UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the period ending JUNE 30, 2000
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or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to
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Commission File Number: 0-15213
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WEBSTER FINANCIAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 06-1187536
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(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
Webster Plaza, Waterbury, Connecticut 06702
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(Address of principal executive offices) (Zip Code)
(203) 753-2921
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
[X] Yes [ ] No
Indicate the number of shares outstanding for each of the issuer's classes of common stock,
as of the latest practicable date.
Common Stock (par value $ .01) 49,024,005 Shares
- --------------------------------------------- ---------------------------------------------
Class Issued and Outstanding at July 31, 2000
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
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INDEX
PAGE NO.
--------
PART I - INTERIM FINANCIAL INFORMATION:
Consolidated Statements of Condition at June 30, 2000 (unaudited) and December 31, 1999 (audited) 3
Consolidated Statements of Income (unaudited) for the three and six months ended June 30, 2000 4
and 1999
Consolidated Statements of Comprehensive Income (unaudited) for the three and six months ended
June 30, 2000 and 1999 5
Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2000 and 1999 6
Notes to Consolidated Financial Statements 8
Management's Discussion and Analysis of Financial Condition and Results of Operations 17
Quantitative and Qualitative Disclosures about Market Risk 20
Forward Looking Statements 25
PART II - OTHER INFORMATION:
Item 1. Legal Proceedings 26
Item 2. Changes in Securities and Use of Proceeds -
Item 3. Defaults upon Senior Securities -
Item 4. Submission of Matters to a Vote of Security Holders -
Item 5. Other Information 27
Item 6. Exhibits and Reports on Form 8-K -
SIGNATURES 28
EXHIBIT INDEX 29
EXHIBITS 30
2
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
(In thousands, except share and per share data)
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(UNAUDITED) (AUDITED)
JUNE 30, DECEMBER 31,
2000 1999
--------- ------
ASSETS:
Cash and due from depository institutions $ 265,999 $ 245,783
Interest-bearing deposits 1,415 37,838
Securities: (note 3)
Trading, at fair value 77,633 50,854
Available for sale, at fair value 2,963,175 2,700,585
Held to maturity, (fair value: $267,769 in 2000;
$300,282 in 1999) 287,829 315,462
Loans receivable:
Residential loans 4,268,372 3,898,943
Commercial real estate loans 887,016 741,168
Commercial and industrial loans 1,081,667 915,035
Home equity loans 563,454 492,684
Other consumer loans 105,881 47,064
Allowance for loan losses (86,199) (72,658)
----------- ----------
Loans receivable, net 6,820,191 6,022,236
Accrued interest receivable 67,593 58,918
Premises and equipment, net 109,975 103,403
Foreclosed properties, net 4,118 4,909
Intangible assets 302,037 138,829
Cash surrender value of life insurance 169,702 148,252
Prepaid expenses and other assets 118,661 104,675
----------- ----------
TOTAL ASSETS $11,188,328 $9,931,744
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
Checking and NOW $ 1,598,534 $1,375,692
Savings and MMDAs 1,959,661 1,719,562
Certificates of deposit 3,446,987 3,095,837
----------- ----------
Total deposits 7,005,182 6,191,091
Federal Home Loan Bank advances 2,332,071 1,714,441
Securities sold under agreements to repurchase and other borrowings (note 4) 691,310 1,074,004
Advance payments by borrowers for taxes and insurance 50,821 41,605
Accrued expenses and other liabilities (note 5) 122,193 75,359
----------- ----------
TOTAL LIABILITIES 10,201,577 9,096,500
----------- ----------
Corporation-obligated mandatorily redeemable capital
securities of subsidiary trusts holding solely junior subordinated
debentures of the corporation (note 10) 150,000 150,000
Preferred stock of subsidiary corporation 49,577 49,577
SHAREHOLDERS' EQUITY: (note 6)
Common stock, $.01 par value:
Authorized - 200,000,000 shares
Issued - 49,102,361 shares at June 30, 2000 and
45,243,770 shares at December 31, 1999 491 452
Paid-in capital 398,944 301,336
Retained earnings 453,284 400,413
Unearned compensation (940) --
Less treasury stock at cost, 5,397 shares at June 30, 2000
and 140,000 shares at December 31, 1999 (119) (3,274)
Less Employee Stock Ownership Plan shares purchased with debt (641) (1,127)
Accumulated other comprehensive loss (63,845) (62,133)
----------- ----------
TOTAL SHAREHOLDERS' EQUITY 787,174 635,667
----------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $11,188,328 $9,931,744
=========== ==========
See accompanying notes to consolidated financial statements.
3
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share data)
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THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------- -------------------------
2000 1999 2000 1999
---- ---- ---- ----
INTEREST INCOME:
Loans $120,652 $106,752 $237,133 $211,044
Securities and interest-bearing deposits 54,294 53,061 107,456 108,795
-------- -------- -------- --------
Total interest income 174,946 159,813 344,589 319,839
-------- -------- -------- --------
INTEREST EXPENSE:
Deposits 52,087 50,853 102,069 103,661
Borrowings 43,828 32,519 87,217 67,051
-------- -------- -------- --------
Total interest expense 95,915 83,372 189,286 170,712
-------- -------- -------- --------
NET INTEREST INCOME 79,031 76,441 155,303 149,127
Provision for loan losses 3,200 2,268 5,400 4,433
-------- -------- -------- --------
Net interest income after provision for loan losses 75,831 74,173 149,903 144,694
-------- -------- -------- --------
NONINTEREST INCOME:
Fees and service charges 14,218 11,850 26,761 22,116
Trust and investment services 4,861 1,786 8,729 3,365
Insurance commissions 3,502 1,550 7,224 3,668
Gain on sale of loans and loan servicing, net 336 1,536 943 3,098
Gain on sale of securities, net 2,908 2,036 5,958 3,918
Increase in cash surrender value of life insurance 2,003 1,889 3,962 3,729
Other noninterest income 2,835 1,923 4,671 4,252
-------- -------- -------- --------
Total noninterest income 30,663 22,570 58,248 44,146
-------- -------- -------- --------
NONINTEREST EXPENSES:
Salaries and employee benefits 30,533 25,404 59,516 50,234
Occupancy expense of premises 5,445 5,146 11,078 10,250
Furniture and equipment expenses 6,248 5,356 12,740 10,508
Intangible amortization 4,283 3,228 8,158 5,845
Marketing expenses 2,601 2,406 4,799 4,703
Professional services expenses 1,847 3,193 3,483 5,270
Capital securities expense (note 10) 3,615 3,662 7,231 7,323
Dividends on preferred stock of subsidiary corporation 1,038 980 2,076 2,000
Other operating expenses (note 5) 8,994 8,897 17,072 17,785
-------- -------- -------- --------
Total noninterest expenses 64,604 58,272 126,153 113,918
-------- -------- -------- --------
Income before income taxes 41,890 38,471 81,998 74,922
Income taxes (note 8) 13,783 13,121 27,080 25,599
-------- -------- -------- --------
NET INCOME $ 28,107 $ 25,350 $ 54,918 $ 49,323
======== ======== ======== ========
NET INCOME PER COMMON SHARE: (note 9)
Basic $0.66 $0.57 $1.28 $1.12
Diluted $0.66 $0.56 $1.26 $1.10
Dividends declared per common share $0.16 $0.12 $0.30 $0.23
See accompanying notes to consolidated financial statements.
4
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
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THREE MONTHS ENDED JUNE 30,
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(In thousands) 2000 1999
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Net Income $ 28,107 $ 25,350
Other comprehensive loss, net of tax:
Unrealized net holding loss on securities available for sale
arising during the period (net of income tax effect of $(651)
and $(20,571) for 2000 and 1999, respectively) (982) (30,190)
Reclassification adjustment for net gains included in
net income (net of income tax effect of $1,304
and $959 for 2000 and 1999, respectively) (1,967) (1,408)
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Other comprehensive loss (2,949) (31,598)
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COMPREHENSIVE INCOME (LOSS) $ 25,158 $ (6,248)
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SIX MONTHS ENDED JUNE 30,
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(In thousands) 2000 1999
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Net Income $ 54,918 $ 49,323
Other comprehensive income (loss), net of tax:
Unrealized net holding gain (loss) on securities available for sale
arising during the period (net of income tax effect of $1,730
and $(31,911) for 2000 and 1999, respectively) 2,609 (46,833)
Reclassification adjustment for net gains included in
net income (net of income tax effect of $2,865
and $1,551 for 2000 and 1999, respectively) (4,321) (2,276)
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Other comprehensive loss (1,712) (49,109)
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COMPREHENSIVE INCOME $ 53,206 $ 214
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See accompanying notes to consolidated financial statements.
