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WATERBURY, Conn.--(BUSINESS WIRE)--Jan. 22, 2003--Webster
Financial Corporation (NYSE: WBS), the holding company for Webster
Bank, today reported a 20 percent increase in operating earnings per
share for both the fourth quarter and the year 2002.
For the fourth quarter ended December 31, 2002, operating earnings
(defined as net income excluding nonrecurring items) increased to
$39.4 million or $.85 per diluted share, compared to $35.4 million or
$.71 per diluted share in the year-ago period. Operating earnings for
the year rose to $160.0 million or $3.31 per diluted share, compared
to $137.7 million or $2.77 per diluted share for 2001.
"The year 2002 was one of significant accomplishment for Webster,
marked by solid loan and deposit growth and by revenue and earnings
growth. Webster's progress in implementing our strategic plan for
growth produced another strong year for our stakeholders," stated
Webster chairman and chief executive officer, James C. Smith. "We are
especially pleased to report a meaningful improvement in loan quality
in the fourth quarter, due primarily to our decision to reduce
exposure to telecommunications loans. From the strategic realignment
and expansion of our executive team to our listing on the New York
Stock Exchange in October, Webster improved its position as a growing
regional financial services provider, and we are poised for future
growth."
Net income for 2002 was $152.7 million or $3.16 per diluted share,
compared to $133.2 million or $2.68 per diluted share for the previous
year. The 2002 results include, net of taxes, net non-recurring
charges of $7.3 million compared to $4.5 million in 2001. Had the
requirements of SFAS 142 and 147 been applied to the 2001 fourth
quarter and full year, operating earnings per share and net income per
share for those periods would have increased by $.08 and $.30,
respectively.
Revenues and Expenses
Webster's earnings improvement was driven by strong revenue
growth. Revenues grew by 12 percent for the quarter and 10 percent for
the year, due primarily to an increase in net interest income and
growth in revenues from fee-based services.
For the fourth quarter of 2002, net interest income increased by 9
percent to $104.1 million from $95.7 million in the year-ago period.
Net interest income for the year increased by 10 percent to $405.7
million from $367.5 million in the previous year. Strong loan growth
during the year was responsible for both increasing revenues and
helping to offset the compression of net interest margin caused by the
lower interest rate environment.
Net interest margin (net interest income as a percentage of
average earning assets) was 3.39 percent in the fourth quarter,
compared to 3.61 percent in the year-ago period. The decrease in net
interest margin was due to declining interest rates and significant
prepayments of mortgage loans and mortgage-backed securities with
proceeds reinvested at lower yields. For the year, net interest margin
was 3.50 percent, up from 3.48 percent the previous year.
For the fourth quarter of 2002, revenue from fee-based services
increased 21 percent to $44.4 million from $36.8 million in the
year-ago period. These revenues increased 9 percent for the year to
$162.2 million, up from $148.4 million in 2001. The increases for both
the fourth quarter and the year are due primarily to growth in deposit
fees, loan and servicing fees and insurance revenue, which in total
increased $7.6 million or 31 percent for the fourth quarter and $16.2
million or 17 percent for the year. As revenues from fee-based
services have grown, Webster has been able to reduce our reliance on
interest-sensitive revenues in this challenging economic environment.
Total non-interest expenses for the 2002 fourth quarter were $89.2
million compared to $77.1 million in the year-ago period, an increase
of 16 percent. The increase in non-interest expenses during the
quarter is primarily a result of acquisitions and continuing
investment in personnel, technology and infrastructure to meet our
strategic plan for growth. These items, coupled with the compression
of net interest margin, caused our efficiency ratio to increase during
the quarter to 54.98 percent. For 2002, the ratio was 52.43 percent,
compared to 50.34 percent the prior year. For the year 2002, total
non-interest expenses were $328.3 million compared to $305.2 million
in 2001, an increase of 8 percent.
Balance Sheet Growth
At December 31, 2002, total assets were $13.5 billion, up 14
percent compared to $11.9 billion for the previous year-end. Total
loans increased 16 percent to $7.9 billion at year-end, compared to
$6.8 billion a year ago. All of Webster's loan growth in 2002 can be
attributed to increases of 32 percent in commercial loans and 55
percent in consumer loans.
Total deposits were $7.6 billion at December 31, 2002, an increase
of 8 percent from $7.1 billion at the prior year-end. Webster's growth
was driven by acquisitions, de novo branch expansion and our
commitment to strengthening customer relationships in existing
markets. Core deposits at December 31, 2002 were $4.9 billion, an
increase of 19 percent over the prior year.
For the fourth quarter, operating return on average shareholders'
equity was 15.4 percent, compared to 13.8 percent in the year-ago
period. Operating return on average shareholders' equity for the year
was 15.4 percent, up from 14.4 percent in 2001. Cash operating return
on average equity was 16.42 percent for the 2002 fourth quarter and
-
16.43 percent for the year.
Book value per common share increased 11 percent in 2002 to
$22.69, up from $20.48 at December 31, 2001, a rise due primarily to
earnings and increases in the fair value of available-for-sale
securities and offset by an increase in treasury stock. During the
year, Webster repurchased approximately 4.0 million shares of its
common stock in the open market.
