Net loss of $28.9 million or ($.56) per diluted share includes the impact of:
- OneWebster costs and other charges totaling $12.5 million or $0.16 per
share.
- Increased provision for credit losses for the continuing portfolios to
$25.0 million against net charge-offs in the continuing portfolios of $11.2
million; credit reserves increased from 1.21 percent to 1.30 percent of the
$12.4 billion continuing loan portfolio; overall credit reserves at 1.52
percent.
- An impairment charge of $8.5 million based on an evaluation of all
goodwill associated with its reporting units (charge has no impact to tangible
capital).
- Charges for other-than-temporary impairment on certain investment
securities totaling $53.7 million and a $1.2 million write-down in direct
investments.
WATERBURY, Conn., July 22 /PRNewswire-FirstCall/ -- Webster Financial
Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today
announced a net loss of $28.9 million or ($.56) per diluted share for the
second quarter of 2008, compared to net income of $24.4 million or $.47 per
diluted share for the first quarter of 2008 and $35.5 million in net income or
$.63 in earnings per share for the second quarter of 2007. As detailed below,
results in the second quarter of 2008 reflect certain cash and non-cash
charges in the quarter aggregating to $.98 per share. For the first six months
of 2008, net loss totaled $4.6 million, or $.09 per diluted share, compared to
net income of $70.5 million, or $1.25 per diluted share in the year-ago
period.
Detail of Charges to Second Quarter 2008 Earnings (Loss) Per Share:
Reported diluted loss per share $(0.56)
Adjustments:
Write-down of certain investments to fair value 0.66
Impairment of goodwill 0.16
Severance and other costs 0.11
Other charges 0.05
Adjusted diluted EPS $0.42
Other items in the quarter include:
-- Capital ratios were strengthened through the issuance of $225 million
of convertible preferred stock; tangible equity now at 6.8 percent; projected
total risk-based capital ratio at 13.2 percent.
-- Solid growth in demand, NOW, and savings deposits resulting in core
deposits improving to 62.0 percent of total deposits.
-- Results of OneWebster earnings optimization program produce estimated
annual cost saves of $40 million, pre-tax, plus $10 million in pre-tax
incremental annual revenue growth when the program is fully implemented over
the next 24 months.
-- Completed the sale of Webster Risk Services.
Webster Chairman and Chief Executive Officer James C. Smith said: "These
non-cash charges reflect the current depressed values for financial assets and
offset the solid core operating results that otherwise would be the focus of
this quarter. Additionally, Webster has taken steps to increase the allowance
for credit losses in light of continuing economic uncertainty in the second
half of 2008."
Smith added, "We have very strong capital levels that are critical in
these uncertain times. Webster's capital position is a huge asset as we pursue
our vision to be New England's bank."
Webster also announced today that its Board of Directors has declared a
regular quarterly cash dividend of $.30 per common share. The dividend is
payable on August 18, 2008 to shareholders of record on August 4, 2008. This
is the 84th consecutive quarterly dividend since Webster first paid a dividend
in 1987. Smith said, "The solid core operating performance in the quarter
supported the Board's decision to declare the regular quarterly cash dividend.
We plan to balance the desire to maintain the current dividend against
Webster's capital needs in the quarters ahead."
Webster will provide details on its second quarter performance in a
conference call at 9:00 a.m. today (refer to details for the conference call
at the end of this release). In addition, Webster has posted supplemental
information regarding its investment securities portfolio and the results of
the OneWebster program. Additional details are also available on our website
at www.wbst.com.
There were several charges specific to the quarter, including $53.7
million in write-downs for other-than-temporary impairment of certain
investment securities classified as available for sale and a $1.2 million
write-down in a direct investment. Webster had previously announced an
expected $14.5 million in securities write-downs; the increase to $53.7
million is primarily from subsequent analysis based on current information and
management's determination subsequent to the preannouncement that we should
act as of the end of the second quarter to impair certain BBB rated pooled
capital trust securities where interest payments to Webster have been deferred
as provided under the original structure. In addition, the company also
evaluated the balance of its remaining BBB rated pooled securities and
determined that based on the best estimate of cash flows, there was the
likelihood of an implied adverse change and elected to impair these securities
as well and write them down to fair value. Webster also recorded $12.5 million
in other pre-tax charges, consisting of $7.7 million in charges 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.
Webster recently completed an evaluation of all goodwill associated with
its reporting units. Having completed this analysis, the company has
determined that $8.5 million in goodwill attributable to its insurance premium
finance subsidiary was impaired, and this charge is reflected in second
quarter results. Such a charge is non-cash in nature and does not affect
Webster's liquidity, tangible equity or regulatory capital ratios. Webster
will evaluate the goodwill associated with its reporting units again in the
third quarter as part of its established annual review process.