5
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30,
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(In thousands) 2000 1999
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Net income $ 54,918 $ 49,323
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses 5,400 4,433
Provision for depreciation on premises and equipment 8,624 7,086
Amortization of securities and loan premiums, net 1,950 3,115
Amortization of intangible assets 8,158 5,845
Amortization of hedging costs, net 2,005 2,331
Amortization of mortgage servicing rights 842 860
Gains on sale of foreclosed properties, net (428) (319)
Gains on sale of securities and loans, net (8,130) (6,732)
Losses (gains) on trading securities, net 1,229 (284)
(Increase) decrease in trading securities (27,900) 20,838
Loans originated for sale (78,075) (112,649)
Proceeds from sale of loans, originated for sale 72,251 113,337
(Increase) decrease in interest receivable (2,771) 1,233
(Increase) decrease in prepaid expenses and other assets, net (6,655) 6,897
Increase (decrease) in interest payable 6,026 (7,133)
(Decrease) increase in accrued expenses and other liabilities, net (8,274) 8,618
Increase in cash surrender value of life insurance (3,347) (3,729)
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Net cash provided by operating activities 25,823 93,070
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INVESTING ACTIVITIES:
Purchases of securities, available for sale (1,859,767) (597,286)
Purchases of securities, held to maturity -- (814)
Principal collected on investment securities 145,289 438,079
Maturities of securities 975,004 224,770
Proceeds from sale of securities, available for sale 782,091 213,658
Proceeds from sale of securities, held to maturity -- 15,458
Net decrease in interest-bearing deposits 48,423 1,452
Net increase in loans (103,690) (83,600)
Proceeds from sale of foreclosed properties 4,918 4,653
Purchases of premises and equipment, net (11,383) (7,163)
Net cash received through purchase acquisitions 122,972 16,706
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Net cash provided by investing activities 103,857 225,913
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FINANCING ACTIVITIES:
Net increase (decrease) in deposits 82,799 (234,983)
Repayment of FHLB advances (1,916,555) (2,037,114)
Proceeds from FHLB advances 2,207,281 1,664,932
Repayment of securities sold under agreement to repurchase and other borrowings (19,040,805) (20,754,999)
Proceeds from securities sold under agreement to repurchase and other borrowings 18,657,870 21,115,305
Cash dividends to common shareholders (12,965) (9,951)
Net increase (decrease) in advance payments for taxes and insurance 2,412 (21,317)
Exercise of stock options 7,102 5,803
Common stock repurchased (96,603) (65,429)
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Net cash used by financing activities (109,464) (337,753)
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See accompanying notes to consolidated financial statements.
6
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30,
-----------------------------
(In thousands) 2000 1999
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Increase (decrease) in cash and cash equivalents 20,216 (18,770)
Cash and cash equivalents at beginning of period 245,783 213,142
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Cash and cash equivalents at end of period $ 265,999 $ 194,372
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SUPPLEMENTAL DISCLOSURES:
Income taxes paid $ 25,007 $ 16,646
Interest paid $ 185,660 $ 176,117
SUPPLEMENTAL SCHEDULE OF NONCASH OPERATING, INVESTING AND
FINANCING ACTIVITIES:
Transfer of loans to foreclosed properties $ 3,420 $ 5,081
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Assets acquired and liabilities assumed in purchase business combinations were as follows:
SIX MONTHS ENDED JUNE 30,
-----------------------------
(In thousands) 2000 1999
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Fair value of noncash assets acquired in purchase acquisitions $ 994,190 $ 354,666
Fair value of liabilities assumed in purchase acquisitions 1,089,103 294,340
Common stock issued in purchase acquisitions 199,425 77,032
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See accompanying notes to consolidated financial statements.
7
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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NOTE 1 - BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
BUSINESS
Webster Financial Corporation ("Webster" or the "Company"), through its
subsidiaries, Webster Bank and Damman Associates Inc. ("Damman"), delivers
financial services to individuals, families and businesses primarily in
Connecticut. Webster emphasizes five business lines - consumer banking, business
banking, mortgage lending, trust and investment services, and insurance
services, and each is supported by centralized administration and operations.
Webster Bank was founded in 1935 and converted from a federal mutual to a
federal stock institution in 1986.
BASIS OF FINANCIAL STATEMENT PRESENTATION
The Consolidated Financial Statements include the accounts of Webster and its
subsidiaries. The Consolidated Financial Statements and notes hereto have been
restated to include the accounts of New England Community Bancorp., Inc.
("NECB") acquired on December 1, 1999, as though this pooling of interests
acquisition had occurred at the beginning of the earliest period presented. All
share data has been restated for stock dividends and stock splits. The
Consolidated Financial Statements have been prepared in conformity with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. All
significant intercompany transactions have been eliminated in consolidation.
Amounts in prior period financial statements are reclassified whenever necessary
to conform to current period presentations. The results of operations for the
three and six month periods ended June 30, 2000, are not necessarily indicative
of the results which may be expected for the year as a whole.
The preparation of the Consolidated Financial Statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities, as of the date of the
consolidated financial statements and the reported amounts of revenues and
expenses for the periods presented. These consolidated financial statements
should be read in conjunction with the consolidated financial statements and
notes thereto included in the Webster 1999 Annual Report to Shareholders. The
actual results of Webster could differ from those estimates. Material estimates
that are susceptible to near-term changes include the determination of the
allowance for loan losses and the valuation allowance for the deferred tax
asset.
8
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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NOTE 2 - ACQUISITIONS
PURCHASE TRANSACTIONS COMPLETED DURING SECOND QUARTER
THE MECHANICS ACQUISITION
In December 1999, Webster announced a definitive agreement to acquire MECH
Financial, Inc. ("Mechanics"), and its subsidiary Mechanics Savings Bank, in a
tax-free, stock-for-stock exchange. Mechanics Savings Bank was a
state-chartered, Hartford-based savings bank with $1.1 billion in assets and 16
branch offices in the capitol region. Based on the terms of the agreement,
Mechanics shareholders received 1.52 shares of Webster common stock for each
share of Mechanics common stock. Webster closed the transaction and completed
the conversion during June 2000.
THE CHASE BRANCH ACQUISITION
In November 1999, Webster announced a definitive agreement to purchase six
Connecticut branches from The Chase Manhattan Bank. Webster closed the
transaction and completed the acquisition during April 2000. Webster received
the deposits from the six branches but acquired only five branch facilities. The
branches are located in Cheshire, Middlebury, North Haven, Waterbury and
Watertown and had approximately $135 million in deposit balances at the time of
closing. The transaction included the purchase of consumer deposits, small
business deposits and loans, and brokerage and custody accounts associated with
these acquired branches.
THE FOLLIS, WYLIE & LANE ACQUITISION
Webster through its wholly-owned insurance subsidiary Damman acquired Follis,
Wylie & Lane, Inc. ("Follis") a privately owned Hamden-based insurance agency in
April 2000. Follis offered a full range of insurance services, including
property and casualty, life and health. During 1999, Follis wrote approximately
$10 million in premiums and had revenue of approximately $1 million.
PURCHASE TRANSACTIONS PENDING AT JUNE 30, 2000
THE FLEETBOSTON BRANCH ACQUISITION
In November 1999, Webster announced a definitive agreement with FleetBoston
Corporation to purchase four Connecticut branches that are being divested as a
result of the Fleet-BankBoston merger. The branches, with approximately $163
million in deposit balances, are located in Brookfield, Guilford, Meriden, and
Thomaston. The transaction includes the purchase of deposits and loans for
individual and small business customers associated with these branches. Webster
expects to close the transaction and complete the acquisition during the third
quarter of 2000.
9
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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NOTE 3 - SECURITIES
Securities are classified as available for sale, held to maturity or trading.
