EX-99.1 CHARTER 3 ex99_1.htm

Exhibit 99.1



Media Contact:             Investor Contact:
Clark Finley 203-578-2429             Terry Mangan 203-578-2318
cfinley@westerbank.com             tmangan@websterbank.com


WEBSTER REPORTS INCREASE IN PER SHARE NET INCOME
FOR THE FOURTH QUARTER AND FULL YEAR

WATERBURY, Conn., January 22, 2004 - Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, today announced net income of $41.4 million in the fourth quarter, compared to $39.4 million in the year-ago period, an increase of 5 percent. Net income per diluted share also increased 5 percent to $.89 in the fourth quarter, compared to $.85 in the year-ago period. Included in the fourth quarter of 2003 are $1.3 million of non-recurring merger expenses, or $.02 per diluted share, related to the acquisition of North American Bank and Trust Company.

Net income in 2003 totaled $163.2 million, compared to $152.7 million in the prior year. Net income per diluted share was $3.52 in 2003, compared to $3.16 in the prior year, an increase of 11 percent. Excluding the cumulative effect of a change in accounting method in the 2002 first quarter, net income in 2002 was $160.0 million or $3.31 per diluted share.

“We are pleased to report solid quarterly results in a year of significant achievement, including double-digit growth in loans and deposits,” stated Webster chairman and chief executive officer James C. Smith. “The fourth quarter was marked by notable improvement in net interest margin and exceptional asset quality.”

“Upon the expected approval of Webster Bank’s application for a national bank charter, we will have completed our transformation to a commercial bank. As the largest publicly-traded bank based in southern New England, we are in the unique position to fill the competitive need for a homegrown provider of banking, insurance and investment services in our markets. We will build on this competitive advantage to grow loans and deposits faster than the market and to drive revenue from our fee-based businesses,” Smith said.

1

Revenues and Expenses

Total revenues (net interest income plus total noninterest income) were $163.8 million in the fourth quarter, compared to $162.5 million a year ago. Total revenues, excluding securities gains, increased 8 percent to $161.1 million in the fourth quarter from $148.5 million a year ago. For the full-year 2003, total revenues increased 9 percent to $646.0 million. Total revenues, excluding securities gains, increased 10 percent to $627.4 million for the full-year 2003. Revenue growth over the past year has been led by increases in Webster’s fee revenue categories.

Net interest income was $107.3 million in the fourth quarter of 2003, compared to $104.1 million in the year-ago period and $100.9 million in the third quarter. The improvement reflects a reduction in the amount of premium amortization within the securities portfolio compared to the first three quarters of 2003 when Webster experienced an acceleration of prepayments due to low market interest rates. Lower funding costs for deposits and borrowings also contributed to the higher level of net interest income during the quarter. Net interest income in the full-year 2003 totaled $413.5 million, compared to $405.7 million in 2002.

Webster’s net interest margin (annualized net interest income as a percentage of average earning assets) was 3.18 percent in the quarter, compared to 3.39 percent in the year-ago period and 2.99 percent in the third quarter. Webster’s net interest margin for all of 2003 was 3.14 percent, compared to 3.50 percent for 2002. Strong loan growth in 2003 helped to offset compression of the net interest margin caused by the lower interest rate environment over the course of the year.

In the fourth quarter of 2003, total noninterest income decreased 3 percent to $56.5 million, compared $58.4 million in the year-ago period. Total fee revenue (total noninterest income excluding securities gains) grew 21 percent in the fourth quarter to $53.8 million from the year-ago period. This growth was led by increases in insurance revenues, loan and loan servicing fees and financial advisory services. For the full-year 2003, total noninterest income increased 25 percent to $232.5 million. Total fee revenue increased 32 percent to $213.9 million in 2003, due primarily to the growth of deposit and loan service fees, insurance revenues and net gains on sales of loans and loan servicing. In the fourth quarter, securities gains totaled $2.7 million, compared to $13.9 million in the year-ago period, and for the full-year 2003 totaled $18.6 million, compared to $23.4 million in 2002.

Total noninterest expenses for the 2003 fourth quarter were $98.3 million, up from $89.2 million one year ago. Growth from the year-ago period includes the $1.3 million of expenses from the acquisition of North American Bank and Trust Company completed in November 2003. In the entire 2003 year, total noninterest expenses were $378.0 million, compared to $328.3 million in 2002, an increase of 15 percent that reflects the impact of acquisitions and continuing investment in personnel, technology and infrastructure to meet our strategic plan for growth.

