2007-04-19 13:38:15 -

WATERBURY, Conn., April 19 /PRNewswire-FirstCall/ -- Webster Financial Corporation , the holding company for Webster Bank, N.A., today announced net income of $35.0 million or $.62 per diluted share for the first quarter of 2007, compared to $37.8 million or $.67 per diluted share for the fourth quarter of 2006 and to $43.9 million or $.82 per diluted share for the first quarter of 2006. First quarter 2007 net income includes charges for other items of $9.9 million ($6.4 million, net of tax) or $.11 per diluted share outlined

in the following table.

Earnings Reconciliation For the Three Months Ended March 31, 2007 December 31, 2006 (In thousands except Pre- Tax Pre- Tax per share data) Tax Effected EPS Tax Effected EPS Reported Net Income $51,222 $35,036 $0.62 $54,895 $37,798 $0.67 Balance Sheet Repositioning Actions: Loss on sale of $250 million of mortgage loans - - - 5,713 3,713 0.07 Loss on sale of AFS securities, net - - - 2,400 1,560 0.03 Total balance sheet repositioning actions - - - 8,113 5,273 0.10 Other Items: Acquisition costs (NewMil) - - - 2,018 1,312 0.02 Net gain from pension curtailment - - - (300) (195) - Gain on sale of properties - - - (1,400) (910) (0.02) Write-down of construction loan held for sale 700 455 0.01 - - - Compensation costs seasonal (A) 4,700 3,055 0.05 - - - Severance-related charges 2,200 1,430 0.02 - - - Closure of Peoples Mortgage Company (PMC) 2,322 1,509 0.03 - - - Total other items 9,922 6,449 0.11 318 207 0.00 Total balance sheet repositioning actions and other items 9,922 6,449 0.11 8,431 5,480 0.10 Adjusted net income excluding balance sheet repositioning actions and other items $61,144 $41,485 $0.73 $63,326 $43,278 $0.77 (A) Expect 25% of the seasonal increase to remain in the second quarter

As previously disclosed, Webster incurred seasonally higher expenses in the first quarter of 2007 primarily related to payroll taxes and 401(k) match. The impact of these seasonally higher expenses was $4.7 million ($3.1 million, net of taxes) or $.05 per diluted share. In addition, as also previously disclosed, one residential construction loan in Florida classified as held for sale was written down in value by $700,000 ($455,000, net of taxes) or $.01 per diluted share. This adjustment is reflected in mortgage banking activities as a reduction in noninterest income in the first quarter. Also, Webster incurred severance related charges from ongoing restructuring in insurance and other lines of business of $2.2 million ($1.4 million, net of taxes) or $.02 per diluted share and closing costs of $2.3 million ($1.5 million, net of taxes) or $.03 per share related to the remaining operations of PMC.

Additionally, as the final component of balance sheet repositioning actions announced in the fourth quarter, Webster completed the securitization of $633 million of residential mortgage loans during the first quarter of 2007. These securities are classified as held-to-maturity.

"Webster has begun to execute changes resulting from our previously announced strategic review with the objective of narrowing and sharpening our focus on our vision to be New England's bank," stated Webster Chairman and Chief Executive Officer James C. Smith. "To date outcomes from this review include the closure of PMC, the termination of mezzanine lending operations, the discontinuance of construction lending outside of our primary market, the restructuring of our insurance operations and the outsourcing of the back office operations of Webster Investment Services. We remain committed to completing this process by mid-year."

Commercial loans, including commercial real estate loans, and consumer loans, were $8.6 billion at March 31, 2007, up 11 percent from March 31, 2006. Commercial and consumer loans represent 70 percent of total loans at March 31, 2007 compared to 61 percent a year ago. "Webster continues to show consistent growth in these core lines of business," stated Webster President and Chief Operating Officer William T. Bromage. "As the results show, our plan has been to reduce our percentage of residential loans to total loans and to continue to focus on growth in commercial and consumer loans."

Revenues

Total revenue, which consists of net interest income plus total non-interest income, was $185.5 million in the first quarter, compared to $180.5 million in the fourth quarter and $185.4 million a year ago.

