<PAGE>
As filed with the Securities and Exchange Commission on November 3, 1995.
Registration No. 33-________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
WEBSTER FINANCIAL CORPORATION
(Exact name of Registrant as specified in its governing instrument)
Delaware 06-1187536
(State of Incorporation) (I.R.S. Employer Identification No.)
------------------------
Webster Plaza
145 Bank Street
Waterbury, Connecticut 06702
(203) 753-2921
(Address, including zip code and telephone number, including area code, of
Registrant's principal executive offices)
------------------------
John V. Brennan
Executive Vice President
Webster Plaza
145 Bank Street
Waterbury, Connecticut 06702
(203) 753-2921
(Name and address, including zip code, and telephone number, including area
code, of Agent for Service)
------------------------
Copies of communications to:
Charles E. Allen, Esq. Kenneth T. Cote, Esq.
Hogan & Hartson L.L.P. Brown & Wood
555 Thirteenth Street, N.W. One World Trade Center
Washington, D.C. 20004 New York, New York 10048
(202) 637-5600 (212) 839-5300
------------------------
Approximate date of commencement of the proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number the earlier effective statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------------------
Proposed Proposed Maximum
Title of Shares to Amount to be Maximum Offering Aggregate Offering Amount of
be Registered Registered Price Per Share* Price* Registration Fee*
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, Par 1,265,000 shares $ 25.8125 $ 32,652,813 $ 11,260
Value $0.01 per share
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Estimated as of October 31, 1995 solely for purposes of calculating the
registration fee pursuant to Rule 457(c).
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED NOVEMBER 3, 1995
PROSPECTUS
1,100,000 Shares
Webster Financial
CORPORATION
Common Stock
All 1,100,000 shares of common stock, par value $.01 per share (the
"Common Stock"), offered hereby (the "Offering") are being sold by Webster
Financial Corporation ("Webster"). The Common Stock is quoted on the Nasdaq
National Market ("NASDAQ") under the symbol "WBST." On November 1, 1995, the
last reported sale price of the Common Stock on NASDAQ was $26.25 per share.
See "RISK FACTORS" at page 10 of this Prospectus for certain
considerations relevant to an investment in the Common Stock.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION ("SEC"), ANY STATE SECURITIES COMMISSION, THE OFFICE OF
THRIFT SUPERVISION ("OTS"), THE FEDERAL DEPOSIT INSURANCE CORPORATION
("FDIC") OR THE CONNECTICUT COMMISSIONER OF BANKING ("COMMISSIONER"),
NOR HAS THE SEC, ANY STATE SECURITIES COMMISSION, THE OTS, THE FDIC
OR THE COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS,
DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION,
AND ARE NOT INSURED BY THE FDIC, THE BANK INSURANCE FUND,
THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY
OTHER GOVERNMENTAL AGENCY.
==============================================================================
Price to Public Underwriting Proceeds to
Discounts (1) Webster (2)
- ------------------------------------------------------------------------------
Per Share .. $ $ $
- ------------------------------------------------------------------------------
Total (3) .. $ $ $
==============================================================================
(1) Webster has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"UNDERWRITING."
(2) Before deducting expenses payable by Webster estimated at $ .
(3) Webster has granted the Underwriters an option to purchase up to an
additional 165,000 shares of Common Stock to cover overallotments, if any.
If all of such shares are purchased, the total Price to Public,
Underwriting Discount and Proceeds to Webster will be increased to $ , $
and $ , respectively. See "UNDERWRITING."
--------------------
The shares of Common Stock are offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the shares of Common Stock will be made in New York, New York on or
about , 199 .
---------------------
Merrill Lynch & Co.
----------------------
The date of this Prospectus is , 199 .
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy to be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
- 1 -
<PAGE>
(See Appendix A)
- --------------------------------------------------------------------------------
County Banking Offices Deposit Market Share Rank
- ------ --------------- -------------------- ----
New Haven 28 12% 4
Hartford 28 8% 2
Total Banking Offices -
Statewide 63 6% 3
- --------------------------------------------------------------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON
STOCK OF WEBSTER AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING
GROUP MEMBERS (IF ANY) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE
COMMON STOCK OF WEBSTER ON NASDAQ IN ACCORDANCE WITH RULE 10b-6A UNDER THE
SECURITIES EXCHANGE ACT OF 1934. SEE "UNDERWRITING."
- 2 -
<PAGE>
AVAILABLE INFORMATION
Webster is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder, and in accordance therewith files reports, proxy or
information statements and other information with the SEC. Such reports,
statements and other information filed with the SEC can be inspected and copied
at the public reference facilities maintained by the SEC at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at its regional offices at Seven
World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material may be obtained at prescribed rates from the Public Reference Section
of the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
This Prospectus does not contain all the information set forth in the
Registration Statement which Webster has filed with the SEC under the Securities
Act of 1933, as amended (the "Securities Act"), of which this Prospectus is a
part, and to which reference is hereby made for further information with respect
to Webster and the Common Stock.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Webster with the SEC (File No.
0-15213) under the Exchange Act are hereby incorporated in this Prospectus by
reference: (i) Webster's Annual Report on Form 10-K for the year ended December
31, 1994; (ii) Webster's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1995, June 30, 1995 and September 30, 1995; and (iii) Webster's
Current Reports on Form 8-K dated March 1, 1995, June 20, 1995, October 10, 1995
and November 1, 1995, and on Form 8-K/A dated July 27, 1995 and October 18,
1995.
All documents filed by Webster pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the Offering shall be deemed to be incorporated by reference
in this Prospectus.
In lieu of incorporating by reference the description of the Common
Stock which is contained in a registration statement filed by Webster under the
Exchange Act, such description is included in this Prospectus. See "DESCRIPTION
OF CAPITAL STOCK."
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
Webster will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon written or oral request of such person, a
copy of any or all of the documents incorporated herein by reference and not
delivered herewith (other than exhibits to such documents which are not
specifically incorporated by reference into the text of such documents).
Requests for such documents should be directed to: Lee A. Gagnon, Executive Vice
President, Chief Operating Officer and Secretary, Webster Financial Corporation,
Webster Plaza, 145 Bank Street, Waterbury, Connecticut 06702; telephone (203)
753-2921.
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<PAGE>
PROSPECTUS SUMMARY
This summary is qualified in its entirety by the detailed information,
definitions and financial statements appearing elsewhere herein or incorporated
herein by reference. Capitalized terms used in this Prospectus Summary which
have not been defined in the foregoing text are defined in the more detailed
information presented hereinafter. Unless otherwise indicated or the context
otherwise requires, all references herein to Webster include its wholly owned
subsidiary, Webster Bank, and subsidiaries of Webster Bank. Similarly, all
references herein to Webster or Webster Bank give effect retroactively to the
following transactions, which occurred in the following sequence on November 1,
1995: (i) the conversion of Webster's wholly owned subsidiary, Bristol Savings
Bank ("Bristol"), from a Connecticut chartered savings bank to a federally
chartered savings bank, (ii) the concurrent renaming of Bristol as "Webster
Bank," (iii) the merger of Webster's wholly owned subsidiary, First Federal
Bank, a federal savings bank ("First Federal"), into Webster Bank, with Webster
Bank as the surviving savings bank, (iv) the acquisition of Shelton Bancorp,
Inc. ("Shelton") through a merger of Webster Acquisition Corp., a wholly owned
subsidiary of Webster formed for such purpose, into Shelton, with Shelton as the
surviving corporation , (v) the merger of Shelton into Webster, with Webster as
the surviving corporation, and (vi) the merger of Shelton Savings Bank ("Shelton
Bank"), a wholly owned subsidiary of Shelton, into Webster Bank, with Webster
Bank as the surviving savings bank. The Shelton acquisition has been accounted
for as a "pooling of interests," so that the assets, liabilities, shareholders'
equity and operating results of Shelton for all periods prior to the acquisition
are reflected retroactively in Webster's historical financial information
included elsewhere in this Prospectus.
Webster
Webster, headquartered in Waterbury, Connecticut, is the holding
company of Webster Bank. Webster Bank is engaged in consumer, commercial and
mortgage banking in Connecticut. Webster Bank attracts deposits from retail and
business customers and obtains additional funds through Federal Home Loan Bank
("FHL Bank") advances and other borrowings. Webster Bank invests its funds in
residential first mortgage loans, commercial and industrial loans, commercial
real estate loans, home equity loans, consumer installment loans and securities.
Webster Bank currently serves customers from 45 banking offices located in New
Haven, Fairfield, Litchfield and Hartford Counties in Connecticut. In the
Shawmut Transaction (as summarized below), Webster Bank will acquire 20 banking
offices in the greater Hartford, Connecticut banking market (the "Hartford
Banking Market"), while exchanging two Webster Bank banking offices in Fairfield
County as part of the consideration for the offices being acquired. As a result,
Webster Bank will then have a total of 63 banking offices, extending from the
Massachusetts border through central Connecticut to Long Island Sound. After
giving effect to the Shawmut Transaction, Webster Bank will be the second
largest independent bank in Connecticut and the largest Connecticut-based bank
in the Hartford Banking Market, based on deposit market share. See "THE SHAWMUT
TRANSACTION." In addition to significantly expanding Webster's franchise, the
Shawmut Transaction will broaden Webster's assets and deposit base and will have
an accretive effect on its net income per common share. See "PRO FORMA COMBINED
FINANCIAL INFORMATION." Webster intends in the future to consider additional
favorable acquisitions in Connecticut or other market areas generally adjacent
to the communities served by Webster Bank.
Webster has significantly increased its banking operations through five
completed acquisitions: Suffield Bank ("Suffield") on September 6, 1991, First
Constitution Bank ("First Constitution") on October 2, 1992, Bristol on March 3,
1994, Shoreline Bank & Trust Company ("Shoreline") on December 16, 1994, and
Shelton on November 1, 1995 (collectively, the "Acquisitions"). These
Acquisitions have extended Webster's banking operations into new markets and
added 33 banking offices, $1.5 billion in deposits and approximately 160,000
customer accounts. The Suffield and First Constitution acquisitions involved
substantial financial assistance from the FDIC. The Suffield, First Constitution
and Bristol acquisitions were accounted for as "purchase" transactions. The
Shoreline and Shelton acquisitions were accounted for as "pooling of interests"
transactions. The Acquisitions have enabled Webster to broadly expand its assets
and deposit base and to improve operating efficiency through the elimination of
duplicative administrative, support and staff functions and the consolidation of
redundant facilities. The Acquisitions have contributed positively to Webster's
operating results. See "COMPLETED ACQUISITIONS" and "PROSPECTUS SUMMARY --
Summary Consolidated Financial Data."
Webster is continuing to expand its banking activities, particularly
commercial and consumer banking. These types of banking activities involve
higher net interest margins and fees than those generally available from
residential first mortgage lending. This expansion has necessitated the addition
of experienced commercial and
- 4 -
<PAGE>
consumer banking officers, support personnel and related systems. The costs of
this infrastructure have resulted in higher overhead expenses in recent years,
partially offsetting the greater revenues available from commercial and consumer
banking. The Shawmut Transaction will enable Webster to further expand its
commercial and consumer banking activities without a proportionate increase in
overhead expenses.
At September 30, 1995, Webster had consolidated total assets of $3.3
billion, total deposits of $2.4 billion and shareholders' equity of $172.6
million or 5.2% of total assets. For the nine months ended September 30, 1995,
Webster had consolidated net income of $16.0 million, compared with net income
of $14.0 million for the same period in 1994. On a pro forma combined basis at
September 30, 1995 after giving effect to the Shawmut Transaction and the
Offering, Webster would have had total assets of approximately $3.8 billion,
total deposits of approximately $3.1 billion and shareholders' equity of
approximately $200 million or 5.16% of total assets. See "PRO FORMA COMBINED
FINANCIAL INFORMATION."
Webster, as a holding company, and its subsidiary Webster Bank, are
subject to comprehensive regulation, supervision and examination by the OTS, as
the primary federal regulator of Webster Bank. Webster Bank's deposits are
federally insured by the Bank Insurance Fund ("BIF") of the FDIC, which also has
significant regulatory authority over Webster Bank. As of September 30, 1995,
approximately 63% of Webster Bank's deposits were assessed premiums at BIF rates
and approximately 37% were assessed premiums at Savings Association Insurance
Fund ("SAIF") rates. After giving effect to the Shawmut Transaction,
approximately 71% of Webster Bank's deposits will be assessed premiums at BIF
rates and approximately 29% at SAIF rates. As of September 30, 1995, Webster
Bank met all regulatory capital requirements for a "well-capitalized" bank, with
ratios of Tier 1 capital to adjusted total assets, Tier 1 capital to
risk-weighted assets, and total capital to risk-weighted assets of 5.60%,
11.68%, and 12.80%, respectively. Webster Bank expects to continue to meet all
regulatory capital requirements for a "well-capitalized" bank following
consummation of the Shawmut Transaction. See "USE OF PROCEEDS" and "CAPITAL
RATIOS."
Shelton Acquisition
On November 1, 1995, Webster completed a stock for stock, tax free
acquisition of Shelton, the holding company of Shelton Bank, a state-chartered
savings bank headquartered in Shelton, Connecticut. Shelton Bank was
concurrently merged into Webster Bank. Shelton Bank had six banking offices
located in Ansonia, Bethany, Oxford and Shelton, which are located in eastern
Fairfield County and southwestern New Haven County, communities which are
contiguous to Webster Bank's market areas. As of September 30, 1995, Shelton had
consolidated total assets of $298 million, total deposits of $273 million and
shareholders' equity of $21 million or 7.0% of total assets. For the nine months
ended September 30, 1995, Shelton had consolidated net income of $1.6 million,
compared with $1.6 million for the same period in 1994. The Shelton acquisition
has been accounted for as a "pooling of interests." Webster issued 1,293,056
shares of its Common Stock to the shareholders of Shelton in the acquisition,
based on a .92 fixed exchange rate. An additional 44,561 shares of Common Stock
are issuable by Webster at an average exercise price of $13.22 per share
pursuant to options previously granted by Shelton to its directors, officers and
employees. See "COMPLETED ACQUISITIONS."
The Shawmut Transaction
On October 1, 1995, Webster Bank entered into a Purchase and Assumption
Agreement (the "Shawmut Agreement") with Shawmut Bank Connecticut, National
Association ("Shawmut"), as part of the Fleet/Shawmut Divestiture, to acquire 20
Shawmut branch banking offices in the Hartford Banking Market, including
deposits and loans at or allocated to such offices (the "Shawmut Transaction").
The Shawmut Transaction is expected to be consummated in early 1996, subject to
prior completion of the Offering, OTS regulatory approval and other closing
conditions. References herein to the Shawmut Transaction include certain related
actions reflected in the pro forma adjustments shown in the footnotes to the Pro
Forma Combined Statement of Condition contained elsewhere in this Prospectus.
Upon consummation of the Shawmut Transaction, Webster Bank will acquire
20 Shawmut Branches in the Hartford Banking Market, including deposits and loans
at or allocated to the Shawmut Branches. See "MAP." Webster Bank will be
acquiring savings and money market deposit accounts, NOW and checking accounts,
business checking and deposit accounts and consumer time deposits. The loans to
be acquired will consist of residential first
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<PAGE>
mortgage loans, commercial real estate loans, commercial and industrial loans,
home equity loans, and consumer installment loans.
The Shawmut Transaction will enhance Webster Bank's ability to provide
a broad line of deposit and cash management services. The Shawmut Transaction is
estimated to increase the percentage of savings and money market deposit
accounts from 25% to 27% of total deposits, NOW and checking accounts from 11%
to 13% of total deposits, and business checking and deposit accounts from 1% to
4% of total deposits. While consumer time deposits are also estimated to
increase in dollar amount, such deposits as a percentage of total deposits are
estimated to decrease from approximately 63% to 56%.
The Shawmut Transaction will expand Webster Bank's lending capacity and
increase its emphasis on commercial and industrial loans and commercial real
estate loans to small and medium sized businesses. The Shawmut Transaction will
enhance Webster Bank's ability to provide a full range of loan services for
commercial banking customers with credit needs up to $10 million. The Shawmut
Transaction is estimated to increase Webster Bank's loan portfolio from $2.0
billion to $2.6 billion. The percentage of commercial loans in Webster Bank's
loan portfolio is estimated to increase from approximately 15% to 19%. The
percentage of residential first mortgage loans is estimated to decrease from
approximately 77% to 73% of Webster Bank's loan portfolio. The percentage of
consumer loans, including home equity loans, is estimated to remain at
approximately 8% of Webster Bank's loan portfolio.
