Exhibit 99.1
| | |
| Media Contact | | Investor Contact |
| Ed Steadham 203-578-2287 | | Terry Mangan 203-578-2318 |
| esteadham@websterbank.com | | tmangan@websterbank.com |
WEBSTER REPORTS THIRD QUARTER 2008 RESULTS; ANNOUNCES
QUARTERLY CASH DIVIDEND OF $.30 PER SHARE
Net loss of $16.8 million or $.42 loss per diluted share includes:
| | • | | Improvement in net interest income, net interest margin, deposit service fees and reduced noninterest expenses compared to the second quarter |
| | • | | Increased provision for credit losses to $45.5 million consisting of $29.9 million for the continuing portfolios and $15.6 million for the liquidating portfolio; the coverage for credit losses for the continuing portfolios increased to 136 basis points compared to 130 basis points in the second quarter |
| | • | | Charges of $35.6 million for other-than-temporary impairment ( “OTTI”) on certain investment securities and loss on sale of securities, and $2.5 million primarily related to the Company’s OneWebster initiative and other charges |
| | • | | Tangible equity ratio of 6.34 percent as of September 30, 2008; Tier 1 leverage ratio of 8.65 percent |
Operating income of $14.0 million or $0.17 per diluted share adjusting for OTTI and other charges
WATERBURY, Conn., October 21, 2008 – Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today announced a net loss of $16.8 million or $.42 loss per diluted share for the third quarter of 2008, compared to a net loss of $28.9 million or $.56 loss per diluted share for the second quarter of 2008 and $35.0 million in net income or $.64 per diluted earnings per share for the third quarter of 2007. As detailed below, results in the third quarter of 2008 reflect certain cash and non-cash charges in the quarter aggregating to $.59 per share. Operating income was $14.0 million or $.17 per diluted share adjusting for OTTI and other charges.
For the first nine months of 2008, net loss totaled $21.3 million, or $.51 loss per diluted share, compared to net income of $105.5 million, or $1.89 per diluted share in the year-ago period. Operating income was $61.2 million or $1.08 per diluted share adjusting for OTTI and other charges.
Detail of Charges to Third Quarter 2008 Earnings (Loss) Per Share:
| | | | | | | | |
Reported loss / loss per diluted share | | $ | (16,754 | ) | | $ | (0.42 | ) |
Adjustments (after-tax): | | | | | | | | |
Write-down of certain investments to fair value | | | 28,791 | | | | 0.55 | |
Severance and other costs | | | 998 | | | | 0.02 | |
Other charges | | | 1,013 | | | | 0.02 | |
| | | | | | | | |
Operating income / diluted EPS | | $ | 14,048 | | | $ | 0.17 | |
| | | | | | | | |
Operating income and operating EPS, representing net income and EPS determined in accordance with generally accepted accounting principles (“GAAP”) excluding the effects of the after-tax, non-cash OTTI charge noted above, provide a more meaningful comparison for effectively evaluating the company’s operating results.
Webster Chairman and Chief Executive Officer James C. Smith said, “Webster’s strong capital levels place us among the best capitalized bank holding companies of our size. During this time of unprecedented economic turmoil, we intend to use our capital strength to help our customers navigate the challenges facing the regional economy. The improvement that Webster has shown this quarter in core operating results would under more normal circumstances be the focus of this report.”
Webster will provide details on its third quarter performance in a conference call at 9:00 a.m. today (refer to details for the conference call at the end of this release). In addition, Webster has posted supplemental information regarding its investment securities portfolio and other items. Additional details are available on our website atwww.wbst.com.
Charges taken in the third quarter included $33.5 million in write-downs for OTTI for certain investment securities classified as available for sale and $2.1 million in losses on the sale of equity securities. $24.5 million of the OTTI charges were related to capital trust income notes and certain BBB rated pooled capital trust securities. Of the remaining $9.0 million of OTTI charges, $8.0 million were related to FNMA and FHLMC preferred stock and $1 million were related to common equity securities. The amount of tax benefit recognized on the OTTI was based on the tax characteristics of each security (capital or ordinary). Those securities that are treated as capital for tax purposes have limited tax benefits recorded.
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Subsequently, on October 3, 2008, the Emergency Economic Stabilization Act was enacted which includes a provision permitting banks to recognize losses relating to FNMA and FHLMC preferred stock as an ordinary loss, thereby allowing the company to tax benefit the losses. Had the legislation been in effect as of September 30, 2008, and had the company recognized the loss as an ordinary loss for the quarter ended September 30, 2008, the positive impact recorded would have been $3.5 million, or $0.07 per diluted share. The company will recognize the additional tax benefit in the quarter ending December 31, 2008 totaling approximately $3.8 million, or $0.07 per diluted share.
Other charges in the quarter include $2.1 million of loss on sale of FNMA and FHLMC preferred stock and $2.5 million in other pre-tax charges, primarily related to the OneWebster earnings optimization initiative.
Webster Chief Financial Officer and Chief Risk Officer Jerry Plush stated, “We are focused on identifying and managing risks during this credit cycle and continue to be proactive in dealing with issues in investments and loans as appropriate. We end the quarter with a solid tangible equity ratio of 6.34 percent.”
Board Declares Quarterly Cash Dividend of $.30 per share
Webster also announced today that its Board of Directors, at its October 20, 2008 meeting, declared a regular quarterly cash dividend of $.30 per common share. The dividend is payable on November 17, 2008 to shareholders of record on November 3, 2008. This is the 85th consecutive quarterly dividend since Webster first paid a dividend in 1987. Chairman and CEO Smith noted: “The Board has elected to pay a $.30 dividend to our shareholders given Webster’s strong capital position and core operating results. As indicated last quarter, our plan is to determine the appropriate dividend level based on core operating results and Webster’s capital needs in the quarters ahead.”
Revenues
Total revenue, which consists of net interest income plus total noninterest income, totaled $144.9 million in the third quarter of 2008 compared to $119.9 million in the second quarter of 2008 and $178.5 million a year ago. The declines in the third and second quarters of 2008 compared to a year ago reflect OTTI charges and losses on the sales of certain investment securities.
Net interest income totaled $129.2 million in the third quarter compared to $125.7 million in the second quarter and $127.1 million in the year-ago period. The $3.5 million increase from the second quarter primarily reflects an increase in the net interest margin as well as a higher level of interest-earning assets while the $2.1 million increase from a year ago mostly reflects
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a higher level of interest-earning assets. The net interest margin was 3.32 percent in the third quarter compared to 3.26 percent in the second quarter and 3.38 percent a year ago. The spread between the yield on interest-earning assets and the cost of interest-bearing liabilities in the third quarter of 2008 was 3.24 percent compared to 3.20 percent in the second quarter of 2008 and 3.29 percent in the third quarter of 2007.
Total noninterest income in the third quarter of 2008 was $15.7 million compared to ($5.7) million in the second quarter of 2008. Noninterest income, excluding OTTI and loss on sale of FNMA and FHLMC preferred stock, was $51.3 million in the third quarter of 2008 compared to $49.2 million in the second quarter and $51.4 million in the year-ago period. Deposit service fees totaled $31.7 million in the third quarter of 2008, an increase of $1.8 million and $1.7 million, respectively compared to $29.9 million in the second quarter and $30.0 million a year ago. Loan-related fees were $7.2 million for the third quarter compared to $7.9 million in the second quarter and $7.7 million in the year-ago period. Wealth and investment services revenues totaled $7.1 million in the third quarter compared to $7.6 million in the second quarter and $7.1 million a year ago. Income from mortgage banking activities was $0.1 million in each of the third and second quarters compared to $1.8 million a year ago. The declines from a year ago reflect the decision to exit the national wholesale mortgage business in the fourth quarter of 2007. Other noninterest income was $2.7 million compared to $0.9 million in the second quarter and $1.7 million a year ago.
Provision For Credit Losses
The total provision for credit losses was $45.5 million compared to $25.0 million in the second quarter and $15.25 million a year ago. $29.9 million of the provision for credit losses was related to the company’s continuing portfolios, and $15.6 million was related to the liquidating portfolio. The increase over the second quarter reflects higher levels of nonperforming and delinquent loans, as well as management’s decision to expedite the resolution of the remaining liquidating national construction loan portfolio and to provide for additional reserves for the liquidating home equity portfolio.