Net interest income was $128.1 million in the first quarter compared to $129.2 million in the fourth quarter and $130.2 million a year ago. Average interest-earning assets were lower in the first quarter of 2007 as a result of recent balance sheet repositioning actions in comparison to the fourth quarter and first quarter of 2006; however, Webster's net interest margin (annualized tax-equivalent net interest income as a percentage of average earning assets) increased to 3.41 percent compared to 3.23 percent in the fourth quarter and 3.24 percent a year ago. Webster's balance sheet repositioning actions have positively impacted the net interest margin as the proceeds from the sales of securities have paid down high-cost borrowings. Slightly offsetting the positive effect of the balance sheet restructuring is continued consumer preference for higher yielding certificates of deposit as well as the impact of the inverted yield curve. The spread between the yield on loans and the cost of deposits increased to 3.87 percent in the first quarter compared to 3.83 percent in the fourth quarter and 4.17 percent a year ago.

Total non-interest income was $57.4 million in the first quarter compared to $51.4 million in the fourth quarter and $55.2 million a year ago. Non- interest income in the fourth quarter was affected by losses on sales of securities of $2.4 million and losses on sale of loans of $5.7 million. Deposit service fees totaled $25.4 million compared to $25.5 million in the fourth quarter and $21.9 million a year ago. Insurance revenue was $10.1 million in the quarter compared to $8.3 million in the fourth quarter and $10.7 million a year ago. Loan related fees were $7.9 million compared to $9.6 million in the fourth quarter and $7.8 million a year ago. The decrease in loan related fees compared to the fourth quarter reflects higher commercial real estate prepayment fees of $2.4 million in that period. Wealth management fees totaled $6.9 million compared to $7.2 million in the fourth quarter and $6.4 million a year ago. Income from mortgage banking activities was $2.2 million in the first quarter compared to $2.9 million in the fourth quarter and $3.3 million a year ago. The decline from the fourth quarter reflects the $700,000 write down in value of one previously-mentioned loan in Florida. Other non-interest income was $1.8 million compared to $3.7 million in the fourth quarter, and $1.8 million a year ago. Fourth quarter 2006 results included a $1.4 million gain on the sale of properties.

Provision For Credit Losses

The provision for credit losses was $3.0 million in the first and fourth quarter and $2.0 million a year ago. Net loan charge-offs totaled $5.3 million compared to $9.1 million in the fourth quarter and $1.7 million a year ago. The increase in net charge-offs when comparing the first quarter of 2007 to the first quarter of 2006 reflects the $2.1 million of previously-announced net charge-offs in connection with 13 residential construction loans in Florida. Net charge-offs in the fourth quarter reflected two commercial loans that had been identified and fully reserved earlier in 2006. The annualized net loan charge-off ratio was 0.17 percent of average loans compared to 0.27 percent in the fourth quarter and 0.05 percent a year ago. The allowance for credit losses to total loans was 1.24 percent at March 31, 2007 and 2006 and 1.20 percent at December 31, 2006.

Non-Interest Expenses

Total non-interest expenses were $131.3 million in the first quarter compared to $122.6 million in the fourth quarter and $119.2 million a year ago. First quarter expenses include the previously-discussed severance related charges from ongoing restructuring in insurance and other lines of business of $2.2 million, closing costs of $2.3 million related to the remaining operations of PMC and $4.7 million of seasonally higher expenses compared to the fourth quarter, primarily related to payroll tax and 401(k) match. The 2006 fourth quarter and 2007 first quarter include the expenses of operations related to the acquisition of NewMil Bancorp. "We are managing our expenses aggressively with the focus on improving operating leverage for the balance of 2007," stated Webster Chief Financial Officer Jerry Plush.

Balance Sheet Trends

Total assets were $16.9 billion at March 31, 2007 compared with $17.9 billion a year ago. Total assets have declined by $1 billion primarily from the balance sheet repositioning actions. Total loans were $12.3 billion, a decrease of $0.3 billion, or 2 percent, from a year ago, due primarily to the securitization of $371 million in residential loans and the sale of $250 million in residential loans in the fourth quarter of 2006 and the securitization of another $633 million in residential loans in the first quarter of 2007. Securities totaled $2.5 billion and declined by $1.1 billion, or 31 percent from a year ago. Deposits were $12.6 billion, an increase of $0.5 billion, or 4 percent, from a year ago as retail deposits increased $898 million, with contributions from the branches acquired from the NewMil Bank acquisition, de novo branching and growth in health savings account deposits at HSA Bank, which more than offset a $418 million decline in brokered deposits.