Management determines the appropriate classification of securities at the time
of purchase. Securities are classified as held to maturity when the Company has
the intent and ability to hold the securities to maturity. Held to maturity
securities are stated at amortized cost. Securities classified as trading are
carried at fair value, with net unrealized gains and losses recognized currently
in the income statement. Securities not classified as held to maturity or
trading are classified as available for sale and are stated at fair value.
Unrealized gains and losses, net of tax, on available for sale securities are
included in accumulated other comprehensive income (loss), a separate component
of shareholders' equity. The values at which held to maturity or available for
sale securities are reported are adjusted for amortization of premiums or
accretion of discounts over the estimated terms of the securities using a method
which approximates the level yield method. Such amortization and accretion is
included in interest income from securities. Unrealized losses on securities are
charged to earnings when the decline in fair value of a security is judged to be
other than temporary. The specific identification method is used to determine
realized gains and losses on sales of securities.
A summary of securities follows:
(In thousands) June 30, 2000 December 31, 1999
- -----------------------------------------------------------------------------------------------------------------------------------
Gross Unrealized Gross Unrealized
Amortized ----------------- Fair Amortized ----------------- Fair
Cost Gains Losses Value Cost Gains Losses Value
--------- ----- ------ ------- --------- ----- ------ -------
TRADING SECURITIES:
Mortgage-backed securities (a) $ 77,633(b) $ -- $ -- $ 77,633 $ 50,854(b) $ -- $ -- $ 50,854
AVAILABLE FOR SALE PORTFOLIO:
U.S. Treasury Notes 5,060 -- (135) 4,925 17,070 18 (233) 16,855
U.S. Government Agency 90,683 6 (3,784) 86,906 92,733 -- (4,338) 88,395
Municipal bonds and notes 27,286 18 (975) 26,330 27,591 3 (1,463) 26,131
Corporate bonds and notes 75,042 -- (16,221) 58,820 75,068 -- (9,895) 65,173
Equity securities 201,229 4,300 (10,980) 194,549 201,352 7,684 (11,060) 197,976
Mortgage-backed securities (a) 2,661,958 3,412 (81,580) 2,583,789 2,379,491 6,330 (88,848) 2,296,973
Purchased interest-rate contracts 8,296 -- (440) 7,856 10,874 -- (1,792) 9,082
---------- ------ --------- ---------- ---------- ------- --------- ----------
3,069,554 7,736 (114,115) 2,963,175 2,804,179 14,035 (117,629) 2,700,585
---------- ------ --------- ---------- ---------- ------- --------- ----------
HELD TO MATURITY PORTFOLIO:
U.S. Treasury Notes 7,899 -- (80) 7,819 10,396 -- (112) 10,284
U.S. Government Agency -- -- -- -- 1,520 -- (6) 1,514
Municipal bonds and notes 24,615 24 (722) 23,917 24,861 39 (783) 24,117
Corporate bonds and notes 135,440 -- (16,265) 119,175 135,476 405 (12,322) 123,559
Mortgage-backed securities (a) 119,875 579 (3,596) 116,858 143,209 544 (2,945) 140,808
---------- ---- --------- ---------- ---------- ------- --------- ----------
287,829 603 (20,663) 267,769 315,462 988 (16,168) 300,282
---------- ---- --------- ---------- ---------- ------- --------- ----------
Total $3,435,016 $8,339 $(134,778) $ 3,308,577 $3,170,495 $15,023 $(133,797) $3,051,721
========== ====== ========= =========== ========== ======= ========= ==========
(a) Mortgage-backed securities, which are guaranteed by Fannie Mae, Federal
Home Loan Mortgage Corporation ("FHLMC") and Government National Mortgage
Association ("GNMA"), represent participating interests in direct pass
through pools of mortgage loans originated and serviced by the issuers of
the securities.
(b) Stated at fair value, including the effect of short futures positions.
10
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 4 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
At June 30, 2000, short-term borrowings through securities sold under agreements
to repurchase totaled $426.4 million. Short-term borrowings through securities
sold under agreements to repurchase averaged approximately $658.0 million during
the second quarter and the maximum amount outstanding at month-end during the
second quarter was $743.3 million. Securities underlying the repurchase
transactions held as collateral are primarily U.S. Government agency securities
consisting of Fannie Mae, GNMA and FHLMC securities. Securities sold under
agreement to repurchase related to Webster's funding operations are delivered to
broker-dealers. Webster also enters into short-term repurchase agreement
transactions directly with commercial and municipal customers through its
Treasury sales desk.
Information concerning short-term borrowings under securities sold under
agreement to repurchase as of June 30, 2000 is summarized below:
(Dollars in thousands)
- --------------------------------------------------------------------------------
WEIGHTED WEIGHTED BOOK VALUE MARKET VALUE
BALANCE AT AVERAGE AVERAGE OF OF
6/30/00 INTEREST RATE MATURITY DATE COLLATERAL COLLATERAL
------------ ------------- ------------- ---------- ----------
$426,423 5.63% less than 1 month $460,934 $441,390
NOTE 5 - ACQUISITION-RELATED EXPENSES
The following table presents a summary of remaining acquisition-related accrued
liabilities for acquisitions that have been completed and accounted for under
the pooling of interests method:
(In thousands) Derby People's Eagle NECB
- ------------------------------------------------------------------------------------------------------------------------------------
Balance of acquisition-related accrued liabilities at December 31, 1998 $3,800 $ 1,600 $1,400 $ --
- ------------------------------------------------------------------------------------------------------------------------------------
Additions/provisions -- -- -- 9,500
Payments and charges against the liabilities:
Compensation (severance and related costs) -- -- -- (3,000)
Data processing contract termination (700) -- -- (400)
Transaction costs (including investment bankers, attorneys and
accountants) -- -- (50) (1,300)
Writedown of fixed assets and facilities costs (100) (1,100) (400) (700)
Acquisition-related miscellaneous expenses (a) -- (100) (175) (800)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance of acquisition-related accrued liabilities at December 31, 1999 $3,000 $ 400 $ 775 $ 3,300
- ------------------------------------------------------------------------------------------------------------------------------------
Payments and charges against the liabilities:
Compensation (severance and related costs) -- -- -- --
Data processing contract termination (371) -- -- --
Transaction costs (including investment bankers, attorneys and
accountants) -- -- -- (193)
Writedown of fixed assets and facilities costs (210) (145) (171) (233)
Acquisition-related miscellaneous expenses (a) -- -- (22) (1,110)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance of acquisition-related accrued liabilities at June 30, 2000 $ 2,419 $ 255 $ 582 $ 1,764
- ------------------------------------------------------------------------------------------------------------------------------------
(a) Includes customer retention, data conversion, supplies and other miscellaneous expenses.
11
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The remaining total accrued liability balance of $5.0 million at June 30, 2000
represents, for the most part, an accrual for data processing contract
termination costs payable over future periods and the estimated loss on sale of
excess fixed assets due to consolidation of overlapping branch locations.
NOTE 6 - SHAREHOLDERS' EQUITY
Total equity increased $186.7 million during the second quarter period. The net
increase was primarily attributable to $198.3 million of common stock issued for
the purchase acquisition of Mechanics and net income of $28.1 million. These
increases were partially offset by charges for repurchases of Webster common
stock, dividend payments to common shareholders and an increase in the
unrealized losses on the available for sale securities portfolio.
Net income for the three and six month periods ending June 30, 2000 was $28.1
million and $54.9 million, respectively. Dividend payments to common
shareholders for the three and six month periods ended June 30, 2000 were $6.8
million and $13.0 million, respectively.
During the second quarter of 2000, Webster repurchased 1.5 million shares of its
common stock. The total cost of the repurchased shares was $32.0 million with an
average per share cost of approximately $21.83. For the six months ended June
30, 2000, Webster repurchased 4.4 million shares of its common stock. The cost
of the repurchased stock was $96.6 million with an average per share cost of
approximately $22.18. The repurchased stock was primarily related to a
repurchase program announced in December 1999 for the purchase acquisition of
Mechanics that closed during June 2000. See Note 2.
