Webster Financial (WBS) 8-K Webster Reports 2010 Fourth Quarter Profit

Exhibit 99.1

Media Contact	Investor Contact
Bob Guenther 203-578-2391	Terry Mangan 203-578-2318
rguenther@websterbank.com	tmangan@websterbank.com

WEBSTER REPORTS 2010 FOURTH QUARTER PROFIT

WATERBURY, Conn., January 14, 2011 – Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today announced consolidated net income of $32.6 million for the quarter ended December 31, 2010. Net income available to common shareholders after $7.6 million of preferred dividends was $25.0 million, or $.30 per diluted share, for the quarter ended December 31, 2010.

Key points for the quarter:

Net loan growth of $116 million, with total originations of $979 million compared to $644 million for the third quarter.

Improved net interest margin of 3.40 percent compared to 3.36 percent for the third quarter.

Continued improvement in asset quality as indicated by a reduced level of non-performing and past due loans, which improved by 12.1 percent and 12.4 percent, respectively, compared to the third quarter.

Reduced levels of provision for loan losses of $15.0 million compared to $25.0 million for the third quarter; improved coverage ratio of allowance to non-performing loans of 117.6 percent compared to109.4 percent at September 30, 2010.

Repurchase of the remaining $300 million of preferred stock that was issued to the U.S. Department of the Treasury under its Capital Purchase Program ($100 million in October and $200 million in December).

Webster Chairman and Chief Executive Officer James C. Smith said, “We are pleased to report that credit metrics, profitability and other key performance metrics showed meaningful improvement in the fourth quarter. The growth in loans in the quarter, most particularly middle market and commercial real estate originations, is a positive sign of quality financing

opportunities in our core lines of business, and reflects a gradually improving regional economy. Our recent successful capital raise and repayment of the U.S. Treasury’s investment in Webster underscores Webster’s capital strength and positions us well for future growth.”

Net interest income

• The net interest margin increased by 4 basis points to 3.40 percent in the quarter, reflecting a 10 basis point decline in the cost of funds partially offset by a 4 basis point decline in the yield on interest-earning assets.

• Average interest-earning assets for the quarter totaled $16.4 billion, down from $16.5 billion last quarter.

Provision for loan losses

• $12.5 million of the $15.0 million provision for loan losses recorded in the quarter was related to the Company’s continuing portfolios, and $2.5 million was related to the liquidating portfolio. In the third quarter, $22.4 million of the $25.0 million provision for loan losses recorded in the quarter was related to the Company’s continuing portfolios, and $2.6 million was related to the liquidating portfolio.

• Net charge-offs were $33.7 million in the quarter compared to $28.7 million for the quarter ended September 30, 2010; $ 27.4 million was related to the continuing portfolios compared to $23.0 million for the previous quarter and $6.3 million was related to the liquidating portfolio compared to $5.7 million for the previous quarter.

“There was continued improvement in key asset quality indicators in the quarter,” noted Webster Vice Chairman and Chief Operating Officer Jerry Plush. “As a result, we recorded net charge-offs in excess of provision for loan losses given the adequacy of allowance for loan losses and also have improved coverage of the allowance to non-performing loans at quarter end.”

Non-interest income

• Total non-interest income was comparable to the third quarter. Included in non-interest income for the fourth quarter was the impact of $1.8 million in reduced deposit service fees from the adoption of Regulation E compared to the third quarter. Fourth quarter results also include higher loan related fees of $0.4 million, higher wealth management fees of $0.4 million and increased income from mortgage banking activities of $0.6 million compared to the third quarter. In addition, there was a $2.3 million positive fair value adjustment on common stock

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classified as trading compared to $1.2 million in the third quarter while the third quarter also included a $1.0 million credit related other-than-temporary impairment loss on the write-down of investments to fair value.

Non-interest expenses

• Non-interest expenses decreased $1.8 million from the third quarter. Included in non-interest expense in the fourth quarter was the recovery of $5.2 million in insurance proceeds, offset by $4.3 million of branch and facilities optimization and $0.6 million in severance and other costs, while the third quarter included a $2.8 million expense related to the previously announced settlement of a class action lawsuit related to the assessment and collection of overdraft fees on customer checking accounts and $0.3 million of severance expenses. Compensation expenses rose by $3.9 million compared to the third quarter, primarily relating to $1.1 million from higher group insurance claims experience, $1.1 million in deferred compensation and stock related expense, and to a lesser extent, $0.5 million from increased incentives and $0.5 million from recent hiring initiatives. Also included in non-interest expenses in the fourth quarter were foreclosed and repossessed asset write-downs of $0.1 million compared to $2.2 million for the third quarter. Loan workout expenses were also lower in the fourth quarter by $1.3 million.

Income taxes

• The Company recorded $8.0 million of income tax expense in the quarter on the $40.4 million of pre-tax income applicable to continuing operations in the period. The effective tax rate for the quarter was 20 percent.

Investment securities

• Total investment securities were $5.5 billion at December 31, 2010 compared to $5.4 billion at September 30, 2010. The carrying value of the available for sale portfolio included $30 million in net unrealized gains compared to net unrealized gains of $36 million at September 30, while the carrying value of the held to maturity portfolio does not reflect $69 million in net unrealized gains compared to net unrealized gains of $136 million at September 30.