The following table presents certain Webster pro forma combined
financial information after combining the historical balance sheet of Webster
(including Shelton) with the Shawmut assets to be acquired and liabilities to be
assumed as if the Shawmut Transaction and the Offering had occurred on September
30, 1995 (dollars in thousands):
At September 30, 1995
---------------------
Pro Forma
Webster Combined
------- --------
Total interest-earning assets .......... $3,177,319 $3,595,319
Total interest-bearing liabilities ..... $3,115,342 $3,574,342
Weighted average interest rates:
Total interest-earning assets ..... 7.50% 7.74%
Total interest-bearing liabilities 4.60% 4.07%
Interest rate spread .............. 2.90% 3.67%
The assets being acquired and the liabilities being assumed in the Shawmut
Transaction will be the amounts outstanding at the date of consummation of the
Shawmut Transaction. The amounts and weighted average interest rates will change
from the September 30, 1995 amounts and weighted average interest rates shown
above due to interest-rate repricing, principal repayments and prepayments and
other changes in balances of the assets being acquired and the liabilities being
assumed. See "PRO FORMA COMBINED FINANCIAL INFORMATION."
Use of Proceeds
All of the net proceeds from the Offering will be contributed by
Webster to Webster Bank in connection with the consummation of the Shawmut
Transaction to increase Webster Bank's regulatory capital ratios, which would
otherwise decrease as a result of Webster Bank's significant increase in size
upon the consummation of the Shawmut Transaction. The contribution of the net
proceeds from the Offering, together with an additional capital contribution by
Webster of existing holding company funds, is expected to enable Webster Bank to
continue to meet all capital ratios required for a "well-capitalized bank"
following consummation of the Shawmut Transaction. See "RISK FACTORS --
Acquisition of Shawmut Branches," "USE OF PROCEEDS" and "CAPITAL RATIOS."
Market for Common Stock and Dividends
The Common Stock is quoted on the NASDAQ under the symbol "WBST." On
November 1, 1995 the last sale price of the Common Stock on NASDAQ was $26.25
per share. Webster's policy is to pay quarterly cash dividends on its Common
Stock. Webster has paid consecutive quarterly cash dividends on the Common Stock
- 6 -
<PAGE>
since 1987. Current quarterly cash dividends on the Common Stock are $.16 per
share. See "MARKET PRICES AND DIVIDENDS."
Risk Factors
Special attention should be given to the factors discussed under "RISK
FACTORS."
Summary Consolidated Financial Data
The following tables summarize selected consolidated financial data of
Webster that give effect to the acquisition of Shelton on a "pooling of
interests" basis by retroactively combining historical Webster and Shelton data
for all periods presented. The selected consolidated financial data at and for
the years ended December 31, 1994, 1993, 1992, 1991 and 1990 were derived from
Webster's consolidated financial statements, which have been restated to include
Shelton. Selected consolidated financial data at and for the nine-month periods
ended September 30, 1995 and 1994 of Webster are derived from consolidated
financial statements of Webster, which have also been restated to include
Shelton. In Webster's opinion, all adjustments, which consist of normal
recurring accruals and the cumulative effect of a change in the method of
accounting for income taxes, necessary for a fair presentation have been
included. The operating data and significant statistical data for the nine
months ended September 30, 1995 are not necessarily indicative of the results of
operations that may be expected for the year ending December 31, 1995.
The selected consolidated financial data should be read in conjunction
with the following financial statements and related notes thereto included in or
incorporated by reference in this Prospectus: (i) Webster's audited consolidated
financial statements, as restated to include Shelton, at December 31, 1994 and
1993 and for the years ended December 31, 1994, 1993 and 1992; (ii) Webster's
unaudited consolidated financial statements, as restated to include Shelton, at
September 30, 1995 and for the nine-month periods ended September 30, 1995 and
1994; (iii) Webster's audited consolidated financial statements (excluding
Shelton) at December 31, 1994 and 1993 and for the years ended December 31,
1994, 1993 and 1992; (iv) Webster's unaudited consolidated financial statements
(excluding Shelton) at September 30, 1995 and for the nine-month periods ended
September 30, 1995 and 1994; (v) Shelton's audited financial statements at June
30, 1995 and 1994 and for the years ended June 30, 1995, 1994 and 1993; and (vi)
Shelton's unaudited financial statements at September 30, 1995 and for the
three-month periods ended September 30, 1995 and 1994. See "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE."
The pro forma combined financial condition and other data at September
30, 1995 give effect to the Offering and the Shawmut Transaction, which is to be
accounted for as a "purchase" transaction, and to certain related actions
reflected in the pro forma adjustments shown in the footnotes to the Pro Forma
Combined Statement of Condition. All pro forma combined data are unaudited. See
"PRO FORMA COMBINED FINANCIAL INFORMATION."
- 7 -
<PAGE>
<TABLE>
<CAPTION>
Selected Consolidated Financial Data
Financial Condition Pro Forma
and Other Data Combined At At
(Dollars in Thousands) September 30, September 30, At December 31,
----------------------------------------------------
1995 1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets................... $3,823,932 $3,332,932 $3,053,851 $2,483,403 $2,367,722 $1,173,489 $ 934,823
Loans receivable, net.......... 2,490,542 1,872,542 1,869,216 1,467,935 1,522,168 701,478 682,417
Mortgage-backed securities..... 742,722 942,722 631,718 518,435 346,719 235,114 113,204
Securities..................... 170,593 170,593 174,130 151,329 91,604 97,326 55,551
Segregated Assets, net......... 116,365 116,365 137,096 176,998 223,907 -- --
Core deposit intangible........ 46,916 4,916 5,457 11,829 15,463 1,402 --
Deposits....................... 3,108,068 2,431,068 2,432,984 1,966,574 1,995,079 990,054 732,511
FHL Bank advances and other
borrowings.................. 455,509 675,509 414,375 312,152 193,864 73,772 101,791
Shareholders' equity........... 199,613 172,613 156,807 126,273 129,195(a) 83,067 81,021
Number of banking offices...... 63 45 45 39 39 23 18
Operating Data At or for the Nine Months
(Dollars in Thousands) Ended September 30, At or for the Year Ended December 31,
------------------- -----------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
Interest income................ $161,790 $139,618 $ 190,820 $ 154,589 $ 111,021 $ 90,901 $ 88,319
Interest expense............... 96,194 71,093 98,464 80,803 61,205 60,015 62,264
------- ------- ----------- --------- --------- --------- ---------
Net interest income............ 65,596 68,525 92,356 73,786 49,816 30,886 26,055
Provision for loan losses...... 1,395 2,185 3,155 4,597 5,574 4,285 10,379
Noninterest income............. 15,357 11,300 13,629 10,703 8,407 5,150 4,027
Noninterest expenses:
Core deposit intangible writedown -- -- 5,000 -- -- -- --
Foreclosed property expenses, net 3,392 5,379 6,949 5,085 6,135 5,089 734
Other noninterest expenses.. 52,698 50,056 67,346 49,912 33,018 20,550 18,340
------- ------- ----------- --------- --------- --------- ---------
Total noninterest expenses 56,090 55,435 79,295 54,997 39,153 25,639 19,074
------- ------- ----------- --------- --------- --------- ---------
Income before income taxes..... 23,468 22,205 23,535 24,895 13,496 6,112 629
Income taxes................... 7,439 8,159 4,850 10,595 7,083 2,774 2,341
------- ------- ----------- --------- --------- --------- ---------
Net income (loss) before cumulative
change ..................... 16,029 14,046 18,685 14,300 6,413 3,338 (1,712)
Cumulative change (b).......... -- -- -- 4,575 -- -- --
------- ------- ----------- --------- --------- --------- ---------
Net income (loss).............. 16,029 14,046 18,685 18,875 6,413 3,338 (1,712)
Preferred stock dividends...... 972 1,406 1,716 2,653 581 -- --
------- ------- ----------- --------- --------- --------- ---------
Net income (loss) available to
common shareholders........ $15,057 $12,640 $ 16,969 $ 16,222 $ 5,832 $ 3,338 $ (1,712)
======= ======= ========= ========= ========= ========= =========
Loan originations during period $287,475 $641,419 $ 745,618 $ 390,337 $ 283,926 $ 133,418 $ 118,301
Net increase (decrease) in deposits 1,916 457,610 466,410 (28,505) 1,005,025 157,543 59,485
Loans serviced for others...... 937,066 948,253 949,337 357,699 409,190 183,273 188,565
Capitalized mortgage loan servicing
rights...................... 3,815 4,601 4,427 1,337 2,008 20 --
See footnotes on the following page.
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<PAGE>
Significant Statistical Data At or for the Nine Months
Ended September 30, At or for the Year Ended December 31,
---------------------------- -------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- ------
For The Period:
Net income (loss) per common share (c):
Primary....................... $2.19 $2.08 $2.69 $2.25 (b) $1.18 $0.68 ($0.33)
Fully Diluted................. $2.04 $1.87 $2.44 $2.04 (b) $1.16 $0.68 ($0.33)
Cash dividends paid per common
share (c)...................... $0.48 $0.35 $0.52 $0.50 $0.48 $0.48 $0.48
Return on average assets ........ 0.69% 0.64% 0.67% 0.60%(b) 0.43% 0.32% (0.19%)
Return on average shareholders'
equity......................... 12.75% 12.74% 12.55% 11.11%(b) 6.87% 4.06% (1.98%)
Average shareholders' equity to average
assets......................... 5.39% 4.99% 5.37% 5.39% 6.29% 7.94% 9.38%
Interest rate spread............. 2.83% 3.24% 3.29% 3.13% 3.32% 2.81% 2.35%
Net interest margin.............. 2.96% 3.29% 3.34% 3.23% 3.50% 3.14% 2.94%
Noninterest expenses to average assets 2.40% 2.51% 2.86% 2.30% 2.64% 2.45 %2.03%
Noninterest expenses (excluding foreclosed
property expenses and provisions) to
average assets................. 2.26% 2.27% 2.61% 2.09% 2.23% 1.95% 1.95%
Ratio of earnings to fixed charges 1.92x 2.27x 1.93x 2.50x 2.85x 1.90x 1.06x
Pro Forma
Combined At At
September 30, September 30,
At End of Period: 1995 1995
------ -----
Book value per common share (c). $23.09 $22.86 $20.59 $19.90 $21.29 $16.88 $16.47
Tangible book value per common share $17.16 $22.14 $19.78 $17.58 $18.13 $16.60 $16.47
Common shares outstanding
(000's) (c).................... 7,900 6,800 6,780 5,088 4,895 4,920 4,918
Shareholders' equity to total assets 5.22% 5.18% 5.13% 5.08% 5.46% 7.08% 8.67%
Nonaccrual assets to total assets 1.51% 1.73% 2.10% 2.41% 2.83% 2.83% 2.75%
Allowance for loan losses to nonaccrual
loans.......................... 126.15% 112.94% 134.04% 135.79% 108.71% 77.15% 79.20%
Allowances for nonaccrual assets
to nonaccrual assets........... 84.60% 75.94% 77.01% 77.32% 76.95% 36.07% 32.18%
- --------------------------------
(a) Includes $18.25 million of the $30 million of Series A cumulative perpetual
preferred stock ("Series A Stock") issued by Webster to the FDIC on October
6, 1995 in connection with the First Constitution acquisition. $11.75
million of the Series A Stock was redeemed on December 29, 1992, and the
remaining $18.5 million was redeemed on June 29, 1993.
(b) Before cumulative change in the method of accounting for income taxes
adopted by Webster and Shelton in 1993 in accordance with Financial
Accounting Standards Bulletin No. 109. After such cumulative change, (i)
net income per common share for 1993 was $3.13 on a primary basis and $2.73
on a fully diluted basis and (ii) return on average shareholders' equity
for 1993 was 14.66%.
(c) All per share data and the number of outstanding shares of Common Stock
have been adjusted retroactively to give effect to stock dividends paid by
Webster and Shelton.
</TABLE>
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<PAGE>
RISK FACTORS
Legislative and General Regulatory Developments
General. Webster is subject to various regulatory restrictions as a
holding company, imposed primarily by the OTS and the Commissioner. Webster Bank
is subject to extensive regulation by the OTS as its primary federal regulator
and also to regulation as to certain matters by the FDIC. The OTS and FDIC have
adopted numerous regulations and undertaken other regulatory initiatives, and
further regulations and initiatives may occur. Future legislation or regulatory
developments could have an adverse effect on Webster or Webster Bank.
Regulatory Capital. Current regulatory capital requirements for
OTS-regulated savings banks include a Tier 1 leverage or a core capital to
adjusted total assets ratio and a risk-based capital ratio in which assets are
weighted based upon their inherent risk. An interest-rate risk component was
added to the risk-based capital requirement by the OTS in 1994, the
implementation of which has been postponed indefinitely. Under the OTS
regulation, an institution is considered to have excess interest-rate risk if,
based upon a 200 basis point change in market interest rates, the market value
of a bank's capital changes by more than 2%. This requirement is not expected to
have a material effect on Webster Bank's ability to meet the risk-based capital
requirement. The FDIC also issued new capital regulations, which became
effective September 1, 1995, pursuant to which the FDIC will include an
assessment of the exposure to declines in the economic value of a bank's capital
due to changes in interest rates in its evaluation of a bank's capital adequacy.
There can be no assurance that Webster Bank will be able to satisfy such capital
requirements in the future or any additional capital requirements that may be
imposed.
At September 30, 1995, Webster Bank had a Tier 1 capital to adjusted
total assets ratio of 5.60%, a Tier 1 capital to risk-weighted assets ratio of
11.68% and a total capital to risk-weighted assets ratio of 12.80%, thereby
meeting all applicable regulatory capital ratios required for classification as
a "well-capitalized" bank for federal deposit insurance assessment rate
purposes. Following consummation of the Shawmut Transaction, Webster Bank
expects that its capital ratios will continue to meet all applicable regulatory
capital ratios required for classification as a "well-capitalized" bank. See
"CAPITAL RATIOS." There can be no assurance that Webster Bank in the future will
continue to meet such capital ratios.
Deposit Insurance Premiums. Webster Bank is a BIF member institution
with approximately 63% of its deposits assessed premiums at BIF rates. The
remaining approximately 37% of Webster Bank's deposits are assessed premiums at
SAIF rates. After giving effect to the Shawmut Transaction, approximately 71% of
Webster Bank's deposits are expected to be assessed premiums at BIF rates and
approximately 29% at SAIF rates.
Deposit insurance premiums to both the BIF and the SAIF were identical
when both funds were created in 1989, with an eight cent differential between
the premiums paid by well-capitalized institutions and the premiums paid by
under-capitalized institutions (23 cents to 31 cents per $100 of assessable
deposits). Such premiums were set to facilitate each fund achieving its
designated reserve ratios. As each fund achieves its designated reserve ratio,
however, the FDIC has the authority to lower the premium assessments for that
fund to a rate that would be sufficient to maintain the designated reserve
ratio. In August 1995, the FDIC determined that the BIF had achieved its
designated reserve ratio and approved lower BIF premium rates for deposit
insurance by the BIF for all but the riskiest institutions. Under the new BIF
deposit insurance premium schedule, deposit insurance premiums range from a low
of four cents per $100 of assessable deposits for well-capitalized institutions
to 31 cents per $100 of assessable deposits for under-capitalized institutions.
Because the SAIF remains significantly below its designated reserve ratio,
insurance premiums for assessable SAIF deposits were not reduced by this recent
FDIC action. As a "well-capitalized" bank, it is anticipated that Webster Bank
will pay insurance premiums to the BIF of four cents per $100 of assessable BIF
deposits. Webster Bank also expects to pay insurance premiums to the SAIF of 23
cents per $100 of assessable SAIF deposits.
