Exhibit 99.1
Media Contact Clark Finley 203-578-2287 cfinley@websterbank.com | Investor Contact Terry Mangan 203-578-2318 |
WEBSTER REPORTS 2007 THIRD QUARTER EARNINGS
Third Quarter Highlights:
| • | Diluted earnings per share of $.64 (includes the effect of an $11.0 million or $.14 per share increase in the provision for credit losses compared with the second quarter of 2007 that is specifically related to the Company’s consumer home equity portfolio). |
| • | Achieved positive operating leverage of 0.8 percent in the quarter. |
| • | Repurchased over 1.1 million shares of common stock during the quarter while maintaining capital ratios within target ranges. |
| • | Opened new branches in September 2007 in New Rochelle, New York and Longmeadow, Massachusetts; 27 branches now opened since 2002. |
WATERBURY, Conn., October 23, 2007 – Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today announced net income of $35.0 million or $.64 per diluted share for the third quarter of 2007, compared to $35.5 million or $.63 per share for the second quarter of 2007 and $9.0 million or $.17 per share for the third quarter of 2006. Results in the third quarter of 2007 reflect an increase in the provision for credit losses of $11.0 million compared to the second quarter of 2007 ($7.6 million net of tax or $.14 per diluted share) in connection with the Company’s home equity portfolio. For the first nine months of 2007, net income totaled $105.5 million, or $1.89 per diluted share, compared to $96.0 million, or $1.80 per diluted share a year ago.
“In an otherwise solid quarter, we have increased our provision for credit losses based on higher delinquency and non-accrual loans in our home equity portfolio, specifically for nationally originated loans with high combined loan to value,” stated Webster Chairman and Chief Executive Officer James C. Smith. “Delinquency for the month of September rose substantially, and we believe taking this step is prudent given this emerging trend.”
Commercial loans (consisting of commercial and industrial and commercial real estate) and consumer loans posted solid growth year over year to $8.7 billion at September 30, 2007, up 7 percent from September 30, 2006. Commercial and consumer loans represent 70 percent of total loans at September 30, 2007 compared to 63 percent a year ago. “We are intensely focused on our direct, core franchise business and our progress is evident” stated Webster President and Chief Operating Officer William T. Bromage.
Revenues
Total revenue, which consists of net interest income plus total noninterest income, totaled $187.3 million in the third quarter. This compares to total revenue of $192.2 million in the second quarter apart from a $2.1 million gain on Webster Capital Trust I and II securities held by Webster and $178.2 million a year ago apart from a $48.9 million charge in connection with an available for sale securities portfolio repositioning. Deducting securities gains from each period results in adjusted total revenue of $186.8 million in the third quarter, $191.7 million in the second quarter and $175.9 million a year ago, or growth of 6.2 percent for the third quarter of 2007 compared to the third quarter of 2006.
Net interest income totaled $127.1 million in the third quarter compared to $130.4 million in the second quarter and $122.4 million a year ago. Average interest-earning assets have been lower in 2007 compared to a year ago as a result of Webster’s balance sheet repositioning actions, with the third quarter of 2007 being 7 percent lower than the third quarter of 2006. However, Webster’s net interest margin (annualized tax-equivalent net interest income as a percentage of average earning assets) has improved compared to year-ago levels. The net interest margin was 3.38 percent in the third quarter of 2007 compared to 3.01 percent in the third quarter of 2006, with the 37 basis point increase in the net interest margin contributing to 4 percent growth in net interest income compared to a year ago. The net interest margin of 3.38 percent in the third quarter declined by 9 basis points from the second quarter, mainly due to the effect of increased share repurchase activity and the impact of the issuance of $200 million in trust preferred securities in June 2007. The spread between the yield on loans and the cost of deposits was 3.84 percent in the third quarter compared to 3.93 percent in the second quarter and 3.89 percent a year ago.
Total noninterest income was $60.2 million in the third quarter. This compares to $64.0 million in the second quarter, which included a $2.1 million gain on Webster Capital Trust I and II securities held by Webster, and $6.8 million a year ago, which was reduced by the $48.9 million securities portfolio repositioning charge. Deposit service fees totaled $30.0 million compared to $28.8 million in the second quarter and $25.3 million a year ago, the growth partly reflecting the growth in core deposits and the recent implementation of a new consumer fee structure. Insurance revenue was $8.9 million compared to $9.1 million in the second quarter and $9.8 million a year ago. Loan-related fees were $7.7 million compared to
$7.9 million in the second quarter and $7.8 million a year ago. Wealth and investment services revenues totaled $7.1 million compared to $7.6 million in the second quarter and $6.7 million a year ago. Income from mortgage banking activities was $1.8 million in the third quarter compared to income of $4.0 million in the second quarter, inclusive of a $948,000 write-down on $96.3 million of loans previously held for sale that were transferred into portfolio, and a loss of $0.2 million a year ago. Other non-interest income was $1.6 million compared to $1.4 million in the second quarter and $1.7 million a year ago.
Provision For Credit Losses
The provision for credit losses was $15.25 million compared to $4.25 million in the second quarter and $3.0 million a year ago. $11.0 million of the provision for credit losses recorded in the third quarter was specifically for the Company’s $3.2 billion home equity loan and lines of credit portfolio. The increase in provision compared with second quarter 2007 is based on the Company’s analysis of third quarter data developed post quarter end. This takes into account the higher level of estimated losses inherent in this portfolio at September 30, 2007 and reflects recent adverse trends in property values and delinquencies, including higher September delinquencies on the home equity loans secured by properties outside the Company’s retail banking footprint.
