Completed the sale of $250 million in residential mortgage loans and
$1.9 billion in available for sale mortgage-backed securities as part
of previously announced balance sheet repositioning actions
WATERBURY, Conn., Jan. 18 /PRNewswire-FirstCall/ -- Webster Financial
Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today
announced net income of $37.8 million or $.67 per diluted share for the fourth
quarter of 2006, compared to $45.5 million or $.84 per diluted share for the
fourth quarter of 2005. Fourth quarter 2006 net income includes net charges
totaling $8.4 million ($5.5 million, net of taxes) or $.10 per diluted share
from previously announced balance sheet repositioning charges and acquisition
costs of NewMil, and gains on the sale of properties and pension plan
curtailment. Net income was $133.8 million or $2.47 per diluted share, for
the twelve months ended December 31, 2006, compared to $185.8 million or $3.43
per diluted share for the twelve months ended December 31, 2005. Net income
for the twelve months ended December 31, 2006, includes net charges totaling
$58.2 million ($37.8 million, net of taxes) or $.70 per diluted share from the
balance sheet repositioning charges, acquisition costs of NewMil, gains on the
sale of properties and pension plan curtailment.
Earnings Reconciliation
For the Three Months
(in thousands except Ended December 31, 2006
per share data) Pre-Tax Tax Effected EPS
Reported Net Income $54,895 $37,798 $0.67
Balance Sheet Repositioning Actions:
Loss on sale of $250 million of
mortgage loans 5,713 3,713 0.07
Loss on sale of AFS securities, net 2,400 1,560 0.03
Total - balance sheet repositioning
actions 8,113 5,273 0.10
Other Items:
Acquisition costs (NewMil) 2,018 1,312 0.02
Net gain from pension plan curtailment (300) (195) 0.00
Gain on sale of properties (1,400) (910) (0.02)
Total Other Items 318 207 0.00
Total - balance sheet repositioning
actions and other items 8,431 5,480 0.10
Adjusted net income excluding
balance sheet repositioning
actions and other items $63,326 $43,278 $0.77
Net pre-tax items of $8.4 million in the fourth quarter include a
previously announced $5.7 million loss on the sale of $250 million of
residential mortgage loans, a $2.4 million loss related to the previously
announced sale of $1.9 billion of mortgage-backed securities classified as
available for sale and $2.0 million of previously announced acquisition
related expenses. Offsetting these charges were a $300,000 net gain from the
recently announced pension plan curtailment and $1.4 million of gains on the
sale of properties.
The Company announced that it had elected in the fourth quarter to curtail
its defined benefit pension and supplemental executive retirement plans and
replace them with an enhanced 401(k) retirement savings plan. This change will
be effective as of January 1, 2008. Overall retirement program expenses are
expected to remain essentially unchanged in future periods. A net gain of
$300,000 from the plan curtailment was recognized in the fourth quarter of
2006.
Additionally, as part of its repositioning plans, the Company had
previously announced in the fourth quarter its decision to securitize $1.0
billion in residential loans and to hold these securities for collateral
needs. As of December 31, 2006, $370 million of these loans had been
securitized, with another $633 million in loans scheduled to be securitized by
January 31, 2007.
"In the fourth quarter, Webster began to realize the positive results of
our repositioning actions," stated Webster Chairman and Chief Executive
Officer James C. Smith. "We are seeing a more reliable and stable earnings
stream as the increasingly negative effects that wholesale borrowings have had
on prior quarters is no longer a significant factor."
Commercial loans, including commercial real estate loans, and consumer
loans were $8.5 billion at December 31, 2006 up, 14 percent from December 31,
2005. Commercial and consumer loans represent 66 percent of total loans at
December 31, 2006 compared to 61 percent a year ago. "Webster has shown
consistent growth and contributions from our commercial and consumer lending
businesses," stated Webster President and Chief Operating Officer William T.
Bromage. "We continue to gain momentum in our core businesses even in a very
competitive market and a challenging interest rate environment."
The Company opened two new branches, one in Waterford, Connecticut and one
in Westerly, Rhode Island in the fourth quarter. In 2006, Webster added six de
novo branches and an additional 14 locations in conjunction with the NewMil
Bank acquisition. "As we have previously stated, we are following a 'build and
buy' strategy to grow our retail presence," stated Mr. Smith. "It is our
intention to continue with this strategy in 2007."
