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Second Quarter Highlights: -- Diluted earnings per share of $.63 (includes the aggregate effect of $.15 per diluted share for the following items: $.07 of severance- related and other charges and $.08 of net charges in connection with the previously announced prepayment of capital trust securities). -- Net interest income reached a record quarterly level of $130.4 million as the net interest margin improved to 3.47 percent, up from 3.41 percent in the first quarter and 3.13 percent in the second quarter of 2006. -- Higher deposit service fees and mortgage banking revenues also contributed to a record quarterly level of total revenues. -- Over $260 million of deposit growth during the second quarter; the loan to deposit ratio improved to 97 percent at June 30 compared to 98 percent at March 31 and 104 percent a year ago. -- Completed the public offering of $200 million of enhanced trust preferred securities at a significantly lower interest rate (7.50% net cost pre-tax) than the $105 million in capital trust securities prepaid (9.57% net cost pre-tax) during the quarter. -- Repurchased over 1.9 million shares of common stock during the second quarter as Webster's strengthened tangible capital position provides capital management flexibility. The tangible capital ratio at June 30, 2007 was 6.32 percent compared to 6.72 percent at March 31, 2007 and 5.47 percent at June 30, 2006. -- Completed the strategic and organizational reviews, which positions Webster to improve ongoing return on capital and operating margins with a heightened focus on its core franchise.WATERBURY, Conn., July 24, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- Webster Financial
Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today
announced net income of $35.5 million or $.63 per diluted share for the second
quarter of 2007, compared to $35.0 million or $.62 per share for the first
quarter of 2007 and $43.1 million or $.81 per share for the second quarter of
2006. As shown in the earnings reconciliation below, second quarter 2007 net
income includes charges of $13.0 million ($8.5 million, net of tax) or $.15
per diluted share while the first quarter includes charges of $5.2 million
($3.4 million, net of tax) or $.06 per share. For the first six months of
2007, net income totaled $70.5 million, or $1.25 per share, compared to $87.0
million, or $1.63 per share in the year-ago period.
Earnings Reconciliation
For the Three Months Ended
June 30, 2007 March 31, 2007
(In thousands Pre- Tax Pre- Tax
except per share Tax Effected EPS Tax Effected EPS
data)
Reported Net
Income $51,997 $35,467 $0.63 $51,222 $35,036 $0.62
Adjustments:
Gain on Webster
Capital
Trust I and II
securities (2,130) (1,384) (0.02) - - -
Debt redemption
premium 8,940 5,811 0.10 - - -
Software development
cost write-off 3,403 2,212 0.04 - - -
Severance costs 1,888 1,227 0.02 2,200 1,430 0.02
Write-down of
construction
loan(s) held
for sale 948 616 0.01 700 455 0.01
Closure of Peoples
Mortgage
Company (PMC) - - - 2,322 1,509 0.03
Total adjustments 13,049 8,482 0.15 5,222 3,394 0.06
Adjusted net
income $65,046 $43,949 $0.78 $56,444 $38,430 $0.68(A)
(A) Excludes $4.7 million pre-tax of seasonally higher expenses in the
first quarter of 200 primarily related to payroll taxes and 401(k)
match.
As previously disclosed, Webster prepaid its Capital Trust I and Capital
Trust II securities on April 2, 2007, at call prices of 104.7 percent and
105.0 percent, respectively, plus accrued and unpaid interest. Webster
recorded a net pre-tax charge to income in the second quarter of 2007 of $6.8
million ($8.9 million related to the redemption premiums and unamortized
issuance costs, partially offset by a $2.1 million gain on Webster Capital
Trust I and II securities held by Webster), or $4.4 million net of tax. Also,
Webster incurred severance and other charges of $5.3 million, or $3.4 million
net of tax, in connection with actions during the second quarter under the
recently concluded strategic and organizational review process. In addition,
residential construction loans previously held for sale were transferred into
portfolio and were written down in value by $0.9 million, or $0.6 million net
of tax. This write-down is reflected in mortgage banking activities as a
reduction in noninterest income in the second quarter.
Webster will provide a detailed update on its strategic and organizational
reviews during its second quarter earnings conference call later today (refer
to details for the conference call at the end of this release). Additional
details regarding the strategic and organizational reviews are also available
on our website at http://www.wbst.com.
