Warburg Pincus Injects $115 Million into Webster Financial

Webster Financial Corp. (NYSE: WBS) has agreed to sell $115 million worth of newly-issued common stock to Warburg Pincus. The deal will give Warburg a 5.9% pro forma ownership stake, which would rise to 15.2% once certain shareholder approvals are obtained. Warburg Pincus managing director David Coulter will join the Webster Financial board of directors.

PRESS RELEASE

Webster Financial Corporation (NYSE: WBS) today announced that Warburg Pincus, the global private equity firm, has agreed to invest $115 million in Webster through a direct purchase of newly issued common stock at $10 per share, junior non-voting preferred stock, and warrants.

In announcing the investment, Webster Chairman and Chief Executive Officer James C. Smith said, “Warburg Pincus’ investment further strengthens Webster’s capital base which already significantly exceeded regulatory requirements for well-capitalized banks. The additional capital will enable us to capitalize on the extraordinary banking opportunities in the market as we pursue our vision to be New England’s bank.” Smith continued, “This investment represents another important step in our capital planning, and coupled with our recently completed and highly successful exchange offer, increases Webster’s tangible common equity by more than $285 million on a pro forma basis with minimal tangible book value dilution. Webster’s ability to attract a long-term value investor of Warburg Pincus’ caliber and experience in the banking sector underscores the inherent strength of our core business and long-term strategy. We also are delighted to welcome Dave Coulter, a well-known senior banking executive whom we respect, to our board.”

David A. Coulter, a Warburg Pincus managing director who co-leads the firm’s Financial Services investment activities, brings to Webster’s board over 30 years of banking industry experience and is the former Chairman and CEO of BankAmerica Corporation and Vice Chairman of JP Morgan Chase.

Coulter commented, “We are excited to partner with Jim Smith and his talented management team in the next phase of Webster’s long term strategy. We are confident that with its strong capital base, deep regional bank core deposit franchise and critical mass in its home markets, Webster is well positioned to drive exceptional value for both its customers and shareholders. We see Webster offering tremendous upside potential and promise, and I look forward to serving on Webster’s board.”

Terms of Warburg Pincus’ investment include:
    —  Warburg Pincus is acquiring 11.5 million common shares from Webster at
        $10.00 per share (a 12.1 percent premium to Webster’s trailing
        10-day average closing price) for an aggregate investment of $115
        million, upon receipt of all necessary approvals.
    —  Warburg Pincus will currently fund approximately $40.2 million of its
        investment and will be issued approximately 4 million shares of common
        stock and 3 million warrants.  It will fund the remaining $74.8 million
        and be issued the remaining common stock, junior non-voting preferred
        stock, and warrants, following receipt of necessary antitrust and
        federal bank regulatory approvals.
    —  A portion of Warburg Pincus’ investment that is funded following
        the receipt of regulatory approvals will initially be held in the form
        of junior non-voting preferred stock but will automatically convert into
        Webster common stock upon receiving the requisite approval of
        Webster’s shareholders.  The preferred stock initially will have a
        dividend that mirrors any dividend payable on the common stock.  If the
        requisite shareholder approval is not received, and the preferred shares
        are therefore still outstanding after February 28, 2010, the preferred
        stock’s annual non-cumulative dividend will increase to 8 percent
        per annum.  The preferred stock is expected to qualify for Tier I
        capital treatment.
    —  As part of the transaction, Warburg Pincus will receive 8.6 million
        seven-year Class A Warrants.  The Class A Warrants will initially have a
        strike price of $10.00 per share, with the strike price increasing to
        $11.50 per share twenty four months after this transaction and to $13.00
        per share forty eight months after this transaction.  Warburg Pincus
        also will receive 5.5 million seven-year Class B Warrants with a strike
        price of $2.50 per share which will only become exercisable and
        transferable if, following the receipt of necessary regulatory
        approvals, shareholder approval is not received by February 28, 2010.
        The Class B Warrants will expire immediately upon receiving shareholder
        approval.
    —  Following the receipt of regulatory approvals and the funding of the
        remainder of the investment, Webster plans to call a special meeting of
        its shareholders asking to eliminate a provision in its corporate
        charter prohibiting any third party from owning more than 9.9 percent of
        Webster’s common stock without shareholder approval, and to approve
        Warburg’s investment under NY Stock Exchange shareholder approval
        requirements.
    —  Pro Forma for its investment, Warburg Pincus will own 5.9 percent of
        Webster’s common stock outstanding prior to the bank regulatory and
        shareholder approvals and 15.2 percent of common stock outstanding
        following all required approvals.

    —  Full details of the agreement will be provided in a forthcoming filing
        on Form 8-K with the Securities and Exchange Commission.

JP Morgan served as financial advisor, Sullivan & Cromwell acted as legal counsel, and Promontory Financial Group and Ernst & Young provided diligence support to Warburg Pincus.

Deutsche Bank Securities served as financial advisor and Wachtell, Lipton, Rosen & Katz acted as legal counsel to Webster.

Webster has posted supplemental information regarding the $115 million investment from Warburg Pincus on our website at www.wbst.com.

About Webster Financial Corporation

Webster Financial Corporation is the holding company for Webster Bank, National Association. With $17.5 billion in assets, Webster provides business and consumer banking, mortgage, financial planning, trust and investment services through 181 banking offices, 492 ATMs, telephone banking and the Internet. Webster Bank owns the asset-based lending firm Webster Business Credit Corporation, the insurance premium finance company Budget Installment Corp., Center Capital Corporation, an equipment finance company headquartered in Farmington, Conn., and provides health savings account trustee and administrative services through HSA Bank, a division of Webster Bank. Webster is a Member FDIC and equal housing lender. For more information about Webster, including past press releases and the latest annual report, visit the Webster investor relations website at www.wbst.com.

About Warburg Pincus

Warburg Pincus is a leading global private equity firm. The firm has more than $25 billion in assets under management. Its active portfolio of more than 100 companies is highly diversified by stage, sector and geography. Warburg Pincus is a growth investor and an experienced partner to management teams seeking to build durable companies with sustainable value. Warburg Pincus has a successful track record of long term investments in the banking sector particularly in periods of market dislocation going back to the 1980s. Historic bank sector investments include The Bowery Savings Bank, Mellon Bank, Dime Bancorp, TAC Banc-shares, HDFC, Kotak Mahindra and ICICI Bank. Founded in 1966, Warburg Pincus has raised 12 private equity funds which have invested more than $29 billion in approximately 600 companies in 30 countries. The firm is currently investing Warburg Pincus Private Equity X, L.P., a $15 billion fund, and has offices in Beijing, Frankfurt, Hong Kong, London, Mumbai, New York, San Francisco, Shanghai and Tokyo. For more information, please visit www.warburgpincus.com.