Webster Financial (WBS) 8-K Webster Reports $.90 In Per Share Net Income for the First Quarter

Exhibit 99.1

Media Contact:	Investor Contact:
Clark Finley 203-578-2429	Terry Mangan 203-578-2318
cfinley@westerbank.com	tmangan@websterbank.com

WEBSTER REPORTS $.90 IN PER SHARE NET INCOME
FOR THE FIRST QUARTER

WATERBURY, Conn., April 15, 2004 — Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, today announced net income of $42.3 million in the first quarter, compared to $39.9 million in the year-ago period, an increase of 6 percent. Net income per diluted share was $.90 in the first quarter, an increase of 5 percent compared to $.86 in the year-ago period.

“We are pleased to report higher earnings and continuing double-digit loan and deposit growth,” stated Webster chairman and chief executive officer James C. Smith. “We look forward to advancing our strategic plan and capitalizing on new opportunities as we complete our conversion to a commercial bank. With our expansion into the Rhode Island and Massachusetts markets through our pending acquisition of FirstFed, Webster will become the largest independent bank headquartered in southern New England.”

Revenues and Expenses

Total revenues (net interest income plus total noninterest income) were $160.5 million in the first quarter, compared to $157.8 million a year ago. Impacting the quarter was the implementation on December 31, 2003 of Financial Accounting Standards Board Interpretation No. (“FIN”) 46 (revised), which required the reclassification of $3.5 million of capital trust securities expense in the first quarter of 2004 from noninterest expense to interest expense. Adjusting the prior period for this effect, total revenues would have grown by $5.6 million, or 4 percent, from a year ago.

Net interest income was $105.8 million in the first quarter of 2004, compared to $104.7 million in the year-ago period and $107.3 million in the fourth quarter. Excluding the

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effect of FIN 46R, net interest income would have grown by $4.1 million, or 4 percent, from a year ago and by $2.0 million, or 2 percent, from the fourth quarter. These increases reflect growth in the loan portfolio over the past year.

Webster’s net interest margin (annualized net interest income as a percentage of average earning assets) was 3.09 percent in the quarter compared to FIN 46R-adjusted 3.21 percent in the year-ago period and 3.08 percent in the fourth quarter. The decline from the year-ago period reflects the generally lower interest rate environment over the past year.

In the first quarter of 2004, total noninterest income increased 3 percent to $54.7 million, compared to $53.1 million in the year-ago period. Excluding securities gains of $5.5 million in the first quarter and $2.6 million in the year-ago period, noninterest income decreased 3 percent in the first quarter to $49.2 million from $50.5 million in the year-ago period. This decrease principally reflects reductions in financial advisory services due to the sale of Duff & Phelps during the quarter and lower net gains on sales of loans and loan servicing due to reduced mortgage origination volume. Partially offsetting this was growth in insurance revenues, wealth management and investment services and loan service fees.

Total noninterest expenses for the 2004 first quarter were $92.1 million, a decrease from $92.8 million in the year-ago period and $98.3 million in the fourth quarter. Adjusting for the effect of FIN 46R, noninterest expenses grew by $2.3 million, or 3%, from a year ago reflecting the impact of acquisitions and continuing investment in personnel, technology and infrastructure to meet our strategic plan for growth. Also adjusting for $1.3 million of acquisition costs in the fourth quarter, total noninterest expenses declined by $1.3 million, or 1%, largely as a result of active management of mortgage-related costs.

Balance Sheet Growth

At March 31, 2004, total assets were $15.1 billion, up 5 percent from $14.4 billion a year ago. Total loans of $9.5 billion at March 31, 2004 increased 12 percent from $8.5 billion the prior year. Deposits totaled $8.6 billion at March 31, 2004, up over $850 million, or 11 percent, compared to a year ago. Over the past year, core deposit growth was especially strong at 13 percent.

“Continuing strong loan and deposit growth have helped to produce another solid quarter and strengthened our growing commercial franchise,” stated Webster president and chief operating officer William T. Bromage.

