EXHIBIT 99.1
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Media Contact | | Investor Contact |
| Clark Finley 203-578-2287 | | Jim Sitro 203-578-2399 |
cfinley@websterbank.com | | jsitro@websterbank.com |
WEBSTER REPORTS 2007 FIRST QUARTER EARNINGS
First Quarter Highlights:
| | • | | Diluted earnings per share of $.62 (includes the aggregate effect of $.11 per diluted share of severance-related charges from ongoing restructuring, the costs of closing the remaining operations of People’s Mortgage Company (PMC) previously announced on April 5, 2007, the write down of a construction loan held for sale and seasonal compensation costs). |
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| | • | | Tangible capital increased to 6.74 percent, up from 6.46 percent at December 31, 2006 and 5.68 percent at September 30, 2006. |
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| | • | | Net interest margin improved to 3.41 percent, up from 3.23 percent in the fourth quarter of 2006 and 3.01 percent in the third quarter of 2006. |
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| | • | | Loan to deposit ratio improved to 98 percent from 104 percent at December 31, 2006 and 106 percent at September 30, 2006. |
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| | • | | Completion of the balance sheet repositioning actions announced in the fourth quarter with the securitization of $633 million in residential mortgage loans. |
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| | • | | Moody’s announced upgrade of Webster based on financial strength and credit ratings; Fitch raised outlook to “Positive.” |
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| | • | | Increased the quarterly cash dividend by 11% to $.30 per share from $.27 per share. |
WATERBURY, Conn., April 19, 2007 — Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today announced net income of $35.0 million or $.62 per diluted share for the first quarter of 2007, compared to $37.8 million or $.67 per diluted share for the fourth quarter of 2006 and to $43.9 million or $.82 per diluted share for the first quarter of 2006. First quarter 2007 net income includes charges for other items of $9.9 million ($6.4 million, net of tax) or $.11 per diluted share outlined in the following table.
Earnings Reconciliation
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | |
| | | March 31, 2007 | | | December 31, 2006 | |
| (In thousands except | | Pre- | | | Tax | | | | | | | Pre- | | | Tax | | | | |
| per share data) | | Tax | | | Effected | | | EPS | | | Tax | | | Effected | | | EPS | |
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| | | | | |
Reported Net Income | | $ | 51,222 | | | $ | 35,036 | | | $ | 0.62 | | | $ | 54,895 | | | $ | 37,798 | | | $ | 0.67 | |
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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 | |
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Total balance sheet repositioning actions | | | — | | | | — | | | | — | | | | 8,113 | | | | 5,273 | | | | 0.10 | |
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Other Items: | | | | | | | | | | | | | | | | | | | | | | | | |
Acquisition costs (NewMil) | | | — | | | | — | | | | — | | | | 2,018 | | | | 1,312 | | | | 0.02 | |
Net gain from pension curtailment | | | — | | | | — | | | | — | | | | (300 | ) | | | (195 | ) | | | — | |
Gain on sale of properties | | | — | | | | — | | | | — | | | | (1,400 | ) | | | (910 | ) | | | (0.02 | ) |
Write-down of construction loan held for sale | | | 700 | | | | 455 | | | | 0.01 | | | | — | | | | — | | | | — | |
Compensation costs seasonal (A) | | | 4,700 | | | | 3,055 | | | | 0.05 | | | | — | | | | — | | | | — | |
Severence -related charges | | | 2,200 | | | | 1,430 | | | | 0.02 | | | | — | | | | — | | | | — | |
Closure of Peoples Mortgage Company (PMC) | | | 2,322 | | | | 1,509 | | | | 0.03 | | | | — | | | | — | | | | — | |
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Total other items | | | 9,922 | | | | 6,449 | | | | 0.11 | | | | 318 | | | | 207 | | | | 0.00 | |
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Total balance sheet repositioning actions and other items | | | 9,922 | | | | 6,449 | | | | 0.11 | | | | 8,431 | | | | 5,480 | | | | 0.10 | |
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Adjusted net income excluding balance sheet repositioning actions and other items | | $ | 61,144 | | | $ | 41,485 | | | $ | 0.73 | | | $ | 63,326 | | | $ | 43,278 | | | $ | 0.77 | |
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| (A) | | Expect 25% of the seasonal increase to remain in the second quarter |
As previously disclosed, Webster incurred seasonally higher expenses in the first quarter of 2007 primarily related to payroll taxes and 401(k) match. The impact of these seasonally higher expenses was $4.7 million ($3.1 million, net of taxes) or $.05 per diluted share. In addition, as also previously disclosed, one residential construction loan in Florida classified as held for sale was written down in value by $700,000 ($455,000, net of taxes) or $.01 per diluted share. This adjustment is reflected in mortgage banking activities as a reduction in noninterest income in the first quarter. Also, Webster incurred severance related charges from ongoing restructuring in insurance and other lines of business of $2.2 million ($1.4 million, net of taxes) or $.02 per diluted share and closing costs of $2.3 million ($1.5 million, net of taxes) or $.03 per share related to the remaining operations of PMC.
Additionally, as the final component of balance sheet repositioning actions announced in the fourth quarter, Webster completed the securitization of $633 million of residential mortgage loans during the first quarter of 2007. These securities are classified as held-to-maturity.
