Webster Reports 19 Percent Increase in Operating Earnings

Apr 17, 2002

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WATERBURY, Conn.--(BUSINESS WIRE)--April 17, 2002--Webster Financial Corporation (Nasdaq: WBST), the holding company for Webster Bank, today reported a 19 percent increase in operating earnings for the first quarter ended March 31, 2002.

Operating earnings for the quarter increased to $39.4 million or $.80 per diluted share, compared to $33.1 million or $.67 per diluted share for the first quarter ended March 31, 2001.

The first quarter 2002 results reflect the adoption of a new accounting standard eliminating the amortization of goodwill expense beginning January 1, 2002. Had the new accounting standard been effective in the 2001 quarter, operating earnings (defined as net income excluding nonrecurring items) for that period would have been $36.3 million or $.73 per diluted share.

Net income for the first quarter of 2002 was $39.4 million or $.80 per diluted share, compared to $27.0 million or $.54 per diluted share for the year-ago period. The 2001 results included net non-recurring items of $6.1 million, net of taxes, or $.13 per diluted share.

"We are pleased to report continued strong performance and progress in advancing our strategic plan for growth," said James C. Smith, chairman and chief executive officer. "The growth in loans and deposits, coupled with improving credit quality, reflect the region's steady performance during the economic slowdown. Our recently announced management reorganization better aligns our executive team and senior managers to execute our strategic growth plan."

The growth in operating earnings was driven by increases in net interest income and growth in revenues from fee-based services. Net interest income increased 10 percent compared to the first quarter last year due to the benefits of a lower interest-rate environment and asset growth. Revenues from fee-based services also grew 10 percent compared to a year-ago primarily as a result of increased loan and loan-servicing fees and higher insurance revenues.

Webster's equipment leasing and financing subsidiary, Center Capital, broadened its product offerings with the formation of a professional practices business line serving potential customers in all 50 states. This division specializes in financing office automation and medical equipment for professionals including those in the fields of medicine, law, accounting, architecture and consulting. William T. Bromage, president and chief operating officer, said "This new division serves an attractive market and will boost loan growth in future periods."

Financial Highlights

Net interest income for the quarter increased 10 percent to $96.5 million from $87.7 million in the year-ago period and compares to $95.7 million in the fourth quarter of 2001. The increase was due primarily to the benefits of a lower interest-rate environment and asset growth. The securities and loan portfolios increased $532 million and $121 million, respectively, in the first quarter compared to the first quarter a year ago. On a linked-quarter comparison, volume growth in the securities and loan portfolios contributed to the growth in net interest income. Net interest margin (net interest income as a percentage of average earning assets) was 3.51 percent in the first quarter, compared to 3.35 percent in the year-ago period and 3.61 percent in the fourth quarter of 2001. The decrease in net interest margin is due primarily to lower reinvestment yields in the securities and loan portfolios.

Revenue from fee-based services excluding gains on the sale of securities, increased 10 percent for the quarter to $38.8 million from $35.2 million in year-ago period. This increase is due primarily to revenue related to loan and loan servicing fees, higher revenues at Webster Insurance and to expanded product offerings to Webster's growing customer base. Income from fee-based services as a percent of total revenue was 29 percent in the first quarter.

Total assets are now $12.3 billion up from $11.8 billion in the fourth quarter. Total gross loans increased almost 4% in the quarter to $7.2 billion compared to $7.0 billion at December 31, 2001. The increase is due primarily to growth in the consumer and residential portfolios. Deposits increased to $7.2 billion in the quarter from $7.1 billion at December 31, 2001, primarily as a result of growth in savings and money market accounts.

The allowance for loan losses increased to $98.9 million or 1.37 percent of total loans at March 31, 2002, from $95.0 million or 1.33 percent of total loans in the year-ago period and $97.3 million or 1.40 percent of total loans in the fourth quarter. Nonperforming assets totaled $54.3 million or 0.44 percent of total assets at March 31, 2002, compared to $49.9 million or 0.43 percent a year earlier and down from $62.5 million or 0.53 percent in the fourth quarter. The allowance for loan losses as a percent of nonaccrual loans was 197 percent, up from 169 percent in the fourth quarter and was 202 percent at March 31, 2001.

