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 INCREASE IN PER SHARE NET INCOME
FOR THE FOURTH QUARTER AND FULL YEAR
WATERBURY, Conn., January 22, 2004 - Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, today announced net income of $41.4 million in the fourth quarter, compared to $39.4 million in the year-ago period, an increase of 5 percent. Net income per diluted share also increased 5 percent to $.89 in the fourth quarter, compared to $.85 in the year-ago period. Included in the fourth quarter of 2003 are $1.3 million of non-recurring merger expenses, or $.02 per diluted share, related to the acquisition of North American Bank and Trust Company.
Net income in 2003 totaled $163.2 million, compared to $152.7 million in the prior year. Net income per diluted share was $3.52 in 2003, compared to $3.16 in the prior year, an increase of 11 percent. Excluding the cumulative effect of a change in accounting method in the 2002 first quarter, net income in 2002 was $160.0 million or $3.31 per diluted share.
“We are pleased to report solid quarterly results in a year of significant achievement, including double-digit growth in loans and deposits,” stated Webster chairman and chief executive officer James C. Smith. “The fourth quarter was marked by notable improvement in net interest margin and exceptional asset quality.”
“Upon the expected approval of Webster Bank’s application for a national bank charter, we will have completed our transformation to a commercial bank. As the largest publicly-traded bank based in southern New England, we are in the unique position to fill the competitive need for a homegrown provider of banking, insurance and investment services in our markets. We will build on this competitive advantage to grow loans and deposits faster than the market and to drive revenue from our fee-based businesses,” Smith said.
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Revenues and Expenses
Total revenues (net interest income plus total noninterest income) were $163.8 million in the fourth quarter, compared to $162.5 million a year ago. Total revenues, excluding securities gains, increased 8 percent to $161.1 million in the fourth quarter from $148.5 million a year ago. For the full-year 2003, total revenues increased 9 percent to $646.0 million. Total revenues, excluding securities gains, increased 10 percent to $627.4 million for the full-year 2003. Revenue growth over the past year has been led by increases in Webster’s fee revenue categories.
Net interest income was $107.3 million in the fourth quarter of 2003, compared to $104.1 million in the year-ago period and $100.9 million in the third quarter. The improvement reflects a reduction in the amount of premium amortization within the securities portfolio compared to the first three quarters of 2003 when Webster experienced an acceleration of prepayments due to low market interest rates. Lower funding costs for deposits and borrowings also contributed to the higher level of net interest income during the quarter. Net interest income in the full-year 2003 totaled $413.5 million, compared to $405.7 million in 2002.
Webster’s net interest margin (annualized net interest income as a percentage of average earning assets) was 3.18 percent in the quarter, compared to 3.39 percent in the year-ago period and 2.99 percent in the third quarter. Webster’s net interest margin for all of 2003 was 3.14 percent, compared to 3.50 percent for 2002. Strong loan growth in 2003 helped to offset compression of the net interest margin caused by the lower interest rate environment over the course of the year.
In the fourth quarter of 2003, total noninterest income decreased 3 percent to $56.5 million, compared $58.4 million in the year-ago period. Total fee revenue (total noninterest income excluding securities gains) grew 21 percent in the fourth quarter to $53.8 million from the year-ago period. This growth was led by increases in insurance revenues, loan and loan servicing fees and financial advisory services. For the full-year 2003, total noninterest income increased 25 percent to $232.5 million. Total fee revenue increased 32 percent to $213.9 million in 2003, due primarily to the growth of deposit and loan service fees, insurance revenues and net gains on sales of loans and loan servicing. In the fourth quarter, securities gains totaled $2.7 million, compared to $13.9 million in the year-ago period, and for the full-year 2003 totaled $18.6 million, compared to $23.4 million in 2002.
Total noninterest expenses for the 2003 fourth quarter were $98.3 million, up from $89.2 million one year ago. Growth from the year-ago period includes the $1.3 million of expenses from the acquisition of North American Bank and Trust Company completed in November 2003. In the entire 2003 year, total noninterest expenses were $378.0 million, compared to $328.3 million in 2002, an increase of 15 percent that reflects the impact of acquisitions and continuing investment in personnel, technology and infrastructure to meet our strategic plan for growth.
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Balance Sheet Growth
At December 31, 2003, total assets were $14.6 billion, up 8 percent from $13.5 billion one year ago. Total loans of $9.2 billion at December 31, 2003 increased 16 percent from $7.9 billion a year ago. Deposits totaled $8.4 billion at December 31, 2003, up almost $800 million, or 10 percent, compared to a year ago. Over the past year, core deposit growth was especially strong at 14 percent.
“Our strategic initiatives have driven double-digit growth in loans and deposits over the past year,” stated Webster president and chief operating officer William T. Bromage. “The strength of this growth demonstrates customer recognition of the depth and breadth of our product set and our ability to meet their financial needs.”
At the end of the fourth quarter, commercial loans, including commercial real estate, were $3.3 billion, up 17 percent from $2.8 billion a year ago. Consumer loans increased 26 percent to $2.1 billion, compared to $1.7 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 December 31, 2003, compared to 57 percent a year ago.
Core deposits (consisting of checking, money market and savings accounts) of $5.6 billion at December 31, 2003 increased by 14 percent from a year ago and represented 67 percent of total deposits, up from 65 percent at December 31, 2002. Webster’s growth in deposits was driven in part by its High Performance Checking products and the continuing success of its de novo branches in Fairfield County, Connecticut. During 2003, Webster continued its de novo expansion by opening new branches in Norwalk, CT and Scarsdale, NY.