“Webster has begun to execute changes resulting from our previously announced strategic review with the objective of narrowing and sharpening our focus on our vision to be New England’s bank,” stated Webster Chairman and Chief Executive Officer James C. Smith. “To date outcomes from this review include the closure of PMC, the termination of mezzanine lending operations, the discontinuance of construction lending outside of our primary market, the restructuring of our insurance operations and the outsourcing of the back office operations of Webster Investment Services. We remain committed to completing this process by mid-year.”
Commercial loans, including commercial real estate loans, and consumer loans, were $8.6 billion at March 31, 2007, up 11 percent from March 31, 2006. Commercial and consumer loans represent 70 percent of total loans at March 31, 2007 compared to 61 percent a year ago. “Webster continues to show consistent growth in these core lines of business,” stated Webster President and Chief Operating Officer William T. Bromage. “As the results show, our plan has been to reduce our percentage of residential loans to total loans and to continue to focus on growth in commercial and consumer loans.”
Revenues
Total revenue, which consists of net interest income plus total non-interest income, was $185.5 million in the first quarter, compared to $180.5 million in the fourth quarter and $185.4 million a year ago.
Net interest income was $128.1 million in the first quarter compared to $129.2 million in the fourth quarter and $130.2 million a year ago. Average interest-earning assets were lower in the first quarter of 2007 as a result of recent balance sheet repositioning actions in
comparison to the fourth quarter and first quarter of 2006; however, Webster’s net interest margin (annualized tax-equivalent net interest income as a percentage of average earning assets) increased to 3.41 percent compared to 3.23 percent in the fourth quarter and 3.24 percent a year ago. Webster’s balance sheet repositioning actions have positively impacted the net interest margin as the proceeds from the sales of securities have paid 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. The spread between the yield on loans and the cost of deposits increased to 3.87 percent in the first quarter compared to 3.83 percent in the fourth quarter and 4.17 percent a year ago.
Total non-interest income was $57.4 million in the first quarter compared to $51.4 million in the fourth quarter and $55.2 million a year ago. Non-interest income in the fourth quarter was affected by losses on sales of securities of $2.4 million and losses on sale of loans of $5.7 million. Deposit service fees totaled $25.4 million compared to $25.5 million in the fourth quarter and $21.9 million a year ago. Insurance revenue was $10.1 million in the quarter compared to $8.3 million in the fourth quarter and $10.7 million a year ago. Loan related fees were $7.9 million compared to $9.6 million in the fourth quarter and $7.8 million a year ago. The decrease in loan related fees compared to the fourth quarter reflects higher commercial real estate prepayment fees of $2.4 million in that period. Wealth management fees totaled $6.9 million compared to $7.2 million in the fourth quarter and $6.4 million a year ago. Income from mortgage banking activities was $2.2 million in the first quarter compared to $2.9 million in the fourth quarter and $3.3 million a year ago. The decline from the fourth quarter reflects the $700,000 write down in value of one previously-mentioned loan in Florida. Other non-interest income was $1.8 million compared to $3.7 million in the fourth quarter, and $1.8 million a year ago. Fourth quarter 2006 results included a $1.4 million gain on the sale of properties.
Provision For Credit Losses
The provision for credit losses was $3.0 million in the first and fourth quarter and $2.0 million a year ago. Net loan charge-offs totaled $5.3 million compared to $9.1 million in the fourth quarter and $1.7 million a year ago. The increase in net charge-offs when comparing the first quarter of 2007 to the first quarter of 2006 reflects the $2.1 million of previously-announced net charge-offs in connection with 13 residential construction loans in Florida. Net charge-offs in the fourth quarter reflected two commercial loans that had been identified and fully reserved earlier in 2006. The annualized net loan charge-off ratio was 0.17 percent of average loans compared to 0.27 percent in the fourth quarter and 0.05 percent a year ago. The allowance for credit losses to total loans was 1.24 percent at March 31, 2007 and 2006 and 1.20 percent at December 31, 2006.
Non-Interest Expenses
Total non-interest expenses were $131.3 million in the first quarter compared to $122.6 million in the fourth quarter and $119.2 million a year ago. First quarter expenses include the previously-discussed severance related charges from ongoing restructuring in insurance and other lines of business of $2.2 million, closing costs of $2.3 million related to the remaining operations of PMC and $4.7 million of seasonally higher expenses compared to the fourth quarter, primarily related to payroll tax and 401(k) match. The 2006 fourth quarter and 2007 first quarter include the expenses of operations related to the acquisition of NewMil Bancorp. “We are managing our expenses aggressively with the focus on improving operating leverage for the balance of 2007,” stated Webster Chief Financial Officer Jerry Plush.
Balance Sheet Trends
Total assets were $16.9 billion at March 31, 2007 compared with $17.9 billion a year ago. Total assets have declined by $1 billion primarily from the balance sheet repositioning actions. Total loans were $12.3 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 and 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 $1.1 billion, or 31 percent from a year ago. Deposits were $12.6 billion, an increase of $0.5 billion, or 4 percent, from a year ago as retail deposits increased $898 million, with contributions from the branches acquired from the NewMil Bank acquisition,de novobranching and growth in health savings account deposits at HSA Bank, which more than offset a $418 million decline in brokered deposits.
The $1.1 billion reduction in securities and $0.5 billion of total deposit growth, each compared to a year ago, contributed to a $1.8 billion reduction in wholesale borrowings over the past year. Wholesale borrowings declined to 13 percent of total assets at March 31 compared to 22 percent a year ago.
