* Says to reserve $18.95 mln in Q2 related to lawsuit
* Co expects to appeal
* Sees additional expenses related to the claim
(Adds analyst comments, updates share movement)
BANGALORE, June 1 Webster Financial Corp
said it will record a reserve of $19 million in the second
quarter, after a jury ruled against its banking unit and asked
it to pay compensatory and punitive damages to an Ohio-based
The case relates to a claim by the developer of the Broadwin
condominium conversion project, and 24 unit purchasers in the
project, who sought damages for the bank's refusal to continue
to fund construction draws, Webster said in a filing.
"The $19 million charge is more than the current consensus
expectations for net income in the second and the third
quarter. So, the charge in itself wipes out two quarters worth
of earnings," analyst Matthew Kelley of Sterne Agee & Leach
Analysts, according to Thomson Reuters I/B/E/S, were
expecting the company's net profit for the second quarter to be
Kelley said the company was surprised by the verdict and
did not expect the kind of punitive damages.
Of the $19 million in damages, the company was asked to pay
$12.15 million in punitive damages to the developer and unit
The company said it expects to file an appeal, but believes
the process could take up several years to complete.
"The appeal will take several years and the accounting
forces them to take a charge in the current quarter," Kelly
In April, Webster posted a loss of $6.1 million, or 8 cents
a share, for the first quarter.
Shares of the company were down about 2 percent at $18.81
Monday in late morning trade on the New York Stock Exchange.
(Reporting by Abhinav Sharma in Bangalore; Editing by Vyas
Mohan, Aradhana Aravindan)