Net loan charge-offs totaled $4.0 million during the third quarter of 2007 compared to $4.2 million in the second quarter and $3.1 million a year ago. Included in net charge-offs in the third and second quarters of 2007 were $0.5 million and $0.6 million, respectively, of consumer overdraft losses. Prior to the second quarter, overdraft losses were shown as a reduction of deposit fee income. The allowance for credit losses, which consists of the allowance for loan losses and the reserve for unfunded credit commitments, was $164.0 million, or 1.32 percent of total loans at September 30, 2007 compared to $152.8 million, or 1.23 percent at June 30, 2007 and $156.3 million, or 1.20 percent at September 30, 2006.
Noninterest Expenses
Total noninterest expenses were $121.7 million in the third quarter, or $121.2 million apart from $0.5 million of severance and other costs. This compares to $138.1 million in the second quarter, which included $8.9 million of debt redemption premium costs related to prepayment of the capital trust securities and $5.3 million of severance and other costs in connection with Webster’s recently completed strategic review, and $115.9 million a year ago, which included $0.9 million of acquisition costs. Noninterest expenses declined by $2.6 million from the second quarter of 2007 (excluding the effect of the debt redemption premium and severance and other costs). Noninterest expenses increased by 5.4 percent for the third quarter of 2007 compared to the third quarter of 2006 (excluding the current quarter
severance and other costs and the acquisition costs of $0.9 million incurred in the year ago period).
Webster Chief Financial Officer Jerry Plush noted: “The effects of the repositioning steps we have taken over the past 15 months are now evidenced by our achieving positive operating leverage with adjusted revenue growth exceeding expense growth compared to a year ago. We’re committed to further reducing expenses in low contribution businesses identified in our recently completed strategic review and to centralizing shared services functions, which should benefit operating leverage in future periods.”
Balance Sheet Trends
Total assets were $16.8 billion at September 30, 2007 compared to $18.1 billion a year ago, with the decrease primarily related to balance sheet repositioning actions taken in the fourth quarter of 2006 and first quarter 2007. Total loans were $12.4 billion, a decrease of $0.6 billion, or 5 percent, from a year ago, as residential loans declined by $1.2 billion primarily due to repositioning actions. Securities totaled $2.5 billion and declined by $0.8 billion, or 24 percent from a year ago. Total deposits were $12.6 billion, an increase of $0.3 billion, or 2 percent from a year ago, which includes a $0.6 billion decline in brokered deposits. Excluding the decline in brokered deposits, retail deposits increased $0.9 billion with contributions from the branches acquired from the NewMil Bank acquisition, organic growth from our branch network and growth in health savings account deposits at HSA Bank.
The $0.6 billion reduction in loans, $0.8 billion reduction in securities and $0.3 billion of total deposit growth, each compared to a year ago, contributed to a $1.7 billion reduction in wholesale borrowings over the past year. Wholesale borrowings declined to 14 percent of total assets at September 30, 2007 compared to 22 percent a year ago.
The loan to deposit ratio was 99 percent at September 30, 2007 compared to 97 percent at June 30 and 106 percent a year ago. Improvement from a year ago reflects completion of balance sheet repositioning actions and the increase in deposits over the past year.
Book value per common share of $33.73 at September 30, 2007 increased from $32.02 a year ago. Tangible book value per share was $18.77 at September 30, 2007 compared to $19.11 a year ago. The ratio of tangible equity to tangible assets increased to 6.17 percent at September 30, 2007 compared to 5.66 percent a year ago.
Capital
Webster repurchased 1,152,800 shares of its common stock during the third quarter at a total cost of $48.9 million. As of September 30, 2007, Webster had 0.7 million shares of remaining
availability under the 2.8 million share repurchase authorization that was announced on June 5, 2007 and 2.7 million shares of availability under an additional authorization that was announced on September 26, 2007, for combined availability of approximately 3.4 million shares.
Mr. Plush noted: “Our improved capital position enabled us to repurchase over 1.1 million shares in the quarter and 3.1 million shares year to date while maintaining our principal capital ratios within the target ranges we outlined in our most recent investor presentation in September. We intend to continue to selectively repurchase our shares given the current level of our stock price.”
Asset Quality
Nonperforming assets totaled $104.2 million, or 0.84 percent of total loans and other real estate owned at September 30, 2007, compared to $78.7 million, or 0.63 percent, at June 30 and $61.4 million, or 0.47 percent, a year ago. Nonperforming assets in the residential portfolio totaled $34.3 million at September 30 compared to $27.4 million at June 30 and $7.6 million a year ago, with the majority of the increase coming from residential construction loans originated by Webster’s National Wholesale Lending operation. Webster previously announced it had discontinued residential construction lending outside of its New England market area, and has allocated reserves against these loans. Nonperforming assets in the consumer portfolio totaled $19.5 million at September 30 compared to $12.3 million at June 30 and $3.6 million a year ago, with the majority of the increase coming from home equity loans and lines of credit originated out of footprint. Webster is currently following a retail/in market origination strategy in its ongoing home equity activity.