At the end of the first quarter, commercial loans, including commercial real estate, were $3.4 billion, up 13 percent from $3.0 billion a year ago. Consumer loans, primarily home

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equity loans and lines, increased 18 percent to $2.2 billion, compared to $1.8 billion one year ago. All loan categories showed growth compared to the fourth quarter. Commercial and consumer loans comprised 58 percent of total loans at March 31, 2004, compared to 57 percent a year ago.

Core deposits (consisting of checking, money market and savings accounts) of $5.9 billion at March 31, 2004 increased by 13 percent from one year ago and represented 68 percent of total deposits, compared to 66 percent one year ago. Total deposits at March 31, 2004 grew at an annualized rate of 13 percent from year-end. Webster’s growth in deposits has been driven in part by its High Performance Checking products and the continuing success of itsde novo branches in Fairfield County, Connecticut and Westchester County, New York.

Book value per common share of $26.18 at March 31, 2004 increased from $23.47 one year ago. Tangible book value per share of $19.60 at March 31, 2004 increased from $16.92 one year ago.

Asset Quality

Nonperforming assets totaled $41.3 million or 0.27 percent of total assets at March 31, 2004, compared to $61.9 million or 0.43 percent a year ago and $42.9 million or 0.29 percent at December 31, 2003.

“Webster’s commitment to a balanced and diversified portfolio has allowed us to maintain overall credit quality during a period of significant growth,” stated Webster chief financial officer William J. Healy.

The allowance for loan losses totaled $123.6 million, or 1.30 percent of total loans at March 31, 2004, compared to $118.6 million, or 1.39 percent, a year ago and $121.7 million, or 1.32 percent, at December 31, 2003. The ratio of the allowance to nonperforming loans at March 31, 2004 increased to 338 percent, compared to 219 percent a year ago and 323 percent at December 31, 2003. The improvements in this ratio are due primarily to the decline in nonperforming loans. The provision for loan losses totaled $5.0 million in the first quarter compared to $5.0 million in the year-ago period.

Webster’s net loan charge-offs in the first quarter of 2004 were $3.1 million compared to $3.4 million in the year-ago period. The annualized net charge-off ratio was 0.13 percent in the 2004 first quarter, compared to 0.16 percent in the year-ago period.

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Strategic Actions

Webster announced in January that its Board of Directors has elected Laurence C. Morse to membership on Webster’s board, effective January 2004.

In March, Webster announced the sale of its majority interest in Duff & Phelps, LLC, the Chicago-based financial advisory services and investment banking firm, to a group including management teams from Duff & Phelps and Stone Ridge Partners and an investor group led by Lovell Minnick Partners, LLC. Webster will maintain a strategic alliance with Duff & Phelps, with preferred customer status.

FIRSTFED AMERICA BANCORP, INC., of Swansea, Massachusetts and the holding company for First Federal Savings Bank of America, has announced that its annual shareholder meeting will be on April 22. A shareholder vote to approve the sale of FIRSTFED to Webster is the primary agenda for the meeting. Webster had announced its definitive agreement to acquire FIRSTFED in October 2003.

Webster also is scheduled to appear before the Commonwealth of Massachusetts Board of Bank Inc. on April 27 to seek approval of the FIRSTFED sale. Board approval is anticipated to be the final regulatory stage for Webster. If approved, the sale of FIRSTFED to Webster will be finalized in the middle of the second quarter.

***

Webster Financial Corporation is the holding company for Webster Bank and Webster Insurance. With $15.1 billion in assets, Webster provides business and consumer banking, mortgage, insurance, financial planning, trust and investment services through 119 banking offices, 233 ATMs, a Connecticut-based call center 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 Webster Trust Company, N.A. In addition, Webster expects to close on its acquisition of FIRSTFED AMERICA BANCORP, INC., which has $2.6 billion in assets, during the second quarter of 2004.

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

***

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Conference Call

A conference call covering Webster’s 2004 first quarter earnings announcement will be held today, Thursday, April 15, at 1:00 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 1-800-901-5218 (Access Code: 32674862). 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 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 2003.

