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 Quarter Ended March 31, 1998
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission File Number: 0-23513
WEBSTER PREFERRED CAPITAL CORPORATION
-------------------------------------
(Exact name of registrant as specified in its charter)
CONNECTICUT 06-1478208
----------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
145 BANK STREET, WATERBURY, CONNECTICUT 06702
- --------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(203) 578-2286
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. Yes [ X ] No [ ]
The number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date is: 100 shares
<PAGE>
Webster Preferred Capital Corporation
INDEX
PAGE NO.
PART I - FINANCIAL INFORMATION
Statements of Condition at March 31, 1998 and December 31, 1997 3
Statements of Income for the Three Months Ended March 31, 1998 and the
Period from March 17, 1997 (Date of Inception) to March 31, 1997 4
Statements of Cash Flows for the Three Months Ended March 31, 1998 and
the Period from March 17, 1997 (Date of Inception) to March 31, 1997 5
Condensed Notes to Financial Statements 6
Management's Discussion and Analysis of Financial Statements 10
Quantitative and Qualitative Disclosures About Market Risk 14
PART II - OTHER INFORMATION 15
SIGNATURES 16
INDEX TO EXHIBITS 17
2
<PAGE>
WEBSTER PREFERRED CAPITAL CORPORATION
STATEMENTS OF CONDITION (unaudited)
(Dollars in Thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
Assets 1998 1997
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash $ 24,204 $ 26,167
Mortgage-Backed Securities Available for Sale (Note 2) 172,739 120,090
Residential Mortgage Loans, Net (Note 3) 650,918 635,634
Accrued Interest Receivable 4,843 4,525
Other Real Estate Owned 110 --
Prepaid Expenses and Other Assets 1,187 1,145
- -----------------------------------------------------------------------------------------------------------------
Total Assets $ 854,001 $ 787,561
- -----------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
- -----------------------------------------------------------------------------------------------------------------
Accrued Dividends Payable $ 795 $ 491
Accrued Expenses and Other Liabilities 680 418
- -----------------------------------------------------------------------------------------------------------------
Total Liabilities 1,475 909
- -----------------------------------------------------------------------------------------------------------------
Mandatorily Redeemable Preferred Stock (Note 4)
Series A 7.375% Cumulative Redeemable Preferred Stock
liquidation preference $1,000 per share; par value $1.00 per share;
40,000 shares authorized, issued and outstanding 40,000 40,000
Shareholders' Equity (Note 5)
- -----------------------------------------------------------------------------------------------------------------
Series B 8.625% Cumulative Redeemable Preferred Stock
liquidation preference $10 per share; par value $1.00 per share;
1,000,000 shares authorized, issued and outstanding 1,000 1,000
Common Stock, par value $.01 per share:
Authorized - 1,000 shares
Issued and Outstanding - 100 shares 1 1
Paid-in Capital 797,799 745,957
Retained Earnings 12,643 --
Distributions in Excess of Accumulated Earnings -- (370)
Unrealized Gains on Securities, Net 1,083 64
- -----------------------------------------------------------------------------------------------------------------
Total Shareholders' Equity 812,526 746,652
- -----------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $ 854,001 $ 787,561
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying condensed notes to financial statements
3
<PAGE>
WEBSTER PREFERRED CAPITAL CORPORATION
STATEMENTS OF INCOME (unaudited)
(Dollars in Thousands, except share data)
<TABLE>
<CAPTION>
For the Period from
March 17, 1997
Three Months Ended (Date of Inception)
March 31, 1998 to March 31,1997
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Interest Income:
Loans $ 11,974 $ 1,852
Securities 2,180 --
- --------------------------------------------------------------------------------------------------------
Total Interest Income 14,154 1,852
- --------------------------------------------------------------------------------------------------------
Provision For Loan Losses -- --
- --------------------------------------------------------------------------------------------------------
Interest Income After Provision for Loan Losses 14,154 1,852
- --------------------------------------------------------------------------------------------------------
Noninterest Expenses:
Advisory Fee Expense Paid to Parent 38 12
Dividends on Mandatorily Redeemable Preferred Stock 738 --
Amortization of Start Up Costs 37 --
Other Noninterest Expenses 112 1
- --------------------------------------------------------------------------------------------------------
Total Noninterest Expenses 925 13
- --------------------------------------------------------------------------------------------------------
Income Before Taxes 13,229 1,839
Income Taxes -- --
- --------------------------------------------------------------------------------------------------------