The current financial condition of the SAIF has resulted in the
introduction of various legislation in both the United States Senate ("Senate")
and the United States House of Representatives ("House") to recapitalize the
SAIF and then to merge the SAIF into the BIF. Both the Senate and the House
legislation, as currently proposed, would generally impose a special one-time
assessment of approximately 85 cents to 90 cents per $100 of assessable SAIF
deposits, which would apply retroactively to approximately $900 million of
assessable SAIF deposits at Webster Bank. After the special assessment, it is
proposed that SAIF premium rates would then become the same as
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<PAGE>
BIF rates until the funds are merged. Webster is unable to predict whether this
legislation will be enacted or the amount or applicable retroactive date of any
one-time assessment or the rates that would then apply to assessable SAIF
deposits.
Elimination of Federal Savings Association Charter
Legislation has been introduced in the House that would eliminate the
federal savings association charter by January 1, 1998. If such legislation is
enacted, Webster Bank would be required to convert its federal savings bank
charter to either a national bank charter or to a state depository institution
charter. Pending legislation also may result in Webster becoming regulated at
the holding company level by the Board of Governors of the Federal Reserve
System ("Federal Reserve") rather than by the OTS. Regulation by the Federal
Reserve could subject Webster to capital requirements that are not currently
applicable to Webster as a holding company under OTS regulation and may result
in statutory limitations on the type of business activities in which Webster may
engage at the holding company level, which business activities currently are not
restricted. The pending legislation may also provide relief as to recapture of
the bad debt deduction that otherwise would be applicable if Webster Bank were
unable to continue as a qualified savings institution for federal tax purposes.
Webster is unable to predict whether such legislation will be enacted or, if
enacted, whether it will contain relief as to bad debt deductions previously
taken.
Sources of Funds for Cash Dividends
The principal sources of funds for Webster's payments of cash dividends
on the Common Stock and the Series B cumulative convertible preferred stock (the
"Series B Stock") of Webster, as well as for the payment of principal and
interest on Webster's $40 million principal amount of 8 3/4% Senior Notes due
2000 (the "Senior Notes"), are cash dividends from Webster Bank. At September
30, 1995, at the holding company level, Webster had liquid investments of $26
million, of which up to $20 million is expected to be contributed by Webster to
Webster Bank in connection with the Shawmut Transaction. Webster Bank is subject
to certain regulatory requirements that affect its ability to pay cash dividends
to Webster. The Series B Stock ranks prior to the Common Stock as to payment of
cash dividends. In addition, the Senior Notes contain certain covenants that
affect Webster's ability to pay cash dividends on the Common Stock. See
"DESCRIPTION OF CAPITAL STOCK," "MARKET PRICES AND DIVIDENDS" and "CAPITAL
RATIOS."
Effect of Interest Rate Fluctuations
Webster's consolidated results of operations depend to a large extent
on the level of its net interest income, which is the difference between
interest income from interest-earning assets (such as loans and investments) and
interest expense on interest-bearing liabilities (such as deposits and
borrowings). If interest-rate fluctuations cause its cost of funds to increase
faster than the yield on its interest-bearing assets, net interest income will
be reduced. Webster measures its interest-rate risk using simulation, price
elasticity and gap analyses. The differences between an institution's
interest-rate sensitive assets and its interest-rate sensitive liabilities at a
point in time is its gap position. A negative gap indicates that cumulative
interest-rate sensitive liabilities exceed cumulative interest-rate sensitive
assets for that period. A positive gap indicates that cumulative interest-rate
sensitive assets exceed cumulative interest-rate sensitive liabilities. Based on
Webster's asset-liability mix at September 30, 1995, management believes
Webster's one year gap position of positive 5.5% represents a reasonable amount
of interest-rate risk at this point in time.
While Webster uses various monitors of interest-rate risk, it is unable
to predict future fluctuations in interest rates or the specific impact thereof.
The market values of most of Webster's financial assets are sensitive to
fluctuations in market interest rates. Fixed-rate investments, mortgage-backed
securities and mortgage loans decline in value as interest rates rise. Although
Webster's investment and mortgage-backed securities portfolios have grown in
recent quarters, most of the growth has been in adjustable-rate securities or
short-term securities with maturities of less than two years. Changes in
interest rates also can affect the amount of loans originated by Webster, as
well as the value of its loans and other interest-earning assets and its ability
to realize gains on the sale of such assets and liabilities. The extent to which
borrowers prepay loans also is affected by prevailing interest rates. When
interest rates increase, borrowers are less likely to prepay their loans;
whereas, when interest rates decrease, borrowers are more likely to prepay
loans. Funds generated by prepayments may be invested at a lower
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<PAGE>
rate. Prepayments may adversely affect the value of mortgage loans, the levels
of such assets that are retained in the portfolio, net interest income and loan
servicing income. Similarly, prepayments on mortgage-backed securities also may
affect adversely the value of these securities and interest income. Increases in
interest rates may cause depositors to shift funds from accounts that have a
comparatively lower cost such as regular savings accounts to accounts with a
higher cost such as certificates of deposit. If the cost of deposits increases
at a rate that is greater than the increase in yields on interest-earning
assets, the interest-rate spread is negatively affected. Changes in the asset
and liability mix also affect the interest-rate spread.
Acquisition of Shawmut Branches
The Shawmut Transaction will represent a further expansion of Webster's
retail and commercial banking activities by adding 20 Shawmut Branches,
including deposits and loans at or allocated to the Shawmut Branches. The
Shawmut Transaction will increase the percentage of commercial loans in Webster
Bank's loan portfolio. Commercial loans generally have a higher degree of risk
and return compared to residential first mortgage loans. The Shawmut Transaction
will impose increased challenges to Webster Bank in its integration of the
retail and commercial banking operations of the 20 Shawmut Branches into the
current Webster Bank structure, including the retention and expansion of deposit
and lending relationships being acquired. Based upon its experience in the five
completed Acquisitions, Webster Bank plans a smooth integration of the
operations of the Shawmut Branches, although this cannot be assured.
The purpose of the Offering is to obtain additional capital for
contribution by Webster to Webster Bank in order for Webster Bank to continue to
meet the regulatory capital ratios for a "well-capitalized" bank following the
consummation of the Shawmut Transaction. Webster intends to consummate the
Offering prior to consummating the Shawmut Transaction. Therefore, investors in
the Common Stock in the Offering cannot be assured that the Shawmut Transaction
will thereafter be consummated. However, Webster intends to consummate the
Offering only after OTS approval has been obtained for the Shawmut Transaction
and the Fleet/Shawmut Merger has been consummated. In the unlikely event that
the Shawmut Transaction were not to close after the consummation of the
Offering, Webster would initially use the net proceeds for investment purposes,
and thereafter seek to use the net proceeds for general business purposes,
including future acquisitions, none of which is pending. See "THE SHAWMUT
TRANSACTION - Conditions to the Shawmut Transaction."
Economic Conditions
Webster's business and financial condition are significantly affected
by national and local economic conditions. Changes in economic conditions are
neither predictable nor controllable and may have materially adverse
consequences upon Webster even if other favorable events occur. Webster's
business and financial condition are especially subject to changes in economic
conditions prevailing in Connecticut where all of its banking offices are
located.
WEBSTER
Webster, headquartered in Waterbury, Connecticut, is the holding
company of Webster Bank. Webster Bank is engaged in consumer, commercial and
mortgage banking in Connecticut. Webster Bank attracts deposits from retail and
business customers and obtains additional funds through FHL Bank advances and
other borrowings. Webster invests its funds in residential first mortgage loans,
commercial and industrial loans, commercial real estate loans, home equity
loans, consumer installment loans and securities. Webster Bank currently serves
customers from 45 banking offices located in New Haven, Fairfield, Litchfield
and Hartford Counties in Connecticut.
At September 30, 1995, Webster had consolidated total assets of $3.3
billion, total deposits of $2.4 billion and shareholders' equity of $172.6
million or 5.2% of total assets. Residential first mortgage, commercial and
consumer loans comprised 82%, 9% and 9%, respectively, of Webster's net loans
receivable of $1.9 billion at September 30, 1995. For the nine months ended
September 30, 1995, Webster had consolidated net income of $16.0 million,
compared with consolidated net income of $14.0 million for the same period in
1994.
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<PAGE>
At September 30, 1995, nonaccrual loans amounted to $37.9 million and
the allowance for loan losses was $42.8 million, or 112.9% of nonaccrual loans.
Foreclosed properties, net of write downs and reserves, were $18.8 million.
Total nonaccrual assets were $56.7 million, or 1.7% of total assets. The
allowances for losses on nonaccrual assets totaled $43.9 million and represented
75.9% of nonaccrual assets. At September 30, 1995, Segregated Assets, net of
allowances totaled $116.4 million. See "COMPLETED ACQUISITIONS -- First
Constitution Acquisition" as to the obligation of the FDIC to reimburse Webster
Bank for 80% to 95% of losses and eligible expenses on Segregated Assets and to
make contingent reserve payments in connection with the First Constitution
acquisition.
In recent years, Webster's banking operations, including the number of
its banking offices and its assets, deposits and loan portfolio, have been
significantly expanded as a result of five completed Acquisitions. Webster
believes that each of these Acquisitions has been completed on favorable terms.
See "COMPLETED ACQUISITIONS." Completion of the pending Shawmut Transaction,
which is expected to occur in early 1996, will further significantly increase
Webster's banking operations. See "THE SHAWMUT TRANSACTION" and "PRO FORMA
COMBINED FINANCIAL INFORMATION." Webster intends in the future to consider
additional favorable acquisitions in Connecticut or other market areas generally
adjacent to the communities served by Webster Bank. No acquisitions other than
the Shawmut Transaction are pending.
Webster is continuing to expand its banking activities, particularly
commercial and consumer lending. These types of banking activities involve
higher net interest margins and fees than those generally available from
residential first mortgage lending. This expansion has necessitated the addition
of experienced commercial and consumer banking officers, support personnel and
related systems. The costs of this infrastructure have resulted in higher
overhead expenses in recent years, partially offsetting the larger revenues
available from commercial and consumer lending. The Shawmut Transaction will
enable Webster to further expand its commercial and consumer banking operations
by significantly increasing its commercial and consumer banking activities
without a proportionate increase in overhead expenses.
Webster, as a holding company, and its subsidiary Webster Bank, are
subject to comprehensive regulation, supervision and examination by the OTS, as
the primary federal regulator of Webster Bank. Webster Bank is a BIF-insured
member institution. The FDIC also has significant regulatory authority over
Webster Bank. As of September 30, 1995, 63% of Webster Bank's deposits were
assessed premiums at BIF rates and 37% were assessed premiums at SAIF rates. As
of September 30, 1995, Webster Bank met all regulatory capital requirements for
a "well-capitalized" institution, with ratios of core capital to adjusted total
assets, core capital to total risk-weighted assets, and total capital to total
risk-weighted assets of 5.60%, 11.68%, and 12.80%, respectively. See "CAPITAL
RATIOS."
COMPLETED ACQUISITIONS
Suffield Acquisition
On September 6, 1991, Webster Bank acquired certain assets and
liabilities of Suffield Bank ("Suffield"), Suffield, Connecticut, from the FDIC
in an assisted transaction, in which Webster Bank received a $2.5 million cash
payment from the FDIC in connection with the acquisition to reflect its negative
bid. The Suffield acquisition involved an assumption of $247 million of deposit
liabilities (including $93 million of brokered and out-of-state deposits) and $5
million of other liabilities and a purchase of $48 million of performing
one-to-four family home loans, passbook loans and installment loans and $26
million of cash, cash equivalents and U.S. agency obligations. In addition,
Webster Bank received $181 million in cash from the FDIC, representing the
difference between the liabilities assumed less the assets purchased. The
Suffield acquisition, accounted for as a "purchase" transaction, is contributing
positively to Webster's operating results. The net interest income and
noninterest income attributable to the Suffield acquisition have more than
offset the direct costs and overhead of the additional branches acquired.
Through the Suffield acquisition, Webster Bank acquired five additional banking
offices and extended its market area to north central Connecticut.
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<PAGE>
First Constitution Acquisition
On October 2, 1992, Webster Bank acquired most of the assets, all of
the deposits and certain other liabilities of First Constitution Bank ("First
Constitution"), New Haven, Connecticut, from the FDIC in an assisted
transaction. This acquisition increased Webster Bank's assets by $1.3 billion
from $880 million to over $2.0 billion and doubled the number of its banking
offices to 32 by adding 14 New Haven County and two Fairfield County offices.
The First Constitution acquisition has been accounted for as a "purchase"
transaction.
The financial terms of the First Constitution acquisition included five
primary components. First, the FDIC made a cash purchase of $30 million of
Series A Stock of Webster. Webster redeemed $11.75 million of the Series A Stock
on December 30, 1992 and redeemed the balance of the Series A Stock on June 29,
1993. Second, Webster received at the time of the acquisition a $24.2 million
cash payment from the FDIC to purchase the assets and assume the liabilities in
the acquisition. This payment increased cash, which was offset by various
adjustments reflecting the market value of assets acquired and liabilities
assumed on the consolidated statement of condition, and had no impact on
Webster's consolidated statement of income. Webster Bank purchased approximately
$1.3 billion of First Constitution's assets, including: $817 million in one- to
- -four family home loans; $30 million in home equity loans; $34 million in
consumer loans; $257 million in "Segregated Assets" (consisting of multi-family,
commercial and commercial real estate loans); and $155 million in cash, cash
equivalents, U.S. agency obligations and mortgage-backed securities. Webster
Bank assumed approximately $1.2 billion in deposit balances of First
Constitution (including approximately $300 million of brokered or out-of-state
deposits, most of which were withdrawn prior to December 31, 1992 as planned by
Webster Bank) and $29 million of other borrowings and liabilities. Third, the
FDIC retained approximately $225 million of First Constitution's higher risk
assets, including OREO, "in-substance foreclosed" loans, commercial loan
participations, real estate investments, and investments in subsidiaries.
Fourth, the FDIC is reimbursing Webster Bank quarterly for 80% of the total net
charge-offs and certain related expenses on all Segregated Assets purchased in
the acquisition for five years after the acquisition date, with such
loss-sharing reimbursement increasing to 95% (less recoveries in years six and
seven) as to such charge-offs and expenses in excess of $49.2 million (with
payment at the end of the seventh year as to such excess). Fifth, the FDIC is
also reimbursing Webster Bank, as a contingent reserve payment, for 80% of the
excess over $52 million for four years after the acquisition date, up to a
maximum reimbursement of $20 million, of (i) the total net charge-offs on all
First Constitution one- to -four family home, home equity and consumer loans
purchased in the acquisition plus (ii) the unreimbursed portion of the total net
charge-offs and certain related expenses on the Segregated Assets.
As part of the First Constitution acquisition, Webster Bank established
a reserve for the estimated unreimbursed portion of loan losses on Segregated
Assets of $10.7 million and an additional reserve of $46.5 million for the
estimated unreimbursed portion of the one- to -four family home, home equity,
and consumer loans acquired in the First Constitution acquisition (including
those held for sale). During the nine months ended September 30, 1995, Webster
Bank received $6.0 million in reimbursement for eligible charge-offs and related
net expenses in accordance with the loss-sharing arrangement described above.
Payments due from the FDIC upon charge-off and related expenses are recorded as
receivables. When such reimbursements are received, the funds are credited
against the receivable and invested in interest earning assets. Such
reimbursements have no immediate impact on Webster's consolidated statement of
income. Webster Bank's provision for loan losses and the amount of net
charge-offs and related expenses that Webster Bank is required to absorb on the
Segregated Assets are lower than otherwise would have been the case in the
absence of the loss-sharing arrangement with the FDIC. While the maturity of
many of the Segregated Assets is longer than the five-year term of the loss
sharing arrangement, Webster Bank is permitted to take charge-offs of the
Segregated Assets during the five-year term of the loss sharing arrangement in
accordance with the examination criteria utilized by the OTS.
Bristol Acquisition
On March 3, 1994 Webster completed the conversion/acquisition of
Bristol Savings Bank ("Bristol"), which then became a wholly owned subsidiary of
Webster. The acquisition, which was accounted for as a "purchase" transaction,
increased Webster's total assets by $486 million and added five full service
banking offices, with $453 million in deposits, in an attractive, contiguous
market where Bristol had the leading deposit market share. Bristol's mortgage
banking subsidiary also enhanced Webster's mortgage banking capabilities. The
Bristol acquisition has made a positive contribution to Webster's operating
results. Webster achieved economies of scale
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<PAGE>
by combining the administration, operations and mortgage banking activities of
Bristol with those of Webster's other subsidiary bank, First Federal, prior to
merging Bristol and First Federal to form Webster Bank on November 1, 1995.
