Webster Financial (WBS) 8-K Webster Reports 2011 Second 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 2011 SECOND QUARTER PROFIT

WATERBURY, Conn., July 15, 2011 – Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A., today announced net income available to common shareholders of $33.4 million, or $.36 per diluted share, for the quarter ended June 30, 2011 compared to $33.5 million, or $.36 per diluted share, for the quarter ended March 31, 2011. The quarter ended March 31, 2011 included $2.0 million of income from discontinued operations, net of tax, or $.02 per diluted share.

Key points for the quarter or at June 30:

Improved net interest margin of 3.46 percent compared to 3.44 percent in the first quarter and 3.27 percent a year ago.

Continued improvement in asset quality as evidenced by a 13.9 percent reduction in nonperforming assets and a 21.4 percent decline in past due loans, both from March 31.

Provision for loan losses of $5.0 million compared to $10.0 million in the first quarter and $32.0 million a year ago.

Continued growth in demand deposits which now represent 16.9 percent of total deposits compared to 15.5 percent at March 31 and 13.1 percent a year ago.

Results include one time items of $6.1 million, including a write-down of foreclosed assets of $5.1 million to expedite sales over the next several quarters, severance and other costs of $1.1 million, branch and facility optimization of $0.9 million, warrant registration cost of $0.4 million and net loan repurchase and unfunded commitment reserve actions of ($1.4) million.

Webster Chairman and Chief Executive Officer James C. Smith said, “Webster is pleased to report solid operating results for the quarter. Continued growth in core business lending coupled with a higher net interest margin contributed to modest revenue growth, while positive asset quality trends also contributed to our improved performance. Given the relatively slow economic recovery, our plans for improving operating efficiency will be essential to sustaining positive earnings momentum.”

Net interest income

• Net interest margin increased by two basis points to 3.46 percent, reflecting a two basis point decline in the cost of funds from the first quarter.

• Average interest-earning assets totaled $16.6 billion compared to $16.7 billion for the first quarter.

Provision for loan losses

• Of the $5.0 million provision for loan losses recorded in the quarter, $2.3 million was related to the Company’s continuing portfolios and $2.7 million was related to the liquidating portfolio. In the first quarter, of the $10.0 million provision for loan losses recorded, $8.7 million was related to the Company’s continuing portfolios and $1.3 million was related to the liquidating portfolio.

• Net charge-offs were $21.7 million in the quarter compared to $33.7 million for the quarter ended March 31; $16.9 million was related to the continuing portfolios compared to $29.2 million for the previous quarter, and $4.8 million was related to the liquidating portfolio compared to $4.5 million for the previous quarter.

• The allowance for loan losses increased to 123 percent of nonperforming loans compared to 114 percent in the prior quarter.

Webster Vice Chairman and Chief Operating Officer Jerry Plush stated, “Significant reductions in past due loans, classified assets and nonperforming loans resulted in a reduced need for provision for loan losses compared to prior periods. We also took steps to further reduce the costs of carrying nonperforming assets with the write-downs recorded to expedite the sale of the existing inventory of real estate owned over the next several quarters.”

Noninterest income

• Total noninterest income increased $2.7 million compared to the first quarter, primarily from increases of $1.6 million in loan related fees and $1.3 million of net gain on sales of investment securities. Second quarter results also include increases of $0.8 million in deposit services fees and $0.7 million from wealth and investment services, offset by a decline in other income of $1.7 million, primarily due to lower income on direct investments.

Noninterest expense

• Total noninterest expense increased $2.9 million from the first quarter. Included in noninterest expense is $5.1 million of write-downs of foreclosed assets to expedite sales of existing inventory over the next several quarters. Also included in the quarter were $0.8 million of net write-downs and losses on sales of other properties in the quarter, severance and other costs of $1.1 million, and $0.4 million in costs related to the registration of the warrants issued to the U.S. Treasury. Offsetting these increases were decreases in compensation and benefits of $1.4 million, occupancy expense of $1.9 million and marketing expense of $1.3 million.

Income taxes

• The Company recorded $15.9 million of income tax expense in the quarter on the $50.1 million of pre-tax income applicable to continuing operations in the period. The effective tax rate for the quarter was 31.7 percent.

Investment securities

• Total investment securities were $5.3 billion at June 30, 2011 compared to $5.4 billion at March 31, 2011. The carrying value of the available for sale portfolio included $45.4 million in net unrealized gains compared to net unrealized gains of $35.9 million at March 31, while the carrying value of the held to maturity portfolio does not reflect $115.6 million in net unrealized gains compared to net unrealized gains of $73.7 million at March 31.

