WATERBURY, Conn., April 5, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- Webster Financial
Corporation (NYSE: WBS), the holding company for Webster Bank, National
Association, reported today preliminary information regarding first quarter
2007 earnings results and also announced plans for its first quarter earnings
release and conference call.
Webster reported the following information regarding first quarter 2007
earnings:
Peoples Mortgage Company
On March 30, 2007, Webster announced the sale of three offices of Peoples
Mortgage Company ("PMC"), a wholly owned subsidiary of Webster Bank, to First
Mariner Bank. The press release announcing the transaction is available on
Webster's website at www.websteronline.com.
As part of Webster's previously announced strategic review process,
Webster determined that PMC's operations no longer fit Webster's core business
model. This determination led to the decision to close PMC's remaining
operations. As a result of these actions, Webster will record a pre-tax charge
of $2.3 million in its first quarter 2007 results. The expenses relate
primarily to severance, lease termination and other transaction costs.
Other Earnings-Related Updates
In addition to the impact of the PMC transactions discussed above, other
factors will impact first quarter results.
Webster incurs seasonally higher expenses in each year's first quarter
primarily related to payroll taxes and 401K match. The company estimates that
the impact of these seasonally higher expenses to the first quarter of 2007 is
$4.7 million (pre-tax) or $.05 per share (after tax and based on 56.8 million
weighted average diluted shares.)
Webster will also record other severance-related charges of $2.2 million
in the first quarter of 2007 from ongoing restructuring in its insurance
operations and other lines of business. Additional costs could be incurred in
2007 as the company continues this organizational review.
Webster continues to expect improvement in its net-interest margin as a
result of completion of the balance sheet repositioning actions announced in
the fourth quarter of 2006. Webster expects that the net interest margin will
improve as anticipated for the first quarter of 2007 to a range of 3.35% -
3.40%, compared to 3.23% in the fourth quarter of 2006.
Webster also expects to record $3 million in provision expenses in the
first quarter of 2007 and net charge-offs of $5.4 million. Inclusive of these
charge-offs, the allowance for credit losses to total loans is expected to be
1.24%, compared to 1.20% at December 31, 2006.
Net charge-offs in the first quarter include $2.1 million for 13
residential construction loans in Florida for which management has determined
a high probability of loss based on borrower delinquency and market
deterioration. The company will also record a $700,000 write down in value on
one loan in Florida that had been classified as held for sale. This adjustment
will be reflected in mortgage banking activities as a reduction in non-
interest income for the quarter ended March 31, 2007.
The Florida loans were originated through Webster's National Wholesale
Lending operation using Bank-approved mortgage brokers. The loans originated
by the National Wholesale Lending operation are primarily residential
mortgages, and to a lesser extent, residential construction loans. As of March
31, 2007, Webster had residential construction loans originated by its
National Wholesale Lending operation of $168.5 million ($33.6 million in
primary market area and $134.9 million out of primary market area), of which
$88.8 million was classified as held for sale (combination
construction/permanent mortgage loans), and $79.7 million was in portfolio
(floating rate construction loans). Loans originated in Florida total $30.9
million, of which $10.6 million was classified as held for sale and $20.3
million was in portfolio. The company has also decided to suspend the accrual
of interest on $11.6 million of construction loans in Florida ($3 million of
which are classified as held for sale with the balance in portfolio) that are
paid from interest reserve on a prospective basis, questioning the ultimate
realization of interest income based on current contractual terms. The company
has discontinued all residential construction lending outside of its primary
New England market area.
Update on Continuing Strategic Review and Organizational Review
Webster's previously announced strategic review is looking at all segments
and lines of business to focus on core competencies, identify operational
efficiencies and position Webster to realize its vision of becoming New
England's bank. This process encompasses evaluating the contribution, growth
potential, fit and alignment of each segment and line of business with the
company's goals and mission. In conjunction with the strategic review, Webster
also is evaluating its structure and organization. The company has retained an
external consulting firm to assist these efforts. Webster anticipates
structural and other changes will be made to improve operational efficiency
and effectiveness in the coming months.
