WASHINGTON (AP) – Webster Financial Corp., which owns bank branches throughout the Northeast, plans to write down $8 million in the third quarter for losses on the value of its remaining preferred shares of mortgage finance giants Fannie Mae and Freddie Mac.

Webster Financial says Fannie and Freddie preferred shares represent less than 1 percent of its investment portfolio.

The regional bank, based in Waterbury, Conn., anticipates taking the write-down as a result of the government takeover of Fannie and Freddie, company executives said last week at an investor conference.

Stocks plummet

The takeover of Fannie and Freddie, announced Sept. 7 and potentially involving a commitment of up to $200 billion in taxpayer funds, rendered the two companies’ preferred shares nearly worthless.

Banks of all sizes around the country, which had long considered Fannie and Freddie preferred stock to be safe investments that paid substantial dividends, now likely will have to write off the losses because they hold the preferred shares as part of their core capital.

For Webster Financial, even under a worst-case scenario of the securities being worthless, it would be an “unfortunate” yet “very manageable” event, analyst Mark Fitzgibbon of Sandler O’Neill wrote in a research note last week.

‘Manageable’

“We do not think this alone would necessitate the company needing to raise additional capital or radically change its operating plans,” Fitzgibbon wrote.

Ed Steadham, a spokesman for Webster Financial said, “We still remain a well capitalized bank by all the relevant Federal Reserve measuring standards, and our capital ratios are in the 85th percentile among our peer group” of 67 bank holding companies with at least $10 billion in assets.

Webster Financial is not among the two dozen or so U.S. banks that federal regulators consider to be most at risk from their holdings of Fannie and Freddie preferred stock, Steadham said.

Webster Financial, with $17.2 billion in assets, is the holding company for Webster Bank, operating in Connecticut, Massachusetts, Rhode Island and New York.

The company reported $5 billion of available liquidity as of June 30.

Early this year Webster Financial had about $15 million in Fannie and Freddie preferred stock, representing less than 1 percent of its estimated $3.1 billion portfolio of investment holdings, according to the company. It wrote down $1 million of the preferred shares in March, then sold about $5 million in June and July, leaving $9 million – of which it plans to write down $8 million in the third quarter.

The company posted a loss in the second quarter of $28.9 million, or 56 cents a share, compared with profit of $35.5 million, or 63 cents a share, in the April-June period of 2007.

Webster Financial shares fell $1.01, or 4.4 percent, to end at $22.15 in trading Monday, a day when the overall market fell steeply amid a Wall Street crisis.

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