Loans

• Total loans were $11.0 billion at both June 30, 2011 and March 31, 2011. Originations for the second quarter consisted of $227 million in commercial non-mortgage, $15 million in equipment finance, $41 million in asset based lending, $116 million in commercial real estate, $85 million in residential, and $160 million in consumer. In the quarter, commercial non-mortgage loans increased by $83.8 million and commercial real estate loans increased by $8.0 million, while equipment finance and asset based lending declined by $65.3 and $2.4 million, respectively. Residential mortgage and consumer loans declined by $10.9 million and $8.7 million, respectively.

Asset quality

• Total nonperforming loans were $228.2 million, or 2.07 percent, of total loans at June 30, 2011 compared to $261.9 million, or 2.38 percent, at March 31, 2011. Included in nonperforming loans are $5.1 million in consumer liquidating loans compared to $7.8 million at March 31. The $33.6 million decrease in total nonperforming loans, or 12.8 percent, primarily reflects a lower level of new nonaccrual loans in the quarter along with an increased level of loans returning to accrual status in the quarter. Included in nonperforming loans were paying loans totaling $77.9 million at June 30 compared to $76.9 million at March 31.

• Past due loans for the continuing portfolios decreased to $58.5 million, or 25.0 percent, at June 30 compared to $78.0 million at March 31. Past due loans for the liquidating portfolio were $6.1 million at June 30 compared to $6.0 million at March 31.

Deposits and borrowings

• Total deposits were $13.7 billion at June 30, 2011 compared to $14.1 billion at March 31, 2011. Increases of $139.6 million in demand deposits, $105.9 million in interest-bearing checking and $52.0 million in savings were offset by declines of $614.6 million in money market and $91.1 million in certificates of deposits. Core to total deposits and loans to deposits were 78 and 80 percent, respectively, compared to 78 percent for both at March 31.

• Total borrowings were $2.0 billion at June 30 compared to $1.8 billion at March 31. Borrowings represented 12 percent of total assets at June 30 compared to 10 percent at March 31.

Capital

• The tangible common equity and Tier 1 common equity to risk weighted assets ratios increased to 7.28 percent and 10.79 percent, respectively, compared to 7.10 percent and 10.53 percent at March 31, 2011.

***

Webster Financial Corporation is the holding company for Webster Bank, National Association. With $18 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust and investment services through 176 banking offices, 495 ATMs, telephone banking, mobile banking, and the Internet. Webster Bank owns the asset based lending firm Webster Business Credit Corporation; the equipment finance firm Webster Capital Finance Corporation; 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 second quarter earnings announcement will be held today, Friday, July 15, at 9:00 a.m. (Eastern) 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, 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.

-30-

WEBSTER FINANCIAL CORPORATION

Selected Financial Highlights (unaudited)

	At or for the Three Months Ended
(In thousands, except per share data)	June 30, 2011			March 31, 2011			Dec. 31, 2010			Sept. 30, 2010			June 30, 2010
Net income and performance ratios (annualized):
Net income attributable to Webster Financial Corp.	$	34,207		$	34,296		$	32,569		$	22,687		$	17,638
Net income available to common shareholders		33,376			33,465			24,959			17,779			12,730
Net income per diluted common share		0.36			0.36			0.30			0.22			0.15
Return on average shareholders’ equity		7.44	%		7.66	%		7.11	%		4.80	%		3.81	%
Return on average tangible equity		10.55			11.00			10.11			6.74			5.40
Return on average assets		0.76			0.76			0.73			0.51			0.39
Income and performance ratios, (annualized), from continuing operations:
Income from continuing operations attributable to Webster Financial Corp.	$	34,207		$	32,301		$	32,475		$	22,687		$	17,638
Net income available to common shareholders		33,376			31,470			24,865			17,779			12,730
Net income from continuing operations per diluted common share		0.36			0.34			0.30			0.22			0.15
Return on average shareholders’ equity		7.44	%		7.21	%		7.09	%		4.80	%		3.81	%
Return on average tangible equity		10.55			10.36			10.08			6.74			5.40
Return on average assets		0.76			0.72			0.73			0.51			0.39
Noninterest income as a percentage of total revenue		25.13			24.11			25.66			25.97			33.11
Efficiency ratio (a)		65.00			67.61			67.82			65.79			65.67
Asset quality:
Allowance for loan losses	$	281,243		$	297,948		$	321,665		$	340,341		$	344,087
Nonperforming assets		250,084			290,349			301,804			343,991			349,203
Allowance for loan losses / total loans		2.55	%		2.71	%		2.92	%		3.12	%		3.17	%
Net charge-offs / average loans (annualized)		0.79			1.22			1.24			1.06			1.17
Nonperforming loans / total loans		2.07			2.38			2.48			2.85			2.92
Nonperforming assets / total loans plus OREO		2.27			2.63			2.73			3.14			3.21
Allowance for loan losses / nonperforming loans		123.22			113.78			117.58			109.39			108.44
Other ratios (annualized):
Tangible capital ratio		7.44	%		7.27	%		6.99	%		7.79	%		7.68	%
Tangible common equity ratio		7.28			7.10			6.82			5.91			5.79
Tier 1 risk-based capital ratio(c)		12.94			12.69			12.12			12.90			12.85
Total risk-based capital(c)		14.52			14.27			13.99			14.77			14.72
Tier 1 common equity / risk-weighted assets (c)		10.79			10.53			9.92			8.16			8.12
Shareholders’ equity / total assets		10.29			10.10			9.83			10.66			10.56
Interest rate spread		3.42			3.40			3.37			3.31			3.22
Net interest margin		3.46			3.44			3.40			3.36			3.27
Share and equity related:
Common equity	$	1,804,141		$	1,786,114		$	1,744,483		$	1,572,053		$	1,549,620
Book value per common share		20.61			20.42			20.01			20.02			19.75
Tangible book value per common share		14.42			14.21			13.78			13.09			12.79
Common stock closing price		21.02			21.43			19.70			17.56			17.94
Dividends declared per common share		0.05			0.01			0.01			0.01			0.01
Common shares issued and outstanding		87,532			87,474			87,160			78,505			78,478
Basic shares (average)		86,986			86,896			78,663			78,097			78,004
Diluted shares (average)		92,184			92,554			82,766			82,128			82,721

