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WATERBURY, Conn.--(BUSINESS WIRE)--Oct. 21, 2004--Webster
Financial Corporation (NYSE: WBS), the holding company for Webster
Bank, N.A., today announced net income of $49.4 million in the third
quarter, compared to $41.3 million in the year-ago period, an increase
of 19 percent. Net income per diluted share was $.92 in the third
quarter, compared to $.89 in the year-ago period, an increase of 3
percent.
For the first nine months of 2004, net income was $137.5 million
compared to $121.9 million in the year-ago period, an increase of 13
percent. Net income per diluted share was $2.73 compared to $2.63 the
prior year, an increase of 4 percent.
"Webster has grown to be the largest independent bank based in
southern New England and is well positioned for future growth. We are
pleased to report higher earnings and continuing double-digit growth
in loans and deposits in a quarter marked by a higher net interest
margin and improved asset quality," said Webster chairman and chief
executive officer James C. Smith. "We also announced in the quarter
the strategic acquisition of the leading bank administrator in the
fast-growing arena of health savings accounts, which will become a new
source of core deposits and fee revenue."
The third quarter of 2004 results reflect the first full quarter
of Webster's acquisition of FIRSTFED AMERICA BANCORP, INC., which
became effective on May 14, 2004. Upon acquisition, FIRSTFED had loans
of $1.5 billion and deposits of $1.5 billion with 26 branches and 33
ATMs.
Revenues and Expenses
Total revenues (net interest income plus total noninterest income)
were $180.4 million in the third quarter, compared to $165.4 million a
year ago. Impacting the quarter and the first nine months of this year
was the implementation on December 31, 2003 of Financial Accounting
Standards Board Interpretation No. ("FIN") 46 (revised), which
required the reclassification of capital trust securities expense as
of January 1, 2004 from noninterest expenses to interest expense.
Adjusting the third quarter of 2003 for $2.8 million of this expense,
total revenues would have grown by $17.7 million, or 11 percent, from
a year ago.
Net interest income was $121.3 million in the third quarter of
2004, compared to $100.9 million in the year-ago period and $113.5
million in the second quarter. Adjusting for the effect of FIN 46R,
net interest income grew by $23.1 million, or 24 percent, from a year
ago and by $7.8 million, or 7 percent, from the second quarter. The
increase over the prior year reflects growth in loans funded by core
deposit growth, while the increase over the second quarter is mainly
due to loan growth plus improvement in the net interest margin.
Webster's net interest margin (annualized net interest income as a
percentage of average earning assets) improved four basis points to
3.06 percent from 3.02 percent in the second quarter. This compares to
2.91 percent in the year-ago period adjusted for FIN 46R. The
increases reflect the growth in higher yielding loans and the benefit
of rising rates during the quarter.
In the third quarter of 2004, total noninterest income was $59.1
million, compared to $64.5 million in the year-ago period. Excluding
securities gains, noninterest income declined in the third quarter to
$53.3 million from $60.0 million in the year-ago period. This decline
is explained by a one-time gain of $4.2 million from the sale of
telecommunication loans that were Held for Sale and proceeds of $1.6
million from an insurance investment in the year-ago quarter and $4.8
million of revenue from Duff & Phelps, which was sold in the first
quarter of this year. The core fee categories of deposit services,
insurance, loan and loan servicing and wealth management grew by 10
percent, 6 percent excluding FIRSTFED. Gains on sales of loans,
excluding the telecommunication loan gains, declined by $1.2 million
due to a slowdown in the volume of mortgage originations.
Total noninterest expenses for the 2004 third quarter were $103.8
million, an increase of 11 percent from $93.7 million in the year-ago
period. Adjusting the prior year for the effect of FIN 46R, and
excluding FIRSTFED and Duff & Phelps, expenses grew by 7 percent in
the third quarter. This increase reflects continuing investment in
personnel, technology and de novo branches under our strategic plan
for growth.
Balance Sheet Trends
At September 30, 2004, total assets were $17.8 billion, up 22
percent from $14.6 billion a year ago. Total loans of $11.6 billion at
September 30, 2004 increased 27 percent from $9.1 billion the prior
year, while deposits were $10.4 billion, up 28 percent from $8.1
billion a year ago. Excluding FIRSTFED, total loans increased by $1.0
billion, or 11 percent, over the past year, while total deposits
increased $0.8 billion, or 10 percent.
"Webster continues to achieve strong, double-digit growth in loans
and deposits through the execution of our strategic plan," stated
Webster president and chief operating officer William T. Bromage. "We
look forward to carrying these strategies into Massachusetts and Rhode
Island, creating new growth opportunities through our FIRSTFED
acquisition."