Revenues
Total revenue, which consists of net interest income plus total
noninterest income, totaled $119.9 million in the second quarter of 2008
compared to $172.7 million in the first quarter of 2008 and $185.9 million a
year ago. Total revenue declined in the second quarter of 2008 as a result of
the $53.7 million in write-downs for other-than-temporary impairment of
certain investment securities classified as available for sale and the $1.2
million write-down in direct investments.
Net interest income totaled $125.7 million in the second quarter compared
to $124.9 million in the first quarter and $130.4 million in the year-ago
period. The $0.8 million increase from the first quarter reflects an increase
in earning assets while the $4.7 million reduction from a year ago reflects a
lower net interest margin partially offset by a higher level of earning
assets. The net interest margin was 3.26 percent in the second quarter
compared to 3.27 percent in the first quarter and 3.47 percent a year ago. The
spread between the yield on interest-earning assets and the cost of interest-
bearing liabilities in the second quarter of 2008 was flat with the first
quarter of 2008 at 3.20 percent compared to 3.37 percent in the second quarter
of 2007.
Noninterest income was $49.2 million in the second quarter of 2008
compared to $47.5 million in the first quarter and $53.4 million in the year-
ago period. Total noninterest income inclusive of charges in the second
quarter of 2008 was ($5.7) million compared to $55.5 million which included a
gain of $2.1 million. Deposit service fees totaled $29.9 million in the second
quarter of 2008, an increase of $1.5 million and $1.1 million, respectively
compared to $28.4 million in the first quarter and $28.8 million a year ago.
Loan-related fees were $7.9 million for the second quarter compared to $6.9
million in the first quarter and $7.9 million in the year-ago period. Wealth
and investment services revenues totaled $7.6 million in the second quarter
compared to $7.0 million in the first quarter and $7.6 million a year ago.
Income from mortgage banking activities was $0.1 million in the second quarter
compared to income of $0.7 million in the first quarter and $4.0 million a
year ago. The decline from each of the prior periods reflects the decision to
exit the national wholesale mortgage business in the fourth quarter of 2007.
Other noninterest income was $0.9 million compared to $1.8 million in the
first quarter and $2.0 million a year ago.
Provision For Credit Losses
The provision for credit losses was $25.0 million compared to $15.8
million in the first quarter and $4.3 million a year ago. The decision to
increase the provision for credit losses in the second quarter reflects
increased levels of nonperforming loans and management's decision to build
reserve levels given continued economic uncertainty.
Net loan charge-offs from the continuing portfolios totaled $11.2 million
in the second quarter compared with $15.8 million in the first quarter.
Additional net charge-offs of $3.7 million and $5.5 million were recorded in
the second quarter against the discontinued indirect national construction
loans and indirect, out-of-market home equity loans in the liquidating
portfolio respectively, compared with net charge-offs of $4.3 million and $3.5
million in the first quarter.
The total allowance for credit losses, which consists of the allowance for
loan losses and the reserve for unfunded credit commitments, was $194.4
million or 1.52 percent of total loans at June 30, 2008, compared to 1.51
percent at March 31, 2008 and 1.23 percent at June 30, 2007. Of the total
allowance for credit losses as of June 30, 2008, $161.5 million was allocated
toward the continuing portfolios, or 1.30 percent of continuing loans, up from
$147.7 million or 1.21 percent of loans as of March 31, 2008 and $32.9 million
was allocated to the liquidating portfolio, or 8.65 percent of liquidating
loans, a decline from $42.1 million, or 10.67 percent, as of March 31, 2008.
Noninterest Expenses
Total noninterest expenses were $137.7 million in the second quarter
compared to $116.1 million in the first quarter of 2008 and $128.9 million a
year ago. The second quarter of 2008 included the $8.5 million goodwill
impairment charge and $12.5 million of other costs consisting of $7.7 million
of previously disclosed amounts related to the OneWebster earnings
optimization initiative, $1.6 million in severance and other expenses related
to early retirement and other executive changes, and $3.2 million of other
charges. The first quarter of 2008 included $5.0 million of seasonally higher
compensation costs primarily related to payroll taxes and benefits and a
credit for the partial release of the Visa-related litigation reserve of
$650,000 established in the fourth quarter of 2007.
Balance Sheet Trends
Total assets were $17.5 billion at June 30, 2008 compared to $17.2 billion
at March 31, 2008 and $17.0 billion a year ago. Total loans were $12.8 billion
compared to $12.6 billion in the first quarter and $12.4 billion a year ago.
Commercial real estate increased by $118 million in the second quarter as
continued disruption in the capital markets has provided more opportunities to
book high quality, low loan to value loans. Commercial & Industrial loans grew
by $65 million in the second quarter, while residential mortgage loans
declined by $41 million and consumer loans grew by $23 million. Securities
totaled $3.0 billion compared to $2.5 billion a year ago, offsetting a decline
in loans held for sale of $369 million.