Revenues
Total revenue, which consists of net interest income plus total
noninterest income, was $180.5 million in the fourth quarter, compared to
$129.3 million in the third quarter and $187.9 million a year ago.
Net interest income was $129.2 million in the fourth quarter compared to
$122.4 million in the third quarter and $129.7 million a year ago. Continued
strong growth in the fourth quarter of 2006 in higher yielding commercial and
consumer loans more than offset the increase in the cost of deposits and
borrowings as well as reduced contributions from the residential mortgage and
securities portfolios.
Webster's net interest margin (annualized tax-equivalent net interest
income as a percentage of average earning assets) increased to 3.23 percent
compared to 3.01 percent in the third quarter and 3.22 percent a year ago. The
net interest margin has been positively impacted by the balance sheet
repositioning actions as the proceeds from the sales of securities have been
utilized to pay-down high cost borrowings. Slightly offsetting the positive
impact of the balance sheet restructuring is continued consumer preference for
higher yielding certificates of deposit as well as the impact of the inverted
yield curve. The spread between the yield on loans and the cost of deposits
decreased to 3.80 percent in the fourth quarter compared to 3.88 percent in
the third quarter, primarily from increased deposit costs.
Total non-interest income was $51.4 million in the fourth quarter compared
to $6.8 million in the third quarter and $58.2 million a year ago.
Non-interest income in the fourth quarter was impacted by charges from losses
on sales of securities of $2.4 million and loss on sale of loans of $5.7
million, while in the third quarter non-interest income included a $48.9
million charge for loss on the write-down of the available for sale securities
portfolio to fair value. Deposit service fees totaled $25.5 million compared
to $25.3 million in the third quarter and $22.9 million a year ago. Insurance
revenue was $8.3 million in the quarter compared to $9.8 million in the third
quarter and $10.7 million a year ago. The decrease in insurance revenue
reflects a reduction in contingent commission income of $1.3 million in the
fourth quarter. Loan and loan servicing fees were $9.6 million compared to
$7.8 million in the third quarter and $9.3 million a year ago. The increase in
loan and loan servicing fees in the quarter reflects higher commercial real
estate prepayment fees of $2.4 million. Wealth management fees totaled $7.2
million compared to $6.7 million in the third quarter and $6.2 million a year
ago. Other noninterest income, including a $1.4 million gain on the sale of
properties, was $3.7 million compared to $1.7 million in the third quarter and
$3.5 million a year ago.
Provision For Credit Losses
The provision for credit losses was $3.0 million in the fourth quarter
compared to $3.0 million in the third quarter and $2.0 million a year ago. Net
loan charge-offs totaled $9.1 million compared to $3.1 million in the third
quarter and $1.4 million a year ago. The increase was primarily related to two
commercial loans which had been identified and fully reserved prior to the
fourth quarter of 2006. The annualized net loan charge-off ratio was 0.27
percent of average loans compared to 0.10 percent in the third quarter and
0.05 percent a year ago. The allowance for credit losses to total loans was
1.20 percent at both December 31, 2006 and September 30, 2006.
Non Interest Expenses
Total noninterest expenses were $122.6 million in the fourth quarter
compared to $115.9 million in the third quarter and $119.4 million a year ago.
Fourth quarter expenses increased primarily from the acquisition of NewMil
Bancorp on October 6, 2006. Expenses include NewMil acquisition costs of $2.0
million and additional costs of approximately $3.4 million for NewMil ongoing
operations. Fourth quarter results also include the write-offs of $200,000 in
leasehold improvements from the early termination of two leased properties and
$440,000 in other lease termination expenses.
Balance Sheet Trends
Total assets were $17.1 billion at December 31, 2006 compared with $17.8
billion a year ago. Total assets have declined due to the balance sheet
repositioning actions previously discussed. Total loans were $12.9 billion, an
increase of $0.6 billion, or 5 percent, from a year ago while securities
totaled $2.0 billion and declined by $1.7 billion, or 47 percent. Deposits
were $12.5 billion, an increase of $0.8 billion, or 7 percent, from a year ago
with contributions from the branches acquired from the NewMil Bank
acquisition, de novo branching and growth in health savings account deposits
at HSA Bank.
Certificates of deposit balances grew by 16 percent during 2006 as
consumer preference continued for this higher yielding product category. The
$1.7 billion reduction in securities compared to a year ago contributed to a
$1.7 billion reduction in wholesale borrowings over the past year. Wholesale
borrowings declined to 15 percent of total assets at December 31 compared to
25 percent a year ago.
