SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 16, 2003
WEBSTER FINANCIAL CORPORATION.
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(Exact name of registrant as specified in its charter)
DELAWARE 001-31486 06-1187536
----------------------------- ---------------------- -------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
WEBSTER PLAZA, WATERBURY, CONNECTICUT 06702
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(Address of principal executive offices)
Registrant's telephone number, including area code: (203) 578-2476
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
ITEM 9. REGULATION FD DISCLOSURE.
-------------------------
Information being provided under Item 12
----------------------------------------
On July 16, 2003, Webster Financial Corporation issued a press
release describing its results of operations for the fiscal quarter ending June
30, 2003. That press release is attached hereto. This information is being
furnished pursuant to Item 12 of Form 8-K and is being presented under Item 9 as
provided in the Commission's interim guidance regarding Form 8-K Item 11 and
Item 12 filing requirements (Release No. 34-47583).
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 hereunto duly authorized.
WEBSTER FINANCIAL CORPORATION
-----------------------------
(Registrant)
/s/ William J. Healy
---------------------------------------------
William J. Healy
Executive Vice President and
Chief Financial Officer
Date: July 16, 2003
MEDIA CONTACT: INVESTOR CONTACT:
Clark Finley 203-578-2429 Terry Mangan 203-578-2318
cfinley@westerbank.com tmangan@websterbank.com
WEBSTER REPORTS PER SHARE NET INCOME INCREASE IN SECOND
QUARTER AND FIRST HALF OF 2003
WATERBURY, Conn., July 16, 2003 - Webster Financial Corporation (NYSE: WBS), the
holding company for Webster Bank, today announced a seven percent increase in
net income per diluted share to $.88 for the second quarter, compared to $.82 in
the year-ago period. Net income totaled $40.6 million, compared to the same
amount in the year-ago period.
For the first six months of 2003, net income was $1.74 per diluted share,
compared to $1.47 in the year-ago period. Net income was $80.5 million, compared
to $72.9 million in the year-ago period. Excluding the cumulative effect of a
change in accounting method in the 2002 first quarter, net income for the first
six months of 2002 was $80.2 million or $1.62 per diluted share.
"We are pleased to report continued progress in executing Webster's strategic
plan for growth, including higher per share earnings," stated Webster chairman
and chief executive officer, James C. Smith. "Webster continues to grow
internally and through value-creating acquisitions, such as our recently
announced partnership with North American Bank and Trust Company. Strong loan
and deposit growth, coupled with the strength of our fee-based businesses, has
mitigated the impact of lower yields on net interest income. We are well
positioned to benefit from a gradually improving economy and the higher interest
rates which will likely result."
Revenues and Expenses
---------------------
Net interest income was $100.6 million in the second quarter, compared to $102.6
million in the year-ago period and $104.7 million in the first quarter. The
decline resulted from significantly lower interest rates during the second
quarter as reflected in Webster's net interest margin (annualized net interest
income as a percentage of average earning assets) of 3.10 percent compared to
3.61 percent in the year-ago period and 3.30 percent in the first quarter of
2003. On a linked-quarter basis, all of the decline in net interest income
resulted from a reduction of $6.0 million in interest income in the securities
portfolio. This reduction is attributable to $1.4 million of incremental
acceleration of premium amortization, significantly lower reinvestment yields on
cash flows and a modest reduction in the portfolio. Webster has redeployed cash
flows into investments with shorter maturities, at significantly reduced yields,
in anticipation of rising interest rates.
In the second quarter of 2003, total noninterest income, including securities
gains, increased by 47 percent to $58.3 million, up from $39.6 million in the
year-ago period. Securities gains totaled $8.7 million in the second quarter
compared to $1.1 million a year ago and $2.6 million in the first quarter. On a
linked-quarter basis, the $6.1 million increase in securities gains offset the
$6.0 million reduction of interest income in the securities portfolio.
Unrealized gains in the investment portfolio were $85.6 million at June 30,
2003.
Excluding securities gains and writedowns of mortgage servicing rights, total
fee revenue was $51.4 million in the second quarter, compared to $38.5 million a
year ago and $51.3 million in the first quarter. Recent acquisitions contributed
$5.3 million of fee-based revenue growth compared to one year ago while the
remaining $5.8 million came from core growth. Deposit service fees were up 17
percent year over year, due primarily to growth in accounts. Insurance revenues
were up 57 percent due to the Mathog & Moniello acquisition and increased
premiums. Loan and loan servicing fees, excluding $1.8 million of writedowns of
mortgage servicing rights, grew by 52% largely as a result of the Whitehall
acquisition. Net gains on sales of loans and loan servicing were up $2.8
million, or 228 percent, due to increased mortgage origination volume. Revenues
at Duff & Phelps and Wealth Management were up 20 percent and 11 percent,
respectively.