At the end of the third quarter, commercial loans including
commercial real estate were $4.2 billion, up 31 percent from $3.2
billion a year ago. Commercial real estate loans were $1.6 billion, up
36 percent. Consumer loans, primarily home equity loans and lines,
increased 22 percent to $2.6 billion, compared to $2.1 billion one
year ago. Excluding FIRSTFED, commercial loans including commercial
real estate were up 16 percent, commercial real estate loans were up
19%, and consumer loans increased 10 percent.
Core deposits (consisting of checking, money market and savings
accounts) of $7.0 billion at September 30, 2004 increased by 29
percent from a year ago and represented 67 percent of total deposits.
Excluding FIRSTFED, core deposits grew 11 percent. Webster's overall
growth in deposits has been driven in part by its High Performance
Checking products and the continuing success of its de novo branches
in Fairfield County, Connecticut and Westchester County, New York.
Book value per common share of $28.54 at September 30, 2004
increased from $24.22 one year ago. Tangible book value per share of
$16.30 at September 30, 2004 decreased from $17.73 one year ago,
principally reflecting an increase in intangible assets related to the
FIRSTFED acquisition.
Asset Quality
Nonperforming assets totaled $40.0 million or 0.22 percent of
total assets at September 30, 2004, compared to $46.1 million or 0.32
percent a year ago and $47.7 million or 0.28 percent at June 30, 2004.
"Webster's asset quality strengthened further in the third
quarter" stated Webster chief financial officer William J. Healy.
"Nonperforming assets have declined substantially compared to a year
ago and June 30, and our allowance for loan losses now exceeds
four-times the level of our nonperforming loans."
The allowance for loan losses was $148.2 million, or 1.28 percent
of total loans at September 30, 2004, compared to $117.7 million, or
1.29 percent, a year ago and $146.5 million, or 1.30 percent, at June
30, 2004. The ratio of the allowance to nonperforming loans at
September 30, 2004 was 401 percent, compared to 284 percent a year ago
and 332 percent at June 30, 2004.
The provision for loan losses totaled $4.0 million in the third
quarter, $1.7 million more than net loan charge-offs of $2.3 million,
compared to a provision of $10.0 million and net loan charge-offs of
$11.5 million a year ago. The annualized net charge-off ratio was 0.08
percent of average loans in the third quarter, compared to 0.52
percent a year ago. The prior-year amounts reflect the charge-off of a
single commercial nonperforming loan during the third quarter of 2003.
Webster Announces Plans to Complete 2003 Balance Sheet
Restructuring Program
In light of the current interest rate environment, Webster plans
to implement and complete during the fourth quarter a balance sheet
de-leveraging through the sale of approximately $750 million of
securities with an effective duration of 2.1 years. This transaction
follows an initial de-leveraging of $750 million in securities that
occurred during the second quarter in connection with the FIRSTFED
acquisition. Proceeds from this de-leveraging will be used to prepay
approximately $500 million of Federal Home Loan Bank advances that
were swapped to floating rates and approximately $250 million of
overnight borrowings. The current yield on the securities being sold
is 3.53 percent while the current cost on the borrowings being repaid
is 4.27 percent. The de-leveraging is expected to result in an
after-tax loss of approximately $34 million ($50 million pre-tax) that
will be reflected in Webster's financial results for the fourth
quarter.
On a pro-forma basis over the next twelve months assuming implied
levels of forward interest rates, the de-leveraging improves the
tangible capital ratio by an additional 22 basis points, significantly
reduces sensitivity to interest rate increases and improves the net
interest margin, depending upon the movement of interest rates, by
approximately 15 - 20 basis points. In addition, the pro-forma ratios
of securities and borrowings as a percent of assets each decline by 3
percent immediately.
"Completion of this $750 million balance sheet restructuring at
this time strengthens Webster's capital position and reduces our
vulnerability to potential increases in interest rates by moving our
balance sheet to a modest asset sensitive position," stated Mr. Healy.
"In addition, the de-leveraging enhances our position as an emerging
commercial bank by improving our ongoing net interest margin and
reducing our securities and borrowings."
In a related transaction, Webster announced that it completed
earlier this month the transfer of $921 million of 15-year
mortgage-backed securities from its Available for Sale portfolio to
its Held to Maturity portfolio. These bonds represent the longest
duration securities that Webster owns. This transfer further protects
Webster's tangible capital from upward movements in interest rates.
Strategic Actions
In July, Webster announced a definitive agreement to acquire First
City Bank (Amex: FBK), headquartered in New Britain, Connecticut, with
assets totaling $187 million at June 30, 2004. The agreement is a
combination cash and stock transaction valued at approximately $33
million or $27 per common share of First City stock, payable 60% in
Webster stock and 40% in cash. This acquisition is expected to close
in December.
