increase in operating earnings for the quarter was driven by growth in
revenues, which rose 9 percent compared to the year-ago period. Most of the
revenue increase came as a result of growth in net interest income, which
increased 10 percent and growth in fee-based services, which increased 9
percent, compared to the year-ago period.
Total loans increased 20 percent to $8.3 billion from $6.9 billion a year-ago,
due primarily to growth in the consumer portfolio and to the acquisition in
August 2002 of $450 million of asset-based loans with the purchase of Whitehall
Business Credit Corporation. Total deposits increased 6 percent to $7.4 billion
at the end of the 2002 third quarter, from $7.0 billion the prior year due to
growth in core deposits. Core deposits increased 19.5 percent to $4.6 billion
from a year ago and now represent 63 percent of total deposits, up from 56
percent a year ago. Total assets are now $13.3 billion, up from $11.6 billion at
September 30, 2001.
Webster President and Chief Operating Officer William T. Bromage said, "The
completion of Webster's acquisition of Whitehall Business Credit Corporation has
strengthened our asset-based lending capabilities and expanded our geographic
reach. By continuing to diversify our lending business, we are creating more
opportunities for continued growth."
For the first nine months of 2002, net income was $113.3 million or $2.31 per
diluted share, compared to $96.5 million or $1.94 per diluted share in the
year-ago period. The 2002 and 2001 results included, net of taxes, net
non-recurring charges of $7.3 million and $5.8 million, respectively.
The three and nine months results reflect the adoption of a new accounting
standard eliminating the amortization of goodwill expense beginning January 1,
2002. Had the new accounting standard been effective in the 2001 third quarter
and nine months period, operating earnings for those periods would have been
$38.8 million or $.78 per diluted share and $113.2 million or $2.28 per diluted
share, respectively.
Financial Highlights
Net interest income for the quarter increased 10 percent to $102.6 million from
$93.6 million in the year-ago period and was unchanged from the second quarter
of 2002. The increase year over year was due primarily to growth in earning
assets and low-cost core deposits. The securities and loan portfolios increased
$364 million and $1.4 billion, respectively, from a year ago. On a
linked-quarter comparison, the increase in the loan portfolios contributed to
growth in net interest income, which was offset by declining loan yields. Like
most financial institutions, Webster was impacted during the quarter by the
precipitous drop in long-term interest rates. As a result, mortgage loans and
mortgage-backed securities experienced significant prepayments with proceeds
reinvested at lower yields. The net interest margin (net interest income as a
percentage of average earning assets) was 3.52 percent in the third quarter,
compared to 3.54 percent a year ago and down from 3.61 percent in the second
quarter of 2002.
Revenue from fee-based services, excluding gains on the sale of securities,
increased 9 percent to $41.2 million from $37.9 million in the year-ago period.
This increase is due primarily to revenue related to loan and loan-servicing
fees, financial advisory fees, higher revenues at Webster Insurance and to
expanded product offerings to Webster's growing customer base. The increase was
partially offset by a decline in revenues from trust and investment services.
Included in loan and loan servicing fees for the quarter was a charge of
$865,000 related to the impairment of capitalized mortgage servicing rights.
Income from fee-based services as a percent of total revenue was 29 percent in
the third quarter.
Noninterest expenses increased $6.9 million to $84.1 million for the quarter,
compared to $77.2 million the prior year due predominantly to salaries and
benefits expenses. Investments in new employees to support the growing lending
and fee-based businesses and branch expansion account for approximately half of
the increase. The increase can also be attributed to one-time expenses of $1.3
million associated with the acquisition of Whitehall Business Credit
Corporation, employee severance of $830,000, and a $690,000 equity investment
write-down.
The allowance for loan losses increased to $116.1 million or 1.40 percent of
total loans at September 30, 2002, from $96.7 million or 1.40 percent of total
loans in the year-ago period and $99.7 million or 1.34 percent in the second
quarter of 2002. The increase in the allowance for loan losses is due primarily
to reserves of $16.3 million established in connection with the acquisition of
the loan portfolio of Whitehall Business Credit Corporation.