Total noninterest expenses for the second quarter increased to $93.2 million, up
from $78.8 million one year ago and flat with the first quarter. The increase in
total noninterest expenses over the prior year's period includes recent
acquisitions that account for $4.7 million and the balance reflects strategic
investments in core businesses. Webster's strategic investments include, de novo
branch expansion activity, the High Performance Checking initiative, the
transformation of the Wealth Management business to a financial planning and
advice-driven model and the expansion of the mortgage origination business.
Balance Sheet Growth
--------------------
At June 30, 2003, total assets increased to $14.5 billion, up 16 percent from
$12.5 billion one year ago and an increase of 1 percent from the end of the 2003
first quarter. Total loans of $8.7 billion at June 30, 2003 increased 19 percent
from a year ago and 2 percent from March 31, 2003. Loan growth over the past
year is primarily attributable to growth in the equipment finance, commercial
real estate and home equity portfolios, as well as the acquisition of the
Whitehall asset-based lending business in August of 2002.
"The second quarter demonstrates the success of our consumer and commercial
business development efforts," stated Webster president and chief operating
officer, William T. Bromage. "Webster's strategic initiatives for growth
continue to drive loan and deposit growth while improving the mix."
At the end of the second quarter, commercial loans, including commercial real
estate, increased to $3.2 billion, up 32 percent from $2.4 billion a year ago
and 5 percent from $3.0 billion at the end of the first quarter. Consumer loans
totaled $2.0 billion, compared to $1.4 billion one year ago and $1.8 billion at
March 31, 2003, with growth over the past year led by Webster's home equity
product offering. Commercial and consumer loans were 59 percent of total loans
at June 30, 2003, compared to 52 percent of total loans one year ago.
Webster's mortgage banking business generated $1.2 billion in originations in
the second quarter, compared to $0.5 billion a year ago. For the first six
months of 2003, mortgage originations totaled $2.1 billion compared to $0.9
billion in the year-ago period. In the first half of 2003, 72 percent of
originations came from national wholesale mortgage banking operations, while 28
percent came from Webster's retail channel. All of Webster's national wholesale
loan originations are sold into the secondary markets. Net gains on sales of
loans and loan servicing totaled $4.1 million in the second quarter of 2003,
which represented an increase of $1.3 million on a linked-quarter basis. This
increase in gains acted as a natural hedge against a linked-quarter increase of
$1.0 million in writedowns of mortgage servicing rights, which totaled $1.8
million in the second quarter of 2003.
Total deposits were $8.1 billion at June 30, 2003, an increase of 10 percent
from $7.3 billion a year ago and an increase of 4 percent from $7.8 billion at
March 31, 2003. Core deposits at June 30, 2003 represented 68 percent of total
deposits, up from 62 percent a year ago. Webster's growth in deposits was driven
in part by its High Performance Checking campaign initiated in August of 2002
and the continuing success of its de novo branches in Fairfield County,
Connecticut.
Book value per common share of $24.09 at June 30, 2003 increased by 9 percent
from $22.05 one year ago and increased by 3 percent from $23.47 at March 31,
2003. Tangible book value per share of $17.59 at June 30, 2003 increased by 8
percent from $16.31 one year ago and by 4 percent from $16.92 at March 31, 2003.
Asset Quality
-------------
Nonperforming assets totaled $57.0 million or 0.39 percent of total assets at
June 30, 2003, compared to $51.6 million or 0.41 percent a year ago and $61.9
million or 0.43 percent at March 31, 2003. Classified loans were 1.3 percent of
total loans at June 30, 2003 compared to 2.1 percent one year ago and 1.5
percent at March 31, 2003.
"Webster's credit quality demonstrates the impact of disciplined underwriting
and focused portfolio management during this period of growth," stated Webster
chief financial officer, William J. Healy. "Credit quality continues to be among
our highest priorities."
The allowance for loan losses totaled $119.2 million at June 30, 2003 compared
to $99.7 million a year ago and $118.6 million at March 31, 2003. The allowance
represented 1.37 percent of total loans at June 30, 2003 compared to 1.36
percent a year ago and 1.39 percent at March 31, 2003. The ratio of the
allowance to nonperforming loans at June 30, 2003 increased to 228 percent,
compared to 206 percent a year ago and 219 percent at March 31, 2003.
