EXHIBIT 99.1
| Media Contact: | Investor Contact: | |
| Clark Finley 203-578-2429 | Terry Mangan 203-578-2318 | |
| cfinley@westerbank.com | tmangan@websterbank.com |
WEBSTER REPORTS SIX PERCENT INCREASE
IN PER SHARE NET INCOME FOR THE THIRD QUARTER
WATERBURY, Conn., October 15, 2003—Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, today announced that net income per diluted share was $.89 for the third quarter of 2003, compared to $.84 in the year-ago period, an increase of six percent. Net income for the quarter totaled $41.3 million, compared to $40.4 million in the year-ago period.
For the first nine months of 2003, net income was $2.63 per diluted share, compared to $2.31 in the year-ago period. Net income was $121.9 million, compared to $113.3 million in the year-ago period. Excluding the cumulative effect of a change in accounting method in the 2002 first quarter, net income for the first nine months of 2002 was $120.6 million or $2.46 per diluted share.
“In a quarter marked by historic milestones for Webster, we are pleased to report significant progress advanced on Webster’s strategic plan, including double-digit growth in core loans and deposits, improved asset quality and a breakout acquisition opportunity,” stated Webster chairman and chief executive officer, James C. Smith. “Webster is fast fulfilling its promise as a leading regional financial services provider.”
In a major step toward regional expansion, Webster announced last week a definitive agreement to acquire FIRSTFED AMERICA BANCORP, INC., headquartered in Swansea, Massachusetts, the holding company for First Federal Savings Bank of America. “This partnership creates new opportunities for growth across southern New England, as we expand our footprint from lower Fairfield County through Connecticut and Rhode Island to southeastern Massachusetts,” stated Smith.
After sixty-eight years as a thrift institution, Webster applied in September to the Office of the Comptroller of the Currency for a national commercial bank charter.
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Revenues and Expenses
Net interest income was $98.2 million in the third quarter of 2003, compared to $102.6 million in the year-ago period and $100.6 million in the second quarter. The decline resulted from continued lower interest rates during the quarter and the acceleration of prepayments on fixed rate loans and investments, with reinvestments into lower yielding assets. Also impacting the quarter was the implementation on July 1, 2003 of Statement of Financial Accounting Standards (SFAS) No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity,” which required the reclassification of $2.8 million of capital trust securities expense from noninterest expense to interest expense. Excluding the effect of SFAS No. 150, net interest income would have grown slightly, compared to the second quarter, as a result of the growth in the loan portfolio.
Webster’s net interest margin (annualized net interest income as a percentage of average earning assets) for the quarter was 2.91 percent, compared to 3.52 percent in the year-ago period and 3.10 percent in the second quarter. The implementation of SFAS No. 150 accounted for eight basis points of the decline in the net interest margin during the quarter. Webster’s margin is positioned to benefit from an improving economy and the higher interest rates that likely would result.
In the third quarter of 2003, total noninterest income, including securities gains, increased by 40 percent to $64.5 million, up from $46.1 million in the year-ago period. Securities gains totaled $4.6 million in the third quarter, compared to $4.9 million in the year-ago period. Excluding securities gains, total fee revenue grew by 46 percent to $60.0 million from $41.2 million in the year-ago period. Deposit service fees were up 13 percent year over year, due primarily to growth in accounts. Insurance revenues were up 56 percent due primarily to the Mathog & Moniello acquisition in the first quarter of 2003. Loan and loan servicing fees increased 78 percent to $7.8 million, due primarily to higher prepayment penalties, line usage fees and the year-ago writedown of mortgage servicing rights. Net gains on sales of loans and loan servicing totaled $9.8 million, compared to $1.8 million a year ago, with $5.6 million of the gains due to continued strength in mortgage origination volumes owing to record low interest rates. The remaining balance of $4.2 million were gains from the sale of telecommunications loans, which in December 2002 were charged down to their realizable value and transferred to loans held for sale.
Total noninterest expenses for the 2003 third quarter were $90.9 million, up from $84.1 million one year ago and a decrease from $93.2 million in the second quarter of 2003. Excluding the implementation of SFAS No. 150 and reclassification of $2.8 million of capital trust securities expense to interest expense, Webster’s total noninterest expenses would have been $93.7 million in the third quarter, relatively unchanged from the second quarter. Webster expects that core expenses will remain flat in the 2003 fourth quarter.
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Balance Sheet Growth
At September 30, 2003, total assets were $14.6 billion, up 10 percent from $13.3 billion one year ago. Total loans of $9.1 billion at September 30, 2003 increased 14 percent from $8.0 billion from a year ago. Deposits totaled $8.1 billion at September 30, 2003 and grew by approximately $800 million, or 11 percent, compared to a year ago.
“Webster’s strategic plan has continued to drive loan and deposit growth over the past year,” stated Webster president and chief operating officer, William T. Bromage. “In this challenging economic climate, we have delivered on our promise to increase loans and deposits faster than the market while maintaining our disciplined approach to credit quality.”
At the end of the third quarter, commercial loans, including commercial real estate, were $3.2 billion, up 11 percent from $2.9 billion a year ago. Consumer loans increased 36 percent to $2.1 billion, compared to $1.6 billion one year ago, with growth over the past year led by Webster’s home equity product offering. Commercial and consumer loans comprised 59 percent of total loans at September 30, 2003, compared to 56 percent a year ago.