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WEBSTER FINANCIAL CORPORATION

Selected Financial Highlights (unaudited)

	At or for the Three
	Months Ended March 31,
(In thousands, except per share data)	2004			2003
Net income and performance ratios (annualized):
Net income	$	42,323		$	39,937
Net income per diluted common share		0.90			0.86
Return on average shareholders’ equity		14.28	%		15.21	%
Return on average assets		1.15			1.16
Noninterest income as a percentage of total revenue		34.09			33.68
Efficiency Ratio (a)		57.40			58.80
Cash income and performance ratios (annualized) (b):
Net income	$	42,323		$	39,937
Tax-effected stock-based compensation		647			913
Tax-effected intangible amortization		2,660			2,575
Cash income		45,630			43,425
Cash income per diluted common share		0.97			0.94
Cash return on average shareholders’ equity		15.40	%		16.54	%
Cash return on average assets		1.24			1.27
Asset Quality:
Allowance for loan losses	$	123,613		$	118,596
Nonperforming assets		41,262			61,921
Allowance for loan losses / total loans		1.30	%		1.39	%
Net charge-offs/ average loans (annualized)		0.13			0.16
Nonperforming loans / total loans		0.38			0.64
Nonperforming assets / total assets		0.27			0.43
Allowance for loan losses / nonperforming loans		338.30			218.51
Other ratios (annualized):
Shareholders’ equity / total assets		8.03	%		7.46	%
Interest-rate spread		3.04			3.26
Net interest margin		3.09			3.30
Share related:
Book value per common share	$	26.18		$	23.47
Tangible book value per common share		19.60			16.92
Common stock closing price		50.71			35.12
Dividends declared per common share		0.21			0.19
Common shares issued and outstanding		46,299			45,617
Basic shares (average)		46,146			45,461
Diluted shares (average)		47,059			46,192

Footnotes:

(a)	Noninterest expense as a percentage of net interest income plus noninterest income.
(b)	Cash income represents net income excluding the after tax effects of non-cash charges related to the amortization of intangible assets and stock-based compensation, which includes stock options and restricted stock.
(c)	Webster adopted FIN 46R on December 31, 2003, and in accordance with its provisions, deconsolidated the capital trusts and reported the associated liabilities as other long-term debt. Commencing in 2004, the costs have been reclassified from noninterest expenses to interest expense.
(d)	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)	2004			2003			2003
Assets:
Cash and due from depository institutions	$	230,137		$	209,234		$	238,370
Short-term investments		22,130			42,420			13,696
Securities:
Trading, at fair value		2,845			555			10,924
Available for sale, at fair value		4,231,102			4,128,255			4,497,686
Held-to-maturity securities		200,531			173,371			—
Total securities		4,434,478			4,302,181			4,508,610
Loans held for sale		135,771			89,830			321,637
Loans:
Residential mortgages		3,972,123			3,744,013			3,657,707
Commercial		2,101,195			2,040,921			1,947,167
Commercial real estate		1,288,509			1,281,516			1,062,891
Consumer		2,169,011			2,146,359			1,841,526
Total loans		9,530,838			9,212,809			8,509,291
Allowance for loan losses		(123,613	)		(121,674	)		(118,596	)
Loans, net		9,407,225			9,091,135			8,390,695
Accrued interest receivable		51,297			52,756			58,137
Premises and equipment, net		99,866			95,631			82,525
Goodwill and intangible assets		322,483			330,929			320,942
Cash surrender value of life insurance		182,511			180,556			174,181
Prepaid expenses and other assets		204,372			174,018			246,866
Total Assets	$	15,090,270		$	14,568,690		$	14,355,659
Liabilities and Shareholders’ Equity:
Deposits:
Demand deposits	$	1,081,455		$	1,090,060		$	974,044
NOW accounts		1,098,972			1,052,690			991,592
Money market deposit accounts		1,779,468			1,581,276			1,454,157
Savings accounts		1,891,298			1,869,398			1,746,447
Certificates of deposit		2,676,910			2,681,986			2,543,060
Total retail deposits		8,528,103			8,275,410			7,709,300
Treasury deposits		109,979			96,725			74,509
Total deposits		8,638,082			8,372,135			7,783,809
Federal Home Loan Bank advances		2,437,014			2,511,495			2,885,098
Federal funds purchased and securities sold under agreements to repurchase		2,150,719			1,892,138			2,030,553
Other long-term debt(c)		532,760			532,760			326,000
Accrued expenses and other liabilities		110,156			97,690			128,921
Total liabilities		13,868,731			13,406,218			13,154,381
Corporation-obligated mandatorily redeemable capital securities of subsidiary trusts(c)		—			—			121,255
Preferred stock of subsidiary corporation		9,577			9,577			9,577
Shareholders’ equity		1,211,962			1,152,895			1,070,446
Total Liabilities and Shareholders’ Equity	$	15,090,270		$	14,568,690		$	14,355,659