Asset Quality
Asset quality improved significantly in the fourth quarter as
non-performing assets declined to $50.0 million or 0.37 percent of
total assets at December 31, 2002, compared to $72.2 million or 0.54
percent at the end of the third quarter and $62.5 million or 0.53
percent a year ago. Classified loans (defined as loans classified
substandard, doubtful or loss), another measure of asset quality,
declined dramatically and totaled $113.0 million or 1.4 percent of
loans at year-end, compared to $168.3 million or 2.1 percent at the
end of the third quarter and $140.8 million or 2.1 percent at December
31, 2001. These improvements were due primarily to the elimination of
Webster's exposure to classified telecommunications and cable loans.
In the fourth quarter, Webster took aggressive actions to dispose
of these classified loans. Five substandard shared national
telecommunications credits totaling $25.8 million were sold or written
down, which resulted in a fourth quarter charge against the allowance
for loan losses of $12.4 million. Webster also sold two classified,
shared national cable credits totaling $9.8 million, resulting in a
$1.5 million charge earlier in the fourth quarter. As a result of
these actions, the fourth quarter provision for loan losses increased
to $16.0 million compared to $5.0 million in the third quarter of 2002
and $4.0 million in the year-ago period. The higher provision was
fully offset by gains on the sale of securities. For the year, the
provision for loan losses was $29.0 million compared to $14.4 million
in 2001.
"These actions are consistent with Webster's history of
maintaining high credit quality through economic cycles," stated
Webster chief financial officer, William J. Healy. "We are pleased
Webster has been able to retain its high standards for asset quality
while at the same time continue to show significant growth in this
challenging economic environment."
The allowance for loan losses increased to $116.8 million or 1.48
percent of total loans at December 31, 2002, up from $116.1 million or
-
1.45 percent at September 30, 2002 and $97.3 million or 1.43 percent
of total loans a year ago. The ratio of the allowance to
non-performing loans at December 31, 2002 was 270.0 percent, compared
to 169.5 percent at both September 30, 2002 and December 31, 2001.
Transformation To A Commercial Bank Profile
"Webster remains committed to developing a commercial bank profile
by continuing to transform and diversify our loan and deposit mix and
further building our fee-income business," said William T. Bromage,
Webster president and chief operating officer. "Long-term efforts to
increase higher-yielding commercial and consumer loans and our mix of
lower-cost core deposits continue to meet success. In 2002, we gained
positive results once again, adding significantly to our asset-based
lending capabilities."
Total loans in 2002 increased 16 percent to $7.9 billion from $6.8
billion at December 31, 2001, due primarily to growth in the consumer
and commercial portfolios. Commercial loan growth benefited from the
third quarter 2002 acquisition of Whitehall Business Credit
Corporation. At December 31, 2002, commercial loans, including
commercial real estate, were $2.8 billion, up 21 percent for the year.
Also, consumer loans totaled $1.7 billion at year-end, an increase of
55 percent over the prior year. Commercial and consumer loans now
comprise 57 percent of the total loan portfolio compared with 50
percent a year ago.
Webster's wholesale mortgage banking operations generated $2.6
billion in loan originations in 2002, compared to $1.3 billion the
prior year. The gain on sale of these loans for 2002 totaled $5.8
million, compared to $2.8 million in 2001.
Total deposits increased 8 percent to $7.6 billion at the end of
2002, from $7.1 billion the prior year due to growth in core deposits.
Core deposits increased 19 percent to $4.9 billion from a year ago and
now represent 65 percent of total deposits, up from 59 percent in
2001. The increases are due in part to the $100 million in new
deposits generated by four branch openings in 2002 under our de novo
expansion plan. In addition, our High Performance Checking program
added $59 million in balances and over 28,000 new checking accounts
since its inception in August 2002.
With the 9 percent increase in fee-based revenues in 2002,
Webster's fee-based revenues now represent 29% of total revenues.
Deposit fees increased 19 percent for the fourth quarter and 10
percent for 2002, while loan and loan servicing fees rose 67 percent
for the quarter and 28 percent for the year. In addition, insurance
revenues increased 28 percent in the fourth quarter and 24 percent for
the year. The recently announced acquisition of The Mathog & Moniello
Companies is projected to contribute more than $11 million in annual
insurance-related revenue for 2003.
2002 Strategic Actions
In January, Webster announced plans to reorganize management in
order to execute more effectively its strategic plan for growth.
William T. Bromage, President, was promoted to Chief Operating Officer
of Webster Financial Corporation and Webster Bank.
As part of the reorganization, Webster announced the creation of
the positions of Executive Vice President, Business Banking and
Executive Vice President, Corporate Development and Planning, filled
in May and July by Joseph Savage and Nathaniel C. Brinn, respectively.