Book value per common share increased 10 percent to $20.69 at March 31, 2002, from $18.85 at March 31, 2001, due primarily to earnings and increases in the fair value of available-for-sale securities. Shareholders' equity exceeded $1 billion at the end of the first quarter, up from $925 million at the end of the 2001 first quarter, representing 8.2% percent of total assets.

2002 Strategic Actions

In January Webster announced a management reorganization and the promotion of President William T. Bromage to the newly created position of Chief Operating Officer. As a result of the change, all lines of business will report to Bromage, who will focus on executing Webster's strategic plan. As part of the reorganization, Webster also announced two newly created positions. An Executive Vice President, Business Banking will report to Bromage and an Executive Vice President, Corporate Development and Planning will report to Smith.

Earlier this month, Webster announced the appointment of Dr. Nicholas Perna as economic advisor. Perna will assist Webster to assess Connecticut, national and international economic developments. Perna is the chief economist and managing director of Perna Associates, a consulting firm that specializes in economic analysis, forecasting and strategy. Prior to founding this company, he was chief economist for Fleet Financial Group, a position he previously held with Shawmut Bank and Connecticut National Bank. Businessweek and The Wall Street Journal have cited him as one of the top economic forecasters in the United States.

In February, Webster announced the opening of its Stamford Branch at 1959 Summer Street, the first step in our announced expansion into Fairfield County. Webster now offers 13 branch locations in 9 Fairfield County towns. In aggregate, our growth plan calls for establishing at least 20 branches and 35 ATM locations in contiguous markets over the next three years.

Webster Financial Corporation is the holding company for Webster Bank and Webster Insurance. With $12 billion in assets, Connecticut-based Webster Bank provides business and consumer banking, mortgage, trust and investment services through more than 100 banking offices, 210 ATMs and the Internet (www.websterbank.com). Webster Financial Corporation is majority owner of Chicago-based Duff & Phelps, LLC, a leader in financial advisory services, and Webster Bank owns Center Capital Corporation, an equipment leasing and financing company headquartered in Farmington, Connecticut and Webster Trust Company, N.A.

For more information on Webster, including past press releases and the latest Annual Report, visit the Webster Bank website at www.websterbank.com.

Conference Call

A conference call covering today's announcement will be held today, Wednesday, April 17, at 1 p.m., Eastern Time and may be heard through Webster's investor relations website at www.wbst.com, or in listen-only mode by calling 1-800-521-5428 (Access Code: 1706365). The call will be archived on the website and available for future retrieval.

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, which could cause actual results to differ from those contained in the forward-looking statement, see "Forward Looking Statements" in the Company's Annual Report for the most recently ended fiscal year.

Selected Financial Highlights (unaudited)
---------------------------------------------
                                                At or for the Three
                                               Months Ended March 31,
(Dollars in thousands, except per share data)     2002        2001
                                                  ----        ----         
Operating income and performance
 ratios before nonrecurring items
 (annualized) (a):
--------------------------------------------- 
As reported:
Operating income                                $ 39,436    $ 33,091
Operating income per common share (diluted)         0.80        0.67
Return on average shareholders' equity             15.48 %     14.64 %
Return on average assets                            1.32        1.17
Fee income as a percentage of total revenue        28.68       28.66
Efficiency ratio (b)                               51.20       51.25

2001 adjusted for SFAS 142:
Operating income                                $ 39,436    $ 36,343
Operating income per common share (diluted)         0.80        0.73
Return on average shareholders' equity             15.48 %     16.05 %
Return on average assets                            1.32        1.28

Net income and performance ratios
 after nonrecurring items
 (annualized):
---------------------------------------------
Net income                                      $ 39,436    $ 26,983
Net income per common share (diluted)               0.80        0.54
Return on average shareholders' equity             15.48 %     11.94 %
Return on average assets                            1.32        0.95
Fee income as a percentage of total revenue        28.68       28.66