2

Balance Sheet Growth

At December 31, 2003, total assets were $14.6 billion, up 8 percent from $13.5 billion one year ago. Total loans of $9.2 billion at December 31, 2003 increased 16 percent from $7.9 billion a year ago. Deposits totaled $8.4 billion at December 31, 2003, up almost $800 million, or 10 percent, compared to a year ago. Over the past year, core deposit growth was especially strong at 14 percent.

“Our strategic initiatives have driven double-digit growth in loans and deposits over the past year,” stated Webster president and chief operating officer William T. Bromage. “The strength of this growth demonstrates customer recognition of the depth and breadth of our product set and our ability to meet their financial needs.”

At the end of the fourth quarter, commercial loans, including commercial real estate, were $3.3 billion, up 17 percent from $2.8 billion a year ago. Consumer loans increased 26 percent to $2.1 billion, compared to $1.7 billion one year ago, with growth over the past year led by Webster’s home equity product offering. Commercial and consumer loans comprised 59 percent of total loans at December 31, 2003, compared to 57 percent a year ago.

Core deposits (consisting of checking, money market and savings accounts) of $5.6 billion at December 31, 2003 increased by 14 percent from a year ago and represented 67 percent of total deposits, up from 65 percent at December 31, 2002. Webster’s growth in deposits was driven in part by its High Performance Checking products and the continuing success of its de novo branches in Fairfield County, Connecticut. During 2003, Webster continued its de novo expansion by opening new branches in Norwalk, CT and Scarsdale, NY.

Book value per common share of $24.91 at December 31, 2003 increased from $22.69 one year ago. Tangible book value per share of $18.18 at December 31, 2003 increased from $16.64 one year ago.

Asset Quality

Nonperforming assets totaled $42.9 million or 0.29 percent of total assets at December 31, 2003, compared to $50.0 million or 0.37 percent a year ago and $46.1 million or 0.32 percent at September 30, 2003.

“Webster’s disciplined approach to credit management has been a hallmark of our institution through many economic cycles,” stated Webster chief financial officer William J. Healy. “Our efforts to identify and address potential problem loans at an early stage continue to drive our approach to portfolio management.”

3

The allowance for loan losses totaled $121.7 million, or 1.32 percent of total loans at December 31, 2003, compared to $116.8 million, or 1.48 percent, a year ago and $117.7 million, or 1.29 percent, at September 30, 2003. The ratio of the allowance to nonperforming loans at December 31, 2003 increased to 323 percent, compared to 270 percent a year ago and 284 percent at September 30, 2003. The improvements in this ratio are due primarily to the decline in nonperforming loans.

The provision for loan losses totaled $5.0 million in the fourth quarter compared to $16.0 million in the year-ago period. The higher provision in the fourth quarter of 2002 offset a write-down against the allowance for loan losses of loans that were transferred to held for sale in that quarter. The full-year 2003 provision for loan losses totaled $25.0 million, compared to $29.0 million in the prior year.

Webster’s net loan charge-offs in the fourth quarter of 2003 were $3.0 million compared to $2.9 million in the year-ago period. The annualized net charge-off ratio was 0.13 percent in the 2003 fourth quarter, compared to 0.14 percent in the year-ago period. The full-year 2003 charge-off ratio was 0.25 percent, compared to 0.18 percent in 2002.

Strategic Actions

Webster announced in December an agreement to acquire Phoenix National Trust Company, which provides trust, custody and other financial services. Upon completion of the transaction, Phoenix National Trust will become part of Webster Bank’s investment and trust division, Webster Financial Advisors.

On November 7, 2003, Webster completed the acquisition of North American Bank and Trust Company, a Connecticut state-chartered commercial bank with $195 million in assets and 8 offices in the Greater Waterbury area.

Webster expanded its footprint beyond Connecticut ’s borders when it announced in October that it had reached a definitive agreement to acquire FIRSTFED AMERICA BANCORP, INC. (AMEX: FAB), headquartered in Swansea, Massachusetts, the holding company for First Federal Savings Bank of America. FIRSTFED is a federally-chartered savings and loan holding company with $2.5 billion in assets at September 30, 2003 and 26 branches, 19 in Massachusetts and 7 in Rhode Island. The combined bank would rank among the 50 largest in the United States, with $16 billion in assets, market capitalization of $2.6 billion and a 142-branch retail footprint in Connecticut, Massachusetts and Rhode Island. Webster expects the acquisition to close in the second quarter of 2004.

In September, Webster Bank announced it filed an application with the Office of the Comptroller of the Currency (OCC) to convert to a national bank charter. Webster Bank has been a federal savings bank regulated by the Office of Thrift Supervision (OTS). As part of the conversion, Webster also is filing an application with the Federal Reserve System to become a financial holding company. Webster expects to complete the conversion in the second quarter of 2004.