Mr. Savage was previously Executive Vice President of the
Communications and Energy Banking Group for CoBank in Denver,
Colorado. Mr. Brinn most recently was Senior Vice President, Business
Development and New Products for HSB Group, Inc., in Hartford,
Connecticut. Webster further strengthened its executive management
team in June with the appointment of Patrick T. Murphy as Executive
Vice President, Human Resources for Webster Bank. Prior to joining
Webster, Mr. Murphy was Vice President, Human Resources at ING Aetna
Financial Services in Hartford, Connecticut. Webster again fortified
its executive management in October, appointing Bruce E. Wolfe to lead
Webster's investment management businesses as Executive Vice
President, Webster Bank. In this capacity, Mr. Wolfe manages Webster
Financial Advisors, including Webster Trust Company and Webster's
private banking, and Webster Investment Services. Mr. Wolfe was
previously Managing Director for Global Strategy with Merrill Lynch
Investment Managers in New York.
In July, Webster announced plans to repurchase up to approximately
-
2.4 million shares, or 5 percent of Webster's 48 million shares of
outstanding common stock. This announcement marked the initiation of
Webster's fifteenth stock repurchase program. Webster's previous
5-percent repurchase plan was announced in September 2001 and
completed during the third quarter of 2002. By December 31, 2002,
Webster had purchased approximately 4.0 million shares of the
September 2001 and July 2002 plans, with approximately 780,000 shares
remaining to be purchased.
Webster announced in August the acquisition of Whitehall Business
Credit Corporation, the former asset-based lending division of IBJ
Whitehall Business Credit Corporation, a subsidiary of the Industrial
Bank of Japan Trust Company. With this transaction, Webster acquired
approximately $450 million of outstanding loans and $60 million of
letters of credit, most of which are customers in the Northeast.
In September, Webster continued its de novo branch expansion plan,
opening its fourth Fairfield County branch in 2002 in Danbury. Two
branches in Stamford and one in Darien opened earlier in the year with
each branch exceeding year-end deposit balance goals.
In October, Webster commenced trading its common stock on the New
York Stock Exchange under the new ticker symbol "WBS". Webster shares
previously traded on the NASDAQ national market.
Also in October, Webster acquired Fleming, Perry & Cox, Inc., a
financial planning and investment services firm based in Norwalk,
Connecticut. In joining Webster Financial Advisors, Fleming, Perry &
Cox will continue to offer financial planning, investment management,
risk management and tax and estate planning services to high-net-worth
clients in the Northeast.
Other Highlights
Webster announced the promotion of two executives to corporate
executive posts. In June, Jo Keeler was appointed to Corporate
Executive Vice President, Risk Management for Webster Financial
Corporation, and in January 2003, Harriet Munrett Wolfe, Esq. was
elevated to the position of Executive Vice President, General Counsel
and Secretary for both Webster Financial Corporation and Webster Bank.
In January 2003, Webster announced the acquisition of The Mathog &
Moniello Companies, an East Haven, Connecticut-based commercial
property and casualty agency that specializes in providing risk
management products and services to self-insured businesses and
groups. With this acquisition, Webster Insurance ranks among the
nation's top ten bank-owned insurance agencies or brokers by revenue.
Also in January 2003, Webster Bank announced an offering of $200
million of subordinated notes. The subordinated notes are listed as
investment grade by the major rating agencies and were offered to
institutional investors. The successful offering closed on January 14.
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, insurance, trust and investment services through more than
109 banking offices, 219 ATMs and the Internet
(www.websteronline.com). Webster Financial Corporation is majority
owner of Chicago-based Duff & Phelps, LLC, a leader in financial
advisory services. Webster Bank owns the asset-based lending firm,
Whitehall Business Credit Corporation, Center Capital Corporation, an
equipment financing company headquartered in Farmington, Connecticut
and Webster Trust Company, N.A.
For more information about Webster, including past press releases
and the latest Annual Report, visit the Webster Bank web site at
www.websteronline.com.
Conference Call
A conference call covering today's announcement will be held
today, Wednesday, January 22, at 2 P.M. Eastern Standard Time and may
be heard through Webster's investor relations website at
www.websteronline.com, or in listen-only mode by calling
1-800-521-5469 (Access Code: 2858838). 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 Company's Annual Report
for the most recently ended fiscal year.