Webster’s mortgage banking business generated $1.3 billion in mortgage originations in the third quarter, compared to $0.8 billion a year ago. For the first nine months of 2003, mortgage originations totaled $3.4 billion, an increase of 97 percent over the same period in 2002. Webster now has regional mortgage offices in Atlanta, Chicago, Phoenix and Seattle, in addition to its mortgage headquarters in Cheshire, CT.
Total deposits were $8.1 billion at September 30, 2003, an increase of 11 percent from $7.4 billion a year ago. Core deposits at September 30, 2003 represented 67 percent of total deposits, up from 63 percent a year ago. Webster’s growth in deposits was driven in part by its High Performance Checking product initiated in August 2002 and the continuing success of its de novo branches in Fairfield County, Connecticut.
Book value per common share of $24.22 at September 30, 2003 increased from $22.43 one year ago. Tangible book value per share of $17.73 at September 30, 2003 increased from $16.52 one year ago.
Asset Quality
Nonperforming assets totaled $46.1 million or 0.32 percent of total assets at September 30, 2003, compared to $72.2 million or 0.54 percent a year ago and $57.0 million or 0.39 percent at June 30, 2003. Classified loans decreased 35 percent to $109.4 million at September 30, 2003 from $168.3 million one year ago and decreased 3 percent from $113.0 million at June 30, 2003. Classified loans were 1.2 percent of total loans at the end of the third quarter, compared to 2.1 percent one year ago and 1.3 percent at June 30, 2003.
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“Webster follows a disciplined approach to portfolio management,” stated Webster chief financial officer, William J. Healy. “Our ability to identify and manage problem loans at an early stage has contributed significantly to the improvement in our asset quality.”
The allowance for loan losses totaled $117.7 million, or 1.29 percent of total loans at September 30, 2003, compared to $116.1 million, or 1.45 percent, a year ago and $119.2 million, or 1.37 percent, at June 30, 2003. The ratio of the allowance to nonperforming loans at September 30, 2003 increased to 284 percent, compared to 170 percent a year ago and 228 percent at June 30, 2003. The increase is due primarily to a 39 percent decline in nonperforming loans from a year ago.
Webster’s net loan charge-offs in the third quarter of 2003 were $11.5 million, compared to $4.9 million in the year-ago period. The annualized net charge-off ratio was 52 basis points in the 2003 third quarter, compared to 26 basis points in the year-ago period. The increase in net charge-offs is entirely attributable to a single commercial nonperforming loan.
The provision for loan losses totaled $10.0 million in the third quarter, compared to $5.0 million in both the year-ago period and the second quarter of 2003. The $5.0 million increase over each period is due primarily to the higher level of net charge-offs in the third quarter. For the first nine months of 2003, the provision for loan losses totaled $20.0 million while net loan charge-offs were $19.2 million.
Strategic Actions
Webster announced in July that its Board of Directors declared a regular cash dividend of $.21 per common share, the 64th consecutive dividend since Webster first paid a dividend in 1987, and authorized the repurchase of up to approximately 2.3 million shares. The 2.3 million shares authorized for stock repurchase represented 5 percent of the company’s 45.6 million shares of outstanding stock.
Webster Insurance also announced in July the acquisition of LJF Insurance Services, Inc., a full-service insurance agency with offices in Southport and Norwalk, Connecticut.
In September, Webster Bank filed an application with the Office of the Comptroller of the Currency to convert to a national bank charter. Webster Bank currently is a federal savings bank regulated by the Office of Thrift Supervision (OTS). As part of its conversion, Webster also is filing an application with the Federal Reserve System to become a financial holding company. Webster expects to complete the conversion in late 2003 or early 2004.
Webster announced in September that it had completed a $75 million capital trust preferred stock offering. The securities bear an interest rate of three-month LIBOR plus
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2.95 percent, and will mature on September 17, 2033. The securities constitute new funding and further strengthen Webster’s existing capital.
On October 7, Webster announced a definitive agreement to acquire FIRSTFED AMERICA BANCORP, INC. (AMEX: FAB), headquartered in Swansea, Massachusetts and the holding company for First Federal Savings Bank of America. The agreement is a combination stock and cash transaction valued at approximately $465 million, or $24.50 per common share of FIRSTFED stock, payable 60 percent in Webster stock and 40 percent in cash. FIRSTFED reported $2.7 billion in assets and 26 branches at June 30, 2003. The combined bank would rank as the 46th largest in the United States, with $16 billion in assets, market capitalization of $2.2 billion and a 141-branch retail footprint in Connecticut, Massachusetts and Rhode Island.
Also in October, Webster opened a new branch in Norwalk, Connecticut, marking the fifth branch opening in its de novo branch expansion plan into Fairfield County since February 2002.
***
Webster Financial Corporation is the holding company for Webster Bank and Webster Insurance. With $14.6 billion in assets, Webster provides business and consumer banking, mortgage, insurance, trust and investment services through 110 banking offices, 220 ATMs, a Connecticut-based call center and the Internet. Webster Financial Corporation is majority owner of Chicago-based Duff & Phelps, LLC, a leader in financial advisory services. Webster Bank owns the asset-based lending firm, Whitehall Business Credit Corporation, the insurance premium finance company, Budget Installment Corp., Center Capital Corporation, an equipment finance company headquartered in Farmington, Connecticut and Webster Trust Company, N.A.
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 today’s announcement will be held today, Wednesday, October 15, at 1:00 p.m. Eastern Daylight Time and may be heard through Webster’s investor relations website at www.wbst.com, or in listen-only mode by calling 1-800-901-5217 (Access Code: 62139638). The call will be archived on the website and available for future retrieval.