The loan to deposit ratio improved to 104 percent at December 31, 2006
from 106 percent at both September 30, 2006 and December 31, 2005. The Company
anticipates that this ratio will further improve in the first quarter of 2007
upon the completion of the previously discussed $633 million mortgage
securitization.
"We have previously stated that several of our goals were to improve our
tangible capital ratio, significantly reduce our reliance on securities and
borrowings and to substantially improve the net interest margin and our loan
to deposit ratio," stated Webster Chief Financial Officer Jerry Plush. "The
positive impact of the balance sheet repositioning actions taken in the fourth
quarter is evident as we have made significant progress toward each of these
goals. Further improvement in the loan to deposit ratio will be seen upon the
completion of the mortgage securitization at the end of this month."
Book value per common share of $33.30 at December 31, 2006 increased from
$30.70 a year ago. Tangible book value per share of $19.00 at December 31,
2006 increased from $18.03 last year. The ratio of tangible equity to tangible
assets increased to 6.46 percent at December 31, 2006 compared to 5.54 percent
a year ago.
Capital
The Company also announced today that, subject to regulatory notices, it
intends to call its Capital Trust I and Capital Trust II securities which have
a call price of 104.7 percent and 105.0 percent, respectively. The Company
will take a pretax charge to income in 2007 of approximately $6.5 million
related to the redemption premium and write-off of unamortized issuance costs.
The Company is considering the replacement of these legacy trust preferred
securities with enhanced trust preferred securities which have greater equity
content for rating agency purposes. "Based on the current interest rate
environment, we may replace the legacy trust preferred securities at a reduced
cost or elect to further boost our capital levels by issuing a higher dollar
amount of enhanced trust preferred securities with no impact to earnings per
share in future periods," stated Mr. Plush.
Asset Quality
Nonperforming assets totaled $61.8 million, or 0.48 percent of total loans
and other real estate owned, at December 31, 2006 compared to $61.4 million,
or 0.47 percent, at September 30 and $66.3 million, or 0.54 percent, a year
ago.
The allowance for credit losses, which consists of the allowance for loan
losses and the reserve for unfunded commitments, was $155.0 million, or 1.20
percent of total loans, at December 31, 2006 compared to $155.6 million, or
1.27 percent at December 31, 2005. The ratio of the allowance to nonperforming
loans was 263 percent at December 31, 2006 compared to 257 percent at December
31, 2005.
Webster Financial Corporation is the holding company for Webster Bank,
National Association and Webster Insurance. With $17.1 billion in assets,
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
http://www.websteronline.com.
Conference Call
A conference call covering Webster's 2006 fourth quarter earnings
announcement will be held today, Thursday, January 18, at 2:00 p.m. Eastern
Time and may be heard through Webster's investor relations website at
http://www.wbst.com, or in listen-only mode by calling 1-877-407-8293 or
201-689-8349 internationally. The call will be archived on the website and
available for future retrieval.
Forward-looking Statements
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 2005. Except as required by law, Webster does not
undertake to update any such forward looking information.
Non-GAAP Financial Measures
In addition to results presented in accordance with GAAP, this press
release contains certain non-GAAP financial measures. We believe that
providing certain non-GAAP financial measures provides investors with
information useful in understanding our financial performance, our performance
trends and financial position. A reconciliation of net income and other
performance ratios, as adjusted is included in the accompanying selected
financial highlights table, elsewhere in this report.
We believe that providing certain non-GAAP financial measures provides
investors with information useful in understanding our financial performance,
our performance trends and financial position. Specifically, we provide
measures based on what we believe are our operating earnings on a consistent
basis and exclude non-core operating items which affect the GAAP reporting of
results of operations. We utilize these measures for internal planning and
forecasting purposes. We, as well as securities analysts, investors and other
interested parties, also use these measures to compare peer company operating
performance. We believe that our presentation and discussion, together with
the accompanying reconciliations, provides a complete understanding of factors
and trends affecting our business and allows investors to view performance in
a manner similar to management. These non-GAAP measures should not be
considered a substitute for GAAP basis measures and results and we strongly
encourage investors to review our consolidated financial statements in their
entirety and not to rely on any single financial measure. Because non-GAAP
financial measures are not standardized, it may not be possible to compare
these financial measures with other companies' non-GAAP financial measures
having the same or similar names.