----------------------------------------------------------------------
Selected Financial Highlights (unaudited)
----------------------------------------------------------------------
At or for the Three At or for the Twelve
(Dollars in thousands, Months Ended Dec. 31, Months Ended Dec. 31,
except per share data) 2002 2001 2002 2001
----------------------------------------------------------------------
Operating income and performance ratios (annualized)(a):
----------------------------------------------------------
As reported:
Operating income $ 39,401 $ 35,433 $ 160,012 $ 137,707
Operating income per
common share (diluted) 0.85 0.71 3.31 2.77
Return on average
shareholders' equity 15.41% 13.83% 15.43% 14.35%
Return on average
assets 1.18 1.22 1.28 1.19
Fee income as a
percentage of total
revenue 29.92 27.76 28.56 28.76
Efficiency ratio(b) 54.98 49.90 52.43 50.34
2001 adjusted for SFAS
Nos. 142 and 147:
Operating income $ 39,401 $ 39,286 $ 160,012 $ 152,789
Operating income per
common share (diluted) 0.85 0.79 3.31 3.07
Return on average
shareholders' equity 15.41% 15.14% 15.43% 15.80%
Return on average assets 1.18 1.35 1.28 1.32
Net income and performance ratios after nonrecurring items
(annualized):
----------------------------------------------------------
Net income $ 39,401 $ 36,670 $ 152,732 $ 133,188
Net income per common
share (diluted) 0.85 0.74 3.16 2.68
Return on average
shareholders' equity 15.41% 14.31% 14.72% 13.88%
Return on average
assets 1.18 1.26 1.22 1.15
Cash income and performance ratios (annualized)(c):
----------------------------------------------------------
Cash income $ 41,999 $ 41,909 $ 170,423 $ 163,283
Cash income per common
share (diluted) 0.91 0.84 3.52 3.28
Cash return on average
shareholders' equity 16.42% 16.15% 16.43% 16.89%
Cash return on average
assets 1.26 1.44 1.36 1.42
Other ratios (annualized):
----------------------------------------------------------
Shareholders' equity/
total assets 7.69% 8.49% 7.69% 8.49%
Interest-rate spread 3.35 3.51 3.43 3.38
Net interest margin 3.39 3.61 3.50 3.48
Share related:
----------------------------------------------------------
Book value per common
share $ 22.69 $ 20.48 $ 22.69 $ 20.48
Tangible book value
per common share 16.18 13.97 16.18 13.97
Common stock closing
price 34.80 31.53 34.80 31.53
Dividends declared per
common share 0.19 0.17 0.74 0.67
Common shares issued
and outstanding 45,625,997 49,149,417 45,625,997 49,149,417
Basic shares
(average) 45,640,203 49,060,256 47,583,709 49,085,841
Diluted shares
(average) 46,320,625 49,690,515 48,391,521 49,742,914
(a) Excludes 2002 nonrecurring item which is SFAS No. 142 transitional
goodwill impairment adjustment of $7.3 million, net of taxes. For
the 2001 twelve month period, excluded items, net of taxes, are:
$1.6 million related to net insurance proceeds (Q2 & Q4), $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). For the
2001 three month period, excluded item, net of taxes, is: $1.2
million of insurance proceeds.
(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)
----------------------------------------------------------------------
December 31, September 30, December 31,
(Dollars in thousands) 2002 2002 2001
----------------------------------------------------------------------
Assets:
Cash and due from depository
institutions $ 266,463 $ 212,606 $ 218,908
Short-term investments 15,596 30,542 35,937
Securities:
Trading, at fair value 5,752 1,104 162
Available for sale, at fair
value 4,119,245 4,106,734 3,999,133
------------ ------------ ------------
Total securities 4,124,997 4,107,838 3,999,295
------------ ------------ ------------
Loans held for sale 405,157 315,585 143,918
Loans receivable:
Residential mortgages 3,386,207 3,538,632 3,386,283
Commercial 1,798,898 1,884,215 1,367,578
Commercial real estate 1,029,332 1,005,296 974,976
Consumer 1,698,202 1,562,849 1,094,463
------------ ------------ ------------
Total loans receivable 7,912,639 7,990,992 6,823,300
Allowance for loan losses (116,804) (116,118) (97,307)
------------ ------------ ------------
Loans, net 7,795,835 7,874,874 6,725,993
Accrued interest receivable 54,601 58,480 54,288
Premises and equipment, net 84,683 82,667 82,808
Intangible assets 297,359 297,054 320,051
Cash surrender value of life
insurance 172,066 169,803 163,023
Prepaid expenses and other
assets 251,247 124,124 113,161
------------ ------------ ------------
Total assets $ 13,468,004 $ 13,273,573 $ 11,857,382
============ ============ ============
Liabilities and Shareholders'
Equity:
Deposits:
Checking and NOW $ 1,927,880 $ 1,774,908 $ 1,708,623
Savings and MMDAs 2,987,595 2,858,477 2,430,691
Certificates of deposit 2,592,701 2,624,344 2,831,344
------------ ------------ ------------
Total retail deposits 7,508,176 7,257,729 6,970,658