The $1.1 billion reduction in securities and $0.5 billion of total deposit growth, each compared to a year ago, contributed to a $1.8 billion reduction in wholesale borrowings over the past year. Wholesale borrowings declined to 13 percent of total assets at March 31 compared to 22 percent a year ago.

The loan to deposit ratio improved to 98 percent at March 31, 2007 from 104 percent at both December 31, 2006 and March 31, 2006. Improvement in this ratio reflects completion of balance sheet repositioning actions and deposit growth over the past year.

Book value per common share of $33.70 at March 31, 2007 increased from $31.09 a year ago. Tangible book value per share of $19.46 at March 31, 2007 increased from $18.18 last year. The ratio of tangible equity to tangible assets increased to 6.74 percent at March 31, 2007 compared to 5.48 percent a year ago.

Capital

As previously announced, Webster prepaid its Capital Trust I and Capital Trust II securities on April 2, 2007, at call prices of 104.68 percent and 105.0 percent, respectively, plus accrued and unpaid interest. As reported in the 2006 10-K, Webster will record a net pretax charge to income in the second quarter of 2007 of approximately $6.9 million ($9.0 million related to the redemption premiums and unamortized issuance costs, partially offset by a $2.1 million gain on Trust I and II securities positions held by Webster).

Mr. Plush noted: "Webster's tangible capital ratio improved to 6.74% at March 31, bringing us above our peer median; it has been our intention to improve our capital position to support our commercial bank balance sheet and the growth potential of our businesses. We have also been evaluating the optimal capital structure for the company. We took a first step on April 2, when we called the outstanding trust preferred securities that were carrying a weighted average coupon of 9.57%; however, $105 million of these securities qualified as Tier 1 capital for regulatory ratio purposes. We are continuing to explore the potential issuance of an even greater amount of enhanced Trust Preferred Securities at a significantly lower coupon, which would provide us

with improved regulatory and ratings agency ratios at an equivalent or lower funding cost."

During the quarter, Moody's upgraded Webster Financial Corporation's issuer rating to A3, Webster Bank's long-term deposit rating to A2 and short- term deposit rating to P1. The report cites Webster's diversified consumer, small- and middle-market commercial banking businesses, strong asset quality on a low-risk portfolio and healthy liquidity for both the holding company and the bank as the primary reasons for the upgrade. In addition, Fitch raised its outlook to "Positive."

Asset Quality

Nonperforming assets totaled $64.8 million, or 0.53 percent of total loans and other real estate owned, at March 31, 2007 compared to $61.8 million, or 0.48 percent, at December 31 and $60.9 million, or 0.48 percent, a year ago.

The allowance for credit losses, which consist of the allowance for loan losses and the reserve for unfunded commitments, was $152.7 million, or 1.24 percent of total loans, at March 31, 2007 compared to $156.0 million, or 1.24 percent at March 31, 2006 and $155.0 million, or 1.20 percent at December 31, 2006. The ratio of the allowance to nonperforming loans was 259 percent at March 31, 2007 compared to 267 percent at March 31, 2006.

Webster Financial Corporation is the holding company for Webster Bank, National Association and Webster Insurance. With $16.9 billion in assets, Webster provides business and consumer banking, mortgage, insurance, financial planning, trust and investment services through 177 banking offices, 334 ATMs, telephone banking and the Internet. Webster Bank owns the asset-based lending firm Webster Business Credit Corporation, the insurance premium finance company Budget Installment Corp., Center Capital Corporation, an equipment finance company headquartered in Farmington, Connecticut and provides health savings account trustee and administrative services through HSA Bank, a division of Webster Bank.

For more information about Webster, including past press releases and the latest Annual Report, visit the Webster website at http://www.websteronline.com/.

Conference Call

A conference call covering Webster's 2007 first quarter earnings announcement will be held today, Thursday, April 19, at 11:00 a.m. Eastern Time and may be heard through Webster's investor relations website at http://www.wbst.com/, or in listen-only mode by calling 1-877-407-8293 or 201-689-8349 internationally. The call will be archived on the website and available for future retrieval.

Forward-looking Statements

Statements in this press release regarding Webster Financial Corporation's business that are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statement, see "Forward Looking Statements" in Webster's Annual Report for 2006. Except as required by law, Webster does not undertake to update any such forward looking information.