The allowance for credit losses, which consists of the allowance for loan losses and the reserve for unfunded credit commitments, was $164.0 million, or 1.32 percent of total loans, at September 30, 2007 compared to $152.8 million, or 1.23 percent at June 30, 2007 and $156.3 million, or 1.20 percent at September 30, 2006. The ratio of the allowance for credit losses to nonperforming loans was 172 percent at September 30, 2007 compared to 211 percent at June 30 and 264 percent a year ago.
***
Webster Financial Corporation is the holding company for Webster Bank, National Association and Webster Insurance. With $16.8 billion in assets, Webster provides business and consumer banking, mortgage, insurance, financial planning, trust and investment services through 179 banking offices, 339 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 at www.websteronline.com.
***
Conference Call
A conference call covering Webster’s 2007 third quarter earnings announcement will be held today, Tuesday, October 23, at 9:00 a.m. EDT and may be heard through Webster’s investor relations website at www.wbst.com, or in listen-only mode by calling 1-877-407-8293 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. A reconciliation of net income and other performance ratios, as adjusted is included in the accompanying selected financial highlights table.
We believe that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, our performance trends and financial position. Specifically, we provide measures based on what we believe are our operating earnings on a consistent basis and exclude non-core operating items which affect the GAAP reporting of results of operations. We utilize these measures for internal planning and forecasting purposes. We, as well as securities analysts, investors and other interested parties, also use these measures to compare peer company operating performance. We believe that our presentation and discussion, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting our business and allows investors to view performance in a manner similar to management. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.
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WEBSTER FINANCIAL CORPORATION
At or for the Three Months Ended September 30, | At or for the Nine Months Ended September 30, | |||||||||||||||
(In thousands, except per share data) | 2007 | 2006 (c) | 2007 | 2006 (c) | ||||||||||||
Adjusted net income and performance ratios, net of tax (annualized): | ||||||||||||||||
Net income | $ | 34,968 | $ | 8,997 | $ | 105,471 | $ | 95,992 | ||||||||
Net debt prepayment expense | — | — | 4,427 | — | ||||||||||||
Software development cost write-off | — | — | 2,212 | — | ||||||||||||
Severance costs | 294 | — | 2,951 | — | ||||||||||||
Closing costs-Peoples Mortgage Company | — | — | 1,509 | — | ||||||||||||
Write-down of construction loans held for sale | — | — | 1,071 | — | ||||||||||||
Recognition of loss on AFS securities | — | 31,768 | — | 31,768 | ||||||||||||
Adjusted net income | 35,262 | 40,765 | 117,641 | 127,760 | ||||||||||||
Net income per diluted common share | 0.65 | 0.77 | 2.11 | 2.40 | ||||||||||||
Return on average shareholders’ equity | 7.70 | % | 9.80 | % | 8.37 | % | 10.23 | % | ||||||||
Return on average tangible equity | 13.68 | 16.55 | 14.65 | 17.27 | ||||||||||||
Return on average assets | 0.84 | 0.91 | 0.93 | 0.95 | ||||||||||||
Noninterest income as a percentage of total revenue | 32.16 | 31.28 | 31.97 | 30.69 | ||||||||||||
Efficiency ratio (a) | 64.72 | 65.03 | 65.62 | 64.37 | ||||||||||||
Net income and performance ratios (annualized): | ||||||||||||||||
Net income | $ | 34,968 | $ | 8,997 | $ | 105,471 | $ | 95,992 | ||||||||
Net income per diluted common share | 0.64 | 0.17 | 1.89 | 1.80 | ||||||||||||
Return on average shareholders’ equity | 7.63 | % | 2.17 | % | 7.50 | % | 7.70 | % | ||||||||
Return on average tangible equity | 13.57 | 3.66 | 13.13 | 13.01 | ||||||||||||
Return on average assets | 0.83 | 0.20 | 0.83 | 0.72 | ||||||||||||
Noninterest income as a percentage of total revenue | 32.16 | 5.30 | 32.03 | 23.89 | ||||||||||||