Net loan charge-offs from the continuing portfolios totaled $20.5 million in the third quarter compared with $11.2 million in the second quarter. Additional net charge-offs of $13.9 million and $6.8 million were recorded in the third quarter against the remaining indirect national construction loans and indirect, out-of-market home equity loans in the liquidating portfolio respectively, compared with net charge-offs of $3.7 million and $5.5 million in the second quarter.
The total allowance for credit losses, which consists of the allowance for loan losses and the reserve for unfunded credit commitments, was $198.7 million or 1.54 percent of total loans at September 30, 2008, compared to 1.52 percent at June 30, 2008 and 1.32 percent at September 30, 2007.
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Of the total allowance for credit losses as of September 30, 2008, $170.9 million was allocated toward the continuing portfolios and unfunded credit commitments, or 1.36 percent of continuing loans, up from $161.5 million or 1.30 percent of loans as of June 30, 2008 and $27.8 million was allocated to the liquidating portfolio, or 14.0 percent and 7.5 percent of liquidating national construction and home equity loans respectively, a decline from $32.9 million, or 14.3 percent and 7.5 percent respectively, as of June 30, 2008.
Noninterest Expenses
Total noninterest expenses were $117.5 million in the third quarter compared to $137.7 million in the second quarter of 2008 and $113.6 million a year ago. Noninterest expenses excluding goodwill impairment and OneWebster charges were $115.0 million in the third quarter compared to $120.0 million in the second quarter of 2008 and $113.1 million a year ago. Total noninterest expense in the third quarter of 2008 included a $1.0 million subsidiary goodwill impairment charge and $1.5 million of previously disclosed severance and other costs primarily related to the OneWebster earnings optimization initiative while the second quarter of 2008 included a $8.5 million goodwill impairment charge and $12.5 million of other costs consisting of $7.7 million of previously disclosed amounts related to the OneWebster earnings optimization initiative, $1.6 million in severance and other expenses related to early retirement and other executive changes, and $3.2 million of other charges. Plush stated, “As we outlined in previous releases regarding our OneWebster initiative, the benefits of this program would begin to be realized as early as the third quarter of this year. We recognize that showing improvement in our core noninterest expenses, which reflects the early stages of this program and other cost containment measures, is essential, particularly in this uncertain economic environment and in light of higher FDIC insurance premiums in future quarters.”
Income Taxes
Due to the pre-tax loss, the effective tax rate for the third quarter was not meaningful. The $1.9 million tax benefit in the quarter on the $18.1 million pre-tax loss applicable to continuing operations in the period was impacted primarily by no tax benefit being available on $22.6 million of securities losses ($7.9 million benefit). Webster’s effective tax rate applicable to continuing operations and excluding primarily the effects of the securities losses, was 27% as compared to 29.5% in the second quarter of 2008 and 31.5% a year ago.
Balance Sheet Trends
Total assets were $17.5 billion at September 30, 2008 compared to $17.5 billion at June 30, 2008 and $16.9 billion a year ago. Total loans were $12.9 billion at September 30, 2008 compared to $12.8 billion at June 30, 2008 and $12.4 billion a year ago. In the third quarter,
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commercial real estate increased by $51 million, while Commercial & Industrial loans grew by $40 million. Consumer loans grew by $36 million while residential mortgage loans declined by $26 million. Securities totaled $3.0 billion at September 30, 2008 compared to $2.5 billion a year ago, which provided offset to a decline of $208 million in loans held for sale.
Total deposits were $11.8 billion, a decrease of $0.7 billion or 6 percent from a year ago, as Webster reduced higher costing brokered certificates of deposits, which declined $107 million, other certificates of deposit, which declined $354 million from a year ago, and money market deposit accounts, which declined $474 million from a year ago. Somewhat offsetting these declines was an increase in NOW and demand deposits of $106 million and a $107 million increase in savings accounts from a year ago. Core deposits as a percent of total deposits was 60.5 percent at September 30, 2008 compared to 62.0 percent in the second quarter and 59.1 percent a year ago. Borrowings totaled $3.7 billion or an increase of $1.4 billion, primarily in repurchase agreements, FED funds purchased and FHLB borrowings, from a year ago. Short-term borrowings continue to represent an attractive alternative to deposits, primarily certificates of deposits, and correspondingly benefit the net interest margin. The company has, given recent market conditions, begun to see strong growth in and consumer preference for certificates of deposit.
Book value per common share of $30.19 at September 30, 2008 compared to $33.73 a year ago. Tangible book value per share was $16.13 at September 30, 2008 compared to $19.62 a year ago. The ratio of tangible equity to tangible assets was 6.34 percent at September 30, 2008 compared to 6.44 percent a year ago. Webster’s Tier 1 leverage ratio is 8.64 percent at September 30, 2008 compared to 8.37 percent a year ago, and projected total risk based capital ratio is 13 percent at September 30, 2008 compared with 11.64 percent a year ago.
Asset Quality
Total nonperforming assets were $250.5 million or 1.94 percent of total loans and other real estate owned at September 30, 2008 compared to $224.1 million or 1.75 percent at June 30, 2008. The $26.4 million increase in nonperforming assets was primarily comprised of $26.7 million in residential development projects and $7.4 million in residential loans, $2.7 million in consumer loans and $5.7 million in other real estate owned, somewhat offset by declines in commercial loans of $4.0 million, commercial real estate of $0.7 million and liquidating portfolio of $11.4 million. Nonperforming loans in the liquidating indirect national construction and indirect out of footprint home equity portfolio totaled $17.5 million and $10.8 million at September 30, 2008, respectively compared to $29.0 million and $10.7 million at June 30, 2008 and $18.5 million and $4.2 million a year ago. The decline in liquidating nonperforming loans was the result of management’s decision to expedite resolution of the NCLC portfolio.
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Past due loans for the continuing portfolios totaled $102.1 million at September 30, 2008, an increase of $34.4 million compared to $67.7 million at June 30, 2008. The increase in past due loans in the continuing portfolio was primarily related to increases of $15.5 million in commercial real estate, $13.0 million in residential loans and $5.1 million in consumer loans. Past due loans for the liquidating portfolio totaled $19.1 million at September 30, 2008 compared to $11.5 million at June 30, 2008.
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Webster Financial Corporation is the holding company for Webster Bank, National Association. With $17.5 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust and investment services through 181 banking offices, 484 ATMs, telephone banking and the Internet. Webster Bank owns the asset-based lending firm Webster Business Credit Corporation, the insurance premium finance company Budget Installment Corp., Center Capital Corporation, an equipment finance company headquartered in Farmington, Conn., and provides health savings account trustee and administrative services through HSA Bank, a division of Webster Bank. Member FDIC and equal housing lender. For more information about Webster, including past press releases and the latest annual report, visit the Webster website atwww.WebsterOnline.com.
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Conference Call
A conference call covering Webster’s third quarter earnings announcement will be held today, Tuesday, October 21, at 9:00 a.m. EDT and may be heard through Webster’s investor relations website atwww.wbst.com, or in listen-only mode by calling 1-877-407-8289 or 201-689-8341 internationally. The call will be archived on the website and available for future retrieval.
Forward-looking Statements
Statements in this press release regarding Webster Financial Corporation’s business that are not historical facts are “forward-looking statements” that involve risks and uncertainties. For a discussion of such risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statement, see “Forward Looking Statements” in Webster’s Annual Report for 2007. Except as required by law, Webster does not undertake to update any such forward looking information.
Non-GAAP Financial Measures
In addition to results presented in accordance with GAAP, this press release contains certain non-GAAP financial measures. A reconciliation of net income and other performance ratios, as adjusted, is included in the accompanying selected financial highlights table.
We believe that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, our performance trends and financial position. Specifically, we provide measures based on what we believe are our operating earnings on a consistent basis and exclude non-core operating items which affect the GAAP reporting of results of operations. We utilize these measures for internal planning and
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forecasting purposes. We, as well as securities analysts, investors and other interested parties, also use these measures to compare peer company operating performance. We believe that our presentation and discussion, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting our business and allows investors to view performance in a manner similar to management. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.