NET INCOME 13,229 1,839
Preferred Stock Dividends 216 8
- --------------------------------------------------------------------------------------------------------
Net Income Available to Common Shareholder $ 13,013 $ 1,831
- --------------------------------------------------------------------------------------------------------
Net Income Per Common Share:
Basic $130,130 $ 18,310
Diluted $130,130 $ 18,310
- --------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying condensed notes to financial statements
4
<PAGE>
WEBSTER PREFERRED CAPITAL CORPORATION
STATEMENTS OF CASH FLOWS (unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
For the Period from
March 17, 1997
Three Months Ended (Date of Inception)
March 31, 1998 to March 31, 1997
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income $ 13,229 $ 1,839
Adjustments to Reconcile Net Cash Provided (Used) by
Operating Activities:
Accretion of Securities Discount (502) --
Amortization of Deferred Fees and Premiums 299 --
Increase in Accrued Interest Receivable (318) (1,707)
Increase in Accrued Liabilities 1,000 426
Increase in Prepaid Expenses and Other Assets (42) (63)
- -----------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 13,666 495
- -----------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchase of Securities (51,682) --
Principal Collected on Securities 555 --
Purchase of Loans (60,356) --
Principal Repayments of Loans 44,662 3,483
- -----------------------------------------------------------------------------------------------------------------
Net Cash (Used) Provided by Investing Activities (66,821) 3,483
- -----------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Dividends Paid on Common and Preferred Stock (650) --
Contributions from Webster Bank 51,842 1
- -----------------------------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities 51,192 1
- -----------------------------------------------------------------------------------------------------------------
(Decrease) Increase in Cash and Cash Equivalents (1,963) 3,979
Cash and Cash Equivalents at Beginning of Period 26,167 --
- -----------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period $ 24,204 $ 3,979
- -----------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES:
Income Taxes Paid $ -- $ --
Interest Paid -- --
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITY:
Transfer of Residential Mortgage Loans to Other Real Estate Owned 110 --
Contribution of Mortgage Assets, net by Webster Bank in exchange for 100
shares of common stock and 2,000 Shares of 10% Cumulative Non-
Convertible Preferred Stock -- 617,022
</TABLE>
See accompanying condensed notes to financial statements
5
<PAGE>
Webster Preferred Capital Corporation
CONDENSED NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1 - BASIS OF PRESENTATION
---------------------
The accompanying financial statements include all adjustments which are, in the
opinion of management, necessary for a fair presentation of the results for the
interim periods presented. All adjustments were of a normal recurring nature.
The results of operations for the three month period ended March 31, 1998 are
not necessarily indicative of the results which may be expected for the year as
a whole. These financial statements should be read in conjunction with the
financial statements and notes thereto included in the Webster Preferred Capital
Corporation 1997 Annual Report to shareholders.
NOTE 2 - MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE
---------------------------------------------
In November 1997 and March 1998, Webster Bank contributed $120.4 million and
$51.8 million, respectively, in cash to Webster Preferred Capital Corporation
(the "Company"), which was used to purchase Government National Mortgage
Association ("GNMA") mortgage-backed securities and Fannie Mae mortgage-backed
securities. The following table sets forth certain information regarding
mortgage-backed securities:
<TABLE>
<CAPTION>
(In Thousands) Mortgage-Backed Securities
- --------------------------------------------------------------------------------------------
Recorded Unrealized Unrealized Estimated
March 31, 1998 Value Gains Losses Fair Value
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Available for Sale Portfolio $ 171,656 $ 1,083 $ -- $ 172,739
- --------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------
Recorded Unrealized Unrealized Estimated
December 31, 1997 Value Gains Losses Fair Value
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Available for Sale Portfolio $ 120,026 $ 64 $ -- $ 120,090
- --------------------------------------------------------------------------------------------
</TABLE>
All mortgage-backed securities have a contractual maturity of over 10 years. The
weighted average yield at March 31, 1998 is 6.76%. Although the stated final
maturity of these obligations are long-term, the weighted average life is
generally much shorter due to prepayments. There were no sales of
mortgage-backed securities for the period from January 1, 1998 through March 31,
1998.