"We are pleased to announce solid results in a challenging operating
environment. Additionally, we have completed our strategic review and have
taken many steps to implement the decisions made over the last two quarters,"
stated Webster Chairman and Chief Executive Officer James C. Smith. "Our
recently completed organizational review will improve the execution of our
business plans in a well structured, more efficient company as we pursue our
vision to become New England's bank."
Commercial loans (consisting of commercial and industrial and commercial
real estate loans) and consumer loans grew strongly year over year to $8.7
billion at June 30, 2007, up 11 percent from June 30, 2006. Commercial and
consumer loans represent 70 percent of total loans at June 30, 2007 compared
to 62 percent a year ago. Commercial and industrial loans increased by $110
million, or 13 percent annualized, from March 31, 2007. "We are seeing the
focus on commercial and consumer lending positively affect our earnings,"
stated Webster President and Chief Operating Officer William T. Bromage.
"Going forward, we will increase our emphasis on growing small business
relationships, which we believe have significant loan and deposit growth
potential."
Revenues
Total revenue, which consists of net interest income plus total non-
interest income, reached a record quarterly level of $194.3 million in the
second quarter, compared to $185.5 million in the first quarter and $183.9
million a year ago.
Net interest income also reached a record level of $130.4 million in the
second quarter compared to $128.1 million in the first quarter and $126.8
million a year ago. Average interest-earning assets were lower in the second
quarter of 2007 compared to a year ago as a result of Webster's recent balance
sheet repositioning actions; however, Webster's net interest margin
(annualized tax-equivalent net interest income as a percentage of average
earning assets) increased to 3.47 percent compared to 3.41 percent in the
first quarter and 3.13 percent a year ago. Webster's balance sheet
repositioning actions have positively impacted the net interest margin as
proceeds from the sales of securities were used to pay down high-cost
borrowings. Slightly offsetting the positive effect 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
during much of the second quarter. The spread between the yield on loans and
the cost of deposits was 3.93 percent in the second quarter compared to 3.87
percent in the first quarter and 4.11 percent a year ago.
Total noninterest income was $64.0 million in the second quarter,
including the $2.1 million gain on Webster Capital Trust I and II securities
held by Webster, compared to $57.4 million in the first quarter and $57.1
million a year ago. Deposit service fees totaled $28.8 million compared to
$25.4 million in the first quarter and $24.2 million a year ago, with growth
partly reflecting the growth in deposits and the recent implementation of a
new consumer fee structure. Insurance revenue was $9.1 million in the quarter
compared to $10.1 million in the first quarter and $10.0 million a year ago.
Loan-related fees were $7.9 million in both the second and first quarters of
2007 compared to $9.2 million a year ago. Wealth management fees totaled $7.6
million compared to $6.9 million in both the first quarter and the comparable
period a year ago. Income from mortgage banking activities increased to $4.0
million in the second quarter inclusive of a $948,000 write-down on $96.3
million of loans previously held for sale that were transferred into
portfolio, compared to income of $2.2 million from mortgage banking activities
in the first quarter, which reflected a $700,000 write-down in value of one
construction loan held for sale, income of $2.5 million a year ago. Other non-
interest income was $1.4 million compared to $1.8 million in the first quarter
and $1.3 million a year ago.
Provision For Credit Losses
The provision for credit losses was $4.25 million in the second quarter
compared to $3.0 million in both the first quarter of 2007 and the second
quarter of 2006. Net loan charge-offs totaled $4.2 million compared to $5.3
million in the first quarter and $2.5 million a year ago. Included in charge-
offs in the second quarter of 2007 were $0.6 million of consumer overdraft
losses. Prior to the second quarter, overdraft losses were shown as a
reduction of deposit fee income. Net charge-offs in the first quarter of 2007
reflected $2.1 million of previously-announced net charge-offs in connection
with 13 residential construction loans in Florida. The allowance for credit
losses, which consists of the allowance for loan losses and the reserve for
unfunded credit commitments, was $152.8 million, or 1.23 percent of total
loans at June 30, 2007 compared to $152.7 million, or 1.24 percent at March
31, 2007 and $156.5 million, or 1.23 percent at June 30, 2006.