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 three month reporting period ending June 30, 2011 and actual for the remaining reporting periods presented.

WEBSTER FINANCIAL CORPORATION

Consolidated Balance Sheets (unaudited)

(In thousands)	June  30, 2011			March 31, 2011			June 30, 2010
Assets:
Cash and due from banks	$	196,181		$	170,691		$	179,490
Interest-bearing deposits		57,863			104,982			40,041
Investment securities:
Trading, at fair value		—			—			8,785
Available for sale, at fair value		2,143,072			2,195,109			2,206,362
Held to maturity		3,123,510			3,211,047			3,136,605
Total securities		5,266,582			5,406,156			5,351,752
Loans held for sale		21,650			10,809			11,109
Loans:
Commercial		2,852,141			2,836,007			2,831,637
Commercial real estate		2,224,184			2,216,206			2,126,853
Residential mortgages		3,139,408			3,150,269			2,980,984
Consumer		2,802,907			2,811,568			2,917,086
Total loans		11,018,640			11,014,050			10,856,560
Allowance for loan losses		(281,243	)		(297,948	)		(344,087	)
Loans, net		10,737,397			10,716,102			10,512,473
Prepaid FDIC premiums		46,546			52,121			68,257
Federal Home Loan Bank and Federal Reserve Bank stock		143,874			143,874			143,874
Premises and equipment, net		152,009			155,464			164,865
Goodwill and other intangible assets, net		548,370			549,767			553,958
Cash surrender value of life insurance policies		303,258			300,683			293,387
Deferred tax asset, net		89,925			95,209			101,855
Accrued interest receivable and other assets		243,173			259,088			322,087
Total Assets	$	17,806,828		$	17,964,946		$	17,743,148
Liabilities and Equity:
Deposits:
Demand	$	2,323,266		$	2,183,665		$	1,763,819
Interest-bearing checking		2,477,625			2,371,707			2,504,659
Money market		2,081,503			2,696,076			2,190,611
Savings		3,773,417			3,721,445			3,521,547
Certificates of deposit		2,939,648			3,030,707			3,447,534
Brokered		121,068			121,068			51,375
Total deposits		13,716,527			14,124,668			13,479,545
Securities sold under agreements to repurchase and other short-term borrowings		1,079,866			857,394			960,197
Federal Home Loan Bank advances		403,131			403,297			629,828
Long-term debt		566,677			570,637			586,617
Accrued expenses and other liabilities		197,970			184,320			203,222
Total liabilities		15,964,171			16,140,316			15,859,409
Webster Financial Corporation shareholders’ equity		1,833,080			1,815,053			1,874,091
Noncontrolling interests		9,577			9,577			9,648
Total equity		1,842,657			1,824,630			1,883,739
Total Liabilities and Equity	$	17,806,828		$	17,964,946		$	17,743,148

See Selected Financial Highlights for footnotes.