Non-GAAP Financial Measures

In addition to results presented in accordance with GAAP, this press release contains certain non-GAAP financial measures. We believe that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, our performance trends and financial position. A reconciliation of net income and other performance ratios, as adjusted is included in the accompanying selected financial highlights table, elsewhere in this report.

We believe that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, our performance trends and financial position. Specifically, we provide measures based on what we believe are our operating earnings on a consistent basis and exclude non-core operating items which affect the GAAP reporting of results of operations. We utilize these measures for internal planning and forecasting purposes. We, as well as securities analysts, investors and other interested parties, also use these measures to compare peer company operating performance. We believe that our presentation and discussion, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting our business and allows investors to view performance in a manner similar to management. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.

Webster Financial Corporation Selected Financial Highlights (unaudited) At or for the Three Months Ended March 31, (In thousands, except per share data) 2007 2006 Adjusted net income and performance ratios, net of tax (annualized): Net income $35,036 $43,852 Seasonal compensation costs 3,055 2,562 Closing costs-Peoples Mortgage Company 1,509 - Severance costs 1,430 - Write-down of construction loan held for sale 455 - Adjusted net income 41,485 46,414 Net income per diluted common share 0.73 0.86 Return on average shareholders' equity 8.73% 11.16% Return on average tangible equity 15.15 18.86 Return on average assets 0.98 1.04 Noninterest income as a percentage of total revenue 31.21 29.78 Efficiency ratio (a) 65.55 62.16 Net income and performance ratios (annualized): Net income $35,036 $43,852 Net income per diluted common share 0.62 0.82 Return on average shareholders' equity 7.38% 10.55% Return on average tangible equity 12.79 17.83 Return on average assets 0.83 0.99 Noninterest income as a percentage of total revenue 30.95 29.78 Efficiency ratio (a) 70.77 64.29 Asset quality: Allowance for credit losses $152,660 $155,957 Nonperforming assets 64,830 60,890 Allowance for credit losses / total loans 1.24% 1.24% Net charge-offs / average loans (annualized) 0.17 0.05 Nonperforming loans / total loans 0.48 0.46 Nonperforming assets / total loans plus OREO 0.53 0.48 Allowance for credit losses / nonperforming loans 259.23 267.23 Other ratios (annualized): Tangible capital ratio 6.74% 5.48% Shareholders' equity / total assets 11.29 9.16 Interest-rate spread 3.32 3.19 Net interest margin 3.41 3.24 Share related: Book value per common share $33.70 $31.09 Tangible book value per common share 19.46 18.18 Common stock closing price 48.01 48.46 Dividends declared per common share 0.27 0.25 Common shares issued and outstanding 56,530 52,776 Basic shares (average) 56,113 53,094 Diluted shares (average) 56,762 53,703 Footnotes: (a) Noninterest expense as a percentage of net interest income plus noninterest income. (b) For purposes of this computation, unrealized gains (losses) are excluded from the average balance for rate calculations. Consolidated Statements of Condition (unaudited) March 31, December 31, March 31, (In thousands) 2007 2006 2006 Assets: Cash and due from depository institutions $269,061 $311,888 $267,541 Short-term investments 6,161 175,648 11,889 Securities: Trading, at fair value 14,076 4,842 1,042 Available for sale, at fair value 395,668 503,918 2,472,699 Held-to-maturity 2,066,763 1,453,973 1,116,386 Total securities 2,476,507 1,962,733 3,590,127 Loans held for sale 456,033 354,798 201,210 Loans: Residential mortgages 3,739,221 4,424,634 4,890,887 Commercial 3,444,612 3,386,274 