1. Webster Financial Corporation conducted an exchange of convertible preferred securities and trust preferred securities, which contributed to improvements in its Tier 1 common equity ratio and tangible common equity ratio.
2. The exchange raised $173 million in new Tier 1 common equity at a price more than double Webster's pre-exchange stock price.
3. As a result of the exchange and higher provision for loan losses, Webster reported a net loss of $31.6 million for the second quarter of 2009, compared to a net loss of $28.7 million in the second quarter of 2008.
2. Forward Looking Statement
This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements include, but are not limited to, statements about Webster Financial Corporation’s
("Webster" or "WBS") future financial condition, operating results, cost savings, management’s expectations regarding
future growth opportunities and business strategy and other statements contained in this presentation that are not historical
facts, as well as other statements identified by words such as "expects," "anticipates," "intends," "plans," "believes,"
"seeks," "estimates" or words of similar meaning. These forward-looking statements are based upon the current beliefs
and expectations of Webster’s management and are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are
subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results
may differ materially from the anticipated results discussed in these forward-looking statements. The following factors,
among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in
the forward-looking statements: (1) changes in general economic conditions, either nationally or locally in the areas in
which we conduct or will conduct our business; (2) the interest rate environment may compress margins and adversely
affect net interest income; (3) increases in competitive pressures among financial institutions and businesses offering
similar products and services; (4) higher defaults on our loan portfolio than we expect; (5) changes in management’s
estimate of the adequacy of the allowance for loan losses; (6) the risks associated with continued diversification of assets
and adverse changes to credit quality; (7) difficulties associated with achieving expected future financial results; (8)
legislative or regulatory changes or changes in accounting principles, policies or guidelines; (9) management’s estimates
and projections of interest rates and interest rate policy; and (10) cost savings and accretion to earnings from mergers and
acquisitions may not be fully realized or may take longer to realize than expected. Additional factors that could cause
actual results to differ materially from those expressed in the forward-looking statements are discussed in Webster’ reports
(such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the
Securities and Exchange Commission and available at the SEC’s Internet site (http://www.sec.gov). Webster cautions
readers not to place undue reliance on any such forward-looking statements, which speak only as of the date they were
made. Except as required by law, Webster does not undertake any obligation to update any forward-looking statement to
reflect circumstances or events that occur after the date the forward-looking statement is made.
2
3. Capital Enhancement - Outcomes of
Exchange Offers
Convertible preferred exchanged at 76% participation and 62% offer
price with $168.5 million accepted (75% maximum)
Trust Preferred exchanged at 32% participation and 65% offer price
The $173 million of new Tier 1 common equity was raised at more than
double Webster’s pre-exchange stock price and represents 45% of pre-
exchange market capitalization
Effective cost of common stock issuance of $14.68 per share compared
to tangible book value per share of $13.02 at March 31, 2009
Interest and preferred dividend expense reduced by $19.2 million
annually ($17.5 million after-tax)
3
4. Capital Position at June 30, 2009
$ in millions