WEBSTER FINANCIAL CORPORATION

Consolidated Statements of Operations (unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands, except per share data)	2011			2010			2011			2010
Interest income:
Interest and fees on loans and leases	$	121,599		$	122,447		$	242,830		$	245,797
Interest and dividends on securities		53,527			55,443			107,371			109,599
Loans held for sale		177			144			599			458
Total interest income		175,303			178,034			350,800			355,854
Interest expense:
Deposits		21,841			30,482			44,610			62,433
Borrowings		13,345			15,210			26,624			29,695
Total interest expense		35,186			45,692			71,234			92,128
Net interest income		140,117			132,342			279,566			263,726
Provision for loan losses		5,000			32,000			15,000			75,000
Net interest income after provision for loan losses		135,117			100,342			264,566			188,726
Noninterest income:
Deposit service fees		26,095			29,345			51,435			57,129
Loan related fees		6,419			7,225			11,248			13,230
Wealth and investment services		7,454			6,218			14,176			12,053
Mortgage banking activities		1,234			427			2,487			289
Increase in cash surrender value of life insurance policies		2,576			2,612			5,109			5,190
Net gain on investment securities		1,647			18,192			2,024			18,830
Other income		1,593			1,501			4,841			5,815
Total noninterest income		47,018			65,520			91,320			112,536
Noninterest expense:
Compensation and benefits		65,592			60,327			132,604			121,269
Occupancy		12,856			13,546			27,591			27,986
Technology and equipment expense		15,134			15,657			30,526			30,925
Marketing		4,252			5,226			9,772			10,017
Professional and outside services		2,813			3,566			5,243			6,168
Intangible assets amortization		1,397			1,397			2,794			2,794
Foreclosed and repossessed asset expenses		710			1,009			1,594			2,701
Foreclosed and repossessed asset write-downs		794			891			479			2,952
Loan workout expenses		1,779			2,200			3,579			4,125
Deposit insurance		5,918			7,161			11,699			13,246
Other expenses		14,716			16,135			28,640			27,493
		125,961			127,115			254,521			249,676
Write-down for expedited asset disposition		5,073			—			5,073			—
Severance and other		1,060			876			1,060			883
Branch and facility optimization		859			—			1,132			—
Costs for warrant registration		350			—			350			—
Provision for litigation and settlements		194			19,676			486			19,676
Loan repurchase and unfunded commitment reserve, net		(1,436	)		—			(1,436	)		—
Fraud loss		—			—			—			11,056
Total noninterest expense		132,061			147,667			261,186			281,291
Income from continuing operations before income taxes		50,074			18,195			94,700			19,971
Income tax expense		15,867			550			28,193			905
Income from continuing operations		34,207			17,645			66,507			19,066
Income from discontinued operations, net of tax		—			—			1,995			—
Consolidated net income		34,207			17,645			68,502			19,066
Less: Net (loss) income attributable to noncontrolling interests		—			7			(1	)		7
Net income attributable to Webster Financial Corp.		34,207			17,638			68,503			19,059
Preferred stock dividends		(831	)		(4,581	)		(1,662	)		(10,036	)
Preferred stock accretion and accounting adjustments		—			(327	)		—			(2,362	)
Net income available to common shareholders	$	33,376		$	12,730		$	66,841		$	6,661
Diluted shares (average)		92,184			82,721			92,368			82,090
Net income per common share available to common shareholders:
Basic
Income from continuing operations	$	0.38		$	0.16		$	0.74		$	0.08
Net income		0.38			0.16			0.77			0.08
Diluted
Income from continuing operations		0.36			0.15			0.70			0.08
Net income		0.36			0.15			0.72			0.08

See Selected Financial Highlights for footnotes.

WEBSTER FINANCIAL CORPORATION

Five Quarter Consolidated Statements of Operations (unaudited)