4

***

Webster Financial Corporation is the holding company for Webster Bank and Webster Insurance. With $14.6 billion in assets, Webster provides business and consumer banking, mortgage, insurance, financial planning, trust and investment services through 119 banking offices, 233 ATMs, a Connecticut-based call center and the Internet. Webster Financial Corporation is majority owner of Chicago-based Duff & Phelps, LLC, a leader in financial advisory services. Webster Bank owns the asset-based lending firm Webster Business Credit Corporation, the insurance premium finance company Budget Installment Corp., Center Capital Corporation, an equipment finance company headquartered in Farmington, Connecticut and Webster Trust Company, N.A.

For more information about Webster, including past press releases and the latest Annual Report, visit the Webster website at www.websteronline.com.

***

Conference Call

A conference call covering Webster’s 2003 fourth quarter earnings announcement will be held today, Thursday, January 22, at 1:00 p.m. Eastern Time and may be heard through Webster’s investor relations website at www.wbst.com, or in listen-only mode by calling 1-800-299-8538 (Access Code: 21041266). The call will be archived on the website and available for future retrieval.

Statements in this press release regarding Webster Financial Corporation’s business that are not historical facts are “forward-looking statements” that involve risks and uncertainties. For a discussion of such risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statement, see “Forward Looking Statements” in Webster’s Annual Report for 2002.

--30--




5

Webster Financial Corporation
Selected Financial Highlights (unaudited)
    At or for the Three
Months Ended December 31,		   At or for the Twelve
Months Ended December 31,
(In thousands, except per share data)   2003     2002     2003     2002  
Net income and performance ratios (annualized):
                                    
                               
Net income   $ 41,386     $ 39,401     $ 163,248     $ 152,732  
Net income per diluted common share     0.89       0.85       3.52       3.16  
Return on average shareholders’ equity     14.92 %     15.41 %     15.16 %     14.78 %
Return on average assets     1.15       1.18       1.15       1.22  
                                 
Net income and performance ratios before cumulative effect of change in accounting method (annualized):
                                
                               
Net income   $ 41,386     $ 39,401     $ 163,248     $ 152,732  
Cumulative effect of change in accounting method (a)     –       –       –       7,280  
     
     
     
     
 

Net income before cumulative effect of change in accounting method

     41,386       39,401       163,248       160,012  
                                 
Net income per diluted common share     0.89       0.85       3.52       3.31  
Return on average shareholders’ equity     14.92 %     15.41 %     15.16 %     15.48 %
Return on average assets     1.15       1.18       1.15       1.28  
Noninterest income as a percentage of total revenue     34.51       35.93       35.99       31.38  
Efficiency ratio (b)     59.99       54.88       58.51       55.53  
                                 
Cash income and performance ratios (annualized) (c):
                                
                               
Net income   $ 41,386     $ 39,401     $ 163,248     $ 152,732  
Cumulative effect of change in accounting method (a)     –       –       –       7,280  
Tax-effected stock-based compensation     965       551       3,749       2,235  
Tax-effected intangible amortization     2,644       2,598       10,399       10,411  
     
     
     
     
 
Cash income     44,995       42,550       177,396       172,658  
                                 
Cash income per diluted common share     0.96       0.92       3.83       3.57  
Cash return on average shareholders’ equity     16.22 %     16.64 %     16.48 %     16.70 %
Cash return on average assets     1.25       1.28       1.25       1.38  
                                 
Asset Quality:                                
                               
Allowance for loan losses   $ 121,674     $ 116,804     $ 121,674     $ 116,804  
Nonperforming assets     42,882       50,035       42,882       50,035  
Allowance for loan losses / total loans     1.32 %     1.48 %     1.32 %     1.48 %
Net charge-offs/ average loans (annualized)     0.13       0.14       0.25       0.18  
Nonperforming loans / total loans     0.41       0.55       0.41       0.55  
Nonperforming assets / total assets     0.29       0.37       0.29       0.37  
Allowance for loan losses / nonperforming loans     323.22       270.05       323.22       270.05  
                                 
Other ratios (annualized):                                
                               
Shareholders’ equity / total assets     7.91 %     7.69 %     7.91 %     7.69 %
Interest-rate spread     3.13       3.35       3.10       3.43  
Net interest margin     3.18       3.39       3.14       3.50  
                                 
Share related:                                
                               
Book value per common share   $ 24.91     $ 22.69     $ 24.91     $ 22.69  
Tangible book value per common share     18.18       16.64       18.18       16.64  
Common stock closing price     45.86       34.80       45.86       34.80  
Dividends declared per common share     0.21       0.19       0.82       0.74  
                                 
Common shares issued and outstanding     46,276       45,626       46,276       45,626  
Basic shares (average)     45,814       45,640       45,542       47,584  
Diluted shares (average)     46,699       46,321       46,362       48,392  