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WEBSTER FINANCIAL CORPORATION
Selected Financial Highlights (unaudited)
| | | | | | | | | | | | | | | | |
| | | At or for the Three
Months Ended September 30, | | | At or for the Nine
Months Ended September 30, | |
(In thousands, except per share data) | | 2008 | | | 2007 (c) | | | 2008 | | | 2007 (c) | |
Net income (loss) and performance ratios (annualized): | | | | | | | | | | | | | | | | |
| | | | |
Net income (loss) | | $ | (16,754 | ) | | $ | 34,968 | | | $ | (21,329 | ) | | $ | 105,471 | |
Net income (loss) per diluted common share | | | (0.42 | ) | | | 0.64 | | | | (0.51 | ) | | | 1.89 | |
Return on average shareholders’ equity | | | (3.59 | )% | | | 7.63 | % | | | (1.59 | )% | | | 7.50 | % |
Return on average tangible equity | | | (5.96 | ) | | | 13.00 | | | | (2.74 | ) | | | 12.60 | |
Return on average assets | | | (0.39 | ) | | | 0.83 | | | | (0.16 | ) | | | 0.83 | |
| | | | |
Income (loss) from continuing operations and performance ratios (annualized): | | | | | | | | | | | | | | | | |
| | | | |
Income (loss) from continuing operations | | $ | (16,236 | ) | | $ | 34,575 | | | $ | (18,248 | ) | | $ | 105,527 | |
Net income (loss) from continuing operations per diluted common share | | | (0.41 | ) | | | 0.64 | | | | (0.45 | ) | | | 1.89 | |
Return on average shareholders’ equity | | | (3.48 | )% | | | 7.55 | % | | | (1.36 | )% | | | 7.51 | % |
Return on average tangible equity | | | (5.78 | ) | | | 12.85 | | | | (2.34 | ) | | | 12.60 | |
Return on average assets | | | (0.37 | ) | | | 0.82 | | | | (0.14 | ) | | | 0.84 | |
Noninterest income as a percentage of total revenue | | | 10.87 | | | | 28.80 | | | | 13.22 | | | | 28.58 | |
Efficiency ratio (a) | | | 59.73 | | | | 61.31 | | | | 63.64 | | | | 61.68 | |
| | | | |
Asset quality: | | | | | | | | | | | | | | | | |
| | | | |
Allowance for credit losses | | $ | 198,669 | | | $ | 164,011 | | | $ | 198,669 | | | $ | 164,011 | |
Nonperforming assets | | | 250,466 | | | | 104,174 | | | | 250,466 | | | | 104,174 | |
Allowance for credit losses / total loans | | | 1.54 | % | | | 1.32 | % | | | 1.54 | % | | | 1.32 | % |
Net charge-offs / average loans (annualized) | | | 1.29 | | | | 0.13 | | | | 0.89 | | | | 0.15 | |
Nonperforming loans / total loans | | | 1.77 | | | | 0.77 | | | | 1.77 | | | | 0.77 | |
Nonperforming assets / total loans plus OREO | | | 1.94 | | | | 0.84 | | | | 1.94 | | | | 0.84 | |
Allowance for credit losses / nonperforming loans | | | 87.25 | | | | 172.06 | | | | 87.25 | | | | 172.06 | |
| | | | |
Other ratios (annualized): | | | | | | | | | | | | | | | | |
| | | | |
Tangible capital ratio | | | 6.34 | % | | | 6.44 | % | | | 6.34 | % | | | 6.44 | % |
Total-risk based capital (e) | | | 13.10 | | | | 11.64 | | | | 13.10 | | | | 11.64 | |
Shareholders’ equity / total assets | | | 10.37 | | | | 10.71 | | | | 10.37 | | | | 10.71 | |
Interest-rate spread | | | 3.24 | | | | 3.29 | | | | 3.21 | | | | 3.32 | |
Net interest margin | | | 3.32 | | | | 3.38 | | | | 3.28 | | | | 3.42 | |
| | | | |
Share related: | | | | | | | | | | | | | | | | |
| | | | |
Book value per common share | | $ | 30.19 | | | $ | 33.73 | | | $ | 30.19 | | | $ | 33.73 | |
Tangible book value per common share | | | 16.13 | | | | 19.62 | | | | 16.13 | | | | 19.62 | |
Common stock closing price | | | 25.25 | | | | 42.12 | | | | 25.25 | | | | 42.12 | |
Dividends declared per common share | | | 0.30 | | | | 0.30 | | | | 0.90 | | | | 0.87 | |
| | | | |
Common shares issued and outstanding | | | 52,711 | | | | 53,520 | | | | 52,711 | | | | 53,520 | |
Basic shares (average) | | | 52,032 | | | | 53,735 | | | | 52,017 | | | | 55,166 | |
Diluted shares (average) | | | 52,032 | | | | 54,259 | | | | 52,017 | | | | 55,753 | |
Footnotes:
| (a) | Calculated using SNL’s methodology - noninterest expense (excluding foreclosed property expenses, intangible amortization, goodwill impairments and other charges) as a percentage of net interest income (FTE basis) plus noninterest income (excluding gain/loss on securities and other charges). |
| (b) | For purposes of the yield computation, unrealized gains (losses) on securities available for sale are excluded from the average balance. |
| (c) | Certain previously reported information has been reclassified for the effect of reporting Webster Insurance as discontinued operations. |
| (d) | NCLC is defined as National Construction Lending Center |
| (e) | The ratios presented are projected for the 2008 reporting periods and actual for the 2007 reporting periods. |
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WEBSTER FINANCIAL CORPORATION
Consolidated Balance Sheet (unaudited)
| | | | | | | | | | | | |
(In thousands) | | Sept 30,
2008 | | | June 30,
2008 | | | Sept 30,
2007 | |
Assets: | | | | | | | | | | | | |
Cash and due from depository institutions | | $ | 221,195 | | | $ | 323,480 | | | $ | 264,929 | |
Short-term investments | | | 6,449 | | | | 2,996 | | | | 80,270 | |
| | | |
Investment securities: | | | | | | | | | | | | |
Trading, at fair value | | | 1,197 | | | | 2,280 | | | | 635 | |
Available for sale, at fair value | | | 824,118 | | | | 849,591 | | | | 344,546 | |
Held-to-maturity | | | 2,031,665 | | | | 2,065,771 | | | | 2,051,277 | |
Other securities | | | 134,874 | | | | 132,210 | | | | 110,962 | |
| | | | | | | | | | | | |
Total securities | | | 2,991,854 | | | | 3,049,852 | | | | 2,507,420 | |
| | | |
Loans held for sale | | | 3,247 | | | | 3,972 | | | | 211,659 | |
| | | |
Loans: | | | | | | | | | | | | |
Residential mortgages | | | 3,567,825 | | | | 3,594,100 | | | | 3,677,682 | |
Commercial | | | 3,677,069 | | | | 3,637,395 | | | | 3,562,394 | |
Commercial real estate | | | 2,365,181 | | | | 2,314,497 | | | | 1,896,566 | |
Consumer | | | 3,256,314 | | | | 3,220,462 | | | | 3,283,914 | |
| | | | | | | | | | | | |
Total loans | | | 12,866,389 | | | | 12,766,454 | | | | 12,420,556 | |
Allowance for loan losses | | | (189,169 | ) | | | (184,868 | ) | | | (154,532 | ) |
| | | | | | | | | | | | |
Loans, net | | | 12,677,220 | | | | 12,581,586 | | | | 12,266,024 | |
| | | |
Accrued interest receivable | | | 75,830 | | | | 73,060 | | | | 86,654 | |
Premises and equipment, net | | | 188,443 | | | | 190,273 | | | | 192,880 | |
Goodwill and other intangible assets, net | | | 754,026 | | | | 756,503 | | | | 769,893 | |
Cash surrender value of life insurance | | | 277,176 | | | | 274,570 | | | | 266,729 | |
Assets held for disposition | | | 900 | | | | 900 | | | | 64,971 | |
Unsettled trades | | | 68,996 | | | | 6,268 | | | | 1,737 | |
Deferred tax assets, net | | | 127,628 | | | | 94,823 | | | | 41,904 | |
Prepaid expenses and other assets | | | 123,073 | | | | 120,353 | | | | 96,777 | |
| | | | | | | | | | | | |
Total Assets | | $ | 17,516,037 | | | $ | 17,478,636 | | | $ | 16,851,847 | |
| | | | | | | | | | | | |
Liabilities and Shareholders’ Equity: | | | | | | | | | | | | |
| | | |
Deposits: | | | | | | | | | | | | |
Demand deposits | | $ | 1,509,319 | | | $ | 1,583,686 | | | $ | 1,479,503 | |
NOW accounts | | | 1,740,650 | | | | 1,861,997 | | | | 1,664,025 | |
Money market deposit accounts | | | 1,591,599 | | | | 1,591,857 | | | | 2,065,474 | |
Savings accounts | | | 2,318,014 | | | | 2,452,831 | | | | 2,211,125 | |
Certificates of deposit | | | 4,492,767 | | | | 4,416,165 | | | | 4,847,060 | |
Brokered deposits | | | 180,026 | | | | 170,031 | | | | 286,806 | |
| | | | | | | | | | | | |
Total deposits | | | 11,832,375 | | | | 12,076,567 | | | | 12,553,993 | |
| | | |
Securities sold under agreements to repurchase and
other short-term debt | | | 1,688,728 | | | | 1,275,024 | | | | 994,624 | |
Federal Home Loan Bank advances | | | 1,355,931 | | | | 1,419,570 | | | | 628,445 | |
Long-term debt | | | 657,004 | | | | 653,995 | | | | 666,236 | |
Liabilities held for disposition | | | — | | | | — | | | | 9,310 | |
Accrued expenses and other liabilities | | | 155,853 | | | | 152,198 | | | | 184,619 | |
| | | | | | | | | | | | |
Total liabilities | | | 15,689,891 | | | | 15,577,354 | | | | 15,037,227 | |
| | | |
Preferred stock of subsidiary corporation | | | 9,577 | | | | 9,577 | | | | 9,577 | |
| | | |
Shareholders’ equity | | | 1,816,569 | | | | 1,891,705 | | | | 1,805,043 | |
| | | | | | | | | | | | |
Total Liabilities and Shareholders’ Equity | | $ | 17,516,037 | | | $ | 17,478,636 | | | $ | 16,851,847 | |
| | | | | | | | | | | | |
See Selected Financial Highlights for footnotes.