Book value per common share of $24.91 at December 31, 2003 increased from $22.69 one year ago. Tangible book value per share of $18.18 at December 31, 2003 increased from $16.64 one year ago.
Asset Quality
Nonperforming assets totaled $42.9 million or 0.29 percent of total assets at December 31, 2003, compared to $50.0 million or 0.37 percent a year ago and $46.1 million or 0.32 percent at September 30, 2003.
“Webster’s disciplined approach to credit management has been a hallmark of our institution through many economic cycles,” stated Webster chief financial officer William J. Healy. “Our efforts to identify and address potential problem loans at an early stage continue to drive our approach to portfolio management.”
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The allowance for loan losses totaled $121.7 million, or 1.32 percent of total loans at December 31, 2003, compared to $116.8 million, or 1.48 percent, a year ago and $117.7 million, or 1.29 percent, at September 30, 2003. The ratio of the allowance to nonperforming loans at December 31, 2003 increased to 323 percent, compared to 270 percent a year ago and 284 percent at September 30, 2003. The improvements in this ratio are due primarily to the decline in nonperforming loans.
The provision for loan losses totaled $5.0 million in the fourth quarter compared to $16.0 million in the year-ago period. The higher provision in the fourth quarter of 2002 offset a write-down against the allowance for loan losses of loans that were transferred to held for sale in that quarter. The full-year 2003 provision for loan losses totaled $25.0 million, compared to $29.0 million in the prior year.
Webster’s net loan charge-offs in the fourth quarter of 2003 were $3.0 million compared to $2.9 million in the year-ago period. The annualized net charge-off ratio was 0.13 percent in the 2003 fourth quarter, compared to 0.14 percent in the year-ago period. The full-year 2003 charge-off ratio was 0.25 percent, compared to 0.18 percent in 2002.
Strategic Actions
Webster announced in December an agreement to acquire Phoenix National Trust Company, which provides trust, custody and other financial services. Upon completion of the transaction, Phoenix National Trust will become part of Webster Bank’s investment and trust division, Webster Financial Advisors.
On November 7, 2003, Webster completed the acquisition of North American Bank and Trust Company, a Connecticut state-chartered commercial bank with $195 million in assets and 8 offices in the Greater Waterbury area.
Webster expanded its footprint beyond Connecticut ’s borders when it announced in October that it had reached a definitive agreement to acquire FIRSTFED AMERICA BANCORP, INC. (AMEX: FAB), headquartered in Swansea, Massachusetts, the holding company for First Federal Savings Bank of America. FIRSTFED is a federally-chartered savings and loan holding company with $2.5 billion in assets at September 30, 2003 and 26 branches, 19 in Massachusetts and 7 in Rhode Island. The combined bank would rank among the 50 largest in the United States, with $16 billion in assets, market capitalization of $2.6 billion and a 142-branch retail footprint in Connecticut, Massachusetts and Rhode Island. Webster expects the acquisition to close in the second quarter of 2004.
In September, Webster Bank announced it filed an application with the Office of the Comptroller of the Currency (OCC) to convert to a national bank charter. Webster Bank has been a federal savings bank regulated by the Office of Thrift Supervision (OTS). As part of the 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 the second quarter of 2004.
4
***
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, financial planning, trust and investment services through 119 banking offices, 233 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 Webster 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 Webster’s 2003 fourth quarter earnings announcement will be held today, Thursday, January 22, at 1:00 p.m. Eastern Time and may be heard through Webster’s investor relations website at www.wbst.com, or in listen-only mode by calling 1-800-299-8538 (Access Code: 21041266). 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.