Cash income and performance ratios
 before nonrecurring items
 (annualized) (c):
---------------------------------------------
Cash income                                     $ 42,239    $ 39,604
Cash income per common share (diluted)              0.85        0.80
Cash return on average shareholders' equity        16.59 %     17.52 %
Cash return on average assets                       1.42        1.40

Other ratios (annualized):
---------------------------------------------
Shareholders' equity / total assets                 8.20 %      7.90 %
Interest-rate spread                                3.42        3.23
Net interest margin                                 3.51        3.35

Share related:
---------------------------------------------
Book value per common share                      $ 20.69     $ 18.85
Tangible book value per common share               14.22       12.04
Common stock closing price                         37.43       29.31
Dividend declared per common share                  0.17        0.16
Common shares issued and outstanding          48,879,355  49,077,409
Basic shares (average)                        48,802,810  48,937,557
Diluted shares (average)                      49,582,577  49,565,661


(a) Excludes the following nonrecurring items for the 2001 period, net
    of taxes: $2.5 million of branch reconfiguration expenses, $2.4
    million related to the adoption of accounting standards for
    derivative instruments and hedging activities and $1.2 million
    related to the early extinguishment of debt. There were no
    nonrecurring items recorded for the 2002 period.

(b) Excludes nonrecurring income and operating expense items (refer to
    item (a)), intangible amortization, capital securities, preferred
    dividend, minority interest, foreclosed property and repossession
    expenses.

(c) Net income excluding tax-effected intangible amortization and
    nonrecurring items (refer to item (a)).



Consolidated Statements of Condition (unaudited)
------------------------------------------------

                                  March 31, December 31,    March 31,
  (Dollars in thousands)            2002       2001           2001
                                ------------ ------------ ------------
Assets:

Cash and due from
 depository institutions        $   167,160  $   218,908  $   237,141
Short-term investments               33,472       35,937          348

Securities:
 Trading, at fair value                 527            -           30
 Available for sale,
  at fair value                   4,221,800    3,999,133    3,690,313
                                ------------ ------------ ------------
   Total securities               4,222,327    3,999,133    3,690,343
                                ------------ ------------ ------------

Loans receivable:
 Residential mortgages            3,664,334    3,530,201    4,069,946
 Commercial and industrial        1,385,276    1,367,578    1,480,745
 Commercial real estate             952,553      974,976      867,789
 Consumer                         1,237,098    1,094,463      699,579
                                ------------ ------------ ------------
   Gross loans receivable         7,239,261    6,967,218    7,118,059
Allowance for loan losses           (98,930)     (97,307)     (94,970)
                                ------------ ------------ ------------
   Loans, net                     7,140,331    6,869,911    7,023,089

Accrued interest receivable          58,928       54,288       68,898
Premises and equipment, net          82,209       82,808       87,839
Intangible assets                   316,602      320,051      334,209
Cash surrender value
 of life insurance                  165,225      163,023      176,619
Prepaid expenses and
 other assets                       155,846      113,323       85,069
                                ------------ ------------ ------------

   Total assets                 $12,342,100  $11,857,382  $11,703,555
                                ============ ============ ============

Liabilities and
 Shareholders' Equity:

Deposits:
 Checking and NOW               $ 1,661,341  $ 1,708,623  $ 1,569,618
 Savings and MMDAs                2,592,132    2,430,691    2,058,873
 Certificates of deposit          2,794,048    2,831,344    3,166,611
                                ------------ ------------ ------------
   Total retail deposits          7,047,521    6,970,658    6,795,102
 Treasury deposits                  121,825       95,813      158,962
                                ------------ ------------ ------------
   Total deposits                 7,169,346    7,066,471    6,954,064

Borrowed funds                    3,903,226    3,533,364    3,422,933
Accrued expenses and
 other liabilities                   98,459       91,503      242,070
                                ------------ ------------ ------------
   Total liabilities             11,171,031   10,691,338   10,619,067
                                ------------ ------------ ------------

Corporation-obligated
 mandatorily redeemable
  capital securities of
   subsidiary trusts                150,000      150,000      150,000

Preferred stock of
 subsidiary corporation               9,577        9,577        9,577