NOTE 7 - BUSINESS SEGMENTS
Webster has four segments for business segment reporting purposes. These
segments include consumer banking, business banking, mortgage lending and
treasury. The organizational hierarchies that define the business segments are
periodically reviewed and revised. Results may be restated to reflect changes in
organizational structure. The following table presents the statement of
operations and total assets for Webster's reportable segments.
12
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Operating income and total assets by business segment are as follows: PENDING UPDATE
THREE MONTHS ENDED JUNE 30, 2000
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER BUSINESS MORTGAGE TOTAL
(IN THOUSANDS) BANKING BANKING LENDING TREASURY OTHER SEGMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income $ 47,011 $ 10,507 $ 15,027 $ 5,755 $ 731 $ 79,031
Provision for loan losses 102 2,654 444 -- -- 3,200
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision 46,909 7,853 14,583 5,755 731 75,831
Noninterest income 12,407 619 2,126 6,933 8,578 30,663
Noninterest expense 39,253 4,730 4,153 2,275 9,540 59,951
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 20,063 3,742 12,556 10,413 (231) 46,543
Income taxes 6,602 1,231 4,131 3,426 (76) 15,314
- ------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) after taxes $ 13,461 $ 2,511 $ 8,425 $ 6,987 $ (155) $ 31,229
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets at period end $1,409,723 $1,573,222 $4,548,879 $3,613,908 $42,596 $11,188,328
THREE MONTHS ENDED JUNE 30, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER BUSINESS MORTGAGE TOTAL
(IN THOUSANDS) BANKING BANKING LENDING TREASURY OTHER SEGMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income $ 49,540 $ 8,412 $ 16,250 $ 2,205 $ 34 $ 76,441
Provision for loan losses 292 943 1,033 -- -- 2,268
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision 49,248 7,469 15,217 2,205 34 74,173
Noninterest income 11,596 624 2,844 5,162 2,344 22,570
Noninterest expense 38,267 4,221 613 6,413 4,116 53,630
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 22,577 3,872 17,448 954 (1,738) 43,113
Income taxes 7,410 1,223 5,951 385 (266) 14,703
- ------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) after taxes $ 15,167 $ 2,649 $ 11,497 $ 569 $(1,472) $ 28,410
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets at period end $ 979,124 $ 907,665 $4,223,625 $3,731,215 $21,605 $ 9,863,234
- ------------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 2000
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER BUSINESS MORTGAGE TOTAL
(IN THOUSANDS) BANKING BANKING LENDING TREASURY OTHER SEGMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income $ 92,513 $ 21,492 $ 31,607 $ 8,362 $ 1,329 155,303
Provision for loan losses 343 4,121 936 -- -- 5,400
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision 92,170 17,371 30,671 8,362 1,329 149,903
Noninterest income 22,868 1,665 4,453 13,041 16,221 58,248
Noninterest expense 76,618 9,273 8,390 4,223 18,342 116,846
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 38,420 9,763 26,734 17,180 (792) 91,305
Income taxes 12,688 3,227 8,831 5,669 (261) 30,154
- ------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) after taxes $ 25,732 $ 6,536 $ 17,903 $ 11,511 $ (531) $ 61,151
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets at period end $1,409,723 $1,573,222 $4,548,879 $3,613,908 $42,596 $11,188,328
SIX MONTHS ENDED JUNE 30, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER BUSINESS MORTGAGE TOTAL
(IN THOUSANDS) BANKING BANKING LENDING TREASURY OTHER SEGMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income $ 86,358 $ 16,233 42,753 $ 3,726 $ 57 $ 149,127
Provision for loan losses 486 1,890 2,057 -- -- 4,433
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision 85,872 14,343 40,696 3,726 57 144,694
Noninterest income 21,625 1,056 7,097 9,200 5,168 44,146
Noninterest expense 73,940 8,684 7,444 8,405 6,122 104,595
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 33,557 6,715 40,349 4,521 (897) 84,245
Income taxes 11,171 2,192 13,798 1,601 22 28,784
- ------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) after taxes $ 22,386 $ 4,523 $ 26,551 $ 2,920 $ (919) $ 55,461
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets at period end $ 979,124 $ 907,665 $4,223,625 $3,731,215 $21,605 $ 9,863,234
The consumer banking segment includes consumer lending and the Bank's deposit
generation and direct banking activities, which include the operation of
automated teller machines and telebanking customer support, sales and small
business lending. The business banking segment includes the Bank's investment in
commercial and industrial loans and commercial real estate loans. The business
banking segment also includes deposits and cash management activities for
business banking. The mortgage lending segment includes the Bank's investment in
residential real
13
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
estate loan origination, servicing and secondary marketing activities. The
treasury segment includes the Bank's investment in assets and liabilities
managed by Treasury and includes interest-bearing deposits, securities, Federal
Home Loan Bank advances, repurchase agreements and other borrowings. The other
segment includes the results of Webster's trust and investment and insurance
subsidiaries, which offer products to both consumer and business customers.
During the third quarter of 1999, Webster changed its internal funds transfer
pricing methodology, which charges or credits for the source or use of funds.
This change effected net interest income for all reported segments. As a result
of this change in methodology there was an increase in interest income allocated
to treasury and an increase in interest expense allocated to mortgage lending.
The allocations are subject to periodic adjustment as the internal management
accounting system is revised and business or product lines within the segments
change. Also, because the development and application of these methodologies is
a dynamic process, the financial results presented may be periodically revised.
Management allocates indirect expenses to its business segments. These expenses
include administration, finance, operations and other support related functions.
During the third quarter of 1999, as a result of further changes in methodology,
Webster reallocated certain noninterest expenses to mortgage lending from
treasury. Net income (loss) after taxes for the segments do not include certain
income and expense categories (net of taxes), totaling for the three and six
month periods ended June 30, 2000, $(3.1) million and $(6.3) million,
respectively, and for the same respective periods in 1999 $(3.0) million and
$(6.2) million, that do not directly relate to segments. The major categories
not included in the segments for the three and six month periods ended June 30,
2000, were (on a before tax basis) $3.6 million and $7.2 million of capital
securities expenses and $1.0 million and $2.1 million of dividend expenses on
the preferred stock of subsidiary corporation for each respective period. For
the three and six month periods ended June 30, 1999, the major categories not
included in the segments were capital securities expenses of $3.7 million and
$7.3 million and $1.0 million and $2.0 million of dividend expenses on the
preferred stock of subsidiary corporation for each respective period.
NOTE 8 - INCOME TAXES
Total income tax expense for the three month periods ended June 2000 and 1999
was $13.8 million and $13.1 million, respectively. Total income tax expense for
the six month periods ended June 2000 and 1999 was $27.1 million and $25.6
million, respectively. Tax expense for the current year three and six month
periods is higher than the corresponding prior year periods primarily due to a
higher level of income before taxes partially offset by lower effective tax
rates for the current year periods. During the first quarter of 1999, Webster
formed a Connecticut Passive Investment Company ("PIC"). PICs are exempt from
state income taxation in Connecticut, and the dividends paid from a PIC to a
related financial institution are also exempt from inclusion in Connecticut
taxable income. Webster Bank qualifies as a financial institution under the
Connecticut statute. The exemption is effective for tax years beginning on or
after January 1, 1999.
14
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 9 - NET INCOME PER COMMON SHARE
The following tables reconcile the components of basic and diluted earnings per
share.
Three months ended June 30, Six months ended June 30,
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data) 2000 1999 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------------
BASIC EARNINGS PER SHARE:
Net income $28,107 $25,350 $54,918 $49,323
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted-average common shares outstanding 42,381 44,321 42,963 43,964
- ------------------------------------------------------------------------------------------------------------------------------------
Basic earnings per share $ .66 $ .57 $ 1.28 $ 1.12
- ------------------------------------------------------------------------------------------------------------------------------------
DILUTED EARNINGS PER SHARE:
Net income $28,107 $25,350 $54,918 $49,323
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted-average common shares outstanding 42,381 44,321 42,964 43,964
Potential dilutive common stock:
Options 470 833 486 816
Total weighted-average diluted shares 42,851 45,154 43,450 44,780
- ------------------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share $ .66 $ .56 $ 1.26 $ 1.10
- ------------------------------------------------------------------------------------------------------------------------------------
At June 30, 2000 and 1999, options to purchase 1,185,391 and 682,097 shares of
common stock at exercise prices between $22.19 and $35.38 and $30.19 and $35.38,
respectively, were not considered in the computation of diluted potential common
stock since the options' exercise prices were greater than the average market
price of Webster common stock for the 2000 and 1999 quarter periods.
