WATERBURY, Conn., July 10 /PRNewswire-FirstCall/ -- Webster Financial
Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today
announced preliminary information regarding second quarter 2008 financial
results. Second quarter results are expected to reflect the following pre-tax
charges:
- An expected $25 million provision for credit losses for the continuing
portfolios. Net charge-offs are estimated to total $11.5 million for the
continuing loan portfolios. As a result, the allowance to total loans for the
continuing portfolios will be an estimated 1.30 percent at June 30, 2008, or 9
basis points higher than at March 31, 2008.
- An expected $14.5 million write-down for other-than-temporary
impairment of certain investment securities classified as available for sale
and an expected $1.1 million write-down in value of direct investments.
- An expected $12.5 million in other charges consisting of $7.7 million
of previously disclosed amounts related to the OneWebster earnings
optimization initiative and $4.8 million in other charges, including $1.6
million in severance and other expenses related to early retirement and other
executive changes.
"These charges, both cash and non-cash in nature, reflect the current
challenging environment for financial institutions. We are taking aggressive
and timely action to best position Webster to manage effectively through this
economic cycle. Webster continues to have capital ratios well in excess of
regulatory levels required to be 'well capitalized'," stated Chairman and
Chief Executive Officer Jim Smith.
The expected provision for credit losses of $25.0 million in the second
quarter, while higher than previously anticipated, is a result of increased
levels of nonperforming loans and to build reserve levels given continued
economic uncertainty. Net charge-offs are estimated to total $11.5 million for
the continuing portfolios. Factoring in the provision, the allowance for
credit losses for the continuing portfolios is expected to be 1.30 percent at
June 30, 2008, or 9 basis points higher than at March 31, 2008.
Nonperforming assets in the continuing portfolios are expected to increase
by $68.8 million from March 31, 2008 to $182.1 million at June 30, 2008. The
expected increase in nonperforming assets is primarily driven by six
commercial credits, of which four are residential development loans
aggregating $37.1 million.
The expected $14.5 million write-down in investment securities classified
as available for sale results from the company's quarterly testing for other-
than-temporary impairments. The quarterly testing is based on management's
review of various factors, including the extent and duration of unrealized
losses.
Webster is also in the process of evaluating all of the goodwill
associated with its reporting units. The stock prices of many financial
services companies, including Webster, declined during the first half of 2008,
and have continued to do so to date in the third quarter. As a result of these
conditions, Webster may upon completion of its analysis incur impairment
charges to reduce the carrying amount of goodwill. Such a charge is non-cash
in nature and would not affect Webster's liquidity, tangible equity or
regulatory capital ratios. Webster expects to provide the results of this
analysis as part of its second quarter earnings release on July 22, 2008.
Webster will issue its earnings release for the second quarter of 2008 on
Tuesday, July 22, 2008 at approximately 8:00 a.m. EDT. A conference call in
listen-only mode to discuss the earnings release will take place at 9:00 a.m.
EDT on the same day. Details for the conference call are as follows:
Dial-in Number: 877-407-8289 or 201-689-8341 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 11:00
a.m. (EDT) on Tuesday, July 22, 2008.
Replay Number: 877-660-6853 or 201-612-7415 for international callers.
The replay account number is 295, and the replay
conference number is 289650.
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. Webster provides business and consumer banking,
mortgage, financial planning, trust and investment services through 181
banking offices, 484 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. Member FDIC and equal
housing lender. For more information about Webster, including past press
releases and the latest annual report, visit the Webster website at
www.WebsterOnline.com.
Media Contact:
Arthur House, 203-378-2391
ahouse@websterbank.com
Investor Contact:
Terry Mangan, 203-578-2318
tmangan@websterbank.com
SOURCE: Webster Financial Corporation