Webster's net loan charge-offs in the second quarter of 2003 were $4.4 million,
compared to $3.2 million in the year-ago period. The annualized net charge-off
ratio was 20 basis points in the 2003 second quarter, compared to 18 basis
points in the year-ago period.
Strategic Actions
-----------------
In April, Webster announced an 11 percent increase in its regular quarterly cash
dividend to $.21 per common share from $.19 per common share previously. On an
annual basis, Webster reported that its dividend rate increased from $.76 to
$.84 per common share. The announcement marked the 63rd consecutive quarterly
dividend since Webster first paid a dividend in 1987 and the 13th time Webster's
dividend had been increased.
Webster also announced in April the appointment of Zeynep Fredrick as Executive
Vice President, Information Technology and Operations. Prior to joining Webster,
Ms. Fredrick held positions of chief information officer and senior vice
president of technology for AllFirst Bank of Baltimore, Maryland and senior vice
president of IT Operations and the Mergers, Acquisitions and Consolidations
Group for First National Bank in Maryland.
In June, Webster announced that it has reached a definitive agreement for the
acquisition of North American Bank and Trust Company (Nasdaq: NAMB), in a
combination cash and stock transaction valued at approximately $30 million, or
$11.25 per common share of North American stock. The acquisition is expected to
increase access and convenience for both Webster and North American Bank
customers and to contribute positively to Webster's earnings per share in the
first year. Webster expects the transaction to close in the fourth quarter of
2003.
Webster held its inaugural Investor Day presentation to analysts and portfolio
managers on June 11th, an event where Webster senior officers delivered
presentations on the histories and strategic plans for Webster's various
business lines. The audio webcast and presentation slides are available at the
Investor Relations section of Webster's website, www.wbst.com.
***
Webster Financial Corporation is the holding company for Webster Bank and
Webster Insurance. With $14 billion in assets, Webster Bank provides business
and consumer banking, mortgage, insurance, trust and investment services through
109 banking offices, 219 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, Whitehall Business Credit Corporation, 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 today's announcement will be held today, Wednesday,
July 16, at 1:00 p.m. Eastern Daylight Time and may be heard through Webster's
investor relations website at www.wbst.com, or in listen-only mode by calling
1-800-299-7635 (Access Code: 35765435). 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.
WEBSTER FINANCIAL CORPORATION
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SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
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At or for the Three At or for the Six
Months Ended June 30, Months Ended June 30,
(In thousands, except per share data) 2003 2002 (a) 2003 2002 (a)
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NET INCOME AND PERFORMANCE RATIOS (ANNUALIZED):
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Net income $ 40,610 $40,572 $ 80,547 $72,907
Net income per diluted common share 0.88 0.82 1.74 1.47
Return on average shareholders' equity 15.01% 15.54% 15.10% 14.18%
Return on average assets 1.15 1.32 1.16 1.21
NET INCOME AND PERFORMANCE RATIOS BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING METHOD (ANNUALIZED):
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Net income 40,610 40,572 80,547 72,907
Cumulative effect of change in accounting method (b) -- -- -- 7,280
-------- ------- -------- -------
Net income before cumulative effect of change in accounting method $ 40,610 $40,572 $ 80,547 $80,187
Net income per diluted common share 0.88 0.82 1.74 1.62
Return on average shareholders' equity 15.01% 15.54% 15.10% 15.60%
Return on average assets 1.15 1.32 1.16 1.33
Noninterest income as a percentage of total revenue 36.68 27.86 35.18 28.95
Efficiency ratio (c) 58.65 55.45 58.73 55.34
CASH INCOME AND PERFORMANCE RATIOS (ANNUALIZED) (d):
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Net income $ 40,610 $40,572 $ 80,547 $72,907
Cumulative effect of change in accounting method (b) -- -- -- 7,280
Tax-effected intangible amortization 2,579 2,603 5,155 5,227
-------- ------- -------- -------
Cash income 43,189 43,175 85,702 85,414
Cash income per diluted common share 0.93 0.87 1.85 1.72
Cash return on average shareholders' equity 15.96% 16.54% 16.07% 16.62%
Cash return on average assets 1.23 1.41 1.23 1.41
ASSET QUALITY:
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Allowance for loan losses $119,239 $99,698 $119,239 $99,698
Nonperforming assets 57,038 51,561 57,038 51,561
Allowance for loan losses / total loans 1.37% 1.36% 1.37% 1.36%
Net charge-offs/ average loans (annualized) 0.20 0.18 0.18 0.16
Nonperforming loans / total loans 0.60 0.66 0.60 0.66
Nonperforming assets / total assets 0.39 0.41 0.39 0.41
Allowance for loan losses / nonperforming loans 228.06 205.72 228.06 205.72
OTHER RATIOS (ANNUALIZED):
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Shareholders' equity / total assets 7.61% 8.55% 7.61% 8.55%
Interest-rate spread 3.06 3.52 3.16 3.47
Net interest margin 3.10 3.61 3.20 3.56
SHARE RELATED:
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Book value per common share $ 24.09 $ 22.05 $ 24.09 $ 22.05
Tangible book value per common share 17.59 16.31 17.59 16.31
Common stock closing price 37.80 38.24 37.80 38.24
Dividends declared per common share 0.21 0.19 0.40 0.36
Common shares issued and outstanding 45,640 48,427 45,640 48,427
Basic shares (average) 45,446 48,631 45,453 48,717
Diluted shares (average) 46,242 49,585 46,217 49,584
Footnotes:
(a) Adjusted to reflect the adoption of SFAS No. 123, "Accounting for
Stock-Based Compensation", SFAS No. 142, " Goodwill and Other Intangible
Assets" and SFAS No. 147, "Acquisitions of Certain Financial Institutions"
during 2002.