The loan to deposit ratio improved to 98 percent at March 31, 2007 from 104 percent at both December 31, 2006 and March 31, 2006. Improvement in this ratio reflects completion of balance sheet repositioning actions and deposit growth over the past year.
Book value per common share of $33.70 at March 31, 2007 increased from $31.09 a year ago. Tangible book value per share of $19.46 at March 31, 2007 increased from $18.18 last year. The ratio of tangible equity to tangible assets increased to 6.74 percent at March 31, 2007 compared to 5.48 percent a year ago.
Capital
As previously announced, Webster prepaid its Capital Trust I and Capital Trust II securities on April 2, 2007, at call prices of 104.68 percent and 105.0 percent, respectively, plus accrued and unpaid interest. As reported in the 2006 10-K, Webster will record a net pretax charge to income in the second quarter of 2007 of approximately $6.9 million ($9.0 million related to the redemption premiums and unamortized issuance costs, partially offset by a $2.1 million gain on Trust I and II securities positions held by Webster).
Mr. Plush noted: “Webster’s tangible capital ratio improved to 6.74% at March 31, bringing us above our peer median; it has been our intention to improve our capital position to support our commercial bank balance sheet and the growth potential of our businesses. We have also been evaluating the optimal capital structure for the company. We took a first step on April 2, when we called the outstanding trust preferred securities that were carrying a weighted average coupon of 9.57%; however, $105 million of these securities qualified as Tier 1 capital for regulatory ratio purposes. We are continuing to explore the potential issuance of an even greater amount of enhanced Trust Preferred Securities at a significantly lower coupon, which would provide us with improved regulatory and ratings agency ratios at an equivalent or lower funding cost.”
During the quarter, Moody’s upgraded Webster Financial Corporation’s issuer rating to A3, Webster Bank’s long-term deposit rating to A2 and short-term deposit rating to P1. The report cites Webster’s diversified consumer, small- and middle-market commercial banking businesses, strong asset quality on a low-risk portfolio and healthy liquidity for both the holding company and the bank as the primary reasons for the upgrade. In addition, Fitch raised its outlook to “Positive.”
Asset Quality
Nonperforming assets totaled $64.8 million, or 0.53 percent of total loans and other real estate owned, at March 31, 2007 compared to $61.8 million, or 0.48 percent, at December 31 and $60.9 million, or 0.48 percent, a year ago.
The allowance for credit losses, which consist of the allowance for loan losses and the reserve for unfunded commitments, was $152.7 million, or 1.24 percent of total loans, at March 31, 2007 compared to $156.0 million, or 1.24 percent at March 31, 2006 and $155.0 million, or 1.20 percent at December 31, 2006. The ratio of the allowance to nonperforming loans was 259 percent at March 31, 2007 compared to 267 percent at March 31, 2006.
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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 atwww.websteronline.com.
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Conference Call
A conference call covering Webster’s 2007 first quarter earnings announcement will be held today, Thursday, April 19, at 11:00 a.m. Eastern Time 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.
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WEBSTER FINANCIAL CORPORATION
Selected Financial Highlights (unaudited)
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| | | At or for the Three |
| | | Months Ended March 31, |
| (In thousands, except per share data) | | 2007 | | 2006 |
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Adjusted net income and performance ratios, net of tax (annualized): | | | | | | | | |
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| Net income | | $ | 35,036 | | | $ | 43,852 | |
| Seasonal compensation costs | | | 3,055 | | | | 2,562 | |
| Closing costs-Peoples Mortgage Company | | | 1,509 | | | | — | |
| Severence costs | | | 1,430 | | | | — | |
| Write-down of construction loan held for sale | | | 455 | | | | — | |
| | | | | | | | | |
| Adjusted net income | | | 41,485 | | | | 46,414 | |
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| Net income per diluted common share | | | 0.73 | | | | 0.86 | |
| Return on average shareholders’ equity | | | 8.73 | % | | | 11.16 | % |
| Return on average tangible equity | | | 15.15 | | | | 18.86 | |
| Return on average assets | | | 0.98 | | | | 1.04 | |
| Noninterest income as a percentage of total revenue | | | 31.21 | | | | 29.78 | |
| Efficiency ratio (a) | | | 65.55 | | | | 62.16 | |
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Net income and performance ratios (annualized): | | | | | | | | |
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| Net income | | $ | 35,036 | | | $ | 43,852 | |
| Net income per diluted common share | | | 0.62 | | | | 0.82 | |
| Return on average shareholders’ equity | | | 7.38 | % | | | 10.55 | % |
| Return on average tangible equity | | | 12.79 | | | | 17.83 | |
| Return on average assets | | | 0.83 | | | | 0.99 | |
| Noninterest income as a percentage of total revenue | | | 30.95 | | | | 29.78 | |
| Efficiency ratio (a) | | | 70.77 | | | | 64.29 | |
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Asset quality: | | | | | | | | |
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| Allowance for credit losses | | $ | 152,660 | | | $ | 155,957 | |
| Nonperforming assets | | | 64,830 | | | | 60,890 | |