Efficiency ratio (a) | 64.96 | 89.61 | 68.95 | 70.68 | ||||||||||||
Asset quality: | ||||||||||||||||
Allowance for credit losses | $ | 164,011 | $ | 156,331 | $ | 164,011 | $ | 156,331 | ||||||||
Nonperforming assets | 104,174 | 61,416 | 104,174 | 61,416 | ||||||||||||
Allowance for credit losses / total loans | 1.32 | % | 1.20 | % | 1.32 | % | 1.20 | % | ||||||||
Net charge-offs / average loans (annualized) | 0.13 | 0.10 | 0.15 | 0.08 | ||||||||||||
Nonperforming loans / total loans | 0.77 | 0.45 | 0.77 | 0.45 | ||||||||||||
Nonperforming assets / total loans plus OREO & repos | 0.84 | 0.47 | 0.84 | 0.47 | ||||||||||||
Allowance for credit losses / nonperforming loans | 172.06 | 264.47 | 172.06 | 264.47 | ||||||||||||
Other ratios (annualized): | ||||||||||||||||
Tangible capital ratio | 6.17 | % | 5.66 | % | 6.17 | % | 5.66 | % | ||||||||
Shareholders’ equity / total assets | 10.72 | 9.26 | 10.72 | 9.26 | ||||||||||||
Interest-rate spread | 3.29 | 2.93 | 3.32 | 3.06 | ||||||||||||
Net interest margin | 3.38 | 3.01 | 3.42 | 3.13 | ||||||||||||
Share related: | ||||||||||||||||
Book value per common share | $ | 33.73 | $ | 32.02 | $ | 33.73 | 32.02 | |||||||||
Tangible book value per common share | 18.77 | 19.11 | 18.77 | 19.11 | ||||||||||||
Common stock closing price | 42.12 | 47.11 | 42.12 | 47.11 | ||||||||||||
Dividends declared per common share | 0.30 | 0.27 | 0.87 | 0.79 | ||||||||||||
Common shares issued and outstanding | 53,520 | 52,476 | 53,520 | 52,476 | ||||||||||||
Basic shares (average) | 53,735 | 52,241 | 55,166 | 52,654 | ||||||||||||
Diluted shares (average) | 54,259 | 52,871 | 55,753 | 53,276 | ||||||||||||
Footnotes:
| (a) | Noninterest expense as a percentage of net interest income plus noninterest income. |
| (b) | For purposes of the yield computation, unrealized gains (losses) are excluded from the average balance. |
| (c) | Certain previously reported information has been revised for the effect of a $4.2 million reduction in insurance commissions receivable, including a $2.7 million after-tax reduction in shareholders’ equity. There was no effect on net income for the periods presented. |
Consolidated Statements of Condition (unaudited)
(In thousands) | September 30, 2007 | June 30, 2007 | September 30, 2006 (c) | |||||||||
Assets: | ||||||||||||
Cash and due from depository institutions | $ | 264,929 | $ | 293,223 | $ | 243,434 | ||||||
Short-term investments | 80,270 | 8,222 | 9,562 | |||||||||
Securities: | ||||||||||||
Trading, at fair value | 635 | 5,935 | 2,848 | |||||||||
Available for sale, at fair value | 455,508 | 411,309 | 2,249,935 | |||||||||
Held-to-maturity | 2,051,277 | 2,046,891 | 1,064,188 | |||||||||
Total securities | 2,507,420 | 2,464,135 | 3,316,971 | |||||||||
Loans held for sale | 211,659 | 372,891 | 309,149 | |||||||||
Loans: | ||||||||||||
Residential mortgages | 3,677,682 | 3,736,313 | 4,845,198 | |||||||||
Commercial | 3,562,394 | 3,554,846 | 3,368,164 | |||||||||
Commercial real estate | 1,896,566 | 1,938,656 | 1,770,674 | |||||||||
Consumer | 3,283,914 | 3,210,457 | 3,037,674 | |||||||||
Total loans | 12,420,556 | 12,440,272 | 13,021,710 | |||||||||
Allowance for loan losses | (154,532 | ) | (144,974 | ) | (147,446 | ) | ||||||
Loans, net | 12,266,024 | 12,295,298 | 12,874,264 | |||||||||
Accrued interest receivable | 86,654 | 85,078 | 93,844 | |||||||||
Premises and equipment, net | 197,852 | 194,412 | 189,562 | |||||||||
Goodwill and other intangible assets | 816,471 | 818,422 | 692,388 | |||||||||
Cash surrender value of life insurance | 266,729 | 264,100 | 245,108 | |||||||||
Prepaid expenses and other assets | 147,399 | 151,475 | 161,803 | |||||||||
Total Assets | $ | 16,845,407 | $ | 16,947,256 | $ | 18,136,085 | ||||||
Liabilities and Shareholders’ Equity: | ||||||||||||
Deposits: | ||||||||||||
Demand deposits | $ | 1,479,503 | $ | 1,544,695 | $ | 1,453,317 | ||||||
NOW accounts | 1,664,025 | 1,797,701 | 1,559,584 | |||||||||
Money market deposit accounts | 2,065,474 | 1,916,097 | 2,078,797 | |||||||||