(b) 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.
(c) Noninterest expense as a percentage of net interest income plus noninterest
income.
(d) Net income excluding tax-effected intangible amortization and cumulative
effect of change in accounting method.
(e) For purposes of this computation, unrealized gains (losses) are excluded
from the average balance for rate calculations.
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CONSOLIDATED STATEMENTS OF CONDITION (UNAUDITED)
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June 30, March 31, June 30,
(Dollars in thousands) 2003 2003 2002 (a)
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ASSETS:
Cash and due from depository institutions $ 254,645 $ 238,370 $ 244,257
Short-term investments 20,671 13,696 55,539
Securities:
Trading, at fair value 3,893 10,924 163
Available for sale, at fair value 4,395,400 4,497,686 4,155,071
----------- ----------- -----------
TOTAL SECURITIES 4,399,293 4,508,610 4,155,234
Loans held for sale 321,055 321,637 109,795
Loans:
Residential mortgages 3,541,922 3,657,707 3,543,947
Commercial 2,010,109 1,947,167 1,392,344
Commercial real estate 1,144,429 1,062,891 992,160
Consumer 2,013,486 1,841,526 1,394,497
----------- ----------- -----------
TOTAL LOANS
8,709,946 8,509,291 7,322,948
Allowance for loan losses (119,239) (118,596) (99,698)
----------- ----------- -----------
LOANS, NET
8,590,707 8,390,695 7,223,250
Accrued interest receivable 54,034 58,137 56,543
Premises and equipment, net 85,062 82,525 81,802
Goodwill and intangible assets 316,989 320,942 301,912
Cash surrender value of life insurance 176,324 174,181 167,492
Prepaid expenses and other assets 233,792 246,866 95,106
----------- ----------- -----------
TOTAL ASSETS $14,452,572 $14,355,659 $12,490,930
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
Checking and NOW $ 2,099,725 $ 1,965,636 $ 1,793,480
Savings and MMDAs 3,365,781 3,200,604 2,743,220
Certificates of deposit 2,526,429 2,543,060 2,696,163
----------- ----------- -----------
TOTAL RETAIL DEPOSITS 7,991,935 7,709,300 7,232,863
Treasury deposits 93,767 74,509 104,726
----------- ----------- -----------
TOTAL DEPOSITS 8,085,702 7,783,809 7,337,589
Federal Home Loan Bank advances 2,185,830 2,885,098 2,196,984
Other borrowings 2,480,666 2,030,553 1,534,665
Senior notes and subordinated debt 326,000 326,000 126,000
Accrued expenses and other liabilities 155,233 128,921 83,392
----------- ----------- -----------
TOTAL LIABILITIES 13,233,431 13,154,381 11,278,630
Corporation-obligated mandatorily redeemable
capital securities of subsidiary trusts 110,255 121,255 135,000
Preferred stock of subsidiary corporation 9,577 9,577 9,577
SHAREHOLDERS' EQUITY 1,099,309 1,070,446 1,067,723
----------- ----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $14,452,572 $14,355,659 $12,490,930
=========== =========== ===========
See Selected Financial Highlights for footnotes.
