UPDATE 2-Webster Financial Q4 loss narrows on lower provisions

* Q4 loss $0.84/shr vs yr-ago loss $5.91/shr

* Provision for credit losses falls 33 pct

* Net interest margin rises 6 basis points

* Seeks to repay Capital Purchase Program funds (Adds analyst's comments, conference call details, updates share movement)

By Archana Shankar and Abhinav Sharma

BANGALORE, Jan 22 (Reuters) - Webster Financial Corp's (WBS.N) quarterly loss narrowed due to lower provision for credit losses and rise in net interest margin.

Stabilizing and improved credit metrics, including lower delinquencies and net charge-offs, helped fourth-quarter results, the company said.

"The company appears to be positioning itself to resume growth as they return to profitability in mid 2010," FTN Equity Capital Markets analyst David Darst said.

The company, in which private-equity firm Warburg Pincus [WP.UL] had agreed to invest $115 million, said the quarterly loss included $34 million of imputed dividends tied to the investment and convertible preferred exchanges completed during the quarter.

Net loss applicable to common shareholders was $54.4 million, or 76 cents a share for the fourth quarter, compared with a loss of $307.6 million, or $5.91 a share, a year earlier.

Analysts on average were looking for a loss of 25 cents a share, according to Thomson Reuters I/B/E/S.

Darst said his estimates of a loss of 25 cents a share excluded fully convertible dividend related expenses and tax benefits and were comparable to 28 cents loss.

The company is seeking orderly repayment of Capital Purchase Program (CPP) funds as it has about $500 million available for CPP repayments, Webster said on a conference call.

For the fourth quarter, the parent of Webster Bank set aside $67 million as provision for credit losses, an increase from $100 million a year back.

Net interest income rose to $63.5 million from $26.1 million.

Net interest margin -- the difference between what the bank earns on loans and pays on deposits -- increased 6 basis points to 3.26 percent.

Deposits rose to $13.6 billion in the quarter from $11.9 billion a year ago, the company said.

Webster shares were up 20 cents at $14.60 in early morning trade on the New York Stock Exchange. The stock had touched a 52-week high of $15.19 on Thursday. (Reporting by Abhinav Sharma in Bangalore; Editing by Ratul Ray Chaudhuri)