Media Contact
Clark Finley 203-578-2287
cfinley@websterbank.com
Investor Contact
James Sitro 203-578-2399
jsitro@websterbank.com
WEBSTER FINANCIAL CORPORATION
Financial Highlights (unaudited)
At or for the At or for the
Three Months Ended Twelve Months Ended
December 31, December 31,
(In thousands, except per
share data) 2006 2005 2006 2005
Adjusted net income and
performance ratios, net
of tax, (annualized):
Net income $37,798 $45,500 $133,790 $185,855
Recognition of loss on AFS
securities 1,560 - 33,328 -
Loss on sale of mortgage
loans 3,713 - 3,713 -
NewMil acquisition Costs 1,312 - 1,918 -
Net gain from pension plan
curtailment (195) - (195) -
Gain on sale of properties (910) - (910) -
Adjusted net income 43,278 45,500 171,644 185,855
- -
Net income per diluted
common share 0.77 0.84 3.17 3.43
Return on average
shareholders' equity 9.24% 11.04% 9.99% 11.52%
Return on average tangible
equity 16.09 18.81 17.02 19.95
Return on average assets 0.97 1.02 0.96 1.06
Noninterest income as a
percentage of total
revenue 31.02 30.99 30.77 29.92
Efficiency ratio(a) 64.57 63.53 64.29 61.71
Net income and performance
ratios (annualized):
Net income $37,798 $45,500 $133,790 $185,855
Net income per diluted
common share 0.67 0.84 2.47 3.43
Return on average
shareholders' equity 8.07% 11.04% 7.79% 11.52%
Return on average tangible
equity 14.06 18.81 13.26 19.95
Return on average assets 0.85 1.02 0.75 1.06
Noninterest income as a
percentage of total
revenue 28.45 30.99 25.11 29.92
Efficiency ratio(a) 67.93 63.53 69.95 61.71
Asset quality:
Allowance for credit
losses $154,994 $155,632 $154,994 $155,632
Nonperforming assets 61,825 66,338 61,825 66,338
Allowance for credit
losses / total loans 1.20% 1.27% 1.20% 1.27%
Net charge-offs
(recoveries) / average
loans (annualized) 0.27 0.05 0.13 0.03
Nonperforming loans /
total loans 0.46 0.49 0.46 0.49
Nonperforming assets /
total loans plus OREO 0.48 0.54 0.48 0.54
Allowance for credit
losses / nonperforming
loans 263.09 257.02 263.09 257.02
Other ratios (annualized):
Tangible capital ratio 6.46% 5.54% 6.46% 5.54%
Shareholders' equity /
total assets 10.98 9.24 10.98 9.24
Interest-rate spread 3.14 3.18 3.09 3.25
Net interest margin 3.23 3.22 3.16 3.29
Share related:
Book value per common
share $33.30 $30.70 $33.30 30.70
Tangible book value per
common share 19.00 18.03 19.00 18.03
Common stock closing price 48.72 46.90 48.72 46.90
Dividends declared per
common share 0.27 0.25 1.06 0.98
Common shares issued and
outstanding 56,362 53,662 56,362 53,662
Basic shares (average) 55,753 53,473 53,435 53,577
Diluted shares (average) 56,452 54,129 54,065 54,236
Footnotes:
(a) Noninterest expense as a percentage of net interest income plus
noninterest income.
(b) For purposes of this computation, unrealized gains (losses) are
excluded from the average balance for rate calculations.