Noninterest Expenses
Total noninterest expenses were $138.1 million in the second quarter
including $8.9 million of debt redemption premium costs related to prepayment
of the capital trust securities and $5.3 million of charges in connection with
Webster's recently completed strategic review (consisting of a $3.4 million
write-off of software development costs due to the cancellation of a
technology project and $1.9 million in severance costs) compared to total
noninterest expenses of $131.3 million in the first quarter and $117.3 million
a year ago. The first quarter of 2007 included severance-related charges from
ongoing restructuring in insurance and other lines of business of $2.2 million
and closing costs of $2.3 million related to the remaining operations of PMC.
Balance Sheet Trends
Total assets were $16.9 billion at June 30, 2007 compared to $18.0 billion
a year ago, with the decrease primarily related to balance sheet repositioning
actions. Total loans were $12.4 billion, a decrease of $0.3 billion, or 2
percent, from a year ago, due primarily to the securitization of $371 million
in residential loans, the sale of $250 million in residential loans in the
fourth quarter of 2006 and the securitization of another $633 million in
residential loans in the first quarter of 2007. Securities totaled $2.5
billion and declined by $0.9 billion, or 28 percent from a year ago. Total
deposits were $12.8 billion, an increase of $0.6 billion, or 5 percent from a
year ago which includes a $438 million decline in brokered deposits. Retail
deposits increased $1.0 billion, with contributions from the branches acquired
from the NewMil Bank acquisition, organic growth from our branch network and
growth in health savings account deposits at HSA Bank.
The $0.9 billion reduction in securities and $0.6 billion of total deposit
growth, each compared to a year ago, contributed to a $1.9 billion reduction
in wholesale borrowings over the past year. Wholesale borrowings declined to
12 percent of total assets at June 30 compared to 22 percent a year ago.
The loan to deposit ratio improved to 97 percent at June 30, 2007 from 98
percent at March 31 and 104 percent a year ago. Improvement in this ratio
reflects completion of balance sheet repositioning actions and the increase in
deposits over the past year.
Book value per common share of $33.63 at June 30, 2007 increased from
$31.22 a year ago. Tangible book value per share of $18.96 at June 30, 2007
increased from $18.31 last year. The ratio of tangible equity to tangible
assets increased to 6.32 percent at June 30, 2007 compared to 5.47 percent a
year ago.
Capital
Webster prepaid $105 million of its Capital Trust I and II securities that
paid 9.57 percent pre-tax on April 2, 2007, at call prices of 104.68 percent
and 105.0 percent, respectively, plus accrued and unpaid interest. As
previously noted, Webster recorded a net pretax charge to income in the second
quarter of 2007 of $6.8 million ($8.9 million related to the redemption
premiums and unamortized issuance costs, partially offset by a $2.1 million
gain on Webster Capital Trust I and II securities held by Webster). On June
13, 2007, Webster issued $200 million of enhanced capital trust securities at
an all-in cost of 7.50 percent pre-tax under Webster Capital Trust IV.
Also during the second quarter, Webster repurchased over 1.9 million
shares of its common stock. Webster still has 1.8 million shares that can be
purchased under the 2.8 million share repurchase authorization that was
announced on June 5, 2007.
Webster Chief Financial Officer Jerry Plush noted: "Our intent now that
the enhanced capital trust securities deal is complete is to focus on our
leverage and risk-based capital ratios (which are 8.31 percent and 11.99
percent, respectively) and target a tangible capital ratio level of 6.00%. The
enhanced capital trust issuance provides Webster with significant capital
management flexibility to selectively buy back shares or to pursue growth
opportunities including acquisitions. We believe repurchasing our stock has
been an attractive opportunity, and as such we elected to re-initiate the
share repurchase program in the second quarter."
Asset Quality
Nonperforming assets totaled $78.7 million, or 0.63 percent of total loans
and other real estate owned at June 30, 2007 compared to $64.8 million, or
0.53 percent, at March 31 and $61.8 million, or 0.49 percent, a year ago. The
majority of the second quarter increase relates to Webster's previous
disclosure in its first quarter release and Form 10-Q that as of April 2007 it
had placed on nonaccrual status $11 million in construction loans previously
held for sale.
The allowance for credit losses, which consist of the allowance for loan
losses and the reserve for unfunded credit commitments, was $152.8 million, or
1.23 percent of total loans, at June 30, 2007 compared to $152.7 million, or
1.24 percent at March 31, 2007 and $156.5 million, or 1.23 percent at June 30,
2006. The ratio of the allowance for credit losses to nonperforming loans was
211 percent at June 30, 2007 compared to 264 percent a year ago and 259
percent at March 31, 2007.