Footnotes:

(a) Cumulative effect of change in accounting method for 2002 is a SFAS No. 142 transitional goodwill impairment charge of $11.2 million, net of taxes, $7.3 million.
(b) Noninterest expense as a percentage of net interest income plus noninterest income.
(c) Cash income represents net income excluding the after tax effects of non-cash charges for cumulative effect of change in accounting method, stock-based compensation, which includes stock options and restricted stock, and amortization of intangible assets.
(d) Webster adopted FIN 46 on December 31, 2003, and in accordance with its provisions, deconsolidated the capital trusts and reported the associated liabilities as other long-term debt.
(e) For purposes of this computation, unrealized gains (losses) are excluded from the average balance for rate calculations.

Webster Financial Corporation
Consolidated Statements of Condition (unaudited)
  December 31,   September 30,   December 31,  
(In thousands) 2003   2003   2002  
Assets:
                  
                   
Cash and due from depository institutions
 $ 209,234   $ 214,566   $ 266,463  
Short-term investments
   42,420     26,196     15,596  
                   
Securities:
                  
Trading, at fair value
   555     56     5,752  
Available for sale, at fair value
   4,128,255     4,284,134     4,119,245  
Held-to-maturity securities
   173,371     –     –  
 
 
 
 
Total securities
   4,302,181     4,284,190     4,124,997  
                   
Loans held for sale
   89,830     278,402     405,157  
                   
Loans:
                  
Residential mortgages
   3,744,013     3,758,106     3,386,207  
Commercial
   2,040,921     2,018,279     1,798,898  
Commercial real estate
   1,281,516     1,187,065     1,029,332  
Consumer
   2,146,359     2,131,878     1,698,202  
 
 
 
 
Total loans
   9,212,809     9,095,328     7,912,639  
Allowance for loan losses
   (121,674 )   (117,707 )   (116,804 )
 
 
 
 
Loans, net
   9,091,135     8,977,621     7,795,835  
                   
Accrued interest receivable
   52,756     53,091     54,601  
Premises and equipment, net
   95,631     85,521     84,683  
Goodwill and intangible assets
   330,929     315,556     297,359  
Cash surrender value of life insurance
   180,556     178,474     172,066  
Prepaid expenses and other assets
   174,018     195,166     251,247  
 
 
 
 
Total assets
 $ 14,568,690   $ 14,608,783   $ 13,468,004  
 
 
 
 
                   
Liabilities and Shareholders’ Equity:
                  
                   
Deposits:
                  
Demand deposits
 $ 1,090,060   $ 1,017,870   $ 982,735  
NOW accounts
   1,052,690     1,010,071     945,145  
Money market deposits accounts
   1,581,276     1,606,342     1,296,303  
Savings accounts
   1,869,398     1,807,891     1,691,292  
Certificates of deposit
   2,681,986     2,590,513     2,592,701  
 
 
 
 
Total retail deposits
   8,275,410     8,032,687     7,508,176  
Treasury deposits
   96,725     100,884     97,946  
 
 
 
 
Total deposits
   8,372,135     8,133,571     7,606,122  
                   
Federal Home Loan Bank advances
   2,511,495     2,149,762     2,163,029  
Federal funds purchased and securities sold under agreements to repurchase
   1,892,138     2,531,875     2,166,640  
Other long-term debt
   532,760     326,000     126,000  
Accrued expenses and other liabilities
   97,690     169,301     239,923  
 
 
 
 
Total liabilities
   13,406,218     13,310,509     12,301,714  
                   
Corporation-obligated mandatorily redeemable capital securities of subsidiary trusts (d)
   –     185,255     121,255  
Preferred stock of subsidiary corporation
   9,577     9,577     9,577  
                   
Shareholders’ equity
   1,152,895     1,103,442     1,035,458  
 
 
 
 
Total liabilities and shareholders’ equity
 $ 14,568,690   $ 14,608,783   $ 13,468,004  
 
 
 
 

See Selected Financial Highlights for footnotes.