Savings accounts | 2,211,125 | 2,194,215 | 1,838,494 | |||||||||
Certificates of deposit | 4,847,060 | 4,965,140 | 4,477,191 | |||||||||
Brokered deposits | 286,806 | 401,213 | 896,670 | |||||||||
Total deposits | 12,553,993 | 12,819,061 | 12,304,053 | |||||||||
Federal Home Loan Bank advances | 628,445 | 531,117 | 1,867,393 | |||||||||
Securities sold under agreements to repurchase and other short-term debt | 994,624 | 899,852 | 1,466,845 | |||||||||
Long-term debt | 666,236 | 656,455 | 636,028 | |||||||||
Reserve for unfunded credit commitments | 9,479 | 7,776 | 8,885 | |||||||||
Accrued expenses and other liabilities | 178,010 | 185,767 | 163,192 | |||||||||
Total liabilities | 15,030,787 | 15,100,028 | 16,446,396 | |||||||||
Preferred stock of subsidiary corporation | 9,577 | 9,577 | 9,577 | |||||||||
Shareholders’ equity | 1,805,043 | 1,837,651 | 1,680,112 | |||||||||
Total Liabilities and Shareholders’ Equity | $ | 16,845,407 | $ | 16,947,256 | $ | 18,136,085 | ||||||
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) | 2007 | 2006 | 2007 | 2006 | ||||||||||
Interest income: | ||||||||||||||
Loans | $ | 212,847 | $ | 215,094 | $ | 632,348 | $ | 617,765 | ||||||
Securities and short-term investments | 34,163 | 40,883 | 100,006 | 121,612 | ||||||||||
Loans held for sale | 4,616 | 4,366 | 18,284 | 11,022 | ||||||||||
Total interest income | 251,626 | 260,343 | 750,638 | 750,399 | ||||||||||
Interest expense: | ||||||||||||||
Deposits | 94,484 | 85,058 | 271,797 | 220,005 | ||||||||||
Borrowings | 30,083 | 52,849 | 93,348 | 150,994 | ||||||||||
Total interest expense | 124,567 | 137,907 | 365,145 | 370,999 | ||||||||||
Net interest income | 127,059 | 122,436 | 385,493 | 379,400 | ||||||||||
Provision for credit losses | 15,250 | 3,000 | 22,500 | 8,000 | ||||||||||
Net interest income after provision for credit losses | 111,809 | 119,436 | 362,993 | 371,400 | ||||||||||
Noninterest income: | ||||||||||||||
Deposit service fees | 29,956 | 25,252 | 84,068 | 71,271 | ||||||||||
Insurance revenue | 8,948 | 9,793 | 28,210 | 30,505 | ||||||||||
Loan related fees | 7,661 | 7,760 | 23,502 | 24,746 | ||||||||||
Wealth and investment services | 7,142 | 6,738 | 21,657 | 20,022 | ||||||||||
Mortgage banking activities | 1,849 | (185 | ) | 8,040 | 5,626 | |||||||||
Increase in cash surrender value of life insurance | 2,629 | 2,368 | 7,749 | 7,053 | ||||||||||
Gain on sale of securities, net | 482 | 2,307 | 1,526 | 4,021 | ||||||||||
Other | 1,568 | 1,693 | 4,759 | 4,752 | ||||||||||
| 60,235 | 55,726 | 179,511 | 167,996 | |||||||||||
Loss on write-down of AFS securities to fair value | — | (48,879 | ) | — | (48,879 | ) | ||||||||
Gain on Webster Capital Trust I and II securities | — | — | 2,130 | — | ||||||||||
Total noninterest income | 60,235 | 6,847 | 181,641 | 119,117 | ||||||||||
Noninterest expenses: | ||||||||||||||
Compensation and benefits | 66,958 | 62,050 | 202,237 | 191,638 | ||||||||||
Occupancy | 12,516 | 11,977 | 39,099 | 35,983 | ||||||||||
Furniture and equipment | 15,039 | 13,840 | 45,397 | 41,397 | ||||||||||
Intangible amortization | 2,153 | 3,079 | 8,970 | 11,000 | ||||||||||
Marketing | 4,134 | 4,211 | 12,554 | 12,127 | ||||||||||
Professional services | 3,557 | 4,302 | 11,791 | 11,310 | ||||||||||
Other | 16,867 | 15,523 | 51,794 | 47,951 | ||||||||||
| 121,224 | 114,982 | 371,842 | 351,406 | |||||||||||
Debt redemption premium | — | — | 8,940 | — | ||||||||||
Severance and other costs | 452 | — | 10,265 | — | ||||||||||
Acquisition costs | — | 868 | — | 933 | ||||||||||
Total noninterest expenses | 121,676 | 115,850 | 391,047 | 352,339 | ||||||||||
Income before income taxes | 50,368 | 10,433 | 153,587 | 138,178 | ||||||||||
Income taxes | 15,400 | 1,436 | 48,116 | 42,186 | ||||||||||
Net income | $ | 34,968 | $ | 8,997 | $ | 105,471 | $ | 95,992 | ||||||
Diluted shares (average) | 54,259 | 52,871 | 55,753 | 53,276 | ||||||||||
Net income per common share: | ||||||||||||||
Basic | $ | 0.65 | $ | 0.17 | $ | 1.91 | $ | 1.82 | ||||||
Diluted | 0.64 | 0.17 | 1.89 | 1.80 | ||||||||||
See Selected Financial Highlights for footnotes.