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CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
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Three Months Ended Six Months Ended
June 30, June 30,
(In thousands, except per share data) 2003 2002 (a) 2003 2002 (a)
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INTEREST INCOME:
Loans and loans held for sale $118,965 $114,027 $236,667 $225,522
Securities and short-term investments 45,772 59,340 97,517 118,938
-------- -------- -------- --------
TOTAL INTEREST INCOME 164,737 173,367 334,184 344,460
-------- -------- -------- --------
INTEREST EXPENSE:
Deposits 28,750 37,005 58,168 76,618
Borrowings 35,368 33,797 70,721 68,794
-------- -------- -------- --------
TOTAL INTEREST EXPENSE 64,118 70,802 128,889 145,412
-------- -------- -------- --------
NET INTEREST INCOME 100,619 102,565 205,295 199,048
Provision for loan losses 5,000 4,000 10,000 8,000
-------- -------- -------- --------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 95,619 98,565 195,295 191,048
-------- -------- -------- --------
NONINTEREST INCOME:
Deposit service fees 17,529 14,924 34,419 28,730
Insurance revenue 9,980 6,376 20,944 13,812
Loan and loan servicing fees 4,723 4,211 10,628 8,096
Financial advisory services 5,229 4,357 10,660 8,316
Wealth and investment services 4,521 4,068 9,099 8,455
Gain on sale of loans and loan servicing, net 4,066 1,239 6,837 1,632
Increase in cash surrender value of life insurance 2,143 2,267 4,258 4,469
Other 1,423 1,047 3,284 3,057
-------- -------- -------- --------
TOTAL FEE REVENUE 49,614 38,489 100,129 76,567
Gain on sale of securities, net 8,666 1,126 11,299 4,531
-------- -------- -------- --------
TOTAL NONINTEREST INCOME 58,280 39,615 111,428 81,098
-------- -------- -------- --------
NONINTEREST EXPENSES:
Compensation and benefits 50,506 41,248 101,067 81,396
Occupancy 7,672 6,212 15,771 12,497
Furniture and equipment 7,575 6,812 15,096 13,380
Intangible amortization 3,968 4,004 7,930 8,042
Marketing 3,236 2,438 6,721 4,862
Professional services 2,994 2,820 5,472 5,147
Capital securities and preferred stock dividend 2,958 3,753 6,096 7,585
Other 14,290 11,556 27,852 22,133
-------- -------- -------- --------
TOTAL NONINTEREST EXPENSES 93,199 78,843 186,005 155,042
-------- -------- -------- --------
Income before income taxes and cumulative effect of change
in accounting method 60,700 59,337 120,718 117,104
Income taxes 20,090 18,765 40,171 36,917
-------- -------- -------- --------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING METHOD 40,610 40,572 80,547 80,187
Cumulative effect of change in accounting method, net of taxes -- -- -- (7,280)
-------- -------- -------- --------
NET INCOME $ 40,610 $ 40,572 $ 80,547 $ 72,907
======== ======== ======== ========
NET INCOME PER COMMON SHARE BEFORE CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING METHOD:
Basic $ 0.89 $ 0.83 $ 1.77 $ 1.65
Diluted 0.88 0.82 1.74 1.62
NET INCOME PER COMMON SHARE:
Basic $ 0.89 $ 0.83 $ 1.77 $ 1.50
Diluted 0.88 0.82 1.74 1.47
See Selected Financial Highlights for footnotes.