--30--
5
Webster Financial Corporation
| Selected Financial Highlights (unaudited) | ||||||||||||||||
| At or for the Three Months Ended December 31, | At or for the Twelve Months Ended December 31, | |||||||||||||||
| (In thousands, except per share data) | 2003 | 2002 | 2003 | 2002 | ||||||||||||
Net income and performance ratios (annualized): | ||||||||||||||||
| Net income | $ | 41,386 | $ | 39,401 | $ | 163,248 | $ | 152,732 | ||||||||
| Net income per diluted common share | 0.89 | 0.85 | 3.52 | 3.16 | ||||||||||||
| Return on average shareholders’ equity | 14.92 | % | 15.41 | % | 15.16 | % | 14.78 | % | ||||||||
| Return on average assets | 1.15 | 1.18 | 1.15 | 1.22 | ||||||||||||
Net income and performance ratios before cumulative effect of change in accounting method (annualized): | ||||||||||||||||
| Net income | $ | 41,386 | $ | 39,401 | $ | 163,248 | $ | 152,732 | ||||||||
| Cumulative effect of change in accounting method (a) | – | – | – | 7,280 | ||||||||||||
Net income before cumulative effect of change in accounting method | 41,386 | 39,401 | 163,248 | 160,012 | ||||||||||||
| Net income per diluted common share | 0.89 | 0.85 | 3.52 | 3.31 | ||||||||||||
| Return on average shareholders’ equity | 14.92 | % | 15.41 | % | 15.16 | % | 15.48 | % | ||||||||
| Return on average assets | 1.15 | 1.18 | 1.15 | 1.28 | ||||||||||||
| Noninterest income as a percentage of total revenue | 34.51 | 35.93 | 35.99 | 31.38 | ||||||||||||
| Efficiency ratio (b) | 59.99 | 54.88 | 58.51 | 55.53 | ||||||||||||
Cash income and performance ratios (annualized) (c): | ||||||||||||||||
| Net income | $ | 41,386 | $ | 39,401 | $ | 163,248 | $ | 152,732 | ||||||||
| Cumulative effect of change in accounting method (a) | – | – | – | 7,280 | ||||||||||||
| Tax-effected stock-based compensation | 965 | 551 | 3,749 | 2,235 | ||||||||||||
| Tax-effected intangible amortization | 2,644 | 2,598 | 10,399 | 10,411 | ||||||||||||
| Cash income | 44,995 | 42,550 | 177,396 | 172,658 | ||||||||||||
| Cash income per diluted common share | 0.96 | 0.92 | 3.83 | 3.57 | ||||||||||||
| Cash return on average shareholders’ equity | 16.22 | % | 16.64 | % | 16.48 | % | 16.70 | % | ||||||||
| Cash return on average assets | 1.25 | 1.28 | 1.25 | 1.38 | ||||||||||||
| Asset Quality: | ||||||||||||||||
| Allowance for loan losses | $ | 121,674 | $ | 116,804 | $ | 121,674 | $ | 116,804 | ||||||||
| Nonperforming assets | 42,882 | 50,035 | 42,882 | 50,035 | ||||||||||||
| Allowance for loan losses / total loans | 1.32 | % | 1.48 | % | 1.32 | % | 1.48 | % | ||||||||
| Net charge-offs/ average loans (annualized) | 0.13 | 0.14 | 0.25 | 0.18 | ||||||||||||
| Nonperforming loans / total loans | 0.41 | 0.55 | 0.41 | 0.55 | ||||||||||||
| Nonperforming assets / total assets | 0.29 | 0.37 | 0.29 | 0.37 | ||||||||||||
| Allowance for loan losses / nonperforming loans | 323.22 | 270.05 | 323.22 | 270.05 | ||||||||||||
| Other ratios (annualized): | ||||||||||||||||
| Shareholders’ equity / total assets | 7.91 | % | 7.69 | % | 7.91 | % | 7.69 | % | ||||||||
| Interest-rate spread | 3.13 | 3.35 | 3.10 | 3.43 | ||||||||||||
| Net interest margin | 3.18 | 3.39 | 3.14 | 3.50 | ||||||||||||
| Share related: | ||||||||||||||||
| Book value per common share | $ | 24.91 | $ | 22.69 | $ | 24.91 | $ | 22.69 | ||||||||
| Tangible book value per common share | 18.18 | 16.64 | 18.18 | 16.64 | ||||||||||||
| Common stock closing price | 45.86 | 34.80 | 45.86 | 34.80 | ||||||||||||
| Dividends declared per common share | 0.21 | 0.19 | 0.82 | 0.74 | ||||||||||||
| Common shares issued and outstanding | 46,276 | 45,626 | 46,276 | 45,626 | ||||||||||||
| Basic shares (average) | 45,814 | 45,640 | 45,542 | 47,584 | ||||||||||||
| Diluted shares (average) | 46,699 | 46,321 | 46,362 | 48,392 | ||||||||||||
Footnotes:
Webster Financial Corporation
| Consolidated Statements of Condition (unaudited) | |||||||||
| December 31, | September 30, | December 31, | |||||||
| (In thousands) | 2003 | 2003 | 2002 | ||||||
Assets: | |||||||||
| Cash and due from depository institutions | $ | 209,234 | $ | 214,566 | $ | 266,463 | |||
| Short-term investments | 42,420 | 26,196 | 15,596 | ||||||
| Securities: | |||||||||
| Trading, at fair value | 555 | 56 | 5,752 | ||||||
| Available for sale, at fair value | 4,128,255 | 4,284,134 | 4,119,245 | ||||||
| Held-to-maturity securities | 173,371 | – | – | ||||||
Total securities | 4,302,181 | 4,284,190 | 4,124,997 | ||||||
| Loans held for sale | 89,830 | 278,402 | 405,157 | ||||||
| Loans: | |||||||||
| Residential mortgages | 3,744,013 | 3,758,106 | 3,386,207 | ||||||
| Commercial | 2,040,921 | 2,018,279 | 1,798,898 | ||||||
| Commercial real estate | 1,281,516 | 1,187,065 | 1,029,332 | ||||||
| Consumer | 2,146,359 | 2,131,878 | 1,698,202 | ||||||
Total loans | 9,212,809 | 9,095,328 | 7,912,639 | ||||||
| Allowance for loan losses | (121,674 | ) | (117,707 | ) | (116,804 | ) | |||
Loans, net | 9,091,135 | 8,977,621 | 7,795,835 | ||||||
| Accrued interest receivable | 52,756 | 53,091 | 54,601 | ||||||
| Premises and equipment, net | 95,631 | 85,521 | 84,683 | ||||||
| Goodwill and intangible assets | 330,929 | 315,556 | 297,359 | ||||||