Consolidated Statements of Condition (unaudited)
December September December
31, 30, 31,
(In thousands) 2006 2006 2005
Assets:
Cash and due from depository
institutions $311,888 $243,434 $293,706
Short-term investments 175,648 9,562 36,302
Securities:
Trading, at fair value 4,842 2,848 2,257
Available for sale, at fair
value 503,918 2,249,935 2,555,419
Held-to-maturity securities 1,453,973 1,064,188 1,142,909
Total securities 1,962,733 3,316,971 3,700,585
Loans held for sale 354,798 309,149 267,919
Loans:
Residential mortgages 4,424,634 4,845,198 4,828,564
Commercial 3,386,274 3,368,164 2,876,528
Commercial real estate 1,904,597 1,770,674 1,808,494
Consumer 3,207,986 3,037,674 2,771,700
Total loans 12,923,491 13,021,710 12,285,286
Allowance for loan losses (147,719) (147,446) (146,486)
Loans, net 12,775,772 12,874,264 12,138,800
Accrued interest receivable 90,565 93,844 85,779
Premises and equipment, net 195,909 189,562 182,856
Goodwill and intangible assets 825,012 692,388 698,570
Cash surrender value of life
insurance 259,318 245,108 237,822
Prepaid expenses and other assets 145,828 164,532 194,223
Total Assets $17,097,471 $18,138,814 $17,836,562
Liabilities and Shareholders'
Equity:
Deposits:
Demand deposits $1,588,783 $1,453,317 $1,546,096
NOW accounts 1,671,778 1,559,584 1,622,403
Money market deposit accounts 1,908,496 2,078,797 1,789,781
Savings accounts 1,985,202 1,838,494 2,015,045
Certificates of deposit 4,911,860 4,583,508 4,249,874
Treasury deposits 392,277 790,353 407,946
Total deposits 12,458,396 12,304,053 11,631,145
Federal Home Loan Bank advances 1,074,933 1,867,393 2,214,010
Securities sold under agreements
to repurchase and
other short-term debt 893,206 1,466,845 1,522,381
Other long-term debt 621,936 636,028 640,906
Reserve for unfunded commitments 7,275 8,885 9,146
Accrued expenses and other
liabilities 155,285 162,886 162,171
Total liabilities 15,211,031 16,446,090 16,179,759
Preferred stock of subsidiary
corporation 9,577 9,577 9,577
Shareholders' equity 1,876,863 1,683,147 1,647,226
Total Liabilities and
Shareholders' Equity $17,097,471 $18,138,814 $17,836,562
See Selected Financial Highlights for footnotes.
Consolidated Statements of Income (unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
(In thousands, except per
share data) 2006 2005 2006 2005
Interest income:
Loans $225,634 $187,607 $843,398 $689,041
Securities and short-term
investments 32,514 42,503 154,127 169,861
Loans held for sale 6,191 3,563 17,213 12,945
Total interest income 264,339 233,673 1,014,738 871,847
Interest expense:
Deposits 90,195 57,132 310,199 188,437
Borrowings 44,994 46,879 195,989 166,069
Total interest expense 135,189 104,011 506,188 354,506
Net interest income 129,150 129,662 508,550 517,341
Provision for credit
losses 3,000 2,000 11,000 9,500
Net interest income after
provision for credit
losses 126,150 127,662 497,550 507,841
Noninterest income:
Deposit service fees 25,494 22,909 96,765 85,967
Insurance revenue 8,301 10,678 38,806 44,015
Loan and loan servicing
fees 9,643 9,290 34,389 33,232
Wealth and investment
services 7,161 6,174 27,183 23,151
Gain from mortgage banking
activities 2,917 2,322 8,542 11,573
Increase in cash surrender
value of life insurance 2,550 2,360 9,603 9,241
Other 3,733 3,470 8,486 10,073
59,799 57,203 223,774 217,252
Loss on write-down of AFS
securities to fair value - - (48,879) -
Loss on sale of mortgage
loans (5,713) - (5,713) -
(Loss) gain on sale of
securities, net (2,732) 1,026 1,289 3,633
Total noninterest income 51,354 58,229 170,471 220,885
Noninterest expenses:
Compensation and benefits 64,142 64,905 255,780 241,469
Occupancy 13,403 11,141 49,386 43,292
Furniture and equipment 14,637 14,810 56,033 50,228
Intangible amortization 3,473 5,001 14,473 19,913
Marketing 3,350 3,981 15,477 14,267
Professional services 5,457 3,594 16,767 14,962
Conversion and
infrastructure costs - 1,281 - 8,138
Acquisition costs 2,018 - 2,951 -
Other 16,129 14,646 64,081 63,301
Total noninterest
expenses 122,609 119,359 474,948 455,570
Income before income taxes 54,895 66,532 193,073 273,156
Income taxes 17,097 21,032 59,283 87,301
Net income $37,798 $45,500 $133,790 $185,855
Diluted shares (average) 56,452 54,129 54,065 54,236
Net income per common share:
Basic $0.68 $0.85 $2.50 $3.47
Diluted 0.67 0.84 2.47 3.43
See Selected Financial Highlights for footnotes.