Required Regulatory
Well
2Q09 Capitalized Minimum 1Q09
Tier 1 Common (1) 6.40% na na 5.26%
Tangible Common Equity 4.92% na na 4.05%
Tangible Equity 7.58% na na 7.75%
Leverage (1) 9.00% 5.0% 4.0% 9.49%
Tier 1 Risk Based (1) 11.70% 6.0% 4.0% 11.99%
Total Risk Based (1) 13.80% 10.0% 8.0% 14.03%
Excess Over
Well
Capital Capitalized Minimum
Leverage $1,520 $676 $844
Tier 1 Risk Based $1,520 $741 $1,000
Total Risk Based $1,791 $492 $752
(1) – Estimated at 6/30/09
4
5. Second Quarter 2009
In line with our key 2009 initiatives, we continue to
focus on capital, credit, deposits and OneWebster:
Exchange of convertible preferred and trust preferred securities
contributed to 114 bp improvement in Tier 1 common ratio and 87
bp improvement in tangible common equity ratio
Capital ratios remain well in excess of regulatory requirements
Increased Allowance for Credit Losses to Total Loans at quarter
end to 2.72%; provision in excess of net charge-offs
Continued strong deposit growth of $480 million; all in core
deposits and from multiple channels
Operating expenses are 6.4% lower year over year (excluding FDIC
assessments, foreclosed property expenses and related write-
downs, severance and other costs, and goodwill impairment in
2Q08)
5
6. 2Q09 Core Earnings
$ in millions
Net Pre-tax loss $ (60.4)
Gain on the exchange of trust preferreds for common stock (24.3)
Loss on sale of investment securities 13.6
Loss on write-down of investments to fair value 27.1
VISA share transaction (1.9)
FDIC special assessment 8.0
OneWebster-related charges 1.3
Foreclosure write-downs 2.8
Provision for loan losses (Net charge-offs of $50.0) 85.0
Pre-tax, pre-provision earnings $ 51.2
Q2 core earnings also impacted by increased ongoing FDIC
premium expense
6
7. Income Statement
$ in thousands except per share amounts
2Q09 1Q09 2Q08
Net interest income $ 119,288 $ 118,197 $ 125,686
Provision for credit losses 85,000 66,000 25,000
Non-interest income 49,838 45,289 49,049
Non-interest expense 116,136 113,149 118,087
Non core items (28,401) 3,957 (74,218)
Loss from continuing ops before
income taxes (60,411) (11,706) (42,570)
Consolidated net loss (31,562) (11,113) (28,724)
extinguishment gain, non-
controlling interests 48,361 (10,443) (216)
Net income (loss) for common 16,799 (21,556) (28,940)
EPS - Diluted $ 0.31 $ (0.41) $ (0.56)
7
8. Net Interest Margin
$ in millions
2Q09 1Q09 2Q08
Avg. Interest Earning Assets $ 16,036 $ 16,138 $ 15,707
Yield on Loans 4.57% 4.65% 5.52%
Yield on Investment Securities 5.32% 5.36% 5.48%
Yield on Interest Earning Assets 4.72% 4.82% 5.51%
Cost of Deposits 1.53% 1.75% 2.01%
Cost of Borrowings 3.02% 2.54% 3.38%
Cost of Funds 1.76% 1.91% 2.31%
Net Interest Margin 3.04% 2.99% 3.26%
8
9. Noninterest Income
$ in thousands
2Q09 1Q09 2Q08
Deposit service fees $ 29,984 $ 27,959 $ 29,943
Loan related fees 6,350 6,482 7,891
Wealth and investment services 6,081 5,750 7,634
Mortgage banking activities 3,433 606 104
Increase in cash surrender value of life insurance 2,665 2,592 2,623
Other income 1,325 1,900 854
Subtotal $ 49,838 $ 45,289 $ 49,049
Net (loss) gain on sale of investment securities (13,593) 4,458 126
Gain on the exchange of trust preferreds for
common stock 24,336
Gain on early extinguishment of debt and swaps - 5,993 -
Loss on write-down of investments to fair value (27,110) - (54,924)
Write-down of direct invesments - (1,625) -
VISA share transaction 1,907 - -
Total noninterest income $ 35,378 $ 54,115 $ (5,749)
9
11. OneWebster
Continuous Improvement Process
Expected Outcomes Progress (as of 6/30/09)
Implementation of 1,600 Completed ideas represent
approved ideas under approximately $49 million in
continuous improvement annual run-rate benefit
process
$66.5 million of annualized run- Ideas generating about 78% of
rate benefit (net of expected run-rate benefits
investments): $56.5 million implemented by 6/30/09; 94%
from expense reduction and expected to be implemented by
$10.0 million from revenue / year-end 2009; full