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Loans

• Total loans were $11.0 billion at December 31, 2010 compared to $10.9 billion at September 30, 2010. Originations for the fourth quarter consisted of $373.5 million in residential, $331.9 million in commercial non-mortgage, $68.3 million in consumer, $42.0 million in equipment finance, $6.6 million in asset-based lending, and $157.2 million in commercial real estate. In the quarter, commercial loans increased by $2.6 million, commercial real estate increased by $90.3 million and residential mortgage loans increased by $52.4 million, while consumer loans declined by $28.7 million. The increase in commercial loans reflects an increase of $92.0 million in middle market loans, offset by reductions in equipment finance and asset based loans of $48.5 million and $40.9 million, respectively.

Asset quality

• Total non-performing loans were $273.6 million or 2.48 percent of total loans at December 31, 2010 compared to $311.1 million or 2.85 percent at September 30, 2010. The decrease in non-performing loans reflects a combined decrease of $41.3 million in nonaccrual loans in all loan categories except performing nonaccrual residential mortgages and consumer loans, which increased by a combined amount of $3.8 million. Paying non-performing loans totaled $95.8 million at December 31 compared to $111.0 million at September 30.

• Past due loans for the continuing portfolios decreased to $67.4 million at December 31 compared to $75.8 million at September 30. Past due loans for the liquidating portfolio were $6.1 million at December 31 compared to $8.1 million at September 30.

Deposits and borrowings

• Total deposits were $13.6 billion at both December 31, 2010 and September 30, 2010. Increases of $376.1 million in non-interest bearing deposits and $82.8 million in savings accounts were offset by declines of $155.4 million, $150.2 million, and $153.1 million in NOW accounts, money market deposit accounts and certificates of deposits, respectively. Non-interest bearing deposits to total deposits increased to 16 percent of total deposits at December 31 compared to 14 percent at September 30.

• Total borrowings were $2.4 billion at December 31 compared to $2.1 billion at September 30. Borrowings represented 14 percent of total assets at December 31 compared to 12 percent at September 30.

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Capital

The tangible common equity and Tier 1 common equity to risk weighted assets ratios increased to 6.82 percent and 9.87 percent, respectively, compared to 5.91 percent and 8.19 percent at September 30, 2010.

***

Webster Financial Corporation is the holding company for Webster Bank, National Association. With $18.0 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust and investment services through 181 banking offices, 497 ATMs, telephone banking and the Internet. Webster Bank owns the asset-based lending firm Webster Business Credit Corporation; the equipment finance firm Webster Capital Finance; and provides health savings account trustee and administrative services through HSA Bank, a division of Webster Bank. Member FDIC and equal housing lender. For more information about Webster, including past press releases and the latest annual report, visit the Webster website atwww.websterbank.com.

***

Conference Call

A conference call covering Webster’s fourth quarter earnings announcement will be held today, Friday, January 14, at 9:00 a.m. EST and may be heard through Webster’s investor relations website atwww.wbst.com, or in listen-only mode by calling 1-877-407-8289 or 201-689-8341 internationally. The call will be archived on the website and available for future retrieval.

Forward-Looking Statements

This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”). Forward-looking statements can be identified by words such as “believes”, “anticipates”, “expects”, “intends”, “targeted”, “continue”, “remain”, “will”, “should”, “may”, “plans”, “estimates” and similar references to future periods, however such words are not the exclusive means of identifying such statements. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, and other financial items; (ii) statements of plans, objectives and expectations of Webster or its management or Board of Directors; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Forward-looking statements are based on Webster’s current expectations and assumptions regarding its business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Webster’s actual results may differ materially from those contemplated by the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to: (1) local, regional, national and international economic conditions and the impact they may have on us and our customers and our assessment of that impact; (2) volatility and disruption in national and international financial markets; (3) government intervention in the U.S. financial system; (4) changes in the level of non-performing assets and charge-offs; (5) changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; (6) adverse conditions in the securities markets that lead to impairment in the value of securities in our investment portfolio; (7) inflation, interest rate, securities market and monetary fluctuations; (8) the timely development and acceptance of new products and services and perceived overall value of these products and services by customers; (9) changes in consumer spending,

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borrowings and savings habits; (10) technological changes; (11) the ability to increase market share and control expenses; (12) changes in the competitive environment among banks, financial holding companies and other financial service providers; (13) the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) with which we and our subsidiaries must comply, including those under the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III update to the Basel Accords that is under development; (14) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters; (15) the costs and effects of legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews; and (16) our success at managing the risks involved in the foregoing items and (17) the other factors that are described in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q under the heading “Risk Factors.” Any forward-looking statement made by the Company in this release speaks only as of the date on which it is made. Factors or events that could cause the Company’s actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Non-GAAP Financial Measures

In addition to results presented in accordance with GAAP, this press release contains certain non-GAAP financial measures. A reconciliation of net income and other performance ratios, as adjusted, is included in the accompanying selected financial highlights table.

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.