Shareholders' equity              1,011,492    1,006,467      924,911
                                ------------ ------------ ------------

   Total liabilities and
    shareholders' equity        $12,342,100  $11,857,382  $11,703,555
                                ============ ============ ============

Consolidated Statements of Income (unaudited)
---------------------------------------------
                                                 Three Months Ended
                                                      March 31,
(Dollars in thousands, except per share data)     2002        2001 (b)
                                             ------------ ------------
Interest income:
Loans                                           $111,495     $138,628
Securities and short-term investments             59,598       57,984
                                             ------------ ------------
  Total interest income                          171,093      196,612
                                             ------------ ------------

Interest expense:
Deposits                                          39,613       59,436
Borrowings                                        34,997       49,465
                                             ------------ ------------
  Total interest expense                          74,610      108,901
                                             ------------ ------------

  Net interest income                             96,483       87,711
Provision for loan losses                          4,000        3,200
                                             ------------ ------------
  Net interest income after
   provision for loan losses                      92,483       84,511
                                             ------------ ------------

Noninterest income:
Deposit service fees                              13,806       13,233
Loan and loan servicing fees                       5,223        2,896
Trust and investment services                      4,387        4,394
Financial advisory services                        3,959        4,505
Insurance revenue                                  7,436        5,014
Gain on sale of securities, net                    3,405        4,249
Increase in cash surrender
 value of life insurance                           2,202        2,324
Other                                              1,784        2,871
                                             ------------ ------------
  Total noninterest income                        42,202       39,486
                                             ------------ ------------

Noninterest expenses:
Compensation and benefits                         40,148       35,617
Occupancy                                          6,285        6,880
Furniture and equipment                            6,568        6,711
Intangible amortization                            4,313        7,564
Marketing                                          2,424        2,090
Professional services                              2,327        1,570
Capital securities                                 3,616        3,616
Other                                             11,512       10,469
                                             ------------ ------------
  Total noninterest expenses                      77,193       74,517
                                             ------------ ------------

Income before income taxes
 and nonrecurring items                           57,492       49,480
Income taxes                                      18,056       16,389
                                             ------------ ------------
  Income before nonrecurring items                39,436       33,091
Nonrecurring items, net of taxes (a)                   -       (6,108)
                                             ------------ ------------
  Net income                                    $ 39,436     $ 26,983
                                             ============ ============

Net income per common share
 before nonrecurring items:
  Basic                                            $0.81        $0.68
  Diluted                                           0.80         0.67

Net income per common share:
 Basic                                             $0.81        $0.55
 Diluted                                            0.80         0.54

(a) See footnote (a) to Selected Financial Highlights.

(b) Had the requirements of Statement of Financial Accounting
    Standards 142 ("SFAS"), been applied to the 2001 period,
    intangible amortization expense would have been $4,312, income
    before nonrecurring items $36,343 and net income $30,235. Net
    income per share before nonrecurring items would have been: basic
    $.74 and diluted $.73. Net income per share would have been: basic
    $.62 and diluted $.61.

Consolidated Statements of Income (unaudited)
---------------------------------------------

                                  Three Months Ended                  
(Dollars in                       
 thousands, except  March 31,  Dec. 31, Sept. 30,  June 30, March 31,
 per share data)       2002      2001      2001      2001      2001   
                    ---------- --------- --------- --------- ---------

Interest income:
Loans               $ 111,495 $ 118,534 $ 127,991 $ 134,702 $ 138,628 
Securities and
 short-term
  investments          59,598    59,004    60,572    59,755    57,984 
                    ---------- --------- --------- --------- ---------
 Total interest
 income               171,093   177,538   188,563   194,457   196,612 
                    ---------- --------- --------- --------- ---------

Interest expense:
Deposits               39,613    45,570    53,627    57,702    59,436 
Borrowings             34,997    36,260    41,385    46,311    49,465 
                    ---------- --------- --------- --------- ---------
 Total interest
 expense               74,610    81,830    95,012   104,013   108,901 
                    ---------- --------- --------- --------- ---------

