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10-Q - FORM 10-Q - WEBSTER PREFERRED CAPITAL CORPd234468d10q.htm
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EX-32.1 - WRITTEN STATEMENT OF PRINCIPAL EXECUTIVE OFFICER SECTION 906 - WEBSTER PREFERRED CAPITAL CORPd234468dex321.htm
EX-32.2 - WRITTEN STATEMENT OF PRINCIPAL FINANCIAL OFFICER SECTION 906 - WEBSTER PREFERRED CAPITAL CORPd234468dex322.htm
EX-31.1 - CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER SECTION 302 - WEBSTER PREFERRED CAPITAL CORPd234468dex311.htm
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EX-31.2 - CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER SECTION 302 - WEBSTER PREFERRED CAPITAL CORPd234468dex312.htm
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Summary Of Significant Accounting Policies
9 Months Ended
Sep. 30, 2011
Summary Of Significant Accounting Policies [Abstract] 
Summary Of Significant Accounting Policies

Note 1: Summary of Significant Accounting Policies

Nature of Operations

Webster Preferred Capital Corporation (the "Company") is a Connecticut corporation incorporated in March 1997 and a subsidiary of Webster Bank, National Association, ("Webster Bank"), which is a wholly owned subsidiary of Webster Financial Corporation ("Webster"). The Company acquires, holds and manages real estate related mortgage assets.

The Company has elected to be treated as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Code"). The Company will generally not be subject to Federal or Connecticut state income taxes for as long as it maintains its qualification as a REIT, requiring, among other organizational and operational issues, that it distribute to its shareholders at least 90%, on an annual basis, of its "REIT taxable income" (not including capital gains and certain items of noncash income). All of the shares of the Company's common stock, par value $0.01 per share, are owned by Webster Bank, which is a federally chartered and federally insured commercial bank. Webster Bank has indicated to the Company that, for as long as any of the Company's preferred shares are outstanding, Webster Bank intends to maintain direct ownership of 100% of the outstanding common stock of the Company.

Basis of Presentation

The Condensed Financial Statements in this Quarterly Report on Form 10-Q have not been audited by an independent registered public accounting firm, but in the opinion of management, reflect all adjustments necessary for a fair presentation of the Company's financial position and results of operations. All such adjustments were of a normal and recurring nature. The Condensed Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q adopted by the Securities and Exchange Commission ("SEC"). Accordingly, the Condensed Financial Statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company's Financial Statements, and notes thereto, for the year ended December 31, 2010, included in the Company's Annual Report on Form 10-K filed with the SEC on March 1, 2011. Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period.

Use of Estimates

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The allowance for loan losses is particularly subject to change.

Cash and Cash Equivalents

For purposes of the Condensed Statements of Cash Flows, the Company defines cash as amounts held in deposit accounts with Webster Bank.

Net Income Per Common Share

Basic net income per common share is calculated by dividing net income available to common shareholders by the weighted-average number of shares of common stock outstanding. Diluted net income per common share does not apply since the Company has issued no options or other instruments representing potential common shares.

Reclassifications

Certain items in prior financial statements have been reclassified to conform to current presentation. These reclassifications had no impact on the Company's financial position, results of operations or net change in cash or cash equivalents. There have been no changes to the Company's significant accounting policies that were disclosed in the 2010 Form 10-K.

 

Accounting Standards Updates

ASU No. 2011-02, "Receivables (Topic 310) - A Creditor's Determination of Whether a Restructuring Is a Troubled Debt Restructuring." In April 2011, the FASB issued ASU No. 2011-02 to clarify when a loan modification or restructuring is considered a troubled debt restructuring ("TDR"). The changes apply to a lender that modifies a receivable covered by Subtopic 310-40, "Receivables—Troubled Debt Restructurings by Creditors." In evaluating whether a restructuring constitutes a TDR, a creditor must separately conclude that both of the following exist: (i) the restructuring constitutes a concession and (ii) the debtor is experiencing financial difficulties. A creditor may determine that a debtor is experiencing financial difficulties, even though the debtor is not currently in default, if the creditor determines it is probable that the debtor would default on its payments for any of its debts in the foreseeable future without the loan modification. Lenders who determine that they are making a concession on the terms of the loan to a borrower who is having financial problems should follow the guidance found in ASU No. 2011-02. The guidance on identifying and disclosing TDRs applies retrospectively to restructuring occurring on or after the beginning of the year. The guidance on measuring the impairment of a receivable restructured in a troubled debt restructuring is effective on a prospective basis. The provisions of ASU 2011-02 became effective for the Company on July 1, 2011 and did not have a significant impact on the Company's financial statements. See Note 2 – Residential Mortgage Loans, Net.

ASU No. 2011-04, "Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S. GAAP and IFRSs." In May 2011, the FASB issued ASU No. 2011-04 which will supersede most of the accounting guidance currently found in Topic 820 of FASB's ASC. The amendments will improve comparability of fair value measurements presented and disclosed in financial statements prepared with GAAP and International Financial Reporting Standards ("IFRS"). The amendments also clarify the application of existing fair value measurement requirements. These amendments include (1) the application of the highest and best use and valuation premise concepts, (2) measuring the fair value of an instrument classified in a reporting entity's shareholders' equity and (3) disclosing quantitative information about the unobservable inputs used within the Level 3 hierarchy. The guidance is effective for the Company's interim and annual periods beginning after December 15, 2011 and will be applied prospectively. The Company is currently evaluating the impact of the adoption of this accounting standards update on the Company's Condensed Financial Statements.