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WEBSTER FINANCIAL CORPORATION

Selected Financial Highlights (unaudited)

	At or for the Three Months Ended December 31,						At or for the Twelve Months Ended December 31,
(In thousands, except per share data)	2010			2009			2010			2009
Net income (loss) and performance ratios (annualized):
Net income (loss) attributable to Webster Financial Corporation	$	32,569		$	(13,694	)	$	74,315		$	(75,632	)
Net income (loss) available to common shareholders		24,958			(54,394	)		49,399			(85,252	)
Net income (loss) per diluted common share		0.30			(0.84	)		0.60			(2.14	)
Return on average shareholders’ equity		7.11	%		(2.81	)%		3.97	%		(4.04	)%
Return on average tangible equity		10.11			(3.91	)		5.60			(5.68	)
Return on average assets		0.73			(0.31	)		0.42			(0.43	)
Income (loss) and performance ratios, (annualized), attributable to Webster Financial Corporation from continuing operations:
Income (loss) from continuing operations	$	32,475		$	(13,683	)	$	74,221		$	(75,934	)
Net income (loss) available to common shareholders		24,864			(54,383	)		49,305			(85,554	)
Net income (loss) from continuing operations per diluted common share		0.30			(0.84	)		0.60			(2.15	)
Return on average shareholders’ equity		7.09	%		(2.81	)%		3.96	%		(4.04	)%
Return on average tangible equity		10.08			(3.91	)		5.59			(5.71	)
Return on average assets		0.73			(0.31	)		0.42			(0.43	)
Noninterest income as a percentage of total revenue		25.66			29.06			27.89			27.45
Efficiency ratio (a)		67.82			64.88			66.49			65.92
Asset quality:
Allowance for loan losses	$	321,665		$	341,184		$	321,665		$	341,184
Non-performing assets		301,804			401,965			301,804			401,965
Allowance for loan losses / total loans		2.92	%		3.09	%		2.92	%		3.09	%
Net charge-offs / average loans (annualized)		1.24			1.85			1.23			1.68
Non-performing loans / total loans		2.48			3.38			2.48			3.38
Non-performing assets / total loans plus OREO		2.73			3.63			2.73			3.63
Allowance for loan losses / non-performing loans		117.58			91.48			117.58			91.48
Other ratios (annualized):
Tangible capital ratio		6.99	%		8.10	%		6.99	%		8.10	%
Tangible common equity ratio		6.82			5.64			6.82			5.64
Tier 1 risk-based capital ratio(c)		12.05			13.25			12.05			13.25
Total-risk based capital(c)		13.91			15.40			13.91			15.40
Tier 1 common equity / risk weighted assets (c)		9.87			7.86			9.87			7.86
Shareholders’ equity / total assets		9.83			10.98			9.83			10.98
Interest-rate spread		3.37			3.20			3.29			3.07
Net interest margin		3.40			3.26			3.34			3.13
Share and equity related:
Common equity	$	1,744,483		$	1,526,284		$	1,744,483		$	1,526,284
Book value per common share		20.01			19.60			20.01			19.60
Tangible book value per common share		13.78			12.57			13.78			12.57
Common stock closing price		19.70			11.87			19.70			11.87
Dividends declared per common share		0.01			0.01			0.04			0.04
Common shares issued and outstanding		87,160			77,896			87,160			77,896
Basic shares (average)		78,663			71,445			78,175			60,943
Diluted shares (average)		82,766			72,747			82,172			63,916

Footnotes:

(a) Calculated using SNL’s methodology - noninterest expense (excluding foreclosed property expenses, intangible amortization, goodwill impairments and other charges) as a percentage of net interest income (FTE basis) plus noninterest income (excluding gain/loss on securities and other charges).

(b) For purposes of the yield computation, unrealized gains (losses) on securities available for sale are excluded from the average balance.

(c) The ratios presented are projected for the 2010 reporting periods and actual for the 2009 reporting periods.

WEBSTER FINANCIAL CORPORATION

Consolidated Balance Sheets (unaudited)

(In thousands)	December 31, 2010			September 30, 2010			December 31, 2009
Assets:
Cash and due from banks	$	159,849		$	174,971		$	171,184
Short-term investments		52,811			65,255			390,310
Investment securities:
Trading, at fair value		11,554			9,991			—
Available for sale, at fair value		2,413,776			2,258,380			2,126,043
Held-to-maturity		3,072,453			3,097,515			2,658,869
Total securities		5,497,783			5,365,886			4,784,912
Loans held for sale		52,224			13,024			12,528
Loans:
Commercial		2,819,938			2,817,366			2,930,239
Commercial real estate		2,197,988			2,107,732			2,182,120
Residential mortgages		3,147,492			3,095,139			2,903,636
Consumer		2,859,221			2,887,946			3,020,714
Total loans		11,024,639			10,908,183			11,036,709
Allowance for loan losses		(321,665	)		(340,341	)		(341,184	)
Loans, net		10,702,974			10,567,842			10,695,525
Prepaid FDIC premiums		57,548			62,813			79,241
Federal Home Loan Bank and Federal Reserve Bank stock		143,874			143,874			140,874
Premises and equipment, net		157,724			160,774			178,422
Goodwill and other intangible assets, net		551,164			552,561			556,752
Cash surrender value of life insurance policies		298,149			295,516			289,486
Deferred tax asset, net		104,774			113,145			121,733
Accrued interest receivable and other assets		259,194			284,597			318,230
Total Assets	$	18,038,068		$	17,800,258		$	17,739,197
Liabilities and Equity:
Deposits:
Non-interest bearing deposits	$	2,216,987		$	1,840,937		$	1,664,958
NOW accounts		2,194,239			2,349,682			2,912,510
Money market deposit accounts		2,460,918			2,611,094			1,991,423
Savings accounts		3,586,732			3,503,930			3,146,603
Certificates of deposit		3,071,030			3,224,131			3,830,865
Brokered deposits		78,879			44,261			85,768
Total deposits		13,608,785			13,574,035			13,632,127
Securities sold under agreements to repurchase and other short-term debt		1,091,477			1,048,362			856,846
Federal Home Loan Bank advances		768,005			473,512			544,651
Long-term debt		582,837			584,727			588,419
Accrued expenses and other liabilities		203,898			213,126			159,120
Total liabilities		16,255,002			15,893,762			15,781,163
Webster Financial Corporation shareholders’ equity		1,773,422			1,896,851			1,948,393
Non controlling interests		9,644			9,645			9,641
Total equity		1,783,066			1,906,496			1,958,034
Total Liabilities and Equity	$	18,038,068		$	17,800,258		$	17,739,197

See Selected Financial Highlights for footnotes.