Consolidated Statements of Income (unaudited)
| Three Months Ended | |||||||||||||||||
(In thousands, except per share data) | Sept. 30, 2007 | June 30, 2007 | March 31, 2007 | Dec. 31, 2006 | Sept. 30, 2006 | ||||||||||||
Interest income: | |||||||||||||||||
Loans | $ | 212,847 | $ | 210,337 | $ | 209,164 | $ | 225,634 | $ | 215,094 | |||||||
Securities and short-term investments | 34,163 | 32,563 | 33,280 | 32,514 | 40,883 | ||||||||||||
Loans held for sale | 4,616 | 7,419 | 6,249 | 6,191 | 4,366 | ||||||||||||
Total interest income | 251,626 | 250,319 | 248,693 | 264,339 | 260,343 | ||||||||||||
Interest expense: | |||||||||||||||||
Deposits | 94,484 | 89,683 | 87,630 | 90,195 | 85,058 | ||||||||||||
Borrowings | 30,083 | 30,283 | 32,982 | 44,994 | 52,849 | ||||||||||||
Total interest expense | 124,567 | 119,966 | 120,612 | 135,189 | 137,907 | ||||||||||||
Net interest income | 127,059 | 130,353 | 128,081 | 129,150 | 122,436 | ||||||||||||
Provision for credit losses | 15,250 | 4,250 | 3,000 | 3,000 | 3,000 | ||||||||||||
Net interest income after provision for credit losses | 111,809 | 126,103 | 125,081 | 126,150 | 119,436 | ||||||||||||
Noninterest income: | |||||||||||||||||
Deposit service fees | 29,956 | 28,758 | 25,354 | 25,494 | 25,252 | ||||||||||||
Insurance revenue | 8,948 | 9,141 | 10,121 | 8,301 | 9,793 | ||||||||||||
Loan related fees | 7,661 | 7,901 | 7,940 | 9,643 | 7,760 | ||||||||||||
Wealth and investment services | 7,142 | 7,637 | 6,878 | 7,161 | 6,738 | ||||||||||||
Mortgage banking activities | 1,849 | 3,962 | 2,229 | 2,917 | (185 | ) | |||||||||||
Increase in cash surrender value of life insurance | 2,629 | 2,586 | 2,534 | 2,550 | 2,368 | ||||||||||||
Gain (loss) on sale of securities, net | 482 | 503 | 541 | (2,732 | ) | 2,307 | |||||||||||
Other | 1,568 | 1,367 | 1,824 | 3,733 | 1,693 | ||||||||||||
| 60,235 | 61,855 | 57,421 | 57,067 | 55,726 | |||||||||||||
Gain on Webster Capital Trust I and II securities | — | 2,130 | — | — | — | ||||||||||||
Loss on write-down of AFS securities to fair value | — | — | — | — | (48,879 | ) | |||||||||||
Loss on sale of mortgage loans | — | — | — | (5,713 | ) | — | |||||||||||
Total noninterest income | 60,235 | 63,985 | 57,421 | 51,354 | 6,847 | ||||||||||||
Noninterest expenses: | |||||||||||||||||
Compensation and benefits | 66,958 | 66,888 | 68,391 | 64,142 | 62,050 | ||||||||||||
Occupancy | 12,516 | 13,200 | 13,383 | 13,403 | 11,977 | ||||||||||||
Furniture and equipment | 15,039 | 15,389 | 14,969 | 14,637 | 13,840 | ||||||||||||
Intangible amortization | 2,153 | 3,344 | 3,473 | 3,473 | 3,079 | ||||||||||||
Marketing | 4,134 | 4,209 | 4,211 | 3,350 | 4,211 | ||||||||||||
Professional services | 3,557 | 3,432 | 4,802 | 5,457 | 4,302 | ||||||||||||
Other | 16,867 | 17,398 | 17,529 | 16,129 | 15,523 | ||||||||||||
| 121,224 | 123,860 | 126,758 | 120,591 | 114,982 | |||||||||||||
Debt redemption premium | — | 8,940 | — | — | — | ||||||||||||
Severance and other costs | 452 | 5,291 | 4,522 | — | — | ||||||||||||
Acquisition costs | — | — | — | 2,018 | 868 | ||||||||||||
Total noninterest expenses | 121,676 | 138,091 | 131,280 | 122,609 | 115,850 | ||||||||||||
Income before income taxes | 50,368 | 51,997 | 51,222 | 54,895 | 10,433 | ||||||||||||
Income taxes | 15,400 | 16,530 | 16,186 | 17,097 | 1,436 | ||||||||||||
Net income | $ | 34,968 | $ | 35,467 | $ | 35,036 | $ | 37,798 | $ | 8,997 | |||||||
Diluted shares (average) | 54,259 | 56,243 | 56,762 | 56,452 | 52,871 | ||||||||||||
Net income per common share: | |||||||||||||||||
Basic | $ | 0.65 | $ | 0.64 | $ | 0.62 | $ | 0.68 | $ | 0.17 | |||||||
Diluted | 0.64 | 0.63 | 0.62 | 0.67 | 0.17 | ||||||||||||
See Selected Financial Highlights for footnotes.
Interest-Rate Spread (unaudited)
| Three Months Ended | |||||||||||||||
| September 30, 2007 | June 30, 2007 | March 31, 2007 | December 31, 2006 | September 30, 2006 | |||||||||||
Interest-rate spread | |||||||||||||||
Yield on interest-earning assets | 6.61 | % | 6.62 | % | 6.61 | % | 6.52 | % | 6.31 | % | |||||
Cost of interest-bearing liabilities | 3.32 | 3.25 | 3.29 | 3.38 | 3.38 | ||||||||||
Interest-rate spread | 3.29 | % | 3.37 | % | 3.32 | % | 3.14 | % | 2.93 | % | |||||
Net interest margin | 3.38 | % | 3.47 | % | 3.41 | % | 3.23 | % | 3.01 | % | |||||
Consolidated Average Statements of Condition (unaudited)
Three Months Ended September 30, | 2007 | 2006 | ||||||||||||||||||
(Dollars in thousands) | Average balance | Interest | Fully tax- equivalent yield/rate | Average balance (c) | Interest | Fully tax- equivalent yield/rate | ||||||||||||||
Assets: | ||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||
Loans | $ | 12,390,191 | $ | 212,847 | 6.80 | % | $ | 12,813,385 | $ | 215,094 | 6.65 | % | ||||||||
Securities (b) | 2,470,938 | 35,783 | 5.79 | 3,347,060 | 43,000 | 5.06 | ||||||||||||||