Consolidated Statements of Income (unaudited)
Three Months Ended
(In thousands, except Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
per share data) 2006 2006 2006 2006 2005
Interest income:
Loans $225,634 $215,094 $207,097 $195,574 $187,607
Securities and short-
term investments 32,514 40,883 39,134 41,595 42,503
Loans held for sale 6,191 4,366 3,317 3,339 3,563
Total interest income 264,339 260,343 249,548 240,508 233,673
Interest expense:
Deposits 90,195 85,058 72,593 62,354 57,132
Borrowings 44,994 52,849 50,150 47,995 46,879
Total interest expense 135,189 137,907 122,743 110,349 104,011
Net interest income 129,150 122,436 126,805 130,159 129,662
Provision for credit
losses 3,000 3,000 3,000 2,000 2,000
Net interest income
after provision for
credit losses 126,150 119,436 123,805 128,159 127,662
Noninterest income:
Deposit service fees 25,494 25,252 24,150 21,869 22,909
Insurance revenue 8,301 9,793 9,988 10,724 10,678
Loan and loan servicing
fees 9,643 7,760 9,162 7,824 9,290
Wealth and investment
services 7,161 6,738 6,930 6,354 6,174
Gain (loss) from
mortgage banking
activities 2,917 (185) 2,538 3,273 2,322
Increase in cash
surrender value of life
insurance 2,550 2,368 2,314 2,371 2,360
Other 3,733 1,693 1,284 1,775 3,470
59,799 53,419 56,366 54,190 57,203
Loss on write-down of
AFS securities to fair
value - (48,879) - - -
Loss on sale of mortgage
loans (5,713) - - - -
(Loss) gain on sale of
securities, net (2,732) 2,307 702 1,012 1,026
Total noninterest
income 51,354 6,847 57,068 55,202 58,229
Noninterest expenses:
Compensation and
benefits 64,142 62,050 64,585 65,003 64,905
Occupancy 13,403 11,977 11,824 12,182 11,141
Furniture and equipment 14,637 13,840 13,962 13,595 14,810
Intangible amortization 3,473 3,079 3,544 4,377 5,001
Marketing 3,350 4,211 4,292 3,624 3,981
Professional services 5,457 4,302 3,464 3,544 3,594
Conversion and
infrastructure costs - - - - 1,281
Acquisition costs 2,018 868 65 - -
Other 16,129 15,523 15,582 16,846 14,646
Total noninterest
expenses 122,609 115,850 117,318 119,171 119,359
Income before income
taxes 54,895 10,433 63,555 64,190 66,532
Income taxes 17,097 1,436 20,412 20,338 21,032
Net income $37,798 $8,997 $43,143 $43,852 $45,500
Diluted shares (average) 56,452 52,871 53,252 53,703 54,129
Net income per common share:
Basic $0.68 $0.17 $0.82 $0.83 $0.85
Diluted 0.67 0.17 0.81 0.82 0.84
See Selected Financial Highlights for footnotes.
Interest-Rate Spread (unaudited)
Three Months Ended
December September June March December
2006 2006 2006 2006 2005
Interest-rate spread
Yield on interest-earning
assets 6.52% 6.31% 6.11% 5.97% 5.73%
Cost of interest-bearing
liabilities 3.38 3.38 3.05 2.78 2.55
Interest-rate spread 3.14% 2.93% 3.06% 3.19% 3.18%
Net interest margin 3.23% 3.01% 3.13% 3.24% 3.22%
Consolidated Average Statements of Condition (unaudited)
Three Months Ended December 31, 2006
Fully tax-
Average equivalent
(Dollars in thousands) balance Interest yield/rate
Assets:
Interest-earning assets:
Loans $13,362,185 $225,634 6.69%
Securities 2,435,986 34,695 5.72(b)
Loans held for sale 417,479 6,191 5.93
Short-term investments 29,896 368 4.82
Total interest-earning assets 16,245,546 266,888 6.52
Noninterest-earning assets 1,617,888
Total assets $17,863,434
Liabilities and Shareholders'
Equity:
Interest-bearing liabilities:
Demand deposits $1,522,571 $- -%
Savings, NOW and money market
deposit accounts 5,582,187 29,609 2.10
Time deposits 5,405,010 60,586 4.44
Total deposits 12,509,768 90,195 2.86
Federal Home Loan Bank advances 1,444,155 18,169 4.92
Repurchase agreements and other
short-term debt 1,239,065 14,100 4.45
Other long-term debt 637,853 12,725 7.98
Total borrowings 3,321,073 44,994 5.33
Total interest-bearing
liabilities 15,830,841 135,189 3.38
Noninterest-bearing liabilities 149,623
Total liabilities 15,980,464
Preferred stock of subsidiary
corporation 9,577
Shareholders' equity 1,873,393
Total liabilities and
shareholders' equity $17,863,434
131,699
Less: tax-equivalent adjustment (2,549)