Nonperforming assets totaled $72.2 million or 0.54 percent of total assets at
September 30, 2002, compared to $60.2 million or 0.52 percent a year earlier and
up from $51.6 million or 0.41 percent at the end of the second quarter of 2002.
The increase can be attributed to five loans totaling $24 million deemed to be
nonperforming and placed on nonaccrual status. While these loans are secured and
are contractually current with respect to interest and principal payments,
future payments will be applied to reduce principal balances. The allowance for
loan losses as a percent of nonaccrual loans was 169 percent, compared to 167
percent at September 30, 2001 and down from 206 percent at June 30, 2002.
Book value per common share increased 9 percent to $22.43 and tangible book
value increased 14 percent to $16.03 at September 30, 2002 due primarily to
higher earnings and an increase in the market value of available-for-sale
securities. Webster purchased 2.1 million of its common shares on the open
market during the third quarter. Common shares outstanding, net of treasury
shares, at the end of the third quarter amounted to 46.4 million compared to
49.3 million a year-ago.
Strategic Actions
In September, Webster opened its second branch in Danbury, the fourth branch
opening this year in its aggressive expansion plan to open a minimum of 20
branches, principally in Fairfield County, during the next three years. Webster
now has 16 branch locations in 10 Fairfield County towns. Webster initiated its
expansion plan in February of this year with a new branch on Summer Street in
Stamford, followed by branch openings at Atlantic Street in downtown Stamford
and a Boston Post Road branch in Darien. These branches have continued to
perform significantly ahead of plan with core deposits representing over 90
percent of total deposits.
In September, Webster announced that it plans to list its common shares on the
New York Stock Exchange ("NYSE") under the new ticker symbol "WBS". Trading is
expected to begin on the NYSE on Thursday, October 17, 2002.
In August, Webster announced that it had completed the acquisition of the
asset-based lending division of IBJ Whitehall Business Credit Corporation, a
subsidiary of the Industrial Bank of Japan Trust Company. The business operates
as a subsidiary of Webster Bank under the name, Whitehall Business Credit
Corporation. With the closing of this transaction, Webster has acquired a
business with approximately $450 million of outstanding loans, most of which are
to customers in the Northeast.
Webster strengthened its management team with two key executive appointments. In
July, Webster announced the appointment of Nathaniel C. Brinn as Executive Vice
President, Corporate Development for Webster Bank. In this capacity, Brinn is
responsible for directing Webster's corporate development, including mergers,
acquisitions and strategic investments and reports directly to Webster chairman
and chief executive officer, James C. Smith. Prior to joining Webster, Mr. Brinn
held senior management positions in corporate development for more than a decade
with HSB Group, Inc. in Hartford, Connecticut, and with Phoenix Companies Inc.,
also in Hartford. In his most recent position Brinn was senior vice president,
business development and new products for HSB Group, Inc.
In October, Webster announced the appointment of Bruce E. Wolfe as Executive
Vice President of Webster Bank to lead the reorganization of Webster's
investment management business. His responsibilities encompass Webster Financial
Advisors, including Webster Trust Company and Webster's private bank, and
Webster Investment Services. Prior to joining Webster, Mr. Wolfe was managing
director responsible for global strategy with Merrill Lynch Investment Managers
in New York. Before his tenure with Merrill Lynch, Wolfe was a principal with
Morgan Stanley & Company in New York.
Webster Financial Corporation is the holding company for Webster Bank and
Webster Insurance. With $13 billion in assets, Connecticut-based Webster Bank
provides business and consumer banking, mortgage, trust and investment services
through more than 108 banking offices, 214 ATMs and the Internet
(www.websteronline.com). Webster Financial Corporation is majority owner of
Chicago-based Duff & Phelps, LLC, a leader in valuation and financial advisory
services to middle-market companies, and Webster Bank owns Center Capital
Corporation, an equipment leasing and financing company headquartered in
Farmington, Connecticut and Webster Trust Company, N.A.
For more information on Webster, including past press releases and the latest
Annual Report, visit the Webster Bank website at www.websteronline.com.