See Selected Financial Highlights for footnotes.

Consolidated Statements of Income (unaudited)

	Three Months Ended
	March 31,
(In thousands, except per share data)	2004		2003
Interest income:
Loans	$	118,591	$	113,221
Securities and short-term investments		44,608		51,745
Loans held for sale		1,070		4,481
Total interest income		164,269		169,447
Interest expense:
Deposits		25,830		29,418
Borrowings		32,633		35,353
Total interest expense		58,463		64,771
Net interest income		105,806		104,676
Provision for loan losses		5,000		5,000
Net interest income after provision for loan losses		100,806		99,676
Noninterest income:
Deposit service fees		17,185		16,890
Insurance revenue		11,638		10,964
Loan and loan servicing fees		6,649		5,905
Wealth and investment services		5,116		4,578
Financial advisory services		3,808		5,431
Gain on sale of loans and loan servicing, net		1,025		2,771
Increase in cash surrender value of life insurance		1,954		2,115
Other		1,848		1,861
		49,223		50,515
Gain on sale of securities, net		5,500		2,633
Total noninterest income		54,723		53,148
Noninterest expenses:
Compensation and benefits		53,127		50,561
Occupancy		8,365		8,099
Furniture and equipment		7,641		7,521
Intangible amortization		4,092		3,962
Marketing		2,984		3,485
Professional services		2,899		2,478
Capital trust securities(c)		—		2,922
Other		13,033		13,778
Total noninterest expenses		92,141		92,806
Income before income taxes		63,388		60,018
Income taxes		21,065		20,081
Net income	$	42,323	$	39,937
Net income per common share:
Basic	$	0.92	$	0.88
Diluted		0.90		0.86

See Selected Financial Highlights for footnotes.

Consolidated Statements of Income (unaudited)

	Three Months Ended
	March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,
(In thousands, except per share data)	2004		2003		2003		2003		2003
Interest income:
Loans	$	118,591	$	117,982	$	114,750	$	114,724	$	113,221
Securities and short-term investments		44,608		43,065		42,050		45,772		51,745
Loans held for sale		1,070		1,791		4,896		4,241		4,481
Total interest income		164,269		162,838		161,696		164,737		169,447
Interest expense:
Deposits		25,830		26,319		26,824		28,750		29,418
Borrowings		32,633		29,224		33,943		35,368		35,353
Total interest expense		58,463		55,543		60,767		64,118		64,771
Net interest income		105,806		107,295		100,929		100,619		104,676
Provision for loan losses		5,000		5,000		10,000		5,000		5,000
Net interest income after provision for loan losses		100,806		102,295		90,929		95,619		99,676
Noninterest income:
Deposit service fees		17,185		17,731		17,868		17,529		16,890
Insurance revenue		11,638		9,077		9,954		9,980		10,964
Loan and loan servicing fees		6,649		8,001		7,755		4,723		5,905
Wealth and investment services		5,116		4,416		4,826		4,521		4,578
Financial advisory services		3,808		7,265		4,833		5,229		5,431
Gain on sale of loans and loan servicing, net		1,025		2,854		9,829		4,066		2,771
Increase in cash surrender value of life insurance		1,954		2,082		2,150		2,143		2,115
Other		1,848		2,402		2,737		1,423		1,861
		49,223		53,828		59,952		49,614		50,515
Gain on sale of securities, net		5,500		2,715		4,560		8,666		2,633
Total noninterest income		54,723		56,543		64,512		58,280		53,148
Noninterest expenses:
Compensation and benefits		53,127		53,722		51,592		50,506		50,561
Occupancy		8,365		7,470		7,457		7,672		8,099
Furniture and equipment		7,641		7,792		8,255		7,575		7,521
Intangible amortization		4,092		4,067		4,001		3,968		3,962
Marketing		2,984		2,058		2,729		3,236		3,485
Professional services		2,899		3,654		2,582		2,994		2,478
Capital trust securities (c)		—		3,485		2,774		2,742		2,922
Acquisition costs		—		1,349		142		6		—
Other		13,033		14,683		14,165		14,500		13,778
Total noninterest expenses		92,141		98,280		93,697		93,199		92,806
Income before income taxes		63,388		60,558		61,744		60,700		60,018
Income taxes		21,065		19,172		20,429		20,090		20,081
Net income	$	42,323	$	41,386	$	41,315	$	40,610	$	39,937
Net income per common share:
Basic	$	0.92	$	0.90	$	0.91	$	0.89	$	0.88
Diluted		0.90		0.89		0.89		0.88		0.86