Additionally, at the time of the Bristol acquisition over $10 million in
potential future tax benefits were available as a result of the Bristol
acquisition, primarily in the form of tax loss carryforwards.
Shoreline Acquisition
On December 16, 1994 Webster completed its acquisition of Shoreline
Bank & Trust Company ("Shoreline"), Madison, Connecticut, for 266,500 shares of
Common Stock of Webster in a tax free transaction accounted for as a "pooling of
interests" transaction, which resulted in Shoreline's financial condition and
operating data being retroactively combined with Webster's consolidated
financial data. Shoreline was formerly a state chartered bank and trust company
with total assets of $51 million, deposit liabilities of $47 million and
shareholders' equity of $4 million. Shoreline had net income of $374,000 for the
nine months ended September 30, 1994 preceding the acquisition and reported
losses for its 1993, 1992 and 1991 fiscal years of $188,000, $870,000 and
$1,056,000, respectively. Concurrent with the acquisition, Shoreline was merged
into Webster Bank and Shoreline's Madison banking office became a full service
office of Webster Bank. The Shoreline acquisition provided a natural extension
of Webster's primary market area.
Shelton Acquisition
On November 1, 1995, Webster acquired Shelton Bancorp, Inc.
("Shelton"), the holding company of Shelton Savings Bank ("Shelton Bank"), a
state-chartered savings bank headquartered in Shelton, Connecticut for 1,293,056
shares of Common Stock. An additional 44,561 shares of Common Stock are issuable
by Webster pursuant to options previously granted by Shelton to its directors,
officers and employees at an average exercise price of $13.22 per share. As part
of the acquisition, Shelton Bank was concurrently merged into Webster Bank. The
acquisition was a tax free transaction and has been accounted for as a "pooling
of interests" transaction. As a result, the consolidated financial condition and
operating data of Shelton as shown below are retroactively combined with
Webster's consolidated financial data.
Shelton Bank has served customers from six banking offices located in
Ansonia, Bethany, Oxford and Shelton. Shelton's general market area was eastern
Fairfield County and southwestern New Haven County. At September 30, 1995,
Shelton had consolidated total assets of $298.3 million, deposits of $273.3
million, and shareholders' equity of $20.8 million. At September 30, 1995,
Shelton had gross loans receivable of $224.1 million, which included $188.1
million in residential first mortgage loans, $12.0 million in commercial real
estate loans, and $24.0 million in home equity and other consumer loans. At
September 30, 1995, nonaccrual loans and OREO were $2.8 million. At that date,
Shelton's allowance for loan losses was $1.5 million, or 71.1% of nonaccrual
loans, and its total allowances for loan and OREO losses were $1.5 million, or
54.4% of nonaccrual loans and OREO. For its fiscal years ended June 30, 1995,
1994 and 1993, Shelton had consolidated net income of $2,216,000, $2,250,000
($1,975,000 before a FASB 109 cumulative accounting change) and $1,920,000,
respectively. For the three months ended September 30, 1995 and 1994, Shelton
had net income of $555,000 and $547,000, respectively.
THE SHAWMUT TRANSACTION
Background of the Acquisition
As of February 20, 1995, Shawmut National Corporation and Fleet
Financial Group, Inc. ("Fleet") (hereinafter jointly referred to as
"Fleet/Shawmut") entered into an Agreement and Plan of Merger (the
"Fleet/Shawmut Merger"). As a condition of regulatory approval of the
Fleet/Shawmut Merger, Fleet/Shawmut are required to have their subsidiary banks
divest certain branches in Connecticut, Massachusetts, New Hampshire and Rhode
Island to avoid anticompetitive effects that could be caused by the
Fleet/Shawmut Merger (the "Fleet/Shawmut Divestiture"). In August 1995,
Fleet/Shawmut announced guidelines that were designed to foster competition,
preserve jobs and continue to meet customer needs in the states where
divestitures are required. Fleet/Shawmut then solicited preliminary bids from
potential acquirors with respect to the branches to be divested.
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<PAGE>
In early September 1995, Webster Bank, along with Eagle Federal Savings
Bank, Bristol, Connecticut ("Eagle"), submitted a preliminary joint bid for all
25 branch banking offices of the Fleet/Shawmut subsidiary banks to be divested
in the Hartford Banking Market. On September 26, 1995, a formal joint bid was
submitted by Webster Bank and Eagle. After extensive negotiations, Fleet/Shawmut
selected Webster Bank and Eagle to acquire all 25 branch banking offices being
divested in the Hartford Banking Market. On October 1, 1995, Webster Bank and
Eagle executed separate purchase and assumption agreements for 20 (the "Shawmut
Branches") and five, respectively, of these offices with Fleet/Shawmut
subsidiary banks. Such agreements may be required to be consummated concurrently
at Fleet/Shawmut's option.
Acquired Branches, Deposits and Loans
Upon consummation of the Shawmut Transaction, Webster Bank will acquire
20 Shawmut Branches in the Hartford Banking Market, including deposits and loans
at or allocated to the Shawmut Branches. The Shawmut Branches are located in the
following Connecticut cities or towns in the Hartford Banking Market: Berlin,
Bristol, Cromwell, East Hartford, Elmwood, Enfield, Farmington, Glastonbury,
Hartford (three offices), Manchester, Middletown, New Britain, Newington,
Simsbury, Southington, West Hartford, Wethersfield and Windsor. See "MAP."
Webster Bank will be acquiring consumer time deposits, savings and money market
deposit accounts, NOW and checking accounts, and business checking and deposit
accounts. The loans to be acquired consist of residential first mortgage loans,
commercial real estate loans, commercial and industrial loans, home equity
loans, and other consumer installment loans.
Strategic Rationale
The Shawmut Transaction will significantly increase Webster Bank's
commercial and retail banking activities in the Hartford Banking Market. After
giving effect to the Shawmut Transaction, Webster Bank will be the second
largest independent bank in Connecticut and the largest Connecticut-based bank
in the Hartford Banking Market, based on total deposit market share. Webster
Bank will have banking offices extending from the Massachusetts border through
central Connecticut to Long Island Sound. Over the last ten years, Webster Bank
has expanded its commercial banking operations serving small and medium sized
businesses in its market areas.
The Shawmut Transaction will enhance Webster Bank's ability to provide
a broad line of deposit and cash management services. The Shawmut Transaction is
estimated to increase the percentage of savings and money market deposit
accounts from 25% to 27% of total deposits, NOW and checking accounts from 11%
to 13% of total deposits, and business checking and deposit accounts from 1% to
4% of total deposits. While consumer time deposits are also estimated to
increase in dollar amount, such deposits as a percentage of total deposits are
estimated to decrease from approximately 63% to 56%.
The Shawmut Transaction will expand Webster Bank's lending capacity and
increase its emphasis on commercial and industrial loans and commercial real
estate loans to small and medium sized businesses as compared to its traditional
emphasis on retail banking. The Shawmut Transaction will enhance Webster Bank's
ability to provide a full range of loan services for commercial banking
customers with credit needs up to $10 million. The Shawmut Transaction is
estimated to increase Webster Bank's loan portfolio from $2.0 billion to $2.6
billion. The percentage of commercial loans in Webster Bank's loan portfolio is
estimated to increase from approximately 15% to 19%. The percentage of
residential first mortgage loans is estimated to decrease from approximately 77%
to 73% of Webster Bank's loan portfolio. The percentage of consumer loans,
including home equity loans, is estimated to remain at approximately 8% of
Webster Bank's loan portfolio.
Webster expects that the Shawmut Transaction will have an accretive
effect on its net income per common share. The Shawmut Transaction will reduce
Webster's tangible book value per common share because of the core deposit
intangible, which will be tax deductible. Book value per common share is
expected to be substantially unchanged after giving effect to the Shawmut
Transaction and the Offering. See "PRO FORMA COMBINED FINANCIAL INFORMATION."
- 16 -
<PAGE>
Purchase Price
Under the terms of the Shawmut Agreement, Webster Bank will
acquire 20 Shawmut Branches for the following purchase price:
(a) Webster Bank will make a cash payment equal to (i) 5.1% of
the average daily balances (including accrued interest) of
assumed deposit liabilities at or allocated to the Shawmut
Branches for the period commencing either 30 days or seven
days prior to the third business day prior to the closing
date, whichever amount is lower, subject to adjustment, as
described in the last paragraph below, less (ii) $2 million;
(b) Webster Bank will pay cash for the stated value of the
real property of the nine owned Shawmut Branches; estimated
payment of approximately $4 million;
(c) Webster Bank will pay cash equal to the net book value of
the personalty (excluding automatic teller machines) at the 20
Shawmut Branches as of the closing date; plus the greater of
$5,000 or net book value, for each of the automatic teller
machines; estimated payment of approximately $1 million;
(d) Webster Bank will exchange two of its branch banking
offices and related deposits (the "Webster Branches") located
in Fairfield and Stamford, Connecticut to Shawmut (the "Branch
Exchange"); Webster Bank will be paid the net book value of
the real and personal property (other than automated teller
machines not being transferred) at the two Webster Branches,
but no separate deposit premium;
(e) Webster will issue a five year nontransferable warrant to
Fleet for 300,000 shares of Common Stock of Webster, with an
exercise price of $32.50 per share, subject to certain
antidilution adjustments (see "The Warrant" below); and
(f) Webster Bank will agree to make a contingent payment (the
"Contingent Payment") in the event of a Change of Control (as
defined below) of Webster within five years of the closing
date in which Fleet would be entitled to receive a cash
payment from Webster Bank equal to (i) the excess of the offer
price per share of Common Stock of Webster over (ii) $32.50,
multiplied by (iii) 150,000 (see "Contingent Payment" below).
Webster Bank will receive a cash payment from Shawmut for the net
deposit liabilities at the closing date, less (i) the aggregate cash payments
described in (a), (b) and (c) above, less (ii) the unpaid principal balances
(based on the general ledger balances), plus accrued interest, on loans to be
acquired that are at or allocated to the Shawmut Branches, plus (iii) the net
book value of the real and personal property at the two Webster Branches as
described in (d) above. See "PRO FORMA COMBINED FINANCIAL INFORMATION" as to the
estimated deposit liabilities to be assumed and loans to be acquired.
Pursuant to purchase and assumption agreements between Eagle and
Fleet/Shawmut subsidiary banks (the "Eagle Purchase Agreements") and subject to
all required regulatory approvals, Eagle will acquire five branch banking
offices from the subsidiary banks with an estimate of approximately $276 million
in deposit liabilities to be acquired. The cash deposit premium to be paid to
the Fleet/Shawmut subsidiary banks by Webster Bank and Eagle combined is
required to average 5.5% of the total amount of the deposit liabilities to be
acquired by both Webster Bank and Eagle combined. The deposit premium to be paid
by Eagle is a fixed percentage that is higher than 5.5% since it involves no
branch exchange, warrant or contingent payment. The 5.1% deposit premium
referred to above to be paid by Webster Bank will be increased or decreased so
as to achieve the 5.5% average deposit premium with Eagle on a combined basis.
Webster does not expect the amount of this adjustment to be material.
-17-
<PAGE>
The Warrant
At the closing of the Shawmut Transaction, Webster will issue to Fleet
a warrant for 300,000 shares of Common Stock of Webster (the "Warrant"). The
exercise price will be $32.50 per share, subject to customary pro rata
antidilution adjustments in the event of a future issuance by Webster of Common
Stock (or securities convertible into or exercisable for Common Stock) at a
price per share of less than $32.50. Such adjustments will not be applicable as
to the Common Stock issued in the Offering, pursuant to employee/director
benefit plans of Webster, upon the conversion of the Series B Stock of Webster,
or pursuant to Webster's dividend reinvestment plan. The Warrant may be
exercised in whole, but not in part, within five years of the date of issuance,
but not within the first two years from the closing date, unless a Change of
Control of Webster has occurred, as defined below. The Warrant may not be sold
or otherwise transferred by Fleet without Webster's prior consent. The $32.50
exercise price represents a premium of 25% over the approximately $26.00 market
price of the Webster Stock prevailing at the time of the negotiation of the
Shawmut Transaction.
For purposes of the Warrant, a "Change of Control" will be deemed to
have occurred in the event that any person or company: (i) acquires voting
rights as to more than 25% of the outstanding Common Stock of Webster or (ii)
executes a definitive merger or other acquisition agreement with Webster.
However, no Change in Control will be deemed to have occurred, if the directors
of Webster serving prior to such acquisition of Common Stock or execution of
such definitive agreement (or successor directors selected by such continuing
directors and unaffiliated with such acquiror) will continue to constitute at
least 50% of the parent holding company board of directors after such
acquisition.
In the event that a Change of Control of Webster is deemed to have
occurred, Fleet would have the right to sell the Warrant to Webster (the "Put").
The price of the Put would be an amount equal to the number of shares issuable
under the Warrant, multiplied by (i) the cash price for the Common Stock of
Webster set forth in the definitive agreement relating to the Change of Control
transaction (or, in the case of a stock for stock transaction, an amount equal
to the five day trailing average closing price of the acquiror's stock following
the public announcement of the transaction, multiplied by the exchange ratio),
less (ii) the then exercise price per share of the shares issuable under the
Warrant. The Put, however, would not be available if the Change of Control
transaction would be accounted for as a "pooling of interests" and Webster's
independent accountants, within ten business days of the exercise of the Put,
issue an opinion indicating that the exercise of the Put would result in the
inability to account for the Change of Control transaction as a "pooling of
interests." If Fleet disagrees with such accounting opinion, Webster, at its
expense, will promptly submit the matter to the accounting staff of the SEC for
an interpretation which will be controlling.
The Standstill Agreement
Webster and Fleet also will enter into a standstill agreement at the
time of the closing of the Shawmut Transaction (the "Standstill Agreement").
Under the Standstill Agreement, for a period of five years, Fleet will (a) vote
all shares of Common Stock of Webster it holds (including shares obtained upon
exercise of the Warrant) on all matters (including the election of directors) as
recommended by the Webster Board of Directors and (b) will not initiate a tender
offer for shares of Common Stock of Webster or participate in a publicly
announced tender offer for Webster that is opposed by the Webster Board of
Directors. However, if during such five year period a bona fide third party
announces or makes an unsolicited offer to acquire more than 25% of the Common
Stock of Webster, that is not solicited by the Webster Board of Directors,
Webster will permit Fleet to make an acquisition proposal to the Webster Board
of Directors or release Fleet from the restrictions set forth in the Standstill
Agreement. Fleet also has agreed that it will not sell the shares of Common
Stock of Webster issued upon exercise of the Warrant in a private sale
transaction (i) to any person as to whom Webster has advised Fleet has filed a
Form 13D or 13G under the Exchange Act as to beneficial ownership of more than
5% of the Common Stock of Webster or (ii) to any person whom Fleet knows or who
confirms to Fleet that such person beneficially owns, or would beneficially own
upon such purchase, more than 4.9% of the then outstanding Common Stock of
Webster. All voting restrictions will terminate upon Fleet's sale of the Common
Stock of Webster issued under the Warrant or upon the execution of a definitive
agreement relating to a Change of Control of Webster, as defined in the Warrant.
-18-
<PAGE>
Contingent Payment
Pursuant to the Shawmut Agreement, Webster Bank and Fleet will enter
into a contingent payment agreement at the time of the closing of the Shawmut
Transaction (the "Contingent Payment Agreement"). If Webster executes a
definitive agreement that would result, if completed, in a Change of Control of
Webster (defined on the same basis as in the Warrant), Fleet would be entitled
to a cash payment from Webster Bank equal to 150,000 times an amount equal to
(i) the cash price per share for the Common Stock of Webster as set forth in the
definitive agreement relating to the Change of Control transaction (or in the
case of a stock for stock transaction, the five day trailing average closing
price of the acquiror's stock following the public announcement of the
transaction multiplied by the exchange ratio, as defined in the definitive
agreement relating to the Change of Control transaction), less (ii) $32.50 (the
"Contingent Payment"). The Contingent Payment also will be due (a) within 30
days of the public announcement of a tender offer supported by the Webster Board
of Directors or (b) upon the consummation of a tender offer that the Webster
Board of Directors has not recommended to its shareholders.
