Citing the impact of heightened credit costs and deteriorating asset quality, Fitch Ratings has downgraded several key ratings for Waterbury’s Webster Financial Corp., parent company of Webster Bank.

"While the company has taken prudent measures to enhance its tangible common equity levels through its second quarter 2009 preferred stock exchanges, Fitch believes the impact of heightened credit costs will continue to hamper WBS’ financial performance given the prevailing market environment, resulting in further pressure on its capital position," Fitch said in a statement.

Fitch also noted that although total delinquencies continued their declining trend for the past two consecutive quarters, asset quality deterioration persisted, as non-performing assets grew to 3.3 percent in the second quarter from 2.87 percent at the end of the first quarter.

Fitch, however, did take Webster off its Ratings Watch Negative list, noting the company’s solid liquidity, sound funding base and bolstered reserve levels.

Fitch downgraded the following Webster ratings:
*Long-term Issuer Default Rating (IDR) to ‘BBB-‘ from ‘BBB’
*Senior Unsecured to ‘BBB-‘ from ‘BBB’
*Preferred stock to ‘BB+’ from ‘BBB-‘
*Short-term IDR to ‘F3’ from ‘F2’

Webster Bank, NA:
*Long-term IDR to ‘BBB-‘ from ‘BBB’
*Long-term deposits to ‘BBB’ from ‘BBB+’
*Subordinated debt to ‘BB+’ from ‘BBB-‘
*Short-term IDR to ‘F3’ from ‘F2’

Webster Capital Trust IV:
*Preferred stock to ‘BB’ from ‘BBB-‘

Webster Preferred Capital Corp. :
*Preferred stock to ‘BB’ from ‘BBB-‘