In addition to the actions regarding PMC and residential construction
lending discussed above, during the first quarter of 2007 Webster decided to
terminate the mezzanine lending operations of Webster Bank's subsidiary,
Webster Growth Capital. Webster also outsourced the back-office operations of
Webster Investment Services, its mutual fund and annuities distribution
services.
The following are the details of Webster's first quarter 2007 earnings
conference call:
Webster's earnings release for the first quarter of 2007 will occur on
Thursday, April 19, 2007 before the market opens. A conference call, which
will be listen-only mode, to discuss the earnings release will take place at
11:00 a.m. (Eastern Daylight Time) on the same day. Details for the conference
call are as follows:
Dial-in Number: (877) 407-8293 or (201) 689-8349 for international
callers
Webcast: Via Webster's website at www.wbst.com
Web Replay: Will be available shortly after the call's completion at
www.wbst.com
Telephone Replay: Will be available for one week, beginning at 1:00 p.m.
(EDT) on Thursday, April 19, 2007
Replay Number: (877) 660-6853 or (201) 612-7415 for international
calls. The replay account number is 295 and the replay
conference number is 237330.
This news release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. These forward-looking
statements include, but are not limited to, statements about Webster Financial
Corporation's ("Webster" or "WBS") future financial condition, operating
results, cost savings and accretion to reported earnings that may be realized
from mergers and acquisitions, management's expectations regarding future
growth opportunities and business strategy and other statements contained in
this presentation that are not historical facts, as well as other statements
identified by words such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates" or words of similar meaning. These forward-
looking statements are based upon the current beliefs and expectations of
Webster's management and are inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of which are
beyond our control. In addition, these forward-looking statements are subject
to assumptions with respect to future business strategies and decisions that
are subject to change. Actual results may differ materially from the
anticipated results discussed in these forward-looking statements. The
following factors, among others, could cause actual results to differ
materially from the anticipated results or other expectations expressed in the
forward-looking statements: (1) changes in general economic conditions, either
nationally or locally in the areas in which we conduct or will conduct our
business; (2) the interest rate environment may compress margins and adversely
affect net interest income; (3) increases in competitive pressures among
financial institutions and businesses offering similar products and services;
(4) higher defaults on our loan portfolio than we expect; (5) changes in
management's estimate of the adequacy of the allowance for loan losses; (6)
the risks associated with continued diversification of assets and adverse
changes to credit quality; (7) difficulties associated with achieving expected
future financial results; (8) legislative or regulatory changes or changes in
accounting principles, policies or guidelines; (9) management's estimates and
projections of interest rates and interest rate policy; and (10) cost savings
and accretion to earnings from mergers and acquisitions may not be fully
realized or may take longer to realize than expected. Additional factors that
could cause actual results to differ materially from those expressed in the
forward-looking statements are discussed in Webster' reports (such as Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K) filed with the Securities and Exchange Commission and available at
the SEC's Internet site (http://www.sec.gov). Webster cautions readers not to
place undue reliance on any such forward-looking statements, which speak only
as of the date they were made. Except as required by law, Webster does not
undertake any obligation to update any forward-looking statement to reflect
circumstances or events that occur after the date the forward-looking
statement is made.
Webster Financial Corporation is the holding company for Webster Bank,
National Association and Webster Insurance. With $17.1 billion in assets as of
12/31/06, Webster provides business and consumer banking, mortgage, insurance,
financial planning, trust and investment services through 177 banking offices,
334 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., Center Capital Corporation, an
equipment finance company headquartered in Farmington, Connecticut and
provides health savings account trustee and administrative services through
HSA Bank, a division of Webster Bank.
For more information about Webster, including past press releases and the
latest annual report, visit the Webster website at www.websteronline.com.
SOURCE
Webster Financial Corporation
Webster Financial Corporation Media: Clark Finley +1-203-578-2287
cfinley@websterbank.com or Investors: Terry Mangan, +1-203-578-2318
tmangan@websterbank.com