Fleet would not be entitled to receive the Contingent Payment in cash
as to any Change of Control transaction that would be accounted for as a
"pooling of interests," if Fleet receives an opinion from Webster's independent
accountants, within ten business days of Fleet's written request for payment,
indicating that payment of the Contingent Payment would result in the inability
to account for the Change of Control transaction as a "pooling of interests." In
such event, the Contingent Payment would be made, at Fleet's option, either (a)
by Webster issuing Common Stock to Fleet immediately before the consummation of
the Change of Control transaction, having a market value equal to the cash
amount of the Contingent Payment, or (b) in cash, plus interest at the "prime
rate" as published from time to time by The Wall Street Journal, at such time as
Webster's independent accountants certify that a cash payment by Webster Bank of
the Contingent Payment would not result in the inability to treat the Change of
Control transaction as a "pooling of interests" for accounting purposes.
The Sublease Agreement
Pursuant to the Shawmut Agreement, Webster Bank and Fleet Bank,
National Association ("Fleet Bank") will enter into a sublease agreement with
respect to a total of 50,000 square feet of office space in One Constitution
Plaza in downtown Hartford (the "Sublease Agreement") at the time of the closing
of the Shawmut Transaction. The Sublease Agreement will provide that Webster
Bank will sublease office space from Fleet Bank at One Constitution Plaza until
December 31, 2003. Under the terms of the Sublease Agreement, Webster Bank will
sublease 20,000 square feet of office space commencing on the closing date, and
will add an additional 10,000 square feet on each of January 1, 1997, January 1,
1998 and January 1, 1999. The Sublease Agreement will provide that Webster Bank
will assume and pay its pro rata portion of taxes and operating expenses over
base rent, based on its sublease percentage of the total square footage leased
by Fleet Bank. Webster Bank will also be entitled to its pro rata portion of the
build-out provisions contained in the master lease agreement relating to One
Constitution Plaza.
Effect on Proportion of BIF/SAIF Deposit Premiums
Webster Bank's deposits are insured by the FDIC through the BIF. After
giving effect to the Shawmut Transaction, approximately 71% of Webster Bank's
deposits will be assessed premiums at BIF rates and only 29% of its deposits
will be assessed premiums at SAIF rates. This compares with approximately 63% of
deposits at BIF rates and 37% of deposits at SAIF rates prior to the Shawmut
Transaction.
Conduct of Business Pending the Shawmut Transaction
The Shawmut Agreement contains various restrictions on the operations
of the branches to be sold while the Shawmut Transaction is pending. In general,
the Shawmut Agreement obligates Shawmut (and Webster Bank vis-a-vis the Webster
Branches) to (a) conduct its business of banking in the usual, regular and
ordinary course, consistent with past practices; (b) to use reasonable efforts
to maintain and preserve intact its relationships with branch employees, and
advantageous business relationships, including branch customers; and (c) to take
no action that would adversely affect or delay the ability of any party to
obtain any regulatory approval. Branch employees may not be transferred to any
facilities other than the branches to be acquired, except upon the request of a
branch employee.
- 19 -
<PAGE>
Regulatory Approvals for the Shawmut Transaction
Consummation of the Shawmut Transaction is conditioned upon the receipt
of all required regulatory approvals. An application for approval by the OTS, as
Webster Bank's primary federal regulator, was submitted on November 3, 1995.
Subject to completion of the Offering, Webster is not aware of any reasons why
the approval of the OTS for the Shawmut Transaction should not be received on a
timely basis; however, this cannot be assured. Webster does not anticipate the
need to obtain any other regulatory approval for the Shawmut Transaction.
In addition to the OTS regulatory approval needed to be obtained by
Webster for the Shawmut Transaction, other regulatory approvals must be received
by Fleet/Shawmut, including various bank regulatory agency approvals for the
Fleet/Shawmut Merger, including no objection from the United States Department
of Justice for the Fleet/Shawmut Divestiture. Webster can provide no assurances
as to receipt of such regulatory approvals by Fleet/Shawmut.
OTS regulatory approval is required to be received by Eagle as to its
acquisition of branches from Fleet/Shawmut under the Eagle Purchase Agreements.
At Fleet/Shawmut's option, such acquisition by Eagle may be required to be
consummated concurrently with the Shawmut Transaction by Webster. While Webster
expects that Eagle should receive OTS regulatory approval on a timely basis,
this cannot be assured.
Webster does not intend to complete the Offering until after Webster
has obtained OTS regulatory approval for the Shawmut Transaction, and the
Fleet/Shawmut Merger has been consummated.
Conditions to the Shawmut Transaction
The respective obligations of Webster and Shawmut to effect the Shawmut
Transaction are subject to various conditions, including the following: (a) the
prior consummation of the Fleet/Shawmut Merger; (b) the receipt of all required
regulatory approvals (without material conditions) to the Shawmut Transaction
and the expiration of any related regulatory waiting periods; (c) the completion
of the Offering; (d) customary closing conditions, such as continued accuracy of
representations and warranties, delivery of legal opinions, officers'
certificates and transfer and assignment documents at the closing; (e) the
execution and delivery of the Warrant, the Standstill Agreement, the Contingent
Payment Agreement and the Sublease Agreement; and (f) the concurrent
consummation of the acquisition by Eagle under the Eagle Purchase Agreements.
Shawmut at its option may terminate the Shawmut Agreement, if the
registration statement, of which this Prospectus is a part, is not declared
effective by the SEC by January 31, 1996, unless Webster by such date has
obtained a "firm commitment underwriting letter" from Merrill Lynch, Pierce,
Fenner & Smith Incorporated or another reputable investment banking firm to
raise the amount of capital required to obtain OTS approval for Webster to
consummate the Shawmut Transaction.
In the event of a Change of Control of Webster (defined on the same
basis as in the Warrant) prior to the closing of the Shawmut Transaction,
Shawmut at its option may terminate the Shawmut Agreement.
USE OF PROCEEDS
Webster will contribute to Webster Bank all of the net proceeds from
the sale of the Common Stock in the Offering in order to increase Webster Bank's
regulatory capital ratios, which otherwise would have decreased as a result of
Webster Bank's significant increase in size upon consummation of the Shawmut
Transaction. Webster anticipates that the net proceeds from the Offering will be
approximately $27 million. See "PRO FORMA COMBINED FINANCIAL INFORMATION." In
addition, Webster expects to contribute to Webster Bank up to $20 million of
Webster's existing holding company funds to further increase Webster Bank's
capital ratios. As a result of these capital contributions, Webster Bank expects
to continue to meet all capital ratios required for a "well-capitalized" bank
following consummation of the Shawmut Transaction. See "CAPITAL RATIOS."
- 20 -
<PAGE>
In the unlikely event that the Shawmut Transaction were not to close
after consummation of the Offering, Webster would initially use the net proceeds
for investment purposes, and thereafter seek to use the net proceeds for general
business purposes, including future acquisitions, none of which is pending.
CAPITALIZATION
The following table sets forth the consolidated capitalization,
including deposit accounts and borrowings, of Webster (including Shelton) at
September 30, 1995, and Webster's pro forma combined capitalization as of that
date after giving effect to the Offering and the Shawmut Transaction. The
information shown below should be read in conjunction with the historical
consolidated statement of condition of Webster at September 30, 1995, as
restated to reflect the acquisition of Shelton. Dollar amounts are stated in
thousands.
September 30, 1995
Webster Pro Forma Combined (e)
Deposits (a)....................... $2,439,833 $3,118,833
FHL Bank Advances.................. 545,415 325,415
Other Borrowings................... 90,094 90,094
Senior Notes due June 30, 2000..... 40,000 40,000
---------- ----------
Total............................ 3,115,342 3,574,342
---------- ----------
Shareholders' Equity:
Common Stock, $.01 par value:
Authorized - 14,000,000 shares
Issued shares (b) (c)........... 73 84
Serial Preferred Stock, $.01 par value:
Authorized - 3,000,000 shares;
Outstanding - 171,869 shares of
Series B Stock 2 2
Paid-in-Capital (d)................ 105,876 132,865
Retained Earnings.................. 73,325 73,325
Less Treasury Stock at cost, 445,424 shares (3,456) (3,456)
Less ESOP Shares Purchased with Debt. (3,207) (3,207)
---------- ----------
Total Shareholders' Equity....... 172,613 199,613
---------- ----------
Total Capitalization............... $3,287,955 $3,773,955
========== ==========
- -------------------------
(a) Includes advance payments by borrowers for taxes and insurance.
(b) 6,799,611 shares of Common Stock (excluding Treasury Stock) were issued and
outstanding as of September 30, 1995 after giving effect to the Shelton
acquisition. On a pro forma combined basis, such number of issued and
outstanding shares of Common Stock would be increased to 7,899,611 shares
(or to 8,064,611 shares if the overallotment option for 165,000 shares is
exercised in full).
(c) Excludes 583,259 shares of Common Stock issuable upon exercise of
outstanding stock options to directors, officers and employees. Also,
excludes 986,062 shares of Common Stock issuable upon conversion of the
remaining shares of the Series B Stock.
(d) Net proceeds from the sale of 1,100,000 shares of Common Stock in the
Offering are estimated at $27 million (or $31.1 million if the
overallotment option for 165,000 shares is exercised in full).
(e) See "PRO FORMA COMBINED FINANCIAL INFORMATION," including adjustments to
the Pro Forma Combined Statement of Condition at September 30, 1995.
- 21 -
<PAGE>
CAPITAL RATIOS
The following table compares Webster Bank's historical and pro forma
regulatory capital levels as of September 30, 1995 to minimum regulatory
requirements. Webster intends to contribute to Webster Bank all of the $27
million in estimated net proceeds from the Offering, plus up to an additional
$20 million of existing holding company funds. Pro forma combined capital, as
shown below, reflects such capital contributions and gives effect to the Shawmut
Transaction. The actual capital level of Webster Bank may be higher or lower
depending on Webster Bank's financial condition and asset mix at the time of the
consummation of the Shawmut Transaction. See "USE OF PROCEEDS" and "PRO FORMA
COMBINED FINANCIAL INFORMATION," including the adjustments to the Pro Forma
Combined Statement of Condition.
<TABLE>
<CAPTION>
Pro Forma Combined,
Historical As Adjusted
---------- -----------
Amount Percent Amount Percent
------ ------- ------ -------
(dollars in thousands)
Tier 1 Capital
<S> <C> <C> <C> <C>
Capital level............................................. $ 185,469 5.60% $ 191,511 5.07%
Minimum Requirement ...................................... 99,292 3.00 113,241 3.00
----------- ----- ----------- ----
Excess ................................................... $ 86,177 2.60% $ 78,270 2.07%
=========== ===== =========== =====
Tier 1 Risk-Based Capital
Capital level............................................. $ 185,469 11.68% $ 191,511 9.25%
Minimum Requirement ...................................... 63,521 4.00 82,805 4.00
----------- ------ ----------- ----
Excess.................................................... $ 121,948 7.68% $ 108,706 5.25%
=========== ===== =========== =====
Total Risk-Based Capital
Capital level............................................. $ 203,203 12.80% $ 209,245 10.11%
Minimum Requirement ...................................... 127,042 8.00 165,611 8.00
----------- ------ ----------- ----
Excess ................................................... $ 76,161 4.80% $ 43,634 2.11%
=========== ===== =========== =====
</TABLE>
To be considered "well-capitalized" for regulatory capital purposes,
Webster Bank would be required to maintain a ratio of Tier 1 capital to adjusted
total assets of 5.0%, a ratio of Tier 1 capital to risk-weighted assets of 6.0%
and a ratio of total capital to risk-weighted assets of 10.0%, which ratios are
calculated on a quarterly basis. Pro forma combined capital reflected above
assumes that the net proceeds from the Offering, and the additional capital to
be contributed from existing holding company funds, will be invested by Webster
Bank in assets with a 20% risk weighting or used to repay outstanding FHL Bank
advances. As a result of such capital contributions, Webster Bank expects to
meet all regulatory capital ratios required for a "well-capitalized" bank
following the consummation of the Shawmut Transaction.
- 22 -
<PAGE>
MARKET PRICES AND DIVIDENDS
The following sets forth the range of high and low sale prices of the
Common Stock as reported on NASDAQ on a quarterly basis, as well as cash
dividends paid during the quarters indicated. Webster paid a 10% stock dividend
on June 4, 1993. The per share data shown below and elsewhere in this Prospectus
have been adjusted retroactively to reflect such 10% stock dividend.
<TABLE>
<CAPTION>
Sale Prices Cash
--------------------------------------------
High Low Period End Dividends Paid
---- --- ---------- --------------
1992:
<S> <C> <C> <C> <C> <C> <C> <C>
First Quarter $12 3/4 $10 1/2 $11 5/8 $0.12
Second Quarter 12 7/8 10 1/2 12 3/4 0.12
Third Quarter 14 1/2 11 7/8 12 7/8 0.12
Fourth Quarter 17 1/4 12 3/4 17 1/4 0.12
1993:
First Quarter 19 1/8 16 3/8 16 7/8 0.12
Second Quarter 18 1/2 15 3/8 18 1/2 0.12
Third Quarter 21 17 3/4 20 1/4 0.13
Fourth Quarter 25 20 1/4 22 7/8 0.13
1994:
First Quarter 22 1/4 18 1/2 21 5/8 0.13
Second Quarter 24 3/4 18 3/8 23 7/8 0.13
Third Quarter 25 1/2 22 1/2 23 1/4 0.13
Fourth Quarter 23 1/2 17 1/4 18 1/2 0.13
1995:
First Quarter 22 1/4 18 1/2 21 5/8 0.16
Second Quarter 25 3/4 21 1/2 23 7/8 0.16
Third Quarter 30 1/2 23 3/8 26 1/4 0.16
Fourth Quarter 27 1/2 24 3/4 26 1/4 0.16 *
(through November 1)
- -------------------
* Payable on November 15, 1995.
</TABLE>
On November 1, 1995, the closing price of the Common Stock on NASDAQ
was $26.25 per share.
Webster's policy is to pay quarterly cash dividends. Webster has paid
consecutive quarterly cash dividends since 1987.
The principal sources of funds for Webster's payments of cash dividends
on its Common Stock and its Series B Stock, as well as for payment of principal
and interest on its Senior Notes, are dividends from Webster Bank and liquid
investments at the holding company level. At September 30, 1995, Webster
(excluding its investment in Webster Bank) had $26.0 million of cash and cash
equivalents, investment securities and other liquid assets at the holding
company level.
Annual dividend payments on the shares of Common Stock (based on an
annual current dividend rate of $0.64 per share) and Series B Stock outstanding
at September 30, 1995 are approximately $4.4 million and $1.3 million,
respectively. While the Senior Notes are outstanding, Webster is required to
maintain liquid assets at the holding company level equal to not less than 150%
of the aggregate interest expense on the Senior Notes and on all indebtedness
for borrowed money of Webster for 12 full calendar months. At September 30,
1995, the liquid
- 23 -
<PAGE>
asset requirement was $5.6 million based on the Senior Notes and a guaranteed
ESOP borrowing. The Senior Notes also limit Funded Indebtedness at the holding
company level to 90% of the consolidated net worth of Webster. In addition,
there are limitations on restricted distributions (which include cash dividends
and other distributions by Webster and certain principal payments or
acquisitions by Webster of its indebtedness). See "DESCRIPTION OF THE CAPITAL
STOCK -- Senior Notes" as to these limitations and related definitions of
capitalized terms. The Series B Stock ranks prior to the Common Stock as to
payment of dividends. See "DESCRIPTION OF CAPITAL STOCK -- Series B Stock."
OTS capital distribution regulations limit Webster Bank's ability to
pay dividends based on its capital level and supervisory condition. Under the
regulations, a savings bank that meets fully phased-in minimum capital
requirements is generally permitted to make capital distributions of up to the
greater of (i) 100% of its net income during that year, plus the amount that
would reduce by one-half its "surplus capital ratio" (the excess capital over
its fully phased-in minimum capital requirements), or (ii) 75% of its net income
over the most recent four-quarter period. Based on fully phased-in minimum
regulatory capital requirements applicable to Webster Bank at September 30,
1995, Webster Bank had $54.1 million available under OTS capital distribution
regulations for the payment of cash dividends. Earnings by Webster Bank
subsequent to September 30, 1995 will increase the amount available under such
regulations for the payment of cash dividends in the future by Webster Bank.
