Webster's Bad Loans Ebbing, Shares Soaring

Webster Financial(WBS Quote) overcame write-downs and charges, thanks to gains from an exchange offer.

Today, the Westbury, Conn.-based bank announced that it widened its consolidated net loss, which came to $31.6 million. In the year-earlier period, the bank lost $28.7 million.

But net income available to common shareholders grew to $16.8 million in the second quarter, or a 31-cent per share profit, thanks to a boost from the aforementioned exchange offer, which was completed during the quarter. According to the Webster's press release, the exchange offer added $173 million in Tier 1 common equity.

In the year-ago period, the bank posted net loss available to shareholders at 28.9 million, or 56 cents per share.

Analysts surveyed by Thomson Financial expected the bank to post a 46-cent per share loss, though this typically excludes one-time items.

Net interest income, before accounting for provisions in credit losses, dropped 5% in the quarter to come to $119.3 million. Net interest margin grew to 3.04% compared to last quarter's 2.99%. Non-interest income also grew to $35.4 million from a loss of $5.8 million last year.

The bank saw a near $480 million sequential jump in deposits in the quarter to $13.1 billion.