 Net interest income   96,483    95,708    93,551    90,444    87,711 
Provision for
 loan losses            4,000     4,000     4,000     3,200     3,200 
                    ---------- --------- --------- --------- ---------
Net interest income
 after provision
  for loan losses      92,483    91,708    89,551    87,244    84,511 
                    ---------- --------- --------- --------- ---------

Noninterest income:
Deposit
 service fees          13,806    14,362    14,142    14,325    13,233 
Loan and loan
 servicing fees         5,223     5,054     5,131     5,670     2,896 
Trust and
 investment
  services              4,387     4,377     4,984     4,591     4,394 
Financial advisory
  services              3,959     3,286     3,942     3,792     4,505 
Insurance revenue       7,436     5,358     5,806     5,573     5,014 
Gain on sale of
 securities, net        3,405     2,012     2,566     1,794     4,249 
Increase in cash
 surrender value
   of life insurance    2,202     2,238     2,211     2,391     2,324 
Other                   1,784     2,094     1,709     2,115     2,871 
                    ---------- --------- --------- --------- ---------
Total noninterest
 income                42,202    38,781    40,491    40,251    39,486 
                    ---------- --------- --------- --------- ---------

Noninterest
 expenses:
Compensation and
 benefits              40,148    35,393    35,827    36,062    35,617 
Occupancy               6,285     6,180     6,057     6,526     6,880 
Furniture and
 equipment              6,568     6,975     7,032     7,160     6,711 
Intangible
 amortization           4,313     7,889     7,888     7,886     7,564 
Marketing               2,424     2,300     2,045     2,293     2,090 
Professional
 services               2,327     2,470     2,896     2,542     1,570 
Capital
 securities             3,616     3,615     3,616     3,615     3,616 
Other                  11,512    12,320    11,840    10,220    10,469 
                    ---------- --------- --------- --------- ---------
Total noninterest
 expenses              77,193    77,142    77,201    76,304    74,517 
                    ---------- --------- --------- --------- ---------

Income before
 income taxes and
 nonrecurring items    57,492    53,347    52,841    51,191    49,480 
Income taxes           18,056    17,914    17,810    17,039    16,389 
                    ---------- --------- --------- --------- ---------
 Income before
 nonrecurring items    39,436    35,433    35,031    34,152    33,091 
Nonrecurring items,
 net of taxes               -     1,237         -       352    (6,108)
                    ---------- --------- --------- --------- ---------
 Net income          $ 39,436  $ 36,670  $ 35,031  $ 34,504  $ 26,983 
                    ========== ========= ========= ========= =========

Net income
 per common
 share before
 nonrecurring items:
  Basic                 $0.81     $0.72     $0.71     $0.70     $0.68 
  Diluted                0.80      0.71      0.70      0.69      0.67 

Net income
 per common
 share before
 nonrecurring items:
 (2001 restated
  for SFAS 142)

  Basic                 $0.81     $0.80     $0.78     $0.77     $0.74
  Diluted                0.80      0.79      0.77      0.76      0.73

Net income per
 common share:
  Basic                 $0.81     $0.75     $0.71     $0.70     $0.55 
  Diluted                0.80      0.74      0.70      0.69      0.54 


Retail and Wholesale Interest-Rate Spreads (unaudited)
------------------------------------------------------

Three Months Ended     March   December September    June      March
                        2002     2001      2001      2001       2001
                    --------- --------- --------- --------- ---------
Interest-rate
 spread
------------------
Total
 interest-earning
  assets (a)           6.24 %    6.64 %    7.06 %    7.28 %    7.55 %
Total
 interest-bearing
  liabilities          2.82      3.13      3.63      3.96      4.32
                    --------- --------- --------- --------- ---------
  Interest-rate
   spread              3.42 %    3.51 %    3.43 %    3.32 %    3.23 %
  Net interest
   margin              3.51      3.61      3.54      3.39      3.35

Retail
 interest-rate
  spread
------------------
Yield on loans         6.39 %    6.78 %    7.33 %    7.61 %    7.99 %
Cost of deposits       2.29      2.59      3.06      3.34      3.52
                    --------- --------- --------- --------- ---------
  Spread               4.10 %    4.19 %    4.27 %    4.27 %    4.47 %
                    ========= ========= ========= ========= =========