Conference Call
A conference call covering today's announcement will be held today, Tuesday,
October 15, at 11 a.m., Eastern Time and may be heard through Webster's investor
relations website at www.wbst.com, or in listen-only mode by calling
1-800-482-2225 (Access Code: 2408651). 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 recent fiscal year.
Selected Financial Highlights (unaudited)
------------------------ ----------------------- ---------------------
At or for the Three At or for the Nine
(Dollars in thousands, Months Ended Sept. 30, Months Ended Sept 30,
except per share data) 2002 2001 2002 2001
------------------------ ----------------------- ---------------------
Operating income and
performance ratios
(annualized) (a):
-----------------------
As reported:
Operating income $ 40,424 $ 35,031 $ 120,611 $ 102,274
Operating income per
common share (diluted) 0.84 0.70 2.46 2.06
Return on average
shareholders' equity 15.30% 14.35% 15.43% 14.55%
Return on average assets 1.28 1.21 1.31 1.18
Fee income as a
percentage of total revenue 28.65 28.85 28.08 29.12
Efficiency ratio (b) 53.10 49.95 51.53 50.48
2001 adjusted for
SFAS Nos. 142 and 147:
Operating income $ 40,424 $ 38,787 $ 120,611 $ 113,215
Operating income per
common share (diluted) 0.84 0.78 2.46 2.28
Return on average
shareholders' equity 15.30% 15.75% 15.43% 16.01%
Return on average assets 1.28 1.34 1.31 1.31
Net income and performance
ratios after nonrecurring
items (annualized):
----------------------------------------------------------------------
Net income $ 40,424 $ 35,031 $ 113,331 $ 96,518
Net income per
common share (diluted) 0.84 0.70 2.31 1.94
Return on average
shareholders' equity 15.30% 14.35% 14.50% 13.73%
Return on average assets 1.28 1.21 1.23 1.12
Cash income and performance ratios (annualized) (c):
----------------------------------------------------------------------
Cash income $ 43,010 $ 41,410 $ 128,424 $ 121,085
Cash income per
common share (diluted) 0.89 0.83 2.62 2.43
Cash return on average
shareholders' equity 16.28% 16.81% 16.43% 17.12%
Cash return
on average assets 1.36 1.43 1.39 1.40
Other ratios (annualized):
----------------------------------------------------------------------
Shareholders'
equity / total assets 7.84% 8.76% 7.84% 8.76%
Interest-rate spread 3.45 3.43 3.46 3.34
Net interest margin 3.52 3.54 3.55 3.43
Share related:
----------------------------------------------------------------------
Book value
per common share $ 22.43 $ 20.63 $ 22.43 $ 20.63
Tangible book
value per common share 16.03 14.02 16.03 14.02
Common stock closing price 33.58 32.96 33.58 32.96
Dividends declared
per common share 0.19 0.17 0.55 0.50
Common shares
issued and outstanding 46,415,424 49,325,947 46,415,424 49,325,947
Basic shares (average) 47,302,503 49,223,332 48,240,032 49,094,463
Diluted shares (average) 48,120,915 49,928,543 49,090,772 49,760,573
(a) Excludes 2002 nonrecurring item which is SFAS No. 142
transitional goodwill impairment adjustment of $7.3 million,
net of taxes. For 2001 items are, net of taxes: $352
thousand related to net insurance proceeds (Q2), $2.5 million
of branch reconfiguration expenses (Q1), $2.4 million expense
related to the adoption of accounting standards for derivative
instruments and hedging activities(Q1) and $1.2 million
expense related to the early extinguishment of debt (Q1).
(b) Excludes nonrecurring income and operating expense items
(refer to item (a)), intangible amortization, capital
securities, preferred dividend, minority interest, foreclosed
property and repossession expenses.
(c) Net income excluding tax-effected intangible amortization and
nonrecurring items (refer to item (a)). 2001 periods are
adjusted for SFAS Nos. 142 and 147.