Webster Financial Corporation
Consolidated Statements of Income (unaudited)
    Three Months Ended   Twelve Months Ended
    December 31,   December 31,
(In thousands, except per share data)     2003     2002     2003     2002  
Interest income:
                          
Loans and loans held for sale
   $ 119,773   $ 120,386   $ 476,086   $ 464,400  
Securities and short-term investments
     43,065     53,189     182,632     227,634  
   
 
 
 
 
Total interest income
     162,838     173,575     658,718     692,034  
   
 
 
 
 
Interest expense:
                          
Deposits
     26,319     33,375     111,311     146,162  
Borrowings
     29,224     36,110     133,888     140,144  
   
 
 
 
 
Total interest expense
     55,543     69,485     245,199     286,306  
   
 
 
 
 
                           
Net interest income
     107,295     104,090     413,519     405,728  
Provision for loan losses
     5,000     16,000     25,000     29,000  
   
 
 
 
 
Net interest income after provision for loan losses
     102,295     88,090     388,519     376,728  
   
 
 
 
 
Noninterest income:
                          
Deposit service fees
     17,731     17,083     70,018     61,610  
Insurance revenue
     9,077     6,875     39,975     27,073  
Loan and loan servicing fees
     8,001     6,089     26,384     18,531  
Financial advisory services
     7,265     4,964     22,758     19,277  
Wealth and investment advisors
     4,416     3,693     18,341     15,918  
Gain on sale of loans and loan servicing, net
     2,854     2,337     19,520     5,808  
Increase in cash surrender value of life insurance
     2,082     2,263     8,490     9,042  
Other
     2,402     1,129     8,423     4,936  
   
 
 
 
 
Total fee revenue
     53,828     44,433     213,909     162,195  
Gain on sale of securities, net
     2,715     13,934     18,574     23,377  
   
 
 
 
 
Total noninterest income
     56,543     58,367     232,483     185,572  
   
 
 
 
 
Noninterest expenses:
                          
Compensation and benefits
     53,722     46,343     206,381     171,042  
Occupancy
     7,470     7,444     30,698     26,606  
Furniture and equipment
     7,792     8,228     31,143     29,167  
Intangible amortization
     4,067     3,997     15,998     16,017  
Marketing
     2,058     3,038     11,508     10,522  
Professional services
     3,654     3,503     11,708     11,404  
Capital securities and preferred stock dividend
     3,701     3,355     12,787     14,388  
Acquistion costs
     1,349     –     1,497     1,965  
Other
     14,467     13,244     56,262     47,212  
   
 
 
 
 
Total noninterest expenses
     98,280     89,152     377,982     328,323  
   
 
 
 
 
Income before income taxes and cumulative effect of change in accounting method
     60,558     57,305     243,020     233,977  
Income taxes
     19,172     17,904     79,772     73,965  
   
 
 
 
 
Income before cumulative effect of change in accounting method
     41,386     39,401     163,248     160,012  
Cumulative effect of change in accounting method, net of taxes (a)
     –     –     –     (7,280 )
   
 
 
 
 
Net income
   $ 41,386   $ 39,401   $ 163,248   $ 152,732  
   
 
 
 
 
Net income per common share before cumulative effect of change in accounting method:
                          
Basic
   $ 0.90   $ 0.86   $ 3.58   $ 3.36  
Diluted
     0.89     0.85     3.52     3.31  
Net income per common share:
                          
Basic
   $ 0.90   $ 0.86   $ 3.58   $ 3.21  
Diluted
     0.89     0.85     3.52     3.16  

See Selected Financial Highlights for footnotes.

Webster Financial Corporation
Consolidated Statements of Income (unaudited)
  Three Months Ended
    December 31,     September 30,     June 30,     March 31,     December 31,
(In thousands, except per share data)
   2003     2003     2003     2003     2002
Interest income:                            
Loans and loans held for sale
 $ 119,773   $ 119,646   $ 118,965   $ 117,702   $ 120,386
Securities and short-term investments
   43,065     42,050     45,772     51,745     53,189
 
 
 
 
 
Total interest income
   162,838     161,696     164,737     169,447     173,575
 
 
 
 
 
Interest expense:                            
Deposits   26,319     26,824     28,750     29,418     33,375
Borrowings   29,224     33,943     35,368     35,353     36,110
 
 
 
 
 
Total interest expense
   55,543     60,767     64,118     64,771     69,485
 
 
 
 
 
                             
Net interest income
   107,295     100,929     100,619     104,676     104,090
Provision for loan losses
   5,000     10,000     5,000     5,000     16,000
 
 
 
 
 
Net interest income after provision for loan losses
   102,295     90,929     95,619     99,676     88,090
 
 
 
 
 
                             
Noninterest income:                            
Deposit service fees
   17,731     17,868     17,529     16,890     17,083
Insurance revenue
   9,077     9,954     9,980     10,964     6,875
Loan and loan servicing fees
   8,001     7,755     4,723     5,905     6,089
Financial advisory services
   7,265     4,833     5,229     5,431     4,964
Wealth and investment advisors
   4,416     4,826     4,521     4,578     3,693
Gain on sale of loans and loan servicing, net
   2,854     9,829     4,066     2,771     2,337
Increase in cash surrender value of life insurance
   2,082     2,150     2,143     2,115     2,263
Other   2,402     2,737     1,423     1,861     1,129
 