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CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
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Three Months Ended
June 30, March 31, December 31, September 30, June 30,
(In thousands, except per share data) 2003 2003 2002 2002 2002 (a)
-------------------------------------------------------------------------------------------------------------------
INTEREST INCOME:
Loans and loans held for sale $118,965 $117,702 $120,386 $118,492 $114,027
Securities and short-term investments 45,772 51,745 53,189 55,507 59,340
-------- -------- -------- -------- --------
TOTAL INTEREST INCOME 164,737 169,447 173,575 173,999 173,367
-------- -------- -------- -------- --------
INTEREST EXPENSE:
Deposits 28,750 29,418 33,375 36,169 37,005
Borrowings 35,368 35,353 36,110 35,240 33,797
-------- -------- -------- -------- --------
TOTAL INTEREST EXPENSE 64,118 64,771 69,485 71,409 70,802
-------- -------- -------- -------- --------
NET INTEREST INCOME 100,619 104,676 104,090 102,590 102,565
Provision for loan losses 5,000 5,000 16,000 5,000 4,000
-------- -------- -------- -------- --------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 95,619 99,676 88,090 97,590 98,565
-------- -------- -------- -------- --------
NONINTEREST INCOME:
Deposit service fees 17,529 16,890 17,083 15,797 14,924
Insurance revenue 9,980 10,964 6,875 6,386 6,376
Loan and loan servicing fees 4,723 5,905 6,089 4,346 4,211
Financial advisory services 5,229 5,431 4,964 5,997 4,357
Wealth and investment services 4,521 4,578 3,693 3,770 4,068
Gain on sale of loans and loan servicing, net 4,066 2,771 2,337 1,839 1,239
Increase in cash surrender value of life insurance 2,143 2,115 2,263 2,310 2,267
Other 1,423 1,861 1,129 750 1,047
-------- -------- -------- -------- --------
TOTAL FEE REVENUE 49,614 50,515 44,433 41,195 38,489
Gain on sale of securities, net 8,666 2,633 13,934 4,912 1,126
-------- -------- -------- -------- --------
TOTAL NONINTEREST INCOME 58,280 53,148 58,367 46,107 39,615
NONINTEREST EXPENSES:
Compensation and benefits 50,506 50,561 46,343 43,303 41,248
Occupancy 7,672 8,099 7,444 6,665 6,212
Furniture and equipment 7,575 7,521 8,228 7,559 6,812
Intangible amortization 3,968 3,962 3,997 3,978 4,004
Marketing 3,236 3,485 3,038 2,622 2,438
Professional services 2,994 2,478 3,503 2,754 2,820
Capital securities and preferred stock dividend 2,958 3,138 3,355 3,449 3,753
Other 14,290 13,562 13,244 13,799 11,556
-------- -------- -------- -------- --------
TOTAL NONINTEREST EXPENSES 93,199 92,806 89,152 84,129 78,843
-------- -------- -------- -------- --------
Income before income taxes and cumulative effect of
change in accounting method 60,700 60,018 57,305 59,568 59,337
Income taxes 20,090 20,081 17,904 19,144 18,765
-------- -------- -------- -------- --------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING METHOD 40,610 39,937 39,401 40,424 40,572
Cumulative effect of change in accounting method,
net of taxes (b) -- -- -- -- --
-------- -------- -------- -------- --------
NET INCOME $ 40,610 $ 39,937 $ 39,401 $ 40,424 $ 40,572
======== ======== ======== ======== ========
NET INCOME PER COMMON SHARE BEFORE CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING METHOD:
Basic $ 0.89 $ 0.88 $ 0.86 $ 0.85 $ 0.83
Diluted 0.88 0.86 0.85 0.84 0.82
NET INCOME PER COMMON SHARE:
Basic $ 0.89 $ 0.88 $ 0.86 $ 0.85 $ 0.83
Diluted 0.88 0.86 0.85 0.84 0.82
See Selected Financial Highlights for footnotes.
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RETAIL AND WHOLESALE INTEREST-RATE SPREADS (UNAUDITED)
--------------------------------------------------------------------------------------------------
Three Months Ended, June March December September June
2003 2003 2002 2002 2002
--------------------------------------------------------------------------------------------------
INTEREST-RATE SPREAD
--------------------
Total interest-earning assets 5.06% 5.35% 5.61% 5.93% 6.09%
Total interest-bearing liabilities 2.00 2.09 2.26 2.48 2.57
---- ---- ---- ---- ----
Interest-rate spread 3.06% 3.26% 3.35% 3.45% 3.52%
Net interest margin 3.10 3.30 3.39 3.52 3.61
RETAIL INTEREST-RATE SPREAD
---------------------------
Yield on loans 5.30% 5.52% 5.71% 6.01% 6.23%
Cost of deposits 1.46 1.57 1.77 1.96 2.06
---- ---- ---- ---- ----
Spread 3.84% 3.95% 3.94% 4.05% 4.17%
==== ==== ==== ==== ====
WHOLESALE INTEREST-RATE SPREAD
------------------------------
Yield on securities 4.52% 5.02% 5.40% 5.77% 5.84%
Cost of borrowings 2.88 2.90 3.07 3.40 3.56
---- ---- ---- ---- ----
Spread 1.64% 2.12% 2.33% 2.37% 2.28%