Webster entered the health savings account market in September
with the announcement of its definitive agreement to acquire Eastern
Wisconsin Bancshares, the holding company for State Bank of Howards
Grove, for $26 million in cash. The State Bank of Howards Grove, which
operates under the trade name "HSA Bank," will make Webster the
nation's leading bank administrator of health savings accounts. Health
savings accounts, paired with high-deductible health plans, Webster
believes, will be a catalyst toward improving the cost, quality and
availability of health care in the United States in the future. HSA
Bank had $157 million in assets and $138 million in deposits at June
30, 2004. The acquisition is expected to close in the first quarter of
2005.
Also in September, Webster announced a ten-year agreement with
Fidelity Information Services, Inc. (FIS), under which FIS will
provide information technology and application processing services.
Webster will use new software for core data processing services and to
support its transition to a commercial bank, enhancing both capacity
and speed for customer benefit in consumer, commercial mortgage and
small business accounts in Fidelity's application service provider
(ASP) environment. Webster will complete its migration to the new
technology platform in the third quarter of 2005.
Webster Financial Corporation is the holding company for Webster
Bank, National Association and Webster Insurance. With $17.8 billion
in assets, Webster provides business and consumer banking, mortgage,
insurance, financial planning, trust and investment services through
148 banking offices, 273 ATMs, telephone banking and the Internet.
Webster Bank owns the asset-based lending firm Webster Business Credit
Corporation, the insurance premium finance company Budget Installment
Corp., and Center Capital Corporation, an equipment finance company
headquartered in Farmington, Connecticut.
For more information about Webster, including past press releases
and the latest Annual Report, visit the Webster website at
www.websteronline.com.
Conference Call
A conference call covering Webster's 2004 third quarter earnings
announcement will be held today, Thursday, October 21, at 1:00 p.m.
Eastern Time and may be heard through Webster's investor relations
website at www.wbst.com, or in listen-only mode by calling
1-800-638-5495 (Access Code: 91089965). 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 that could cause actual
results to differ from those contained in the forward-looking
statement, see "Forward Looking Statements" in Webster's Annual Report
for 2003.
Webster Financial Corporation
----------------------------------------------------------------------
Selected Financial Highlights (unaudited)
----------------------------------------------------------------------
At or for the Three At or for the Nine
Months Ended Months Ended
(In thousands, except per September 30, September 30,
share data) 2004 2003 2004 2003
----------------------------------------------------------------------
Net income and performance
ratios (annualized):
----------------------------
Net income $ 49,361 $ 41,315 $137,527 $121,862
Net income per diluted
common share 0.92 0.89 2.73 2.63
Return on average
shareholders' equity 13.25 % 15.54 % 13.75 % 15.25 %
Return on average tangible
equity 23.56 21.57 21.64 21.14
Return on average assets 1.13 1.13 1.13 1.15
Noninterest income as a
percentage of total
revenue 32.76 38.99 33.41 36.49
Efficiency Ratio (a) 57.53 56.63 57.30 58.01
Cash income and performance
ratios (annualized) (b):
----------------------------
Net income $ 49,361 $ 41,315 $137,527 $121,862
Tax-effected stock-based
compensation 1,260 971 3,242 2,855
Tax-effected intangible
amortization 3,138 2,601 8,776 7,755
-------- -------- --------- ---------
Cash income 53,759 44,887 149,545 132,472
Cash income per diluted
common share 1.00 0.97 2.96 2.86
Cash return on average
shareholders' equity 14.43 % 16.88 % 14.95 % 16.58 %
Cash return on average
tangible equity 25.65 23.43 23.53 22.98
Cash return on average
assets 1.23 1.23 1.23 1.25
Asset quality:
----------------------------
Allowance for loan losses $148,179 $117,707 $148,179 $117,707
Nonperforming assets 39,993 46,063 39,993 46,063
Allowance for loan losses /
total loans 1.28 % 1.29 % 1.28 % 1.29 %
Net charge-offs/ average
loans (annualized) 0.08 0.52 0.10 0.30
Nonperforming loans /
total loans 0.32 0.46 0.32 0.46
Nonperforming assets /
total assets 0.22 0.32 0.22 0.32
Allowance for loan losses /
nonperforming loans 400.87 283.61 400.87 283.61
Other ratios (annualized):
----------------------------
Tangible capital ratio 4.92 % 5.51 % 4.92 % 5.51 %
Shareholders' equity /
total assets 8.53 7.55 8.53 7.55
Interest-rate spread (c) 3.04 2.95 3.02 3.09
Net interest margin (c) 3.06 2.99 3.05 3.13
Share related:
----------------------------
Book value per common
share $ 28.54 $ 24.22 $ 28.54 $ 24.22
Tangible book value per
common share 16.30 17.73 16.30 17.73
Common stock closing price 49.39 39.88 49.39 39.88
Dividends declared per
common share 0.23 0.21 0.67 0.61
Common shares issued and
outstanding 53,185 45,562 53,185 45,562
Basic shares (average) 52,938 45,444 49,606 45,450
Diluted shares (average) 53,767 46,313 50,448 46,249
Footnotes:
(a) Noninterest expense as a percentage of net interest income plus
noninterest income.