----------------------------------------------------------------------
Consolidated Statements of Condition (unaudited)
----------------------------------------------------------------------
Sept. 30, June 30, Sept. 30,
(Dollars in thousands) 2002 2002(a) 2001
----------------------------------------------------------------------
Assets:
Cash and due from
depository institutions $ 212,606 244,257 255,620
Short-term investments 30,542 55,539 1,782
Securities:
Trading, at fair value 1,104 163 147
Available for sale, at fair value 4,106,734 4,155,071 3,743,350
----------- ---------- ----------
Total securities 4,107,838 4,155,234 3,743,497
----------- ---------- ----------
Loans receivable:
Residential mortgages 3,854,217 3,653,742 3,755,401
Commercial 1,884,215 1,392,344 1,358,904
Commercial real estate 1,005,296 992,160 952,914
Consumer 1,562,849 1,394,497 833,998
----------- ---------- ----------
Total loans receivable 8,306,577 7,432,743 6,901,217
Allowance for loan losses (116,118) (99,698) (96,654)
----------- ---------- ----------
Loans, net 8,190,459 7,333,045 6,804,563
Accrued interest receivable 58,480 56,543 61,808
Premises and equipment, net 82,667 81,802 84,511
Intangible assets 297,054 301,912 326,396
Cash surrender
value of life insurance 169,803 167,492 161,690
Prepaid expenses and other assets 124,124 95,106 182,384
----------- ---------- ----------
Total assets $13,273,573 12,490,930 11,622,251
=========== ========== ==========
Liabilities and Shareholders' Equity:
Deposits:
Checking and NOW $ 1,774,908 1,793,480 1,568,905
Savings and MMDAs 2,858,477 2,743,220 2,309,147
Certificates of deposit 2,624,344 2,696,163 2,917,210
----------- ---------- ----------
Total retail deposits 7,257,729 7,232,863 6,795,262
Treasury deposits 95,694 104,726 169,741
----------- ---------- ----------
Total deposits 7,353,423 7,337,589 6,965,003
Borrowed funds 4,653,963 3,857,649 3,268,003
Accrued expenses
and other liabilities 82,679 83,568 211,839
----------- ---------- ----------
Total liabilities 12,090,065 11,278,806 10,444,845
----------- ---------- ----------
Corporation-obligated
mandatorily redeemable
capital securities
of subsidiary trusts 132,650 135,000 150,000
Preferred stock
of subsidiary corporation 9,577 9,577 9,577
Shareholders' equity 1,041,281 1,067,547 1,017,829
----------- ---------- ----------
Total liabilities and
shareholders' equity $13,273,573 12,490,930 11,622,251
=========== ========== ==========
(a) Adjusted for adoption of SFAS No. 147, "Acquisitions of Certain
Financial Institutions".
----------------------------------------------------------------------
Consolidated Statements of Income (unaudited)
----------------------------------------------------------------------
Three Months Ended
(Dollars in thousands, Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
except per share data) 2002 2002(a) 2002(a) 2001 2001
----------------------------------------------------------------------
Interest income:
Loans $ 118,492 114,027 111,495 118,534 127,991
Securities and
short-term investments 55,507 59,340 59,598 59,004 60,572
--------- -------- -------- -------- --------
Total interest income 173,999 173,367 171,093 177,538 188,563
--------- -------- -------- -------- --------
Interest expense:
Deposits 36,169 37,005 39,613 45,570 53,627
Borrowings 35,240 33,797 34,997 36,260 41,385
--------- -------- -------- -------- --------
Total interest expense 71,409 70,802 74,610 81,830 95,012