| Allowance for credit losses / total loans | | | 1.24 | % | | | 1.24 | % |
| Net charge-offs / average loans (annualized) | | | 0.17 | | | | 0.05 | |
| Nonperforming loans / total loans | | | 0.48 | | | | 0.46 | |
| Nonperforming assets / total loans plus OREO | | | 0.53 | | | | 0.48 | |
| Allowance for credit losses / nonperforming loans | | | 259.23 | | | | 267.23 | |
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Other ratios (annualized): | | | | | | | | |
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| Tangible capital ratio | | | 6.74 | % | | | 5.48 | % |
| Shareholders’ equity / total assets | | | 11.29 | | | | 9.16 | |
| Interest-rate spread | | | 3.32 | | | | 3.19 | |
| Net interest margin | | | 3.41 | | | | 3.24 | |
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Share related: | | | | | | | | |
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| Book value per common share | | $ | 33.70 | | | $ | 31.09 | |
| Tangible book value per common share | | | 19.46 | | | | 18.18 | |
| Common stock closing price | | | 48.01 | | | | 48.46 | |
| Dividends declared per common share | | | 0.27 | | | | 0.25 | |
| | | | | | | | | |
| Common shares issued and outstanding | | | 56,530 | | | | 52,776 | |
| Basic shares (average) | | | 56,113 | | | | 53,094 | |
| Diluted shares (average) | | | 56,762 | | | | 53,703 | |
Footnotes:
| | (a) | | Noninterest expense as a percentage of net interest income plus noninterest income. |
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| | (b) | | For purposes of this computation, unrealized gains (losses) are excluded from the average balance for rate calculations. |
Consolidated Statements of Condition (unaudited)
| | | | | | | | | | | | | |
| | | March 31, | | | December 31, | | | March 31, | |
| (In thousands) | | 2007 | | | 2006 | | | 2006 | |
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Assets: | | | | | | | | | | | | |
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| Cash and due from depository institutions | | $ | 269,061 | | | $ | 311,888 | | | $ | 267,541 | |
| Short-term investments | | | 6,161 | | | | 175,648 | | | | 11,889 | |
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| Securities: | | | | | | | | | | | | |
| Trading, at fair value | | | 14,076 | | | | 4,842 | | | | 1,042 | |
| Available for sale, at fair value | | | 395,668 | | | | 503,918 | | | | 2,472,699 | |
| Held-to-maturity | | | 2,066,763 | | | | 1,453,973 | | | | 1,116,386 | |
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Total securities | | | 2,476,507 | | | | 1,962,733 | | | | 3,590,127 | |
| | | | | | | | | | | | | |
| Loans held for sale | | | 456,033 | | | | 354,798 | | | | 201,210 | |
| | | | | | | | | | | | | |
| Loans: | | | | | | | | | | | | |
| Residential mortgages | | | 3,739,221 | | | | 4,424,634 | | | | 4,890,887 | |
| Commercial | | | 3,444,612 | | | | 3,386,274 | | | | 3,038,930 | |
| Commercial real estate | | | 1,936,650 | | | | 1,904,597 | | | | 1,851,035 | |
| Consumer | | | 3,182,765 | | | | 3,207,986 | | | | 2,809,785 | |
| | | | | | | | | | |
Total loans | | | 12,303,248 | | | | 12,923,491 | | | | 12,590,637 | |
| Allowance for loan losses | | | (145,367 | ) | | | (147,719 | ) | | | (146,383 | ) |
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Loans, net | | | 12,157,881 | | | | 12,775,772 | | | | 12,444,254 | |
| | | | | | | | | | | | | |
| Accrued interest receivable | | | 86,878 | | | | 90,565 | | | | 94,602 | |
| Premises and equipment, net | | | 196,232 | | | | 195,909 | | | | 184,831 | |
| Goodwill and other intangible assets | | | 823,200 | | | | 825,012 | | | | 698,557 | |
| Cash surrender value of life insurance | | | 261,852 | | | | 259,318 | | | | 240,426 | |
| Prepaid expenses and other assets | | | 145,395 | | | | 145,828 | | | | 173,749 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
Total Assets | | $ | 16,879,200 | | | $ | 17,097,471 | | | $ | 17,907,186 | |
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Liabilities and Shareholders’ Equity: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | |
| Demand deposits | | $ | 1,505,074 | | | $ | 1,588,783 | | | $ | 1,459,855 | |
| NOW accounts | | | 1,761,178 | | | | 1,671,778 | | | | 1,683,677 | |
| Money market deposit accounts | | | 1,887,602 | | | | 1,908,496 | | | | 1,761,016 | |
| Savings accounts | | | 2,109,866 | | | | 1,985,202 | | | | 2,004,375 | |
| Certificates of deposit | | | 4,834,440 | | | | 4,831,477 | | | | 4,291,378 | |
| Brokered deposits | | | 460,230 | | | | 472,660 | | | | 877,976 | |
| | | | | | | | | | |
Total deposits | | | 12,558,390 | | | | 12,458,396 | | | | 12,078,277 | |
| | | | | | | | | | | | | |
| Federal Home Loan Bank advances | | | 655,709 | | | | 1,074,933 | | | | 2,383,118 | |
| Securities sold under agreements to repurchase and other short-term debt | | | 943,802 | | | | 893,206 | | | | 1,007,439 | |
| Long-term debt | | | 623,091 | | | | 621,936 | | | | 631,568 | |
| Reserve for unfunded credit commitments | | | 7,293 | | | | 7,275 | | | | 9,574 | |
| Accrued expenses and other liabilities | | | 176,324 | | | | 155,285 | | | | 146,871 | |
| | | | | | | | | | |
Total liabilities | | | 14,964,609 | | | | 15,211,031 | | | | 16,256,847 | |
| | | | | | | | | | | | | |
| Preferred stock of subsidiary corporation | | | 9,577 | | | | 9,577 | | | | 9,577 | |
| | | | | | | | | | | | | |
Shareholders’ equity | | | 1,905,014 | | | | 1,876,863 | | | | 1,640,762 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
Total Liabilities and Shareholders’ Equity | | $ | 16,879,200 | | | $ | 17,097,471 | | | $ | 17,907,186 | |
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See Selected Financial Highlights for footnotes.