See Selected Financial Highlights for footnotes.

Retail and Wholesale Interest-Rate Spreads (unaudited)

	March			December			September			June			March
Three Months Ended,	2004			2003			2003			2003			2003
Interest-rate spread
Total interest-earning assets		4.78	%		4.81	%		4.75	%		5.06	%		5.35	%
Total interest-bearing liabilities		1.74			1.68			1.80			2.00			2.09
Interest-rate spread		3.04	%		3.13	%		2.95	%		3.06	%		3.26	%
Net interest margin		3.09			3.18			2.99			3.10			3.30
Retail interest-rate spread
Yield on loans and loans held for sale		5.05	%		5.09	%		5.09	%		5.30	%		5.52	%
Cost of deposits		1.24			1.26			1.32			1.46			1.57
Spread		3.81	%		3.83	%		3.77	%		3.84	%		3.95	%
Wholesale interest-rate spread Yield on securities and short-term		4.19	%		4.17	%		4.02	%		4.52	%		5.02	%
investments
Cost of borrowings		2.56			2.41			2.55			2.88			2.90
Spread		1.63	%		1.76	%		1.47	%		1.64	%		2.12	%

Consolidated Average Statements of Condition (unaudited)

Three Months Ended March 31,	2004								2003
						Fully tax-								Fully tax-
	Average					equivalent			Average					equivalent
(Dollars in thousands)	balance		Interest			yield/rate			balance		Interest			yield/rate
Assets:
Interest-earning assets:
Loans	$	9,368,169	$	118,591			5.05	%	$	8,225,032	$	113,221			5.52	%
Securities		4,331,501		45,161			4.22	(d)		4,208,492		52,027			5.05	(d)
Loans held for sale		85,276		1,070			5.02			327,620		4,481			5.47
Short-term investments		35,759		66			0.73			27,260		62			0.91
Total interest-earning assets		13,820,705		164,888			4.78			12,788,404		169,791			5.35
Noninterest-earning assets		889,392								935,423
Total assets	$	14,710,097							$	13,723,827
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Demand deposits	$	1,058,849	$	—			—	%	$	951,230	$	—			—	%
Savings, NOW and money market deposit accounts		4,539,038		8,984			0.80			3,982,828		11,204			1.14
Time deposits		2,789,750		16,846			2.43			2,663,492		18,214			2.77
Total deposits		8,387,637		25,830			1.24			7,597,550		29,418			1.57
Federal Home Loan Bank advances		2,428,829		19,004			3.10			2,581,216		23,791			3.69
Fed funds and repurchase agreements		2,093,519		5,431			1.03			2,000,136		6,252			1.25
Other long-term debt (c)		532,760		8,198			6.16			297,111		5,310			7.15
Total borrowings		5,055,108		32,633			2.56			4,878,463		35,353			2.90
Total interest-bearing liabilities		13,442,745		58,463			1.74			12,476,013		64,771			2.09
Noninterest-bearing liabilities		72,405								66,604
Total liabilities		13,515,150								12,542,617
Capital securities and preferred stock of subsidiary corporation (c)		9,577								130,832
Shareholders’ equity		1,185,370								1,050,378
Total liabilities and shareholders’ equity	$	14,710,097							$	13,723,827
				106,425								105,020
Less: tax-equivalent adjustment				(619	)							(344	)
Net interest income			$	105,806							$	104,676
Interest-rate spread							3.04	%							3.26	%
Net interest margin							3.09	%							3.30	%