Treasury deposits 97,946 95,694 95,813
------------ ------------ ------------
Total deposits 7,606,122 7,353,423 7,066,471
Other borrowings 2,166,640 2,165,665 876,185
Federal Home Loan Bank advances 2,163,029 2,362,298 2,531,179
Senior Notes 126,000 126,000 126,000
Accrued expenses and other
liabilities 239,923 82,679 91,503
------------ ------------ ------------
Total liabilities 12,301,714 12,090,065 10,691,338
------------ ------------ ------------
Corporation-obligated
mandatorily redeemable
capital securities of
subsidiary trusts 121,255 132,650 150,000
Preferred stock of subsidiary
corporation 9,577 9,577 9,577
Shareholders' equity 1,035,458 1,041,281 1,006,467
------------ ------------ ------------
Total liabilities and
shareholders' equity $ 13,468,004 $ 13,273,573 $ 11,857,382
============ ============ ============
----------------------------------------------------------------------
Consolidated Statements of Income (unaudited)
----------------------------------------------------------------------
Three Months Ended Twelve Months Ended
(Dollars in thousands, December 31, December 31,
except per share data) 2002 2001(b) 2002 2001(b)
----------------------------------------------------------------------
Interest income:
Loans and loans held
for sale $ 120,386 $ 118,534 $ 464,400 $ 519,920
Securities and short-
term investments 53,189 59,004 227,634 237,315
--------- --------- ---------- ----------
Total interest
income 173,575 177,538 692,034 757,235
--------- --------- ---------- ----------
Interest expense:
Deposits 33,375 45,570 146,162 216,335
Borrowings 36,110 36,260 140,144 173,421
--------- --------- ---------- ----------
Total interest
expense 69,485 81,830 286,306 389,756
--------- --------- ---------- ----------
Net interest income 104,090 95,708 405,728 367,479
Provision for loan
losses 16,000 4,000 29,000 14,400
--------- --------- ---------- ----------
Net interest income
after provision for
loan losses 88,090 91,708 376,728 353,079
--------- --------- ---------- ----------
Noninterest income:
Deposit service fees 17,083 14,362 61,610 56,061
Loan and loan servicing
fees 8,426 5,054 24,339 19,033
Trust and investment
services 3,693 4,377 15,918 18,346
Financial advisory
services 4,964 3,286 19,277 15,525
Insurance revenue 6,875 5,358 27,073 21,751
Increase in cash
surrender value of
life insurance 2,263 2,238 9,042 9,164
Other 1,129 2,094 4,936 8,508
--------- --------- ---------- ----------
Total fee revenue 44,433 36,769 162,195 148,388
Gain on sale of
securities, net 13,934 2,012 23,377 10,621
--------- --------- ---------- ----------
Total noninterest
income 58,367 38,781 185,572 159,009
--------- --------- ---------- ----------
Noninterest expenses:
Compensation and
benefits 46,343 35,393 171,042 142,899
Occupancy 7,444 6,180 26,606 25,643
Furniture and equipment 8,228 6,975 29,167 27,878
Intangible amortization 3,997 7,889 16,017 31,227
Marketing 3,038 2,300 10,522 8,728
Professional services 3,503 2,470 11,404 8,516
Capital securities 3,139 3,615 13,525 14,462
Acquisition expenses - - 1,965 -
Other 13,460 12,320 48,075 45,876
--------- --------- ---------- ----------
Total noninterest
expenses 89,152 77,142 328,323 305,229
--------- --------- ---------- ----------
Income before income
taxes and nonrecurring
items 57,305 53,347 233,977 206,859
Income taxes 17,904 17,914 73,965 69,152
--------- --------- ---------- ----------
Income before
nonrecurring items 39,401 35,433 160,012 137,707
Nonrecurring items, net
of taxes(a) - 1,237 (7,280) (4,519)
--------- --------- ---------- ----------
Net income $ 39,401 $ 36,670 $ 152,732 $ 133,188
========= ========= ========== ==========
Net income per common
share before
nonrecurring items:
Basic $ 0.86 $ 0.72 $ 3.36 $ 2.81
Diluted 0.85 0.71 3.31 2.77
Net income per common
share:
Basic $ 0.86 $ 0.75 $ 3.21 $ 2.71
Diluted 0.85 0.74 3.16 2.68
(a) Nonrecurring item for 2002 is a SFAS No. 142 transitional goodwill
impairment adjustment of $7.3 million, net of taxes. For the 2001
twelve month period, items are, net of taxes: $1.6 million related
to net insurance proceeds (Q2 & Q4), $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). For the 2001 three month
period, item is, net of taxes: $1.2 million of insurance proceeds.
(b) Had the requirements of SFAS Nos. 142 and 147, been applied to the
2001 three and twelve month periods, intangible amortization
expense would have been $4,036 and $16,145, respectively, income
before nonrecurring items $39,286 and $152,789, respectively, and
net income $40,523 and $148,270, respectively. Net income per
share before nonrecurring items would have been: basic $.80 and
$3.11 and diluted $.79 and $3.07, respectivley. Net income per
share would have been: basic $.83 and $3.02 and diluted $.82 and
$2.98, respectively.