Loans held for sale | 297,330 | 4,616 | 6.21 | 277,181 | 4,366 | 6.30 | ||||||||||||||
Short-term investments | 91,362 | 1,185 | 5.08 | 18,484 | 190 | 4.02 | ||||||||||||||
Total interest-earning assets | 15,249,821 | 254,431 | 6.61 | 16,456,110 | 262,650 | 6.31 | ||||||||||||||
Noninterest-earning assets | 1,597,950 | 1,496,171 | ||||||||||||||||||
Total assets | $ | 16,847,771 | $ | 17,952,281 | ||||||||||||||||
Liabilities and Shareholders’ Equity: | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||
Demand deposits | $ | 1,512,450 | $ | — | — | % | $ | 1,451,171 | $ | — | — | % | ||||||||
Savings, NOW and money market deposit accounts | 5,909,836 | 34,832 | 2.34 | 5,445,159 | 28,258 | 2.06 | ||||||||||||||
Time deposits | 5,224,511 | 59,652 | 4.53 | 5,308,496 | 56,800 | 4.23 | ||||||||||||||
Total deposits | 12,646,797 | 94,484 | 2.96 | 12,204,826 | 85,058 | 2.76 | ||||||||||||||
Federal Home Loan Bank advances | 589,427 | 6,906 | 4.58 | 2,069,417 | 26,328 | 4.98 | ||||||||||||||
Repurchase agreements and other short-term debt | 949,452 | 10,733 | 4.42 | 1,215,371 | 13,764 | 4.43 | ||||||||||||||
Long-term debt | 661,075 | 12,444 | 7.53 | 627,379 | 12,757 | 8.13 | ||||||||||||||
Total borrowings | 2,199,954 | 30,083 | 5.40 | 3,912,167 | 52,849 | 5.31 | ||||||||||||||
Total interest-bearing liabilities | 14,846,751 | 124,567 | 3.32 | 16,116,993 | 137,907 | 3.38 | ||||||||||||||
Noninterest-bearing liabilities | 159,375 | 165,298 | ||||||||||||||||||
Total liabilities | 15,006,126 | 16,282,291 | ||||||||||||||||||
Preferred stock of subsidiary corporation | 9,577 | 9,577 | ||||||||||||||||||
Shareholders’ equity | 1,832,068 | 1,660,413 | ||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 16,847,771 | $ | 17,952,281 | ||||||||||||||||
| 129,864 | 124,743 | |||||||||||||||||||
Less: tax-equivalent adjustment | (2,805 | ) | (2,307 | ) | ||||||||||||||||
Net interest income | $ | 127,059 | $ | 122,436 | ||||||||||||||||
Interest-rate spread | 3.29 | % | 2.93 | % | ||||||||||||||||
Net interest margin | 3.38 | % | 3.01 | % | ||||||||||||||||
See Selected Financial Highlights for footnotes.
5
Consolidated Average Statements of Condition (unaudited)
Nine Months Ended September 30, | 2007 | 2006 | ||||||||||||||||||
(Dollars in thousands) | Average balance | Interest | Fully tax- equivalent | Average balance (c) | Interest | Fully tax- equivalent | ||||||||||||||
Assets: | ||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||
Loans | $ | 12,380,468 | $ | 632,348 | 6.78 | % | $ | 12,611,701 | $ | 617,765 | 6.51 | % | ||||||||
Securities (b) | 2,402,321 | 105,023 | 5.84 | 3,490,595 | 127,810 | 4.81 | ||||||||||||||
Loans held for sale | 390,651 | 18,284 | 6.24 | 245,559 | 11,022 | 5.98 | ||||||||||||||
Short-term investments | 73,122 | 2,913 | 5.25 | 24,038 | 709 | 3.89 | ||||||||||||||
Total interest-earning assets | 15,246,562 | 758,568 | 6.61 | 16,371,893 | 757,306 | 6.13 | ||||||||||||||
Noninterest-earning assets | 1,598,840 | 1,498,577 | ||||||||||||||||||
Total assets | $ | 16,845,402 | $ | 17,870,470 | ||||||||||||||||
Liabilities and Shareholders’ Equity: | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||
Demand deposits | $ | 1,511,333 | $ | — | — | % | $ | 1,453,435 | $ | — | — | % | ||||||||
Savings, NOW and money market deposit accounts | 5,733,793 | 93,982 | 2.19 | 5,375,789 | 70,555 | 1.75 | ||||||||||||||
Time deposits | 5,256,838 | 177,815 | 4.52 | 5,122,366 | 149,450 | 3.89 | ||||||||||||||
Total deposits | 12,501,964 | 271,797 | 2.91 | 11,951,590 | 220,005 | 2.46 | ||||||||||||||
Federal Home Loan Bank advances | 743,770 | 26,490 | 4.70 | 2,235,163 | 76,153 | 4.49 | ||||||||||||||
Repurchase agreements and other short-term debt | 970,515 | 33,208 | 4.51 | 1,244,686 | 38,200 | 4.05 | ||||||||||||||
Long-term debt | 591,331 | 33,650 | 7.59 | 632,257 | 36,641 | 7.73 | ||||||||||||||
Total borrowings | 2,305,616 | 93,348 | 5.36 | 4,112,106 | 150,994 | 4.86 | ||||||||||||||
Total interest-bearing liabilities | 14,807,580 | 365,145 | 3.29 | 16,063,696 | 370,999 | 3.07 | ||||||||||||||
Noninterest-bearing liabilities | 154,169 | 134,520 | ||||||||||||||||||
Total liabilities | 14,961,749 | 16,198,216 | ||||||||||||||||||
Preferred stock of subsidiary corporation | 9,577 | 9,577 | ||||||||||||||||||
Shareholders’ equity | 1,874,076 | 1,662,677 | ||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 16,845,402 | $ | 17,870,470 | ||||||||||||||||
| 393,423 | 386,307 | |||||||||||||||||||
Less: tax-equivalent adjustment | (7,930 | ) | (6,907 | ) | ||||||||||||||||
Net interest income | $ | 385,493 | $ | 379,400 | ||||||||||||||||
Interest-rate spread | 3.32 | % | 3.06 | % | ||||||||||||||||
Net interest margin | 3.42 | % | 3.13 | % | ||||||||||||||||
See Selected Financial Highlights for footnotes.