	Three Months Ended
	June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,
(In thousands, except per share data)	2011			2011			2010			2010			2010
Interest income:
Interest and fees on loans and leases	$	121,599		$	121,231		$	121,944		$	123,042		$	122,447
Interest and dividends on securities		53,527			53,844			51,652			53,182			55,443
Loans held for sale		177			422			433			79			144
Total interest income		175,303			175,497			174,029			176,303			178,034
Interest expense:
Deposits		21,841			22,769			23,787			26,409			30,482
Borrowings		13,345			13,279			13,892			15,160			15,210
Total interest expense		35,186			36,048			37,679			41,569			45,692
Net interest income		140,117			139,449			136,350			134,734			132,342
Provision for loan losses		5,000			10,000			15,000			25,000			32,000
Net interest income after provision for loan losses		135,117			129,449			121,350			109,734			100,342
Noninterest income:
Deposit service fees		26,095			25,340			25,026			26,822			29,345
Loan related fees		6,419			4,829			6,568			6,119			7,225
Wealth and investment services		7,454			6,722			6,652			6,220			6,218
Mortgage banking activities		1,234			1,253			2,222			1,658			427
Increase in cash surrender value of life insurance policies		2,576			2,533			2,650			2,677			2,612
Net gain on investment securities		1,647			377			2,295			1,262			18,192
Other income		1,593			3,248			1,639			2,510			1,501
Total noninterest income		47,018			44,302			47,052			47,268			65,520
Noninterest expense:
Compensation and benefits		65,592			67,012			63,941			60,133			60,327
Occupancy		12,856			14,735			13,871			13,777			13,546
Technology and equipment expense		15,134			15,392			16,044			15,886			15,657
Marketing		4,252			5,520			4,317			4,634			5,226
Professional and outside services		2,813			2,430			4,515			4,038			3,566
Intangible assets amortization		1,397			1,397			1,397			1,397			1,397
Foreclosed and repossessed asset expenses		710			884			1,319			1,596			1,009
Foreclosed and repossessed asset (gains) write-downs		794			(315	)		48			2,157			891
Loan workout expenses		1,779			1,800			2,228			3,477			2,200
Deposit insurance		5,918			5,781			5,407			5,882			7,161
Other expenses		14,716			13,924			15,117			13,641			16,135
		125,961			128,560			128,204			126,618			127,115
Write-down for expedited asset disposition		5,073			—			—			—			—
Severance and other		1,060			—			646			303			876
Branch and facility optimization		859			273			4,307			—			—
Costs for warrant registration		350			—			—			—			—
Provision for litigation and settlements		194			292			—			2,800			19,676
Loan repurchase and unfunded commitment reserve, net		(1,436	)		—			—			—			—
Fraud recovery		—			—			(5,195	)		—			—
Total noninterest expense		132,061			129,125			127,962			129,721			147,667
Income from continuing operations before income taxes		50,074			44,626			40,440			27,281			18,195
Income tax expense		15,867			12,326			7,966			4,597			550
Income from continuing operations		34,207			32,300			32,474			22,684			17,645
Income from discontinued operations, net of tax		—			1,995			94			—			—
Consolidated net income		34,207			34,295			32,568			22,684			17,645
Less: Net (loss) income attributable to noncontrolling interests		—			(1	)		(1	)		(3	)		7
Net income attributable to Webster Financial Corp.		34,207			34,296			32,569			22,687			17,638
Preferred stock dividends		(831	)		(831	)		(3,469	)		(4,581	)		(4,581	)
Preferred stock accretion and accounting adjustments		—			—			(4,141	)		(327	)		(327	)
Net income available to common shareholders	$	33,376		$	33,465		$	24,959		$	17,779		$	12,730
Diluted shares (average)		92,184			92,554			82,766			82,128			82,721
Net income per common share available to common shareholders:
Basic
Income from continuing operations	$	0.38		$	0.36		$	0.32		$	0.23		$	0.16
Net income		0.38			0.38			0.32			0.23			0.16
Diluted
Income from continuing operations		0.36			0.34			0.30			0.22			0.15
Net income		0.36			0.36			0.30			0.22			0.15

See Selected Financial Highlights for footnotes.

WEBSTER FINANCIAL CORPORATION

Five Quarter Interest Rate Spreads and Margin (unaudited)

	Three Months Ended
	June 30, 2011			March 31, 2011			December 31, 2010			September 30, 2010			June 30, 2010
Interest rate spread
Yield on interest-earning assets		4.31	%		4.31	%		4.32	%		4.36	%		4.37	%
Cost of interest-bearing liabilities		0.89			0.91			0.95			1.05			1.15
Interest rate spread		3.42	%		3.40	%		3.37	%		3.31	%		3.22	%
Net interest margin		3.46	%		3.44	%		3.40	%		3.36	%		3.27	%

Consolidated Average Balances, Yields, and Rates Paid (unaudited)