 
 
 
 
Total fee revenue
   53,828     59,952     49,614     50,515     44,433
Gain on sale of securities, net
   2,715     4,560     8,666     2,633     13,934
 
 
 
 
 
Total noninterest income
   56,543     64,512     58,280     53,148     58,367
                             
Noninterest expenses:
                            
Compensation and benefits
   53,722     51,592     50,506     50,561     46,343
Occupancy   7,470     7,457     7,672     8,099     7,444
Furniture and equipment
   7,792     8,255     7,575     7,521     8,228
Intangible amortization
   4,067     4,001     3,968     3,962     3,997
Marketing   2,058     2,729     3,236     3,485     3,038
Professional services
   3,654     2,582     2,994     2,478     3,503
Capital securities and preferred stock dividend
   3,701     2,990     2,958     3,138     3,355
Acquistion costs
   1,349     142     6     –     –
Other   14,467     13,949     14,284     13,562     13,244
 
 
 
 
 
Total noninterest expenses
   98,280     93,697     93,199     92,806     89,152
 
 
 
 
 
                             
Income before income taxes and cumulative effect of change in accounting method
   60,558     61,744     60,700     60,018     57,305
Income taxes
   19,172     20,429     20,090     20,081     17,904
 
 
 
 
 
Income before cumulative effect of change in accounting method
   41,386     41,315     40,610     39,937     39,401
                             
Cumulative effect of change in accounting method, net of taxes
   –     –     –     –     –
 
 
 
 
 
Net income
 $ 41,386   $ 41,315   $ 40,610   $ 39,937   $ 39,401
 
 
 
 
 
                             
Net income per common share before cumulative effect of change in accounting method:
                            
Basic
 $ 0.90   $ 0.91   $ 0.89   $ 0.88   $ 0.86
Diluted
   0.89     0.89     0.88     0.86     0.85
                             
Net income per common share:
                            
Basic
 $ 0.90   $ 0.91   $ 0.89   $ 0.88   $ 0.86
Diluted
   0.89     0.89     0.88     0.86     0.85

See Selected Financial Highlights for footnotes.


Webster Financial Corporation
Retail and Wholesale Interest-Rate Spreads (unaudited)
Three Months Ended,     December
2003		       September
2003		       June
2003		       March
2003		       December
2002		          
 
Interest-rate spread
                                                
Total interest-earning assets
     4.81 %     4.75 %     5.06 %     5.35 %     5.61 %        
Total interest-bearing liabilities
     1.68       1.80       2.00       2.09       2.26          
     
     
     
     
     
         
Interest-rate spread
     3.13 %     2.95 %     3.06 %     3.26 %     3.35 %        
Net interest margin
     3.18       2.99       3.10       3.30       3.39          
 
Retail interest-rate spread
                                                
Yield on loans and loans held for sale
     5.09 %     5.09 %     5.30 %     5.52 %     5.71 %        
Cost of deposits
     1.26       1.32       1.46       1.57       1.77          
     
     
     
     
     
         
Spread
     3.83 %     3.77 %     3.84 %     3.95 %     3.94 %        
     
     
     
     
     
         
 
Wholesale interest-rate spread
                                                
Yield on securities and short-term investments
     4.17 %     4.02 %     4.52 %     5.02 %     5.40 %        
Cost of borrowings
     2.41       2.55       2.88       2.90       3.07          
     
     
     
     
     
         
Spread
     1.76 %     1.47 %     1.64 %     2.12 %     2.33 %        
     
     
     
     
     
         

Consolidated Average Statements of Condition (unaudited)
 
Three Months Ended December 31,
   2003   2002
                      Fully tax-                       Fully tax-  
      Average               equivalent       Average               equivalent  
(Dollars in thousands)
     balance       Interest       yield/rate       balance       Interest       yield/rate  
 
Assets:
                                                
Interest-earning assets:
                                                
Loans
   $ 9,206,436     $ 117,983       5.08 %   $ 8,035,293     $ 115,746       5.72 %
Loans held for sale
     135,632       1,790       5.28       339,742       4,642       5.47  
Securities
     4,153,607       43,486       4.20 (e)     4,028,148       53,445       5.42 (e)
Short-term investments
     32,791       76       0.91       22,652       66       1.14  
   
   
   
   
   
   
 
Total interest-earning assets
     13,528,466       163,335       4.81       12,425,835       173,899       5.61  
           
                   
         
Noninterest-earning assets
     903,477                       922,021                  
   
                   
                 
Total assets
   $ 14,431,943                     $ 13,347,856                  
   
                   
                 
 
Liabilities and Shareholders’ Equity:
                                                