See Selected Financial Highlights for footnotes.

Asset Quality (unaudited)

	At or for the Three Months Ended
	March 31,		Dec. 31,		Sept. 30,		June 30,		March 31,
( Dollars in thousands)	2004		2003		2003		2003		2003
Nonperforming Assets
Nonperforming loans:
Commercial:
Commercial	$	11,832	$	14,266	$	17,024	$	27,881	$	27,784
Specialized industry		5,019		6,427		6,493		3,399		3,399
Equipment financing		5,561		5,583		8,241		8,722		8,960
Total commercial		22,412		26,276		31,758		40,002		40,143
Commercial real estate		5,583		4,281		1,940		4,920		6,910
Residential		7,941		6,128		7,087		6,596		5,712
Consumer		604		959		718		767		1,510
Total nonperforming loans		36,540		37,644		41,503		52,285		54,275
Loans held for sale		—		—		—		—		3,444
Other real estate owned and repossessed assets:
Commercial		4,273		4,296		4,019		4,224		3,967
Residential		325		942		541		520		234
Consumer		124		—		—		9		1
Total other real estate owned and repossessed assets		4,722		5,238		4,560		4,753		4,202
Total nonperforming assets	$	41,262	$	42,882	$	46,063	$	57,038	$	61,921

Summary of Classified Loans
Substandard:
Accruing	$	87,477		$	72,638		$	69,216		$	62,064		$	74,398
Nonaccruing		31,595			29,403			36,365			44,313			45,005
Total substandard		119,072			102,041			105,581			106,377			119,403
Doubtful:
Nonaccruing		4,377			6,791			3,792			6,617			7,279
Loss		—			—			—			—			—
Total classified loans	$	123,449		$	108,832		$	109,373		$	112,994		$	126,682
Classified as a percent of total loans		1.3	%		1.2	%		1.2	%		1.3	%		1.5	%

Allowance for Loan Losses (unaudited)

	At or for the Three Months Ended
	March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,
( Dollars in thousands)	2004			2003			2003			2003			2003
Allowance for Loan Losses
Beginning balance	$	121,674		$	117,707		$	119,239		$	118,596		$	116,804
Allowance for purchased loans		—			1,970			—			—			146
Provision		5,000			5,000			10,000			5,000			5,000
Charge-offs:
Commercial:
Specialized industry		826			558			3,870			327			—
All other commercial		2,249			2,949			9,361			4,232			3,601
Total commercial		3,075			3,507			13,231			4,559			3,601
Residential		983			330			39			160			78
Consumer		97			174			122			153			195
Total charge-offs		4,155			4,011			13,392			4,872			3,874
Recoveries		(1,094	)		(1,008	)		(1,860	)		(515	)		(520	)
Net loan charge-offs		3,061			3,003			11,532			4,357			3,354
Ending balance	$	123,613		$	121,674		$	117,707		$	119,239		$	118,596
Asset Quality Ratios:
Allowance for loan losses / total loans		1.30	%		1.32	%		1.29	%		1.37	%		1.39	%
Net charge-offs/ average loans (annualized)		0.13			0.13			0.52			0.20			0.16
Nonperforming loans / total loans		0.38			0.41			0.46			0.60			0.64
Nonperforming assets / total assets		0.27			0.29			0.32			0.39			0.43
Allowance for loan losses / nonperforming loans		338.30			323.22			283.61			228.06			218.51