--------- -------- -------- -------- --------
Net interest income 102,590 102,565 96,483 95,708 93,551
Provision for loan losses 5,000 4,000 4,000 4,000 4,000
--------- -------- -------- -------- --------
Net interest income
after provision
for loan losses 97,590 98,565 92,483 91,708 89,551
--------- -------- -------- -------- --------
Noninterest income:
Deposit service fees 15,798 14,924 13,806 14,362 14,142
Loan and loan
servicing fees 6,168 5,450 4,278 5,054 5,131
Trust and
investment services 3,758 4,068 4,387 4,377 4,984
Financial advisory
services 5,997 4,357 3,959 3,286 3,942
Insurance revenue 6,386 6,376 7,436 5,358 5,806
Increase in cash surrender
value of life insurance 2,311 2,267 2,202 2,238 2,211
Other 777 1,047 2,010 2,094 1,709
--------- -------- -------- -------- --------
Total fee revenue 41,195 38,489 38,078 36,769 37,925
Gain on sale
of securities, net 4,912 1,126 3,405 2,012 2,566
--------- -------- -------- -------- --------
Total noninterest
income 46,107 39,615 41,483 38,781 40,491
--------- -------- -------- -------- --------
Noninterest expenses:
Compensation and benefits 43,302 41,248 40,148 35,393 35,827
Occupancy 6,665 6,212 6,285 6,180 6,057
Furniture and equipment 7,559 6,812 6,568 6,975 7,032
Intangible amortization 3,978 4,004 4,038 7,889 7,888
Marketing 2,622 2,438 2,424 2,300 2,045
Professional services 2,746 2,820 2,327 2,470 2,896
Capital securities 3,233 3,537 3,616 3,615 3,616
Acquisition expenses 1,349 616 - - -
Other 12,675 11,156 10,793 12,320 11,840
-------- -------- -------- -------- --------
Total noninterest
expenses 84,129 78,843 76,199 77,142 77,201
-------- -------- -------- -------- --------
Income before income
taxes and
nonrecurring items 59,568 59,337 57,767 53,347 52,841
Income taxes 19,144 18,765 18,152 17,914 17,810
-------- -------- -------- -------- --------
Income before
nonrecurring items 40,424 40,572 39,615 35,433 35,031
Nonrecurring items,
net of taxes - - (7,280) 1,237 -
-------- -------- -------- -------- --------
Net income $ 40,424 40,572 32,335 36,670 35,031
======== ======== ======== ======== ========
Net income per common share
before nonrecurring items:
Basic $0.85 0.83 0.81 0.72 0.71
Diluted 0.84 0.82 0.80 0.71 0.70
Net income per common
share before nonrecurring
items: (2001 restated for
SFAS Nos. 142 and 147)
Basic $0.85 0.83 0.81 0.80 0.79
Diluted 0.84 0.82 0.80 0.79 0.78
Net income per common share:
Basic $0.85 0.83 0.66 0.75 0.71
Diluted 0.84 0.82 0.65 0.74 0.70
(a) Adjusted to reflect the adoption of SFAS No. 123, "Accounting for
Stock-Based Compensation", and SFAS No. 147, "Acquisitions of
Certain Financial Institutions", during the third quarter. Also,
adjusted for reclasses made between noninterest income and
expenses.
----------------------------------------------------------------------
Consolidated Statements of Income (unaudited)
----------------------------------------------------------------------
Three Months Ended Nine Months Ended
(Dollars in thousands, September 30, September 30,
except per share data) 2002 2001(b) 2002 2001(b)
----------------------------------------------------------------------
Interest income:
Loans $ 118,492 127,991 $ 344,014 401,321
Securities and
short-term investments 55,507 60,572 174,445 178,311
---------- --------- --------- ---------
Total interest income 173,999 188,563 518,459 579,632
---------- --------- --------- ---------
Interest expense:
Deposits 36,169 53,627 112,787 170,765