NOTE 10 - CORPORATION-OBLIGATED MANDATORILY REDEEMABLE CAPITAL SECURITIES OF
SUBSIDIARY TRUSTS HOLDING SOLELY JUNIOR SUBORDINATED DEBENTURES OF THE
CORPORATION
During 1997, Webster formed a statutory business trust, Webster Capital Trust I
("Trust I"), of which Webster owns all of the common stock. Trust I exists for
the sole purpose of issuing trust securities and investing the proceeds in an
equivalent amount of subordinated debentures of the Corporation. On January 31,
1997, Trust I completed a $100 million underwritten public offering of 9.36%
Corporation-Obligated Manditorily Redeemable Capital Securities of Webster
Capital Trust I ("capital securities"). The sole asset of Trust I is $100
million of Webster's 9.36% junior subordinated deferrable interest debentures
due in 2027 ("subordinated debt securities"), purchased by Trust I on January
30, 1997. On April 1, 1997, Eagle Financial Capital Trust I, subsequently
renamed Webster Capital Trust II ("Trust II"), completed a $50 million private
placement of 10.00% capital securities. Proceeds from the issue were invested by
Trust II in junior subordinated deferrable debentures issued by Eagle due in
2027. These debentures represent the sole assets of Trust II. The subordinated
debt securities are unsecured obligations of Webster and are subordinate and
junior in right of payment to all present and future senior indebtedness of
Webster. Webster has entered into guarantees, which together with Webster's
obligations under the subordinated debt securities and the declarations of trust
governing Trust I and Trust II, including its obligations to pay costs,
expenses, debts and liabilities (other than trust securities), provides a full
and unconditional guarantee of amounts on the capital securities. Expense on the
securities including amortization of issuance costs, for the three month periods
ended June 30, 2000 and 1999, was $3.6 million and $3.7 million, respectively,
and for the six month periods ended June 30, 2000 and 1999 was $7.2 million and
$7.3 million, respectively.
15
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 11 - ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standard ("SFAS"), No. 133, "Accounting for Derivative
Instruments and Hedging Activities". This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. The accounting for changes in the fair
value of a derivative depends on the intended use of the derivative and the
resulting designation. Under this statement, an entity that elects to apply
hedge accounting is required to establish at the inception of the hedge the
method it will use for assessing the effectiveness of the hedging derivative and
the measurement approach for determining the ineffective aspect of the hedge.
Those methods must be consistent with the entity's approach to managing risk.
SFAS No. 133, as amended by SFAS No. 137, is now effective for all fiscal
quarters of fiscal years beginning after June 15, 2000. Upon adoption, hedging
relationships must be designated anew and documented pursuant to the provisions
of this statement. Early adoption is permitted, however, retroactive application
is prohibited. Management is in the process of evaluating the impact of this
statement on its financial position and results of operations.
In June 2000, the FASB issued SFAS No. 138, "Accounting for Derivative
Instruments and Hedging Activities, and amendment to the FASB Statement No.
133". This statement amends the accounting and reporting standards of SFAS No.
133 for certain derivative instruments and certain hedging activities.
In June 2000, the FASB issued SFAS No. 139, "Recission of FASB Statement No. 53
and amendments to FASB statements No. 63, 89 and 121". This statement shall be
effective for financial statements for fiscal years beginning after December 15,
2000. The changes under this statement pertain to industries other than banking
and therefore, this statement is expected to have no impact on Webster's
financial statements.
16
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
GENERAL
Webster Financial Corporation ("Webster" or the "Corporation"), through its
subsidiaries, Webster Bank (the "Bank") and Damman Associates, Inc. ("Damman"),
delivers financial services to individuals, families and businesses primarily in
Connecticut. Webster emphasizes five business lines - consumer banking, business
banking, mortgage lending, trust and investment services, and insurance
services, each supported by centralized administration and operations. Webster
has grown significantly in recent years, primarily through a series of
acquisitions which have expanded and strengthened its franchise.
FINANCIAL CONDITION
Webster on a consolidated basis at June 30, 2000 and December 31, 1999 had total
assets of $11.2 billion and $9.9 billion, total securities of $3.3 billion and
$3.1 billion, respectively, and net loans receivable of $6.8 billion and $6.0
billion, respectively. Total deposits at June 30, 2000 and December 31, 1999
were $7.0 billion and $6.2 billion, respectively. Shareholders' equity totaled
$787.2 million and $635.7 million at June 30, 2000 and December 31, 1999,
respectively.
The overall increase in the balance sheet at June 30, 2000 as compared to
December 31, 1999 is primarily due to purchase acquisitions that were completed
during the current year second quarter period. The increase of $1.3 billion in
total assets was primarily related to increases in net loans of $798.0 million,
securities of $261.7 million and intangibles of $163.2 million. The acquisitions
contributed $732.7 million of net loans. The increase in securities for the most
part was not attributable to the acquisitions as approximately 91% of the
portfolio received from the Mechanics acquisition was sold prior to June 30,
2000. Goodwill and core deposit intangibles totaling $165.5 million were
recorded during the current second quarter period. The increase in total
liabilities and equity of $1.3 billion is primarily due to increases in deposits
of $814.1 million, borrowings of $235.0 million and equity $151.5 million. The
acquisitions added deposits and borrowings of $734.1 million and $329.0 million,
respectively. The net increase to total equity of $151.5 million reflects $198.4
million of common stock issued for the acquisitions, net income of $54.9 million
and stock option exercise proceeds of $7.1 million decreased by $96.6 million of
charges for common stock repurchases, $13.0 million for common stock dividend
payments and an increase in the unrealized losses on the available for sale
securities portfolio.
At June 30, 2000, the assets of Webster, on an unconsolidated basis, consisted
primarily of its investments in the Bank and Damman that totaled $896.6 million,
investment securities of $99.7 million and $11.3 million of cash and
interest-bearing deposits. Primary sources of income to Webster, on an
unconsolidated basis, are dividend payments received from the Bank and interest
and dividends from investment securities. Primary expenses of Webster, on an
unconsolidated basis, are interest expense on borrowings and interest expense
related to the capital securities.
The Bank's deposits are federally insured by the Federal Deposit Insurance
Corporation ("FDIC"). The Bank is a Bank Insurance Fund ("BIF") member
institution.
Webster, as a holding company, and the Bank are subject to comprehensive
regulation, examination and supervision by the Office of Thrift Supervision (the
"OTS"), as the primary federal regulator. Webster is also subject to regulation,
examination and supervision by the FDIC as to certain matters. Webster's
executive offices are located at Webster Plaza, Waterbury, Connecticut 06702.
Its telephone number is (203) 753-2921. Webster's internet website is:
www.websterbank.com.
17
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
ASSET QUALITY
NONACCRUAL ASSETS
Webster devotes significant attention to maintaining high asset quality through
conservative underwriting standards, active servicing of loans and aggressively
managing nonaccrual assets. The aggregate amount of nonaccrual assets increased
to $46.4 million at June 30, 2000 from $43.3 million at December 31, 1999 and
decreased as a percentage of total assets to .42% at June 30, 2000 from .44% at
December 31, 1999. Nonaccrual loans increased $6.4 million and foreclosed
properties decreased $28,000 during the current year second quarter period and
for the six month period, nonaccrual loans increased $3.9 million and foreclosed
properties decreased $790,000. The increase in nonaccrual loans for the current
year second quarter period is due primarily to the transfer of a commercial loan
relationship to nonaccrual during the period. The allowance for loan losses at
June 30, 2000 was $86.2 million and represented 204% of nonaccrual loans and
1.3% of total loans. Total allowances for nonaccrual assets of $86.4 million
represented 185% of nonaccrual assets. The following table details nonaccrual
assets for the periods presented.