growth initiatives implementation by mid-year 2010
OneWebster: making Webster a better, more efficient bank
11
12. Selected Balances
End of period balances $ in millions
2Q09 1Q09 2Q08
Securities $ 4,174 $ 3,527 $ 2,917
Loans 11,611 12,095 12,766
Allowance for Loan Losses (306) (271) (185)
Intangibles 561 562 757
Total Assets 17,453 17,257 17,479
Deposits 13,175 12,695 12,077
Borrowings 2,269 2,480 3,349
Shareholder's Equity 1,842 1,855 1,892
Tangible Equity / Tangible Assets 7.58% 7.75% 6.79%
Loans / Deposits 88% 95% 106%
12
13. Investment Portfolio
•Carrying value of $4.2 billion at 6/30/09
Municipals
•Excludes unrealized gains of $33 million in HTM
•Includes $49 million of unrealized losses in AFS
$ millions
30 Yr Agency MBS
83 32 12 3 691
61
81
15 Yr Agency MBS
Agency Hybrid ARMS
AAA CMBS
1094
AAA Whole Loan Pass Throughs
Pooled Trust Preferred
1564
Single Issuer Trust Preferred
Common Stock
553
Preferred Stock
13
14. Investment Portfolio Actions in 2Q09
Purchased $618 million in agency mortgage-backed securities
Securitized $203 million in conforming residential loans
Sold $7 million in common stock at a net loss of $1.7 million
Sold $12.3 million book value (par value of $104.1 million) of
pooled trust preferred securities at a net loss of $11.9 million;
generated tax loss of $75 million which reduces the deferred
tax asset
Recognized OTTI charges of $23.6 million on pooled trust
preferred securities and $3.5 million on a preferred stock
14
15. Loans
$11.6 Billion as of June 30, 2009
Disc./Liq.
$.256
2.2%
Residential Mtg
CRE $2,875
$2.236 24.8%
19.3%
Consumer
Commercial $2.910
$3.334 25.0%
28.7%
15
16. Loan Mix and Yield
End of period balances $ in millions
2Q09 1Q09
Balance Yield Balance Yield
Residential $2,882 5.26% $3,184 5.46%
Commercial 3,334 4.31% 3,415 4.31%
CRE 2,236 4.62% 2,250 4.64%
Consumer 3,159 4.17% 3,246 4.24%
Total $11,611 4.57% $12,095 4.65%
16
17. Residential Continuing portfolio
30-89 Day delinquency trend Portfolio Statistics
2Q09 1Q09 2Q08
1.60%
Average portfolio ($m) $3,113 $3,092 $3,564
1.40%
Ending Balance 2,876 3,171 3,548
1.20% Net Charge-offs ($m) 4.7 2.9 0.8
1.00% Net Charge-offs (%) 0.60% 0.38% 0.10%
0.80% NPLs ($m) $ 93.6 $ 66.8 $ 27.1
0.60% Portion of paying NPLs ($) 33.0 10.8 -
0.40%
0.20%
0.00%
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09
80% of portfolio is in footprint (CT, MA, RI, NY)
Portfolio updated weighted average FICO of 723
Portfolio updated weighted average LTV of 59%
47% Jumbo, 51% Conforming
No Option ARMs, minimal Alt-A (under $40 million)
Permanent NCLC declined to $45 million at 6/30/09 down from $50 million at 3/31/09
Permanent NCLC accounts for $19.5 million of $93.6 million NPLs at 06/30/09 and
$1.9 million of the $4.2 million in net charge-offs in 2Q09
17
18. Commercial Non-Mortgage
30-89 Day delinquency trend Portfolio Statistics
2Q09 1Q09 2Q08
1.00%
0.90% Average portfolio ($m) $1,751 $1,784 $1,778
0.80% Ending Balance 1,712 1,739 1,793
0.70% Net Charge-offs ($m) 8.8 5.0 0.8
0.60% Net Charge-offs (%) 2.00% 1.12% 0.20%
0.50% NPLs ($m) $ 69.0 $ 65.1 $ 36.8
0.40%
0.30%
0.20%
0.10%
0.00%
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09
Consists of Middle Market, Small Business, Insurance Premium Finance and Segment
Banking
Net charge-offs in 2Q09 consisted primarily of $5.3 million in Small Business charge-
offs and a $2.8 million single credit charge in Segment Lending
Improved NPL trends in core Middle Market and Small Business portfolios evidenced
by a marginal increase in 2Q09
18
19. Equipment Finance
30-89 Day delinquency trend Portfolio Statistics
2Q09 1Q09 2Q08
1.80%
1.60%
Average portfolio ($m) $1,012 $1,026 $1,001
Ending Balance 998 1,017 1,003
1.40%
Net Charge-offs ($m) 6.1 1.9 0.4
1.20%
Net Charge-offs (%) 2.42% 0.76% 0.17%
1.00%
NPLs ($m) $ 35.7 $ 16.1 $ 6.7
0.80%
0.60%
0.40%
0.20%
0.00%
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09
Five industry segments: Transportation, Construction, Environmental, Manufacturing,
Aviation.