WEBSTER FINANCIAL CORPORATION

Consolidated Statements of Operations (unaudited)

	Three Months Ended December 31,						Twelve Months Ended December 31,
(In thousands, except per share data)	2010			2009			2010			2009
Interest income:
Interest and fees on loans and leases	$	121,944		$	127,069		$	490,783		$	536,635
Investment securities		51,652			54,029			214,433			206,630
Loans held for sale		433			364			970			2,077
Total interest income		174,029			181,462			706,186			745,342
Interest expense:
Deposits		23,787			35,937			112,629			180,804
Borrowings		13,892			15,044			58,747			69,900
Total interest expense		37,679			50,981			171,376			250,704
Net interest income		136,350			130,481			534,810			494,638
Provision for loan losses		15,000			67,000			115,000			303,000
Net interest income after provision for loan losses		121,350			63,481			419,810			191,638
Non-interest income:
Deposit service fees		25,026			30,634			108,977			119,421
Loan related fees		6,568			6,501			25,917			24,890
Wealth and investment services		6,652			6,009			24,925			24,000
Mortgage banking activities		2,222			1,456			4,169			6,901
Increase in cash surrender value of life insurance policies		2,650			2,680			10,517			10,629
Net gain (loss) on sale of investment securities		39			53			9,748			(13,810	)
Other income		1,639			2,649			9,964			7,766
		44,796			49,982			194,217			179,797
Higher One - fair value adjustment and gain on sale		2,256			—			18,477			—
Loss on write-down of investment securities to fair value		—			(77	)		(5,838	)		(28,477	)
Gain on the exchange of trust preferreds for common stock		—			—			—			24,336
Gain on early extinguishment of subordinated notes		—			—			—			5,993
Visa share transactions		—			—			—			1,907
Warrants - fair value adjustment		—			3,552			—			3,552
Total non-interest income		47,052			53,457			206,856			187,108
Non-interest expenses:
Compensation and benefits		64,132			61,644			246,026			237,074
Occupancy		13,871			14,061			55,634			55,522
Technology and equipment expense		16,044			15,299			62,855			60,926
Marketing		4,317			4,365			18,968			14,469
Professional and outside services		4,515			4,209			14,721			15,015
Intangible assets amortization		1,397			1,408			5,588			5,743
Foreclosed and repossessed asset expenses		1,319			2,349			5,616			7,060
Foreclosed and repossessed asset write-downs		48			2,588			5,157			11,099
Loan workout expenses		2,228			1,582			9,830			5,816
Deposit insurance		5,407			5,565			24,535			30,056
Other expenses		14,926			12,610			55,568			52,359
		128,204			125,680			504,498			495,139
Provision for litigation and settlements		—			—			22,476			—
Fraud (recovery) loss		(5,195	)		1,069			5,861			4,121
Branch and facility optimization		4,307			1,659			4,307			2,809
Severance and other		646			3,805			1,832			5,325
Total non-interest expenses		127,962			132,213			538,974			507,394
Income (loss) from continuing operations before income taxes		40,440			(15,275	)		87,692			(128,648	)
Income tax expense (benefit)		7,966			(1,593	)		13,468			(52,736	)
Income (loss) from continuing operations		32,474			(13,682	)		74,224			(75,912	)
Income from discontinued operations, net of tax		94			(11	)		94			302
Consolidated net income (loss)		32,568			(13,693	)		74,318			(75,610	)
Less: Net income (loss) attributable to noncontrolling interests		(1	)		1			3			22
Net income (loss) attributable to Webster Financial Corp.		32,569			(13,694	)		74,315			(75,632	)
Preferred stock dividends		(3,470	)		(6,457	)		(18,086	)		(32,862	)
Preferred stock accretion and accounting adjustments		(4,141	)		(34,243	)		(6,830	)		23,242
Net income (loss) available to common shareholders	$	24,958		$	(54,394	)	$	49,399		$	(85,252	)
Diluted shares (average)		82,766			72,747			82,172			63,916
Net income (loss) per common share available to common shareholders:
Basic
Income (loss) from continuing operations	$	0.32		$	(0.76	)	$	0.63		$	(1.41	)
Net income (loss)		0.32			(0.76	)		0.63			(1.40	)
Diluted
Income (loss) from continuing operations		0.30			(0.84	)		0.60			(2.15	)
Net income (loss)		0.30			(0.84	)		0.60			(2.14	)

See Selected Financial Highlights for footnotes.