6
<PAGE>
Webster Preferred Capital Corporation
CONDENSED NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
NOTE 3 - RESIDENTIAL MORTGAGE LOANS
A summary of the Company's residential mortgage loans follows:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
- -----------------------------------------------------------------------------------------------------------
Carrying Carrying
(In Thousands) Amount Amount
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Fixed-Rate Loans:
Fixed Rate 15 yr. Loans $63,305 $59,631
Fixed Rate 20 yr. Loans 1,582 1,636
Fixed Rate 25 yr. Loans 1,360 813
Fixed Rate 30 yr. Loans 164,452 161,884
- -----------------------------------------------------------------------------------------------------------
Total Fixed-Rate Loans 230,699 223,964
- -----------------------------------------------------------------------------------------------------------
Variable-Rate Loans:
Variable Rate 15 yr. Loans 4,627 4,896
Variable Rate 20 yr. Loans 4,379 4,004
Variable Rate 25 yr. Loans 7,494 8,553
Variable Rate 30 yr. Loans 403,045 393,924
- -----------------------------------------------------------------------------------------------------------
Total Variable-Rate Loans 419,545 411,377
- -----------------------------------------------------------------------------------------------------------
Total Residential Mortgage Loans $650,244 $635,341
- -----------------------------------------------------------------------------------------------------------
Premiums and Deferred Fees on Loans, Net 2,213 1,831
Less Allowance for Loan Losses (1,539) (1,538)
- -----------------------------------------------------------------------------------------------------------
Residential Mortgage Loans, Net $650,918 $635,634
- -----------------------------------------------------------------------------------------------------------
</TABLE>
In March 1997, Webster Bank contributed approximately $617.0 million of mortgage
assets, net as part of the formation of the Company. The $617.0 million
consisted of $215.8 million of fixed rate loans, $401.3 million of variable rate
loans, net of premiums, deferred fees on loans and an allowance for loan losses.
NOTE 4 - MANDATORILY REDEEMABLE PREFERRED STOCK
--------------------------------------
On December 24, 1997, the Company raised $40 million, less expenses, in a public
offering of 40,000 shares of its Series A 7.375% cumulative redeemable preferred
stock, liquidation preference $1,000 per share.
The Company is required to redeem all outstanding Series A Preferred Shares on
January 15, 2001 at a redemption price of $1,000 per share, plus accrued and
unpaid dividends.
7
<PAGE>
Webster Preferred Capital Corporation
CONDENSED NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
The Series A Preferred Shares are not redeemable prior to January 15, 1999
except upon the occurrence of a tax event. A tax event can occur when a change
in existing laws and regulations results in a substantial risk that dividends
paid by the Company will no longer be fully deductible for federal income tax
purposes or that dividends paid by the Company to Webster Bank will no longer be
fully deductible for state income tax purposes. Upon the occurrence of a tax
event, and at any time on and after January 15, 1999 through January 14, 2001,
the Series A Preferred Shares may be redeemed at the option of the Company.
NOTE 5 - CAPITAL STRUCTURE
-----------------
On December 24, 1997, the Company raised $10 million, less expenses, in a public
offering of 1,000,000 shares of its Series B 8.625% cumulative redeemable
preferred stock, liquidation preference $10 per share.
Dividends on the Series B Stock are payable at the rate of 8.625% per annum (an
amount equal to $.8625 per annum per share), in all cases if, when and as
declared by the Board of Directors of the Company. Dividends on the preferred
shares are cumulative and, if declared, payable on January 15, April 15, July 15
and October 15 in each year.
