Waterbury-based Webster Bank, which recently discontinued its wholesale mortgage business, has reported first-quarter income of $24.4 million for 2008.

Banks and brokerages keep reporting massive write-downs and layoffs, but Connecticut may dodge the heavy hits.

New York-based Citigroup and Merrill Lynch & Co. both reported large first-quarter losses blamed on bad loans. The earnings reports included additional plans for layoffs, too, with 9,000 cuts for Citigroup and 4,000 for Merrill Lynch.

Insiders do not expect the Merrill Lynch situation to have much of an effect on Connecticut, as the company plans to keep its financial advisors and investment associates – positions that make up the bulk of the firm’s Connecticut workforce.

The picture is not as clear at Citigroup.

The 9,000 cuts will be “spread out globally,” over various company divisions, and will be completed by the end of 2008, said spokeswoman Christina Pretto. Citigroup, which also announced 4,200 job cuts at the end of 2007, will be looking for ways to trim costs each quarter, she added.

The 10 Citibank branch closings are viewed as separate from the cuts, according to spokesman Robert Julavits. By the end of the third quarter, the bank is shuttering branches outside of Fairfield County, in municipalities such as South Windsor, North Haven, Bristol, Orange and Waterbury.

“We will [still] have 20 branches in the Fairfield County area that will remain open,” Julavits said.

‘A Strategic Decision’

While Citigroup and Merrill Lynch posted first-quarter losses of $5.1 billion and $2.1 billion, respectively, the largest locally based banks fared much better.

Bridgeport-based People’s United Bank and Waterbury-based Webster Bank reported incomes of $15.1 million and $24.4 million, respectively, for the quarter. Neither bank fared as well as it had in the same quarter last year. But neither bank suffered the dramatic losses stemming from bad loans like the national banks.

While touting their assets’ quality, however, both banks exited the wholesale mortgage business in the first quarter.

“Our decision to exit wholesale lending, which we had been in for 14 years, had nothing to do with credit quality,” said Wayne C. Walker, senior vice president of residential and consumer lending at People’s United. “The credit quality of our wholesale book of business has been stellar.”

The move was made to focus on growing the bank’s retail business, from New York to Maine, he explained.

“We have found that through our retail channels, whether it’s the branches or mortgage account officers, we have been able to broaden our customer relationships by cross-selling other banking products and services,” Walker said. That is something the bank could not do as well through the wholesale channel, he added.

Webster expressed similar reasons for getting out of wholesale lending.

“The reason we opted out of the wholesale operation is because it was a strategic decision,” said Jim Smith, Webster’s chairman and chief executive officer. “It turns out that the timing of it looks like we were pushed out by market forces.”

But the decision was really about building “direct-to-customer retail and commercial banking,” Smith said. “That’s what drove all the decisions that were made.”

Both locally based banks acknowledged that cutting out the broker will impact loan volume.

When Webster exited wholesale lending in January, the company pegged its total volume of lending at $500 million on the retail side, and about $3 billion on the wholesale side.

At People’s, “probably at the peak, maybe 60 [percent] to 70 percent of our mortgage business was done through our broker and correspondent channel,” Walker said.

The change meant about 165 job cuts for Webster, with 100 in Connecticut. While People’s United is planning to cut 420 jobs, the company said those cuts are not related to exiting wholesale lending.

The bank had been winding down its wholesale operations for 18 months, Walker noted, so the effect of leaving that business completely had “a very small impact on staffing.”

The cuts at People’s United mainly are designed to eliminate positions duplicated through the bank’s merger with Vermont-based Chittenden Corp., according to bank spokesman Brent DiGiorgio. Nineteen branches also are slated to close. Three are in Connecticut, he added, in Mansfield, Southbury and Ridgefield.