----------------------------------------------------------------------
Consolidated Statements of Income (unaudited)
----------------------------------------------------------------------
Three Months Ended
(Dollars in thousands, Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
except per share data) 2002 2002 2002(a) 2002(a) 2001
----------------------------------------------------------------------
Interest income:
Loans and loans held
for sale $ 120,386 $ 118,492 $ 114,027 $ 111,495 $ 118,534
Securities and
short-term
investments 53,189 55,507 59,340 59,598 59,004
--------- --------- --------- --------- ---------
Total interest
income 173,575 173,999 173,367 171,093 177,538
--------- --------- --------- --------- ---------
Interest expense:
Deposits 33,375 36,169 37,005 39,613 45,570
Borrowings 36,110 35,240 33,797 34,997 36,260
--------- --------- --------- --------- ---------
Total interest
expense 69,485 71,409 70,802 74,610 81,830
--------- --------- --------- --------- ---------
Net interest income 104,090 102,590 102,565 96,483 95,708
Provision for loan
losses 16,000 5,000 4,000 4,000 4,000
--------- --------- --------- --------- ---------
Net interest income
after provision
for loan losses 88,090 97,590 98,565 92,483 91,708
--------- --------- --------- --------- ---------
Noninterest income:
Deposit service fees 17,083 15,797 14,924 13,806 14,362
Loan and loan servicing
fees 8,426 6,185 5,450 4,278 5,054
Trust and investment
services 3,693 3,770 4,068 4,387 4,377
Financial advisory
services 4,964 5,997 4,357 3,959 3,286
Insurance revenue 6,875 6,386 6,376 7,436 5,358
Increase in cash
surrender value of
life insurance 2,263 2,310 2,267 2,202 2,238
Other 1,129 750 1,047 2,010 2,094
--------- --------- --------- --------- ---------
Total fee revenue 44,433 41,195 38,489 38,078 36,769
Gain on sale of
securities, net 13,934 4,912 1,126 3,405 2,012
--------- --------- --------- --------- ---------
Total noninterest
income 58,367 46,107 39,615 41,483 38,781
Noninterest expenses:
Compensation and
benefits 46,343 43,303 41,248 40,148 35,393
Occupancy 7,444 6,665 6,212 6,285 6,180
Furniture and
equipment 8,228 7,559 6,812 6,568 6,975
Intangible
amortization 3,997 3,978 4,004 4,038 7,889
Marketing 3,038 2,622 2,438 2,424 2,300
Professional services 3,503 2,754 2,820 2,327 2,470
Capital securities 3,139 3,233 3,537 3,616 3,615
Acquisition expenses - 1,349 616 - -
Other 13,460 12,666 11,156 10,793 12,320
--------- --------- --------- --------- ---------
Total noninterest
expenses 89,152 84,129 78,843 76,199 77,142
--------- --------- --------- --------- ---------
Income before income
taxes and
nonrecurring items 57,305 59,568 59,337 57,767 53,347
Income taxes 17,904 19,144 18,765 18,152 17,914
--------- --------- --------- --------- ---------
Income before
nonrecurring items 39,401 40,424 40,572 39,615 35,433
Nonrecurring items,
net of taxes - - - (7,280) 1,237
--------- --------- --------- --------- ---------
Net income $ 39,401 $ 40,424 $ 40,572 $ 32,335 $ 36,670
========= ========= ========= ========= =========
Net income per common
share before
nonrecurring items:
Basic $ 0.86 $ 0.85 $ 0.83 $ 0.81 $ 0.72
Diluted 0.85 0.84 0.82 0.80 0.71
Net income per common share before nonrecurring items:
(2001 restated for SFAS Nos. 142 and 147)
Basic $ 0.86 $ 0.85 $ 0.83 $ 0.81 $ 0.80
Diluted 0.85 0.84 0.82 0.80 0.79
Net income per common
share:
Basic $ 0.86 $ 0.85 $ 0.83 $ 0.66 $ 0.75
Diluted 0.85 0.84 0.82 0.65 0.74
(a) Adjusted to reflect the adoption of SFAS No. 123, "Accounting for
Stock-Based Compensation", and SFAS No.147, "Acquisition of
Certain Financial Institutions", during the third quarter. Also,
adjusted for reclasses made between noninterest income and
expenses.
----------------------------------------------------------------------
Retail and Wholesale Interest-Rate Spreads (unaudited)
----------------------------------------------------------------------
Three Months Ended, December September June March December
2002 2002 2002 2002 2001
----------------------------------------------------------------------
Interest-rate spread
--------------------
Total interest-
earning assets(a) 5.61% 5.93% 6.09% 6.24% 6.64%
Total interest-
bearing liabilities 2.26 2.48 2.57 2.82 3.13
---- ---- ---- ---- ----
Interest-rate
spread 3.35% 3.45% 3.52% 3.42% 3.51%
Net interest margin 3.39 3.52 3.61 3.51 3.61
Retail interest-rate
spread
--------------------
Yield on loans 5.71% 6.01% 6.23% 6.39% 6.78%
Cost of deposits 1.77 1.96 2.06 2.29 2.59
---- ---- ---- ---- ----
Spread 3.94% 4.05% 4.17% 4.10% 4.19%
==== ==== ==== ==== ====
Wholesale interest-
rate spread
--------------------
Yield on securities(a) 5.40% 5.77% 5.84% 5.98% 6.38%
Cost of borrowings 3.07 3.40 3.56 3.85 4.24
---- ---- ---- ---- ----
Spread 2.33% 2.37% 2.28% 2.13% 2.14%
==== ==== ==== ==== ====
----------------------------------------------------------------------
Consolidated Average Statements of Condition (unaudited)
----------------------------------------------------------------------
Three Months Ended December 31, 2002
----------------------------------------------------------------------
Fully tax-
Average equivalent
(Dollars in thousands) balance Interest(b) yield/rate
----------------------------------------------------------------------
Assets:
Interest-earning assets:
Loans and loans held for
sale $ 8,375,035 $ 120,388 5.71%
Securities and short-term
investments 4,050,800 53,511 5.40(a)
------------ ------------ ------------
Total interest-earning
assets 12,425,835 173,899 5.61