3,038,930 Commercial real estate 1,936,650 1,904,597 1,851,035 Consumer 3,182,765 3,207,986 2,809,785 Total loans 12,303,248 12,923,491 12,590,637 Allowance for loan losses (145,367) (147,719) (146,383) Loans, net 12,157,881 12,775,772 12,444,254 Accrued interest receivable 86,878 90,565 94,602 Premises and equipment, net 196,232 195,909 184,831 Goodwill and other intangible assets 823,200 825,012 698,557 Cash surrender value of life insurance 261,852 259,318 240,426 Prepaid expenses and other assets 145,395 145,828 173,749 Total Assets $16,879,200 $17,097,471 $17,907,186 Liabilities and Shareholders' Equity: Deposits: Demand deposits $1,505,074 $1,588,783 $1,459,855 NOW accounts 1,761,178 1,671,778 1,683,677 Money market deposit accounts 1,887,602 1,908,496 1,761,016 Savings accounts 2,109,866 1,985,202 2,004,375 Certificates of deposit 4,834,440 4,831,477 4,291,378 Brokered deposits 460,230 472,660 877,976 Total deposits 12,558,390 12,458,396 12,078,277 Federal Home Loan Bank advances 655,709 1,074,933 2,383,118 Securities sold under agreements to repurchase and other short-term debt 943,802 893,206 1,007,439 Long-term debt 623,091 621,936 631,568 Reserve for unfunded credit commitments 7,293 7,275 9,574 Accrued expenses and other liabilities 176,324 155,285 146,871 Total liabilities 14,964,609 15,211,031 16,256,847 Preferred stock of subsidiary corporation 9,577 9,577 9,577 Shareholders' equity 1,905,014 1,876,863 1,640,762 Total Liabilities and Shareholders' Equity $16,879,200 $17,097,471 $17,907,186 See Selected Financial Highlights for footnotes. Consolidated Statements of Income (unaudited) Three Months Ended March 31, (In thousands, except per share data) 2007 2006 Interest income: Loans $209,164 $195,574 Securities and short-term investments 33,280 41,595 Loans held for sale 6,249 3,339 Total interest income 248,693 240,508 Interest expense: Deposits 87,630 62,354 Borrowings 32,982 47,995 Total interest expense 120,612 110,349 Net interest income 128,081 130,159 Provision for credit losses 3,000 2,000 Net interest income after provision for credit losses 125,081 128,159 Noninterest income: Deposit service fees 25,354 21,869 Insurance revenue 10,121 10,724 Loan related fees 7,940 7,824 Wealth and investment services 6,878 6,354 Mortgage banking activities 2,229 3,273 Increase in cash surrender value of life insurance 2,534 2,371 Other 1,824 1,775 56,880 54,190 Gain on sale of securities, net 541 1,012 Total noninterest income 57,421 55,202 Noninterest expenses: Compensation and benefits 68,391 65,003 Occupancy 13,383 12,182 Furniture and equipment 14,969 13,595 Intangible amortization 3,473 4,377 Marketing 4,211 3,624 Professional services 4,802 3,544 Severance and closing costs 4,522 - Other 17,529 16,846 Total noninterest expenses 131,280 119,171 Income before income taxes 51,222 64,190 Income taxes 16,186 20,338 Net income $35,036 $43,852 Diluted shares (average) 56,762 53,703 Net income per common share: Basic $0.62 $0.83 Diluted 0.62 0.82 See Selected Financial Highlights for footnotes. Consolidated Statements of Income (unaudited) Three Months Ended (In thousands, except March 31, Dec. 31, Sept. 30, June 30, March 31, per share data) 2007 2006 2006 2006 2006 Interest income: Loans $209,164 $225,634 $215,094 $207,097 $195,574 Securities and short- term investments 33,280 32,514 40,883 39,134 41,595 Loans held for sale 6,249 6,191 4,366 3,317 3,339 Total interest income 248,693 264,339 260,343 249,548 240,508 Interest expense: Deposits 87,630 90,195 85,058 72,593 62,354 Borrowings 32,982 44,994 52,849 50,150 47,995 Total interest expense 120,612 135,189 137,907 122,743 110,349 Net interest income 128,081 129,150 122,436 126,805 130,159 Provision for credit losses 3,000 3,000 3,000 3,000 2,000 Net interest income after provision for credit losses 125,081 126,150 119,436 123,805 128,159 Noninterest income: Deposit service fees 25,354 25,494 25,252 24,150 21,869 Insurance revenue 10,121 8,301 