JUNE 30, DECEMBER 31,
(In thousands) 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------------
NONACCRUAL ASSETS:
Loans accounted for on a nonaccrual basis:
Residential $ 8,872 $ 11,490
Commercial 31,799 25,722
Consumer 1,647 1,182
FORECLOSED PROPERTIES:
Residential and Consumer 2,375 2,698
Commercial 1,743 2,210
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 46,436 $ 43,302
- ------------------------------------------------------------------------------------------------------------------------------------
A summary of the activity in the allowance for loan losses follows:
FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
(Dollars in thousands) 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at beginning of period $ 72,658 $ 65,201
CHARGE-OFFS:
Residential real estate (857) (1,366)
Consumer (1,248) (759)
Commercial (1,917) (774)
- ------------------------------------------------------------------------------------------------------------------------------------
(4,022) (2,899)
RECOVERIES:
Residential real estate 175 474
Consumer 136 684
Commercial 873 121
- ------------------------------------------------------------------------------------------------------------------------------------
Net charge-offs (2,838) (1,620)
Provisions charged to operations 5,400 4,433
Purchase acquisition 10,979 --
Pooling adjustment -- 3,647
Balance at end of period $ 86,199 $ 71,661
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net charge-offs to average loans outstanding 0.05% 0.03%
- ------------------------------------------------------------------------------------------------------------------------------------
18
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Net charge-offs increased for the current year six month period when compared to
the same period in 1999 due primarily to an increase in commercial loan net
charge-offs for the current period. Provision for loan losses expense for the
current year period increased compared to the previous year same period
primarily due to an increase in nonaccrual loans. Management believes that the
allowance for loan losses at June 30, 2000 is adequate to cover expected losses
in the portfolio.
ASSET/LIABILITY MANAGEMENT
Interest-rate risk is the sensitivity of the market value of Webster's
interest-sensitive assets and liabilities and the sensitivity of Webster's
earnings to changes in interest rates over short-term and long-term time
horizons. The primary goal of interest-rate risk management is to control risk
within limits approved by Webster's Board of Directors. Webster's Asset &
Liability Management Committee manages interest-rate risk to maximize net
interest income and net market value over time in changing interest-rate
environments. Management measures interest-rate risk using simulation analyses
with particular emphasis on measuring changes in net market value and net
interest income in different rate environments. Market value is measured as the
net present value of future cash flows.
Simulation analysis incorporates assumptions about balance sheet changes such as
asset and liability growth, loan and deposit pricing and changes due to the mix
of assets and liabilities. Key assumptions relate to the behavior of interest
rates and spreads, fluctuations in product balances, prepayment speeds and decay
rates on deposits. From such simulations, interest-rate risk is quantified and
appropriate strategies are formulated and implemented.
Webster also uses as part of its asset/liability management strategy various
interest-rate contracts including futures and options, interest-rate swaps and
interest-rate caps and floors. Webster utilizes these financial instruments to
manage interest-rate risk by reducing net exposures. These interest-rate
financial instruments involve, to varying degrees, credit risk and market risk.
Credit risk is the possibility that a loss may occur if a counterparty to a
transaction fails to perform according to the terms of the contract. Market risk
is the effect of a change in interest rates on the value of the instruments. The
notional amount of interest-rate financial instruments is the amount upon which
interest and other payments under the contract are based. The notional amount is
not exchanged and therefore, the notional amounts should not be taken as a
measure of credit risk.
Webster holds futures and options positions and interest-rate contracts to
minimize the price volatility of certain assets held as trading securities.
Changes in the market value of these positions are recognized in the
Consolidated Statements of Income in the period for which the change occurred.
19
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
The following table summarizes the estimated market value of Webster's
interest-sensitive assets and interest-sensitive liabilities at June 30, 2000
and December 31, 1999, and the projected change to market values if interest
rates instantaneously increase or decrease by 100 basis points.
Book Market Estimated Market Value Impact
(Dollars in thousands) Value Value -100 BP +100 BP
- ------------------------------------------------------------------------------------------------------------------------------
JUNE 30, 2000
Interest Sensitive Assets:
Trading $ 77,633 $ 77,633 $ (368) $ (262)
Non-trading 9,937,338 9,815,566 241,897 (269,514)
Interest Sensitive Liabilities 10,028,563 9,855,625 (160,546) 145,628
Net Impact 80,983 (124,148)
Net Impact as % of interest
sensitive assets 0.8% (1.3)%
DECEMBER 31, 1999
Interest Sensitive Assets:
Trading $ 50,854 $ 50,854 $ 181 $ (479)
Non-trading 8,780,473 8,695,323 223,137 (256,650)
Interest Sensitive Liabilities 9,219,951 8,838,371 (139,222) 129,373
Net Impact 84,096 (127,756)
Net Impact as % of interest
sensitive assets 1.0% (1.5)%
- ------------------------------------------------------------------------------------------------------------------------------
The tables above exclude interest-earning assets that are not directly impacted
by changes in interest rates. These assets include equity securities of $194.5
million at June 30, 2000 and $201.4 million at December 31, 1999 and nonaccrual
loans of $42.3 million at June 30, 2000 and $38.4 million at December 31, 1999
(see "Asset Quality" within the MD&A). Values for mortgage servicing rights have
been included in the tables above as movements in interest rates affect the
valuation of the servicing rights. Equity securities and nonaccrual assets not
included in the above tables are, however, subject to fluctuations in market
value based on other risks. The equity securities at June 30, 2000 and December
31, 1999 include $125.3 million and $103.9 million, respectively, of FHLB stock
which is insensitive to market fluctuations.
Interest-sensitive assets, net of interest-sensitive liabilities, when impacted
by a minus 100 basis point rate change, result in a favorable $81.0 million
change in net market values for June 30, 2000 compared to a favorable $84.1
million net market value change at December 31, 1999. These changes represent
0.8% of interest-sensitive assets at June 30, 2000 and 1.0% of interest-rate
sensitive assets at December 31, 1999. A plus 100 basis point rate change
results in an unfavorable $124.1 million or 1.3% change at June 30, 2000
compared to an unfavorable $127.8 million or 1.5% change in December 31, 1999.
20
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Based on Webster's asset/liability mix at June 30, 2000, management estimates
that an instantaneous 100 basis point increase in interest rates would decrease
net interest income over the next twelve months by approximately 3.4%. An
instantaneous 100 basis point decline in interest rates would increase net
interest income by approximately 2.5%. These estimates assume that management
takes no action to mitigate any negative effects from changing interest rates.
The market values and net interest income estimates are subject to factors that
could cause actual results to differ. Management believes that Webster's
interest-rate risk position at June 30, 2000, represents a reasonable level of
risk.
LIQUIDITY AND CAPITAL RESOURCES
The Bank is required to maintain minimum levels of liquid assets as defined by
regulations adopted by the OTS. This requirement, which may be varied by the
OTS, is based upon a percentage of net withdrawable deposits and short-term
borrowings. The required liquidity ratio is currently 4.00% and the Bank's
liquidity ratio at June 30, 2000 exceeded the requirement. Webster Bank also is
required by regulation to maintain sufficient liquidity to ensure safe and sound
operations. Adequate liquidity as assessed by the OTS may vary from institution
to institution depending on such factors as the institution's overall
asset/liability structure, market conditions, competition and the nature of the
institution's deposit and loan customers. The OTS considers both an
institution's liquidity ratio as well as safety and soundness issues in
assessing whether an institution has sufficient liquidity.
Liquidity management allows Webster to meet cash needs at a reasonable cost
under various operating environments. Liquidity is actively managed and reviewed
in order to maintain stable cost effective funding to support the balance sheet.
Liquidity comes from a variety of sources such as the cash flow from operating
activities including principal and interest payments on loans and investments,
unpledged securities which can be sold or utilized to secure funding and by
maintaining the ability to attract new deposits. Webster's goal is to maintain a
strong base of core deposits to support its growing balance sheet.
Management monitors current and projected cash needs and adjusts liquidity as
necessary. Webster has a detailed liquidity contingency plan, which is designed
to respond to liquidity concerns in a prompt and comprehensive manner. It is
designed to provide early detection of potential problems and details specific
actions required to address liquidity risks.
Webster is a member of the Federal Home Loan Bank ("FHLB") system and has
additional borrowing capacity from the FHLB of $1.3 billion at June 30, 2000. At
that date, the Bank had FHLB advances outstanding of $2.3 billion compared to
$1.7 billion at December 31, 1999.