However, Webster Bank's significant increase in size following consummation of
the Shawmut Transaction will reduce the amount available for the payment of cash
dividends in the future by Webster Bank. See "CAPITAL RATIOS." A 30-day notice
filing is required to be made with the OTS before any cash dividends are
declared or paid by a savings bank. There can be no assurance that Webster Bank
will continue to meet its fully phased-in minimum capital requirements in the
future or that its net income and surplus capital in the future will be
sufficient to permit the payment of cash dividends in the future by Webster Bank
to Webster.
At September 30, 1995, Webster Bank exceeded all regulatory capital
ratios required for a "well-capitalized" bank. See "CAPITAL RATIOS" as to
Webster's capital ratios at September 30, 1995, including the pro forma effect
of the Offering, the additional capital contribution using existing holding
company funds and the Shawmut Transaction on the capital ratios of Webster as of
that date. Webster Bank expects to continue to meet all regulatory capital
ratios required for a "well capitalized" bank following the Shawmut Transaction.
Since Webster Bank intends to continue to follow its policy of maintaining its
regulatory capital ratios at the levels required for a "well capitalized" bank,
the amount available for dividends by Webster Bank would be substantially less
than the amount permitted under the OTS capital distribution regulations
discussed above. There can be no assurance that Webster Bank will continue to
meet all regulatory capital ratios required for a "well capitalized" bank in the
future.
An insured depository institution is prohibited from declaring any
dividend, making any other capital distribution, or paying a management fee to
its holding company if, following the distribution or payment, the institution
would be classified as "undercapitalized" or lower. Under prompt corrective
action regulations adopted by both the OTS and FDIC, an insured depository
institution would be "undercapitalized" if the institution has a total
risk-based capital ratio of less than 8%, a Tier 1 risk-based capital ratio of
less than 4%, or a Tier 1 capital ratio that is less than 4% (3% if the
institution is rated Composite or Macro 1 in its most recent report of
examination). Webster Bank is subject to the dividend limitations imposed by the
prompt corrective action regulations. Webster Bank, as an OTS regulated
institution, however, is only permitted to make a capital distribution under the
prompt corrective action regulations if the amount and type also would be
permitted under the OTS's existing capital distribution regulations discussed
above. In addition, Webster might be required by the OTS to maintain the capital
of Webster Bank at a level consistent with regulatory capital requirements. This
may reduce the amount of funds that would otherwise be available to Webster for
the payment of cash dividends on the Common Stock.
- 24 -
<PAGE>
PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited Pro Forma Combined Financial Information as of
September 30, 1995 combines the unaudited consolidated statement of condition of
Webster, as restated to include Shelton, at September 30, 1995, with the
unaudited financial information at September 30, 1995 supplied by Shawmut as to
the Shawmut assets to be acquired and liabilities to be assumed. The Pro Forma
Combined Financial Information is presented as if the Shawmut Transaction and
the Offering had occurred on September 30, 1995, and gives effect to the pro
forma adjustments described in the accompanying notes. The Pro Forma Combined
Financial Information should be read in conjunction with the unaudited
consolidated statement of financial condition of Webster, restated to include
Shelton, at September 30, 1995. See the introductory paragraphs under
"PROSPECTUS SUMMARY-- Summary Consolidated Financial Data."
The Pro Forma Combined Financial Information is not necessarily
indicative of the consolidated financial position that would have been achieved
had the Shawmut Transaction and the Offering been consummated on the date
indicated.
- 25 -
<PAGE>
Pro Forma Combined Statement of Condition
<TABLE>
<CAPTION>
Shawmut Assets Purchase
Acquired and Accounting
Liabilities and Other Pro Forma
At September 30, 1995 (Unaudited) Webster Assumed Adjustments Combined
------- ------- ------------ ------------
(In Thousands)
ASSETS
<S> <C> <C> <C> <C>
Cash and Due from Depository Institutions.......... $ 48,340 $ 264,000 $ (247,000)(b) $65,340
Interest-bearing Deposits.......................... 75,097 -- -- 75,097
Securities......................................... 170,593 -- -- 170,593
Mortgage-backed Securities......................... 942,722 -- (200,000)(c) 742,722
Loans Receivable, Net.............................. 1,872,542 630,000(a)(c) (12,000)(d) 2,490,542
Accrued Interest Receivable........................ 21,631 5,000 -- 26,631
Premises and Equipment, Net........................ 36,212 5,000 4,000 (e) 45,212
Segregated Assets, Net............................. 116,365 -- -- 116,365
Foreclosed Properties, Net......................... 18,801 -- 18,801
Core Deposit Intangible............................ 4,916 -- 42,000 (f) 46,916
Prepaid Expenses and Other Assets.................. 25,713 25,713
----------- ----------- ------------ -----------
TOTAL ASSETS.................................... $ 3,332,932 $ 904,000 $ (413,000) $3,823,932
=========== =========== ============ ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits........................................... $ 2,431,068 $ 900,000(a) $ (223,000)(b) $3,108,068
Federal Home Loan Bank Advances.................... 545,415 -- (220,000)(c) 325,415
Other Borrowings................................... 130,094 -- -- 130,094
Advance Payments by Borrowers for Taxes
and Insurance.................................... 8,765 2,000 -- 10,765
Accrued Expenses and Other Liabilities............. 44,977 2,000 3,000 (g) 49,977
----------- ----------- ----------- -----------
Total Liabilities............................... 3,160,319 904,000 (440,000) 3,624,319
SHAREHOLDERS' EQUITY............................... 172,613 -- 27,000 (h) 199,613
----------- ----------- ----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY......................................... $ 3,332,932 $ 904,000 $ (413,000) $3,823,932
=========== =========== ============ ==========
</TABLE>
The Pro Forma Combined Statement of Condition does not include results of
operations subsequent to September 30, 1995, which are expected to increase
shareholders' equity.
The Pro Forma Combined Statement of Condition has not been adjusted to reflect
any of the improvements in operating efficiencies that Webster anticipates may
occur in the future due to the Shawmut Transaction.
See footnotes on following page.
Pro Forma Combined Selected Significant Statistical Data
Pro Forma
At September 30, 1995 (Unaudited) Webster Combined
Book value per common share........................... $22.86 $23.09
Tangible book value per common share.................. $22.14 $17.16(i)
Common shares outstanding (000's)..................... 6,800 7,900
Shareholders' equity to total assets.................. 5.18% 5.22%
Nonaccrual assets to total assets..................... 1.73% 1.51%
Allowance for loan losses to nonaccrual loans......... 112.94% 126.15%
Allowances for nonaccrual assets to nonaccrual assets. 75.94% 84.60%
- 26 -
<PAGE>
Notes to Pro Forma Combined Statement of Condition
(a) The weighted average interest rates at September 30, 1995 for the loans
to be acquired and deposits to be assumed in the Shawmut Transaction
were 8.37% and 2.80%, respectively.
(b) As part of the Shawmut Transaction, Webster will exchange two of its
Fairfield County branch banking offices (the "Branch Exchange"), the
effect of which is expected to reduce cash and deposits by
approximately $173 million. The weighted average interest rate at
September 30, 1995 of the deposits being exchanged is 4.93%. Included
below is a summary of the projected effect on cash of the Branch
Exchange, the effect of adjustments to cash for estimated run-off of
assumed deposits of $50 million and the acquired loan repayments and
prepayments of principal balances of $15 million. Such deposit run-off
is projected from October 1, 1995 to the expected date of the Shawmut
Transaction closing. The amounts reflected as loan repayments and
prepayments of principal are primarily estimates of such activity from
October 1, 1995 to the expected date of the Shawmut Transaction
closing. The remaining $39 million of other cash reductions represents
the estimated net impact of the Shawmut Transaction, the Offering and
other adjustments as described in footnote (c) below.
(In thousands)
Branch Exchange................................... $(173,000)
Projected deposit run-off......................... (50,000)
----------
Total cash adjustments related to deposits...... (223,000)
----------
Projected loan repayments and prepayments......... 15,000
Other cash reductions ............................ (39,000)
----------
Total net cash adjustments ..................... $(247,000)
==========
(c) Webster expects to sell approximately $200 million of available for
sale mortgage-backed securities with a weighted average interest rate
at September 30, 1995 of approximately 6.61% and use excess cash to
payoff approximately $220 million of outstanding FHL Bank advances with
a weighted average interest rate at September 30, 1995 of approximately
6.20%. Such transactions will assist Webster Bank to continue as a
"well-capitalized" bank for regulatory capital ratio purposes following
the Shawmut Transaction and the Offering. See footnote (h) below as to
the Offering. Also, see "CAPITAL RATIOS" elsewhere in this Prospectus.
(d) Purchase accounting and other adjustments related to the acquired loan
portfolio reflect loan loss allowances, projected repayments and
prepayments of principal balances offset by mark to market premium
adjustments.
(e) The stated book value of premises and equipment acquired estimated at
$5.0 million approximates market value. Webster expects to purchase
approximately $4 million of additional data processing and other
equipment.
(f) Represents a tax deductible core deposit intangible estimated at
approximately $42 million based on $850 million of deposit liabilities
assumed (after the projected deposit run-off).
(g) Includes estimated transaction costs of approximately $3 million
(principally financial advisory and other professional fees).
- 27 -
<PAGE>
(h) Webster expects to raise approximately $27 million in net shareholders'
equity through the sale of approximately 1.1 million additional shares
of Common Stock in the Offering. There can be no assurance that the
Offering will be consummated or as to the number of shares to be issued
or the price per share.
(In thousands)
Estimated common equity raised....................... $ 29,000
Estimated expenses (including underwriting discount)
related to the sale of common equity................ (2,000)
------------
Estimated net proceeds from the sale of
common equity..................................... $ 27,000
============
(i) On a pro forma combined basis, the tangible book value per share is
computed by subtracting the tax deductible core deposit intangible
estimated at approximately $46.9 million (including $4.9 million prior
to the Shawmut Transaction) from common shareholders' equity estimated
at approximately $182.4 million, divided by the shares of Common Stock
outstanding estimated at approximately 7.9 million shares.
Pro Forma Combined Summary
After giving effect to the Shawmut Transaction: Webster at September
30, 1995 would have pro forma combined total assets of approximately $3.8
billion. Webster's net loans receivable would increase as of that date from $1.9
billion to approximately $2.5 billion on a pro forma combined basis; the
weighted average interest rate of Webster's total interest-earning assets of
7.50% at September 30, 1995 would increase to approximately 7.74% on a pro forma
combined basis; total deposits at September 30, 1995 would increase from $2.4
billion to approximately $3.1 billion on a pro forma combined basis; the
weighted average interest rate of Webster's total interest-bearing liabilities
of 4.60% at September 30, 1995 would decrease to approximately 4.07% on a pro
forma combined basis; and the weighted average interest rate spread of 2.90% at
September 30, 1995 would increase to approximately 3.67% on a pro forma combined
basis. The assets being acquired and the liabilities being assumed in the
Shawmut Transaction will be the amounts outstanding at the date of consummation
of the Shawmut Transaction. The amounts and weighted average interest rates will
change from the September 30, 1995 amounts and weighted average interest rates
shown above due to interest-rate repricing, principal repayments and prepayments
and other changes in balances of the assets being acquired and the liabilities
being assumed.
- 28 -
<PAGE>
DESCRIPTION OF CAPITAL STOCK
Common Stock
Webster is authorized to issue 14,000,000 shares of Common Stock (par
value $.01 per share), of which 6,807,198 shares (excluding Treasury Stock) were
issued and outstanding as of November 1, 1995. As of November 1, 1995, there
were outstanding options for 583,259 shares of Common Stock held by directors,
officers and employees of Webster. After giving effect to the conversion of the
outstanding Series B Stock into 986,062 shares of Common Stock as described
below and the exercise of outstanding stock options, there would be a total of
8,376,519 shares of Common Stock (excluding Treasury Stock) then outstanding.
See "CAPITALIZATION" as to the number of shares of Common Stock to be
outstanding after giving effect to the Offering. Each share of Common Stock has
the same relative rights and is identical in all respects to each other share of
the Common Stock. The Common Stock is non-withdrawable capital, is not of an
insurable type and is not insured by the FDIC or any other governmental entity.
Holders of the Common Stock are entitled to one vote per share on each
matter properly submitted to shareholders for their vote, including the election
of directors. Holders of the Common Stock do not have the right to cumulate
their votes for the election of directors, and they have no pre-emptive or
conversion rights with respect to any shares that may be issued. The Common
Stock is not subject to additional calls or assessments by Webster, and all
shares of the Common Stock currently outstanding are fully paid and
nonassessable.
Holders of the Common Stock are entitled to receive dividends when and
as declared by the Board of Directors out of funds legally available for
distribution. No cash dividends or other distributions may be declared or paid
on the Common Stock, however, unless all accumulated dividends have been paid
concurrently on the Series B Stock. In addition, as described below, the
indenture for the Senior Notes places certain restrictions on Webster's ability
to pay cash dividends on the Common Stock. See "DESCRIPTION OF CAPITAL STOCK --
Senior Notes."
In the unlikely event of any liquidation or dissolution of Webster, the
holders of the Common Stock would be entitled to receive (after payment or
provision for payment of all debts and liabilities of Webster and after payment
of the liquidation preferences of all outstanding shares of preferred stock) all
remaining assets of Webster available for distribution, in cash or in kind.
The transfer agent and registrar for the Common Stock is Chemical
Mellon Shareholders Services, L.L.C., Securityholder Relations, P.O. Box 24935,
Church Street Station, New York, New York 10249.
Series B Stock
Webster's Certificate of Incorporation authorizes the Board of
Directors, without further stockholder approval, to issue up to 3,000,000 shares
of serial preferred stock for any proper corporate purpose. In approving any
issuance of serial preferred stock, the Board of Directors has broad authority
to determine the rights and preferences of the serial preferred stock, which may
be issued in one or more series. These rights and preferences may include
voting, dividend, conversion and liquidation rights that may be senior to the
Common Stock.
Of the 3,000,000 authorized shares of serial preferred stock, 171,869
shares of Series B Stock are currently outstanding. The Series B Stock ranks
prior to the Common Stock with respect to dividends and amounts distributable
upon liquidation. The Series B Stock is entitled to receive, when declared by
the Board of Directors out of funds of Webster legally available therefor,
cumulative quarterly cash dividends at an annual rate of 7 1/2%. Unless full
cumulative dividends on the Series B Stock have been paid, dividends (other than
in Common Stock) may not be paid or declared upon the Common Stock. Upon any
liquidation of Webster, the holders of the Series B Stock will be entitled to
receive out of the assets of Webster available for distribution to its
shareholders before any distribution is made to holders of the Common Stock an
amount equal to $100 per share, plus an amount equal to all dividends
accumulated and unpaid on the Series B Stock to the date of final distribution.
Except as indicated below or as required by law, holders of the Series
B Stock have no voting rights. If at any time six quarterly dividends payable on
the Series B Stock are accumulated and unpaid, the number of directors
- 29 -
<PAGE>
of Webster is required to be increased by two and the holders of all the Series
B Stock, voting as a single class, will be entitled to elect the additional two
directors until all dividends accumulated on the Series B Stock have been paid
in full. In addition, without the vote or consent of the holders of at least
two-thirds of the Series B Stock then outstanding, Webster may not (i) amend,
alter or repeal any of the provisions of its Certificate of Incorporation or
Certificate of Designation so as to affect adversely the preferences or powers
of the Series B Stock, (ii) authorize any reclassification of the Series B
Stock, or (iii) issue any shares of any class or series of stock of Webster
ranking prior to the shares of the Series B Stock as to dividends or upon
liquidation, or reclassify any authorized stock of Webster into any such prior
shares or issue any obligation or security convertible into or evidencing the
right to purchase any such prior shares. Accordingly, the voting rights of the
holders of Series B Stock could under certain circumstances operate to restrict
the flexibility that Webster would otherwise have in connection with any future
issuances of equity securities or changes to its capital structure.