Webster Financial Corporation is the holding company for Webster Bank,
National Association and Webster Insurance. With $16.9 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 www.websteronline.com.
Conference Call
A conference call covering Webster's 2007 second quarter earnings
announcement will be held today, Tuesday, July 24, at 9:00 a.m. EDT and may be
heard through Webster's investor relations website at 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 2006. 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.
CONTACT: Webster Bank
Media:
Clark Finley, 203-578-2287
cfinley@websterbank.com
or
Investors:
James Sitro 203-578-2399
jsitro@websterbank.com
WEBSTER FINANCIAL CORPORATION
Selected Financial Highlights (unaudited)
At or for the Three At or for the Six
Months Ended June 30, Months Ended June 30,
(In thousands, except 2007 2006 (c) 2007 2006 (c)
per share data)
Adjusted net income and
performance ratios, net
of tax (annualized):
Net income $35,467 $43,143 $70,503 $86,995
Net debt prepayment
expense 4,427 - 4,427 -
Software development cost
write-off 2,212 - 2,212 -
Severence costs 1,227 - 2,657 -
Closing costs-Peoples
Mortgage Company - - 1,509 -
Write-down of construction
loans held for sale 616 - 1,071 -
Adjusted net income 43,949 43,143 82,379 86,995
- -
Net income per diluted
common share 0.78 0.81 1.46 1.63
Return on average
shareholders' equity 9.28 % 10.35 % 8.69 % 10.46 %
Return on average tangible
equity 16.13 17.48 15.10 17.68
Return on average assets 1.04 0.96 0.98 0.98
Noninterest income as a
percentage of total
revenue 32.51 31.04 31.88 30.41
Efficiency ratio (a) 64.12 63.80 66.06 64.05
Net income and performance
ratios (annualized):
Net income $35,467 $43,143 $70,503 $86,995
Net income per diluted
common share 0.63 0.81 1.25 1.63
Return on average
shareholders' equity 7.49 % 10.35 % 7.44 % 10.46 %
Return on average tangible
equity 13.02 17.48 12.92 17.68
Return on average assets 0.84 0.96 0.84 0.98
Noninterest income as a
percentage of total
revenue 32.92 31.04 31.96 30.41
Efficiency ratio (a) 71.06 63.80 70.92 64.05
Asset quality:
Allowance for credit
losses $152,750 $156,471 $152,750 $156,471
Nonperforming assets 78,654 61,777 78,654 61,777
Allowance for credit
losses / total loans 1.23 % 1.23 % 1.23 % 1.23 %
Net charge-offs / average
loans (annualized) 0.14 0.08 0.15 0.07
Nonperforming loans /
total loans 0.58 0.47 0.58 0.47
Nonperforming assets /
total loans plus OREO 0.63 0.49 0.63 0.49
Allowance for credit
losses / nonperforming
loans 210.61 264.32 210.61 264.32
Other ratios (annualized):
Tangible capital ratio 6.32 % 5.47 % 6.32 % 5.47 %
Shareholders' equity /
total assets 10.84 9.11 10.84 9.11
Interest-rate spread 3.37 3.06 3.34 3.13
Net interest margin 3.47 3.13 3.44 3.18
Share related:
Book value per common
share $33.63 $31.22 $33.63 31.22
Tangible book value per
common share 18.96 18.31 18.96 18.31
Common stock closing price 42.67 47.44 42.67 47.44
Dividends declared per
common share 0.30 0.27 0.57 0.52
Common shares issued and
outstanding 54,643 52,610 54,643 52,610
Basic shares (average) 55,677 52,637 55,894 52,864
Diluted shares (average) 56,243 53,252 56,497 53,468
Footnotes:
(a) Noninterst expense as a percentage of net interest income plus
noninterest income.
(b) For purposes of the yield computation, unrealized gaines (losses) are
excluded from the average balance.
(c) Certain previously reported information has been revised for the
effect of a $4.2 million reduction in insurance commissions
receivable, including a $2.7 million after-tax reduction in
shareholders' equity. There was no effect on net income for the
periods presented.