Consolidated Statements of Income (unaudited)
| | | | | | | | | |
| | | Three Months Ended | |
| | | March 31, | |
| (In thousands, except per share data) | | 2007 | | | 2006 | |
| |
| | | | | | | | | |
Interest income: | | | | | | | | |
| Loans | | $ | 209,164 | | | $ | 195,574 | |
| Securities and short-term investments | | | 33,280 | | | | 41,595 | |
| Loans held for sale | | | 6,249 | | | | 3,339 | |
| | | | | | | |
Total interest income | | | 248,693 | | | | 240,508 | |
| | | | | | | |
| | | | | | | | | |
Interest expense: | | | | | | | | |
| Deposits | | | 87,630 | | | | 62,354 | |
| Borrowings | | | 32,982 | | | | 47,995 | |
| | | | | | | |
Total interest expense | | | 120,612 | | | | 110,349 | |
| | | | | | | |
| | | | | | | | | |
Net interest income | | | 128,081 | | | | 130,159 | |
| Provision for credit losses | | | 3,000 | | | | 2,000 | |
| | | | | | | |
Net interest income after provision for credit losses | | | 125,081 | | | | 128,159 | |
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| | | | | | | | | |
Noninterest income: | | | | | | | | |
| Deposit service fees | | | 25,354 | | | | 21,869 | |
| Insurance revenue | | | 10,121 | | | | 10,724 | |
| Loan related fees | | | 7,940 | | | | 7,824 | |
| Wealth and investment services | | | 6,878 | | | | 6,354 | |
| Mortgage banking activities | | | 2,229 | | | | 3,273 | |
| Increase in cash surrender value of life insurance | | | 2,534 | | | | 2,371 | |
| Other | | | 1,824 | | | | 1,775 | |
| | | | | | | |
| | | | 56,880 | | | | 54,190 | |
| Gain on sale of securities, net | | | 541 | | | | 1,012 | |
| | | | | | | |
Total noninterest income | | | 57,421 | | | | 55,202 | |
| | | | | | | |
| | | | | | | | | |
Noninterest expenses: | | | | | | | | |
| Compensation and benefits | | | 68,391 | | | | 65,003 | |
| Occupancy | | | 13,383 | | | | 12,182 | |
| Furniture and equipment | | | 14,969 | | | | 13,595 | |
| Intangible amortization | | | 3,473 | | | | 4,377 | |
| Marketing | | | 4,211 | | | | 3,624 | |
| Professional services | | | 4,802 | | | | 3,544 | |
| Severance and closing costs | | | 4,522 | | | | — | |
| Other | | | 17,529 | | | | 16,846 | |
| | | | | | | |
Total noninterest expenses | | | 131,280 | | | | 119,171 | |
| | | | | | | |
| | | | | | | | | |
| Income before income taxes | | | 51,222 | | | | 64,190 | |
| Income taxes | | | 16,186 | | | | 20,338 | |
| | | | | | | |
Net income | | $ | 35,036 | | | $ | 43,852 | |
| | | | | | | |
| | | | | | | | | |
Diluted shares (average) | | | 56,762 | | | | 53,703 | |
| | | | | | | | | |
Net income per common share: | | | | | | | | |
| Basic | | $ | 0.62 | | | $ | 0.83 | |
| Diluted | | | 0.62 | | | | 0.82 | |
See Selected Financial Highlights for footnotes.