Increase in net charge-offs related to weakness across all sectors as each Equipment
Finance segment experienced higher NCOs compared to 1Q09
Aviation contributed 50% of 2Q09 charge-offs
Increase in NPLs related to weakness across all sectors; each Equipment Finance
segment had higher NPLs compared to 1Q09
Portfolio remains granular as no single borrower represents greater than 1% of the
overall portfolio
19
20. Asset Based Lending
30-89 Day delinquency trend Portfolio Statistics
2Q09 1Q09 2Q08
0.60%
Average portfolio ($m) $ 652 $ 701 $ 837
0.50% Ending Balance 623 660 842
Net Charge-offs ($m) 5.3 3.0 1.2
0.40% Net Charge-offs (%) 3.25% 1.70% 0.60%
NPLs ($m) $ 24.5 $ 29.4 $ 19.0
0.30%
0.20%
0.10%
0.00%
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09
Significant reductions in commitments and outstanding balances in all periods shown
Strong portfolio and problem asset management
Lower working capital levels resulting from general economic conditions
Strong collateral base – proactively monitoring collateral values and advance rates
20
21. Commercial Real Estate
30-89 Day delinquency trend Portfolio Statistics
2Q09 1Q09 2Q08
1.20% Average portfolio ($m) $2,091 $2,084 $2,016
Ending Balance 2,092 2,095 2,084
1.00% (1) Net Charge-offs ($m) - - 1.5
0.80% Net Charge-offs (%) 0.00% 0.00% 0.30%
NPLs ($m) $ 16.7 $ 12.6 $ 9.7
0.60%
0.40%
0.20%
0.00%
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09
(1) Increase in delinquency due to $13 million loan maturity that has been resolved since quarter-end
Consists of Investor CRE and Owner-occupied
Diversified portfolio by product, geography and property type
Institutional quality portfolio with strong sponsors; modest retail and hospitality
exposure
Proactive credit management – monitoring maturities, vacancy trends and leasing
activity
Use PPR to evaluate portfolio through market data overlay on Investor CRE portfolio
21
22. Residential Development
30-89 Day delinquency trend Portfolio Statistics
2Q09 1Q09 2Q08
3.00%
Average portfolio ($m) $ 151 $ 159 $ 231
2.50% Ending Balance 144 155 231
Net Charge-offs ($m) 2.3 0.1 3.7
2.00% Net Charge-offs (%) 6.21% 0.12% 6.43%
NPLs ($m) $ 46.8 $ 54.1 $ 48.1
1.50%
1.00%
0.50%
0.00%
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09
Continued challenging environment resulting in slower absorption and higher
delinquencies
Recent appraisals on non-accruing residential development loans resulted in charge-
offs of $30 million in 4Q08
2Q09 charges primarily driven by nonaccrual resolution and updated valuations on
new NPLs
22
23. Consumer Continuing portfolio
30-89 Day delinquency trend Portfolio Statistics
2Q09 1Q09 2Q08
1.20%
Average portfolio ($m) $2,952 $3,012 $2,891
1.00% Ending Balance 2,910 2,979 2,910
Net Charge-offs ($m) 9.5 5.8 2.5
0.80% Net Charge-offs (%) 1.29% 0.77% 0.35%
0.60%
NPLs ($m) $ 38.4 $ 40.2 $ 20.7
Portion of paying NPLs ($) 4.5 2.7 -
0.40%
0.20%
0.00%
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09
99% home equity of which 36% is home equity loans; 64% home equity lines
Line utilization of 51% compared to 50% at 3/31/09
82% of portfolio is in footprint (CT, MA, RI, NY)
19% of Home Equity is in 1st lien position
Portfolio updated weighted average FICO of 724
Portfolio updated weighted average CLTV of 74%
$2.2 billion retail originated portfolio has 0.34% annualized charge-off rate at 06/30/09
23
24. Discontinued Liquidating