Total deposits were $12.1 billion, a decrease of $0.7 billion or 6 percent
from a year ago, as brokered certificates of deposits declined $231 million
and other certificates of deposit declined $549 million from a year ago. The
company now has only $170 million in brokered deposits of which $106 million
mature in the last six months of 2008 and are not expected to be replaced.
Core deposits increased $38 million from a year ago, and as a percent of total
deposits increased to 62.0 percent at June 30, 2008 from 60.7 percent in the
first quarter and 58.1 percent a year ago. Borrowings totaled $3.3 billion or
an increase of $1.3 billion, primarily in repurchase agreements and FHLB
borrowings, from a year ago. While short-term borrowings have represented an
attractive alternative to certificates of deposits given recent market
conditions, the company does not currently intend to further increase the use
of borrowings.
Book value per common share of $31.71 at June 30, 2008 compared to $33.63
a year ago. Tangible book value per share was $17.57 at June 30, 2008 compared
to $19.79 a year ago. The ratio of tangible equity to tangible assets was 6.8
percent at June 30, 2008 compared to 6.6 percent a year ago. Webster's
projected Tier 1 leverage ratio is 9.0 percent at June 30, 2008 compared to
8.6 percent a year ago, and projected total risk based capital ratio is 13.3
percent at June 30, 2008 compared with 12.3 percent a year ago.
Asset Quality
Nonperforming assets for the continuing portfolios totaled $182.1 million
or 1.47 percent of total loans and other real estate owned at June 30, 2008
compared to $113.3 million or 0.93 percent at March 31, 2008. The $68.8
million increase in nonperforming assets from continuing portfolios was
primarily comprised of $36.6 million in commercial real estate (primarily 4
residential development projects) and $26.5 million in commercial loans, $3.7
million in consumer loans and $2.0 million in other real estate owned.
Nonperforming loans in the liquidating indirect national construction and
indirect out of footprint home equity portfolio totaled $29.0 million and
$10.7 million at June 30, 2008, respectively compared to $29.8 million and
$9.4 million at March 31, 2008 and $13.4 million and $2.7 million a year ago.
Past due loans for the continuing portfolios totaled $67.7 million at June
30, 2008, a decline of $29.8 million compared to $97.5 million at March 31,
2008, primarily due to a decline in commercial real estate loans. Past due
loans for the liquidating portfolio totaled $11.5 million at June 30, 2008,
down from $15.5 million at March 31, 2008, due to a decline in indirect
national construction loans.
The ratio of the allowance for credit losses to nonperforming loans for
the continuing portfolios was 96 percent at June 30, 2008 compared to 147
percent at March 31, 2008. At June 30, 2008, the $32.8 million allowance for
the liquidating portfolio was 83 percent of non-performing loans from this
portfolio compared to 108 percent at March 31, 2008.
Webster Financial Corporation is the holding company for Webster Bank,
National Association. With $17.5 billion in assets, 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.
Conference Call
A conference call covering Webster's second quarter earnings announcement
will be held today, Tuesday, July 22, 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 1-877-407-8289 or 201-689-8341 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 2007. 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. A reconciliation of net
income and other performance ratios, as adjusted, is included in the
accompanying selected financial highlights table.
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.
WEBSTER FINANCIAL CORPORATION
Selected Financial Highlights (unaudited)
At or for the Three At or for the Six
(In thousands, except Months Ended June 30, Months Ended June 30,
per share data) 2008 2007 (c) 2008 2007 (c)
Net income (loss) and
performance ratios
(annualized):
Net income (loss) $(28,940) $35,467 $(4,575) $70,503
Net income (loss) per
diluted common share (0.56) 0.63 (0.09) 1.25
Return on average
shareholders' equity N/M 7.49% N/M 7.44%
Return on average tangible
equity N/M 12.50 N/M 12.40
Return on average assets N/M 0.84 N/M 0.84
Income (loss) from
continuing operations and
performance ratios
(annualized):
Income (loss) from
continuing operations $(28,501) $35,872 $(2,012) $70,952
Net income (loss) from
continuing operations per
diluted common share (0.55) 0.64 (0.04) 1.26
Return on average
shareholders' equity N/M 7.58% N/M 7.49%
Return on average tangible
equity N/M 12.64 N/M 12.48
Return on average assets N/M 0.85 N/M 0.84
Noninterest income as a
percentage of total
revenue N/M% 29.86 N/M 28.47
Efficiency ratio (a) N/M 69.37 N/M 69.22
Asset quality:
Allowance for credit
losses $194,368 $152,750 $194,368 $152,750
Nonperforming assets 224,100 78,654 224,100 78,654
Allowance for credit
losses / total loans 1.52% 1.23% 1.52% 1.23%
Net charge-offs / average
loans (annualized) 0.64 0.14 0.70 0.15
Nonperforming loans /
total loans 1.62 0.58 1.62 0.58
Nonperforming assets /
total loans plus OREO 1.75 0.63 1.75 0.63
Allowance for credit
losses / nonperforming
loans 93.87 210.61 93.87 210.61
Other ratios (annualized):
Tangible capital ratio 6.79% 6.59% 6.79% 6.59%
Total-risk based capital (e) 13.17 12.28 13.17 12.28
Shareholders' equity /
total assets 10.82 10.84 10.82 10.84
Interest-rate spread 3.20 3.37 3.20 3.34
Net interest margin 3.26 3.47 3.27 3.44
Share related:
Book value per common share $31.71 $33.63 $31.71 $33.63
Tangible book value per
common share 17.57 19.79 17.57 19.79
Common stock closing price 18.60 42.67 18.60 42.67
Dividends declared per
common share 0.30 0.30 0.60 0.57
Common shares issued and
outstanding 52,551 54,643 52,551 54,643
Basic shares (average) 52,017 55,677 52,009 55,894
Diluted shares (average) 52,017 56,243 52,009 56,497
Footnotes:
(a) Noninterest expense as a percentage of net interest income plus
noninterest income.
