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Webster Financial Corp., parent of Webster Bank, said its third-quarter earnings report, due to be issued next month, will include setting aside $10.5 million in provisions and taking $12.5 million in write-downs because of problem construction loans outside New England. That includes loans in Florida and Arizona, states hit hard by the subprime mortgage crisis.
James C. Smith, Webster's chairman and chief executive officer, and Jerry Plush, senior executive vice president and chief financial officer, revealed the branch and loan information to analysts during the Lehman Brothers Global Financial Services Conference in New York on Tuesday.
Smith and Plush also said Webster expects to report non-recurring charges of $1.5 million in the third quarter related to branch closings, branch relocations and severance costs.
Webster's third-quarter earnings report will be released in mid-October, said Edward P. Steadham, a Webster spokesman.
The company also reported a loss of $2.3 million from the sale of common and preferred stock, including $2 million in losses from selling $5 million in preferred stock of government sponsored enterprises, such as Fannie Mae and Freddie Mac. It said it would write down $8 million on the $9 million it still holds in Fannie Mae and Freddie Mac shares.
Webster, which opened four new retail locations in 2007 and a new branch in North Kingstown, R.I., in August, said it plans to open new branches in Cranston and Coventry, R.I., in 2009, along with the new branches in Boston and Providence. It also plans to move existing branches in Brockton, Mass., and Ridgefield to new, upgraded locations.
Webster, which invested in new, state-of-the-art automated teller machines in 60 locations in 2007, said it would complete 63 similar upgrades this year and 56 more in 2009.
Webster shares, which are traded on the New York Stock Exchange under the symbol WBS, lost $1.25, or 5 percent, Tuesday to close at $23.40.
The stock was downgraded earlier Tuesday by analysts from Keefe, Bruyette & Woods, who adjusted their rating of Webster shares to "Market Perform" from "Outperform." The analysts said the bank remains well capitalized, but noted its stock is up almost 80 percent from a multiyear low of $13.75 hit on July 15 and will likely hold steady for some time.-30-
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