Borrowings 35,240 41,385 104,034 137,161
---------- --------- --------- ---------
Total interest expense 71,409 95,012 216,821 307,926
---------- --------- --------- ---------
Net interest income 102,590 93,551 301,638 271,706
Provision for loan losses 5,000 4,000 13,000 10,400
---------- --------- --------- ---------
Net interest income
after provision for
loan losses 97,590 89,551 288,638 261,306
---------- --------- --------- ---------
Noninterest income:
Deposit service fees 15,798 14,142 44,528 41,699
Loan and loan
servicing fees 6,168 5,131 15,896 13,698
Trust and
investment services 3,758 4,984 12,213 13,969
Financial advisory services 5,997 3,942 14,313 12,239
Insurance revenue 6,386 5,806 20,198 16,393
Increase in cash surrender
value of life insurance 2,311 2,211 6,780 6,926
Other 777 1,709 3,834 6,695
---------- --------- --------- ---------
Total fee revenue 41,195 37,925 117,762 111,619
Gain on sale
of securities, net 4,912 2,566 9,443 8,609
---------- --------- --------- ---------
Total noninterest income 46,107 40,491 127,205 120,228
---------- --------- --------- ---------
Noninterest expenses:
Compensation and benefits 43,302 35,827 124,698 107,506
Occupancy 6,665 6,057 19,162 19,463
Furniture and equipment 7,559 7,032 20,939 20,903
Intangible amortization 3,978 7,888 12,020 23,338
Marketing 2,622 2,045 7,484 6,428
Professional services 2,746 2,896 7,893 7,008
Capital securities 3,233 3,616 10,386 10,847
Acquisition expenses 1,349 - 1,965 -
Other 12,675 11,840 34,624 32,529
---------- --------- --------- ---------
Total noninterest
expenses 84,129 77,201 239,171 228,022
---------- --------- --------- ---------
Income before income taxes
and nonrecurring items 59,568 52,841 176,672 153,512
Income taxes 19,144 17,810 56,061 51,238
---------- --------- --------- ---------
Income before
nonrecurring items 40,424 35,031 120,611 102,274
Nonrecurring items,
net of taxes (a) - - (7,280) (5,756)
---------- --------- --------- ---------
Net income $ 40,424 35,031 $ 113,331 96,518
========== ========= ========= =========
Net income per common share
before nonrecurring items:
Basic $0.85 0.71 $2.50 2.08
Diluted 0.84 0.70 2.46 2.06
Net income per common share:
Basic $0.85 $0.71 $2.35 $1.97
Diluted 0.84 0.70 2.31 1.94
(a) Nonrecurring item for 2002 is a SFAS No. 142 transitional
goodwill impairment adjustment of $7.3 million, net of taxes.
For 2001 items are, net of taxes: $352,000 related to net
insurance proceeds (Q2), $2.5 million of branch
reconfiguration expenses (Q1), $2.4 million expense related to
the adoption of SFAS No. 133 (Q1) and $1.2 million expense
related to early extinguishment of debt (Q1).
(b) Had the requirements of SFAS Nos. 142 and 147, been applied to
the 2001 three and nine month periods, intangible amortization
expense would have been $4,036 and $12,108, respectively,
income before nonrecurring items $38,787 and $113,215,
respectively, and net income $38,787 and $107,459,
respectively. Net income per share before nonrecurring items
would have been: basic $.79 and $2.31 and diluted $.78 and
$2.28, respectively. Net income per share would have been:
basic $.79 and $2.19 and diluted $.78 and $2.16, respectively.
----------------------------------------------------------------------
Retail and Wholesale Interest-Rate Spreads (unaudited)
----------------------------------------------------------------------
Three Months Ended, Sept. June March Dec. Sept.