Noninterest-earning assets 922,021 ------------
------------
Total assets $ 13,347,856
============
Liabilities and Shareholders'
Equity:
Interest-bearing
liabilities:
Interest-bearing deposits $ 6,530,109 $ 33,375 2.03%
Noninterest-bearing
deposits 969,282 - -
Federal Home Loan Bank
advances 2,377,163 25,163 4.14
Repurchase agreements and
other borrowings 2,111,537 8,157 1.51
Senior notes 126,000 2,790 8.86
------------ ------------ ------------
Total interest-bearing
liabilities 12,114,091 69,485 2.26
Noninterest-bearing ------------
liabilities 71,552
------------
Total liabilities 12,185,643
Capital securities and
preferred stock of
subsidiary corporation 139,378
Shareholders' equity 1,022,835
------------
Total liabilities and
shareholders' equity $ 13,347,856
============
Less: tax-equivalent
adjustment (324)
------------
Net interest income $ 104,090
============
Interest-rate spread 3.35%
============
Net interest margin 3.39%
============
Three Months Ended December 31, 2001
----------------------------------------------------------------------
Fully tax-
Average equivalent
(Dollars in thousands) balance Interest(b) yield/rate
----------------------------------------------------------------------
Assets:
Interest-earning assets:
Loans and loans held for
sale $ 6,942,991 $ 118,535 6.78%
Securities and short-term
investments 3,795,970 59,309 6.38(a)
------------ ------------ ------------
Total interest-earning
assets 10,738,961 177,844 6.64
Noninterest-earning assets 866,974 ------------
------------
Total assets $ 11,605,935
============
Liabilities and Shareholders'
Equity:
Interest-bearing
liabilities:
Interest-bearing deposits $ 6,136,462 $ 45,570 2.95%
Noninterest-bearing
deposits 836,316 - -
Federal Home Loan Bank
advances 2,319,287 28,450 4.80
Repurchase agreements and
other borrowings 905,497 5,020 2.17
Senior notes 126,000 2,790 8.86
------------ ------------ ------------
Total interest-bearing
liabilities 10,323,562 81,830 3.13
Noninterest-bearing ------------
liabilities 97,901
------------
Total liabilities 10,421,463
Capital securities and
preferred stock of
subsidiary corporation 159,577
Shareholders' equity 1,024,895
------------
Total liabilities and
shareholders' equity $ 11,605,935
============
Less: tax-equivalent
adjustment (306)
------------
Net interest income $ 95,708
============
Interest-rate spread 3.51%
============
Net interest margin 3.61%
============
(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)
----------------------------------------------------------------------
Twelve Months Ended December 31, 2002
----------------------------------------------------------------------
Fully tax-
Average equivalent
(Dollars in thousands) balance Interest(b) yield/rate
----------------------------------------------------------------------
Assets:
Interest-earning assets:
Loans and loans held for
sale $ 7,629,298 $ 464,402 6.09%
Securities and short-term
investments 4,047,754 228,857 5.75(a)
------------ ------------ ------------
Total interest-earning
assets 11,677,052 693,259 5.97
Noninterest-earning assets 870,900 ------------
------------
Total assets $ 12,547,952
============
Liabilities and Shareholders'
Equity:
Interest-bearing
liabilities:
Interest-bearing deposits $ 6,361,951 $ 146,162 2.30%
Noninterest-bearing
deposits 902,908 - -
Federal Home Loan Bank
advances 2,337,688 102,789 4.40
Repurchase agreements and
other borrowings 1,555,552 26,195 1.68
Senior notes 126,000 11,160 8.86
------------ ------------ ------------
Total interest-bearing
liabilities 11,284,099 286,306 2.54
Noninterest-bearing ------------
liabilities 76,914
------------
Total liabilities 11,361,013
Capital securities and
preferred stock of
subsidiary corporation 149,666
Shareholders' equity 1,037,273
------------
Total liabilities and
shareholders' equity $ 12,547,952
============
Less: tax-equivalent
adjustment (1,225)
------------
Net interest income $ 405,728
============
Interest-rate spread 3.43%
============
Net interest margin 3.50%
============
Twelve Months Ended December 31, 2001
----------------------------------------------------------------------
Fully tax-
Average equivalent
(Dollars in thousands) balance Interest(b) yield/rate
----------------------------------------------------------------------
Assets:
Interest-earning assets:
Loans and loans held for
sale $ 6,969,481 $ 519,930 7.46%
Securities and short-term
investments 3,667,917 238,423 6.56(a)
------------ ------------ ------------
Total interest-earning
assets 10,637,398 758,353 7.15
Noninterest-earning assets 896,052 ------------
------------
Total assets $ 11,533,450
============
Liabilities and Shareholders'
Equity:
Interest-bearing
liabilities:
Interest-bearing deposits $ 6,115,884 $ 216,335 3.54%
Noninterest-bearing
deposits 813,658 - -
Federal Home Loan Bank
advances 2,011,440 112,784 5.61
Repurchase agreements and
other borrowings 1,258,247 49,475 3.93
Senior notes 126,000 11,162 8.86
------------ ------------ ------------
Total interest-bearing
liabilities 10,325,229 389,756 3.77
Noninterest-bearing ------------
liabilities 87,530
------------
Total liabilities 10,412,759
Capital securities and
preferred stock of
subsidiary corporation 161,221
Shareholders' equity 959,470
------------
Total liabilities and
shareholders' equity $ 11,533,450
============
Less: tax-equivalent
adjustment (1,118)
------------
Net interest income $ 367,479
============
Interest-rate spread 3.38%
============
Net interest margin 3.48%
============
(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.