(b) For purposes of the yield computation, unrealized gains (losses) on
securities available for sale are excluded from the average balance.
(c) Certain previously reported information has been reclassified for the
effect of reporting Webster Insurance as discontinued operations.
(d) NCLC is defined as National Construction Lending Center.
(e) The ratios presented are projected for the 2008 reporting periods and
actual for the 2007 reporting periods.
WEBSTER FINANCIAL CORPORATION
Consolidated Statements of Condition (unaudited)
June 30, March 31, June 30,
(In thousands) 2008 2008 2007 (c)
Assets:
Cash and due from
depository institutions $323,480 $274,321 $293,223
Short-term investments 2,996 4,042 8,222
Investment securities:
Trading, at fair value 2,280 1,049 5,935
Available for sale, at
fair value 849,591 760,502 299,599
Held-to-maturity 2,065,771 2,091,918 2,046,891
Other securities 132,210 117,213 110,962
Total securities 3,049,852 2,970,682 2,463,387
Loans held for sale 3,972 8,223 372,891
Loans:
Residential mortgages 3,594,100 3,635,314 3,736,313
Commercial 3,637,395 3,571,954 3,554,846
Commercial real estate 2,314,497 2,196,110 1,938,656
Consumer 3,220,462 3,197,591 3,210,457
Total loans 12,766,454 12,600,969 12,440,272
Allowance for loan losses (184,868) (180,308) (144,974)
Loans, net 12,581,586 12,420,661 12,295,298
Accrued interest
receivable 73,060 77,593 85,078
Premises and equipment,
net 190,273 192,928 190,895
Goodwill and other
intangible assets, net 756,503 766,467 771,454
Cash surrender value of
life insurance 274,570 271,947 264,100
Assets held for
disposition 900 6,912 61,918
Prepaid expenses and
other assets 221,444 249,786 144,124
Total Assets $17,478,636 $17,243,562 $16,950,590
Liabilities and
Shareholders' Equity:
Deposits:
Demand deposits $1,583,686 $1,475,258 $1,544,695
NOW accounts 1,861,997 1,825,963 1,797,701
Money market deposit
accounts 1,591,857 1,704,655 1,916,097
Savings accounts 2,452,831 2,361,522 2,194,215
Certificates of deposit 4,416,165 4,564,887 4,965,140
Brokered deposits 170,031 211,007 401,213
Total deposits 12,076,567 12,143,292 12,819,061
Securities sold under
agreements to repurchase
and other short-term
debt 1,275,024 1,642,320 899,852
Federal Home Loan Bank
advances 1,419,570 869,079 531,117
Long-term debt 653,995 666,891 656,455
Reserve for unfunded
credit commitments 9,500 9,500 7,776
Liabilities held for
disposition - 806 6,257
Accrued expenses and
other liabilities 142,698 185,381 182,844
Total liabilities 15,577,354 15,517,269 15,103,362
Preferred stock of
subsidiary corporation 9,577 9,577 9,577
Shareholders' equity 1,891,705 1,716,716 1,837,651
Total Liabilities and
Shareholders' Equity $17,478,636 $17,243,562 $16,950,590
See Selected Financial Highlights for footnotes.