Webster's main sources of liquidity at the holding company level are dividends
from the Bank, investment income and net proceeds from capital offerings and
borrowings. The main uses of liquidity are purchases of available for sale
securities, the payment of dividends to common stockholders, repurchases of
Webster's common stock, and the payment of interest on borrowings and capital
securities. Senior notes held by Webster with a book value of $40.0 million
matured on June 30, 2000. Repayment of the senior notes came from general
operating funds. There are certain restrictions on the payment of dividends by
the Bank to Webster. Webster also maintains $120.0 million in revolving lines of
credit with correspondent banks.
21
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
During the second quarter of 2000, Webster repurchased a total of 1,466,080
shares of its common stock under previously announced repurchase programs. The
total cost of the repurchased shares was $32.0 million with an average per share
cost of approximately $21.80. The repurchased stock was specifically related to
the purchase acquisition of Mechanics that closed during June. See Note 2.
Applicable OTS regulations require the Bank, as a federal savings bank, to
satisfy certain minimum capital requirements, including a leverage capital
requirement and risk-based capital requirements. As an OTS regulated savings
institution, the Bank is also subject to a minimum tangible capital requirement.
At June 30, 2000, the Bank was in full compliance with all applicable capital
requirements.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2000 AND 1999.
GENERAL
Net income for the three month period ended June 30, 2000, was $28.1 million or
$.66 per diluted share compared to $25.4 million or $.56 per diluted share for
the same period ended June 30, 1999. Net income for the six month period ended
June 30, 2000 was $54.9 million or $1.26 per diluted share compared to $49.3
million or $1.10 per diluted share for the previous year period. In general,
higher net income for the current three and six month periods was the result of
higher net interest income and noninterest income partially offset by increased
operating expenses for the current year periods. More specifically, these
increases are primarily a result of the business combinations completed during
the last 18 months. Information concerning business combinations is contained
within "Note 2 - Acquisitions" and in the 1999 Annual Report to Shareholders
within "Management's Discussion and Analysis of Financial Condition & Results of
Operations" section and Incorporated herein by reference.
NET INTEREST INCOME
Net interest income for the three and six month periods ended June 30, 2000,
amounted to $79.0 million and $155.3 million, respectively, compared to $76.4
million and $149.1 million for the respective periods in 1999. Total interest
income for the current year three and six month periods compared to the same
periods in 1999 increased $15.1 million and $24.8 million, respectively, while
increases in total interest expense of $12.5 million and $18.6 million,
respectively, partially offset the increases in total interest income. Net
interest rate spread for the three and six month periods ended June 30, 2000 was
3.18% and 3.14%, respectively, as compared to 3.23% and 3.16% for the same
periods in the previous year.
INTEREST INCOME
Total interest income for the three and six month periods ended June 30, 2000
was $174.9 million and $344.6 million, respectively, compared to $159.8 million
and $319.8 million in the previous year. The increases in total interest income
for the current year periods are due to both an increase in average
interest-earning assets and higher yields. When the three month periods ended
June 30, 2000 and 1999 are compared, average loans increased $465.3 million and
the yield increased 33 basis points over the prior year same period. Investment
securities average funds decreased $141.9 million for the current year three
month period, however the yield increased 16 basis points over the prior year
period. When the six month periods ended June 30, 2000 and 1999 are compared,
interest-earning assets increased $265.1 million and the yield increased 23
basis points for the current year period. The increase in average assets and
yield for the current year six month period was primarily attributable to an
increase in average loans of $483.9 million and an increased yield of 22 basis
points for the current year period. Average investment securities decreased
during the current year six month period, however an increased yield kept
interest income consistent as compared to the previous year same period.
22
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
INTEREST EXPENSE
Total interest expense for the three and six month periods ended June 30, 2000,
was $95.9 million and $189.3 million, respectively, compared to $83.4 million
and $170.7 million for the previous year periods. The rate paid on
interest-bearing liabilities for the three and six months periods ended June 30,
2000 was 4.14% and 4.13% respectively, as compared to 3.79% and 3.88%,
respectively, for the same periods one year earlier. The increase in total
interest expense for the current three and six month periods as compared to one
year earlier, is primarily due to a higher volume of average interest-bearing
liabilities of $515.2 million and $396.3 million, respectively, and higher costs
on borrowings for the current year periods.
The higher costs on borrowings for the current periods are primarily the result
of higher yields on FHLB advances that increased approximately 86 and 71 basis
points for the current year three and six month periods, respectively, and the
cost on repurchase agreements that increased approximately 116 and 93 basis
points for the current year three and six month periods, respectively. The
increase in borrowing costs reflect a rising wholesale borrowing cost
environment for the current year.
The following table shows the major categories of average assets and average
liabilities together with their respective interest income or expense and the
rates earned and paid by Webster.
THREE MONTHS ENDED JUNE 30,
(Dollars in thousands) 2000 1999
- ----------------------------------------------------------------------------------------------------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST YIELD BALANCE INTEREST YIELD
------- -------- ------- ------- -------- -------
ASSETS
INTEREST-EARNING ASSETS:
Loans $ 6,206,383 $120,652 7.79% $5,741,107 $ 106,752 7.46%
Securities 3,234,130 54,294 6.46(a) 3,376,054 53,061 6.30(a)
----------- -------- ---- ---------- --------- ----
TOTAL INTEREST-EARNING ASSETS 9,440,513 174,946 7.32 9,117,161 159,813 7.02
-------- ---------
Noninterest-earning assets 748,840 591,485
----------- ----------
TOTAL ASSETS $10,189,353 $9,708,646
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST-BEARING LIABILITIES:
Deposits $ 6,439,303 52,087 3.24% $6,267,564 50,853 3.25%
Borrowings 2,875,471 43,828 6.11 2,532,009 32,519 5.15
----------- -------- ---- ---------- -------- ----
TOTAL INTEREST-BEARING LIABILITIES 9,314,774 95,915 4.14 8,799,573 83,372 3.79
-------- --------
Noninterest-bearing liabilities 74,523 107,982
----------- ----------
TOTAL LIABILITIES 9,389,297 8,907,555
Capital securities and preferred stock of
subsidiary corporation 199,577 199,577
SHAREHOLDERS' EQUITY 600,479 601,514
----------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $10,189,353 $9,708,646
=========== =========
NET INTEREST INCOME $ 79,031 $ 76,441
======== ========
INTEREST-RATE SPREAD 3.18% 3.23%
==== ====
NET YIELD ON AVERAGE INTEREST-EARNING ASSETS 3.29% 3.36%
==== ====
(a) For purposes of this computation, unrealized gains (losses) are excluded
from the average rate calculations.
- --------------------------------------------------------------------------------
23
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30,
(Dollars in thousands) 2000 1999
- ----------------------------------------------------------------------------------------------------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST YIELD BALANCE INTEREST YIELD
------- -------- ------- ------- -------- -------
ASSETS
INTEREST-EARNING ASSETS:
Loans $ 6,142,498 $237,133 7.74% $ 5,658,585 $ 211,044 7.52
Securities 3,233,577 107,456 6.40(a) 3,452,349 108,795 6.32(a)
----------- -------- ---- ----------- --------- ----
TOTAL INTEREST-EARNING ASSETS 9,376,075 344,589 7.27 9,110,934 319,839 7.04
-------- ---------
Noninterest-earning assets 715,871 613,343
----------- -----------
TOTAL ASSETS $10,091,946 $ 9,724,277
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST-BEARING LIABILITIES:
Deposits $ 6,290,832 $102,069 3.26% $ 6,228,011 103,661 3.36%
Borrowings 2,929,872 87,217 5.99 2,596,367 67,051 5.21
----------- -------- ---- ----------- --------- ----
TOTAL INTEREST-BEARING LIABILITIES 9,220,704 189,286 4.13 8,824,378 170,712 3.88
-------- ---------
Noninterest-bearing liabilities 69,443 95,151
----------- -----------
TOTAL LIABILITIES 9,290,147 8,919,529
Capital securities and preferred stock of
subsidiary corporation 199,577 199,577
SHAREHOLDERS' EQUITY 602,222 605,171
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $10,091,946 $ 9,724,277
=========== ===========
NET INTEREST INCOME $155,303 $ 149,127
======== =========
INTEREST-RATE SPREAD 3.14% 3.16%
==== ====
NET YIELD ON AVERAGE INTEREST-EARNING ASSETS 3.26% 3.30%
==== ====
(a) For purposes of this computation, unrealized gains (losses) are excluded
from the average rate calculations.