Consolidated Statements of Income (unaudited)
| | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | |
| | | March 31, | | | Dec. 31, | | | Sept. 30, | | | June 30, | | | March 31, | |
| (In thousands, except per share data) | | 2007 | | | 2006 | | | 2006 | | | 2006 | | | 2006 | |
| |
| | | | | | | | | | | | | | | | | | | | | |
Interest income: | | | | | | | | | | | | | | | | | | | | |
| Loans | | $ | 209,164 | | | $ | 225,634 | | | $ | 215,094 | | | $ | 207,097 | | | $ | 195,574 | |
| Securities and short-term investments | | | 33,280 | | | | 32,514 | | | | 40,883 | | | | 39,134 | | | | 41,595 | |
| Loans held for sale | | | 6,249 | | | | 6,191 | | | | 4,366 | | | | 3,317 | | | | 3,339 | |
| | | | | | | | | | | | | | | | |
Total interest income | | | 248,693 | | | | 264,339 | | | | 260,343 | | | | 249,548 | | | | 240,508 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Interest expense: | | | | | | | | | | | | | | | | | | | | |
| Deposits | | | 87,630 | | | | 90,195 | | | | 85,058 | | | | 72,593 | | | | 62,354 | |
| Borrowings | | | 32,982 | | | | 44,994 | | | | 52,849 | | | | 50,150 | | | | 47,995 | |
| | | | | | | | | | | | | | | | |
Total interest expense | | | 120,612 | | | | 135,189 | | | | 137,907 | | | | 122,743 | | | | 110,349 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Net interest income | | | 128,081 | | | | 129,150 | | | | 122,436 | | | | 126,805 | | | | 130,159 | |
| Provision for credit losses | | | 3,000 | | | | 3,000 | | | | 3,000 | | | | 3,000 | | | | 2,000 | |
| | | | | | | | | | | | | | | | |
Net interest income after provision for credit losses | | | 125,081 | | | | 126,150 | | | | 119,436 | | | | 123,805 | | | | 128,159 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Noninterest income: | | | | | | | | | | | | | | | | | | | | |
| Deposit service fees | | | 25,354 | | | | 25,494 | | | | 25,252 | | | | 24,150 | | | | 21,869 | |
| Insurance revenue | | | 10,121 | | | | 8,301 | | | | 9,793 | | | | 9,988 | | | | 10,724 | |
| Loan related fees | | | 7,940 | | | | 9,643 | | | | 7,760 | | | | 9,162 | | | | 7,824 | |
| Wealth and investment services | | | 6,878 | | | | 7,161 | | | | 6,738 | | | | 6,930 | | | | 6,354 | |
| Mortgage banking activities | | | 2,229 | | | | 2,917 | | | | (185 | ) | | | 2,538 | | | | 3,273 | |
| Increase in cash surrender value of life insurance | | | 2,534 | | | | 2,550 | | | | 2,368 | | | | 2,314 | | | | 2,371 | |
| Other | | | 1,824 | | | | 3,733 | | | | 1,693 | | | | 1,284 | | | | 1,775 | |
| | | | | | | | | | | | | | | | |
| | | | 56,880 | | | | 59,799 | | | | 53,419 | | | | 56,366 | | | | 54,190 | |
| 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 | | | 541 | | | | (2,732 | ) | | | 2,307 | | | | 702 | | | | 1,012 | |
| | | | | | | | | | | | | | | | |
Total noninterest income | | | 57,421 | | | | 51,354 | | | | 6,847 | | | | 57,068 | | | | 55,202 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Noninterest expenses: | | | | | | | | | | | | | | | | | | | | |
| Compensation and benefits | | | 68,391 | | | | 64,142 | | | | 62,050 | | | | 64,585 | | | | 65,003 | |
| Occupancy | | | 13,383 | | | | 13,403 | | | | 11,977 | | | | 11,824 | | | | 12,182 | |
| Furniture and equipment | | | 14,969 | | | | 14,637 | | | | 13,840 | | | | 13,962 | | | | 13,595 | |
| Intangible amortization | | | 3,473 | | | | 3,473 | | | | 3,079 | | | | 3,544 | | | | 4,377 | |
| Marketing | | | 4,211 | | | | 3,350 | | | | 4,211 | | | | 4,292 | | | | 3,624 | |
| Professional services | | | 4,802 | | | | 5,457 | | | | 4,302 | | | | 3,464 | | | | 3,544 | |
| Severance and closing costs | | | 4,522 | | | | — | | | | — | | | | — | | | | — | |
| Acquisition costs | | | — | | | | 2,018 | | | | 868 | | | | 65 | | | | — | |
| Other | | | 17,529 | | | | 16,129 | | | | 15,523 | | | | 15,582 | | | | 16,846 | |
| | | | | | | | | | | | | | | | |
Total noninterest expenses | | | 131,280 | | | | 122,609 | | | | 115,850 | | | | 117,318 | | | | 119,171 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Income before income taxes | | | 51,222 | | | | 54,895 | | | | 10,433 | | | | 63,555 | | | | 64,190 | |
| Income taxes | | | 16,186 | | | | 17,097 | | | | 1,436 | | | | 20,412 | | | | 20,338 | |
| | | | | | | | | | | | | | | | |
Net income | | $ | 35,036 | | | $ | 37,798 | | | $ | 8,997 | | | $ | 43,143 | | | $ | 43,852 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Diluted shares (average) | | | 56,762 | | | | 56,452 | | | | 52,871 | | | | 53,252 | | | | 53,703 | |
| | | | | | | | | | | | | | | | | | | | | |
Net income per common share: | | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.62 | | | $ | 0.68 | | | $ | 0.17 | | | $ | 0.82 | | | $ | 0.83 | |
| Diluted | | | 0.62 | | | | 0.67 | | | | 0.17 | | | | 0.81 | | | | 0.82 | |
See Selected Financial Highlights for footnotes.