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WEBSTER FINANCIAL CORPORATION
Consolidated Statements of Operations (unaudited)
| | | | | | | | | | | | | | | |
| | | Three Months Ended
Sept 30, | | Nine Months Ended
Sept 30, | |
(In thousands, except per share data) | | 2008 | | | 2007 | | 2008 | | | 2007 | |
Interest income: | | | | | | | | | | | | | | | |
Loans | | $ | 175,363 | | | $ | 212,847 | | $ | 542,421 | | | $ | 632,348 | |
Investment securities and short-term investments | | | 39,210 | | | | 34,163 | | | 116,657 | | | | 100,006 | |
Loans held for sale | | | 54 | | | | 4,616 | | | 1,546 | | | | 18,284 | |
| | | | | | | | | | | | | | | |
Total interest income | | | 214,627 | | | | 251,626 | | | 660,624 | | | | 750,638 | |
| | | | | | | | | | | | | | | |
Interest expense: | | | | | | | | | | | | | | | |
Deposits | | | 57,730 | | | | 94,484 | | | 193,028 | | | | 271,797 | |
Borrowings | | | 27,716 | | | | 30,083 | | | 87,873 | | | | 93,348 | |
| | | | | | | | | | | | | | | |
Total interest expense | | | 85,446 | | | | 124,567 | | | 280,901 | | | | 365,145 | |
| | | | | | | | | | | | | | | |
Net interest income | | | 129,181 | | | | 127,059 | | | 379,723 | | | | 385,493 | |
Provision for credit losses | | | 45,500 | | | | 15,250 | | | 86,300 | | | | 22,500 | |
| | | | | | | | | | | | | | | |
Net interest income after provision for credit losses | | | 83,681 | | | | 111,809 | | | 293,423 | | | | 362,993 | |
| | | | | | | | | | | | | | | |
Noninterest income: | | | | | | | | | | | | | | | |
Deposit service fees | | | 31,738 | | | | 29,956 | | | 90,114 | | | | 84,068 | |
Loan related fees | | | 7,171 | | | | 7,661 | | | 21,920 | | | | 23,502 | |
Wealth and investment services | | | 7,070 | | | | 7,142 | | | 21,660 | | | | 21,657 | |
Mortgage banking activities | | | 50 | | | | 1,849 | | | 894 | | | | 8,040 | |
Increase in cash surrender value of life insurance | | | 2,606 | | | | 2,629 | | | 7,810 | | | | 7,749 | |
Gain (loss) on sale of securities, net | | | (50 | ) | | | 482 | | | 199 | | | | 1,526 | |
Other | | | 2,731 | | | | 1,688 | | | 5,369 | | | | 5,591 | |
| | | | | | | | | | | | | | | |
| | | 51,316 | | | | 51,407 | | | 147,966 | | | | 152,133 | |
Loss on write-down of investments to fair value | | | (33,507 | ) | | | — | | | (89,684 | ) | | | — | |
Loss on sale of FNMA/FHLMC preferred stock | | | (2,060 | ) | | | — | | | (2,060 | ) | | | — | |
Visa share redemption | | | — | | | | — | | | 1,625 | | | | — | |
Gain on Webster Capital Trust I and II securities | | | — | | | | — | | | — | | | | 2,130 | |
| | | | | | | | | | | | | | | |
Total noninterest income | | | 15,749 | | | | 51,407 | | | 57,847 | | | | 154,263 | |
| | | | | | | | | | | | | | | |
Noninterest expenses: | | | | | | | | | | | | | | | |
Compensation and benefits | | | 61,314 | | | | 61,171 | | | 187,623 | | | | 183,605 | |
Occupancy | | | 12,827 | | | | 11,932 | | | 39,637 | | | | 36,557 | |
Furniture and equipment | | | 14,892 | | | | 14,846 | | | 45,686 | | | | 44,418 | |
Intangible amortization | | | 1,464 | | | | 2,027 | | | 4,476 | | | | 8,493 | |
Marketing | | | 2,478 | | | | 4,123 | | | 11,061 | | | | 12,486 | |
Professional services | | | 3,798 | | | | 3,625 | | | 11,657 | | | | 11,317 | |
Foreclosed property expense | | | 3,464 | | | | 231 | | | 5,529 | | | | 376 | |
Other | | | 14,759 | | | | 15,146 | | | 45,943 | | | | 47,189 | |
| | | | | | | | | | | | | | | |
| | | 114,996 | | | | 113,101 | | | 351,612 | | | | 344,441 | |
Debt redemption premium | | | — | | | | — | | | — | | | | 8,940 | |
Severance and other costs | | | 1,535 | | | | 452 | | | 10,253 | | | | 10,265 | |
Impairment of subsidiary goodwill | | | 1,013 | | | | — | | | 9,513 | | | | — | |
| | | | | | | | | | | | | | | |
Total noninterest expenses | | | 117,544 | | | | 113,553 | | | 371,378 | | | | 363,646 | |
| | | | | | | | | | | | | | | |
Income (loss) from continuing operations before income taxes | | | (18,114 | ) | | | 49,663 | | | (20,108 | ) | | | 153,610 | |
Income taxes (benefit) | | | (1,878 | ) | | | 15,088 | | | (1,860 | ) | | | 48,083 | |
| | | | | | | | | | | | | | | |
Income (loss) from continuing operations | | | (16,236 | ) | | | 34,575 | | | (18,248 | ) | | | 105,527 | |
Income (loss) from discontinued operations, net of tax | | | (518 | ) | | | 393 | | | (3,081 | ) | | | (56 | ) |
| | | | | | | | | | | | | | | |
Net income (loss) | | $ | (16,754 | ) | | $ | 34,968 | | $ | (21,329 | ) | | $ | 105,471 | |
| | | | | | | | | | | | | | | |
Preferred stock dividends | | | 4,994 | | | | — | | | 4,994 | | | | — | |
| | | | | | | | | | | | | | | |
Net income (loss) available to common shareholders | | $ | (21,748 | ) | | $ | 34,968 | | $ | (26,323 | ) | | $ | 105,471 | |
| | | | | | | | | | | | | | | |
Diluted shares (average) | | | 52,032 | | | | 54,259 | | | 52,017 | | | | 55,753 | |
Net income (loss) per common share: | | | | | | | | | | | | | | | |
Basic | | | | | | | | | | | | | | | |
Income (loss) from continuing operations | | $ | (0.41 | ) | | $ | 0.64 | | $ | (0.45 | ) | | $ | 1.91 | |
Net income (loss) | | | (0.42 | ) | | | 0.65 | | | (0.51 | ) | | | 1.91 | |
Diluted | | | | | | | | | | | | | | | |
Income (loss) from continuing operations | | | (0.41 | ) | | | 0.64 | | | (0.45 | ) | | | 1.89 | |
Net income (loss) | | | (0.42 | ) | | | 0.64 | | | (0.51 | ) | | | 1.89 | |
See Selected Financial Highlights for footnotes.