(b) Cash income represents net income excluding the after tax effects
of non-cash charges related to the amortization of intangible
assets and stock-based compensation, which includes stock options
and restricted stock.
(c) Webster adopted FIN 46R on December 31, 2003, and in accordance
with its provisions, deconsolidated the capital trusts and
reported the associated liabilities as other long-term debt.
Commencing in 2004, the costs have been reclassified from
noninterest expenses to interest expense.
(d) For purposes of this computation, unrealized gains (losses) are
excluded from the average balance for rate calculations.
----------------------------------------------------------------------
Consolidated Statements of Condition (unaudited)
----------------------------------------------------------------------
September 30, June 30, September 30,
(In thousands) 2004 2004 2003
----------------------------------------------------------------------
Assets:
Cash and due from depository
institutions $ 234,449 $ 252,818 $ 214,566
Short-term investments 25,783 39,887 26,196
Securities:
Trading, at fair value 2,635 1,944 56
Available for sale, at fair
value 4,164,056 3,853,154 4,284,134
Held-to-maturity securities 323,378 284,392 -
----------- ----------- -----------
Total securities 4,490,069 4,139,490 4,284,190
Loans held for sale 111,175 153,396 278,402
Loans:
Residential mortgages 4,773,284 4,731,950 3,758,106
Commercial 2,586,351 2,455,512 2,018,279
Commercial real estate 1,619,968 1,572,289 1,187,065
Consumer 2,595,629 2,530,443 2,131,878
----------- ----------- -----------
Total loans 11,575,232 11,290,194 9,095,328
Allowance for loan losses (148,179) (146,511) (117,707)
----------- ----------- -----------
Loans, net 11,427,053 11,143,683 8,977,621
Accrued interest receivable 65,812 59,737 53,091
Premises and equipment, net 136,385 132,842 85,521
Goodwill and intangible
assets 676,176 681,252 315,556
Cash surrender value of life
insurance 226,503 224,082 178,474
Prepaid expenses and other
assets 408,837 198,683 195,166
----------- ----------- -----------
Total Assets $ 17,802,242 $17,025,870 $ 14,608,783
=========== =========== ===========
Liabilities and Shareholders'
Equity:
Deposits:
Demand deposits $ 1,356,924 $ 1,362,339 $ 1,017,870
NOW accounts 1,271,553 1,423,822 1,010,071
Money market deposit
accounts 2,153,852 2,013,894 1,606,342
Savings accounts 2,243,949 2,281,312 1,807,891
Certificates of deposit 3,204,624 3,184,991 2,590,513
----------- ----------- -----------
Total retail deposits 10,230,902 10,266,358 8,032,687
Treasury deposits 208,521 106,564 100,884
----------- ----------- -----------
Total deposits 10,439,423 10,372,922 8,133,571
Federal Home Loan Bank
advances 3,021,503 2,731,332 2,149,762
Federal funds purchased and
securities sold under
agreements to repurchase 1,973,478 1,670,594 2,531,875
Other long-term debt (c) 695,316 695,417 326,000
Accrued expenses and other
liabilities 144,963 95,112 169,301
----------- ----------- -----------
Total liabilities 16,274,683 15,565,377 13,310,509
Corporation-obligated
mandatorily redeemable
capital securities of
subsidiary trusts (c) - - 185,255
Preferred stock of subsidiary
corporation 9,577 9,577 9,577
Shareholders' equity 1,517,982 1,450,916 1,103,442
----------- ----------- -----------
Total Liabilities and
Shareholders' Equity $ 17,802,242 $17,025,870 $ 14,608,783
=========== =========== ===========
See Selected Financial Highlights for footnotes.