NOTE 6 - COMPREHENSIVE INCOME
--------------------
The Company adopted the provisions of Statement of Financial Accounting Standard
("SFAS") No. 130, "Reporting Comprehensive Income" as of January 1, 1998. SFAS
No. 130, establishes standards for the reporting and display of comprehensive
income and its components ( such as changes in net unrealized investment gains
and losses). Comprehensive income includes net income and any changes in equity
from non-owner sources that bypass the income statement. The purpose of
reporting comprehensive income is to report a measure of all changes in equity
of an enterprise that result from recognized transactions and other economic
events of the period other than transactions with owners in their capacity as
owners. Application of SFAS No. 130 will not impact amounts previously reported
for net income or affect the comparability of previously issued financial
statements.
The following table summarizes comprehensive income for the three months ended
March 31, 1998 and for the period from March 17, 1997 (date of inception) to
March 31, 1997:
<TABLE>
<CAPTION>
(In Thousands) For the Period from
Three Months March 17, 1997
Ended (Date of Inception) to
March 31, 1998 March 31, 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Net Income $13,229 $1,839
Other Comprehensive Income
Unrealized gains (losses) on investments 1,019 -
- -----------------------------------------------------------------------------------------------
Total Comprehensive Income $14,248 $1,839
- -----------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
Webster Preferred Capital Corporation
CONDENSED NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
NOTE 7 - ACCOUNTING STANDARDS
--------------------
In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information." This
statement establishes standards for the method in which public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim reports issued to shareholders. This statement
requires that public business enterprises report quantitative and qualitative
information about its reportable segments, including profit or loss, certain
specific revenue and expense items and segment assets. This SFAS does not apply
to the Company since the Company has only one reportable operating segment.
9
<PAGE>
Webster Preferred Capital Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
GENERAL
- -------
Webster Preferred Capital Corporation (the "Company") is a subsidiary of Webster
Bank and was incorporated in March 1997 to provide a cost-effective means of
raising funds, including capital, on a consolidated basis for Webster Bank. In
March 1997, Webster Bank contributed approximately $617.0 million of mortgage
assets, net as part of the formation of the Company. In November 1997 and March
1998, Webster Bank contributed approximately $120.4 million and $51.8 million,
respectively, in cash which the Company used to purchase mortgage-backed
securities. Total assets at March 31, 1998 were $854.0 million, consisting
primarily of residential mortgage loans and mortgage-backed securities.
The Company has elected to be treated as a real estate investment trust ("REIT")
under the Internal Revenue Code (the "Code"), and will generally not be subject
to federal income tax for as long as it maintains its qualifications as a REIT,
requiring among other thing, that it currently distribute to stockholders at
least 95% of its "REIT taxable income" ( not including capital gains and certain
items of noncash income). The Company and Webster Bank will also benefit
significantly from federal and state tax treatment of dividends paid by the
Company as a result of its qualification as a REIT. The following discussion of
the Company's financial condition and results of operations should be read in
conjunction with the Company's financial statements and other financial data
included elsewhere herein.
CHANGES IN FINANCIAL CONDITION
- ------------------------------
Total assets were $854.0 million at March 31, 1998, an increase of $66.4
million from $787.6 million at December 31, 1997. The increase in total assets
is primarily attributable to the purchase of additional mortgage-backed
securities totaling approximately $51.7 million and to the purchase of
additional residential mortgage loans. The increases were funded by a
contribution from Webster Bank and net earnings.
Total net foreclosed properties were $110,000 at March 31, 1998. There were
no foreclosed properties at December 31, 1997.
Shareholders' equity was $812.5 million at March 31, 1998 and $746.7
million at December 31, 1997.
ASSET QUALITY
- -------------
The Company maintains asset quality by acquiring residential real estate loans
that have been conservatively underwritten, aggressively managing nonaccrual
assets and maintaining adequate reserve coverage. At March 31, 1998, residential
real estate loans comprised the entire loan portfolio. The Company also invests
in highly rated mortgage-backed securities.