Wholesale
 interest-rate
  spread
------------------
Yield on
 securities (a)        5.98 %    6.38 %    6.57 %    6.63 %    6.67 %
Cost of borrowings     3.85      4.24      4.79      5.18      5.98
                    --------- --------- --------- --------- ---------
  Spread               2.13 %    2.14 %    1.78 %    1.45 %    0.69 %
                    ========= ========= ========= ========= =========


Consolidated Average Statements of Condition (unaudited)
--------------------------------------------------------

  Three Months Ended March 31,                   2002                 
                                                           Fully tax-  
                                     Average    Interest   equivalent 
  (Dollars in thousands)             balance       (b)     yield/rate 
                                  ----------- ----------- ----------- 
Assets:
 Interest-earning assets:
  Loans                           $ 6,996,981 $   111,495     6.39 %  
  Securities and
   interest-bearing deposits        4,044,428      59,902     5.98 (a)
                                  ----------- ----------- ----------- 
     Total interest-earning assets 11,041,409     171,397     6.24    
                                              -----------
  Noninterest-earning assets          881,237                         
                                  -----------
    Total assets                  $11,922,646                         
                                  ===========

Liabilities and
 Shareholders' Equity:
  Interest-bearing liabilities:
  Interest-bearing deposits       $ 6,184,667    $ 39,613     2.60 %  
  Noninterest-bearing deposits        838,903           -        -    
  Federal Home Loan Bank advances   2,391,373      27,287     4.56    
  Repurchase agreements
   and other borrowings             1,116,611       4,920     1.76    
  Senior notes                        126,000       2,790     8.86    
                                  ----------- ----------- ----------- 
    Total interest-bearing
     liabilities                   10,657,554      74,610     2.82    
                                              -----------
  Noninterest-bearing liabilities      86,796                         
                                  -----------
    Total liabilities              10,744,350                         

  Capital securities and
   preferred stock of
    subsidiary corporation            159,577                         

  Shareholders' equity              1,018,719                         
                                  -----------
    Total liabilities and
     shareholders' equity         $11,922,646                         
                                  ===========

  Less: tax-equivalent adjustment                    (304)            
                                              -----------

  Net interest income                            $ 96,483             
                                              ===========            

  Interest-rate spread                                        3.42 %  
                                                          ===========
  Net interest margin                                         3.51 %  
                                                          ===========



  Three Months Ended March 31,                   2001
                                                           Fully tax-  
                                     Average    Interest   equivalent 
  (Dollars in thousands)             balance       (b)     yield/rate 
                                  ----------- ----------- ----------- 

Assets:
 Interest-earning assets:
  Loans                           $ 6,943,051   $ 138,631     7.99 %
  Securities and 
   interest-bearing deposits        3,500,761      58,216     6.67 (a)
                                  ----------- ----------- ----------- 
    Total interest-earning assets  10,443,812     196,847     7.55
                                              -----------
  Noninterest-earning assets          869,976
                                  -----------
    Total assets                  $11,313,788
                                  ===========

Liabilities and
 Shareholders' Equity:
  Interest-bearing liabilities:
  Interest-bearing deposits       $ 6,051,782    $ 59,436     3.98 %
  Noninterest-bearing deposits        801,781           -        -
  Federal Home Loan Bank advances   1,985,957      30,830     6.21
  Repurchase agreements
   and other borrowings             1,196,391      15,848     5.30
  Senior notes                        126,000       2,787     8.85
                                  ----------- ----------- ----------- 
    Total interest-bearing
     liabilities                   10,161,911     108,901     4.32
                                              -----------
  Noninterest-bearing liabilities      81,485
                                  -----------
    Total liabilities              10,243,396

  Capital securities and
   preferred stock of
    subsidiary corporation            166,244

  Shareholders' equity                904,148
                                  -----------
    Total liabilities and
     shareholders' equity         $11,313,788
                                  ===========

  Less: tax-equivalent adjustment                    (235)
                                              -----------

  Net interest income                            $ 87,711
                                              ===========

  Interest-rate spread                                        3.23 %
                                                          ===========
  Net interest margin                                         3.35 %
                                                          ===========


(a) For purposes of this computation, unrealized gains(losses) are
    excluded from the average for rate calculations.