Consolidated Statements of Condition (unaudited)
June 30, March 31, June 30,
(In thousands) 2007 2007 (c) 2006 (c)
Assets:
Cash and due from depository
institutions $293,223 $269,061 $327,622
Short-term investments 8,222 6,161 59,666
Securities:
Trading, at fair value 5,935 14,076 2,698
Available for sale, at fair
value 411,309 395,668 2,317,645
Held-to-maturity 2,046,891 2,066,763 1,088,206
Total securities 2,464,135 2,476,507 3,408,549
Loans held for sale 372,891 456,033 275,240
Loans:
Residential mortgages 3,736,313 3,739,221 4,875,134
Commercial 3,554,846 3,444,612 3,160,200
Commercial real estate 1,938,656 1,936,650 1,819,635
Consumer 3,210,457 3,182,765 2,855,558
Total loans 12,440,272 12,303,248 12,710,527
Allowance for loan losses (144,974) (145,367) (147,401)
Loans, net 12,295,298 12,157,881 12,563,126
Accrued interest receivable 85,078 86,878 85,719
Premises and equipment, net 194,412 196,232 188,125
Goodwill and other intangible
assets 818,422 823,200 695,014
Cash surrender value of life
insurance 264,100 261,852 242,740
Prepaid expenses and other assets 151,475 141,196 172,142
Total Assets $16,947,256 $16,875,001 $18,017,943
Liabilities and Shareholders'
Equity:
Deposits:
Demand deposits $1,544,695 $1,505,074 $1,549,051
NOW accounts 1,797,701 1,761,178 1,687,297
Money market deposit accounts 1,916,097 1,887,602 1,888,179
Savings accounts 2,194,215 2,109,866 1,954,298
Certificates of deposit 4,965,140 4,834,440 4,298,367
Brokered deposits 401,213 460,230 839,273
Total deposits 12,819,061 12,558,390 12,216,465
Federal Home Loan Bank advances 531,117 655,709 1,804,140
Securities sold under agreements
to repurchase and
other short-term debt 899,852 943,802 1,528,224
Long-term debt 656,455 623,091 622,267
Reserve for unfunded credit
commitments 7,776 7,293 9,070
Accrued expenses and other
liabilities 185,767 174,854 185,975
Total liabilities 15,100,028 14,963,139 16,366,141
Preferred stock of subsidiary
corporation 9,577 9,577 9,577
Shareholders' equity 1,837,651 1,902,285 1,642,225
Total Liabilities and
Shareholders' Equity $16,947,256 $16,875,001 $18,017,943
See Selected Financial Highlights for footnotes.
Consolidated Statements of Income (unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
(In thousands, except per 2007 2006 2007 2006
share data)
Interest income:
Loans $210,337 $207,097 $419,501 $402,671
Securities and short-term
investments 32,563 39,134 65,843 80,729
Loans held for sale 7,419 3,317 13,668 6,656
Total interest income 250,319 249,548 499,012 490,056
Interest expense:
Deposits 89,683 72,593 177,313 134,947
Borrowings 30,283 50,150 63,265 98,145
Total interest expense 119,966 122,743 240,578 233,092
Net interest income 130,353 126,805 258,434 256,964
Provision for credit losses 4,250 3,000 7,250 5,000
Net interest income after
provision for credit
losses 126,103 123,805 251,184 251,964
Noninterest income:
Deposit service fees 28,758 24,150 54,112 46,019
Insurance revenue 9,141 9,988 19,262 20,712
Loan related fees 7,901 9,162 15,841 16,986
Wealth and investment
services 7,637 6,930 14,515 13,284
Mortgage banking activities 3,962 2,538 6,191 5,811
Increase in cash surrender
value of life insurance 2,586 2,314 5,120 4,685
Gain on sale of securities, net 503 702 1,044 1,714
Other 1,367 1,284 3,191 3,059
61,855 57,068 119,276 112,270
Gain on Webster Capital
Trust I and II securities 2,130 - 2,130 -
Total noninterest income 63,985 57,068 121,406 112,270
Noninterest expenses:
Compensation and benefits 66,888 64,585 135,279 129,588
Occupancy 13,200 11,824 26,583 24,006
Furniture and equipment 15,389 13,962 30,358 27,557
Intangible amortization 3,344 3,544 6,817 7,921
Marketing 4,209 4,292 8,420 7,916
Professional services 3,432 3,464 8,234 7,008
Other 17,398 15,582 34,927 32,428
123,860 117,253 250,618 236,424
Debt redemption premium 8,940 - 8,940 -
Severance and other costs 5,291 - 9,813 -
Acquisition costs - 65 - 65
Total noninterest expenses 138,091 117,318 269,371 236,489
Income before income taxes 51,997 63,555 103,219 127,745
Income taxes 16,530 20,412 32,716 40,750
Net income $35,467 $43,143 $70,503 $86,995
Diluted shares (average) 56,243 53,252 56,497 53,468
Net income per common share:
Basic $0.64 $0.82 $1.26 $1.65
Diluted 0.63 0.81 1.25 1.63
See Selected Financial Highlights for footnotes.