Interest-Rate Spread (unaudited)
| | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended |
| | | March | | December | | September | | June | | March |
| | | 2007 | | 2006 | | 2006 | | 2006 | | 2006 |
| |
| | | | | | | | | | | | | | | | | | | | | |
Interest-rate spread | | | | | | | | | | | | | | | | | | | | |
| Yield on interest-earning assets | | | 6.61 | % | | | 6.52 | % | | | 6.31 | % | | | 6.11 | % | | | 5.97 | % |
| Cost of interest-bearing liabilities | | | 3.29 | | | | 3.38 | | | | 3.38 | | | | 3.05 | | | | 2.78 | |
| | | | | | | | | | | | | | | | | | | | | |
| Interest-rate spread | | | 3.32 | % | | | 3.14 | % | | | 2.93 | % | | | 3.06 | % | | | 3.19 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Net interest margin | | | 3.41 | % | | | 3.23 | % | | | 3.01 | % | | | 3.13 | % | | | 3.24 | % |
| | | | | | | | | | | | | | | | | | | | | |
Consolidated Average Statements of Condition (unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | 2007 | | | 2006 | |
| | | | | | | | | | | Fully tax- | | | | | | | | | | | Fully tax- | |
| | | Average | | | | | | | equivalent | | | Average | | | | | | | equivalent | |
| (Dollars in thousands) | | balance | | | Interest | | | yield/rate | | | balance | | | Interest | | | yield/rate | |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | | | | | | | | | | | | | | |
| Loans | | $ | 12,445,025 | | | $ | 209,164 | | | | 6.74 | % | | $ | 12,392,022 | | | $ | 195,574 | | | | 6.33 | % |
| Securities | | | 2,303,191 | | | | 34,203 | | | | 5.97 | (b) | | | 3,630,986 | | | | 43,819 | | | | 4.77 | (b) |
| Loans held for sale | | | 394,102 | | | | 6,249 | | | | 6.34 | | | | 228,695 | | | | 3,339 | | | | 5.84 | |
| Short-term investments | | | 117,584 | | | | 1,585 | | | | 5.39 | | | | 15,181 | | | | 112 | | | | 2.95 | |
| | | | | | | | | | | | | | | | | | | |
Total interest-earning assets | | | 15,259,902 | | | | 251,201 | | | | 6.61 | | | | 16,266,884 | | | | 242,844 | | | | 5.97 | |
| | | | | | | | | | | | | | | | | | | | | |
| Noninterest-earning assets | | | 1,605,708 | | | | | | | | | | | | 1,500,627 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Total assets | | $ | 16,865,610 | | | | | | | | | | | $ | 17,767,511 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Liabilities and Shareholders’ Equity: | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
| Demand deposits | | $ | 1,505,598 | | | $ | — | | | | — | % | | $ | 1,451,677 | | | $ | — | | | | — | % |
| Savings, NOW and money market deposit accounts | | | 5,567,702 | | | | 28,762 | | | | 2.10 | | | | 5,309,282 | | | | 19,808 | | | | 1.51 | |
| Time deposits | | | 5,303,759 | | | | 58,868 | | | | 4.50 | | | | 4,906,912 | | | | 42,546 | | | | 3.52 | |
| | | | | | | | | | | | | | | | | | | |
Total deposits | | | 12,377,059 | | | | 87,630 | | | | 2.87 | | | | 11,667,871 | | | | 62,354 | | | | 2.16 | |
| | | | | | | | | | | | | | | | | | | |
| Federal Home Loan Bank advances | | | 918,125 | | | | 10,909 | | | | 4.75 | | | | 2,397,872 | | | | 24,496 | | | | 4.09 | |
| Repurchase agreements and other short-term debt | | | 883,172 | | | | 9,878 | | | | 4.47 | | | | 1,289,102 | | | | 11,830 | | | | 3.67 | |
| Long-term debt | | | 620,451 | | | | 12,195 | | | | 7.86 | | | | 640,804 | | | | 11,669 | | | | 7.28 | |
| | | | | | | | | | | | | | | | | | | |
Total borrowings | | | 2,421,748 | | | | 32,982 | | | | 5.45 | | | | 4,327,778 | | | | 47,995 | | | | 4.44 | |
| | | | | | | | | | | | | | | | | | | |
Total interest-bearing liabilities | | | 14,798,807 | | | | 120,612 | | | | 3.29 | | | | 15,995,649 | | | | 110,349 | | | | 2.78 | |
| | | | | | | | | | | | | | | | | | | | | |
| Noninterest-bearing liabilities | | | 157,247 | | | | | | | | | | | | 98,991 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Total liabilities | | | 14,956,054 | | | | | | | | | | | | 16,094,640 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Preferred stock of subsidiary corporation | | | 9,577 | | | | | | | | | | | | 9,577 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Shareholders’ equity | | | 1,899,979 | | | | | | | | | | | | 1,663,294 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 16,865,610 | | | | | | | | | | | $ | 17,767,511 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | 130,589 | | | | | | | | | | | | 132,495 | | | | | |
Less: tax-equivalent adjustment | | | | | | | (2,508 | ) | | | | | | | | | | | (2,336 | ) | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Net interest income | | | | | | $ | 128,081 | | | | | | | | | | | $ | 130,159 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-rate spread | | | | | | | | | | | 3.32 | % | | | | | | | | | | | 3.19 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
Net interest margin | | | | | | | | | | | 3.41 | % | | | | | | | | | | | 3.24 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
See Selected Financial Highlights for footnotes.