| Cash surrender value of life insurance | 180,556 | 178,474 | 172,066 | ||||||
| Prepaid expenses and other assets | 174,018 | 195,166 | 251,247 | ||||||
Total assets | $ | 14,568,690 | $ | 14,608,783 | $ | 13,468,004 | |||
Liabilities and Shareholders’ Equity: | |||||||||
| Deposits: | |||||||||
| Demand deposits | $ | 1,090,060 | $ | 1,017,870 | $ | 982,735 | |||
| NOW accounts | 1,052,690 | 1,010,071 | 945,145 | ||||||
| Money market deposits accounts | 1,581,276 | 1,606,342 | 1,296,303 | ||||||
| Savings accounts | 1,869,398 | 1,807,891 | 1,691,292 | ||||||
| Certificates of deposit | 2,681,986 | 2,590,513 | 2,592,701 | ||||||
Total retail deposits | 8,275,410 | 8,032,687 | 7,508,176 | ||||||
| Treasury deposits | 96,725 | 100,884 | 97,946 | ||||||
Total deposits | 8,372,135 | 8,133,571 | 7,606,122 | ||||||
| Federal Home Loan Bank advances | 2,511,495 | 2,149,762 | 2,163,029 | ||||||
| Federal funds purchased and securities sold under agreements to repurchase | 1,892,138 | 2,531,875 | 2,166,640 | ||||||
| Other long-term debt | 532,760 | 326,000 | 126,000 | ||||||
| Accrued expenses and other liabilities | 97,690 | 169,301 | 239,923 | ||||||
Total liabilities | 13,406,218 | 13,310,509 | 12,301,714 | ||||||
Corporation-obligated mandatorily redeemable capital securities of subsidiary trusts (d) | – | 185,255 | 121,255 | ||||||
| Preferred stock of subsidiary corporation | 9,577 | 9,577 | 9,577 | ||||||
Shareholders’ equity | 1,152,895 | 1,103,442 | 1,035,458 | ||||||
Total liabilities and shareholders’ equity | $ | 14,568,690 | $ | 14,608,783 | $ | 13,468,004 | |||
See Selected Financial Highlights for footnotes.
Webster Financial Corporation
| Consolidated Statements of Income (unaudited) | |||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||
| December 31, | December 31, | ||||||||||||
| (In thousands, except per share data) | 2003 | 2002 | 2003 | 2002 | |||||||||
Interest income: | |||||||||||||
| Loans and loans held for sale | $ | 119,773 | $ | 120,386 | $ | 476,086 | $ | 464,400 | |||||
| Securities and short-term investments | 43,065 | 53,189 | 182,632 | 227,634 | |||||||||
Total interest income | 162,838 | 173,575 | 658,718 | 692,034 | |||||||||
Interest expense: | |||||||||||||
| Deposits | 26,319 | 33,375 | 111,311 | 146,162 | |||||||||
| Borrowings | 29,224 | 36,110 | 133,888 | 140,144 | |||||||||
Total interest expense | 55,543 | 69,485 | 245,199 | 286,306 | |||||||||
Net interest income | 107,295 | 104,090 | 413,519 | 405,728 | |||||||||
| Provision for loan losses | 5,000 | 16,000 | 25,000 | 29,000 | |||||||||
Net interest income after provision for loan losses | 102,295 | 88,090 | 388,519 | 376,728 | |||||||||
Noninterest income: | |||||||||||||
| Deposit service fees | 17,731 | 17,083 | 70,018 | 61,610 | |||||||||
| Insurance revenue | 9,077 | 6,875 | 39,975 | 27,073 | |||||||||
| Loan and loan servicing fees | 8,001 | 6,089 | 26,384 | 18,531 | |||||||||
| Financial advisory services | 7,265 | 4,964 | 22,758 | 19,277 | |||||||||
| Wealth and investment advisors | 4,416 | 3,693 | 18,341 | 15,918 | |||||||||
| Gain on sale of loans and loan servicing, net | 2,854 | 2,337 | 19,520 | 5,808 | |||||||||
| Increase in cash surrender value of life insurance | 2,082 | 2,263 | 8,490 | 9,042 | |||||||||
| Other | 2,402 | 1,129 | 8,423 | 4,936 | |||||||||
Total fee revenue | 53,828 | 44,433 | 213,909 | 162,195 | |||||||||
| Gain on sale of securities, net | 2,715 | 13,934 | 18,574 | 23,377 | |||||||||
Total noninterest income | 56,543 | 58,367 | 232,483 | 185,572 | |||||||||
Noninterest expenses: | |||||||||||||
| Compensation and benefits | 53,722 | 46,343 | 206,381 | 171,042 | |||||||||
| Occupancy | 7,470 | 7,444 | 30,698 | 26,606 | |||||||||
| Furniture and equipment | 7,792 | 8,228 | 31,143 | 29,167 | |||||||||
| Intangible amortization | 4,067 | 3,997 | 15,998 | 16,017 | |||||||||
| Marketing | 2,058 | 3,038 | 11,508 | 10,522 | |||||||||
| Professional services | 3,654 | 3,503 | 11,708 | 11,404 | |||||||||
| Capital securities and preferred stock dividend | 3,701 | 3,355 | 12,787 | 14,388 | |||||||||
| Acquistion costs | 1,349 | – | 1,497 | 1,965 | |||||||||
| Other | 14,467 | 13,244 | 56,262 | 47,212 | |||||||||
Total noninterest expenses | 98,280 | 89,152 | 377,982 | 328,323 | |||||||||
| Income before income taxes and cumulative effect of change in accounting method | 60,558 | 57,305 | 243,020 | 233,977 | |||||||||
| Income taxes | 19,172 | 17,904 | 79,772 | 73,965 | |||||||||
Income before cumulative effect of change in accounting method | 41,386 | 39,401 | 163,248 | 160,012 | |||||||||
Cumulative effect of change in accounting method, net of taxes (a) | – | – | – | (7,280 | ) | ||||||||
Net income | $ | 41,386 | $ | 39,401 | $ | 163,248 | $ | 152,732 | |||||
Net income per common share before cumulative effect of change in accounting method: | |||||||||||||
| Basic | $ | 0.90 | $ | 0.86 | $ | 3.58 | $ | 3.36 | |||||
| Diluted | 0.89 | 0.85 | 3.52 | 3.31 | |||||||||
Net income per common share: | |||||||||||||
| Basic | $ | 0.90 | $ | 0.86 | $ | 3.58 | $ | 3.21 | |||||
| Diluted | 0.89 | 0.85 | 3.52 | 3.16 | |||||||||
See Selected Financial Highlights for footnotes.