WEBSTER FINANCIAL CORPORATION
Consolidated Statements of Operations (unaudited)
Three Months Ended Six Months Ended
(In thousands, except per June 30, June 30,
share data) 2008 2007 2008 2007
Interest income:
Loans $175,786 $210,337 $367,058 $419,501
Investment securities and
short-term investments 38,115 32,563 77,447 65,843
Loans held for sale 92 7,419 1,492 13,668
Total interest income 213,993 250,319 445,997 499,012
Interest expense:
Deposits 60,056 89,683 135,298 177,313
Borrowings 28,251 30,283 60,157 63,265
Total interest expense 88,307 119,966 195,455 240,578
Net interest income 125,686 130,353 250,542 258,434
Provision for credit losses 25,000 4,250 40,800 7,250
Net interest income after
provision for credit
losses 100,686 126,103 209,742 251,184
Noninterest income:
Deposit service fees 29,943 28,758 58,376 54,112
Loan related fees 7,891 7,901 14,749 15,841
Wealth and investment
services 7,634 7,637 14,590 14,515
Mortgage banking activities 104 3,962 844 6,191
Increase in cash surrender
value of life insurance 2,623 2,586 5,204 5,120
Gain on sale of securities,
net 126 503 249 1,044
Other 854 2,025 2,638 3,903
49,175 53,372 96,650 100,726
Visa share redemption - - 1,625 -
Loss on write-down of
investments to fair value (54,924) - (56,177) -
Gain on Webster Capital
Trust I and II securities - 2,130 - 2,130
Total noninterest income (5,749) 55,502 42,098 102,856
Noninterest expenses:
Compensation and benefits 62,866 60,899 126,309 122,434
Occupancy 13,128 12,064 26,810 24,625
Furniture and equipment 15,634 15,014 30,794 29,572
Intangible amortization 1,464 3,144 3,012 6,466
Marketing 4,940 4,175 8,583 8,363
Professional services 3,706 3,181 7,859 7,692
Other 18,117 16,224 33,249 32,188
119,855 114,701 236,616 231,340
Debt redemption premium - 8,940 - 8,940
Severance and other costs 9,368 5,291 8,718 9,813
Impairment of goodwill 8,500 - 8,500 -
Total noninterest
expenses 137,723 128,932 253,834 250,093
Income (loss) from
continuing operations
before income taxes (42,786) 52,673 (1,994) 103,947
Income taxes (benefit) (14,285) 16,801 18 32,995
Income (loss) from
continuing operations (28,501) 35,872 (2,012) 70,952
Loss from discontinued
operations, net of tax (439) (405) (2,563) (449)
Net income (loss) $(28,940) $35,467 $(4,575) $70,503
Diluted shares (average) 52,017 56,243 52,009 56,497
Net income (loss) per common
share:
Basic
Income (loss) from
continuing operations $(0.55) $0.64 $(0.04) $1.27
Net income (loss) (0.56) 0.64 (0.09) 1.26
Diluted
Income (loss) from
continuing operations (0.55) 0.64 (0.04) 1.26
Net income (loss) (0.56) 0.63 (0.09) 1.25
See Selected Financial Highlights for footnotes.
WEBSTER FINANCIAL CORPORATION
Consolidated Statements of Operations (unaudited)
Three Months Ended
(In thousands, except June 30, March 31, Dec. 31, Sept. 30, June 30,
per share data) 2008 2008 2007 2007 2007
Interest income:
Loans $175,786 $191,272 $205,363 $212,847 $210,337
Investment securities
and short-term
investments 38,115 39,332 36,318 34,163 32,563
Loans held for sale 92 1,400 3,276 4,616 7,419
Total interest income 213,993 232,004 244,957 251,626 250,319
Interest expense:
Deposits 60,056 75,242 89,510 94,484 89,683
Borrowings 28,251 31,906 32,748 30,083 30,283
Total interest expense 88,307 107,148 122,258 124,567 119,966
Net interest income 125,686 124,856 122,699 127,059 130,353
Provision for credit
losses 25,000 15,800 45,250 15,250 4,250
Net interest income
after provision for
credit losses 100,686 109,056 77,449 111,809 126,103
Noninterest income:
Deposit service fees 29,943 28,433 30,577 29,956 28,758
Loan related fees 7,891 6,858 7,328 7,661 7,901
Wealth and investment
services 7,634 6,956 7,507 7,142 7,637
Mortgage banking
activities 104 740 1,276 1,849 3,962
Increase in cash
surrender value of life
insurance 2,623 2,581 2,637 2,629 2,586
Gain on sale of
securities, net 126 123 195 482 503
Other 854 1,784 2,094 1,688 2,025
49,175 47,475 51,614 51,407 53,372
VISA share redemption - 1,625 - - -
Loss on write-down of
investments to fair
value (54,924) (1,253) (3,565) - -
Gain on Webster Capital
Trust I and II
securities - - - - 2,130
Total noninterest
income (5,749) 47,847 48,049 51,407 55,502
Noninterest expenses:
Compensation and
benefits 62,866 63,443 59,910 61,171 60,899
Occupancy 13,128 13,682 12,321 11,932 12,064
Furniture and equipment 15,634 15,160 15,353 14,846 15,014
Intangible amortization 1,464 1,548 1,881 2,027 3,144
Marketing 4,940 3,643 1,727 4,123 4,175
Professional services 3,706 4,153 3,721 3,625 3,181
Other 18,117 15,132 18,513 15,377 16,224
119,855 116,761 113,426 113,101 114,701