Three Months Ended June 30,	2011								2010
(Dollars in thousands)	Average balance		Interest			Fully tax- equivalent yield/rate			Average balance		Interest			Fully tax- equivalent yield/rate
Assets:
Interest-earning assets:
Loans	$	10,998,039	$	121,599			4.41	%	$	10,877,997	$	122,447			4.49	%
Investment securities (b)		5,244,359		56,395			4.34			5,374,567		58,126			4.33
Loans held for sale		14,814		177			4.78			12,761		144			4.51
Federal Home Loan and Federal Reserve Bank stock		143,874		832			2.32			142,918		746			2.09
Interest-bearing deposits		212,172		123			0.23			185,364		121			0.26
Total interest-earning assets		16,613,258		179,126			4.31			16,593,607		181,584			4.37
Noninterest-earning assets		1,311,512								1,382,519
Total assets	$	17,924,770							$	17,976,126
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Deposits:
Demand	$	2,225,819	$	—			—	%	$	1,715,043	$	—			—	%
Savings, interest checking, and money market		8,675,135		9,554			0.44			8,657,141		13,203			0.61
Certificates of deposit		3,122,527		12,287			1.58			3,628,750		17,279			1.91
Total deposits		14,023,481		21,841			0.62			14,000,934		30,482			0.87
Securities sold under agreements to repurchase and other short-term borrowings		891,344		3,777			1.68			785,028		4,121			2.08
Federal Home Loan Bank advances		403,223		3,295			3.23			576,880		4,747			3.25
Long-term debt		568,868		6,273			4.41			587,702		6,342			4.32
Total borrowings		1,863,435		13,345			2.85			1,949,610		15,210			3.10
Total interest-bearing liabilities		15,886,916		35,186			0.89			15,950,544		45,692			1.15
Noninterest-bearing liabilities		188,395								163,744
Total liabilities		16,075,311								16,114,288
Noncontrolling interests		9,577								9,639
Webster Financial Corp. shareholders’ equity		1,839,882								1,852,199
Total liabilities and equity	$	17,924,770							$	17,976,126
Tax-equivalent net interest income				143,940								135,892
Less: tax-equivalent adjustment				(3,823	)							(3,550	)
Net interest income			$	140,117							$	132,342
Interest rate spread							3.42	%							3.22	%
Net interest margin							3.46	%							3.27	%

See Selected Financial Highlights for footnotes.

WEBSTER FINANCIAL CORPORATION

Consolidated Average Balances, Yields, and Rates Paid (unaudited)

Six Months Ended June 30,	2011								2010
(Dollars in thousands)	Average balance		Interest			Fully tax- equivalent yield/rate			Average balance		Interest			Fully tax- equivalent yield/rate
Assets:
Interest-earning assets:
Loans	$	11,031,630	$	242,830			4.40	%	$	10,927,030	$	245,797			4.50	%
Investment securities (b)		5,322,767		113,239			4.29			5,221,609		114,962			4.41
Loans held for sale		25,792		599			4.64			20,063		458			4.57
Federal Home Loan and Federal Reserve Bank stock		143,874		1,663			2.33			141,902		1,462			2.08
Interest-bearing deposits		137,156		157			0.23			217,732		283			0.26
Total interest-earning assets		16,661,219		358,488			4.31			16,528,336		362,962			4.39
Noninterest-earning assets		1,322,394								1,390,512
Total assets	$	17,983,613							$	17,918,848
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Deposits:
Demand	$	2,193,967	$	—			—	%	$	1,678,551	$	—			—	%
Savings, interest checking, and money market		8,659,127		20,137			0.47			8,512,228		27,081			0.64
Certificates of deposit		3,116,638		24,473			1.58			3,705,533		35,352			1.92
Total deposits		13,969,732		44,610			0.64			13,896,312		62,433			0.91
Securities sold under agreements to repurchase and other short-term borrowings		942,745		7,339			1.55			806,501		8,124			2.00
Federal Home Loan Bank advances		478,474		6,650			2.76			576,778		9,165			3.16
Long-term debt		575,188		12,635			4.39			588,248		12,406			4.22
Total borrowings		1,996,407		26,624			2.66			1,971,527		29,695			3.00
Total interest-bearing liabilities		15,966,139		71,234			0.90			15,867,839		92,128			1.17
Noninterest-bearing liabilities		192,356								157,132
Total liabilities		16,158,495								16,024,971
Noncontrolling interests		9,606								9,640
Webster Financial Corporation shareholders’ equity		1,815,512								1,884,237
Total liabilities and equity	$	17,983,613							$	17,918,848
Tax-equivalent net interest income				287,254								270,834
Less: tax-equivalent adjustment				(7,688	)							(7,108	)
Net interest income			$	279,566							$	263,726
Interest rate spread							3.41	%							3.22	%
Net interest margin							3.45	%							3.27	%

See Selected Financial Highlights for footnotes.