WEBSTER FINANCIAL CORPORATION

Five Quarter Consolidated Statements of Operations (unaudited)

	Three Months Ended
(In thousands, except per share data)	Dec. 31, 2010			Sept. 30, 2010			June 30, 2010			March 31, 2010			Dec. 31, 2009
Interest income:
Interest and fees on loans and leases	$	121,944		$	123,042		$	122,447		$	123,350		$	127,069
Investment securities		51,652			53,182			55,443			54,156			54,029
Loans held for sale		433			79			144			314			364
Total interest income		174,029			176,303			178,034			177,820			181,462
Interest expense:
Deposits		23,787			26,409			30,482			31,951			35,937
Borrowings		13,892			15,160			15,210			14,485			15,044
Total interest expense		37,679			41,569			45,692			46,436			50,981
Net interest income		136,350			134,734			132,342			131,384			130,481
Provision for loan losses		15,000			25,000			32,000			43,000			67,000
Net interest income after provision for loan losses		121,350			109,734			100,342			88,384			63,481
Non-interest income:
Deposit service fees		25,026			26,822			29,345			27,784			30,634
Loan related fees		6,568			6,119			7,225			6,005			6,501
Wealth and investment services		6,652			6,220			6,218			5,835			6,009
Mortgage banking activities		2,222			1,658			427			(138	)		1,456
Increase in cash surrender value of life insurance policies		2,650			2,677			2,612			2,578			2,680
Net gain (loss) on sale of investment securities		39			1,027			4,364			4,318			53
Other income		1,639			2,510			1,501			4,314			2,649
		44,796			47,033			51,692			50,696			49,982
Higher One - fair value adjustment and gain on sale		2,256			1,205			15,016			—			—
Loss on write-down of investment securities to fair value		—			(970	)		(1,188	)		(3,680	)		(77	)
Warrants - fair value adjustment		—			—			—			—			3,552
Total non-interest income		47,052			47,268			65,520			47,016			53,457
Non-interest expenses:
Compensation and benefits		64,132			60,231			60,584			61,079			61,644
Occupancy		13,871			13,777			13,546			14,440			14,061
Technology and equipment expense		16,044			15,886			15,657			15,268			15,299
Marketing		4,317			4,634			5,226			4,791			4,365
Professional and outside services		4,515			4,038			3,566			2,602			4,209
Intangible assets amortization		1,397			1,397			1,397			1,397			1,408
Foreclosed and repossessed asset expenses		1,319			1,596			1,009			1,692			2,349
Foreclosed and repossessed asset write-downs		48			2,157			891			2,061			2,588
Loan workout expenses		2,228			3,477			2,200			1,925			1,582
Deposit insurance		5,407			5,882			7,161			6,085			5,565
Other expenses		14,926			13,543			15,878			11,221			12,610
		128,204			126,618			127,115			122,561			125,680
Provision for litigation and settlements		—			2,800			19,676			—			—
Fraud (recovery) loss		(5,195	)		—			—			11,056			1,069
Branch and facility optimization		4,307						—			—			1,659
Severance and other		646			303			876			7			3,805
Total non-interest expenses		127,962			129,721			147,667			133,624			132,213
Income (loss) from continuing operations before income taxes		40,440			27,281			18,195			1,776			(15,275	)
Income tax expense (benefit)		7,966			4,597			550			355			(1,593	)
Income (loss) from continuing operations		32,474			22,684			17,645			1,421			(13,682	)
Income (loss) from discontinued operations, net of tax		94			—			—			—			(11	)
Consolidated net income (loss)		32,568			22,684			17,645			1,421			(13,693	)
Less: Net income (loss) attributable to noncontrolling interests		(1	)		(3	)		7			—			1
Net income (loss) attributable to Webster Financial Corp.		32,569			22,687			17,638			1,421			(13,694	)
Preferred stock dividends		(3,470	)		(4,581	)		(4,581	)		(5,455	)		(6,457	)
Preferred stock accretion and accounting adjustments		(4,141	)		(327	)		(327	)		(2,035	)		(34,243	)
Net income (loss) available to common shareholders	$	24,958		$	17,779		$	12,730		$	(6,069	)	$	(54,394	)
Diluted shares (average)		82,766			82,128			82,721			77,922			72,747
Net income (loss) per common share available to common shareholders:
Basic
Income (loss) from continuing operations	$	0.32		$	0.23		$	0.16		$	(0.08	)	$	(0.76	)
Net income (loss)		0.32			0.23			0.16			(0.08	)		(0.76	)
Diluted
Income (loss) from continuing operations		0.30			0.22			0.15			(0.08	)		(0.84	)
Net income (loss)		0.30			0.22			0.15			(0.08	)		(0.84	)

See Selected Financial Highlights for footnotes.

WEBSTER FINANCIAL CORPORATION

Five Quarter Interest-Rate Spreads and Margin (unaudited)

	Three Months Ended
	December 31, 2010			September 30, 2010			June 30, 2010			March 31, 2010			December 31, 2009
Interest-rate spread
Yield on interest-earning assets		4.32	%		4.36	%		4.37	%		4.42	%		4.50	%
Cost of interest-bearing liabilities		0.95			1.05			1.15			1.19			1.30
Interest-rate spread		3.37	%		3.31	%		3.22	%		3.23	%		3.20	%
Net interest margin		3.40	%		3.36	%		3.27	%		3.28	%		3.26	%

Consolidated Average Balances, Yields and Rates Paid (unaudited)