Debt redemption premium - - - - 8,940
Severance and other
costs 9,368 (650) 6,898 452 5,291
Impairment of goodwill 8,500 - - - -
Total noninterest
expenses 137,723 116,111 120,324 113,553 128,932
Income (loss) from
continuing operations
before income taxes (42,786) 40,792 5,174 49,663 52,673
Income taxes (benefit) (14,285) 14,303 5 15,088 16,801
Income (loss) from
continuing
operations (28,501) 26,489 5,169 34,575 35,872
(Loss) income from
discontinued
operations, net of tax (439) (2,124) (13,867) 393 (405)
Net income (loss) $(28,940) $24,365 $(8,698) $34,968 $35,467
Diluted shares (average) 52,017 52,297 52,795 54,259 56,243
Net income (loss) per
common share:
Basic
Income (loss) from
continuing
operations $(0.55) $0.51 $0.10 $0.64 $0.64
Net income (loss) (0.56) 0.47 (0.17) 0.65 0.64
Diluted
Income (loss) from
continuing
operations (0.55) 0.51 0.10 0.64 0.64
Net income (loss) (0.56) 0.47 (0.16) 0.64 0.63
See Selected Financial Highlights for footnotes.
WEBSTER FINANCIAL CORPORATION
Interest-Rate Spread (unaudited)
Three Months Ended
June 30, March 31, December September June 30,
2008 2008 31, 2007 30, 2007 2007
Interest-rate spread
Yield on interest-earning
assets 5.51% 6.02% 6.42% 6.61% 6.62%
Cost of interest-bearing
liabilities 2.31 2.82 3.24 3.32 3.25
Interest-rate spread 3.20% 3.20% 3.18% 3.29% 3.37%
Net interest margin 3.26% 3.27% 3.26% 3.38% 3.47%
Consolidated Average Statements of Condition (unaudited)
Three Months Ended June 30, 2008
Fully tax-
Average equivalent
(Dollars in thousands) balance Interest yield/rate
Assets:
Interest-earning assets:
Loans $12,686,784 $175,786 5.52%
Investment securities (b) 3,008,582 41,801 5.43
Loans held for sale 5,705 92 6.45
Short-term investments 6,374 40 2.50
Total interest-earning assets 15,707,445 217,719 5.51
Noninterest-earning assets 1,541,441
Total assets $17,248,886
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Demand deposits $1,487,433 $- - %
Savings, NOW and money market
deposit accounts 5,891,261 19,305 1.31
Time deposits 4,626,051 40,751 3.53
Total deposits 12,004,745 60,056 2.01
Securities sold under agreements to
repurchase and other short-term
debt 1,298,709 8,561 2.61
Federal Home Loan Bank advances 1,358,648 10,548 3.07
Long-term debt 660,642 9,142 5.54
Total borrowings 3,317,999 28,251 3.38
Total interest-bearing
liabilities 15,322,744 88,307 2.31
Noninterest-bearing liabilities 149,693
Total liabilities 15,472,437
Preferred stock of subsidiary
corporation 9,577
Shareholders' equity 1,766,872
Total liabilities and
shareholders' equity $17,248,886
Tax-equivalent net interest income 129,412
Less: tax-equivalent adjustment (3,726)
Net interest income $125,686
Interest-rate spread 3.20%
Net interest margin 3.26%
See Selected Financial Highlights for footnotes.
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%
Investment 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
Securities sold under agreements to
repurchase and other short-term
debt 1,078,192 12,596 4.62
Federal Home Loan Bank advances 727,371 8,675 4.72
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
Tax-equivalent net interest income 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.
WEBSTER FINANCIAL CORPORATION
Consolidated Average Statements of Condition (unaudited)
Six Months Ended June 30, 2008
Fully tax-
Average equivalent
(Dollars in thousands) balance Interest yield/rate
Assets:
Interest-earning assets:
Loans $12,613,449 $367,058 5.80%
Investment securities (b) 2,981,734 84,774 5.59
Loans held for sale 51,039 1,492 5.85
Short-term investments 5,032 77 3.05
Total interest-earning assets 15,651,254 453,401 5.76
Noninterest-earning assets 1,540,169
Total assets $17,191,423
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Demand deposits $1,462,493 $- - %
Savings, NOW and money market
deposit accounts 5,843,966 43,485 1.49
Time deposits 4,782,166 91,813 3.85
Total deposits 12,088,625 135,298 2.25
Securities sold under agreements
to repurchase and other short-term
debt 1,329,236 19,780 2.94
Federal Home Loan Bank advances 1,199,292 20,427 3.37
Long-term debt 659,715 19,950 6.05
Total borrowings 3,188,243 60,157 3.75
Total interest-bearing
liabilities 15,276,868 195,455 2.56
Noninterest-bearing liabilities 155,120
Total liabilities 15,431,988
Preferred stock of subsidiary
corporation 9,577
Shareholders' equity 1,749,858
Total liabilities and
shareholders' equity $17,191,423
257,946
Less: tax-equivalent adjustment (7,404)
Net interest income $250,542
Interest-rate spread 3.20%
Net interest margin 3.27%
See Selected Financial Highlights for footnotes.