| | | | | | | | | | | | | | | | | | | | | |
| | | At or for the Three Months Ended | |
| (Unaudited) | | March 31, | | | December 31, | | | September 30, | | | June 30, | | | March 31, | |
| (Dollars in thousands) | | 2007 | | | 2006 | | | 2006 | | | 2006 | | | 2006 | |
| |
| | | | | | | | | | | | | | | | | | | | | |
Asset Quality | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Nonperforming loans: | | | | | | | | | | | | | | | | | | | | |
| Commercial: | | | | | | | | | | | | | | | | | | | | |
| Commercial | | $ | 13,679 | | | $ | 21,105 | | | $ | 29,321 | | | $ | 22,930 | | | $ | 19,719 | |
| Equipment financing | | | 2,405 | | | | 2,616 | | | | 2,450 | | | | 2,693 | | | | 2,864 | |
| | | |
| Total commercial | | | 16,084 | | | | 23,721 | | | | 31,771 | | | | 25,623 | | | | 22,583 | |
| |
| Commercial real estate | | | 18,524 | | | | 17,618 | | | | 16,811 | | | | 23,291 | | | | 24,012 | |
| Residential | | | 13,473 | | | | 11,307 | | | | 7,032 | | | | 7,218 | | | | 8,891 | |
| Consumer | | | 10,808 | | | | 6,266 | | | | 3,496 | | | | 3,065 | | | | 2,875 | |
| | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total nonperforming loans | | | 58,889 | | | | 58,912 | | | | 59,110 | | | | 59,197 | | | | 58,361 | |
| | | |
| | | | | | | | | | | | | | | | | | | | | |
Other real estate owned and repossessed assets: | | | | | | | | | | | | | | | | | | | | |
| Commercial | | | 4,833 | | | | 1,922 | | | | 1,573 | | | | 2,254 | | | | 1,712 | |
| Residential | | | 350 | | | | 383 | | | | 607 | | | | 316 | | | | 456 | |
| Consumer | | | 758 | | | | 608 | | | | 126 | | | | 10 | | | | 361 | |
| | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total other real estate owned and repossessed assets | | | 5,941 | | | | 2,913 | | | | 2,306 | | | | 2,580 | | | | 2,529 | |
| | | |
| | | | | | | | | | | | | | | | | | | | | |
Total nonperforming assets | | $ | 64,830 | | | $ | 61,825 | | | $ | 61,416 | | | $ | 61,777 | | | $ | 60,890 | |
| | | |
| | | | | | | | | | | | | | | | | | | | | |
| Accruing loans 90 or more days past due | | $ | 4,636 | | | $ | 1,490 | | | $ | 4,609 | | | $ | 2,542 | | | $ | 1,002 | |
| | | |
| | | | | | | | | | | | | | | | | | | | | |
Allowance for Credit Losses | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 154,994 | | | $ | 156,331 | | | $ | 156,471 | | | $ | 155,957 | | | $ | 155,632 | |
| Provision | | | 3,000 | | | | 3,000 | | | | 3,000 | | | | 3,000 | | | | 2,000 | |
| Allowance for acuqired loans | | | — | | | | 4,724 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Charge-offs: | | | | | | | | | | | | | | | | | | | | |
| Commercial | | | 2,293 | | | | 9,352 | | | | 3,369 | | | | 2,775 | | | | 1,629 | |
| Residential | | | 2,581 | | | | 199 | | | | 46 | | | | 65 | | | | 75 | |
| Consumer | | | 1,993 | | | | 454 | | | | 265 | | | | 239 | | | | 362 | |
| | | |
| Total charge-offs | | | 6,867 | | | | 10,005 | | | | 3,680 | | | | 3,079 | | | | 2,066 | |
| Recoveries | | | (1,533 | ) | | | (944 | ) | | | (540 | ) | | | (593 | ) | | | (391 | ) |
| | | |
| Net loan charge-offs | | | 5,334 | | | | 9,061 | | | | 3,140 | | | | 2,486 | | | | 1,675 | |
| | | |
| | | | | | | | | | | | | | | | | | | | | |
Ending balance | | $ | 152,660 | | | $ | 154,994 | | | $ | 156,331 | | | $ | 156,471 | | | $ | 155,957 | |
| | | |
| | | | | | | | | | | | | | | | | | | | | |
| Components: | | | | | | | | | | | | | | | | | | | | |
| Allowance for loan losses | | $ | 145,367 | | | $ | 147,719 | | | $ | 147,446 | | | $ | 147,401 | | | $ | 146,383 | |
| Reserve for unfunded credit commitments | | | 7,293 | | | | 7,275 | | | | 8,885 | | | | 9,070 | | | | 9,574 | |
| | | | | | | | | | | | | | | | |
| Allowance for credit losses | | $ | 152,660 | | | $ | 154,994 | | | $ | 156,331 | | | $ | 156,471 | | | $ | 155,957 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Asset Quality Ratios: | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Allowance for loan losses / total loans | | | 1.18 | % | | | 1.14 | % | | | 1.13 | % | | | 1.16 | % | | | 1.16 | % |
| Allowance for credit losses / total loans | | | 1.24 | | | | 1.20 | | | | 1.20 | | | | 1.23 | | | | 1.24 | |
| Net charge-offs / average loans (annualized) | | | 0.17 | | | | 0.27 | | | | 0.10 | | | | 0.08 | | | | 0.05 | |
| Nonperforming loans / total loans | | | 0.48 | | | | 0.46 | | | | 0.45 | | | | 0.47 | | | | 0.46 | |
| Nonperforming assets / total loans plus OREO | | | 0.53 | | | | 0.48 | | | | 0.47 | | | | 0.49 | | | | 0.48 | |
| Allowance for credit losses / nonperforming loans | | | 259.23 | | | | 263.09 | | | | 264.47 | | | | 264.32 | | | | 267.23 | |
See Selected Financial Highlights for footnotes.