11
WEBSTER FINANCIAL CORPORATION
Five Quarter Consolidated Statements of Operations (unaudited)
| | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended |
(In thousands, except per share data) | | Sept 30,
2008 | | | June 30,
2008 | | | March 31,
2008 | | | Dec. 31,
2007 | | | Sept. 30,
2007 |
Interest income: | | | | | | | | | | | | | | | | | | | |
Loans | | $ | 175,363 | | | $ | 175,786 | | | $ | 191,272 | | | $ | 205,363 | | | $ | 212,847 |
Investment securities and short-term investments | | | 39,210 | | | | 38,115 | | | | 39,332 | | | | 36,318 | | | | 34,163 |
Loans held for sale | | | 54 | | | | 92 | | | | 1,400 | | | | 3,276 | | | | 4,616 |
| | | | | | | | | | | | | | | | | | | |
Total interest income | | | 214,627 | | | | 213,993 | | | | 232,004 | | | | 244,957 | | | | 251,626 |
| | | | | | | | | | | | | | | | | | | |
Interest expense: | | | | | | | | | | | | | | | | | | | |
Deposits | | | 57,730 | | | | 60,056 | | | | 75,242 | | | | 89,510 | | | | 94,484 |
Borrowings | | | 27,716 | | | | 28,251 | | | | 31,906 | | | | 32,748 | | | | 30,083 |
| | | | | | | | | | | | | | | | | | | |
Total interest expense | | | 85,446 | | | | 88,307 | | | | 107,148 | | | | 122,258 | | | | 124,567 |
| | | | | | | | | | | | | | | | | | | |
Net interest income | | | 129,181 | | | | 125,686 | | | | 124,856 | | | | 122,699 | | | | 127,059 |
Provision for credit losses | | | 45,500 | | | | 25,000 | | | | 15,800 | | | | 45,250 | | | | 15,250 |
| | | | | | | | | | | | | | | | | | | |
Net interest income after provision for credit losses | | | 83,681 | | | | 100,686 | | | | 109,056 | | | | 77,449 | | | | 111,809 |
| | | | | | | | | | | | | | | | | | | |
Noninterest income: | | | | | | | | | | | | | | | | | | | |
Deposit service fees | | | 31,738 | | | | 29,943 | | | | 28,433 | | | | 30,577 | | | | 29,956 |
Loan related fees | | | 7,171 | | | | 7,891 | | | | 6,858 | | | | 7,328 | | | | 7,661 |
Wealth and investment services | | | 7,070 | | | | 7,634 | | | | 6,956 | | | | 7,507 | | | | 7,142 |
Mortgage banking activities | | | 50 | | | | 104 | | | | 740 | | | | 1,276 | | | | 1,849 |
Increase in cash surrender value of life insurance | | | 2,606 | | | | 2,623 | | | | 2,581 | | | | 2,637 | | | | 2,629 |
Gain (loss) on sale of securities, net | | | (50 | ) | | | 126 | | | | 123 | | | | 195 | | | | 482 |
Other | | | 2,731 | | | | 854 | | | | 1,784 | | | | 2,094 | | | | 1,688 |
| | | | | | | | | | | | | | | | | | | |
| | | 51,316 | | | | 49,175 | | | | 47,475 | | | | 51,614 | | | | 51,407 |
Loss on write-down of investments to fair value | | | (33,507 | ) | | | (54,924 | ) | | | (1,253 | ) | | | (3,565 | ) | | | — |
Loss on sale of FNMA/FHLMC preferred stock | | | (2,060 | ) | | | — | | | | — | | | | — | | | | — |
VISA share redemption | | | — | | | | — | | | | 1,625 | | | | — | | | | — |
| | | | | | | | | | | | | | | | | | | |
Total noninterest income | | | 15,749 | | | | (5,749 | ) | | | 47,847 | | | | 48,049 | | | | 51,407 |
| | | | | | | | | | | | | | | | | | | |
Noninterest expenses: | | | | | | | | | | | | | | | | | | | |
Compensation and benefits | | | 61,314 | | | | 62,866 | | | | 63,443 | | | | 59,910 | | | | 61,171 |
Occupancy | | | 12,827 | | | | 13,128 | | | | 13,682 | | | | 12,321 | | | | 11,932 |
Furniture and equipment | | | 14,892 | | | | 15,634 | | | | 15,160 | | | | 15,353 | | | | 14,846 |
Intangible amortization | | | 1,464 | | | | 1,464 | | | | 1,548 | | | | 1,881 | | | | 2,027 |
Marketing | | | 2,478 | | | | 4,940 | | | | 3,643 | | | | 1,727 | | | | 4,123 |
Professional services | | | 3,798 | | | | 3,706 | | | | 4,153 | | | | 3,721 | | | | 3,625 |
Foreclosed property expense | | | 3,464 | | | | 1,552 | | | | 513 | | | | 1,634 | | | | 231 |
Other | | | 14,759 | | | | 16,565 | | | | 14,619 | | | | 16,879 | | | | 15,146 |
| | | | | | | | | | | | | | | | | | | |
| | | 114,996 | | | | 119,855 | | | | 116,761 | | | | 113,426 | | | | 113,101 |
Severance and other costs | | | 1,535 | | | | 9,368 | | | | (650 | ) | | | 6,898 | | | | 452 |
Impairment of subsidiary goodwill | | | 1,013 | | | | 8,500 | | | | — | | | | — | | | | — |
| | | | | | | | | | | | | | | | | | | |
Total noninterest expenses | | | 117,544 | | | | 137,723 | | | | 116,111 | | | | 120,324 | | | | 113,553 |
| | | | | | | | | | | | | | | | | | | |
Income (loss) from continuing operations before income taxes | | | (18,114 | ) | | | (42,786 | ) | | | 40,792 | | | | 5,174 | | | | 49,663 |
Income taxes (benefit) | | | (1,878 | ) | | | (14,285 | ) | | | 14,303 | | | | 5 | | | | 15,088 |
| | | | | | | | | | | | | | | | | | | |
Income (loss) from continuing operations | | | (16,236 | ) | | | (28,501 | ) | | | 26,489 | | | | 5,169 | | | | 34,575 |
Income (loss) from discontinued operations, net of tax | | | (518 | ) | | | (439 | ) | | | (2,124 | ) | | | (13,867 | ) | | | 393 |
| | | | | | | | | | | | | | | | | | | |
Net income (loss) | | $ | (16,754 | ) | | $ | (28,940 | ) | | $ | 24,365 | | | $ | (8,698 | ) | | $ | 34,968 |
| | | | | | | | | | | | | | | | | | | |
Preferred stock dividends | | | 4,994 | | | | — | | | | — | | | | — | | | | — |
| | | | | | | | | | | | | | | | | | | |
Net income (loss) available to common shareholders | | $ | (21,748 | ) | | $ | (28,940 | ) | | $ | 24,365 | | | $ | (8,698 | ) | | $ | 34,968 |
| | | | | | | | | | | | | | | | | | | |
Diluted shares (average) | | | 52,032 | | | | 52,017 | | | | 52,297 | | | | 52,795 | | | | 54,259 |
| | | | | |
Net income (loss) per common share: | | | | | | | | | | | | | | | | | | | |
Basic | | | | | | | | | | | | | | | | | | | |
Income (loss) from continuing operations | | $ | (0.41 | ) | | $ | (0.55 | ) | | $ | 0.51 | | | $ | 0.10 | | | $ | 0.64 |
Net income (loss) | | | (0.42 | ) | | | (0.56 | ) | | | 0.47 | | | | (0.17 | ) | | | 0.65 |
Diluted | | | | | | | | | | | | | | | | | | | |
Income (loss) from continuing operations | | | (0.41 | ) | | | (0.55 | ) | | | 0.51 | | | | 0.10 | | | | 0.64 |
Net income (loss) | | | (0.42 | ) | | | (0.56 | ) | | | 0.47 | | | | (0.16 | ) | | | 0.64 |
See Selected Financial Highlights for footnotes.