(b) On a fully tax-equivalent basis.

Asset Quality and Allowance for Loan Losses (unaudited)
-------------------------------------------------------

(Dollars in thousands)
                            At or for the Three Months Ended,
                    --------------------------------------------------
Nonperforming
 Assets             March 31,  Dec. 31, Sept. 30,  June 30, March 31,
-------------         2002      2001      2001      2001      2001
                    ---------- --------- --------- --------- ---------
Nonperforming loans:
  Commercial:
    Business
     banking         $ 20,461  $ 20,574  $ 16,852  $  9,032  $ 13,529
    Specialized
     industry           3,399     8,947    11,003     5,100     5,100
    Lease financing     7,510     7,333     6,733     6,295     5,700
                    ---------- --------- --------- --------- ---------
         Total
          commercial   31,370    36,854    34,588    20,427    24,329

  Commercial
   real estate         11,122    11,062    13,945    13,876    12,185
  Residential           6,262     7,677     7,745     8,693     8,540
  Consumer              1,545     1,823     1,474     1,571     2,077
                    ---------- --------- --------- --------- ---------

Total nonperforming
 loans                 50,299    57,416    57,752    44,567    47,131
                    ---------- --------- --------- --------- ---------

Other real estate
 owned and
  repossessed assets:
   Commercial           2,690     2,534       539     1,685     1,040
   Residential          1,131     1,956     1,240       784     1,685
   Consumer               205       548       710       364        37
                    ---------- --------- --------- --------- ---------

Total other real
 estate owned and
   repossessed assets   4,026     5,038     2,489     2,833     2,762
                    ---------- --------- --------- --------- ---------      
Total nonperforming
 assets              $ 54,325  $ 62,454  $ 60,241  $ 47,400  $ 49,893
                    ========== ========= ========= ========= =========

Allowance for
 Loan Losses
-------------
Beginning balance    $ 97,307  $ 96,654  $ 96,135  $ 94,970  $ 90,809
   Allowance from
    purchase
     transactions           -         -         -         -     1,852
   Provision            4,000     4,000     4,000     3,200     3,200

   Loan charge-offs:
     Commercial:
       Specialized
        industry        1,361       564     3,039     1,359         -
       All other
        commercial        541     2,518       365       552       581
                    ---------- --------- --------- --------- ---------
         Total
          commercial    1,902     3,082     3,404     1,911       581
   Residential            362       249       325       134       388
   Consumer               377       394       281       371       454
                    ---------- --------- --------- --------- ---------
         Total
          charge-offs   2,641     3,725     4,010     2,416     1,423
   Recoveries            (264)     (378)     (529)     (381)     (532)
                    ---------- --------- --------- --------- ---------
         Net loan
          charge-offs   2,377     3,347     3,481     2,035       891
                    ---------- --------- --------- --------- ---------
Ending balance       $ 98,930  $ 97,307  $ 96,654  $ 96,135  $ 94,970
                    ========== ========= ========= ========= =========


Asset Quality Ratios:
---------------------
Net charge-offs /
 average loans
 (annualized)            0.14 %    0.19 %    0.20 %    0.12 %    0.05 %

Allowance for loan
 losses / gross
 loans                   1.37      1.40      1.40      1.38      1.33

Nonperforming
 assets / total
 assets                  0.44      0.53      0.52      0.40      0.43

Nonperforming
 loans / total
 loans                   0.69      0.82      0.84      0.64      0.66

Allowance for
 loan losses /
 nonperforming
 loans                 196.68    169.48    167.36    215.71    201.50

--30--kb/kf/sw/ny*

CONTACT: Webster Bank, Waterbury
Media:
Art House, 203/578-2391
ahouse@websterbank.com
Clark Finley, 203/578-2429
cfinley@websterbank.com
or
Investors:
James M. Sitro, 203/578-2399
jsitro@websterbank.com