Webster Financial Corp. Posts Third-Quarter Loss Of $19.2 Million

Oct 23, 2009 (The Hartford Courant - McClatchy-Tribune Information Services via COMTEX) -- WBS | Quote | Chart | News | PowerRating -- Pressure on Webster Financial Corp., hit early and hard in the economic downturn, appears to be easing, even though it posted another loss in the third quarter Thursday.

Wall Street is now more comfortable that the Waterbury-based parent of Webster Bank has enough capital reserves to absorb losses, even as the country faces a possible wave of commercial real estate loan troubles.

But Webster executives say it still might be months before they consider bumping up the dividend on a share of common stock. Webster slashed the dividend from 30 cents a share to 1 cent earlier this year to preserve its capital, its cushion against losses, and got an earful at this year's annual meeting.

"My expectation is that the earliest we would consider that would be in the middle of 2010," said James C. Smith, the bank's chairman and chief executive.

Webster reported a net loss of $19.2 million, or 39 cents a share, for the quarter ending Sept. 30, compared with a loss of $16.5 million, or 42 cents a share, a year earlier. The per-share earnings in the most recent quarter were lower because of fewer shares outstanding.

The per-share loss results were higher than the 24-cent consensus estimate in a poll of analysts by Thomson Reuters.

The loss for the quarter was driven by the bank's setting aside $85 million to cover bad loans and other assets, including foreclosed property. That figure was flat compared with the previous quarter, but nearly double the year-ago period.

But the provision for the most recent quarter also exceeded the $64.4 million in bad loans and assets written off as uncollectable -- a strategy that the bank has pursued in recent quarters to further build its reserves.

Besides stronger capital reserves, Smith said that the bank made "progress on several fronts," including deposit growth of $426 million to $13.6 billion "Loan delinquencies were flat for the third consecutive quarter and overall performance was solid considering the challenging environment," Smith said.

Analysts said that Wall Street's comfort with capital levels -- a key issue for banks in the economic downturn -- is also helping Webster's battered stock price.

The shares, which fell as low as $3 a share in March, have risen in recent weeks above $13. But that's still far below the $51 reached in 2007. The shares closed Thursday at $13.20, up 50 cents.

"They are in a much better capital position and that helps to ease the pressure on the stock price," said Damon DelMonte, an analyst at Keefe, Bruyette & Woods Inc. in Hartford. "It also makes it easier to deal with credit issues."

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