WEBSTER FINANCIAL CORPORATION
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%
Investment 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
Securities sold under agreements
to repurchase and other short-term
debt 981,222 22,475 4.56
Federal Home Loan Bank advances 822,221 19,584 4.74
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.
WEBSTER FINANCIAL CORPORATION
Nonperforming Assets (unaudited)
June 30, March 31, Dec. 31, Sept. 30, June 30,
(Dollars in thousands) 2008 2008 2007 2007 2007
Nonperforming loans:
Continuing Portfolio:
Commercial:
Commercial $55,788 $30,264 $26,804 $25,845 $20,142
Equipment financing 6,718 5,719 6,473 5,054 2,584
Total commercial 62,506 35,983 33,277 30,899 22,726
Commercial real estate 57,840 21,211 12,896 14,238 12,242
Residential:
Residential
construction to
permanent 6,660 4,200 2,820 - -
All other 19,633 22,042 19,532 14,811 13,288
Total residential 26,293 26,242 22,352 14,811 13,288
Consumer 20,745 17,084 14,455 12,688 8,164
Nonperforming loans -
continuing portfolio 167,384 100,520 82,980 72,636 56,420
Liquidating Portfolio:
NCLC (d) 29,025 29,804 22,797 18,486 13,395
Consumer 10,651 9,378 7,126 4,199 2,711
Nonperforming loans -
liquidating portfolio 39,676 39,182 29,923 22,685 16,106
Total nonperforming loans 207,060 139,702 112,903 95,321 72,526
Other real estate owned
and repossessed assets:
Commercial 6,776 6,590 2,211 5,233 3,950
Residential 4,071 1,820 1,062 985 711
Consumer 6,193 5,872 4,896 2,635 1,467
Total other real estate
owned and repossessed
assets 17,040 14,282 8,169 8,853 6,128
Total nonperforming
assets $224,100 $153,984 $121,072 $104,174 $78,654
Accruing loans 90 or
more days past due $1,380 $1,032 $1,891 $1,286 $2,088
See Selected Financial Highlights for footnotes.
WEBSTER FINANCIAL CORPORATION
Past Due Loans (unaudited)
June 30, March 31, Dec. 31, Sept. 30, June 30,
(Dollars in thousands) 2008 2008 2007 2007 2007
Past Due 30-89 days:
Continuing Portfolio:
Commercial:
Commercial $8,337 $10,229 $13,291 $4,237 $9,999
Equipment financing 9,414 10,269 5,644 3,057 3,355
Total commercial 17,751 20,498 18,935 7,294 13,354
Commercial real estate 5,241 30,654 12,054 21,017 13,452
Residential:
Residential
construction to
permanent 1,914 3,339 3,743 1,656 536
All other 24,621 22,295 19,967 22,501 14,556
Total residential 26,535 25,634 23,710 24,157 15,092
Consumer 18,137 20,721 22,347 17,836 17,005
Past Due 30-89 days -
continuing portfolio 67,664 97,507 77,046 70,304 58,903
Liquidating Portfolio:
NCLC (d) 3,486 4,983 13,143 10,209 9,037
Consumer 8,063 10,473 8,793 7,815 5,379
Past Due 30-89 days -
liquidating portfolio 11,549 15,456 21,936 18,024 14,416
Past Due 90 days or more:
Commercial 1,380 596 1,141 1,031 1,188
Commercial real estate - 436 750 255 900
Total $80,593 $113,995 $100,873 $89,614 $75,407
See Selected Financial Highlights for footnotes.