12
WEBSTER FINANCIAL CORPORATION
Five Quarter Interest-Rate Spreads (unaudited)
| | | | | | | | | | | | | | | |
| | | Three Months Ended | |
| | | September 30,
2008 | | | June 30,
2008 | | | March 31,
2008 | | | December 31,
2007 | | | September 30,
2007 | |
Interest-rate spread | | | | | | | | | | | | | | | |
Yield on interest-earning assets | | 5.45 | % | | 5.51 | % | | 6.02 | % | | 6.42 | % | | 6.61 | % |
Cost of interest-bearing liabilities | | 2.21 | | | 2.31 | | | 2.82 | | | 3.24 | | | 3.32 | |
| | | | | | | | | | | | | | | |
Interest-rate spread | | 3.24 | % | | 3.20 | % | | 3.20 | % | | 3.18 | % | | 3.29 | % |
| | | | | | | | | | | | | | | |
Net interest margin | | 3.32 | % | | 3.26 | % | | 3.27 | % | | 3.26 | % | | 3.38 | % |
| | | | | | | | | | | | | | | |
Consolidated Average Balances, Yields and Rates Paid (unaudited)
| | | | | | | | | | | | | | | | | | | | |
Three Months Ended September 30, | | 2008 | | | 2007 | |
(Dollars in thousands) | | Average
balance | | Interest | | | Fully tax-
equivalent
yield/rate | | | Average
balance | | Interest | | | Fully tax-
equivalent
yield/rate | |
Assets: | | | | | | | | | | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | | | | | | | | | | |
Loans | | $ | 12,805,398 | | $ | 175,363 | | | 5.43 | % | | $ | 12,390,191 | | $ | 212,847 | | | 6.80 | % |
Investment securities (b) | | | 2,992,722 | | | 42,926 | | | 5.54 | | | | 2,470,938 | | | 35,783 | | | 5.79 | |
Loans held for sale | | | 3,810 | | | 54 | | | 5.62 | | | | 297,330 | | | 4,616 | | | 6.21 | |
Short-term investments | | | 4,193 | | | 28 | | | 2.64 | | | | 91,362 | | | 1,185 | | | 5.08 | |
| | | | | | | | | | | | | | | | | | | | |
Total interest-earning assets | | | 15,806,123 | | | 218,371 | | | 5.45 | | | | 15,249,821 | | | 254,431 | | | 6.61 | |
| | | | | | | | | | | | | | | | | | | | |
Noninterest-earning assets | | | 1,537,759 | | | | | | | | | | 1,597,950 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total assets | | $ | 17,343,882 | | | | | | | | | $ | 16,847,771 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Liabilities and Shareholders’ Equity: | | | | | | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | |
Demand deposits | | $ | 1,515,047 | | $ | — | | | — | % | | $ | 1,512,450 | | $ | — | | | — | % |
Savings, NOW and money market deposit accounts | | | 5,869,948 | | | 19,660 | | | 1.33 | | | | 5,909,836 | | | 34,832 | | | 2.34 | |
Time deposits | | | 4,670,268 | | | 38,070 | | | 3.23 | | | | 5,224,511 | | | 59,652 | | | 4.53 | |
| | | | | | | | | | | | | | | | | | | | |
Total deposits | | | 12,055,263 | | | 57,730 | | | 1.90 | | | | 12,646,797 | | | 94,484 | | | 2.96 | |
| | | | | | | | | | | | | | | | | | | | |
Securities sold under agreements to repurchase and other short-term debt | | | 1,332,097 | | | 8,517 | | | 2.50 | | | | 949,452 | | | 10,733 | | | 4.42 | |
Federal Home Loan Bank advances | | | 1,291,583 | | | 10,181 | | | 3.08 | | | | 589,427 | | | 6,906 | | | 4.58 | |
Long-term debt | | | 655,760 | | | 9,018 | | | 5.50 | | | | 661,075 | | | 12,444 | | | 7.53 | |
| | | | | | | | | | | | | | | | | | | | |
Total borrowings | | | 3,279,440 | | | 27,716 | | | 3.33 | | | | 2,199,954 | | | 30,083 | | | 5.40 | |
| | | | | | | | | | | | | | | | | | | | |
Total interest-bearing liabilities | | | 15,334,703 | | | 85,446 | | | 2.21 | | | | 14,846,751 | | | 124,567 | | | 3.32 | |
Noninterest-bearing liabilities | | | 132,799 | | | | | | | | | | 159,375 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total liabilities | | | 15,467,502 | | | | | | | | | | 15,006,126 | | | | | | | |
| | | | | | |
Preferred stock of subsidiary corporation | | | 9,577 | | | | | | | | | | 9,577 | | | | | | | |
| | | | | | |
Shareholders’ equity | | | 1,866,803 | | | | | | | | | | 1,832,068 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 17,343,882 | | | | | | | | | $ | 16,847,771 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Tax-equivalent net interest income | | | | | | 132,925 | | | | | | | | | | 129,864 | | | | |
Less: tax-equivalent adjustment | | | | | | (3,744 | ) | | | | | | | | | (2,805 | ) | | | |
| | | | | | | | | | | | | | | | | | | | |
Net interest income | | | | | $ | 129,181 | | | | | | | | | $ | 127,059 | | | | |
| | | | | | | | | | | | | | | | | | | | |
Interest-rate spread | | | | | | | | | 3.24 | % | | | | | | | | | 3.29 | % |
| | | | | | | | | | | | | | | | | | | | |
Net interest margin | | | | | | | | | 3.32 | % | | | | | | | | | 3.38 | % |
| | | | | | | | | | | | | | | | | | | | |
See Selected Financial Highlights for footnotes.