9,793 9,988 10,724 Loan related fees 7,940 9,643 7,760 9,162 7,824 Wealth and investment services 6,878 7,161 6,738 6,930 6,354 Mortgage banking activities 2,229 2,917 (185) 2,538 3,273 Increase in cash surrender value of life insurance 2,534 2,550 2,368 2,314 2,371 Other 1,824 3,733 1,693 1,284 1,775 56,880 59,799 53,419 56,366 54,190 Loss on write-down of AFS securities to fair value - - (48,879) - - Loss on sale of mortgage loans - (5,713) - - - (Loss) gain on sale of securities, net 541 (2,732) 2,307 702 1,012 Total noninterest income 57,421 51,354 6,847 57,068 55,202 Noninterest expenses: Compensation and benefits 68,391 64,142 62,050 64,585 65,003 Occupancy 13,383 13,403 11,977 11,824 12,182 Furniture and equipment 14,969 14,637 13,840 13,962 13,595 Intangible amortization 3,473 3,473 3,079 3,544 4,377 Marketing 4,211 3,350 4,211 4,292 3,624 Professional services 4,802 5,457 4,302 3,464 3,544 Severance and closing costs 4,522 - - - - Acquisition costs - 2,018 868 65 - Other 17,529 16,129 15,523 15,582 16,846 Total noninterest expenses 131,280 122,609 115,850 117,318 119,171 Income before income taxes 51,222 54,895 10,433 63,555 64,190 Income taxes 16,186 17,097 1,436 20,412 20,338 Net income $35,036 $37,798 $8,997 $43,143 $43,852 Diluted shares (average) 56,762 56,452 52,871 53,252 53,703 Net income per common share: Basic $0.62 $0.68 $0.17 $0.82 $0.83 Diluted 0.62 0.67 0.17 0.81 0.82 See Selected Financial Highlights for footnotes. Interest-Rate Spread (unaudited) Three Months Ended March Dec. Sept. June March 2007 2006 2006 2006 2006 Interest-rate spread Yield on interest-earning assets 6.61% 6.52% 6.31% 6.11% 5.97% Cost of interest-bearing liabilities 3.29 3.38 3.38 3.05 2.78 Interest-rate spread 3.32% 3.14% 2.93% 3.06% 3.19% Net interest margin 3.41% 3.23% 3.01% 3.13% 3.24% Consolidated Average Statements of Condition (unaudited) Three Months Ended March 31, 2007 Fully tax- Average equivalent (Dollars in thousands) balance Interest yield/rate Assets: Interest-earning assets: Loans $12,445,025 $209,164 6.74% Securities 2,303,191 34,203 5.97(b) Loans held for sale 394,102 6,249 6.34 Short-term investments 117,584 1,585 5.39 Total interest-earning assets 15,259,902 251,201 6.61 Noninterest-earning assets 1,605,708 Total assets $16,865,610 Liabilities and Shareholders' Equity: Interest-bearing liabilities: Demand deposits $1,505,598 $ - - % Savings, NOW and money market deposit accounts 5,567,702 28,762 2.10 Time deposits 5,303,759 58,868 4.50 Total deposits 12,377,059 87,630 2.87 Federal Home Loan Bank advances 918,125 10,909 4.75 Repurchase agreements and other short-term debt 883,172 9,878 4.47 Long-term debt 620,451 12,195 7.86 Total borrowings 2,421,748 32,982 5.45 Total interest-bearing liabilities 14,798,807 120,612 3.29 Noninterest-bearing liabilities 157,247 Total liabilities 14,956,054 Preferred stock of subsidiary corporation 9,577 Shareholders' equity 1,899,979 Total liabilities and shareholders' equity $16,865,610 130,589 Less: tax-equivalent adjustment (2,508) Net interest income $128,081 Interest-rate spread 3.32 % Net interest margin 3.41 % See Selected Financial Highlights for footnotes. Consolidated Average Statements of Condition (unaudited) Three Months Ended March 31, 2006 Fully tax- Average equivalent (Dollars in thousands) balance Interest yield/rate Assets: Interest-earning assets: Loans $12,392,022 $195,574 6.33% Securities 3,630,986 43,819 4.77(b) Loans held for sale 228,695 3,339 5.84 Short-term investments 15,181 112 2.95 Total interest-earning assets 16,266,884 242,844 5.97 Noninterest-earning assets 1,500,627 Total assets $17,767,511 Liabilities and Shareholders' Equity: Interest-bearing liabilities: Demand deposits $1,451,677 $ - - % Savings, NOW and money market deposit accounts 5,309,282 19,808 1.51 Time deposits 4,906,912 42,546 3.52 Total deposits 11,667,871 62,354 2.16 Federal Home Loan Bank advances 2,397,872 24,496 4.09 Repurchase agreements and other