Interest-bearing liabilities:
                                                
Demand deposits
   $ 1,058,875     $ –       – %   $ 969,282     $ –       – %
Savings, NOW and money market deposit accounts
     4,471,260       9,115       0.81       3,827,364       12,796       1.33  
Time deposits
     2,755,184       17,204       2.48       2,702,745       20,579       3.02  
   
   
   
   
   
   
 
Total interest-bearing deposits
     8,285,319       26,319       1.26       7,499,391       33,375       1.77  
   
   
   
   
   
   
 
Federal Home Loan Bank advances
     2,299,456       19,641       3.34       2,377,163       25,163       4.14  
Fed funds and repurchase agreements
     2,139,619       5,587       1.02       2,111,537       8,157       1.51  
Other long-term debt
     317,509       3,996       5.03       126,000       2,790       8.86  
   
   
   
   
   
   
 
Total borrowings
     4,756,584       29,224       2.41       4,614,700       36,110       3.07  
   
   
   
   
   
   
 
Total interest-bearing liabilities
     13,041,903       55,543       1.68       12,114,091       69,485       2.26  
           
                   
         
Noninterest-bearing liabilities
     85,714                       71,552                  
   
                   
                 
Total liabilities
     13,127,617                       12,185,643                  
 
Capital securities and preferred stock of subsidiary corporation
     194,832                       139,378                  
 
Shareholders’ equity
     1,109,494                       1,022,835                  
   
                   
                 
Total liabilities and shareholders’ equity
   $ 14,431,943                     $ 13,347,856                  
   
                   
                 
              107,792                       104,414          
Less: tax-equivalent adjustment
             (497 )                     (324 )        
           
                   
         
 
Net interest income
           $ 107,295                     $ 104,090          
           
                   
         
 
Interest-rate spread
                     3.13 %                     3.35 %
                   
                   
 
Net interest margin
                     3.18 %                     3.39 %
                   
                   
 

See Selected Financial Highlights for footnotes.


Webster Financial Corporation
Consolidated Average Statements of Condition (unaudited)
 
Twelve Months Ended December 31,
   2003   2002
                      Fully tax-                       Fully tax-  
      Average               equivalent       Average               equivalent  
(Dollars in thousands)
     balance       Interest       yield/rate       balance       Interest       yield/rate  
 
Assets:
                                                
Interest-earning assets:
                                                
Loans
   $ 8,756,883     $ 460,677       5.26 %   $ 7,451,370     $ 454,673       6.10 %
Loans held for sale
     292,514       15,409       5.27       177,928       9,729       5.47  
Securities
     4,177,490       184,007       4.45 (e)     4,025,566       228,493       5.77 (e)
Short-term investments
     25,588       250       0.98       22,188       364       1.64  
   
   
   
   
   
   
 
Total interest-earning assets
     13,252,475       660,343       5.00       11,677,052       693,259       5.97  
           
                   
         
Noninterest-earning assets
     951,575                       867,310                  
   
                   
                 
Total assets
   $ 14,204,050                     $ 12,544,362                  
   
                   
                 
 
Liabilities and Shareholders’ Equity:
                                                
Interest-bearing liabilities:
                                                
Demand deposits
   $ 1,010,952     $ –       – %   $ 902,908     $ –       – %
Savings, NOW and money market deposit accounts
     4,282,536       41,519       0.97       3,551,731       49,521       1.39  
Time deposits
     2,677,863       69,792       2.61       2,810,220       96,641       3.44  
   
   
   
   
   
   
 
Total interest-bearing deposits
     7,971,351       111,311       1.40       7,264,859       146,162       2.01  
   
   
   
   
   
   
 
Federal Home Loan Bank advances
     2,395,814       88,845       3.71       2,337,688       102,789       4.40  
Fed funds and repurchase agreements
     2,218,799       26,108       1.18       1,555,552       26,195       1.68  
Other long-term debt
     316,736       18,935       5.98       126,000       11,160       8.86  
   
   
   
   
   
   
 
Total borrowings
     4,931,349       133,888       2.72       4,019,240       140,144       3.49  
   
   
   
   
   
   
 
Total interest-bearing liabilities
     12,902,700       245,199       1.90       11,284,099       286,306       2.54  
           
                   
         
Noninterest-bearing liabilities
     79,491                       76,914                  
   
                   
                 
Total liabilities
     12,982,191                       11,361,013                  
 
Capital securities and preferred stock of subsidiary corporation
     145,227                       149,666                  
 
Shareholders’ equity
     1,076,632                       1,033,683                  
   
                   
                 
Total liabilities and shareholders’ equity
   $ 14,204,050                     $ 12,544,362                  
   
                   
                 
              415,144                       406,953          
Less: tax-equivalent adjustment
             (1,625 )                     (1,225 )        
           
                   
         
 
Net interest income
           $ 413,519                     $ 405,728          
           
                   
         
 
Interest-rate spread
                     3.10 %                     3.43 %
                   
                   
 
Net interest margin
                     3.14 %                     3.50 %
                   
                   
 

See Selected Financial Highlights for footnotes.