Webster Financial Corporation
| Consolidated Statements of Income (unaudited) | ||||||||||||||
| Three Months Ended | ||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||
(In thousands, except per share data) | 2003 | 2003 | 2003 | 2003 | 2002 | |||||||||
| Interest income: | ||||||||||||||
| Loans and loans held for sale | $ | 119,773 | $ | 119,646 | $ | 118,965 | $ | 117,702 | $ | 120,386 | ||||
| Securities and short-term investments | 43,065 | 42,050 | 45,772 | 51,745 | 53,189 | |||||||||
Total interest income | 162,838 | 161,696 | 164,737 | 169,447 | 173,575 | |||||||||
| Interest expense: | ||||||||||||||
| Deposits | 26,319 | 26,824 | 28,750 | 29,418 | 33,375 | |||||||||
| Borrowings | 29,224 | 33,943 | 35,368 | 35,353 | 36,110 | |||||||||
Total interest expense | 55,543 | 60,767 | 64,118 | 64,771 | 69,485 | |||||||||
Net interest income | 107,295 | 100,929 | 100,619 | 104,676 | 104,090 | |||||||||
| Provision for loan losses | 5,000 | 10,000 | 5,000 | 5,000 | 16,000 | |||||||||
Net interest income after provision for loan losses | 102,295 | 90,929 | 95,619 | 99,676 | 88,090 | |||||||||
| Noninterest income: | ||||||||||||||
| Deposit service fees | 17,731 | 17,868 | 17,529 | 16,890 | 17,083 | |||||||||
| Insurance revenue | 9,077 | 9,954 | 9,980 | 10,964 | 6,875 | |||||||||
| Loan and loan servicing fees | 8,001 | 7,755 | 4,723 | 5,905 | 6,089 | |||||||||
| Financial advisory services | 7,265 | 4,833 | 5,229 | 5,431 | 4,964 | |||||||||
| Wealth and investment advisors | 4,416 | 4,826 | 4,521 | 4,578 | 3,693 | |||||||||
| Gain on sale of loans and loan servicing, net | 2,854 | 9,829 | 4,066 | 2,771 | 2,337 | |||||||||
| Increase in cash surrender value of life insurance | 2,082 | 2,150 | 2,143 | 2,115 | 2,263 | |||||||||
| Other | 2,402 | 2,737 | 1,423 | 1,861 | 1,129 | |||||||||
Total fee revenue | 53,828 | 59,952 | 49,614 | 50,515 | 44,433 | |||||||||
| Gain on sale of securities, net | 2,715 | 4,560 | 8,666 | 2,633 | 13,934 | |||||||||
Total noninterest income | 56,543 | 64,512 | 58,280 | 53,148 | 58,367 | |||||||||
Noninterest expenses: | ||||||||||||||
| Compensation and benefits | 53,722 | 51,592 | 50,506 | 50,561 | 46,343 | |||||||||
| Occupancy | 7,470 | 7,457 | 7,672 | 8,099 | 7,444 | |||||||||
| Furniture and equipment | 7,792 | 8,255 | 7,575 | 7,521 | 8,228 | |||||||||
| Intangible amortization | 4,067 | 4,001 | 3,968 | 3,962 | 3,997 | |||||||||
| Marketing | 2,058 | 2,729 | 3,236 | 3,485 | 3,038 | |||||||||
| Professional services | 3,654 | 2,582 | 2,994 | 2,478 | 3,503 | |||||||||
| Capital securities and preferred stock dividend | 3,701 | 2,990 | 2,958 | 3,138 | 3,355 | |||||||||
| Acquistion costs | 1,349 | 142 | 6 | – | – | |||||||||
| Other | 14,467 | 13,949 | 14,284 | 13,562 | 13,244 | |||||||||
Total noninterest expenses | 98,280 | 93,697 | 93,199 | 92,806 | 89,152 | |||||||||
| Income before income taxes and cumulative effect of change in accounting method | 60,558 | 61,744 | 60,700 | 60,018 | 57,305 | |||||||||
| Income taxes | 19,172 | 20,429 | 20,090 | 20,081 | 17,904 | |||||||||
Income before cumulative effect of change in accounting method | 41,386 | 41,315 | 40,610 | 39,937 | 39,401 | |||||||||
| Cumulative effect of change in accounting method, net of taxes | – | – | – | – | – | |||||||||
Net income | $ | 41,386 | $ | 41,315 | $ | 40,610 | $ | 39,937 | $ | 39,401 | ||||
Net income per common share before cumulative effect of change in accounting method: | ||||||||||||||
| Basic | $ | 0.90 | $ | 0.91 | $ | 0.89 | $ | 0.88 | $ | 0.86 | ||||
| Diluted | 0.89 | 0.89 | 0.88 | 0.86 | 0.85 | |||||||||
Net income per common share: | ||||||||||||||
| Basic | $ | 0.90 | $ | 0.91 | $ | 0.89 | $ | 0.88 | $ | 0.86 | ||||
| Diluted | 0.89 | 0.89 | 0.88 | 0.86 | 0.85 | |||||||||
See Selected Financial Highlights for footnotes.