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 2002.
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| Selected Financial Highlights (unaudited) | ||||||||||||||||
| At or for the Three Months Ended September 30, | At or for the Nine Months Ended September 30, | |||||||||||||||
| (In thousands, except per share data) | 2003 | 2002 | 2003 | 2002 | ||||||||||||
| Net income and performance ratios (annualized): | ||||||||||||||||
| Net income | $ | 41,315 | $ | 40,424 | $ | 121,862 | $ | 113,331 | ||||||||
| Net income per diluted common share | 0.89 | 0.84 | 2.63 | 2.31 | ||||||||||||
| Return on average shareholders’ equity | 15.54 | % | 15.30 | % | 15.25 | % | 14.56 | % | ||||||||
| Return on average assets | 1.13 | 1.28 | 1.15 | 1.23 | ||||||||||||
Net income and performance ratios before cumulative effect of change in accounting method (annualized): | ||||||||||||||||
| Net income | $ | 41,315 | $ | 40,424 | $ | 121,862 | $ | 113,331 | ||||||||
Cumulative effect of change in accounting method (a) | - | - | - | 7,280 | ||||||||||||
Net income before cumulative effect of change in accounting method | 41,315 | 40,424 | 121,862 | 120,611 | ||||||||||||
Net income per diluted common share | 0.89 | 0.84 | 2.63 | 2.46 | ||||||||||||
Return on average shareholders’ equity | 15.54 | % | 15.30 | % | 15.25 | % | 15.50 | % | ||||||||
Return on average assets | 1.13 | 1.28 | 1.15 | 1.31 | ||||||||||||
Noninterest income as a percentage of total revenue | 39.66 | 31.01 | 36.70 | 29.66 | ||||||||||||
Efficiency ratio (b) | 55.90 | 56.58 | 57.77 | 55.77 | ||||||||||||
Cash income and performance ratios (annualized) (c): | ||||||||||||||||
Net income | $ | 41,315 | $ | 40,424 | $ | 121,862 | $ | 113,331 | ||||||||
Cumulative effect of change in accounting method (b) | - | - | - | 7,280 | ||||||||||||
Tax-effected intangible amortization | 2,601 | 2,586 | 7,755 | 7,813 | ||||||||||||
Cash income | 43,916 | 43,010 | 129,617 | 128,424 | ||||||||||||
Cash income per diluted common share | 0.95 | 0.89 | 2.80 | 2.62 | ||||||||||||
Cash return on average shareholders’ equity | 16.52 | % | 16.28 | % | 16.22 | % | 16.50 | % | ||||||||
Cash return on average assets | 1.21 | 1.36 | 1.22 | 1.40 | ||||||||||||
Asset Quality: | ||||||||||||||||
Allowance for loan losses | $ | 117,707 | $ | 116,118 | $ | 117,707 | $ | 116,118 | ||||||||
Nonperforming assets | 46,063 | 72,202 | 46,063 | 72,202 | ||||||||||||
Allowance for loan losses / total loans | 1.29 | % | 1.45 | % | 1.29 | % | 1.45 | % | ||||||||
Net charge-offs/ average loans (annualized) | 0.52 | 0.26 | 0.30 | 0.19 | ||||||||||||
Nonperforming loans / total loans | 0.46 | 0.86 | 0.46 | 0.86 | ||||||||||||
Nonperforming assets / total assets | 0.32 | 0.54 | 0.32 | 0.54 | ||||||||||||
Allowance for loan losses / nonperforming loans | 283.61 | 169.52 | 283.61 | 169.52 | ||||||||||||
Other ratios (annualized): | ||||||||||||||||
Shareholders’ equity / total assets | 7.55 | % | 7.84 | % | 7.55 | % | 7.84 | % | ||||||||
Interest-rate spread | 2.88 | 3.45 | 3.07 | 3.46 | ||||||||||||
Net interest margin | 2.91 | 3.52 | 3.10 | 3.55 | ||||||||||||
Share related: | ||||||||||||||||
Book value per common share | $ | 24.22 | $ | 22.43 | $ | 24.22 | $ | 22.43 | ||||||||
Tangible book value per common share | 17.73 | 16.52 | 17.73 | 16.52 | ||||||||||||
Common stock closing price | 39.88 | 33.58 | 39.88 | 33.58 | ||||||||||||
Dividends declared per common share | 0.21 | 0.19 | 0.61 | 0.55 | ||||||||||||
Common shares issued and outstanding | 45,562 | 46,415 | 45,562 | 46,415 | ||||||||||||
Basic shares (average) | 45,444 | 47,303 | 45,450 | 48,240 | ||||||||||||
Diluted shares (average) | 46,313 | 48,121 | 46,249 | 49,091 | ||||||||||||
| Consolidated Statements of Condition (unaudited) | ||||||||||||
| September 30, | June 30, | September 30, | ||||||||||
| (Dollars in thousands) | 2003 | 2003 | 2002 | |||||||||
Assets: | ||||||||||||
Cash and due from depository institutions | $ | 214,566 | $ | 254,645 | $ | 212,606 | ||||||
Short-term investments | 26,196 | 20,671 | 30,542 | |||||||||
Securities: | ||||||||||||
Trading, at fair value | 56 | 3,893 | 1,104 | |||||||||
Available for sale, at fair value | 4,284,134 | 4,395,400 | 4,106,734 | |||||||||
Total securities | 4,284,190 | 4,399,293 | 4,107,838 | |||||||||
Loans held for sale | 278,402 | 321,055 | 315,585 | |||||||||
Loans: | ||||||||||||
Residential mortgages | 3,758,106 | 3,541,922 | 3,538,632 | |||||||||
Commercial | 2,018,279 | 2,010,109 | 1,884,215 | |||||||||
Commercial real estate | 1,187,065 | 1,144,429 | 1,005,296 | |||||||||
