Financial storm buffets Webster

FOR ALL OF 2008, Webster Financial posted losses of $321.83M, compared with its 2007 full-year profit of $96.77M. Most of those losses occurred in the fourth quarter. /
FOR ALL OF 2008, Webster Financial posted losses of $321.83M, compared with its 2007 full-year profit of $96.77M. Most of those losses occurred in the fourth quarter. /

WATERBURY, Conn. – Webster Financial Corp. (NYSE: WBS), the parent of Webster Bank N.A., today reported a preliminary fourth-quarter loss of $300.5 million compared with its year-ago loss of $8.70 million.

The performance pushed Webster’s 2008 losses to $321.83 million, compared with the full-year profit of $96.77 million the company posted for 2007.

For the fourth quarter, Webster recorded revenue of $252.34 million, a decline of 14.91 percent from the year-ago period’s $296.57 million. Losses per diluted share in the quarter just ended amounted to $5.91.

The quarterly results included a $188.87 million non-cash goodwill impairment charge, a $129.59 million write-down of certain investments to fair value and a $100 million loan-loss provision. The goodwill impairment will not affect Webster’s liquidity and capital positions, the company said.

- Advertisement -

“Webster’s exceptionally strong capital position enables us to act purposefully to address the current and future challenges faced by the financial services industry,” said James C. Smith, Webster chairman and chief executive officer. “We are committed and well prepared to meet our customers’ needs and to contribute to the eventual economic recovery in our region.”
The bank – which last month received a $400 million investment through the U.S. Treasury Department’s Capital Purchase Program (READ MORE) – continued to move to protect itself against deteriorating loan quality, setting aside $100 million in anticipation of bad loans. That provision is more than double the $45.5 million provision in the third quarter.
About $30 million of the fourth-quarter provision was for residential development loans, and another $25 million was related to the liquidation of the home equity portfolio, Webster said.
Meanwhile, the amount of total nonperforming assets continued its upward climb, rising to $263.19 million at year’s end – an increase of $13.51 million, or 5.41 percent, from $249.68 million at Sept. 30. The bank’s nonperforming assets stood at $121.07 million at the start of 2008.
Webster said the nonperforming assets were 2.15 percent of total loans and other real estate owned, up from 1.94 percent at Sept. 30.
The bank’s net interest margin declined slightly to 3.20 percent in the four quarter from 3.32 percent in the preceding quarter and 3.26 percent in the year-ago period.
Webster today announced that it was cutting its quarterly dividend by 1 cent, to 29 cents per common share. “Given this extended period of unprecedented economic uncertainty, the [board of directors] has chosen to reduce the dividend to preserve capital,” Smith said.
Last month, Smith and Gerald P. Plush, the company’s chief financial officer, both requested that they be paid no annual incentive bonus this year. (READ MORE) They cited the severe market downturn, the decline in the bank’s net income and a depressed stock price.

By noon, the company’s stock price was down more than 18 percent for the day, to $4.35 per share, on today’s earnings announcement.
The results were characterized as preliminary because the company is conducting a review of its goodwill impairment in its retail banking segment that could change the overall impairment charge. Webster said it would finish the analysis in the “near future.”

Also today, Webster – the eighth-largest commercial bank in Rhode Island in terms of deposits – announced plans to trim another 200 jobs, in addition to its previously announced payroll reductions. A Webster spokesperson said “all but a handful” of the new job cuts will take place in Connecticut.

Webster Financial Corp. (NYSE: WBS) is the holding company for Webster Bank N.A., a financial services company with more than 180 branches including 10 branches in Rhode Island. Additional information is available at www.WebsterOnline.com.

Information about the federal government’s financial stabilization efforts is available at EconomicRecovery.gov.

No posts to display