Three Months Ended December 31,	2010								2009
(Dollars in thousands)	Average balance		Interest			Fully tax- equivalent yield/rate			Average balance			Interest			Fully tax- equivalent yield/rate
Assets:
Interest-earning assets:
Loans	$	10,904,996	$	121,944			4.43	%	$	11,182,063		$	127,069			4.50	%
Investment securities (b)		5,267,983		54,716			4.19			4,673,090			56,607			4.86
Loans held for sale		39,913		433			4.34			41,250			364			3.53
Federal Home Loan and Federal Reserve Bank stock		143,874		761			2.10			140,874			716			2.02
Short-term investments		59,880		36			0.24			317,183			211			0.26
Total interest-earning assets		16,416,646		177,890			4.32			16,354,460			184,967			4.50
Noninterest-earning assets		1,361,258								1,331,093
Total assets	$	17,777,904							$	17,685,553
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Demand deposits	$	1,985,664	$	—			—	%	$	1,639,058		$	—			—	%
Savings, NOW and money market deposits		8,368,949		10,769			0.51			7,749,872			14,429			0.74
Certificates of deposit		3,181,917		13,018			1.62			4,110,743			21,508			2.08
Total deposits		13,536,530		23,787			0.70			13,499,673			35,937			1.06
Securities sold under agreements to repurchase and other short-term debt		1,086,312		3,728			1.34			884,867			4,449			1.97
Federal Home Loan Bank advances		513,943		3,782			2.88			594,919	��		5,259			3.46
Long-term debt		583,920		6,382			4.37			589,548			5,336			3.62
Total borrowings		2,184,175		13,892			2.51			2,069,334			15,044			2.87
Total interest-bearing liabilities		15,720,705		37,679			0.95			15,569,007			50,981			1.30
Noninterest-bearing liabilities		214,492								158,592
Total liabilities		15,935,197								15,727,599
Noncontrolling interests		9,649								9,638
Webster Financial Corp. shareholders’ equity		1,833,058								1,948,316
Total liabilities and equity	$	17,777,904							$	17,685,553
Tax-equivalent net interest income				140,211									133,986
Less: tax-equivalent adjustment				(3,861	)								(3,505	)
Net interest income			$	136,350								$	130,481
Interest-rate spread							3.37	%								3.20	%
Net interest margin							3.40	%								3.26	%

See Selected Financial Highlights for footnotes.

WEBSTER FINANCIAL CORPORATION

Consolidated Average Balances, Yields and Rates Paid (unaudited)

Twelve Months Ended December 31,	2010								2009
(Dollars in thousands)	Average balance		Interest			Fully tax- equivalent yield/rate			Average balance		Interest			Fully tax- equivalent yield/rate
Assets:
Interest-earning assets:
Loans	$	10,911,140	$	490,783			4.50	%	$	11,697,078	$	536,635			4.59	%
Investment securities (b)		5,254,314		225,918			4.32			4,150,969		217,961			5.18
Loans held for sale		21,758		970			4.46			52,131		2,077			3.98
Federal Home Loan and Federal Reserve Bank stock		142,896		2,983			2.09			137,931		2,685			1.95
Short-term investments		151,756		389			0.26			156,553		471			0.30
Total interest-earning assets		16,481,864		721,043			4.38			16,194,662		759,829			4.68
Noninterest-earning assets		1,375,987								1,395,821
Total assets	$	17,857,851							$	17,590,483
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Demand deposits	$	1,789,161	$	—			—	%	$	1,578,356	$	—			—	%
Savings, NOW and money market deposits		8,458,169		49,251			0.58			6,977,196		60,971			0.87
Certificates of deposit		3,490,017		63,378			1.82			4,525,770		119,833			2.65
Total deposits		13,737,347		112,629			0.82			13,081,322		180,804			1.38
Securities sold under agreements to repurchase and other short-term debt		899,203		15,900			1.77			1,124,118		19,275			1.71
Federal Home Loan Bank advances		567,711		17,628			3.11			697,711		25,286			3.62
Long-term debt		586,546		25,219			4.30			628,145		25,339			4.03
Total borrowings		2,053,460		58,747			2.86			2,449,974		69,900			2.85
Total interest-bearing liabilities		15,790,807		171,376			1.09			15,531,296		250,704			1.61
Noninterest-bearing liabilities		184,264								168,970
Total liabilities		15,975,071								15,700,266
Noncontrolling interests		9,643								9,631
Webster Financial Corporation shareholders’ equity		1,873,137								1,880,586
Total liabilities and equity	$	17,857,851							$	17,590,483
				549,667								509,125
Less: tax-equivalent adjustment				(14,857	)							(14,487	)
Net interest income			$	534,810							$	494,638
Interest-rate spread							3.29	%							3.07	%
Net interest margin							3.34	%							3.13	%

See Selected Financial Highlights for footnotes.

WEBSTER FINANCIAL CORPORATION

Five Quarter Loan Balances(unaudited)