13
WEBSTER FINANCIAL CORPORATION
Consolidated Average Balances, Yields and Rates Paid (unaudited)
| | | | | | | | | | | | | | | | | | | | |
Nine Months Ended September 30, | | 2008 | | | 2007 | |
(Dollars in thousands) | | Average
balance | | Interest | | | Fully tax-
equivalent
yield/rate | | | Average
balance | | Interest | | | Fully tax-
equivalent
yield/rate | |
| | | | |
Assets: | | | | | | | | | | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | | | | | | | | | | |
Loans | | $ | 12,677,899 | | $ | 542,421 | | | 5.67 | % | | $ | 12,380,468 | | $ | 632,348 | | | 6.78 | % |
Investment securities (b) | | | 2,985,423 | | | 127,699 | | | 5.57 | | | | 2,402,321 | | | 105,023 | | | 5.84 | |
Loans held for sale | | | 35,181 | | | 1,546 | | | 5.86 | | | | 390,651 | | | 18,284 | | | 6.24 | |
Short-term investments | | | 4,750 | | | 106 | | | 2.93 | | | | 73,122 | | | 2,913 | | | 5.25 | |
| | | | | | | | | | | | | | | | | | | | |
Total interest-earning assets | | | 15,703,253 | | | 671,772 | | | 5.65 | | | | 15,246,562 | | | 758,568 | | | 6.61 | |
| | | | | | | | | | | | | | | | | | | | |
Noninterest-earning assets | | | 1,538,806 | | | | | | | | | | 1,598,840 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total assets | | $ | 17,242,059 | | | | | | | | | $ | 16,845,402 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Liabilities and Shareholders’ Equity: | | | | | | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | |
Demand deposits | | $ | 1,480,139 | | $ | — | | | — | % | | $ | 1,511,333 | | $ | — | | | — | % |
Savings, NOW and money market deposit accounts | | | 5,852,690 | | | 63,145 | | | 1.44 | | | | 5,733,793 | | | 93,982 | | | 2.19 | |
Time deposits | | | 4,744,594 | | | 129,883 | | | 3.65 | | | | 5,256,838 | | | 177,815 | | | 4.52 | |
| | | | | | | | | | | | | | | | | | | | |
Total deposits | | | 12,077,423 | | | 193,028 | | | 2.13 | | | | 12,501,964 | | | 271,797 | | | 2.91 | |
| | | | | | | | | | | | | | | | | | | | |
Securities sold under agreements to repurchase and other short-term debt | | | 1,330,197 | | | 28,298 | | | 2.80 | | | | 970,515 | | | 33,208 | | | 4.51 | |
Federal Home Loan Bank advances | | | 1,230,280 | | | 30,607 | | | 3.27 | | | | 743,770 | | | 26,490 | | | 4.70 | |
Long-term debt | | | 658,387 | | | 28,968 | | | 5.87 | | | | 591,331 | | | 33,650 | | | 7.59 | |
| | | | | | | | | | | | | | | | | | | | |
Total borrowings | | | 3,218,864 | | | 87,873 | | | 3.60 | | | | 2,305,616 | | | 93,348 | | | 5.36 | |
| | | | | | | | | | | | | | | | | | | | |
Total interest-bearing liabilities | | | 15,296,287 | | | 280,901 | | | 2.44 | | | | 14,807,580 | | | 365,145 | | | 3.29 | |
| | | | | | | | | | | | | | | | | | | | |
Noninterest-bearing liabilities | | | 147,620 | | | | | | | | | | 154,169 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total liabilities | | | 15,443,907 | | | | | | | | | | 14,961,749 | | | | | | | |
| | | | | | |
Preferred stock of subsidiary corporation | | | 9,577 | | | | | | | | | | 9,577 | | | | | | | |
| | | | | | |
Shareholders’ equity | | | 1,788,575 | | | | | | | | | | 1,874,076 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 17,242,059 | | | | | | | | | $ | 16,845,402 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | 390,871 | | | | | | | | | | 393,423 | | | | |
Less: tax-equivalent adjustment | | | | | | (11,148 | ) | | | | | | | | | (7,930 | ) | | | |
| | | | | | | | | | | | | | | | | | | | |
Net interest income | | | | | $ | 379,723 | | | | | | | | | $ | 385,493 | | | | |
| | | | | | | | | | | | | | | | | | | | |
Interest-rate spread | | | | | | | | | 3.21 | % | | | | | | | | | 3.32 | % |
| | | | | | | | | | | | | | | | | | | | |
Net interest margin | | | | | | | | | 3.28 | % | | | | | | | | | 3.42 | % |
| | | | | | | | | | | | | | | | | | | | |
See Selected Financial Highlights for footnotes.
14
WEBSTER FINANCIAL CORPORATION
Five Quarter Nonperforming Assets(unaudited)
| | | | | | | | | | | | | | | |
(Dollars in thousands) | | Sept. 30,
2008 | | June 30,
2008 | | March 31,
2008 | | Dec. 31,
2007 | | Sept. 30,
2007 |
Nonperforming loans: | | | | | | | | | | | | | | | |
Continuing Portfolio: | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | |
Commercial | | $ | 51,081 | | $ | 55,788 | | $ | 30,264 | | $ | 26,804 | | $ | 25,845 |
Equipment financing | | | 7,462 | | | 6,718 | | | 5,719 | | | 6,473 | | | 5,054 |
| | | | | | | | | | | | | | | |
Total commercial | | | 58,543 | | | 62,506 | | | 35,983 | | | 33,277 | | | 30,899 |
| | | | | |
Commercial real estate | | | 8,971 | | | 9,710 | | | 7,809 | | | 8,523 | | | 10,116 |
Residential development | | | 74,808 | | | 48,130 | | | 13,402 | | | 4,373 | | | 4,122 |
Residential: | | | | | | | | | | | | | | | |
Residential construction to permanent | | | 8,189 | | | 6,660 | | | 4,200 | | | 2,820 | | | — |
All other | | | 25,474 | | | 19,633 | | | 22,042 | | | 19,532 | | | 14,811 |
| | | | | | | | | | | | | | | |
Total residential | | | 33,663 | | | 26,293 | | | 26,242 | | | 22,352 | | | 14,811 |
| | | | | |
Consumer | | | 23,427 | | | 20,745 | | | 17,084 | | | 14,455 | | | 12,688 |
| | | | | | | | | | | | | | | |
Nonperforming loans - continuing portfolio | | | 199,412 | | | 167,384 | | | 100,520 | | | 82,980 | | | 72,636 |
| | | | | | | | | | | | | | | |
Liquidating Portfolio: | | | | | | | | | | | | | | | |
NCLC(d) | | | 17,491 | | | 29,025 | | | 29,804 | | | 22,797 | | | 18,486 |
Consumer | | | 10,801 | | | 10,651 | | | 9,378 | | | 7,126 | | | 4,199 |
| | | | | | | | | | | | | | | |
Nonperforming loans - liquidating portfolio | | | 28,292 | | | 39,676 | | | 39,182 | | | 29,923 | | | 22,685 |
| | | | | | | | | | | | | | | |
Total nonperforming loans | | | 227,704 | | | 207,060 | | | 139,702 | | | 112,903 | | | 95,321 |
| | | | | | | | | | | | | | | |
Other real estate owned and repossessed assets: | | | | | | | | | | | | | | | |
Commercial | | | 13,287 | | | 6,776 | | | 6,590 | | | 2,211 | | | 5,233 |
Residential | | | 6,014 | | | 4,071 | | | 1,820 | | | 1,062 | | | 985 |
Consumer | | | 3,461 | | | 6,193 | | | 5,872 | | | 4,896 | | | 2,635 |
| | | | | | | | | | | | | | | |
Total other real estate owned and repossessed assets | | | 22,762 | | | 17,040 | | | 14,282 | | | 8,169 | | | 8,853 |
| | | | | | | | | | | | | | | |
Total nonperforming assets | | $ | 250,466 | | $ | 224,100 | | $ | 153,984 | | $ | 121,072 | | $ | 104,174 |
| | | | | | | | | | | | | | | |
Accruing loans 90 or more days past due | | $ | 708 | | $ | 1,380 | | $ | 1,032 | | $ | 1,891 | | $ | 1,286 |
| | | | | | | | | | | | | | | |
See Selected Financial Highlights for footnotes.
15
WEBSTER FINANCIAL CORPORATION
Five Quarter Past Due Loans(unaudited)
| | | | | | | | | | | | | | | |
(Dollars in thousands) | | Sept. 30,
2008 | | June 30,
2008 | | March 31,
2008 | | Dec. 31,
2007 | | Sept. 30,
2007 |
Past Due 30-89 days: | | | | | | | | | | | | | | | |
Continuing Portfolio: | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | |
Commercial | | $ | 7,196 | | $ | 8,337 | | $ | 10,229 | | $ | 13,291 | | $ | 4,237 |
Equipment financing | | | 8,102 | | | 9,414 | | | 10,269 | | | 5,644 | | | 3,057 |
| | | | | | | | | | | | | | | |
Total commercial | | | 15,298 | | | 17,751 | | | 20,498 | | | 18,935 | | | 7,294 |
Commercial real estate | | | 18,241 | | | 2,756 | | | 24,655 | | | 8,178 | | | 13,369 |
Residential development | | | 5,832 | | | 2,485 | | | 5,999 | | | 3,876 | | | 7,648 |
Residential: | | | | | | | | | | | | | | | |
Residential construction to permanent | | | 4,156 | | | 1,914 | | | 3,339 | | | 3,743 | | | 1,656 |
All other | | | 35,341 | | | 24,621 | | | 22,295 | | | 19,967 | | | 22,501 |
| | | | | | | | | | | | | | | |
Total residential | | | 39,497 | | | 26,535 | | | 25,634 | | | 23,710 | | | 24,157 |
Consumer | | | 23,279 | | | 18,137 | | | 20,721 | | | 22,347 | | | 17,836 |
| | | | | | | | | | | | | | | |
Past Due 30-89 days - continuing portfolio | | | 102,147 | | | 67,664 | | | 97,507 | | | 77,046 | | | 70,304 |
| | | | | | | | | | | | | | | |
Liquidating Portfolio: | | | | | | | | | | | | | | | |
NCLC(d) | | | 3,758 | | | 3,486 | | | 4,983 | | | 13,143 | | | 10,209 |
Consumer | | | 15,370 | | | 8,063 | | | 10,473 | | | 8,793 | | | 7,815 |
| | | | | | | | | | | | | | | |
Past Due 30-89 days - liquidating portfolio | | | 19,128 | | | 11,549 | | | 15,456 | | | 21,936 | | | 18,024 |
| | | | | | | | | | | | | | | |
Past Due 90 days or more: | | | | | | | | | | | | | | | |
Commercial | | | 534 | | | 1,380 | | | 596 | | | 1,141 | | | 1,031 |
Commercial real estate | | | 174 | | | — | | | — | | | 550 | | | — |
Residential development | | | — | | | — | | | 436 | | | 200 | | | 255 |
| | | | | | | | | | | | | | | |
Past Due 90 days or more | | | 708 | | | 1,380 | | | 1,032 | | | 1,891 | | | 1,286 |
| | | | | | | | | | | | | | | |
Total | | $ | 121,983 | | $ | 80,593 | | $ | 113,995 | | $ | 100,873 | | $ | 89,614 |
| | | | | | | | | | | | | | | |
See Selected Financial Highlights for footnotes.