10
<PAGE>
Webster Preferred Capital Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
The aggregate amount of nonaccrual assets was $807,000 at March 31, 1998. The
following table details the Company's nonaccrual assets:
<TABLE>
<CAPTION>
At March 31, At December 31,
(In Thousands) 1998 1997
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Loans Accounted for on a Nonaccrual Basis:
Residential Fixed-Rate Loans $ 209 $ 158
Residential Variable-Rate Loans 488 1,145
- --------------------------------------------------------------------------------------------------------------
Total Nonaccrual Loans 697 1,303
Residential Foreclosed Properties 110 -
- --------------------------------------------------------------------------------------------------------------
Total Nonaccrual Assets $ 807 $ 1,303
==============================================================================================================
</TABLE>
At March 31, 1998 the allowance for loan losses was $1.5 million, or 220% of
nonaccrual loans and 191% of total nonaccrual assets. Management believes that
the allowance for loan losses is adequate to cover expected losses in the
portfolio.
The net decrease in nonaccrual assets of $496,000 at March 31, 1998 as compared
to the December 31, 1997 balance is due primarily to a decrease in mortgage
payment delinquencies.
A detail of the change in the allowance for loan losses for the three months
ended March 31, 1998 follows:
<TABLE>
<CAPTION>
(In Thousands) At March 31, 1998
- ----------------------------------------------------------------------------------
<S> <C>
Balance at Beginning of Period $ 1,538
Provisions Charged to Operations -
Charge-offs -
Recoveries 1
- ----------------------------------------------------------------------------------
Balance at End of Period $ 1,539
==================================================================================
</TABLE>
ASSET/LIABILITY MANAGEMENT
- --------------------------
The goal of the Company's asset/liability management policy is to manage
interest-rate risk so as to maximize net interest income over time in changing
interest-rate environments while maintaining acceptable levels of risk. The
Company must provide for sufficient liquidity for daily operations. The Company
prepares estimates of the level of prepayments and the effect of such
prepayments on the level of future earnings due to reinvestment of funds at
rates different than those that currently exist. The Company is unable to
predict future fluctuations in interest rates and as such the market values of
certain of the Company's financial assets are sensitive to fluctuations in
market interest rates. Changes in interest rates can affect the value of its
loans and other interest-earning assets. At March 31, 1998, 64.5% of the
Company's residential mortgage loans were variable rate loans. The Company's
management believes these residential mortgage loans are less likely to incur
prepayments of principal.
11
<PAGE>
Webster Preferred Capital Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The primary sources of liquidity for the Company are net cash flows from
operating activities, investing activities and financing activities. Net cash
flows from operating activities primarily include net income, net changes in
prepaid expenses and other assets, accrued interest receivable and adjustments
for noncash items such as amortization on deferred fees and premiums, and
mortgage-backed securities net amortization and accretion. Net cash flows from
investing activities primarily include the purchase and repayments of
residential real estate loans and mortgage backed securities that are classified
as available for sale. Net cash flows from financing activities primarily
include net changes in capital generally related to stock issuances and dividend
payments.
While scheduled loan amortization, maturing securities, short term investments
and securities repayments are predictable sources of funds, loan and
mortgage-backed security prepayments are greatly influenced by general interest
rates, economic conditions and competition. One of the inherent risks of
investing in loans and mortgage-backed securities is the ability of such
instruments to incur prepayments of principal prior to maturity at prepayment
rates different than those estimated at the time of purchase. This generally
occurs because of changes in market interest rates. The market values of
fixed-rate loans and mortgage-backed securities are sensitive to fluctuations in
market interest rates, declining in value as interest rates rise. If interest
rates decrease, the market value of loans generally will tend to increase with
the level of prepayments also normally increasing.
Dividends on the Series A Stock are payable at the rate of 7.375% per annum (an
amount equal to $73.75 per annum per share), and the dividends on the Series B
Stock are payable at the rate of 8.625% per annum (an amount equal to $.8625 per
annum per share), in all cases if, when and as declared by the Board of
Directors of the Company. Dividends on the preferred shares are cumulative and,
if declared, payable on January 15, April 15, July 15 and October 15 in each
year.
12
<PAGE>
Webster Preferred Capital Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
GENERAL
- -------
The Company reported net income of $13.0 million, or $130,130 per common share
on a diluted basis for the three months ended March 31, 1988, compared to net
income of $1.8 million, or $18,310 per common share on a diluted basis for the
period from March 17, 1997 (date of inception) to March 31, 1997.