----------------------------------------------------------------------
Consolidated Statements of Income (unaudited)
----------------------------------------------------------------------
Three Months Ended Nine Months Ended
(In thousands, except per September 30, September 30,
share data) 2004 2003 2004 2003
----------------------------------------------------------------------
Interest income:
Loans $145,456 $114,750 $393,131 $342,695
Securities and short-term
investments 45,541 42,050 135,311 139,567
Loans held for sale 1,755 4,896 4,964 13,618
--------- --------- --------- ---------
Total interest income 192,752 161,696 533,406 495,880
--------- --------- --------- ---------
Interest expense:
Deposits 32,611 26,824 87,613 84,992
Borrowings 38,853 33,943 105,232 104,664
--------- --------- --------- ---------
Total interest expense 71,464 60,767 192,845 189,656
--------- --------- --------- ---------
Net interest income 121,288 100,929 340,561 306,224
Provision for loan losses 4,000 10,000 14,000 20,000
--------- --------- --------- ---------
Net interest income after
provision for loan losses 117,288 90,929 326,561 286,224
--------- --------- --------- ---------
Noninterest income:
Deposit service fees 20,596 17,868 57,031 52,287
Insurance revenue 10,924 9,954 33,158 30,898
Loan and loan servicing fees 6,893 7,755 20,847 18,383
Wealth and investment
services 6,044 4,826 17,009 13,925
Financial advisory services - 4,833 3,808 15,493
Gain on sale of loans and
loan servicing, net 4,467 9,829 10,813 16,666
Increase in cash surrender
value of life insurance 2,421 2,150 6,552 6,408
Other 1,912 2,737 4,724 6,021
--------- --------- --------- ---------
53,257 59,952 153,942 160,081
Gain on sale of securities,
net 5,843 4,560 16,959 15,859
--------- --------- --------- ---------
Total noninterest income 59,100 64,512 170,901 175,940
--------- --------- --------- ---------
Noninterest expenses:
Compensation and benefits 55,606 51,592 162,392 152,659
Occupancy 9,144 7,457 25,911 23,228
Furniture and equipment 10,103 8,255 26,737 23,351
Intangible amortization 4,827 4,001 13,501 11,931
Marketing 4,233 2,729 10,847 9,450
Professional services 4,294 2,582 10,131 8,054
Acquisition costs - 142 265 148
Capital trust securities (c) - 2,774 - 8,439
Other 15,562 14,165 43,305 42,442
--------- --------- --------- ---------
Total noninterest expenses 103,769 93,697 293,089 279,702
--------- --------- --------- ---------
Income before income taxes 72,619 61,744 204,373 182,462
Income taxes 23,258 20,429 66,846 60,600
--------- --------- --------- ---------
Net income $ 49,361 $ 41,315 $137,527 $121,862
========= ========= ========= =========
Diluted shares (average) 53,767 46,313 50,448 46,249
Net income per common share:
Basic $ 0.93 $ 0.91 $ 2.77 $ 2.68
Diluted 0.92 0.89 2.73 2.63
See Selected Financial Highlights for footnotes.
----------------------------------------------------------------------
Consolidated Statements of Income (unaudited)
----------------------------------------------------------------------
Three Months Ended
(In thousands,
except per Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
share data) 2004 2004 2004 2003 2003
----------------------------------------------------------------------
Interest income:
Loans $145,456 $129,084 $118,591 $117,982 $114,750
Securities and
short-term
investments 45,541 45,162 44,608 43,065 42,050
Loans held for
sale 1,755 2,139 1,070 1,791 4,896
--------- --------- --------- --------- ---------
Total interest
income 192,752 176,385 164,269 162,838 161,696
--------- --------- --------- --------- ---------
Interest expense:
Deposits 32,611 29,172 25,830 26,319 26,824
Borrowings 38,853 33,746 32,633 29,224 33,943
--------- --------- --------- --------- ---------
Total interest
expense 71,464 62,918 58,463 55,543 60,767
--------- --------- --------- --------- ---------
Net interest income 121,288 113,467 105,806 107,295 100,929
Provision for
loan losses 4,000 5,000 5,000 5,000 10,000
--------- --------- --------- --------- ---------
Net interest income
after provision for
loan losses 117,288 108,467 100,806 102,295 90,929
--------- --------- --------- --------- ---------
Noninterest
income:
Deposit service
fees 20,596 19,250 17,185 17,731 17,868
Insurance
revenue 10,924 10,596 11,638 9,077 9,954
Loan and loan
servicing fees 6,893 7,305 6,649 8,001 7,755
Wealth and
investment
services 6,044 5,849 5,116 4,416 4,826
Financial
advisory
services - - 3,808 7,265 4,833
Gain on sale of
loans and loan
servicing, net 4,467 5,321 1,025 2,854 9,829
Increase in cash
surrender value
of life insurance 2,421 2,177 1,954 2,082 2,150
Other 1,912 964 1,848 2,402 2,737
--------- --------- --------- --------- ---------
53,257 51,462 49,223 53,828 59,952
Gain on sale of
securities, net 5,843 5,616 5,500 2,715 4,560
--------- --------- --------- --------- ---------
Total noninterest
income 59,100 57,078 54,723 56,543 64,512
--------- --------- --------- --------- ---------
Noninterest
expenses:
Compensation and
benefits 55,606 53,659 53,127 53,722 51,592
Occupancy 9,144 8,402 8,365 7,470 7,457
Furniture and
equipment 10,103 8,993 7,641 7,792 8,255
Intangible
amortization 4,827 4,582 4,092 4,067 4,001
Marketing 4,233 3,630 2,984 2,058 2,729
Professional
services 4,294 2,938 2,899 3,654 2,582
Capital trust
securities (c) - - - 3,485 2,774
Acquisition
costs - 265 - 1,349 142
Other 15,562 14,710 13,033 14,683 14,165
--------- --------- --------- --------- ---------
Total
noninterest
expenses 103,769 97,179 92,141 98,280 93,697
--------- --------- --------- --------- ---------
Income before
income taxes 72,619 68,366 63,388 60,558 61,744
Income taxes 23,258 22,523 21,065 19,172 20,429
--------- --------- --------- --------- ---------
Net income $ 49,361 $ 45,843 $ 42,323 $ 41,386 $ 41,315
========= ========= ========= ========= =========
Diluted shares
(average) 53,767 50,475 47,059 46,699 46,313
Net income per
common share:
Basic $ 0.93 $ 0.92 $ 0.92 $ 0.90 $ 0.91
Diluted 0.92 0.91 0.90 0.89 0.89
See Selected Financial Highlights for footnotes.