==== ==== ==== ==== ====
-----------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED AVERAGE STATEMENTS OF CONDITION (UNAUDITED)
-----------------------------------------------------------------------------------------------------------------------------------
Three Months Ended June 30, 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
Fully tax- Fully tax-
Average equivalent Average equivalent
(Dollars in thousands) balance Interest yield/rate balance (a) Interest yield/rate
-----------------------------------------------------------------------------------------------------------------------------------
ASSETS:
INTEREST-EARNING ASSETS:
Loans and loans held for sale $ 8,951,987 $118,965 5.30% $ 7,300,691 $114,027 6.23%
Securities and short-term investments 4,170,243 46,142 4.52(e) 4,135,496 59,637 5.84(e)
----------- -------- ---- ----------- -------- ----
TOTAL INTEREST-EARNING ASSETS 13,122,230 165,107 5.06 11,436,187 173,664 6.09
Noninterest-earning assets 949,376 -------- 816,046 --------
----------- -----------
TOTAL ASSETS $14,071,606 $12,252,233
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
INTEREST-BEARING LIABILITIES:
Interest-bearing deposits $ 6,925,879 $ 28,750 1.67% $ 6,341,251 $ 37,005 2.34%
Noninterest-bearing deposits 989,619 -- -- 878,727 -- --
Federal Home Loan Bank advances 2,386,590 23,286 3.86 2,270,242 24,991 4.35
Repurchase agreements and other borrowings 2,153,916 6,783 1.25 1,363,189 6,016 1.75
Senior notes and subordinated debt 326,000 5,299 6.50 126,000 2,790 8.86
----------- -------- ---- ----------- -------- ----
TOTAL INTEREST-BEARING LIABILITIES 12,782,004 64,118 2.00 10,979,409 70,802 2.57
Noninterest-bearing liabilities 83,574 -------- 72,719 --------
----------- -----------
TOTAL LIABILITIES 12,865,578 11,052,128
Capital securities and preferred stock of
subsidiary corporation 123,475 155,950
Shareholders' equity 1,082,553 1,044,155
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $14,071,606 $12,252,233
=========== ===========
100,989 102,862
LESS: TAX-EQUIVALENT ADJUSTMENT (370) (297)
-------- --------
NET INTEREST INCOME $100,619 $102,565
======== ========
INTEREST-RATE SPREAD 3.06% 3.52%
==== ====
NET INTEREST MARGIN 3.10% 3.61%
==== ====
See Selected Financial Highlights for footnotes.
------------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED AVERAGE STATEMENTS OF CONDITION (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Six Months Ended June 30, 2003 2002
------------------------------------------------------------------------------------------------------------------------------------
Fully tax- Fully tax-
Average equivalent Average equivalent
(Dollars in thousands) balance Interest yield/rate balance (a) Interest yield/rate
------------------------------------------------------------------------------------------------------------------------------------
ASSETS:
INTEREST-EARNING ASSETS:
Loans and loans held for sale $ 8,753,421 $ 236,667 5.41 % $ 7,149,701 $ 225,522 6.31 %
Securities and short-term investments 4,202,817 98,231 4.77 (e) 4,090,213 119,539 5.91 (e)
------------ --------- ---- ------------ --------- ----
TOTAL INTEREST-EARNING ASSETS 12,956,238 334,898 5.20 11,239,914 345,061 6.16
--------- ---------
Noninterest-earning assets 942,439 845,076
------------ ------------
TOTAL ASSETS $ 13,898,677 $ 12,084,990
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
INTEREST-BEARING LIABILITIES:
Interest-bearing deposits $ 6,786,871 58,168 1.73 % $ 6,263,392 $ 76,618 2.47 %
Noninterest-bearing deposits 970,530 -- -- 858,925 -- --
Federal Home Loan Bank advances 2,483,365 47,077 3.77 2,330,473 52,278 4.46
Repurchase agreements and other borrowings 2,077,451 13,035 1.25 1,240,582 10,936 1.75
Senior notes and subordinated debt 311,635 10,609 6.81 126,000 5,580 8.86
------------ --------- ---- ------------ --------- ----
TOTAL INTEREST-BEARING LIABILITIES 12,629,852 128,889 2.04 10,819,372 145,412 2.69
--------- ---------
Noninterest-bearing liabilities 75,137 79,751
------------ ------------
TOTAL LIABILITIES 12,704,989 10,899,123
Capital securities and preferred stock of
subsidiary corporation 127,133 157,754
Shareholders' equity 1,066,555 1,028,113
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 13,898,677 $ 12,084,990
============ ============
206,009 199,649
LESS: TAX-EQUIVALENT ADJUSTMENT (714) (601)
--------- ---------
NET INTEREST INCOME $ 205,295 $ 199,048
========= =========
INTEREST-RATE SPREAD 3.16 % 3.47 %
==== ====
NET INTEREST MARGIN 3.20 % 3.56 %
==== ====
See Selected Financial Highlights for footnotes.