Webster Financial Corporation
| Retail and Wholesale Interest-Rate Spreads (unaudited) | ||||||||||||||||||||||||
| Three Months Ended, | December 2003 | September 2003 | June 2003 | March 2003 | December 2002 | |||||||||||||||||||
Interest-rate spread | ||||||||||||||||||||||||
| Total interest-earning assets | 4.81 | % | 4.75 | % | 5.06 | % | 5.35 | % | 5.61 | % | ||||||||||||||
| Total interest-bearing liabilities | 1.68 | 1.80 | 2.00 | 2.09 | 2.26 | |||||||||||||||||||
| Interest-rate spread | 3.13 | % | 2.95 | % | 3.06 | % | 3.26 | % | 3.35 | % | ||||||||||||||
| Net interest margin | 3.18 | 2.99 | 3.10 | 3.30 | 3.39 | |||||||||||||||||||
Retail interest-rate spread | ||||||||||||||||||||||||
| Yield on loans and loans held for sale | 5.09 | % | 5.09 | % | 5.30 | % | 5.52 | % | 5.71 | % | ||||||||||||||
| Cost of deposits | 1.26 | 1.32 | 1.46 | 1.57 | 1.77 | |||||||||||||||||||
| Spread | 3.83 | % | 3.77 | % | 3.84 | % | 3.95 | % | 3.94 | % | ||||||||||||||
Wholesale interest-rate spread | ||||||||||||||||||||||||
| Yield on securities and short-term investments | 4.17 | % | 4.02 | % | 4.52 | % | 5.02 | % | 5.40 | % | ||||||||||||||
| Cost of borrowings | 2.41 | 2.55 | 2.88 | 2.90 | 3.07 | |||||||||||||||||||
| Spread | 1.76 | % | 1.47 | % | 1.64 | % | 2.12 | % | 2.33 | % | ||||||||||||||
| Consolidated Average Statements of Condition (unaudited) | ||||||||||||||||||||||||
Three Months Ended December 31, | 2003 | 2002 | ||||||||||||||||||||||
| Fully tax- | Fully tax- | |||||||||||||||||||||||
| Average | equivalent | Average | equivalent | |||||||||||||||||||||
(Dollars in thousands) | balance | Interest | yield/rate | balance | Interest | yield/rate | ||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
| Loans | $ | 9,206,436 | $ | 117,983 | 5.08 | % | $ | 8,035,293 | $ | 115,746 | 5.72 | % | ||||||||||||
| Loans held for sale | 135,632 | 1,790 | 5.28 | 339,742 | 4,642 | 5.47 | ||||||||||||||||||
| Securities | 4,153,607 | 43,486 | 4.20 | (e) | 4,028,148 | 53,445 | 5.42 | (e) | ||||||||||||||||
| Short-term investments | 32,791 | 76 | 0.91 | 22,652 | 66 | 1.14 | ||||||||||||||||||
Total interest-earning assets | 13,528,466 | 163,335 | 4.81 | 12,425,835 | 173,899 | 5.61 | ||||||||||||||||||
| Noninterest-earning assets | 903,477 | 922,021 | ||||||||||||||||||||||
Total assets | $ | 14,431,943 | $ | 13,347,856 | ||||||||||||||||||||
Liabilities and Shareholders’ Equity: | ||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | $ | 1,058,875 | $ | – | – | % | $ | 969,282 | $ | – | – | % | ||||||||||||
| Savings, NOW and money market deposit accounts | 4,471,260 | 9,115 | 0.81 | 3,827,364 | 12,796 | 1.33 | ||||||||||||||||||
| Time deposits | 2,755,184 | 17,204 | 2.48 | 2,702,745 | 20,579 | 3.02 | ||||||||||||||||||
Total interest-bearing deposits | 8,285,319 | 26,319 | 1.26 | 7,499,391 | 33,375 | 1.77 | ||||||||||||||||||
| Federal Home Loan Bank advances | 2,299,456 | 19,641 | 3.34 | 2,377,163 | 25,163 | 4.14 | ||||||||||||||||||
| Fed funds and repurchase agreements | 2,139,619 | 5,587 | 1.02 | 2,111,537 | 8,157 | 1.51 | ||||||||||||||||||
| Other long-term debt | 317,509 | 3,996 | 5.03 | 126,000 | 2,790 | 8.86 | ||||||||||||||||||
Total borrowings | 4,756,584 | 29,224 | 2.41 | 4,614,700 | 36,110 | 3.07 | ||||||||||||||||||
Total interest-bearing liabilities | 13,041,903 | 55,543 | 1.68 | 12,114,091 | 69,485 | 2.26 | ||||||||||||||||||
| Noninterest-bearing liabilities | 85,714 | 71,552 | ||||||||||||||||||||||
Total liabilities | 13,127,617 | 12,185,643 | ||||||||||||||||||||||
| Capital securities and preferred stock of subsidiary corporation | 194,832 | 139,378 | ||||||||||||||||||||||
| Shareholders’ equity | 1,109,494 | 1,022,835 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 14,431,943 | $ | 13,347,856 | ||||||||||||||||||||
| 107,792 | 104,414 | |||||||||||||||||||||||
Less: tax-equivalent adjustment | (497 | ) | (324 | ) | ||||||||||||||||||||
Net interest income | $ | 107,295 | $ | 104,090 | ||||||||||||||||||||
Interest-rate spread | 3.13 | % | 3.35 | % | ||||||||||||||||||||
Net interest margin | 3.18 | % | 3.39 | % | ||||||||||||||||||||
See Selected Financial Highlights for footnotes.