----------------------------------------------------------------------
Retail and Wholesale Interest-Rate Spreads (unaudited)
----------------------------------------------------------------------
Three Months Ended, Sept. June March Dec. Sept.
2004 2004 2004 2003 2003
----------------------------------------------------------------------
Interest-rate spread
--------------------------------
Total interest-earning assets 4.82% 4.68% 4.78% 4.81% 4.75%
Total interest-bearing liabilities 1.78 1.69 1.74 1.68 1.80
------ ------ ------- ------ ------
Interest-rate spread 3.04% 2.99% 3.04% 3.13% 2.95%
Net interest margin 3.06 3.02 3.09 3.18 2.99
Retail interest-rate spread
--------------------------------
Yield on loans and loans held
for sale 5.07% 4.93% 5.05% 5.09% 5.09%
Cost of deposits 1.25 1.23 1.24 1.26 1.32
------ ------ ------- ------ ------
Spread 3.82% 3.70% 3.81% 3.83% 3.77%
====== ====== ======= ====== ======
Wholesale interest-rate spread
--------------------------------
Yield on securities and short-
term investments 4.18% 4.09% 4.19% 4.17% 4.02%
Cost of borrowings 2.80 2.50 2.56 2.41 2.55
------ ------ ------- ------ ------
Spread 1.38% 1.59% 1.63% 1.76% 1.47%
====== ====== ======= ====== ======
----------------------------------------------------------------------
Consolidated Average Statements of Condition (unaudited)
----------------------------------------------------------------------
Three Months Ended September 30, 2004
----------------------------------------------------------------------
Fully tax-
Average equivalent
(Dollars in thousands) balance Interest yield/rate
----------------------------------------------------------------------
Assets:
Interest-earning assets:
Loans $11,401,076 $ 145,456 5.06 %
Securities 4,456,849 47,095 4.20 (d)
Loans held for sale 129,157 1,755 5.44
Short-term investments 31,231 106 1.33
------------ ------------ ------------
Total interest-earning
assets 16,018,313 194,412 4.82
------------
Noninterest-earning assets 1,413,030
------------
Total assets $17,431,343
============
Liabilities and
Shareholders' Equity:
Interest-bearing
liabilities:
Demand deposits $ 1,357,230 $ - - %
Savings, NOW and money
market deposit accounts 5,673,797 12,703 0.89
Time deposits 3,366,232 19,908 2.35
------------ ------------ ------------
Total deposits 10,397,259 32,611 1.25
------------ ------------ ------------
Federal Home Loan Bank
advances 3,147,887 23,373 2.91
Fed funds and repurchase
agreements 1,608,818 5,919 1.44
Other long-term debt (c) 695,365 9,561 5.50
------------ ------------ ------------
Total borrowings 5,452,070 38,853 2.80
------------ ------------ ------------
Total interest-bearing
liabilities 15,849,329 71,464 1.78
------------
Noninterest-bearing
liabilities 82,696
------------
Total liabilities 15,932,025
Capital securities and
preferred stock of
subsidiary corporation (c) 9,577
Shareholders' equity 1,489,741
------------
Total liabilities and
shareholders' equity $17,431,343
============
122,948
Less: tax-equivalent
adjustment (1,660)
------------
Net interest income $ 121,288
============
Interest-rate spread 3.04 %
============
Net interest margin 3.06 %
============
----------------------------------------------------------------------
Three Months Ended September 30, 2003
----------------------------------------------------------------------
Fully tax-
Average equivalent
(Dollars in thousands) balance Interest yield/rate
----------------------------------------------------------------------
Assets:
Interest-earning assets:
Loans $ 8,953,970 $ 114,792 5.09 %
Securities 4,201,679 42,408 4.04 (d)
Loans held for sale 385,059 4,854 5.04
Short-term investments 18,593 56 1.18
------------ ------------ ------------
Total interest-earning
assets 13,559,301 162,110 4.75
------------
Noninterest-earning assets 1,017,648
------------
Total assets $14,576,949
============
Liabilities and
Shareholders' Equity:
Interest-bearing
liabilities:
Demand deposits $ 1,042,556 $ - - %
Savings, NOW and money
market deposit accounts 4,393,262 9,851 0.89
Time deposits 2,642,488 16,973 2.55
------------ ------------ ------------
Total deposits 8,078,306 26,824 1.32
------------ ------------ ------------
Federal Home Loan Bank
advances 2,319,927 22,127 3.73
Fed funds and repurchase
agreements 2,576,065 7,486 1.14
Other long-term debt (c) 326,000 4,330 5.31
------------ ------------ ------------
Total borrowings 5,221,992 33,943 2.55