Consumer | 2,131,878 | 2,013,486 | 1,562,849 | |||||||||
Total loans | 9,095,328 | 8,709,946 | 7,990,992 | |||||||||
Allowance for loan losses | (117,707 | ) | (119,239 | ) | (116,118 | ) | ||||||
Loans, net | 8,977,621 | 8,590,707 | 7,874,874 | |||||||||
Accrued interest receivable | 53,091 | 54,034 | 58,480 | |||||||||
Premises and equipment, net | 85,521 | 85,062 | 82,667 | |||||||||
Goodwill and intangible assets | 315,556 | 316,989 | 297,054 | |||||||||
Cash surrender value of life insurance | 178,474 | 176,324 | 169,803 | |||||||||
Prepaid expenses and other assets | 195,166 | 233,792 | 124,124 | |||||||||
Total assets | $ | 14,608,783 | $ | 14,452,572 | $ | 13,273,573 | ||||||
Liabilities and Shareholders’ Equity: | ||||||||||||
Deposits: | ||||||||||||
Demand deposits | $ | 1,017,870 | $ | 1,035,389 | $ | 911,283 | ||||||
NOW accounts | 1,010,071 | 1,064,336 | 863,625 | |||||||||
Money market accounts | 2,301,148 | 2,249,805 | 1,871,007 | |||||||||
Savings accounts | 1,113,085 | 1,115,976 | 987,470 | |||||||||
Certificates of deposit | 2,590,513 | 2,555,442 | 2,637,066 | |||||||||
Total retail deposits | 8,032,687 | 8,020,948 | 7,270,451 | |||||||||
Treasury deposits | 100,884 | 64,754 | 82,972 | |||||||||
Total deposits | 8,133,571 | 8,085,702 | 7,353,423 | |||||||||
Federal Home Loan Bank advances | 2,149,762 | 2,185,830 | 2,362,298 | |||||||||
Federal funds purchased and securities sold under agreements to repurchase | 2,531,875 | 2,480,666 | 2,165,665 | |||||||||
Other long-term debt | 511,255 | 326,000 | 126,000 | |||||||||
Accrued expenses and other liabilities | 169,301 | 155,233 | 82,679 | |||||||||
Total liabilities | 13,495,764 | 13,233,431 | 12,090,065 | |||||||||
Corporation-obligated mandatorily redeemable capital securities of subsidiary trusts | - | 110,255 | 132,650 | |||||||||
Preferred stock of subsidiary corporation | 9,577 | 9,577 | 9,577 | |||||||||
Shareholders’ equity | 1,103,442 | 1,099,309 | 1,041,281 | |||||||||
Total liabilities and shareholders’ equity | $ | 14,608,783 | $ | 14,452,572 | $ | 13,273,573 | ||||||
See Selected Financial Highlights for footnotes.
| Consolidated Statements of Income (unaudited) | |||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||
| (In thousands, except per share data) | 2003 | 2002 | 2003 | 2002 | |||||||||
Interest income: | |||||||||||||
Loans and loans held for sale | $ | 119,646 | $ | 118,492 | $ | 356,313 | $ | 344,014 | |||||
Securities and short-term investments | 42,050 | 55,507 | 139,567 | 174,445 | |||||||||
Total interest income | 161,696 | 173,999 | 495,880 | 518,459 | |||||||||
Interest expense: | |||||||||||||
Deposits | 26,824 | 36,169 | 84,992 | 112,787 | |||||||||
Borrowings | 36,717 | 35,240 | 107,438 | 104,034 | |||||||||
Total interest expense | 63,541 | 71,409 | 192,430 | 216,821 | |||||||||
Net interest income | 98,155 | 102,590 | 303,450 | 301,638 | |||||||||
Provision for loan losses | 10,000 | 5,000 | 20,000 | 13,000 | |||||||||
Net interest income after provision for loan losses | 88,155 | 97,590 | 283,450 | 288,638 | |||||||||
Noninterest income: | |||||||||||||
Deposit service fees | 17,868 | 15,797 | 52,287 | 44,527 | |||||||||
Insurance revenue | 9,954 | 6,386 | 30,898 | 20,198 | |||||||||
Loan and loan servicing fees | 7,755 | 4,346 | 18,383 | 12,442 | |||||||||
Financial advisory services | 4,833 | 5,997 | 15,493 | 14,313 | |||||||||
Wealth and investment advisors | 4,826 | 3,770 | 13,925 | 12,225 | |||||||||
Gain on sale of loans and loan servicing, net | 9,829 | 1,839 | 16,666 | 3,471 | |||||||||
Increase in cash surrender value of life insurance | 2,150 | 2,310 | 6,408 | 6,779 | |||||||||
Other | 2,737 | 750 | 6,021 | 3,807 | |||||||||
Total fee revenue | 59,952 | 41,195 | 160,081 | 117,762 | |||||||||
Gain on sale of securities, net | 4,560 | 4,912 | 15,859 | 9,443 | |||||||||
Total noninterest income | 64,512 | 46,107 | 175,940 | 127,205 | |||||||||
Noninterest expenses: | |||||||||||||
Compensation and benefits | 51,592 | 43,303 | 152,659 | 124,699 | |||||||||
Occupancy | 7,457 | 6,665 | 23,228 | 19,162 | |||||||||
Furniture and equipment | 8,255 | 7,559 | 23,351 | 20,939 | |||||||||
Intangible amortization | 4,001 | 3,978 | 11,931 | 12,020 | |||||||||
Marketing | 2,729 | 2,622 | 9,450 | 7,484 | |||||||||
Professional services | 2,582 | 2,754 | 8,054 | 7,901 | |||||||||
Capital securities and preferred stock dividend | 216 | 3,449 | 6,312 | 11,034 | |||||||||
Other | 14,091 | 13,799 | 41,943 | 35,932 | |||||||||
Total noninterest expenses | 90,923 | 84,129 | 276,928 | 239,171 | |||||||||