30-89 Day delinquency trend Portfolio Statistics
2Q09 1Q09 2Q08
7.00%
Average portfolio ($m) $ 282 $ 292 $ 368
6.00% Ending Balance 256 280 357
5.00% Net Charge-offs ($m) 13.2 11.4 9.2
Net Charge-offs (%) 18.69% 15.62% 10.10%
4.00% NPLs ($m) $ 25.8 $ 32.0 $ 38.9
3.00% Portion of paying NPLs ($) 0.7 0.2 -
2.00%
1.00%
0.00%
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09
Consists of $249.1 million of home equity and $6.5 million of national construction
loans
$24 million decline in 2Q09 includes $8.4 million of net payoff activity
Reserves of $41.8 million ($40.3 million for home equity and $1.5 million for national
construction) provide coverage of 16.4% at 6/30/09
70% of Liquidating Home Equity charge-offs year-to-date generated from $105 million
of NIV loans/lines; NIV loans represent 42% of Liquidating HE portfolio
24
25. Asset Quality – Key Ratios
Ratios as of June 30, 2009 (March ratios in parentheses)
Discontinued
Continuing TOTAL
Liquidating
Allowance for Credit
2.41% / (2.01%) 16.37% / (15.84%) 2.72% / (2.33%)
Losses to Total Loans
Allowance for Credit
Losses to Nonperforming 84% / (84%) 162% / (139%) 90% / (89%)
Loans
30+ Delinquent to Total
0.99% / (0.96%) 3.87% / (4.37%) 1.06% / (1.03%)
Loans
Nonperforming Loans to
2.86% / (2.41%) 10.10% / (11.41%) 3.02% / (2.61%)
Total Loans
Net Charge-offs to
1.25% / (0.63%) 18.74% / (16.51%) 1.66% / 0.99%)
Average Loans
25
26. Deposits
$13.2 Billion as of June 30, 2009
Brokered
$.168 Demand
1.3% $1.595
12.1%
CDs
$4.422
33.6%
NOW
$2.592
19.6%
Savings
$2.779
Money Market
21.1%
$1.619
12.3%
26
27. Deposit Mix and Cost
End of period balances $ in millions
2Q09 1Q09
Balance Cost Balance Cost
Demand $1,595 - $1,530 -
NOW 2,592 0.55% 1,936 0.71%
Money market 1,619 1.11% 1,795 1.39%
Savings 2,779 0.99% 2,576 1.14%
CDs 4,422 2.97% 4,639 3.17%
Brokered 168 2.84% 219 3.23%
Total $13,175 1.53% $12,695 1.75%
$480 million of deposit growth; continued reduction in the cost of total deposits of 22
basis points
Retail CD maturities of $1.7 billion in Q309
Core deposit ratio improved to 65% compared to 62% for 1Q09
Loan/Deposit ratio improved to 88% compared to 95% for 1Q09
27
28. Sources of Liquidity
At or as of June 30, 2009
Wide array of sources provide a strong competitive advantage
Diverse deposit gathering capabilities include: Q2 Growth
Retail $206 million
Government finance $149 million $480
Health savings accounts through HSA Bank $ 25 million million
Small business $ 69 million
Commercial $ 31 million
Additional capacity available from wholesale sources include:
$2.0 billion with the FHLB
$2.0 billion of other secured sources $4.9
$0.3 billion of FDIC backed debt billion
$0.6 billion of other unsecured sources
Strong holding company liquidity position;
over 7 years of cash flow needs on hand
28
29. Concluding Comments
Substantially improved Tier 1 common and tangible
common equity levels; continue to be very well
capitalized measured by regulatory capital ratios
Proactively identifying and addressing credit issues and
further strengthening credit loss coverage given
economic environment
Continued strong deposit growth in the quarter reflects
shift to a deposit first culture; significant improvement in
loan to deposit and core deposit ratios
OneWebster earnings optimization program on-track
with original expectations
Improved pre-tax, pre-provision core operating earnings
29