Webster to shut mortgage unit
NEW YORK (Reuters) - Webster Financial Corp. (WBS.N), one of the largest banking companies based in New England, said on Thursday it is closing a mortgage unit and will incur several first-quarter charges, sending its shares to a 6-1/2-month low.
The Waterbury, Connecticut-based parent of Webster Bank will take a $2.3 million pre-tax charge to close its Peoples Mortgage unit. Last week it announced the sale of three of the unit's offices to Baltimore's First Mariner Bank for an undisclosed price.
Many mortgage lenders have sold operations or quit their industry in the last year as housing price appreciation slowed and delinquencies and defaults began to mount.
Webster also said quarterly pre-tax earnings will be cut by $4.7 million, or 5 cents per share, from payroll tax and retirement plan costs, while restructuring-related severance charges will reduce earnings by $2.2 million.
Net charge-offs will total $5.4 million, triple the year-earlier level, hurt by losses on Florida residential construction loans where Webster sees a "high probability of loss based on borrower delinquency and market deterioration."
Webster is continuing its previously announced strategic review, and has hired an outside consultant for assistance. The company ended 2006 with $17.1 billion of assets and recently operated about 177 banking offices.
Shares of the company fell 85 cents to $46.41 in morning trading on the New York Stock Exchange. They earlier fell to $45.73, their lowest level since September 19, 2006.
(Additional reporting by Ankur Relia in Bangalore)