Income before income taxes and cumulative effect of change in accounting method | 61,744 | 59,568 | 182,462 | 176,672 | |||||||||
Income taxes | 20,429 | 19,144 | 60,600 | 56,061 | |||||||||
Income before cumulative effect of change in accounting method | 41,315 | 40,424 | 121,862 | 120,611 | |||||||||
Cumulative effect of change in accounting method, net of taxes (a) | - | - | - | (7,280 | ) | ||||||||
Net income | $ | 41,315 | $ | 40,424 | $ | 121,862 | $ | 113,331 | |||||
Net income per common share before cumulative effect of change in accounting method: | |||||||||||||
Basic | $ | 0.91 | $ | 0.85 | $ | 2.68 | $ | 2.50 | |||||
Diluted | 0.89 | 0.84 | 2.63 | 2.46 | |||||||||
Net income per common share: | |||||||||||||
Basic | $ | 0.91 | $ | 0.85 | $ | 2.68 | $ | 2.35 | |||||
Diluted | 0.89 | 0.84 | 2.63 | 2.31 | |||||||||
See Selected Financial Highlights for footnotes.
| Consolidated Statements of Income (unaudited) | ||||||||||||||||
| Three Months Ended | ||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||
| (In thousands, except per share data) | 2003 | 2003 | 2003 | 2002 | 2002 | |||||||||||
Interest income: | ||||||||||||||||
Loans and loans held for sale | $ | 119,646 | $ | 118,965 | $ | 117,702 | $ | 120,386 | $ | 118,492 | ||||||
Securities and short-term investments | 42,050 | 45,772 | 51,745 | 53,189 | 55,507 | |||||||||||
Total interest income | 161,696 | 164,737 | 169,447 | 173,575 | 173,999 | |||||||||||
Interest expense: | ||||||||||||||||
Deposits | 26,824 | 28,750 | 29,418 | 33,375 | 36,169 | |||||||||||
Borrowings | 36,717 | 35,368 | 35,353 | 36,110 | 35,240 | |||||||||||
Total interest expense | 63,541 | 64,118 | 64,771 | 69,485 | 71,409 | |||||||||||
Net interest income | 98,155 | 100,619 | 104,676 | 104,090 | 102,590 | |||||||||||
Provision for loan losses | 10,000 | 5,000 | 5,000 | 16,000 | 5,000 | |||||||||||
Net interest income after provision for loan losses | 88,155 | 95,619 | 99,676 | 88,090 | 97,590 | |||||||||||
Noninterest income: | ||||||||||||||||
Deposit service fees | 17,868 | 17,529 | 16,890 | 17,083 | 15,797 | |||||||||||
Insurance revenue | 9,954 | 9,980 | 10,964 | 6,875 | 6,386 | |||||||||||
Loan and loan servicing fees | 7,755 | 4,723 | 5,905 | 6,089 | 4,346 | |||||||||||
Financial advisory services | 4,833 | 5,229 | 5,431 | 4,964 | 5,997 | |||||||||||
Wealth and investment advisors | 4,826 | 4,521 | 4,578 | 3,693 | 3,770 | |||||||||||
Gain on sale of loans and loan servicing, net | 9,829 | 4,066 | 2,771 | 2,337 | 1,839 | |||||||||||
Increase in cash surrender value of life insurance | 2,150 | 2,143 | 2,115 | 2,263 | 2,310 | |||||||||||
Other | 2,737 | 1,423 | 1,861 | 1,129 | 750 | |||||||||||
Total fee revenue | 59,952 | 49,614 | 50,515 | 44,433 | 41,195 | |||||||||||
Gain on sale of securities, net | 4,560 | 8,666 | 2,633 | 13,934 | 4,912 | |||||||||||
Total noninterest income | 64,512 | 58,280 | 53,148 | 58,367 | 46,107 | |||||||||||
Noninterest expenses: | ||||||||||||||||
Compensation and benefits | 51,592 | 50,506 | 50,561 | 46,343 | 43,303 | |||||||||||
Occupancy | 7,457 | 7,672 | 8,099 | 7,444 | 6,665 | |||||||||||
Furniture and equipment | 8,255 | 7,575 | 7,521 | 8,228 | 7,559 | |||||||||||
Intangible amortization | 4,001 | 3,968 | 3,962 | 3,997 | 3,978 | |||||||||||
Marketing | 2,729 | 3,236 | 3,485 | 3,038 | 2,622 | |||||||||||
Professional services | 2,582 | 2,994 | 2,478 | 3,503 | 2,754 | |||||||||||
Capital securities and preferred stock dividend | 216 | 2,958 | 3,138 | 3,355 | 3,449 | |||||||||||
Other | 14,091 | 14,290 | 13,562 | 13,244 | 13,799 | |||||||||||
Total noninterest expenses | 90,923 | 93,199 | 92,806 | 89,152 | 84,129 | |||||||||||
Income before income taxes and cumulative effect of change in accounting method | 61,744 | 60,700 | 60,018 | 57,305 | 59,568 | |||||||||||
Income taxes | 20,429 | 20,090 | 20,081 | 17,904 | 19,144 | |||||||||||
Income before cumulative effect of change in accounting method | 41,315 | 40,610 | 39,937 | 39,401 | 40,424 | |||||||||||
Cumulative effect of change in accounting method, net of taxes (a) | - | - | - | - | - | |||||||||||
Net income | $ | 41,315 | $ | 40,610 | $ | 39,937 | $ | 39,401 | $ | 40,424 | ||||||
Net income per common share before cumulative effect of change in accounting method: | ||||||||||||||||
Basic | $ | 0.91 | $ | 0.89 | $ | 0.88 | $ | 0.86 | $ | 0.85 | ||||||
Diluted | 0.89 | 0.88 | 0.86 | 0.85 | 0.84 | |||||||||||
Net income per common share: | ||||||||||||||||
Basic | $ | 0.91 | $ | 0.89 | $ | 0.88 | $ | 0.86 | $ | 0.85 | ||||||
Diluted | 0.89 | 0.88 | 0.86 | 0.85 | 0.84 | |||||||||||
See Selected Financial Highlights for footnotes.