Webster Financial Corporation
| Consolidated Average Statements of Condition (unaudited) | ||||||||||||||||||||||||
Twelve Months Ended December 31, | 2003 | 2002 | ||||||||||||||||||||||
| Fully tax- | Fully tax- | |||||||||||||||||||||||
| Average | equivalent | Average | equivalent | |||||||||||||||||||||
(Dollars in thousands) | balance | Interest | yield/rate | balance | Interest | yield/rate | ||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
| Loans | $ | 8,756,883 | $ | 460,677 | 5.26 | % | $ | 7,451,370 | $ | 454,673 | 6.10 | % | ||||||||||||
| Loans held for sale | 292,514 | 15,409 | 5.27 | 177,928 | 9,729 | 5.47 | ||||||||||||||||||
| Securities | 4,177,490 | 184,007 | 4.45 | (e) | 4,025,566 | 228,493 | 5.77 | (e) | ||||||||||||||||
| Short-term investments | 25,588 | 250 | 0.98 | 22,188 | 364 | 1.64 | ||||||||||||||||||
Total interest-earning assets | 13,252,475 | 660,343 | 5.00 | 11,677,052 | 693,259 | 5.97 | ||||||||||||||||||
| Noninterest-earning assets | 951,575 | 867,310 | ||||||||||||||||||||||
Total assets | $ | 14,204,050 | $ | 12,544,362 | ||||||||||||||||||||
Liabilities and Shareholders’ Equity: | ||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | $ | 1,010,952 | $ | – | – | % | $ | 902,908 | $ | – | – | % | ||||||||||||
| Savings, NOW and money market deposit accounts | 4,282,536 | 41,519 | 0.97 | 3,551,731 | 49,521 | 1.39 | ||||||||||||||||||
| Time deposits | 2,677,863 | 69,792 | 2.61 | 2,810,220 | 96,641 | 3.44 | ||||||||||||||||||
Total interest-bearing deposits | 7,971,351 | 111,311 | 1.40 | 7,264,859 | 146,162 | 2.01 | ||||||||||||||||||
| Federal Home Loan Bank advances | 2,395,814 | 88,845 | 3.71 | 2,337,688 | 102,789 | 4.40 | ||||||||||||||||||
| Fed funds and repurchase agreements | 2,218,799 | 26,108 | 1.18 | 1,555,552 | 26,195 | 1.68 | ||||||||||||||||||
| Other long-term debt | 316,736 | 18,935 | 5.98 | 126,000 | 11,160 | 8.86 | ||||||||||||||||||
Total borrowings | 4,931,349 | 133,888 | 2.72 | 4,019,240 | 140,144 | 3.49 | ||||||||||||||||||
Total interest-bearing liabilities | 12,902,700 | 245,199 | 1.90 | 11,284,099 | 286,306 | 2.54 | ||||||||||||||||||
| Noninterest-bearing liabilities | 79,491 | 76,914 | ||||||||||||||||||||||
Total liabilities | 12,982,191 | 11,361,013 | ||||||||||||||||||||||
| Capital securities and preferred stock of subsidiary corporation | 145,227 | 149,666 | ||||||||||||||||||||||
| Shareholders’ equity | 1,076,632 | 1,033,683 | ||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 14,204,050 | $ | 12,544,362 | ||||||||||||||||||||
| 415,144 | 406,953 | |||||||||||||||||||||||
Less: tax-equivalent adjustment | (1,625 | ) | (1,225 | ) | ||||||||||||||||||||
Net interest income | $ | 413,519 | $ | 405,728 | ||||||||||||||||||||
Interest-rate spread | 3.10 | % | 3.43 | % | ||||||||||||||||||||
Net interest margin | 3.14 | % | 3.50 | % | ||||||||||||||||||||
See Selected Financial Highlights for footnotes.