------------ ------------ ------------
Total interest-bearing
liabilities 13,300,298 60,767 1.80
------------
Noninterest-bearing
liabilities 81,836
------------
Total liabilities 13,382,134
Capital securities and
preferred stock of
subsidiary corporation (c) 131,220
Shareholders' equity 1,063,595
------------
Total liabilities and
shareholders' equity $14,576,949
============
101,343
Less: tax-equivalent
adjustment (414)
------------
Net interest income $ 100,929
============
Interest-rate spread 2.95 %
============
Net interest margin 2.99 %
============
See Selected Financial Highlights for footnotes.
----------------------------------------------------------------------
Consolidated Average Statements of Condition (unaudited)
----------------------------------------------------------------------
Nine Months Ended September 30, 2004
----------------------------------------------------------------------
Fully tax-
Average equivalent
(Dollars in thousands) balance Interest yield/rate
----------------------------------------------------------------------
Assets:
Interest-earning assets:
Loans $10,407,028 $ 393,131 5.01 %
Loans held for sale 127,846 4,964 5.18
Securities 4,424,813 138,533 4.18 (d)
Short-term investments 32,290 256 1.04
------------ ------------ ------------
Total interest-earning
assets 14,991,977 536,884 4.76
------------
Noninterest-earning assets 1,174,680
------------
Total assets $16,166,657
============
Liabilities and
Shareholders' Equity:
Interest-bearing
liabilities:
Demand deposits $ 1,207,649 $ - - %
Savings, NOW and money
market deposit accounts 5,166,808 33,143 0.86
Time deposits 3,071,795 54,470 2.37
------------ ------------ ------------
Total deposits 9,446,252 87,613 1.24
------------ ------------ ------------
Federal Home Loan Bank
advances 2,802,588 62,282 2.92
Fed funds and repurchase
agreements 1,853,465 16,238 1.15
Other long-term debt (c) 633,343 26,712 5.62
------------ ------------ ------------
Total borrowings 5,289,396 105,232 2.62
------------ ------------ ------------
Total interest-bearing
liabilities 14,735,648 192,845 1.74
------------
Noninterest-bearing
liabilities 88,132
------------
Total liabilities 14,823,780
Capital securities and
preferred stock of
subsidiary corporation (c) 9,577
Shareholders' equity 1,333,300
------------
Total liabilities and
shareholders' equity $16,166,657
============
344,039
Less: tax-equivalent
adjustment (3,478)
------------
Net interest income $ 340,561
============
Interest-rate spread 3.02 %
============
Net interest margin 3.05 %
============
----------------------------------------------------------------------
Nine Months Ended September 30, 2003
----------------------------------------------------------------------
Fully tax-
Average equivalent
(Dollars in thousands) balance Interest yield/rate
----------------------------------------------------------------------
Assets:
Interest-earning assets:
Loans $ 8,605,386 $ 342,695 5.29 %
Loans held for sale 345,382 13,618 5.26
Securities 4,185,538 140,521 4.54 (d)
Short-term investments 23,161 174 0.99
------------ ------------ ------------
Total interest-earning
assets 13,159,467 497,008 5.05
------------
Noninterest-earning assets 967,783
------------
Total assets $14,127,250
============
Liabilities and
Shareholders' Equity:
Interest-bearing
liabilities:
Demand deposits $ 994,803 $ - - %
Savings, NOW and money
market deposit accounts 4,218,937 32,403 1.03
Time deposits 2,651,806 52,589 2.65
------------ ------------ ------------
Total deposits 7,865,546 84,992 1.44
------------ ------------ ------------
Federal Home Loan Bank
advances 2,428,287 69,204 3.76
Fed funds and repurchase
agreements 2,245,481 20,521 1.21
Other long-term debt (c) 316,476 14,939 6.29
------------ ------------ ------------
Total borrowings 4,990,244 104,664 2.77
------------ ------------ ------------
Total interest-bearing
liabilities 12,855,790 189,656 1.96
------------
Noninterest-bearing
liabilities 77,393
------------
Total liabilities 12,933,183
Capital securities and
preferred stock of
subsidiary
corporation (c) 128,510
Shareholders' equity 1,065,557
------------
Total liabilities and
shareholders' equity $14,127,250
============
307,352
Less: tax-equivalent
adjustment (1,128)
------------
Net interest income $ 306,224
============
Interest-rate spread 3.09 %
============
Net interest margin 3.13 %
============
See Selected Financial Highlights for footnotes.