| At or for the Three Months Ended | ||||||||||||||||||||
(Unaudited) (Dollars in thousands) | September 30, 2007 | June 30, 2007 | March 31, 2007 | December 31, 2006 | September 30, 2006 | |||||||||||||||
Asset Quality | ||||||||||||||||||||
Nonperforming loans: | ||||||||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial | $ | 25,845 | $ | 20,142 | $ | 13,679 | $ | 21,105 | $ | 29,321 | ||||||||||
Equipment financing | 5,054 | 2,584 | 2,405 | 2,616 | 2,450 | |||||||||||||||
Total commercial | 30,899 | 22,726 | 16,084 | 23,721 | 31,771 | |||||||||||||||
Commercial real estate | 14,238 | 12,242 | 18,524 | 17,618 | 16,811 | |||||||||||||||
Residential | 33,297 | 26,683 | 13,473 | 11,307 | 7,032 | |||||||||||||||
Consumer | 16,887 | 10,875 | 10,808 | 6,266 | 3,496 | |||||||||||||||
Total nonperforming loans | 95,321 | 72,526 | 58,889 | 58,912 | 59,110 | |||||||||||||||
Other real estate owned and repossessed assets: | ||||||||||||||||||||
Commercial | 5,233 | 3,950 | 4,833 | 1,922 | 1,573 | |||||||||||||||
Residential | 985 | 711 | 350 | 383 | 607 | |||||||||||||||
Consumer | 2,635 | 1,467 | 758 | 608 | 126 | |||||||||||||||
Total other real estate owned and repossessed assets | 8,853 | 6,128 | 5,941 | 2,913 | 2,306 | |||||||||||||||
Total nonperforming assets | $ | 104,174 | $ | 78,654 | $ | 64,830 | $ | 61,825 | $ | 61,416 | ||||||||||
Accruing loans 90 or more days past due | $ | 1,286 | $ | 2,088 | $ | 4,636 | $ | 1,490 | $ | 4,609 | ||||||||||
Allowance for Credit Losses | ||||||||||||||||||||
Beginning balance | $ | 152,750 | $ | 152,660 | $ | 154,994 | $ | 156,331 | $ | 156,471 | ||||||||||
Provision | 15,250 | 4,250 | 3,000 | 3,000 | 3,000 | |||||||||||||||
Allowance for acquired loans | — | — | — | 4,724 | — | |||||||||||||||
Charge-offs: | ||||||||||||||||||||
Commercial | 1,992 | 2,034 | 2,293 | 9,352 | 3,369 | |||||||||||||||
Residential | 433 | 286 | 2,581 | 199 | 46 | |||||||||||||||
Consumer | 2,582 | 3,176 | 1,993 | 454 | 265 | |||||||||||||||
Total charge-offs | 5,007 | 5,496 | 6,867 | 10,005 | 3,680 | |||||||||||||||
Recoveries | (1,018 | ) | (1,336 | ) | (1,533 | ) | (944 | ) | (540 | ) | ||||||||||
Net loan charge-offs | 3,989 | 4,160 | 5,334 | 9,061 | 3,140 | |||||||||||||||
Ending balance | $ | 164,011 | $ | 152,750 | $ | 152,660 | $ | 154,994 | $ | 156,331 | ||||||||||
Components: | ||||||||||||||||||||
Allowance for loan losses | $ | 154,532 | $ | 144,974 | $ | 145,367 | $ | 147,719 | $ | 147,446 | ||||||||||
Reserve for unfunded credit commitments | 9,479 | 7,776 | 7,293 | 7,275 | 8,885 | |||||||||||||||
Allowance for credit losses | $ | 164,011 | $ | 152,750 | $ | 152,660 | $ | 154,994 | $ | 156,331 | ||||||||||
Asset Quality Ratios: | ||||||||||||||||||||
Allowance for loan losses / total loans | 1.24 | % | 1.17 | % | 1.18 | % | 1.14 | % | 1.13 | % | ||||||||||
Allowance for credit losses / total loans | 1.32 | 1.23 | 1.24 | 1.20 | 1.20 | |||||||||||||||
Net charge-offs / average loans (annualized) | 0.13 | 0.14 | 0.17 | 0.27 | 0.10 | |||||||||||||||
Nonperforming loans / total loans | 0.77 | 0.58 | 0.48 | 0.46 | 0.45 | |||||||||||||||
Nonperforming assets / total loans plus OREO & repos | 0.84 | 0.63 | 0.53 | 0.48 | 0.47 | |||||||||||||||
Allowance for credit losses / nonperforming loans | 172.06 | 210.61 | 259.23 | 263.09 | 264.47 | |||||||||||||||
See Selected Financial Highlights for footnotes.