The Series B Stock is not subject to any mandatory redemption at the
election of the holder or sinking fund provision. The Series B Stock may be
redeemed for cash at the option of Webster, in whole or in part, at any time on
or after January 15, 1997, at the applicable redemption price, plus accumulated
and unpaid dividends. The redemption price initially will be $104.50 per share
effective as of January 15, 1997 and will decline to $100.00 after January 15,
2003. Holders of Series B Stock have the right, at their option, at any time to
convert the Series B Stock into a number of fully paid and nonassessable shares
of Common Stock equal to $100.00 for each share surrendered for conversion
divided by the conversion price, subject to certain exceptions following a
notice of redemption by Webster. The current conversion price per share of
Series B Stock is $17.43 (equivalent to 5.74 shares of Common Stock per share of
Series B Stock), as adjusted for the 10% stock dividend issued to shareholders
of record on June 4, 1993. Such conversion price is subject to further
adjustment upon certain events. If the actual price of the shares of Common
Stock sold in the Offering is less than the average of the last reported sales
prices per share for the ten consecutive trading days preceding the date of
issuance of such Common Stock, the conversion price for the Series B Stock will
be subject to further adjustment.
Senior Notes
The Senior Notes were issued by Webster in an aggregate principal
amount of $40,000,000 pursuant to an Indenture (the "Indenture"), dated as of
June 15, 1993, between Webster and Chemical Bank, as trustee (the "Trustee").
Certain provisions of the Indenture are summarized below because of their impact
on the Common Stock. The Senior Notes bear interest at the annual rate of 8
3/4%, payable semi-annually on each June 30 and December 30 until maturity on
June 30, 2000. The Senior Notes are unsecured general obligations of Webster
only and not of its subsidiaries. The Senior Notes may not be redeemed by
Webster prior to maturity. This provision is not expected to have an
anti-takeover effect, since the Notes would be assumed by any acquiror of
Webster. The Indenture contains covenants that limit Webster's ability at the
holding company level to incur additional Funded Indebtedness (as defined
below), to make Restricted Distributions (as defined below), to engage in
certain dispositions affecting Webster Bank or its voting stock, to create
certain liens upon Webster's assets at the holding company level (including a
negative pledge clause), and to engage in mergers, consolidations, or sale of
substantially all of Webster's assets unless certain conditions are satisfied.
The Indenture also requires that Webster maintain a specified level of liquid
assets at the holding company level.
Restrictions on Additional Indebtedness. The Indenture limits the
amount of Funded Indebtedness which Webster may incur or guarantee at the
holding company level. Funded Indebtedness includes any obligation of Webster
with a maturity in excess of one year for borrowed money, for the deferred
purchase price of property or services, for capital lease payments, or related
to the guarantee of such obligations. Webster may not incur or guarantee any
Funded Indebtedness if, immediately after giving effect thereto, the amount of
Funded Indebtedness of Webster at the holding company level, including the
Senior Notes, would be greater than 90% of Webster's consolidated net worth. As
of September 30, 1995, Webster's consolidated net worth was $172.6 million and
it had $43.1 million of Funded Indebtedness.
Restricted Distributions. Under the Indenture, Webster may not,
directly or indirectly, make any Restricted Distribution (as defined below),
except in capital stock of Webster, if, at the time or after giving effect
thereto: (a) an event of default shall have occurred and be continuing under the
Indenture; (b) Webster Bank would fail to meet any of the applicable minimum
capital requirements under OTS regulations; (c) Webster would fail to maintain
sufficient liquid assets to comply with the terms of the covenant described
under "Liquidity Maintenance"
- 30 -
<PAGE>
below; or (d) the aggregate amount of all Restricted Distributions subsequent to
March 31, 1993 would exceed the sum of (i) $5 million, plus (ii) 75% of
Webster's aggregate consolidated net income (or if such aggregate consolidated
net income would be a deficit, minus 100% of such deficit) accrued on a
cumulative basis in the period commencing on March 31, 1993 and ending on the
last day of the fiscal quarter immediately preceding the date of the Restricted
Distribution, and plus (iii) 100% of the net proceeds received by Webster from
any capital stock issued by Webster (other than to a subsidiary) subsequent to
March 31, 1993. As of September 30, 1995, Webster had the ability to pay $57.2
million in Restricted Distributions. Such amount will be increased by the amount
of net proceeds raised by Webster in the Offering.
Restricted Distribution means: (a) any dividend, distribution or other
payment (except for dividends, distributions or payments payable in capital
stock or dividends on the Series B Stock) on the capital stock of Webster or any
subsidiary (other than a wholly owned subsidiary); (b) any payment to purchase,
redeem, acquire or retire any capital stock of Webster (other than the Series A
Stock, which was previously redeemed), the capital stock of any subsidiary
(other than a wholly owned subsidiary); and (c) any payment by Webster of
principal (whether a prepayment, redemption or at maturity) of, or to acquire,
any indebtedness for borrowed money issued or guaranteed by Webster (other than
the Senior Notes or pursuant to a guarantee by Webster of any borrowing by any
ESOP established by Webster or a wholly owned subsidiary), except that any such
payment of principal of, or to acquire, any such indebtedness for borrowed money
that is not subordinated to the Senior Notes will not constitute a Restricted
Distribution, if such indebtedness was issued or guaranteed by Webster at a time
when the Senior Notes were rated in the same or higher rating category as the
rating assigned to the Senior Notes by Standard & Poor's Ratings Group ("S&P")
at the time the Senior Notes were issued.
Liquidity Maintenance. The Indenture requires that Webster maintain at
all times, on an unconsolidated basis, liquid assets in an amount equal to or
greater than 150% of the aggregate interest expense on the Senior Notes and all
other indebtedness for borrowed money of Webster for 12 full calendar months
immediately following each determination date under the Indenture, provided that
Webster will not be required to maintain such liquid assets once the Senior
Notes have been rated "BBB-" or higher by S&P for six calendar months and remain
rated in such category.
Provisions Affecting Rights of Shareholders
General. Certain provisions included in Webster's Certificate of
Incorporation and Bylaws may serve to entrench current management and to prevent
a change in control of Webster even if desired by a majority of shareholders.
These provisions are desired to encourage potential acquirers to negotiate
directly with the Board of Directors of Webster and to discourage other takeover
attempts. The following discussion is a general summary of certain provisions of
Webster's Certificate of Incorporation and Bylaws, and certain other regulatory
provisions that may be deemed to have an "anti-takeover" effect. The description
is necessarily general and, with respect to provisions contained in Webster's
Certificate of Incorporation and Bylaws, reference should be made to the
document in question, each of which is an exhibit to Webster's registration
statement. In addition, see "THE SHAWMUT TRANSACTION -- The Standstill
Agreement."
Directors. Certain provisions of Webster's Certificate of Incorporation
and Bylaws will impede changes in majority control of Webster's Board of
Directors. The Certificate of Incorporation provides that the Board of Directors
will be divided into three classes, with directors in each class elected for
three-year staggered terms. Thus, assuming nine directors, as is currently the
case, it would take two annual elections to replace a majority of the board. The
Bylaws provide that the size of the Board of Directors, within the 7-to-15 range
specified in the Certificate of Incorporation, may be increased or decreased
only by a two-thirds vote of the board and by a vote of two-thirds of the shares
eligible to be voted at a duly constituted meeting of shareholders called for
such purpose. The Certificate of Incorporation provides that a vacancy occurring
in the Board of Directors, including a vacancy created by any increase in the
number of directors, may be filled for the remainder of the unexpired term by a
majority vote of the directors then in office. Finally, the Bylaws impose
certain restrictions on the nomination by shareholders of candidates for
election to the Board of Directors or the proposal by shareholders of business
to be acted upon at an annual meeting of shareholders.
The Certificate of Incorporation provides that a director may be
removed only for cause and then only by the affirmative vote of two-thirds of
the total shares eligible to vote at a duly constituted meeting of the
shareholders
- 31 -
<PAGE>
called expressly for that purpose. The Certificate of Incorporation also
provides that 30 days' written notice must be provided to any director or
directors whose removal is to be considered at a shareholders' meeting called
for such purpose. See "THE SHAWMUT TRANSACTION -- The Standstill Agreement" as
to the agreement by Fleet to vote all shares of Common Stock of Webster owned by
Fleet or its affiliates, as determined by the Board of Directors of Webster, for
a period of five years after the issuance of the Warrant. The Standstill
Agreement also contains limitations on the sale of shares of Common Stock of
Webster acquired upon exercise of the Warrant.
Call of Special Meetings. The Corporation's Certificate of
Incorporation contains a provision which provides that a special meeting of
shareholders may be called at any time but only by the chairman of the board or
the president of the corporation or by the Board of Directors. Shareholders are
not authorized to call a special meeting.
Cumulative Voting. The Certificate of Incorporation denies cumulative
voting rights in the election of directors.
Authorization of Serial Preferred Stock. The Certificate of
Incorporation authorizes 3,000,000 shares of serial preferred stock, $.01 par
value, of which only 171,869 shares of Series B Stock are outstanding. See
"DESCRIPTION OF CAPITAL STOCK -- Series B Stock." Webster is authorized to issue
serial preferred stock from time-to-time in one or more series subject to
applicable provisions of law. Webster's Board of Directors, without stockholder
approval, is authorized to fix the designations, powers, preferences, and
relative, participating, optional and other special rights of such shares,
including voting rights (which could be multiple or as a separate class) and
conversion rights, that could adversely affect the voting power of the holders
of its Common Stock. In the event of a proposed merger, tender offer or other
attempt to gain control of Webster of which management does not approve, it
might be possible for the Board of Directors to authorize the issuance of a
series of serial preferred stock with rights and preferences that could impede
the completion of such a transaction. The Board of Directors could also issue a
series of serial preferred stock that may have the effect of deterring a future
takeover attempt.
Approval of Acquisitions of Control. The Certificate of Incorporation
prohibits any person (whether an individual, company or group acting in concert)
from acquiring beneficial ownership of 10% or more of Webster's voting stock,
unless the acquisition has received the prior approvals of two-thirds of
Webster's outstanding voting shares and of all required federal regulatory
authorities. Furthermore, no person may make an offer to acquire 10% or more of
Webster's voting stock without obtaining prior approval of the offer by a
two-thirds vote of Webster's Board of Directors or, alternatively, before the
offer is made, obtaining approval of the acquisition from the OTS. These
provisions do not apply to the purchase of shares by underwriters in connection
with a public offering, and the provisions remain effective only so long as
Webster Bank is a majority-owned subsidiary of Webster. Shares acquired in
excess of these limitations are not entitled to vote or take other shareholder
action or be counted in determining the total number of outstanding shares of
voting stock in connection with any matter involving shareholder action. These
excess shares are also subject to transfer to a trustee, selected by Webster,
for the sale on the open market or otherwise, with the expenses of the trustee
to be paid out of the proceeds of such sale. These limitations on offers and
purchases do not apply to Webster Bank's ESOP or other employee benefits plans.
See "THE SHAWMUT TRANSACTION --The Standstill Agreement" as to the voting of
shares of Common Stock of Webster owned by Fleet or its affiliates, as
determined by the Board of Directors of Webster.
Federal law provides that, subject to certain exemptions, no person
acting directly or indirectly or through or in concert with one or more other
persons may acquire "control" of an insured institution (such as Webster Bank)
without giving at least 60 days' prior written notice providing specified
information to the institution's primary federal regulator, which is the OTS.
"Control" is defined for this purpose as the power, directly or indirectly, to
direct the management or policies of an insured institution or to vote 25
percent or more of any class of voting securities of an insured institution.
Control is presumed to exist where the acquiring party has voting control of at
least 10 percent of any class of the institution's voting securities and the
acquiring party is subject to a "control factor" as defined in the Rules and
Regulation of the OTS. The OTS may prohibit the acquisition of control if it
finds among other things that (i) the acquisition would result in a monopoly or
substantially lessen competition; (ii) the financial condition of the acquiring
person might jeopardize the financial stability of the institution; or (iii) the
competence, experience or integrity of any acquiring person or any of the
proposed management personnel indicates that it would not be in the interest of
the depositors or the public to permit the acquisition of control by such
person.
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<PAGE>
Connecticut banking statutes prohibit any person from offering to
acquire or acquiring voting stock of a federal savings bank having its principal
office in Connecticut (such as Webster Bank) or a holding company of such an
entity (such as Webster), that would result in such person becoming, directly or
indirectly, the beneficial owner of more than 10% of any class of voting stock
of such savings bank unless such person had previously filed an acquisition
statement with the Commissioner and such offer or acquisition has not been
disapproved by the Commissioner.
Regulations adopted by the Commissioner also place certain restrictions
on the ability of any person to acquire more than 10 percent of any class of
equity securities of Webster. No person, acting singly or together with any
associate or group of persons acting in concert, for a period of three years
following the date of the Bristol acquisition (until March 3, 1997) shall
directly or indirectly offer to acquire or acquire the beneficial ownership of
more than 10 percent of any class of equity securities of Webster without the
prior written approval of the Commissioner. The foregoing restriction will not
apply to Webster's Series B Stock, so long as six or more quarterly dividends
are not accumulated and unpaid so as to entitle such preferred shareholders to
elect two members of the Board of Directors of Webster. Where any person,
directly or indirectly, acquires the beneficial ownership of more than 10
percent of any such class of equity securities of Webster without the prior
written approval of the Commissioner, the securities beneficially owned by such
person in excess of 10 percent shall not be counted as shares entitled to vote
and shall not be voted by any person or counted as voting shares in connection
with any matter submitted to the shareholders for a vote. The foregoing
provisions will not apply to the acquisition of beneficial ownership by one or
more employee benefit plans of Webster provided that the plan or plans do not
have beneficial ownership in an aggregate of more than 25 percent of any class
of any equity security of Webster.
Procedures for Certain Business Combinations. The Certificate of
Incorporation requires that certain business combinations between Webster (or
any majority-owned subsidiary thereof) and a 10% or more stockholder or its
affiliates (collectively, the "Interested Shareholder") either (i) be approved
by at least 80% of the total number of outstanding voting shares of Webster, or
(ii) either be approved by two-thirds of Webster's continuing Board of Directors
(persons serving prior to the 10% shareholder becoming such) or involve
consideration per share generally equal to that paid by the 10% shareholder when
it acquired its block of stock. The types of business combinations with an
Interested Shareholder covered by this provision include: mergers,
consolidations, stock exchanges; a sale, lease, exchange, mortgage, pledge or
other transfer of assets other than in the usual and regular course of business;
an issuance by Webster of its equity securities having a market value in excess
of 5% of aggregate market value of its outstanding shares; the adoption of any
plan of liquidation of Webster or any subsidiary proposed by an Interested
Shareholder; and any reclassification of securities or recapitalization of
Webster which has the effect of increasing the proportionate equity ownership
interest of the Interested Shareholder.
Anti-Greenmail. The Certificate of Incorporation requires approval by a
majority of the outstanding voting stock before Webster may directly or
indirectly purchase or otherwise acquire any voting stock beneficially owned by
a holder of 5% or more of Webster's voting stock, if such holder has owned the
shares for less than two years. Any shares beneficially held by such person
would be excluded in calculating majority stockholder approval. This provision
would not apply to a pro rata offer made by Webster to all of its shareholders
in compliance with the Exchange Act and the rules and regulations thereunder or
a purchase of voting stock by Webster if the Board of Directors has determined
that the purchase price per share does not exceed the fair market value of such
voting stock.
Criteria for Evaluating Offers. The Certificate of Incorporation
provides that the Board of Directors, when evaluating any acquisition offers,
shall give due consideration to all relevant factors, including, without
limitation, the economic effects of acceptance of the offer on depositors,
borrowers and employees of Webster Bank and on the communities in which Webster
Bank operates or is located, as well as on the ability of Webster Bank to
fulfill the objectives of an insured institution under applicable federal
statutes and regulations.
Amendment to Certificate of Incorporation and Bylaws. Amendments to the
Certificate of Incorporation must be approved by a two-thirds vote of Webster's
Board of Directors and also by a majority of the outstanding shares of Webster's
voting stock, provided, however, that approval by two-thirds of the outstanding
voting stock is generally required for certain provisions. In addition, the
provisions regarding certain business combinations may be amended only by the
same "80%" stockholder vote required to approve a business combination with a
10% stockholder.
- 33 -
<PAGE>
The Bylaws may be amended by a two-thirds vote of the Board of
Directors or a two-thirds vote of the total shares eligible to be voted at a
duly constituted meeting of shareholders.