Net interest income $129,150
Interest-rate spread 3.14%
Net interest margin 3.23%
Three Months Ended December 31, 2005
Fully tax-
Average equivalent
(Dollars in thousands) balance Interest yield/rate
Assets:
Interest-earning assets:
Loans $12,328,141 $187,608 6.03%
Securities 3,715,720 44,733 4.76(b)
Loans held for sale 251,169 3,563 5.67
Short-term investments 19,846 147 2.90
Total interest-earning assets 16,314,876 236,051 5.73
Noninterest-earning assets 1,537,062
Total assets $17,851,938
Liabilities and Shareholders'
Equity:
Interest-bearing liabilities:
Demand deposits $1,522,306 $- -%
Savings, NOW and money market
deposit accounts 5,502,733 19,065 1.37
Time deposits 4,665,580 38,067 3.24
Total deposits 11,690,619 57,132 1.94
Federal Home Loan Bank advances 2,280,934 22,742 3.90
Repurchase agreements and other
short-term debt 1,454,730 12,568 3.38
Other long-term debt 665,062 11,569 6.96
Total borrowings 4,400,726 46,879 4.19
Total interest-bearing
liabilities 16,091,345 104,011 2.55
Noninterest-bearing liabilities 101,994
Total liabilities 16,193,339
Preferred stock of subsidiary
corporation 9,577
Shareholders' equity 1,649,022
Total liabilities and
shareholders' equity $17,851,938
132,040
Less: tax-equivalent adjustment (2,378)
Net interest income $129,662
Interest-rate spread 3.18%
Net interest margin 3.22%
See Selected Financial Highlights for footnotes.
Consolidated Average Statements of Condition (unaudited)
Twelve Months Ended December 31, 2006
Fully tax-
Average equivalent
(Dollars in thousands) balance Interest yield/rate
Assets:
Interest-earning assets:
Loans $12,800,864 $843,398 6.59%
Securities 3,224,776 162,504 4.98(b)
Loans held for sale 288,892 17,213 5.96
Short-term investments 25,514 1,079 4.23
Total interest-earning assets 16,340,046 1,024,194 6.25
Noninterest-earning assets 1,531,421
Total assets $17,871,467
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Demand deposits $1,470,861 $- -%
Savings, NOW and money market
deposit accounts 5,427,812 100,165 1.85
Time deposits 5,193,608 210,034 4.04
Total deposits 12,092,281 310,199 2.57
Federal Home Loan Bank advances 2,035,786 94,322 4.63
Repurchase agreements and other
short-term debt 1,243,269 52,301 4.21
Other long-term debt 633,667 49,366 7.79
Total borrowings 3,912,722 195,989 5.01
Total interest-bearing
liabilities 16,005,003 506,188 3.16
Noninterest-bearing liabilities 139,057
Total liabilities 16,144,060
Preferred stock of subsidiary
corporation 9,577
Shareholders' equity 1,717,830
Total liabilities and
shareholders' equity $17,871,467
518,006
Less: tax-equivalent adjustment (9,456)
Net interest income $508,550
Interest-rate spread 3.09%
Net interest margin 3.16%
Twelve Months Ended December 31, 2005
Fully tax-
Average equivalent
(Dollars in thousands) balance Interest yield/rate
Assets:
Interest-earning
assets:
Loans $11,930,776 $689,048 5.78%
Securities 3,806,289 178,106 4.68(b)
Loans held for sale 232,695 12,945 5.56
Short-term investments 19,982 537 2.69
Total interest-earning assets 15,989,742 880,636 5.50
Noninterest-earning assets 1,484,723
Total assets $17,474,465
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Demand deposits $1,449,596 $- -%
Savings, NOW and money market
deposit accounts 5,633,897 66,226 1.18
Time deposits 4,215,801 122,211 2.90
Total deposits 11,299,294 188,437 1.67
Federal Home Loan Bank advances 2,256,216 78,623 3.48
Repurchase agreements and other
short-term debt 1,520,086 43,842 2.88
Other long-term debt 673,562 43,604 6.47
Total borrowings 4,449,864 166,069 3.73
Total interest-bearing
liabilities 15,749,158 354,506 2.25
Noninterest-bearing liabilities 102,732
Total liabilities 15,851,890
Preferred stock of subsidiary
corporation 9,577
Shareholders' equity 1,612,998
Total liabilities and
shareholders' equity $17,474,465
526,130
Less: tax-equivalent adjustment (8,789)
Net interest income $517,341
Interest-rate spread 3.25%
Net interest margin 3.29%
See Selected Financial Highlights for footnotes.