Consolidated Statements of Income (unaudited)
Three Months Ended
June 30, March 31, Dec. 31, Sept. 30, June 30,
(In thousands, except 2007 2007 2006 2006 2006
per share data)
Interest income:
Loans $210,337 $209,164 $225,634 $215,094 $207,097
Securities and short-
term investments 32,563 33,280 32,514 40,883 39,134
Loans held for sale 7,419 6,249 6,191 4,366 3,317
Total interest income 250,319 248,693 264,339 260,343 249,548
Interest expense:
Deposits 89,683 87,630 90,195 85,058 72,593
Borrowings 30,283 32,982 44,994 52,849 50,150
Total interest expense 119,966 120,612 135,189 137,907 122,743
Net interest income 130,353 128,081 129,150 122,436 126,805
Provision for credit
losses 4,250 3,000 3,000 3,000 3,000
Net interest income
after provision for
credit losses 126,103 125,081 126,150 119,436 123,805
Noninterest income:
Deposit service fees 28,758 25,354 25,494 25,252 24,150
Insurance revenue 9,141 10,121 8,301 9,793 9,988
Loan related fees 7,901 7,940 9,643 7,760 9,162
Wealth and investment
services 7,637 6,878 7,161 6,738 6,930
Mortgage banking
activities 3,962 2,229 2,917 (185) 2,538
Increase in cash
surrender value of life
insurance 2,586 2,534 2,550 2,368 2,314
Gain (loss) on sale of
securities, net 503 541 (2,732) 2,307 702
Other 1,367 1,824 3,733 1,693 1,284
61,855 57,421 57,067 55,726 57,068
Gain on Webster Capital
Trust I and II
securities 2,130 - - - -
Loss on write-down of
AFS securities to fair
value - - - (48,879) -
Loss on sale of mortgage
loans - - (5,713) - -
Total noninterest
income 63,985 57,421 51,354 6,847 57,068
Noninterest expenses:
Compensation and
benefits 66,888 68,391 64,142 62,050 64,585
Occupancy 13,200 13,383 13,403 11,977 11,824
Furniture and equipment 15,389 14,969 14,637 13,840 13,962
Intangible amortization 3,344 3,473 3,473 3,079 3,544
Marketing 4,209 4,211 3,350 4,211 4,292
Professional services 3,432 4,802 5,457 4,302 3,464
Other 17,398 17,529 16,129 15,523 15,582
123,860 126,758 120,591 114,982 117,253
Debt redemption premium 8,940 - - - -
Severance and other
costs 5,291 4,522 - - -
Acquisition costs - - 2,018 868 65
Total noninterest
expenses 138,091 131,280 122,609 115,850 117,318
Income before income
taxes 51,997 51,222 54,895 10,433 63,555
Income taxes 16,530 16,186 17,097 1,436 20,412
Net income $35,467 $35,036 $37,798 $8,997 $43,143
Diluted shares (average) 56,243 56,762 56,452 52,871 53,252
Net income per common
share:
Basic $0.64 $0.62 $0.68 $0.17 $0.82
Diluted 0.63 0.62 0.67 0.17 0.81
See Selected Financial Highlights for footnotes.