WEBSTER FINANCIAL CORPORATION

Five Quarter Loan Balances(unaudited)

(Dollars in thousands)	June 30, 2011			March 31, 2011			Dec. 31, 2010			Sept. 30, 2010			June 30, 2010
Loan Balances (actuals):
Continuing Portfolio:
Commercial	$	1,793,362		$	1,709,592		$	1,654,615		$	1,562,633		$	1,538,924
Equipment financing		578,117			643,388			710,925			759,416			804,871
Asset based lending		480,662			483,027			454,398			495,317			487,842
Commercial real estate		2,170,986			2,160,097			2,138,314			2,041,237			2,044,264
Residential development		53,198			56,109			59,674			66,495			82,589
Residential mortgages		3,139,407			3,150,268			3,147,491			3,093,581			2,978,601
Consumer		2,641,102			2,642,533			2,682,645			2,702,920			2,722,348
Total continuing		10,856,834			10,845,014			10,848,062			10,721,599			10,659,439
Allowance for loan losses		(243,543	)		(258,140	)		(278,665	)		(293,541	)		(294,187	)
Total continuing, net		10,613,291			10,586,874			10,569,397			10,428,058			10,365,252
Liquidating Portfolio:
National Construction Lending Center (NCLC)		1			1			1			1,558			2,383
Consumer		161,805			169,035			176,576			185,026			194,738
Total liquidating portfolio		161,806			169,036			176,577			186,584			197,121
Allowance for loan losses		(37,700	)		(39,808	)		(43,000	)		(46,800	)		(49,900	)
Total liquidating, net		124,106			129,228			133,577			139,784			147,221
Total Loan Balances (actuals)		11,018,640			11,014,050			11,024,639			10,908,183			10,856,560
Allowance for loan losses		(281,243	)		(297,948	)		(321,665	)		(340,341	)		(344,087	)
Loans, net	$	10,737,397		$	10,716,102		$	10,702,974		$	10,567,842		$	10,512,473
Loan Balances (average):
Continuing Portfolio:
Commercial	$	1,753,100		$	1,691,452		$	1,570,641		$	1,555,430		$	1,542,994
Equipment finance		621,447			688,767			733,611			784,215			825,581
Asset based lending		472,837			488,181			488,639			496,871			497,673
Commercial real estate		2,154,922			2,144,904			2,049,658			2,039,180			2,049,162
Residential development		54,757			58,152			62,223			73,510			88,866
Residential mortgages		3,133,742			3,158,754			3,124,899			3,029,900			2,932,305
Consumer		2,641,621			2,662,454			2,693,191			2,714,835			2,737,076
Total continuing		10,832,426			10,892,664			10,722,862			10,693,941			10,673,657
Allowance for loan losses		(255,412	)		(280,589	)		(288,003	)		(295,414	)		(294,079	)
Total continuing, net		10,577,014			10,612,075			10,434,859			10,398,527			10,379,578
Liquidating Portfolio:
NCLC		1			1			1,246			1,975			2,574
Consumer		165,612			172,929			180,888			190,104			201,766
Total liquidating portfolio		165,613			172,930			182,134			192,079			204,340
Allowance for loan losses		(37,700	)		(39,808	)		(43,000	)		(46,800	)		(49,900	)
Total liquidating, net		127,913			133,122			139,134			145,279			154,440
Total Loan Balances (average)		10,998,039			11,065,594			10,904,996			10,886,020			10,877,997
Allowance for loan losses		(293,112	)		(320,397	)		(331,003	)		(342,214	)		(343,979	)
Loans, net	$	10,704,927		$	10,745,197		$	10,573,993		$	10,543,806		$	10,534,018

See Selected Financial Highlights for footnotes.

WEBSTER FINANCIAL CORPORATION

Five Quarter Nonperforming Assets(unaudited)