Webster Financial Corporation
| Asset Quality (unaudited) | |||||||||||||||||||
| At or for the Three Months Ended, | |||||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | |||||||||||||||
| ( Dollars in thousands) | 2003 | 2003 | 2003 | 2003 | 2002 | ||||||||||||||
Nonperforming Assets | |||||||||||||||||||
Nonperforming loans: | |||||||||||||||||||
| Commercial: | |||||||||||||||||||
| Commercial | $ | 14,266 | $ | 17,024 | $ | 27,881 | $ | 27,784 | $ | 16,001 | |||||||||
| Specialized industry | 6,427 | 6,493 | 3,399 | 3,399 | 3,399 | ||||||||||||||
| Equipment financing | 5,583 | 8,241 | 8,722 | 8,960 | 6,586 | ||||||||||||||
| Total commercial | 26,276 | 31,758 | 40,002 | 40,143 | 25,986 | ||||||||||||||
| Commercial real estate | 4,281 | 1,940 | 4,920 | 6,910 | 9,109 | ||||||||||||||
| Residential | 6,128 | 7,087 | 6,596 | 5,712 | 7,263 | ||||||||||||||
| Consumer | 959 | 718 | 767 | 1,510 | 894 | ||||||||||||||
| Total nonperforming loans | 37,644 | 41,503 | 52,285 | 54,275 | 43,252 | ||||||||||||||
| Loans held for sale | – | – | – | 3,444 | 3,706 | ||||||||||||||
Other real estate owned and repossessed assets: | |||||||||||||||||||
| Commercial | 4,296 | 4,019 | 4,224 | 3,967 | 2,568 | ||||||||||||||
| Residential | 942 | 541 | 520 | 234 | 477 | ||||||||||||||
| Consumer | – | – | 9 | 1 | 32 | ||||||||||||||
| Total other real estate owned and repossessed assets | 5,238 | 4,560 | 4,753 | 4,202 | 3,077 | ||||||||||||||
Total nonperforming assets | $ | 42,882 | $ | 46,063 | $ | 57,038 | $ | 61,921 | $ | 50,035 | |||||||||
Summary of Classified Loans | |||||||||||||||||||
| Substandard: | |||||||||||||||||||
| Accruing | $ | 72,638 | $ | 69,216 | $ | 62,064 | $ | 74,398 | $ | 70,245 | |||||||||
| Nonaccruing | 29,403 | 36,365 | 44,313 | 45,005 | 38,994 | ||||||||||||||
| Total substandard | 102,041 | 105,581 | 106,377 | 119,403 | 109,239 | ||||||||||||||
| Doubtful: | |||||||||||||||||||
| Nonaccruing | 6,791 | 3,792 | 6,617 | 7,279 | 3,743 | ||||||||||||||
| Loss | – | – | – | – | – | ||||||||||||||
Total classified loans | $ | 108,832 | $ | 109,373 | $ | 112,994 | $ | 126,682 | $ | 112,982 | |||||||||
Classified as a percent of total loans | 1.2 | % | 1.2 | % | 1.3 | % | 1.5 | % | 1.4 | % | |||||||||
| Allowance for Loan Losses (unaudited) | |||||||||||||||||||
| At or for the Three Months Ended, | |||||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | |||||||||||||||
| ( Dollars in thousands) | 2003 | 2003 | 2003 | 2003 | 2002 | ||||||||||||||
Allowance for Loan Losses | |||||||||||||||||||
Beginning balance | $ | 117,707 | $ | 119,239 | $ | 118,596 | $ | 116,804 | $ | 116,118 | |||||||||
| Allowance for purchased loans | 1,970 | – | – | 146 | – | ||||||||||||||
| Provision | 5,000 | 10,000 | 5,000 | 5,000 | 16,000 | ||||||||||||||
| Write-down of loans transferred to held for sale | – | – | – | – | (12,432 | ) | |||||||||||||
| Charge-offs: | |||||||||||||||||||
| Commercial: | |||||||||||||||||||
| Specialized industry | 558 | 3,870 | 327 | – | 2,569 | ||||||||||||||
| All other commercial | 2,949 | 9,361 | 4,232 | 3,601 | 1,031 | ||||||||||||||
| Total commercial | 3,507 | 13,231 | 4,559 | 3,601 | 3,600 | ||||||||||||||
| Residential | 330 | 39 | 160 | 78 | 84 | ||||||||||||||
| Commercial real estate | – | – | – | – | – | ||||||||||||||
| Consumer | 174 | 122 | 153 | 195 | 220 | ||||||||||||||
| Total charge-offs | 4,011 | 13,392 | 4,872 | 3,874 | 3,904 | ||||||||||||||
| Recoveries | (1,008 | ) | (1,860 | ) | (515 | ) | (520 | ) | (1,022 | ) | |||||||||
| Net loan charge-offs | 3,003 | 11,532 | 4,357 | 3,354 | 2,882 | ||||||||||||||
Ending balance | $ | 121,674 | $ | 117,707 | $ | 119,239 | $ | 118,596 | $ | 116,804 | |||||||||
Asset Quality Ratios: | |||||||||||||||||||
| Allowance for loan losses / total loans | 1.32 | % | 1.29 | % | 1.37 | % | 1.39 | % | 1.48 | % | |||||||||
| Net charge-offs/ average loans (annualized) | 0.13 | 0.52 | 0.20 | 0.16 | 0.14 | ||||||||||||||
| Nonperforming loans / total loans | 0.41 | 0.46 | 0.60 | 0.64 | 0.55 | ||||||||||||||
| Nonperforming assets / total assets | 0.29 | 0.32 | 0.39 | 0.43 | 0.37 | ||||||||||||||
| Allowance for loan losses / nonperforming loans | 323.22 | 283.61 | 228.06 | 218.51 | 270.05 | ||||||||||||||