Interest-Rate Spread (unaudited)
Three Months Ended
June March Dec. Sept. June
2007 2007 2006 2006 2006
Interest-rate spread
Yield on interest-earning assets 6.62 % 6.61 % 6.52 % 6.31 % 6.11 %
Cost of interest-bearing
liabilities 3.25 3.29 3.38 3.38 3.05
Interest-rate spread 3.37 % 3.32 % 3.14 % 2.93 % 3.06 %
Net interest margin 3.47 % 3.41 % 3.23 % 3.01 % 3.13 %
Consolidated Average Statements of Condition (unaudited)
Three Months Ended June 30, 2007
Fully tax-
Average equivalent
(Dollars in thousands) balance Interest yield/rate
Assets:
Interest-earning assets:
Loans $12,306,789 $210,337 6.81 %
Securities (b) 2,430,989 35,035 5.78
Loans held for sale 481,583 7,419 6.16
Short-term investments 10,708 145 5.36
Total interest-earning assets 15,230,069 252,936 6.62
Noninterest-earning assets 1,597,103
Total assets $16,827,172
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Demand deposits $1,515,877 $- - %
Savings, NOW and money market
deposit accounts 5,720,081 30,388 2.13
Time deposits 5,243,115 59,295 4.53
Total deposits 12,479,073 89,683 2.88
Federal Home Loan Bank advances 727,371 8,675 4.72
Repurchase agreements and other
short-term debt 1,078,192 12,596 4.62
Long-term debt 492,020 9,012 7.33
Total borrowings 2,297,583 30,283 5.23
Total interest-bearing
liabilities 14,776,656 119,966 3.25
Noninterest-bearing liabilities 147,312
Total liabilities 14,923,968
Preferred stock of subsidiary
corporation 9,577
Shareholders' equity 1,893,627
Total liabilities and
shareholders' equity $16,827,172
132,970
Less: tax-equivalent adjustment (2,617)
Net interest income $130,353
Interest-rate spread 3.37 %
Net interest margin 3.47 %
See Selected Financial Highlights for footnotes.
Consolidated Average Statements of Condition (unaudited)
Three Months Ended June 30, 2006
Fully tax-
Average equivalent
(Dollars in thousands) balance (c) Interest yield/rate
Assets:
Interest-earning assets:
Loans $12,625,061 $207,097 6.54 %
Securities (b) 3,496,863 40,991 4.61
Loans held for sale 230,268 3,317 5.76
Short-term investments 38,412 407 4.19
Total interest-earning assets 16,390,604 251,812 6.11
Noninterest-earning assets 1,503,138
Total assets $17,893,742
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Demand deposits $1,457,462 $- - %
Savings, NOW and money market
deposit accounts 5,371,432 22,489 1.68
Time deposits 5,147,276 50,104 3.90
Total deposits 11,976,170 72,593 2.43
Federal Home Loan Bank advances 2,241,811 25,329 4.47
Repurchase agreements and other
short-term debt 1,230,394 12,606 4.05
Long-term debt 628,735 12,215 7.77
Total borrowings 4,100,940 50,150 4.85
Total interest-bearing
liabilities 16,077,110 122,743 3.05
Noninterest-bearing liabilities 139,999
Total liabilities 16,217,109
Preferred stock of subsidiary
corporation 9,577
Shareholders' equity 1,667,056
Total liabilities and
shareholders' equity $17,893,742
129,069
Less: tax-equivalent adjustment (2,264)
Net interest income $126,805
Interest-rate spread 3.06 %
Net interest margin 3.13 %
See Selected Financial Highlights for footnotes.
Consolidated Average Statements of Condition (unaudited)
Six Months Ended June 30, 2007
Fully tax-
Average equivalent
(Dollars in thousands) balance Interest yield/rate
Assets:
Interest-earning assets:
Loans $12,375,526 $419,501 6.78 %
Securities (b) 2,367,443 69,238 5.87
Loans held for sale 438,084 13,668 6.24
Short-term investments 63,851 1,729 5.39
Total interest-earning assets 15,244,904 504,136 6.61
Noninterest-earning assets 1,599,293
Total assets $16,844,197
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Demand deposits $1,510,766 $- - %
Savings, NOW and money market
deposit accounts 5,644,312 59,150 2.11
Time deposits 5,273,269 118,163 4.52
Total deposits 12,428,347 177,313 2.88
Federal Home Loan Bank advances 822,221 19,584 4.74
Repurchase agreements and other
short-term debt 981,222 22,475 4.56
Long-term debt 555,881 21,206 7.63
Total borrowings 2,359,324 63,265 5.34
Total interest-bearing
liabilities 14,787,671 240,578 3.27
Noninterest-bearing liabilities 151,521
Total liabilities 14,939,192
Preferred stock of subsidiary
corporation 9,577
Shareholders' equity 1,895,428
Total liabilities and
shareholders' equity $16,844,197
263,558
Less: tax-equivalent adjustment (5,124)
Net interest income $258,434
Interest-rate spread 3.34 %
Net interest margin 3.44 %
See Selected Financial Highlights for footnotes.