| Retail and Wholesale Interest-Rate Spreads (unaudited) | ||||||||||||||||||||
| Three Months Ended, | September | June | March | December | September | |||||||||||||||
| 2003 | 2003 | 2003 | 2002 | 2002 | ||||||||||||||||
Interest-rate spread | ||||||||||||||||||||
Total interest-earning assets | 4.75 | % | 5.06 | % | 5.35 | % | 5.61 | % | 5.93 | % | ||||||||||
Total interest-bearing liabilities | 1.87 | 2.00 | 2.09 | 2.26 | 2.48 | |||||||||||||||
Interest-rate spread | 2.88 | % | 3.06 | % | 3.26 | % | 3.35 | % | 3.45 | % | ||||||||||
Net interest margin | 2.91 | 3.10 | 3.30 | 3.39 | 3.52 | |||||||||||||||
Retail interest-rate spread | ||||||||||||||||||||
Yield on loans and loans held for sale | 5.09 | % | 5.30 | % | 5.52 | % | 5.71 | % | 6.01 | % | ||||||||||
Cost of deposits | 1.32 | 1.46 | 1.57 | 1.77 | 1.96 | |||||||||||||||
Spread | 3.77 | % | 3.84 | % | 3.95 | % | 3.94 | % | 4.05 | % | ||||||||||
Wholesale interest-rate spread | ||||||||||||||||||||
Yield on securities and short-term investments | 4.04 | % | 4.52 | % | 5.02 | % | 5.40 | % | 5.77 | % | ||||||||||
Cost of borrowings | 2.70 | 2.88 | 2.90 | 3.07 | 3.40 | |||||||||||||||
Spread | 1.34 | % | 1.64 | % | 2.12 | % | 2.33 | % | 2.37 | % | ||||||||||
| Consolidated Average Statements of Condition (unaudited) | |||||||||||||||||||
| Three Months Ended September 30, | 2003 | 2002 | |||||||||||||||||
| (Dollars in thousands) | Average balance | Interest | Fully tax- equivalent yield/rate | Average balance | Interest | Fully tax- equivalent yield/rate | |||||||||||||
Assets: | |||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||
Loans | $ | 8,953,970 | $ | 114,792 | 5.09 | % | $ | 7,636,246 | $ | 115,846 | 6.01 | % | |||||||
Loans held for sale | 385,059 | 4,854 | 5.04 | 190,867 | 2,646 | 5.55 | |||||||||||||
Securities | 4,201,679 | 42,408 | 4.04 | (d) | 3,946,460 | 55,758 | 5.79 | (d) | |||||||||||
Short-term investments | 18,593 | 56 | 1.18 | 14,712 | 49 | 1.30 | |||||||||||||
Total interest-earning assets | 13,559,301 | 162,110 | 4.75 | 11,788,285 | 174,299 | 5.93 | |||||||||||||
Noninterest-earning assets | 1,017,648 | 857,424 | |||||||||||||||||
Total assets | $ | 14,576,949 | $ | 12,645,709 | |||||||||||||||
Liabilities and Shareholders’ Equity: | |||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||
Demand deposits | $ | 1,042,556 | $ | - | - | % | $ | 923,065 | $ | - | - | % | |||||||
Savings, NOW and money market deposits | 4,393,262 | 9,851 | 0.89 | 3,617,743 | 13,190 | 1.45 | |||||||||||||
Time deposits | 2,642,488 | 16,973 | 2.55 | 2,769,955 | 22,979 | 3.29 | |||||||||||||
Total interest-bearing deposits | 8,078,306 | 26,824 | 1.32 | 7,310,763 | 36,169 | 1.96 | |||||||||||||
Federal Home Loan Bank advances | 2,319,927 | 22,127 | 3.73 | 2,312,409 | 25,348 | 4.29 | |||||||||||||
Fed funds and repurchase agreements | 2,576,065 | 7,486 | 1.14 | 1,619,238 | 7,102 | 1.72 | |||||||||||||
Other long-term debt | 447,643 | 7,104 | 6.35 | 126,000 | 2,790 | 8.86 | |||||||||||||
Total borrowings | 5,343,635 | 36,717 | 2.70 | 4,057,647 | 35,240 | 3.40 | |||||||||||||
Total interest-bearing liabilities | 13,421,941 | 63,541 | 1.87 | 11,368,410 | 71,409 | 2.48 | |||||||||||||
Noninterest-bearing liabilities | 81,836 | 76,724 | |||||||||||||||||
Total liabilities | 13,503,777 | 11,445,134 | |||||||||||||||||
Capital securities and preferred stock of subsidiary corporation | 9,577 | 144,041 | |||||||||||||||||
Shareholders’ equity | 1,063,595 | 1,056,534 | |||||||||||||||||
Total liabilities and shareholders’ equity | $ | 14,576,949 | $ | 12,645,709 | |||||||||||||||
| 98,569 | 102,890 | ||||||||||||||||||
Less: tax-equivalent adjustment | (414 | ) | (300 | ) | |||||||||||||||
Net interest income | $ | 98,155 | $ | 102,590 | |||||||||||||||
Interest-rate spread | 2.88 | % | 3.45 | % | |||||||||||||||
Net interest margin | 2.91 | % | 3.52 | % | |||||||||||||||
See Selected Financial Highlights for footnotes.