----------------------------------------------------------------------
Asset Quality (unaudited)
----------------------------------------------------------------------
At or for the Three Months Ended
-------------------------------------------------
(Dollars in Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
thousands) 2004 2004 2004 2003 2003
----------------------------------------------------------------------
Nonperforming Assets
--------------------
Nonperforming loans:
Commercial:
Commercial $ 12,407 $ 15,895 $ 11,832 $ 14,266 $ 17,024
Specialized
industry - - 5,019 6,427 6,493
Equipment
financing 4,501 5,021 5,561 5,583 8,241
-------------------------------------------------
Total
commercial 16,908 20,916 22,412 26,276 31,758
Commercial real
estate 11,157 13,757 5,583 4,281 1,940
Residential 7,695 8,599 7,941 6,128 7,087
Consumer 1,204 826 604 959 718
-------------------------------------------------
Total nonperforming
loans 36,964 44,098 36,540 37,644 41,503
-------------------------------------------------
Other real estate owned and
repossessed assets:
Commercial 2,482 3,192 4,273 4,296 4,019
Residential 527 238 325 942 541
Consumer 20 130 124 - -
-------------------------------------------------
Total other real
estate owned and
repossessed assets 3,029 3,560 4,722 5,238 4,560
-------------------------------------------------
Total nonperforming
assets $ 39,993 $ 47,658 $ 41,262 $ 42,882 $ 46,063
=================================================
----------------------------------------------------------------------
Summary of Classified
Loans
---------------------
Substandard:
Accruing $ 89,463 $ 90,421 $ 87,477 $ 72,638 $ 69,216
Nonaccruing 32,234 39,600 31,595 29,403 36,365
-------------------------------------------------
Total
substandard 121,697 130,021 119,072 102,041 105,581
Doubtful:
Nonaccruing 3,615 3,286 4,377 6,791 3,792
Loss - - - - -
-------------------------------------------------
Total classified
loans $125,312 $133,307 $123,449 $108,832 $109,373
=================================================
Classified as a
percent of total
loans 1.1% 1.2% 1.3% 1.2% 1.2%
=================================================
----------------------------------------------------------------------
Allowance for Loan Losses (unaudited)
----------------------------------------------------------------------
At or for the Three Months Ended
-------------------------------------------------
(Dollars in Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
thousands) 2004 2004 2004 2003 2003
----------------------------------------------------------------------
Allowance for Loan
Losses
-------------------
Beginning balance $146,511 $123,613 $121,674 $117,707 $119,239
Allowance for
purchased loans - 20,081 - 1,970 -
Provision 4,000 5,000 5,000 5,000 10,000
Charge-offs:
Commercial:
Specialized
industry - - 826 558 3,870
All other
commercial 3,556 2,646 2,249 2,949 9,361
-------------------------------------------------
Total
commercial 3,556 2,646 3,075 3,507 13,231
Residential 92 187 983 330 39
Consumer 195 174 97 174 122
-------------------------------------------------
Total charge-offs 3,843 3,007 4,155 4,011 13,392
Recoveries (1,511) (824) (1,094) (1,008) (1,860)
-------------------------------------------------
Net loan charge-
offs 2,332 2,183 3,061 3,003 11,532
-------------------------------------------------
Ending balance $148,179 $146,511 $123,613 $121,674 $117,707
=================================================
Asset Quality Ratios:
---------------------
Allowance for loan
losses / total
loans 1.28 % 1.30 % 1.30 % 1.32 % 1.29 %
Net charge-offs/
average loans
(annualized) 0.08 0.08 0.13 0.13 0.52
Nonperforming loans /
total loans 0.32 0.39 0.38 0.41 0.46
Nonperforming
assets / total
assets 0.22 0.28 0.27 0.29 0.32
Allowance for loan
losses /
nonperforming loans 400.87 332.24 338.30 323.22 283.61
CONTACT: Webster Bank, N.A.
Media:
Meghan Thompson, 203-578-2287
mthompson@websterbank.com
or
Investors:
Terry Mangan, 203-578-2318
tmangan@websterbank.com
SOURCE: Webster Financial Corporation