Consolidated Average Statements of Condition (unaudited)
Six Months Ended June 30, 2006
Fully tax-
Average equivalent
(Dollars in thousands) balance (c) Interest yield/rate
Assets:
Interest-earning assets:
Loans $12,509,184 $402,671 6.44 %
Securities (b) 3,563,554 84,810 4.70
Loans held for sale 229,486 6,656 5.80
Short-term investments 26,861 519 3.84
Total interest-earning assets 16,329,085 494,656 6.04
Noninterest-earning assets 1,499,802
Total assets $17,828,887
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Demand deposits $1,454,585 $- - %
Savings, NOW and money market
deposit accounts 5,340,529 42,297 1.60
Time deposits 5,027,758 92,650 3.72
Total deposits 11,822,872 134,947 2.30
Federal Home Loan Bank advances 2,319,410 49,825 4.27
Repurchase agreements and other
short-term debt 1,259,585 24,436 3.86
Long-term debt 634,736 23,884 7.53
Total borrowings 4,213,731 98,145 4.64
Total interest-bearing
liabilities 16,036,603 233,092 2.91
Noninterest-bearing liabilities 118,879
Total liabilities 16,155,482
Preferred stock of subsidiary
corporation 9,577
Shareholders' equity 1,663,828
Total liabilities and
shareholders' equity $17,828,887
261,564
Less: tax-equivalent adjustment (4,600)
Net interest income $256,964
Interest-rate spread 3.13 %
Net interest margin 3.18 %
See Selected Financial Highlights for footnotes.
At or for the Three Months Ended
(Unaudited) June 30, March 31,
(Dollars in thousands) 2007 2007
Asset Quality
Nonperforming loans:
Commercial:
Commercial $20,142 $13,679
Equipment financing 2,584 2,405
Total commercial 22,726 16,084
Commercial real estate 12,242 18,524
Residential (1) 26,683 13,473
Consumer 10,875 10,808
Total nonperforming loans 72,526 58,889
Other real estate owned and
repossessed assets:
Commercial 3,950 4,833
Residential 711 350
Consumer 1,467 758
Total other real estate owned and
repossessed assets 6,128 5,941
Total nonperforming assets $78,654 $64,830
Accruing loans 90 or more days past due $2,088 $4,636
(1) Balance at June 30, 2007 includes, as previously announced, $11
million of construction loans placed on non accrual status.
Allowance for Credit Losses
Beginning balance $152,660 $154,994
Provision 4,250 3,000
Allowance for acquired loans - -
Charge-offs:
Commercial 2,034 2,293
Residential 286 2,581
Consumer 3,176 1,993
Total charge-offs 5,496 6,867
Recoveries (1,336) (1,533)
Net loan charge-offs 4,160 5,334
Ending balance $152,750 $152,660
Components:
Allowance for loan losses $144,974 $145,367
Reserve for unfunded credit
commitments 7,776 7,293
Allowance for credit losses $152,750 $152,660
Asset Quality Ratios:
Allowance for loan losses / total
loans 1.17 % 1.18
Allowance for credit losses / total
loans 1.23 1.24
Net charge-offs / average loans
(annualized) 0.14 0.17
Nonperforming loans / total loans 0.58 0.48
Nonperforming assets / total loans
plus OREO 0.63 0.53
Allowance for credit losses /
nonperforming loans 210.61 259.23
See Selected Financial Highlights for footnotes.
At or for the Three Months Ended
(Unaudited) December 31, September 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 (1) 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
(1) Balance at June 30, 2007 includes, as previously announced, $11
million of construction loans placed on non accrual status.
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 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 / 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
See Selected Financial Highlights for footnotes.
SOURCE Webster Financial Corporation
Webster Bank Media: Clark Finley, 203-578-2287 cfinley@websterbank.com or Investors:
James Sitro 203-578-2399 jsitro@websterbank.com
http://www.prnewswire.com