2002 2002 2002 2001 2001
----------------------------------------------------------------------
Interest-rate spread
--------------------
Total interest-earning assets(a) 5.93% 6.09% 6.24% 6.64% 7.06%
Total interest-bearing liabilities 2.48 2.57 2.82 3.13 3.63
---- ---- ---- ---- ----
Interest-rate spread 3.45% 3.52% 3.42% 3.51% 3.43%
Net interest margin 3.52 3.61 3.51 3.61 3.54
Retail interest-rate spread
---------------------------
Yield on loans 6.01% 6.23% 6.39% 6.78% 7.33%
Cost of deposits 1.96 2.06 2.29 2.59 3.06
---- ---- ---- ---- ----
Spread 4.05% 4.17% 4.10% 4.19% 4.27%
==== ==== ==== ==== ====
Wholesale interest-rate spread
------------------------------
Yield on securities(a) 5.77% 5.84% 5.98% 6.38% 6.57%
Cost of borrowings 3.40 3.56 3.85 4.24 4.79
---- ---- ---- ---- ----
Spread 2.37% 2.28% 2.13% 2.14% 1.78%
==== ==== ==== ==== ====
----------------------------------------------------------------------
Consolidated Average Statements of Condition (unaudited)
----------------------------------------------------------------------
Three Months Ended
September 30, 2002 2001
----------------------------------------------------------------------
Fully Fully
tax tax-
equiv- equiv-
alent- alent
(Dollars in Average yield/ Average yield/
thousands) balance Interest(b) rate balance Interest(b)rate
----------------------------------------------------------------------
Assets:
Interest-earning
assets:
Loans $ 7,827,113 $118,492 6.01% $6,932,448 $127,994 7.33%
Securities
and short-term
investments 3,961,172 55,807 5.77(a) 3,742,996 60,883 6.57(a)
---------- -------- ---- ---------- -------- ----
Total interest-
earning
assets 11,788,285 174,299 5.93 10,675,444 188,877 7.06
-------- --------
Noninterest-
earning assets 857,424 878,582
------------ -----------
Total assets $ 12,645,709 $11,554,026
============ ===========
Liabilities and
Shareholders'
Equity:
Interest-bearing
liabilities:
Interest-bearing
deposits $ 6,387,698 $36,169 2.25% $ 6,152,366 $ 53,627 3.46%
Noninterest-
bearing deposits 923,065 - - 799,312 - -
Federal Home Loan
Bank advances 2,312,409 25,348 4.29 1,932,931 26,810 5.43
Repurchase
agreements and
other borrowings 1,619,238 7,102 1.72 1,326,400 11,785 3.48
Senior notes 126,000 2,790 8.86 126,000 2,790 8.86
----------- -------- ---- ---------- -------- ----
Total interest-
bearing
liabilities 11,368,410 71,409 2.48 10,337,009 95,012 3.63
-------- --------
Noninterest-
bearing
liabilities 76,724 81,153
----------- ----------
Total
liabilities 11,445,134 10,418,162
Capital
securities and
preferred stock
of subsidiary
corporation 144,041 159,577
Shareholders'
equity 1,056,534 976,287
------------ ----------
Total
liabilities
and
shareholders'
equity $ 12,645,709 $11,554,026
============ ===========
Less:
tax-equivalent
adjustment (300) (314)
-------- --------
Net interest
income $102,590 $ 93,551
======== ========
Interest-rate
spread 3.45% 3.43%
===== ====
Net interest
margin 3.52% 3.54%
===== ====
(a) For purposes of this computation, unrealized gains(losses) are
excluded from the average balance for rate calculations.
(b) On a fully tax-equivalent basis.
----------------------------------------------------------------------
Consolidated Average Statements of Condition (unaudited)
----------------------------------------------------------------------
Nine Months Ended
September 30, 2002 2001
----------------------------------------------------------------------
Fully Fully
tax tax
equiv- equiv-
alent- alent
(Dollars in Average yield/ Average yield/
thousands) balance Interest(b) rate balance Interest(b)rate
----------------------------------------------------------------------
Assets:
Interest-
earning
assets:
Loans $ 7,377,986 $344,014 6.20% $ 6,978,408 $401,330 7.64%
Securities and
short-term
investments 4,046,727 175,346 5.87(a) 3,624,762 179,114 6.62(a)
----------- -------- ---- ---------- -------- ----
Total interest-
earning
assets 11,424,713 519,360 6.08 10,603,170 580,444 7.30
-------- --------
Noninterest-
earning assets 853,673 905,852
----------- -----------
Total assets $12,278,386 $11,509,022
=========== ===========
Liabilities and
Shareholders'
Equity:
Interest-bearing
liabilities:
Interest-bearing
deposits $ 6,305,282 $112,787 2.39% $ 6,108,950 $170,765 3.74%
Noninterest-
bearing deposits 880,540 - - 806,022 - -
Federal Home Loan
Bank advances 2,324,385 77,626 4.40 1,907,696 84,334 5.83
Repurchase
agreements and
other
borrowings 1,368,187 18,038 1.74 1,377,122 44,455 4.26
Senior notes 126,000 8,370 8.86 126,000 8,372 8.86
----------- -------- ---- ---------- -------- ----
Total interest-
bearing
liabilities 11,004,394 216,821 2.62 10,325,790 307,926 3.96
-------- --------
Noninterest-
bearing
liabilities 78,722 84,035
----------- -----------
Total
liabilities 11,083,116 10,409,825
Capital
securities and
preferred stock
of subsidiary
corporation 153,132 161,775
Shareholders'
equity 1,042,138 937,422
----------- -----------
Total
liabilities
and
shareholders'
equity $ 12,278,386 $11,509,022
============ ===========
Less: tax-
equivalent
adjustment (901) (812)
-------- --------
Net interest
income $301,638 $271,706
======== ========
Interest-rate
spread 3.46% 3.34%
==== ====
Net interest
margin 3.55% 3.43%
==== ====
(a) For purposes of this computation, unrealized gains (losses)
are excluded from the average balance rate calculations.