- --------------------------------------------------------------------------------
PROVISION FOR LOAN LOSSES
The provision for loan losses was $3.2 million and $5.4 million, respectively,
for the three and six month periods ended June 30, 2000 compared to $2.3 million
and $4.4 million for the respective periods in 1999. The increase for 2000 is
attributable to the increase in gross loans and a shift within the loan
portfolio to a higher concentration of commercial loans. At June 30, 2000 the
allowance for loan losses totaled $86.2 million and represented 203.69% of
nonaccrual loans as compared to $72.7 million and 190.69% respectively, at
December 31, 1999. At June 30, 2000 and December 31, 1999, the allowance for
loan losses represented 1.25% and 1.19% of gross outstanding loans,
respectively.
24
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
NONINTEREST INCOME
Total noninterest income for the three and six month periods ended June 30, 2000
totaled $30.7 million and $58.2 million, respectively, compared to $22.6 million
and $44.1 million for the same respective periods in 1999. When the three month
periods are compared, increased income for the current period of $8.l million is
primarily due to an increase of $2.4 million in fees and service charges, $3.1
million in trust and investment services and $2.0 million in insurance
commissions. When the six month periods are compared, increased income for the
current period of $14.1 million is primarily due to an increase of $4.6 million
in fees and service charges, $5.4 million in trust and investment services, $2.0
million on gain on sale of securities and a $3.6 million increase in insurance
commissions. The increases are due primarily to an increase in the customer base
and fees generated from expanded insurance and trust and investments services
sales and product offerings and as a result of the business combinations
referred to in "Note 2- Acquisitions".
NONINTEREST EXPENSES
Total noninterest expenses for the three and six month periods ended June 30,
2000 totaled $64.6 million and $126.2 million, respectively, compared to $58.3
million and $113.9 million, respectively, for the same periods in 1999. The
increases in noninterest expenses for the current year periods reflects
additional expenses related to the purchase acquisitions of Mechanics, Chase
branches and Follis during the current year second quarter period, as well as
the purchase acquisitions of Village Bancorp, Inc. and the Maritime Bank and
Trust Company during the previous year second quarter period. Increased costs
for salaries and benefits, furniture and equipment and intangible amortization
expense were offset by lower professional services costs for the current year
periods.
INCOME TAXES
Total income tax expense for the three and six month periods ended June 30, 2000
were $13.8 million and $27.1 million, respectively, as compared to $13.1 million
and $25.6 million, respectively, for the same periods in 1999. Tax expenses for
the current year periods are higher than the corresponding 1999 periods due to a
higher level of income before income taxes partially offset by lower effective
tax rates. During the first quarter of 1999, Webster formed a Connecticut
Passive Investment Company ("PIC"). PICs are exempt from state income taxation
in Connecticut, and the dividends paid from a PIC to a related financial
institution are also exempt from inclusion in Connecticut taxable income.
Webster Bank qualifies as a financial institution under the Connecticut statute.
The exemption is effective for tax years beginning on or after January 1, 1999.
FORWARD LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of the
Securities and Exchange Act of 1934, as amended. Actual results could differ
materially from management expectations, projections and estimates. Factors that
could cause future results to vary from current management expectations include,
but are not limited to, general economic conditions, legislative and regulatory
changes, monetary and fiscal policies of the federal government, changes in tax
policies, rates and regulations of federal, state and local tax authorities,
changes in interest rates, deposit flows, the cost of funds, demand for loan
products, demand for financial services, competition, changes in the quality or
composition of Webster's loan and investment portfolios, changes in accounting
principles, policies or guidelines, and other economic, competitive,
governmental and technological factors affecting Webster's operations, markets,
products, services and prices. Some of these and other factors are discussed in
Webster's annual and quarterly reports previously filed with the Securities and
Exchange Commission. Such developments could have an adverse impact on Webster's
financial position and results of operations.
25
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
- --------------------------------------------------------------------------------
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - Not Applicable.
Item 2 Changes in Securities and Use of Proceeds
(a) Not applicable.
(b) Not applicable.
(c) On April 26, 2000, in exchange for an aggregate of 100 shares
of Follis, Wylie & Lane, Inc. common stock, Webster issued
5,000 shares of Webster's common stock and paid an aggregate
of $2,050,000 in cash pursuant to the Stock Purchase
Agreement, dated as of April 3, 2000, by and among Damman
Associates, Inc., a direct subsidiary of Webster, Follis,
Wylie & Lane, Inc., and Stephen Lane. The offer and sale of
the stock satisfied the requirements of Section (4)(2) of the
Securities Act of 1933, as amended (the "Securities Act")
(transactions by an issuer not involving a public offering).
Item 3 Defaults upon Senior Securities - Not Applicable
Item 4 Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Shareholders was held on April 27, 2000.
(b) The following individuals were elected as directors at the
annual meeting: O. Joseph Bizzozero, Jr. was re-elected for a
two-year term; former directors, Robert A. Finkenzeller, John F.
McCarthy, and Sister Marguerite Waite, C.S.J. were re-elected
for three year terms; and Michael G. Morris was elected for a
three-year term. Continuing directors include: Richard H. Alden,
Achille A. Apicella, Joel S. Becker, George T. Carpenter, John
J. Crawford, Harry P. DiAdamo, Jr., P. Anthony Giorgio, C.
Michael Jacobi, and James C. Smith.
(c) The following matters were voted upon and approved by the
Registrant's shareholders at the 2000 Annual Meeting of
Shareholders on April 27, 2000: (i) the election of five
directors, four to serve for three-year terms and one to serve
for a two-year term (Proposal 1); (ii) an amendment of the
Webster 1992 Stock Option Plan (Proposal 2); (iii) the approval
and adoption of the Webster Employee Stock Purchase Plan
(Proposal 3); and (iv) the ratification of the appointment of
KPMG LLP as independent auditors of the Company for the fiscal
year ending December 31, 2000 (Proposal 4).
26
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
- --------------------------------------------------------------------------------
As to Proposal 1, O. Joseph Bizzozero, Jr. received 34,456,719
votes for election and 796,293 votes were withheld; Robert A.
Finkenzeller received 34,463,526 votes for election and
789,485 votes were withheld; John F. McCarthy received
34,410,724 votes for election and 842,287 votes were withheld;
Michael G. Morris received 34,441,309 votes for election and
811,703 votes were withheld; and Sister Marguerite Waite,
C.S.J. received 34,314,886 votes for election and 938,125
votes were withheld. There were no abstentions or broker
non-votes for any of the nominees. As to Proposal 2,
shareholders cast 31,790,961 votes for, 2,964,383 against,
485,988 abstentions and 11,689 broker non-votes. As to
Proposal 3, shareholders cast 33,356,835 votes for, 1,464,172
against, 431,991 abstentions and 23 broker non-votes. As to
Proposal 4, shareholders cast 34,898,122 votes for, 177,141
against, 177,737 abstentions and 21 broker non-votes.
Item 5 Other Information - Not Applicable
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits
3 Bylaws, as amended (incorporated by reference to Exhibit 3
to the Registration Statement on Form S-8 filed with the
Securities and Exchange Commission ("SEC") on July 25, 2000.
27 Financial Data Schedule
(b) Reports on Form 8-K
Current Report on Form 8-K filed with the Securities and
Exchange Commission on June 26, 2000 (announcing Webster's
acquisition of MECH Financial, Inc).
27
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
- --------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WEBSTER FINANCIAL CORPORATION
-----------------------------
Registrant
Date: August 11, 2000 By: /s/ Peter J. Swiatek
- --------------------- ----------------------------------------------------
Peter J. Swiatek
Controller and Acting Principal Financial
Officer and Acting Principal Accounting Officer
28
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
- --------------------------------------------------------------------------------
EXHIBIT INDEX
Exhibit No. Description
------------ -----------
3 Bylaws of Webster Financial Corporation, as amended
27 Financial Data Tables.
29