NET INTEREST INCOME
- -------------------
Total interest income for the three months ended March 31, 1998 and the period
from March 17, 1997 (date of inception) to March 31, 1997 amounted to $14.2
million, and $1.9 million, respectively. The following table shows the major
categories of average interest-earning assets, their respective interest income
and the rates earned by the Company:
<TABLE>
<CAPTION>
THE PERIOD FROM MARCH 17, 1997 (DATE
THREE MONTHS ENDED MARCH 31, 1998 OF INCEPTION) TO MARCH 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Average Interest Average Average Interest Average
(In Thousands) Balance Income Yield Balance Income Yield
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mortgage Loans $660,600 $11,974 7.25% $102,968 $1,852 7.19%
Mortgage-Backed Securities 127,884 2,140 6.69% - - -
Interest Bearing Deposits 1,986 40 6.10% - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Total $790,470 $14,154 7.16% $102,968 $1,852 7.19%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
PROVISION FOR LOAN LOSSES
- -------------------------
There were no provisions for loan losses for the three months ended March 31,
1998 or the period from March 17, 1997 (date of inception) to March 31, 1997.
NONINTEREST EXPENSES
- --------------------
Noninterest expenses for the three months ended March 31, 1998 and the period
from March 17, 1997 (date of inception) to March 31, 1997 amounted to $925,924
and $13,000, respectively, and included advisory fees, dividends on Series A
Preferred Stock, and amortization of start-up costs.
INCOME TAXES
- ------------
No income tax expense was recorded for the three months ended March 31, 1998 or
the period from March 17, 1997 (date of inception) to March 31, 1997.
13
<PAGE>
Webster Preferred Capital Corporation
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- --------------------------------------------------------------------------------
The following table summarizes the estimated market value of the Company's
interest-sensitive assets and interest- sensitive liabilities at March 31, 1998,
and the projected change to market values if interest rates instantaneously
increase or decrease by 100 basis points.
<TABLE>
<CAPTION>
Estimated Market Value
Impact
----------------------
Book Market
(In Thousands) Value Value -100 BP +100 BP
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest-Sensitive Assets:
Mortgage-Backed Securities $171,656 $172,739 $3,680 $(5,570)
Variable-Rate Residential Mortgage Loans 419,545 428,671 3,736 (5,370)
Fixed-Rate Residential Mortgage Loans 230,699 237,131 3,836 (8,456)
Interest-Sensitive Liabilities:
Series A Preferred Stock 40,000 40,072 992 (2,497)
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
Webster Preferred Capital Corporation
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS - Not Applicable
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS - Not Applicable
Item 3. DEFAULTS UPON SENIOR SECURITIES - Not Applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - Not Applicable
Item 5. OTHER INFORMATION - Not Applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K - Not Applicable
(a) Exhibits
Exhibits No. Description
------------ -----------
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended
March 31, 1998.
15
<PAGE>
Webster Preferred Capital Corporation
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 PREFERRED CAPITAL CORPORATION
-------------------------------------
Registrant
Date: May 14, 1998 By: /s/ Peter J. Swiatek
----------------------------------------
Peter J. Swiatek
Vice President and Treasurer
Principal Financial Officer and
Principal Accounting Officer
16
<PAGE>
Webster Preferred Capital Corporation
INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
27 Financial Data Schedule
17
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 24,204
<SECURITIES> 172,739
<RECEIVABLES> 652,456
<ALLOWANCES> (1,538)
<INVENTORY> 0
<CURRENT-ASSETS> 6,140
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 854,001
<CURRENT-LIABILITIES> 1,475
<BONDS> 0
40,000
1,000
<COMMON> 1
<OTHER-SE> 811,525
<TOTAL-LIABILITY-AND-EQUITY> 854,001
<SALES> 14,154
<TOTAL-REVENUES> 14,154
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 925
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 13,229
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,229
<EPS-PRIMARY> 130,130
<EPS-DILUTED> 130,130
</TABLE>