(b) On a fully tax-equivalent basis.
----------------------------------------------------------------------
Asset Quality and Allowance for Loan Losses (unaudited)
----------------------------------------------------------------------
(Dollars in thousands)
At or for the Three Months Ended,
-----------------------------------------------
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2002 2002 2002 2001 2001
-----------------------------------------------
Nonperforming Assets
Nonperforming loans:
Commercial:
Business banking $19,000 21,626 20,461 20,574 16,852
Specialized industry 27,231 3,399 3,399 8,947 11,003
Lease financing 5,559 6,531 7,510 7,333 6,733
----------------------------------------------
Total commercial 51,790 31,556 31,370 36,854 34,588
Commercial real estate 10,124 9,506 11,122 11,062 13,945
Residential 5,521 5,991 6,262 7,677 7,745
Consumer 1,062 1,409 1,545 1,823 1,474
----------------------------------------------
Total nonperforming loans 68,497 48,462 50,299 57,416 57,752
----------------------------------------------
Other real estate owned
and repossessed assets:
Commercial 3,007 2,294 2,690 2,534 539
Residential 686 635 1,131 1,956 1,240
Consumer 12 170 205 548 710
----------------------------------------------
Total other real
estate owned and
repossessed assets 3,705 3,099 4,026 5,038 2,489
----------------------------------------------
Total
nonperforming assets $ 72,202 51,561 54,325 62,454 60,241
==============================================
Allowance for Loan Losses
Beginning balance $ 99,698 98,930 97,307 96,654 96,135
Allowance for
purchased loans 16,338 - - - -
Provision 5,000 4,000 4,000 4,000 4,000
Loan charge-offs:
Commercial:
Specialized industry 1,892 854 1,361 564 3,039
All other commercial 3,029 2,498 541 2,518 365
----------------------------------------------
Total commercial 4,921 3,352 1,902 3,082 3,404
Residential 249 187 362 249 325
Consumer 246 250 377 394 281
----------------------------------------------
Total charge-offs 5,416 3,789 2,641 3,725 4,010
Recoveries (498) (557) (264) (378) (529)
----------------------------------------------
Net loan
charge-offs 4,918 3,232 2,377 3,347 3,481
----------------------------------------------
Ending balance $116,118 99,698 98,930 97,307 96,654
==============================================
----------------------------------------------------------------------
Asset Quality Ratios:
---------------------
Net charge-offs/
average loans
(annualized) 0.25 % 0.18 0.14 0.19 0.20
Allowance for loan
losses / gross loans 1.40 1.34 1.37 1.40 1.40
Nonperforming
assets / total assets 0.54 0.41 0.44 0.53 0.52
Nonperforming
loans / total loans 0.82 0.65 0.69 0.82 0.84
Allowance for
loan losses /
nonperforming loans 169.52 205.72 196.68 169.48 167.36
Webster Financial Corporation
CONTACT:
Webster Financial Corporation
Media:
Art House, 203/578-2391
ahouse@websterbank.com
or
Clark Finley, 203/578-2429
cfinley@websterbank.com
or
Investors:
James M. Sitro, 203/578-2399
jsitro@websterbank.com
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