WATERBURY, Conn. – Webster Financial Corp. (NYSE: WBS), the parent of Webster Bank N.A., today posted a second-quarter profit of $16.80 million due in part to an exchange offer for convertible preferred stock and trust preferred securities completed in the second quarter.

The bank had recorded a $28.94 million net loss in the year-ago period.

However, discounting a $48.36 million gain that came in part from the exchange offer, Webster said its loss from continuing operations was $31.88 million for the quarter.

With the exchange offer, earnings per diluted share for the quarter were 31 cents, well above the 46 cent per-share loss expected by a consensus of analysts who cover Webster, according to Yahoo! Finance.

Webster recorded $223.41 million in interest and non-interest revenue for the second quarter, down 17.8 percent from the year-ago period’s $263.17 million.

"The major development in the second quarter was our highly successful exchange offer which boosted our Tier 1 common equity by more than $170 million,” said James C. Smith, Webster’s chairman and CEO. “In addition to strengthening our capital position, the additional common equity enhances our ability to compete vigorously for new business and to move forward confidently toward our goal of being New England’s bank.”

The second quarter’s $85 million loan-loss provision represented a significant increase from the bank’s provisions of $25 million in the 2008 second quarter.

Meanwhile, total non-performing loans from continuing operations climbed to $324.57 million – an increase of $40.35 million, or 14.2 percent – from $284.21 million at March 31 and nearly double the $168.17 million at the end of the 2008 second quarter. Webster said that increase comprised $16.7 million in commercial real estate loans, $68.98 million in commercial loans; and $4.51 million in consumer loans.

But Smith said growth in delinquencies appears to be slowing.

"During the quarter, we continued to be vigilant on asset quality. We again added to reserves in excess of charge-offs so that our allowance for credit losses now stands at 2.72 percent of total loans,” Smith said. “The slow-down in the growth of delinquencies and nonperforming loans across most loan categories is encouraging in this challenging economic environment."

The bank’s net interest margin increased slightly to 3.04 percent in the second quarter from 2.99 percent in the previous quarter, but is narrower than 3.26 percent a year ago.

Total deposits grew $480 million in the second quarter, from $12.69 billion as of March 31 to $13.17 billion on June 30. A year ago, deposits stood at $12.08 billion.

Webster Financial Corp. (NYSE: WBS) – a $13.2 billion company based in Waterbury, Conn. – is the holding company for Webster Bank N.A., a financial services company with more than 180 branches, including 10 branches in Rhode Island. Additional information is available at www.WebsterOnline.com.