(Dollars in thousands)	Dec. 31, 2010			Sept. 30, 2010			June 30, 2010			March 31, 2010			Dec. 31, 2009
Loan Balances (actuals):
Continuing Portfolio:
Commercial	$	1,654,615		$	1,562,633		$	1,538,924		$	1,539,975		$	1,505,956
Equipment financing		710,925			759,416			804,871			846,562			897,802
Asset based lending		454,398			495,317			487,842			503,816			526,481
Commercial real estate		2,138,314			2,041,237			2,044,264			2,057,361			2,067,862
Residential development		59,674			66,495			82,589			97,173			114,258
Residential mortgages		3,147,491			3,093,581			2,978,601			2,890,982			2,898,820
Consumer		2,682,645			2,702,920			2,722,348			2,750,084			2,801,588
Total continuing		10,848,062			10,721,599			10,659,439			10,685,953			10,812,767
Allowance for loan losses		(278,665	)		(293,541	)		(294,187	)		(291,171	)		(287,784	)
Total continuing, net		10,569,397			10,428,058			10,365,252			10,394,782			10,524,983
Liquidating Portfolio:
National Construction Lending Center (NCLC)		1			1,558			2,383			3,309			4,817
Consumer		176,576			185,026			194,738			207,258			219,125
Total liquidating portfolio		176,577			186,584			197,121			210,567			223,942
Allowance for loan losses		(43,000	)		(46,800	)		(49,900	)		(52,700	)		(53,400	)
Total liquidating, net		133,577			139,784			147,221			157,867			170,542
Total Loan Balances (actuals)		11,024,639			10,908,183			10,856,560			10,896,520			11,036,709
Allowance for loan losses		(321,665	)		(340,341	)		(344,087	)		(343,871	)		(341,184	)
Loans, (net)	$	10,702,974		$	10,567,842		$	10,512,473		$	10,552,649		$	10,695,525
Loan Balances (average):
Continuing Portfolio:
Commercial	$	1,570,641		$	1,555,430		$	1,542,994		$	1,520,157		$	1,548,470
Equipment finance		733,611			784,215			825,581			871,972			930,050
Asset based lending		488,639			496,871			497,673			523,938			577,330
Commercial real estate		2,049,658			2,039,180			2,049,162			2,062,769			2,075,754
Residential development		62,223			73,510			88,866			107,343			125,320
Residential mortgages		3,124,899			3,029,900			2,932,305			2,892,797			2,860,204
Consumer		2,693,191			2,714,835			2,737,076			2,780,063			2,834,923
Total continuing		10,722,862			10,693,941			10,673,657			10,759,039			10,952,051
Allowance for loan losses		(288,003	)		(295,414	)		(294,079	)		(291,281	)		(277,870	)
Total continuing, net		10,434,859			10,398,527			10,379,578			10,467,758			10,674,181
Liquidating Portfolio:
NCLC		1,246			1,975			2,574			4,558			5,661
Consumer		180,888			190,104			201,766			213,013			224,351
Total liquidating portfolio		182,134			192,079			204,340			217,571			230,012
Allowance for loan losses		(43,000	)		(46,800	)		(49,900	)		(52,700	)		(53,400	)
Total liquidating, net		139,134			145,279			154,440			164,871			176,612
Total Loan Balances (average)		10,904,996			10,886,020			10,877,997			10,976,610			11,182,063
Allowance for loan losses		(331,003	)		(342,214	)		(343,979	)		(343,981	)		(331,270	)
Loans, (net)	$	10,573,993		$	10,543,806		$	10,534,018		$	10,632,629		$	10,850,793

See Selected Financial Highlights for footnotes.

WEBSTER FINANCIAL CORPORATION

Five Quarter Non-performing Assets(unaudited)

(Dollars in thousands)	Dec. 31, 2010		Sept. 30, 2010		June 30, 2010		March 31, 2010		Dec. 31, 2009
Non-performing loans:
Continuing Portfolio:
Commercial	$	34,366	$	45,877	$	48,533	$	46,486	$	56,632
Equipment financing		20,482		23,300		28,271		32,985		30,152
Asset based lending		7,832		15,779		21,903		28,647		13,982
Commercial real estate		51,858		62,588		53,826		50,711		56,144
Residential development		15,610		19,620		26,941		34,651		47,264
Residential mortgages		53,768		55,517		60,512		70,908		70,311
Performing non-accrual residential mortgages		45,360		42,472		33,112		34,699		39,256
Consumer		23,592		24,129		23,290		27,832		31,299
Performing non-accrual consumer		10,983		10,765		8,348		5,735		7,456
Nonperforming loans - continuing portfolio		263,851		300,047		304,736		332,654		352,496
Liquidating Portfolio:
NCLC		—		1,557		1,557		2,483		3,408
Performing non-accrual NCLC		—		—		825		826		825
Consumer		7,310		7,784		8,549		10,895		13,915
Performing non-accrual consumer		2,412		1,736		1,644		1,990		2,333
Nonperforming loans - liquidating portfolio		9,722		11,077		12,575		16,194		20,481
Total non-performing loans	$	273,573	$	311,124	$	317,311	$	348,848	$	372,977
Other real estate owned and repossessed assets:
Continuing Portfolio:
Commercial	$	20,033	$	17,916	$	14,918	$	13,464	$	11,621
Equipment financing		1,023		5,056		4,757		6,654		6,522
Asset based lending		—		—		—		—		—
Commercial real estate		—		—		—		—		—
Residential development		—		—		—		—		—
Residential mortgages		5,794		5,883		4,309		4,461		4,131
Consumer		937		1,041		4,542		4,025		5,017
Total continuing		27,787		29,896		28,526		28,604		27,291
Liquidating Portfolio:
NCLC		444		2,380		2,939		1,744		1,401
Consumer		—		591		427		126		296
Total liquidating		444		2,971		3,366		1,870		1,697
Total other real estate owned and repossessed assets	$	28,231	$	32,867	$	31,892	$	30,474	$	28,988
Total non-performing assets	$	301,804	$	343,991	$	349,203	$	379,322	$	401,965

See Selected Financial Highlights for footnotes.