(Dollars in thousands)	June 30, 2011		March 31, 2011		Dec. 31, 2010		Sept. 30, 2010		June 30, 2010
Nonperforming loans:
Continuing Portfolio:
Commercial	$	46,327	$	40,534	$	34,366	$	45,877	$	48,533
Equipment financing		11,313		16,602		20,482		23,300		28,271
Asset based lending		3,650		5,062		7,832		15,779		21,903
Commercial real estate		38,794		47,095		51,991		62,721		53,826
Residential development		16,173		17,300		15,477		19,487		26,941
Residential mortgages		82,189		95,750		99,128		97,989		93,624
Consumer		24,674		31,722		34,575		34,894		31,638
Nonperforming loans - continuing portfolio		223,120		254,065		263,851		300,047		304,736
Liquidating Portfolio:
NCLC		—		—		—		1,557		2,382
Consumer		5,116		7,802		9,722		9,520		10,193
Nonperforming loans - liquidating portfolio		5,116		7,802		9,722		11,077		12,575
Total nonperforming loans	$	228,236	$	261,867	$	273,573	$	311,124	$	317,311
Other real estate owned and repossessed assets:
Continuing Portfolio:
Commercial	$	13,577	$	19,959	$	20,033	$	17,916	$	14,918
Equipment financing		2,115		1,486		1,023		5,056		4,757
Asset based lending		—		—		—		—		—
Commercial real estate		—		—		—		—		—
Residential development		—		—		—		—		—
Residential mortgages		4,772		5,056		5,794		5,883		4,309
Consumer		725		978		937		1,041		4,542
Total continuing		21,189		27,479		27,787		29,896		28,526
Liquidating Portfolio:
NCLC		659		1,003		444		2,380		2,939
Consumer		—		—		—		591		427
Total liquidating		659		1,003		444		2,971		3,366
Total other real estate owned and repossessed assets	$	21,848	$	28,482	$	28,231	$	32,867	$	31,892
Total nonperforming assets	$	250,084	$	290,349	$	301,804	$	343,991	$	349,203

See Selected Financial Highlights for footnotes.

WEBSTER FINANCIAL CORPORATION

Five Quarter Past Due Loans(unaudited)

(Dollars in thousands)	June 30, 2011		March 31, 2011		Dec. 31, 2010		Sept. 30, 2010		June 30, 2010
Past due 30-89 days:
Accruing loans:
Continuing Portfolio:
Commercial	$	8,568	$	8,746	$	5,201	$	9,026	$	11,295
Equipment financing		7,155		10,520		7,937		6,043		8,818
Asset based lending		—		—		—		—		—
Commercial real estate		4,670		22,229		11,006		7,354		11,069
Residential development		500		—		194		—		200
Residential mortgages		18,631		19,080		21,513		27,821		28,015
Consumer		18,989		17,457		21,539		25,546		27,378
Past Due 30-89 days - continuing portfolio		58,513		78,032		67,390		75,790		86,775
Liquidating Portfolio:
NCLC		—		—		—		—		—
Consumer		6,134		5,966		6,128		8,133		6,496
Past Due 30-89 days - liquidating portfolio		6,134		5,966		6,128		8,133		6,496
Accruing loans past due 90 days or more:		1,417		97		91		150		2,138
Total past due loans	$	66,064	$	84,095	$	73,609	$	84,073	$	95,409

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)	June 30, 2011		March 31, 2011		Dec. 31, 2010		Sept. 30, 2010		June 30, 2010
Beginning balance	$	297,948	$	321,665	$	340,341	$	344,087	$	343,871
Provision		5,000		10,000		15,000		25,000		32,000
Allowance for sold loans		—		—		—		—		—
Charge-offs continuing portfolio:
Commercial		4,911		10,611		4,955		4,069		4,101
Equipment financing		413		1,134		4,079		3,972		3,601
Asset based lending		450		500		1,500		4,686		5,200
Commercial real estate		3,765		7,169		5,466		2,260		94
Residential development		—		191		871		1,167		2,110
Residential mortgages		2,951		3,318		3,998		2,666		3,067
Consumer		8,843		10,354		9,732		9,472		10,166
Charge-offs continuing portfolio		21,333		33,277		30,601		28,292		28,339
Charge-offs liquidating portfolio:
NCLC		16		32		1,566		—		1,170
Consumer		5,049		4,634		5,004		6,158		6,469
Charge-offs liquidating portfolio		5,065		4,666		6,570		6,158		7,639
Total charge-offs		26,398		37,943		37,171		34,450		35,978
Recoveries continuing portfolio:
Commercial		1,150		487		824		408		764
Equipment financing		1,579		1,469		1,042		1,473		1,100
Asset based lending		171		929		94		1,136		497
Commercial real estate		406		—		—		—		—
Residential development		—		—		—		616		172
Residential mortgages		96		67		284		380		141
Consumer		1,079		1,086		971		1,277		1,153
Recoveries continuing portfolio		4,481		4,038		3,215		5,290		3,827
Recoveries liquidating portfolio:
NCLC		23		61		194		73		217
Consumer		189		127		86		341		150
Recoveries liquidating portfolio		212		188		280		414		367
Total recoveries		4,693		4,226		3,495		5,704		4,194
Total net charge-offs		21,705		33,717		33,676		28,746		31,784
Ending balance	$	281,243	$	297,948	$	321,665	$	340,341	$	344,087

See Selected Financial Highlights for footnotes.