Delaware Takeover Statute. Section 203 of the Delaware General
Corporation Law (the "Delaware Takeover Statute") applies to Delaware
corporations with a class of voting stock listed on a national securities
exchange, authorized for quotation on an inter-dealer quotation system, or held
of record by 2,000 or more persons, and restricts transactions which may be
entered into by such a corporation and certain of its shareholders. The Delaware
Takeover Statute provides, in essence, that a shareholder acquiring more than
15% of the outstanding voting shares of a corporation subject to the statute (an
"Interested Person") but less than 85% of such shares may not engage in certain
"Business Combinations" with the corporation for a period of three years
subsequent to the date on which the shareholder became an Interested Person
unless (i) prior to such date the corporation's Board of Directors approved
either the Business Combination or the transaction in which the shareholder
became an Interested Person or (ii) the Business Combination is approved by the
corporation's Board of Directors and authorized by a vote of at least two-thirds
of the outstanding voting stock of the corporation not owned by the Interested
Person.
The Delaware Takeover Statute defines the term "Business Combination"
to encompass a wide variety of transactions with or caused by an Interested
Person in which the Interested Person receives or could receive a benefit on
other than a pro rata basis with other shareholders, including mergers, certain
asset sales, certain issuances of additional shares to the Interested Person,
transactions with the corporation which increase the proportionate interest of
the Interested Person or transactions in which the Interested Person receives
certain other benefits.
- 34 -
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Purchase
Agreement, Webster has agreed to sell to each of the Underwriters named below,
and each of the Underwriters, for whom Merrill Lynch, Pierce, Fenner & Smith
Incorporated is acting as representative (the "Representative"), has severally
agreed to purchase, the number of shares of Common Stock set forth opposite its
name below. The Underwriters are committed to purchase all of such shares if any
are purchased. Under certain circumstances, the commitments of non-defaulting
Underwriters may be increased as set forth in the Purchase Agreement.
Underwriter Number of Shares
----------- ----------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
---------
Total 1,100,000
=========
The Representative has advised Webster that the Underwriters propose
initially to offer the shares of Common Stock to the public at the public
offering price set forth on the cover page of this Prospectus, and to certain
dealers at such price less a concession not in excess of $_____ per share. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of $_____ per share on sales to certain other dealers. After the initial public
offering, the public offering price, concession and discount may be changed.
Webster has granted the Underwriters an option, exercisable for 30 days
after the date of this Prospectus, to purchase up to an additional 165,000
shares of Common Stock to cover over-allotments, if any, at the public offering
price less the underwriting discount. If the Underwriters exercise this option,
each of the Underwriters will have a firm commitment, subject to certain
conditions, to purchase approximately the same percentage thereof which the
number of shares of Common Stock purchased by it shown in the foregoing table is
of the 1,100,000 shares of Common Stock initially offered hereby.
Webster has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments the Underwriters may be required to make in respect thereof.
Webster has agreed that it will not, with certain exceptions, offer,
sell or otherwise dispose of any shares of Common Stock for 45 days from the
date of this Prospectus without the prior written consent of the Underwriters.
This prohibition will not affect shares of Common Stock issued by Webster
pursuant to employee or director benefit plans, the dividend reinvestment plan,
an acquisition, the conversion or exercise of securities convertible into or
exercisable for Common Stock of Webster, or the Warrant.
In connection with this Offering, certain Underwriters (and selling
group members, if any) may engage in passive market making transactions in the
Common Stock on NASDAQ in accordance with Rule 10b-6A under the
- 35 -
<PAGE>
Exchange Act. Rule 10b-6A permits, upon satisfaction of certain conditions,
underwriters and selling group members participating in a distribution that are
also NASDAQ market makers in the security being distributed to engage in limited
market making transactions during the period when Rule 10b-6 under the Exchange
Act would otherwise prohibit such activity. Rule 10b-6A prohibits underwriters
and selling group members engaged in passive market making, generally, from
entering a bid or effecting a purchase at a price that exceeds the highest bid
for those securities displayed on NASDAQ by a market maker that is not
participating in the distribution. Under Rule 10b-6A, each underwriter or
selling group member engaged in passive market making is subject to a daily net
purchase limitation equal to 30% of such entity's average daily trading volume
during the two full consecutive calendar months immediately preceding the date
of the filing of the registration statement under the Securities Act pertaining
to the security to be distributed.
Merrill Lynch, Pierce, Fenner & Smith Incorporated renders various
financial advisory services to Webster from time to time, including services in
connection with the Shawmut Transaction.
LEGAL MATTERS
Hogan & Hartson L.L.P., Washington, D.C., counsel to Webster, will
render an opinion as to the legality of the shares of the Common Stock being
offered hereby. Certain legal matters will be passed upon for the Underwriters
by Brown & Wood, New York, New York.
EXPERTS
The consolidated financial statements of Webster at December 31, 1994
and 1993, and for each of the three years in the period ended December 31, 1994,
incorporated by reference into this Prospectus, have been so incorporated in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, appearing in the incorporated materials and given upon the
authority of that firm as experts in accounting and auditing. The report refers
to the fact that Webster adopted the provisions of the Financial Accounting
Standards Board's Statements of Financial Accounting Standards No. 109
"Accounting for Income Taxes" and No. 115 "Accounting for Certain Debt and
Equity Securities" in 1993.
The financial statements of Shelton at June 30, 1995 and 1994, and for
each of the three years in the period ended June 30, 1995, incorporated by
reference in this Prospectus, have been so incorporated in reliance upon the
report of Coopers & Lybrand L.L.P., independent public accountants, appearing in
the incorporated materials and given on the authority of that firm as experts in
accounting and auditing. The report refers to the fact that Shelton changed its
methods of accounting for investments and income taxes during the fiscal year
ended June 30, 1994.
- 36 -
<PAGE>
Appendix A
Description of Graphic Material
A map of the State of Connecticut is included as a part of the
Prospectus. Each branch of Webster Bank is represented on the map as a dot; the
20 branches to be acquired in the Shawmut Transaction are represented by a dot
with a circle surrounding it; and the two branches of Webster Bank being
transferred to Shawmut are each represented by a dot surrounded by a box.
<PAGE>
No dealer, salesman or other individual has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus in connection with the offer made
by this Prospectus and, if given or made, such information or representations
must not be relied upon as having been authorized by Webster or the
Underwriters. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any securities other than those specifically
offered hereby or of any securities offered hereby in any jurisdiction to any
person to whom it is unlawful to make an offer or solicitation in such
jurisdiction. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create an implication that there has
been no change in the affairs of Webster since the date hereof or that the
information included or incorporated by reference herein is correct as of any
time subsequent to its date.
--------------------
TABLE OF CONTENTS
Page
Map........................................... 2
Available Information......................... 3
Incorporation of Certain Documents by
Reference................................... 3
Prospectus Summary............................ 4
Risk Factors.................................. 10
Webster....................................... 12
Completed Acquisitions........................ 13
The Shawmut Transaction....................... 15
Use of Proceeds............................... 20
Capitalization................................ 21
Capital Ratios................................ 22
Market Prices and Dividends................... 23
Pro Forma Combined Financial Information...... 25
Description of Capital Stock.................. 29
Underwriting.................................. 35
Legal Matters................................. 36
Experts ...................................... 36
1,100,000 Shares
Webster
Financial
Corporation
Common Stock
--------------------
PROSPECTUS
--------------------
Merrill Lynch & Co.
___________ ___, 199__
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following expenses are expected to be incurred in connection with
the issuance and sale of the securities being registered:
Securities and Exchange Commission registration fee...... $ 11,260
NASD filing fee.......................................... 3,765
Printing and mailing expenses............................
Legal fees and expenses..................................
Accounting fees and expenses.............................
Blue sky fees and expenses...............................
Regulatory filing fees...................................
Miscellaneous expenses................................... ----------
Total.................................................... $
==========
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law sets forth certain
circumstances under which directors, officers, employees and agents may be
indemnified against liability that they may incur in their capacity as such.
Section 145 of the Delaware General Corporation Law, which is filed as Exhibit
99.1 to this Registration Statement, is incorporated herein by reference.
Article Nine of the Registrant's Bylaws, entitled "Indemnification,"
provides for indemnification of the Registrant's directors, officers, employees
and agents under certain circumstances. Article Nine of the Registrant's Bylaws,
which are filed as Exhibit 4.4 to this Registration Statement, is incorporated
herein by reference.
The Registrant also has the power to purchase and maintain insurance on
behalf of its directors and officers. The Registrant has in effect a policy of
liability insurance covering its directors and officers, the effect of which is
to reimburse the directors and officers of the Registrant against certain
damages and expenses resulting from certain claims made against them caused by
their negligent act, error or omission.
The foregoing indemnity and insurance provisions have the effect of
reducing directors' and officers' exposure to personal liability for actions
taken in connection with their respective positions.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than payment by the Registrant
of expenses incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
11-1
<PAGE>
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act of 1933 and will
be governed by the final adjudication of such issue.
Item 16. Exhibits.
The following exhibits are filed herewith as part of this Registration
Statement or incorporated herein by reference.
Exhibit No. Exhibit
---------- ---------
1* Form of Purchase Agreement among the Registrant and the
Underwriters.
2.1 Purchase and Assumption Agreement, between the Registrant and
Shawmut Bank Connecticut, National Corporation, dated as of
October 1, 1995 (incorporated herein by reference to the
Registrant's Current Report on Form 8-K filed on October 1,
1995).
2.2 Agreement and Plan of Merger dated June 20, 1995, as amended,
among the Registrant, Webster Acquisition Corp. and Shelton
Bancorp, Inc., including exhibits A through G thereto
(incorporated herein by reference to Exhibit 2 to the
Registrant's Current Report on Form 8-K/A filed on July 27,
1995).
4.1 Restated Certificate of Incorporation of Registrant
(incorporated herein by reference to Exhibit 3(a) to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1986).
4.2 Certificate of Amendment of Restated Certificate of
Incorporation (incorporated herein by reference to Exhibit
4.2 to the Registrant's Registration Statement on Form S-2,
Registration No. 33-54980, filed on November 25, 1992).
4.3 Certificate of Designation for the Series B 7 1/2% Cumulative
Convertible Preferred Stock (incorporated herein by reference
to Exhibit 4.4 to the Registrant's Registration Statement on
Form S-2, Registration No. 33-54980, filed on November 25,
1992).
4.4 Bylaws of the Registrant, as amended to date (incorporated
herein by reference to Exhibit 3.5 to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994).
4.5 Form of Stock Certificate for Common Stock (incorporated
herein by reference to Exhibit 4(b) to the Registrant's
Registration Statement on Form S-1, Registration No. 33-8675,
filed on September 11, 1986).
5* Opinion of Hogan & Hartson L.L.P. regarding legality of
securities being registered.
23.1 Consent of Hogan & Hartson L.L.P. (included in Exhibit 5).
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Coopers & Lybrand L.L.P.
24 Power of Attorney (filed as part of the signature page to the
Registration Statement).
II-2
<PAGE>
99.1 Section 145 of the Delaware General Corporation Law
(incorporated herein by reference to Exhibit 28.1 to the
Registrant's Registration Statement on Form S-2, Registration
No. 33-54980, filed on November 25, 1992).
____________________________
*To be filed by Pre-Effective Amendment.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(2) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(4) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Waterbury, State of Connecticut, on the 1st day of
November, 1995.
WEBSTER FINANCIAL CORPORATION
By: /s/ James C. Smith
-----------------------
James C. Smith
Chairman, President and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person who signature appears
below, hereby constitutes and appoints James C. Smith, Lee A. Gagnon and John V.
Brennan, or any of them, his attorneys-in-fact and agents, with full power of
substitution and resubstitution for him or her in any and all capacities, to
sign any or all amendments or post-effective amendments to this Registration
Statement, and to file the same, with all exhibits thereto and other documents
in connection therewith or in connection with the registration of the Common
Stock under the Securities Exchange Act of 1934, with the Securities and
Exchange Commission, granting unto each of such attorneys-in-fact and agents
full power and authority to do and perform each and every act and thing
requisite and necessary in connection with such matters as fully to all intents
and purposes as he or she might or could do in person, hereby ratifying and
confirming all that each of such attorneys-in-fact and agents or his/her
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the undersigned in the capacities
indicated on the 1st day of November, 1995.
Signature Title
- --------- -----
/s/ James C. Smith
- -------------------- Chairman, President, Chief Executive
James C. Smith Officer and Director
(Principal Executive Officer)
/s/ John V. Brennan
- -------------------- Executive Vice President, Chief
John V. Brennan Financial Officer and Treasurer
(Principal Financial Officer)
/s/ Peter J. Swiatek
- -------------------- Controller
Peter J. Swiatek (Principal Accounting Officer)
II-4
<PAGE>
Signature Title
/s/ Joel S. Becker Director
- ----------------------------
Joel S. Becker
/s/ O. Joseph Bizzozero, Jr. Director
- ----------------------------
O. Joseph Bizzozero, Jr.
/s/ Robert A. Finkenzeller Director
- -----------------------------
Robert A. Finkenzeller
/s/ Walter R. Griffin Director
- -----------------------------
Walter R. Griffin
/s/ J. Gregory Hickey Director
- -----------------------------
J. Gregory Hickey
/s/ C. Michael Jacobi Director
- -----------------------------
C. Michael Jacobi
/s/ Harold W. Smith Director
- -----------------------------
Harold W. Smith
- ----------------------------- Director
Sr. Marguerite Waite, C.S.J.
II-5
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
------------- ---------
1* Form of Purchase Agreement among the Registrant and the
Underwriters.
2.1 Purchase and Assumption Agreement, between the Registrant and
Shawmut Bank Connecticut, National Corporation, dated as of
October 1, 1995 (incorporated herein by reference to the
Registrant's Current Report on Form 8-K filed on October 1,
1995).
2.2 Agreement and Plan of Merger dated June 20, 1995, as amended,
among the Registrant, Webster Acquisition Corp. and Shelton
Bancorp, Inc., including exhibits A through G thereto
(incorporated herein by reference to Exhibit 2 to the
Registrant's Current Report on Form 8-K/A filed on July 27,
1995).
4.1 Restated Certificate of Incorporation of Registrant
(incorporated herein by reference to Exhibit 3(a) to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1986).
4.2 Certificate of Amendment of Restated Certificate of
Incorporation (incorporated herein by reference to Exhibit
4.2 to the Registrant's Registration Statement on Form S-2,
Registration No. 33-54980, filed on November 25, 1992).
4.3 Certificate of Designation for the Series B 7 1/2% Cumulative
Convertible Preferred Stock (incorporated herein by reference
to Exhibit 4.4 to the Registrant's Registration Statement on
Form S-2, Registration No. 33-54980, filed on November 25,
1992).
4.4 Bylaws of the Registrant, as amended to date (incorporated
herein by reference to Exhibit 3.5 to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994).
4.5 Form of Stock Certificate for Common Stock (incorporated
herein by reference to Exhibit 4(b) to the Registrant's
Registration Statement on Form S-1, Registration No. 33-8675,
filed on September 11, 1986).
5* Opinion of Hogan & Hartson L.L.P. regarding legality of
securities being registered.
23.1 Consent of Hogan & Hartson L.L.P. (included in Exhibit 5).
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Coopers & Lybrand L.L.P.
24 Power of Attorney (filed as part of the signature page to the
Registration Statement).
99.1 Section 145 of the Delaware General Corporation Law
(incorporated herein by reference to Exhibit 28.1 to the
Registrant's Registration Statement on Form S-2, Registration
No. 33-54980, filed on November 25, 1992).
_________________________________________
* To be filed by Pre-Effective Amendment.
II-6
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Webster Financial Corporation
We consent to the use of our report incorporated herein by reference
and to the reference to our Firm under the heading "Experts" in the prospectus.
/s/ KPMG PEAT MARWICK LLP
Hartford, Connecticut
November 3, 1995
II-7
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration
statement on Form S-3 of Webster Financial Corporation of our report dated July
24, 1995 on our audit of the consolidated financial statements of Shelton
Bancorp, Inc. ("Shelton"), which report is included in Shelton's 1995 annual
report on Form 10-K. We also consent to the reference to our firm under the
caption "Experts."
/s/ COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
November 1, 1995
II-8
<PAGE>