At or for the Three Months Ended
(Unaudited) Dec. 31, Sept. 30, June 30,
(Dollars in thousands) 2006 2006 2006
Asset Quality
Nonperforming loans:
Commercial:
Commercial $21,105 $29,321 $22,930
Equipment financing 2,616 2,450 2,693
Total commercial 23,721 31,771 25,623
Commercial real estate 17,618 16,811 23,291
Residential 11,307 7,032 7,218
Consumer 6,266 3,496 3,065
Total nonperforming loans 58,912 59,110 59,197
Other real estate owned and
repossessed assets:
Commercial 1,922 1,573 2,254
Residential 383 607 316
Consumer 608 126 10
Total other real estate owned and
repossessed assets 2,913 2,306 2,580
Total nonperforming assets $61,825 $61,416 $61,777
Accruing loans 90 or more days past
due $1,490 4,609 2,542
Allowance for Credit Losses
Beginning balance $156,331 $156,471 $155,957
Provision 3,000 3,000 3,000
Allowance for acquired loans 4,724 - -
Charge-offs:
Commercial 9,352 3,369 2,775
Residential 199 46 65
Consumer 454 265 239
Total charge-offs 10,005 3,680 3,079
Recoveries (944) (540) (593)
Net loan charge-offs (recoveries) 9,061 3,140 2,486
Ending balance $154,994 $156,331 $156,471
Components:
Allowance for loan losses $147,719 $147,446 $147,401
Reserve for unfunded credit
commitments 7,275 8,885 9,070
Allowance for credit losses $154,994 $156,331 $156,471
Asset Quality Ratios:
Allowance for loan losses / total loans 1.14% 1.13% 1.16
Allowance for credit losses / total loans 1.20 1.20 1.23
Net charge-offs (recoveries)/ average
loans (annualized) 0.27 0.10 0.08
Nonperforming loans / total loans 0.46 0.45 0.47
Nonperforming assets / total loans
plus OREO 0.48 0.47 0.49
Allowance for credit losses /
nonperforming loans 263.09 264.47 264.32
At or for the Three Months Ended
(Unaudited) March 31, Dec. 31,
(Dollars in thousands) 2006 2005
Asset Quality
Nonperforming loans:
Commercial:
Commercial $19,719 $26,002
Equipment financing 2,864 3,065
Total commercial 22,583 29,067
Commercial real estate 24,012 22,678
Residential 8,891 6,979
Consumer 2,875 1,829
Total nonperforming loans 58,361 60,553
Other real estate owned and
repossessed assets:
Commercial 1,712 5,126
Residential 456 232
Consumer 361 427
Total other real estate owned and
repossessed assets 2,529 5,785
Total nonperforming assets $60,890 $66,338
Accruing loans 90 or more days past due 1,002 6,676
Allowance for Credit Losses
Beginning balance $155,632 $155,052
Provision 2,000 2,000
Allowance for acquired loans - -
Charge-offs:
Commercial 1,629 3,272
Residential 75 110
Consumer 362 153
Total charge-offs 2,066 3,535
Recoveries (391) (2,115)
Net loan charge-offs (recoveries) 1,675 1,420
Ending balance $155,957 $155,632
Components:
Allowance for loan losses $146,383 $146,486
Reserve for unfunded credit
commitments 9,574 9,146
Allowance for credit losses $155,957 $155,632
Asset Quality Ratios:
Allowance for loan losses / total loans 1.16% 1.19
Allowance for credit losses / total loans 1.24 1.27
Net charge-offs (recoveries)/ average loans
(annualized) 0.05 0.05
Nonperforming loans / total loans 0.46 0.49
Nonperforming assets / total loans plus OREO 0.48 0.54
Allowance for credit losses / nonperforming
loans 267.23 257.02
See Selected Financial Highlights for footnotes.
SOURCE
Webster Financial Corporation
CONTACT:
Media Contact
Clark Finley 203-578-2287
cfinley@websterbank.com
Investor Contact
James Sitro 203-578-2399
jsitro@websterbank.com