short-term debt 1,289,102 11,830 3.67 Long-term debt 640,804 11,669 7.28 Total borrowings 4,327,778 47,995 4.44 Total interest-bearing liabilities 15,995,649 110,349 2.78 Noninterest-bearing liabilities 98,991 Total liabilities 16,094,640 Preferred stock of subsidiary corporation 9,577 Shareholders' equity 1,663,294 Total liabilities and shareholders' equity $17,767,511 132,495 Less: tax-equivalent adjustment (2,336) Net interest income $130,159 Interest-rate spread 3.19% Net interest margin 3.24% See Selected Financial Highlights for footnotes. At or for the Three Months Ended (Unaudited) March 31, Dec. 31, Sept. 30, (Dollars in thousands) 2007 2006 2006 Asset Quality Nonperforming loans: Commercial: Commercial $13,679 $21,105 $29,321 Equipment financing 2,405 2,616 2,450 Total commercial 16,084 23,721 31,771 Commercial real estate 18,524 17,618 16,811 Residential 13,473 11,307 7,032 Consumer 10,808 6,266 3,496 Total nonperforming loans 58,889 58,912 59,110 Other real estate owned and repossessed assets: Commercial 4,833 1,922 1,573 Residential 350 383 607 Consumer 758 608 126 Total other real estate owned and repossessed assets 5,941 2,913 2,306 Total nonperforming assets $64,830 $61,825 $61,416 Accruing loans 90 or more days past due $4,636 $1,490 $4,609 Allowance for Credit Losses Beginning balance $154,994 $156,331 $156,471 Provision 3,000 3,000 3,000 Allowance for acquired loans - 4,724 - Charge-offs: Commercial 2,293 9,352 3,369 Residential 2,581 199 46 Consumer 1,993 454 265 Total charge-offs 6,867 10,005 3,680 Recoveries (1,533) (944) (540) Net loan charge-offs 5,334 9,061 3,140 Ending balance $152,660 $154,994 $156,331 Components: Allowance for loan losses $145,367 $147,719 $147,446 Reserve for unfunded credit commitments 7,293 7,275 8,885 Allowance for credit losses $152,660 $154,994 $156,331 Asset Quality Ratios: Allowance for loan losses / total loans 1.18% 1.14% 1.13% Allowance for credit losses / total loans 1.24 1.20 1.20 Net charge-offs / average loans (annualized) 0.17 0.27 0.10 Nonperforming loans / total loans 0.48 0.46 0.45 Nonperforming assets / total loans plus OREO 0.53 0.48 0.47 Allowance for credit losses / nonperforming loans 259.23 263.09 264.47 See Selected Financial Highlights for footnotes. At or for the Three Months Ended (Unaudited) June 30, March 31, (Dollars in thousands) 2006 2006 Asset Quality Nonperforming loans: Commercial: Commercial $22,930 $19,719 Equipment financing 2,693 2,864 Total commercial 25,623 22,583 Commercial real estate 23,291 24,012 Residential 7,218 8,891 Consumer 3,065 2,875 Total nonperforming loans 59,197 58,361 Other real estate owned and repossessed assets: Commercial 2,254 1,712 Residential 316 456 Consumer 10 361 Total other real estate owned and repossessed assets 2,580 2,529 Total nonperforming assets $61,777 $60,890 Accruing loans 90 or more days past due $2,542 $1,002 Allowance for Credit Losses Beginning balance $155,957 $155,632 Provision 3,000 2,000 Allowance for acquired loans - - Charge-offs: Commercial 2,775 1,629 Residential 65 75 Consumer 239 362 Total charge-offs 3,079 2,066 Recoveries (593) (391) Net loan charge-offs 2,486 1,675 Ending balance $156,471 $155,957 Components: Allowance for loan losses $147,401 $146,383 Reserve for unfunded credit commitments 9,070 9,574 Allowance for credit losses $156,471 $155,957 Asset Quality Ratios: Allowance for loan losses / total loans 1.16 % 1.16 % Allowance for credit losses / total loans 1.23 1.24 Net charge-offs / average loans (annualized) 0.08 0.05 Nonperforming loans / total loans 0.47 0.46 Nonperforming assets / total loans plus OREO 0.49 0.48 Allowance for credit losses / nonperforming loans 264.32 267.23 See Selected Financial Highlights for footnotes.

CONTACT: Webster Bank Media: Clark Finley 203-578-2287 cfinley@websterbank.com or Investors: Jim Sitro 203-578-2399 jsitro@websterbank.com

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Source: Webster Financial Corporation