WEBSTER FINANCIAL CORPORATION
Allowance for Credit Losses (unaudited)
For the Three Months Ended
June 30, March 31,
(Dollars in thousands) 2008 2008
Beginning balance $189,808 $197,586
Provision 25,000 15,800
Charge-offs continuing portfolio:
Commercial 8,664 11,439
Residential 1,036 1,480
Consumer 2,784 3,697
Charge-offs continuing portfolio: 12,484 16,616
Recoveries (1,290) (827)
Net loan charge-offs 11,194 15,789
Charge-offs liquidating portfolio:
NCLC (d) 4,203 4,341
Consumer 5,450 3,448
Charge-offs liquidating portfolio: 9,653 7,789
Recoveries (407) -
Net loan charge-offs 9,246 7,789
Total net charge-offs 20,440 23,578
Ending balance $194,368 $189,808
Components:
Allowance for loan losses $184,868 $180,308
Reserve for unfunded credit
commitments 9,500 9,500
Allowance for credit losses $194,368 $189,808
Asset Quality Ratios:
Allowance for loan losses / total loans 1.45% 1.43%
Allowance for credit losses / total loans 1.52 1.51
Net charge-offs / average loans
(annualized) 0.64 0.75
Nonperforming loans / total loans 1.62 1.11
Nonperforming assets / total loans
plus OREO 1.75 1.22
Allowance for credit losses /
nonperforming loans 93.87 135.87
Continuing Portfolio
Allowance for loan losses / total loans 1.23% 1.13%
Allowance for credit losses / total loans 1.30 1.21
Net charge-offs / average loans
(annualized) 0.36 0.52
Nonperforming loans / total loans 1.35 0.82
Nonperforming assets / total loans
plus OREO 1.47 0.93
Allowance for credit losses /
nonperforming loans 96.48 146.92
Liquidating Portfolio
NCLC
Allowance for loan losses / total loans 14.26% 18.77%
Net charge-offs / average loans
(annualized) 23.00 25.78
Nonperforming loans / total loans 45.68 43.49
Allowance for loan losses /
nonperforming loans 31.22 43.15
Consumer
Allowance for loan losses / total loans 7.53% 8.96%
Net charge-offs / average loans
(annualized) 6.75 4.20
Nonperforming loans / total loans 3.37 2.87
Allowance for loan losses /
nonperforming loans 223.63 312.09
See Selected Financial Highlights for footnotes.
WEBSTER FINANCIAL CORPORATION
Allowance for Credit Losses (unaudited)
For the Three Months Ended
Dec. 31, Sept. 30, June 30,
(Dollars in thousands) 2007 2007 2007
Beginning balance $164,011 $152,750 $152,660
Provision 45,250 15,250 4,250
Charge-offs continuing portfolio:
Commercial 2,485 1,992 2,034
Residential 71 364 286
Consumer 1,833 1,613 1,892
Charge-offs continuing portfolio: 4,389 3,969 4,212
Recoveries (1,611) (1,018) (1,336)
Net loan charge-offs 2,778 2,951 2,876
Charge-offs liquidating portfolio:
NCLC (d) 7,051 69 -
Consumer 1,846 969 1,284
Charge-offs liquidating portfolio: 8,897 1,038 1,284
Recoveries - - -
Net loan charge-offs 8,897 1,038 1,284
Total net charge-offs 11,675 3,989 4,160
Ending balance $197,586 $164,011 $152,750
Components:
Allowance for loan losses $188,086 $154,532 $144,974
Reserve for unfunded credit
commitments 9,500 9,479 7,776
Allowance for credit losses $197,586 $164,011 $152,750
Asset Quality Ratios:
Allowance for loan losses / total
loans 1.51% 1.24% 1.17%
Allowance for credit losses / total
loans 1.58 1.32 1.23
Net charge-offs / average loans
(annualized) 0.38 0.13 0.14
Nonperforming loans / total loans 0.90 0.77 0.58
Nonperforming assets / total loans
plus OREO 0.97 0.84 0.63
Allowance for credit losses /
nonperforming loans 175.01 172.06 210.61
Continuing Portfolio
Allowance for loan losses / total
loans 1.15% n/a n/a
Allowance for credit losses / total
loans 1.23 n/a n/a
Net charge-offs / average loans
(annualized) 0.09 n/a n/a
Nonperforming loans / total loans 0.69 n/a n/a
Nonperforming assets / total loans
plus OREO 0.76 n/a n/a
Allowance for credit losses /
nonperforming loans 177.98 n/a n/a
Liquidating Portfolio
NCLC
Allowance for loan losses / total
loans 20.65% n/a n/a
Net charge-offs / average loans
(annualized) 25.43 n/a n/a
Nonperforming loans / total loans 27.37 n/a n/a
Allowance for loan losses /
nonperforming loans 75.45 n/a n/a
Consumer
Allowance for loan losses / total
loans 9.60% n/a n/a
Net charge-offs / average loans
(annualized) 2.17 n/a n/a
Nonperforming loans / total loans 2.09 n/a n/a
Allowance for loan losses /
nonperforming loans 458.88 n/a n/a
See Selected Financial Highlights for footnotes.
SOURCE Webster Financial Corporation
CONTACT: Media Contact:
Ed Steadham, 203-578-2287
esteadham@websterbank.com
or
Investor Contact:
Terry Mangan, 203-578-2318
tmangan@websterbank.com/
Web site: http://www.websteronline.com
http://www.wbst.com