16
WEBSTER FINANCIAL CORPORATION
Five Quarter Changes in the Allowance for Credit Losses (unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | |
(Dollars in thousands) | | Sept. 30,
2008 | | | June 30,
2008 | | | March 31,
2008 | | | Dec. 31,
2007 | | | Sept. 30,
2007 | |
Beginning balance | | $ | 194,368 | | | $ | 189,808 | | | $ | 197,586 | | | $ | 164,011 | | | $ | 152,750 | |
Provision | | | 45,500 | | | | 25,000 | | | | 15,800 | | | | 45,250 | | | | 15,250 | |
Charge-offs continuing portfolio: | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 13,837 | | | | 3,903 | | | | 10,949 | | | | 2,182 | | | | 1,609 | |
Equipment financing | | | 998 | | | | 672 | | | | 490 | | | | 303 | | | | 266 | |
Commercial real estate | | | — | | | | 378 | | | | — | | | | — | | | | 117 | |
Residential development | | | 161 | | | | 3,711 | | | | — | | | | — | | | | — | |
Residential | | | 1,624 | | | | 1,036 | | | | 1,480 | | | | 71 | | | | 364 | |
Consumer | | | 4,643 | | | | 2,784 | | | | 3,697 | | | | 1,833 | | | | 1,613 | |
| | | | | | | | | | | | | | | | | | | | |
Charge-offs continuing portfolio: | | | 21,263 | | | | 12,484 | | | | 16,616 | | | | 4,389 | | | | 3,969 | |
Recoveries | | | (714 | ) | | | (1,290 | ) | | | (827 | ) | | | (1,611 | ) | | | (1,018 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net loan charge-offs | | | 20,549 | | | | 11,194 | | | | 15,789 | | | | 2,778 | | | | 2,951 | |
| | | | | | | | | | | | | | | | | | | | |
Charge-offs liquidating portfolio: | | | | | | | | | | | | | | | | | | | | |
NCLC(d) | | | 14,025 | | | | 4,203 | | | | 4,341 | | | | 7,051 | | | | 69 | |
Consumer | | | 6,767 | | | | 5,450 | | | | 3,448 | | | | 1,846 | | | | 969 | |
| | | | | | | | | | | | | | | | | | | | |
Charge-offs liquidating portfolio: | | | 20,792 | | | | 9,653 | | | | 7,789 | | | | 8,897 | | | | 1,038 | |
Recoveries | | | (142 | ) | | | (407 | ) | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Net loan charge-offs | | | 20,650 | | | | 9,246 | | | | 7,789 | | | | 8,897 | | | | 1,038 | |
| | | | | | | | | | | | | | | | | | | | |
Total net charge-offs | | | 41,199 | | | | 20,440 | | | | 23,578 | | | | 11,675 | | | | 3,989 | |
| | | | | | | | | | | | | | | | | | | | |
Ending balance | | $ | 198,669 | | | $ | 194,368 | | | $ | 189,808 | | | $ | 197,586 | | | $ | 164,011 | |
| | | | | | | | | | | | | | | | | | | | |
Components: | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses | | $ | 189,169 | | | $ | 184,868 | | | $ | 180,308 | | | $ | 188,086 | | | $ | 154,532 | |
Reserve for unfunded credit commitments | | | 9,500 | | | | 9,500 | | | | 9,500 | | | | 9,500 | | | | 9,479 | |
| | | | | | | | | | | | | | | | | | | | |
Allowance for credit losses | | $ | 198,669 | | | $ | 194,368 | | | $ | 189,808 | | | $ | 197,586 | | | $ | 164,011 | |
| | | | | | | | | | | | | | | | | | | | |
Asset Quality Ratios: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Allowance for loan losses / total loans | | | 1.47 | % | | | 1.45 | % | | | 1.43 | % | | | 1.51 | % | | | 1.24 | % |
Allowance for credit losses / total loans | | | 1.54 | | | | 1.52 | | | | 1.51 | | | | 1.58 | | | | 1.32 | |
Net charge-offs / average loans (annualized) | | | 1.29 | | | | 0.64 | | | | 0.75 | | | | 0.38 | | | | 0.13 | |
Nonperforming loans / total loans | | | 1.77 | | | | 1.62 | | | | 1.11 | | | | 0.90 | | | | 0.77 | |
Nonperforming assets / total loans plus OREO | | | 1.94 | | | | 1.75 | | | | 1.22 | | | | 0.97 | | | | 0.84 | |
Allowance for credit losses / nonperforming loans | | | 87.25 | | | | 93.87 | | | | 135.87 | | | | 175.01 | | | | 172.06 | |
| | | | | |
Continuing Portfolio | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses / total loans | | | 1.29 | % | | | 1.23 | % | | | 1.13 | % | | | 1.15 | % | | | n/a | |
Allowance for credit losses / total loans | | | 1.36 | | | | 1.30 | | | | 1.21 | | | | 1.23 | | | | n/a | |
Net charge-offs / average loans (annualized) | | | 0.66 | | | | 0.36 | | | | 0.52 | | | | 0.09 | | | | n/a | |
Nonperforming loans / total loans | | | 1.59 | | | | 1.35 | | | | 0.82 | | | | 0.69 | | | | n/a | |
Nonperforming assets / total loans plus OREO | | | 1.74 | | | | 1.47 | | | | 0.93 | | | | 0.76 | | | | n/a | |
Allowance for credit losses / nonperforming loans | | | 85.66 | | | | 96.48 | | | | 146.92 | | | | 177.98 | | | | n/a | |
| | | | | |
Liquidating Portfolio | | | | | | | | | | | | | | | | | | | | |
| | | | | |
NCLC | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses / total loans | | | 14.01 | % | | | 14.26 | % | | | 18.77 | % | | | 20.65 | % | | | n/a | |
Net charge-offs / average loans (annualized) | | | 92.69 | | | | 23.00 | | | | 25.78 | | | | 25.43 | | | | n/a | |
Nonperforming loans / total loans | | | 42.20 | | | | 45.68 | | | | 43.49 | | | | 27.37 | | | | n/a | |
Allowance for loan losses / nonperforming loans | | | 33.19 | | | | 31.22 | | | | 43.15 | | | | 75.45 | | | | n/a | |
| | | | | |
Consumer | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses / total loans | | | 7.45 | % | | | 7.53 | % | | | 8.96 | % | | | 9.60 | % | | | n/a | |
Net charge-offs / average loans (annualized) | | | 8.81 | | | | 6.75 | | | | 4.20 | | | | 2.17 | | | | n/a | |
Nonperforming loans / total loans | | | 3.65 | | | | 3.37 | | | | 2.87 | | | | 2.09 | | | | n/a | |
Allowance for loan losses / nonperforming loans | | | 204.08 | | | | 223.63 | | | | 312.09 | | | | 458.88 | | | | n/a | |
See Selected Financial Highlights for footnotes.
17