| Consolidated Average Statements of Condition (unaudited) | ||||||||||||||||||||
Nine Months Ended September 30, | 2003 | 2002 | ||||||||||||||||||
(Dollars in thousands) | Average balance | Interest | Fully tax- equivalent yield/rate | Average balance | Interest | Fully tax- equivalent yield/rate | ||||||||||||||
| Assets: | ||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||
Loans | $ | 8,608,235 | $ | 342,793 | 5.29 | % | $ | 7,254,589 | $ | 338,927 | 6.20 | % | ||||||||
Loans held for sale | 342,533 | 13,520 | 5.26 | 123,397 | 5,087 | 5.50 | ||||||||||||||
Securities | 4,185,538 | 140,521 | 4.54 | (d) | 4,024,696 | 175,048 | 5.89 | (d) | ||||||||||||
Short-term investments | 23,161 | 174 | 0.99 | 22,031 | 298 | 1.78 | ||||||||||||||
Total interest-earning assets | 13,159,467 | 497,008 | 5.05 | 11,424,713 | 519,360 | 6.08 | ||||||||||||||
Noninterest-earning assets | 967,783 | 849,422 | ||||||||||||||||||
Total assets | $ | 14,127,250 | $ | 12,274,135 | ||||||||||||||||
Liabilities and Shareholders’ Equity: | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||
Demand deposits | $ | 994,803 | $ | - | - | % | $ | 880,540 | $ | - | - | % | ||||||||
Savings, NOW and money market deposits | 4,218,937 | 32,403 | 1.03 | 3,458,844 | 36,725 | 1.42 | ||||||||||||||
Time deposits | 2,651,806 | 52,589 | 2.65 | 2,846,438 | 76,062 | 3.57 | ||||||||||||||
Total interest-bearing deposits | 7,865,546 | 84,992 | 1.44 | 7,185,822 | 112,787 | 2.10 | ||||||||||||||
Federal Home Loan Bank advances | 2,428,287 | 69,204 | 3.76 | 2,324,385 | 77,626 | 4.40 | ||||||||||||||
Fed funds and repurchase agreements | 2,245,481 | 20,521 | 1.21 | 1,368,187 | 18,038 | 1.74 | ||||||||||||||
Other long-term debt | 357,469 | 17,713 | 6.61 | 126,000 | 8,370 | 8.86 | ||||||||||||||
Total borrowings | 5,031,237 | 107,438 | 2.82 | 3,818,572 | 104,034 | 3.60 | ||||||||||||||
Total interest-bearing liabilities | 12,896,783 | 192,430 | 1.98 | 11,004,394 | 216,821 | 2.62 | ||||||||||||||
Noninterest-bearing liabilities | 77,393 | 78,913 | ||||||||||||||||||
Total liabilities | 12,974,176 | 11,083,307 | ||||||||||||||||||
Capital securities and preferred stock of subsidiary corporation | 87,517 | 153,132 | ||||||||||||||||||
Shareholders’ equity | 1,065,557 | 1,037,696 | ||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 14,127,250 | $ | 12,274,135 | ||||||||||||||||
| 304,578 | 302,539 | |||||||||||||||||||
Less: tax-equivalent adjustment | (1,128 | ) | (901 | ) | ||||||||||||||||
Net interest income | $ | 303,450 | $ | 301,638 | ||||||||||||||||
Interest-rate spread | 3.07 | % | 3.46 | % | ||||||||||||||||
Net interest margin | 3.10 | % | 3.55 | % | ||||||||||||||||
See Selected Financial Highlights for footnotes.