Webster Financial Corporation
Asset Quality (unaudited)
                                       
  At or for the Three Months Ended,
 
                                       
    Dec. 31,       Sept. 30,       June 30,       March 31,       Dec. 31,  
( Dollars in thousands)   2003       2003       2003       2003       2002  
                                       
Nonperforming Assets
                                      
                                       
Nonperforming loans:
                                      
Commercial:
                                      
Commercial
 $ 14,266     $ 17,024     $ 27,881     $ 27,784     $ 16,001  
Specialized industry
   6,427       6,493       3,399       3,399       3,399  
Equipment financing
   5,583       8,241       8,722       8,960       6,586  
 
Total commercial
   26,276       31,758       40,002       40,143       25,986  
                                       
Commercial real estate
   4,281       1,940       4,920       6,910       9,109  
Residential
   6,128       7,087       6,596       5,712       7,263  
Consumer
   959       718       767       1,510       894  
 
                                       
Total nonperforming loans
   37,644       41,503       52,285       54,275       43,252  
 
                                       
Loans held for sale
   –       –       –       3,444       3,706  
 
                                       
Other real estate owned and repossessed assets:
                                      
Commercial
   4,296       4,019       4,224       3,967       2,568  
Residential
   942       541       520       234       477  
Consumer
   –       –       9       1       32  
 
                                       
Total other real estate owned and repossessed assets
   5,238       4,560       4,753       4,202       3,077  
 
                                       
Total nonperforming assets
 $ 42,882     $ 46,063     $ 57,038     $ 61,921     $ 50,035  
 
                                       
 
Summary of Classified Loans
                                      
                                       
Substandard:
                                      
Accruing
 $ 72,638     $ 69,216     $ 62,064     $ 74,398     $ 70,245  
Nonaccruing
   29,403       36,365       44,313       45,005       38,994  
 
Total substandard
   102,041       105,581       106,377       119,403       109,239  
                                       
Doubtful:
                                      
Nonaccruing
   6,791       3,792       6,617       7,279       3,743  
                                       
Loss
   –       –       –       –       –  
 
                                       
Total classified loans
 $ 108,832     $ 109,373     $ 112,994     $ 126,682     $ 112,982  
 
                                       
Classified as a percent of total loans
   1.2 %     1.2 %     1.3 %     1.5 %     1.4 %
 


Allowance for Loan Losses (unaudited)
 
  At or for the Three Months Ended,
 
 
    Dec. 31,       Sept. 30,       June 30,       March 31,       Dec. 31,  
( Dollars in thousands)   2003       2003       2003       2003       2002  
 
Allowance for Loan Losses
  
 
Beginning balance
 $ 117,707     $ 119,239     $ 118,596     $ 116,804     $ 116,118  
 
Allowance for purchased loans
   1,970       –       –       146       –  
Provision
   5,000       10,000       5,000       5,000       16,000  
Write-down of loans transferred to held for sale
   –       –       –       –       (12,432 )
 
Charge-offs:
  
 
Commercial:
                                      
Specialized industry
   558       3,870       327       –       2,569  
All other commercial
   2,949       9,361       4,232       3,601       1,031  
 
Total commercial
   3,507       13,231       4,559       3,601       3,600  
Residential
   330       39       160       78       84  
Commercial real estate
   –       –       –       –       –  
Consumer
   174       122       153       195       220  
 
Total charge-offs
   4,011       13,392       4,872       3,874       3,904  
Recoveries
   (1,008 )     (1,860 )     (515 )     (520 )     (1,022 )
 
Net loan charge-offs
   3,003       11,532       4,357       3,354       2,882  
 
 
Ending balance
 $ 121,674     $ 117,707     $ 119,239     $ 118,596     $ 116,804  
 
 
Asset Quality Ratios:
  
 
Allowance for loan losses / total loans
   1.32 %     1.29 %     1.37 %     1.39 %     1.48 %
Net charge-offs/ average loans (annualized)
   0.13       0.52       0.20       0.16       0.14  
Nonperforming loans / total loans
   0.41       0.46       0.60       0.64       0.55  
Nonperforming assets / total assets
   0.29       0.32       0.39       0.43       0.37  
Allowance for loan losses / nonperforming loans
   323.22       283.61       228.06       218.51       270.05