----------------------------------------------------------------------
Asset Quality (unaudited)
----------------------------------------------------------------------
(Dollars in thousands) At or for the Three Months Ended,
---------------------------------
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2002 2002 2002 2002 2001
----------------------------------------------------------------------
Nonperforming Assets
---------------------
Nonperforming loans:
Commercial:
Business banking $ 16,001 $ 19,000 $ 21,626 $ 20,461 $ 20,574
Specialized
industry 3,399 27,231 3,399 3,399 8,947
Lease financing 6,586 5,559 6,531 7,510 7,333
-------------------------------------------------
Total commercial 25,986 51,790 31,556 31,370 36,854
Commercial real
estate 9,109 10,124 9,506 11,122 11,062
Residential 7,263 5,521 5,991 6,262 7,677
Consumer 894 1,062 1,409 1,545 1,823
-------------------------------------------------
Total nonperforming
loans 43,252 68,497 48,462 50,299 57,416
-------------------------------------------------
Loans held for sale 3,706 - - - -
-------------------------------------------------
Other real estate
owned and repossessed
assets:
Commercial 2,568 3,007 2,294 2,690 2,534
Residential 477 686 635 1,131 1,956
Consumer 32 12 170 205 548
-------------------------------------------------
Total other real
estate owned and
repossessed assets 3,077 3,705 3,099 4,026 5,038
-------------------------------------------------
Total nonperforming
assets $ 50,035 $ 72,202 $ 51,561 $ 54,325 $ 62,454
=================================================
----------------------------------------------------------------------
Summary of Classified Loans
---------------------------
Substandard:
Accruing $ 70,245 $ 102,436 $ 106,281 $ 94,864 $ 88,397
Nonaccruing 38,994 62,170 43,634 43,146 47,846
-------------------------------------------------
Total substandard 109,239 164,606 149,915 138,010 136,243
Doubtful:
Accruing - 3 6 11 66
Nonaccruing 3,743 3,724 3,808 3,756 4,464
-------------------------------------------------
Total doubtful 3,743 3,727 3,814 3,767 4,530
Loss - - - - -
-------------------------------------------------
Total classified
loans $ 112,982 $ 168,333 $ 153,729 $ 141,777 $ 140,773
=================================================
Classified as a
percent of loans 1.4% 2.1% 2.1% 2.0% 2.1%
----------------------------------------------------------------------
Allowance for Loan Losses (unaudited)
----------------------------------------------------------------------
(Dollars in thousands) At or for the Three Months Ended,
--------------------------------
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2002 2002 2002 2002 2001
----------------------------------------------------------------------
Allowance for Loan Losses
-------------------------
Beginning balance $ 116,118 $ 99,698 $ 98,930 $ 97,307 $ 96,654
Allowance for
purchased loans - 16,338 - - -
Provision 16,000 5,000 4,000 4,000 4,000
Write-down of loans
transferred to held
for sale (12,432) - - - -
Less: Loan charge-offs:
Commercial:
Specialized
industry 2,569 1,892 854 1,361 564
All other
commercial 1,031 3,029 2,498 541 2,518
-------------------------------------------------
Total commercial 3,600 4,921 3,352 1,902 3,082
Residential 84 249 187 362 249
Consumer 220 246 250 377 394
-------------------------------------------------
Total charge-offs 3,904 5,416 3,789 2,641 3,725
Recoveries (1,022) (498) (557) (264) (378)
-------------------------------------------------
Net loan
charge-offs 2,882 4,918 3,232 2,377 3,347
-------------------------------------------------
Ending balance $ 116,804 $ 116,118 $ 99,698 $ 98,930 $ 97,307
=================================================
----------------------------------------------------------------------
Asset Quality Ratios:
---------------------
Net charge-offs/
average loans
(annualized) 0.14% 0.26% 0.18% 0.14% 0.20%
Allowance for loan
losses/total loans 1.48 1.45 1.36 1.39 1.43
Nonperforming loans/
total loans 0.55 0.86 0.66 0.70 0.84
Nonperforming assets/
total assets 0.37 0.54 0.41 0.44 0.53
Allowance for loan
losses/
nonperforming loans 270.05 169.52 205.72 196.68 169.48
| CONTACT: |
For Webster Financial Corporation |
|---|
| |
Media Contacts: |
|---|
| |
Clark Finley, 203/578-2429 |
|---|
| |
cfinley@websterbank.com |
|---|
| |
or |
|---|
| |
Arthur House, 203/578-2391 |
|---|
| |
ahouse@websterbank.com |
|---|
| |
or |
|---|
| |
Investor Contacts: |
|---|
| |
William J. Healy, 203/578-2399 |
|---|
|
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|
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