-------------------------------------------------------------------------------------------------------------------
ASSET QUALITY (UNAUDITED)
-------------------------------------------------------------------------------------------------------------------
AT OR FOR THE THREE MONTHS ENDED,
------------------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
(Dollars in thousands) 2003 2003 2002 2002 2002
-------------------------------------------------------------------------------------------------------------------
NONPERFORMING ASSETS
--------------------
NONPERFORMING LOANS:
Commercial:
Commercial $ 27,881 $ 27,784 $ 16,001 $ 19,000 $ 21,626
Specialized industry 3,399 3,399 3,399 27,231 3,399
Equipment financing 8,722 8,960 6,586 5,559 6,531
------------------------------------------------------------
Total commercial 40,002 40,143 25,986 51,790 31,556
Commercial real estate 4,920 6,910 9,109 10,124 9,506
Residential 6,596 5,712 7,263 5,521 5,991
Consumer 767 1,510 894 1,062 1,409
------------------------------------------------------------
Total nonperforming loans 52,285 54,275 43,252 68,497 48,462
------------------------------------------------------------
LOANS HELD FOR SALE -- 3,444 3,706 -- --
------------------------------------------------------------
OTHER REAL ESTATE OWNED AND REPOSSESSED ASSETS:
Commercial 4,224 3,967 2,568 3,007 2,294
Residential 520 234 477 686 635
Consumer 9 1 32 12 170
------------------------------------------------------------
Total other real estate owned and repossessed assets 4,753 4,202 3,077 3,705 3,099
------------------------------------------------------------
TOTAL NONPERFORMING ASSETS $ 57,038 $ 61,921 $ 50,035 $ 72,202 $ 51,561
============================================================
-------------------------------------------------------------------------------------------------------------------
SUMMARY OF CLASSIFIED LOANS
---------------------------
Substandard:
Accruing $ 62,064 $ 74,398 $ 70,245 $102,436 $106,281
Nonaccruing 44,313 45,005 38,994 62,170 43,634
-----------------------------------------------------------
Total substandard 106,377 119,403 109,239 164,606 149,915
Doubtful:
Accruing -- -- -- 3 6
Nonaccruing 6,617 7,279 3,743 3,724 3,808
------------------------------------------------------------
Total doubtful 6,617 7,279 3,743 3,727 3,814
Loss -- -- -- -- --
------------------------------------------------------------
Total classified loans $112,994 $126,682 $112,982 $168,333 $153,729
============================================================
Classified as a percent of loans 1.3% 1.5% 1.4% 2.1% 2.1
------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
ALLOWANCE FOR LOAN LOSSES (UNAUDITED)
-----------------------------------------------------------------------------------------------------------------------------
AT OR FOR THE THREE MONTHS ENDED,
-----------------------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
(Dollars in thousands) 2003 2003 2002 2002 2002
-----------------------------------------------------------------------------------------------------------------------------
ALLOWANCE FOR LOAN LOSSES
-------------------------
BEGINNING BALANCE $ 118,596 $ 116,804 $ 116,118 $ 99,698 $ 98,930
Allowance for purchased loans -- 146 -- 16,338 --
Provision 5,000 5,000 16,000 5,000 4,000
Write-down of loans transferred to held for sale -- -- (12,432) -- --
Charge-offs:
Residential 160 78 84 249 187
Commercial:
Specialized industry 327 -- 2,569 1,892 854
All other commercial 4,232 3,601 1,031 3,029 2,498
-----------------------------------------------------------------
Total commercial 4,559 3,601 3,600 4,921 3,352
Commercial real estate -- -- -- -- --
Consumer 153 195 220 246 250
-----------------------------------------------------------------
Total charge-offs 4,872 3,874 3,904 5,416 3,789
Recoveries (515) (520) (1,022) (498) (557)
-----------------------------------------------------------------
Net loan charge-offs 4,357 3,354 2,882 4,918 3,232
-----------------------------------------------------------------
ENDING BALANCE $ 119,239 $ 118,596 $ 116,804 $ 116,118 $ 99,698
=================================================================
ASSET QUALITY RATIOS:
---------------------
Allowance for loan losses / total loans 1.37 % 1.39 % 1.48 % 1.45 % 1.36 %
Net charge-offs/ average loans (annualized) 0.20 0.16 0.14 0.26 0.18
Nonperforming loans / total loans 0.60 0.64 0.55 0.86 0.66
Nonperforming assets / total assets 0.39 0.43 0.37 0.54 0.41
Allowance for loan losses / nonperforming loans 228.06 218.51 270.05 169.52 205.72