| Asset Quality (unaudited) | ||||||||||||||||||||||||||
| At or for the Three Months Ended, | ||||||||||||||||||||||||||
| Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | ||||||||||||||||||||||
| (Dollars in thousands) | 2003 | 2003 | 2003 | 2002 | 2002 | |||||||||||||||||||||
| Nonperforming Assets | ||||||||||||||||||||||||||
| Nonperforming loans: | ||||||||||||||||||||||||||
Commercial: | ||||||||||||||||||||||||||
Commercial | $ | 17,024 | $ | 27,881 | $ | 27,784 | $ | 16,001 | $ | 19,000 | ||||||||||||||||
Specialized industry | 6,493 | 3,399 | 3,399 | 3,399 | 27,231 | |||||||||||||||||||||
Equipment financing | 8,241 | 8,722 | 8,960 | 6,586 | 5,559 | |||||||||||||||||||||
Total commercial | 31,758 | 40,002 | 40,143 | 25,986 | 51,790 | |||||||||||||||||||||
Commercial real estate | 1,940 | 4,920 | 6,910 | 9,109 | 10,124 | |||||||||||||||||||||
Residential | 7,087 | 6,596 | 5,712 | 7,263 | 5,521 | |||||||||||||||||||||
Consumer | 718 | 767 | 1,510 | 894 | 1,062 | |||||||||||||||||||||
| Total nonperforming loans | 41,503 | 52,285 | 54,275 | 43,252 | 68,497 | |||||||||||||||||||||
| Loans held for sale | - | - | 3,444 | 3,706 | - | |||||||||||||||||||||
Other real estate owned and repossessed assets: | ||||||||||||||||||||||||||
Commercial | 4,019 | 4,224 | 3,967 | 2,568 | 3,007 | |||||||||||||||||||||
Residential | 541 | 520 | 234 | 477 | 686 | |||||||||||||||||||||
Consumer | - | 9 | 1 | 32 | 12 | |||||||||||||||||||||
Total other real estate owned and repossessed assets | 4,560 | 4,753 | 4,202 | 3,077 | 3,705 | |||||||||||||||||||||
| Total nonperforming assets | $ | 46,063 | $ | 57,038 | $ | 61,921 | $ | 50,035 | $ | 72,202 | ||||||||||||||||
| Summary of Classified Loans | ||||||||||||||||||||||||||
Substandard: | ||||||||||||||||||||||||||
Accruing | $ | 69,216 | $ | 62,064 | $ | 74,398 | $ | 70,245 | $ | 102,436 | ||||||||||||||||
Nonaccruing | 36,365 | 44,313 | 45,005 | 38,994 | 62,170 | |||||||||||||||||||||
Total substandard | 105,581 | 106,377 | 119,403 | 109,239 | 164,606 | |||||||||||||||||||||
Doubtful: | ||||||||||||||||||||||||||
Accruing | - | - | - | - | 3 | |||||||||||||||||||||
Nonaccruing | 3,792 | 6,617 | 7,279 | 3,743 | 3,724 | |||||||||||||||||||||
Total doubtful | 3,792 | 6,617 | 7,279 | 3,743 | 3,727 | |||||||||||||||||||||
Loss | - | - | - | - | - | |||||||||||||||||||||
Total classified loans | $ | 109,373 | $ | 112,994 | $ | 126,682 | $ | 112,982 | $ | 168,333 | ||||||||||||||||
| Classified as a percent of loans | 1.2 | % | 1.3 | % | 1.5 | % | 1.4 | % | 2.1 | % | ||||||||||||||||
| Allowance for Loan Losses (unaudited) | ||||||||||||||||||||
| At or for the Three Months Ended, | ||||||||||||||||||||
| Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | ||||||||||||||||
| (Dollars in thousands) | 2003 | 2003 | 2003 | 2002 | 2002 | |||||||||||||||
| Allowance for Loan Losses | ||||||||||||||||||||
| Beginning balance | $ | 119,239 | $ | 118,596 | $ | 116,804 | $ | 116,118 | $ | 99,698 | ||||||||||
Allowance for purchased loans | - | - | 146 | - | 16,338 | |||||||||||||||
Provision | 10,000 | 5,000 | 5,000 | 16,000 | 5,000 | |||||||||||||||
Write-down of loans transferred to held for sale | - | - | - | (12,432 | ) | - | ||||||||||||||
Charge-offs: | ||||||||||||||||||||
Residential | 39 | 160 | 78 | 84 | 249 | |||||||||||||||
Commercial: | ||||||||||||||||||||
Specialized industry | 3,870 | 327 | - | 2,569 | 1,892 | |||||||||||||||
All other commercial | 9,361 | 4,232 | 3,601 | 1,031 | 3,029 | |||||||||||||||
Total commercial | 13,231 | 4,559 | 3,601 | 3,600 | 4,921 | |||||||||||||||
Commercial real estate | - | - | - | - | - | |||||||||||||||
Consumer | 122 | 153 | 195 | 220 | 246 | |||||||||||||||
Total charge-offs | 13,392 | 4,872 | 3,874 | 3,904 | 5,416 | |||||||||||||||
Recoveries | (1,860 | ) | (515 | ) | (520 | ) | (1,022 | ) | (498 | ) | ||||||||||
Net loan charge-offs | 11,532 | 4,357 | 3,354 | 2,882 | 4,918 | |||||||||||||||
| Ending balance | $ | 117,707 | $ | 119,239 | $ | 118,596 | $ | 116,804 | $ | 116,118 | ||||||||||
| Asset Quality Ratios: | ||||||||||||||||||||
Allowance for loan losses / total loans | 1.29 | % | 1.37 | % | 1.39 | % | 1.48 | % | �� | 1.45 | % | |||||||||
Net charge-offs/ average loans (annualized) | 0.52 | 0.20 | 0.16 | 0.14 | 0.26 | |||||||||||||||
Nonperforming loans / total loans | 0.46 | 0.60 | 0.64 | 0.55 | 0.86 | |||||||||||||||
Nonperforming assets / total assets | 0.32 | 0.39 | 0.43 | 0.37 | 0.54 | |||||||||||||||
Allowance for loan losses / nonperforming loans | 283.61 | 228.06 | 218.51 | 270.05 | 169.52 | |||||||||||||||