WEBSTER FINANCIAL CORPORATION

Five Quarter Past Due Loans(unaudited)

(Dollars in thousands)	Dec. 31, 2010		Sept. 30, 2010		June 30, 2010		March 31, 2010		Dec. 31, 2009
Past due 30-89 days:
Accruing loans:
Continuing Portfolio:
Commercial	$	5,201	$	9,026	$	11,295	$	17,124	$	7,870
Equipment financing		7,937		6,043		8,818		11,030		10,642
Asset based lending		—		—		—		—		—
Commercial real estate		11,006		7,354		11,069		16,950		8,184
Residential development		194		—		200		2,528		551
Residential mortgages		21,513		27,821		28,015		30,843		36,086
Consumer		21,539		25,546		27,378		27,099		27,214
Past Due 30-89 days - continuing portfolio		67,390		75,790		86,775		105,574		90,547
Liquidating Portfolio:
NCLC		—		—		—		—		582
Consumer		6,128		8,133		6,496		8,596		9,804
Past Due 30-89 days - liquidating portfolio		6,128		8,133		6,496		8,596		10,386
Accruing loans past due 90 days or more:
Commercial		91		150		366		350		50
Equipment financing		—		—		—		—		—
Asset based lending		—		—		—		—		—
Commercial real estate		—		—		1,305		365		236
Residential development		—		—		—		—		—
Residential mortgages		—		—		407		—		—
Consumer		—		—		60		—		—
Accruing loans past due 90 days or more:		91		150		2,138		715		286
Total past due loans	$	73,609	$	84,073	$	95,409	$	114,885	$	101,219

See Selected Financial Highlights for footnotes.

WEBSTER FINANCIAL CORPORATION

Five Quarter Changes in the Allowance for Loan Losses (unaudited)

	For the Three Months Ended
(Dollars in thousands)	Dec. 31, 2010		Sept. 30, 2010		June 30, 2010		March 31, 2010		Dec. 31, 2009
Beginning balance	$	340,341	$	344,087	$	343,871	$	341,184	$	326,406
Provision		15,000		25,000		32,000		43,000		67,000
Allowance for sold loans		—		—		—		—		(469	)
Charge-offs continuing portfolio:
Commercial		4,955		4,069		4,101		5,271		6,094
Equipment financing		4,079		3,972		3,601		5,108		13,302
Asset based lending		1,500		4,686		5,200		2,447		1,099
Commercial real estate		5,466		2,260		94		1,382		4,605
Residential development		871		1,167		2,110		5,131		6,600
Residential mortgages		3,998		2,666		3,067		4,455		2,858
Consumer		9,732		9,472		10,166		9,896		10,723
Charge-offs continuing portfolio		30,601		28,292		28,339		33,690		45,281
Charge-offs liquidating portfolio:
NCLC		1,566		—		1,170		70		1,068
Consumer		5,004		6,158		6,469		9,315		8,232
Charge-offs liquidating portfolio		6,570		6,158		7,639		9,385		9,300
Total charge-offs		37,171		34,450		35,978		43,075		54,581
Recoveries continuing portfolio:
Commercial		824		408		764		515		476
Equipment financing		1,042		1,473		1,100		952		898
Asset based lending		94		1,136		497		254		55
Commercial real estate		—		—		—		—		—
Residential development		—		616		172		—		—
Residential mortgages		284		380		141		80		82
Consumer		971		1,277		1,153		455		535
Recoveries continuing portfolio		3,215		5,290		3,827		2,256		2,046
Recoveries liquidating portfolio:
NCLC		194		73		217		302		614
Consumer		86		341		150		204		168
Recoveries liquidating portfolio		280		414		367		506		782
Total recoveries		3,495		5,704		4,194		2,762		2,828
Total net charge-offs		33,676		28,746		31,784		40,313		51,753
Ending balance	$	321,665	$	340,341	$	344,087	$	343,871	$	341,184

WEBSTER FINANCIAL CORPORATION

Asset Quality Ratios

	For the Three Months Ended
(Dollars in thousands)	Dec. 31, 2010			Sept. 30, 2010			June 30, 2010			March 31, 2010			Dec. 31, 2009
Total Portfolio
Allowance for loan losses / total loans		2.92	%		3.12	%		3.17	%		3.16	%		3.09	%
Net charge-offs / average loans (annualized)		1.24			1.06			1.17			1.47			1.85
Nonperforming loans / total loans		2.48			2.85			2.92			3.20			3.38
Nonperforming assets / total loans plus OREO		2.73			3.14			3.21			3.47			3.63
Allowance for loan losses / nonperforming loans		117.58			109.39			108.44			98.57			91.48
Continuing Portfolio
Allowance for loan losses / total loans		2.57	%		2.74	%		2.76	%		2.72	%		2.66	%
Net charge-offs / average loans (annualized)		1.02			0.86			0.92			1.17			1.58
Nonperforming loans / total loans		2.43			2.80			2.86			3.11			3.26
Nonperforming assets / total loans plus OREO		2.68			3.07			3.12			3.37			3.50
Allowance for loan losses / nonperforming loans		105.61			97.83			96.54			87.53			81.64
Liquidating Portfolio
NCLC
Allowance for loan losses / total loans		—	%		19.26	%		16.79	%		21.15	%		18.68	%
Net charge-offs (recoveries) / average loans (annualized)		440.45			(14.78	)		148.10			(20.36	)		32.08
Nonperforming loans / total loans		—			99.94			99.96			99.97			87.88
Allowance for loan losses / nonperforming loans		—			19.27			16.79			21.16			21.26
Consumer
Allowance for loan losses / total loans		24.35	%		25.13	%		25.42	%		25.09	%		23.96	%
Net charge-offs / average loans (annualized)		10.88			12.24			12.53			17.11			14.38
Nonperforming loans / total loans		5.51			5.15			5.23			6.22			7.41
Allowance for loan losses / nonperforming loans		442.30			488.45			485.63			403.57			323.12

See Selected Financial Highlights for footnotes.