WEBSTER FINANCIAL CORP - 10-K Annual Report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the Fiscal Year Ended December 31, 1999.

OR

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from
_____________________________________ to _____________________________.

Commission File Number: 0-15213

WEBSTER FINANCIAL CORPORATION
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(Exact name of registrant as specified in its charter)

Delaware 06-1187536
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(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

Webster Plaza, Waterbury, Connecticut 06702
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(Address of principal executive offices) (Zip Code)

(203) 753-2921
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(Registrant's telephone number, including area code)

Not Applicable
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(Securities registered pursuant to Section 12(b) of the Act)

Common Stock, $.01 par value
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(Securities registered pursuant to Section 12(g) of the Act, Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

[X] Yes [ ] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

Based upon the closing price of the registrant's common stock as of March 24,
2000, the aggregate market value of the voting common stock held by
non-affiliates of the registrant is $913,166,330. Solely for purposes of this
calculation, the shares held by directors and executive officers of the
registrant have been excluded because such persons may be deemed to be
affiliates. This reference to affiliate status is not necessarily a conclusive
determination for other purposes.

The number of shares outstanding of each of the registrant's classes of common
stock, as of the latest practicable date is:

Common Stock (par value $ .01) 42,650,134 Shares
------------------------------ ----------------------------------------
Class Issued and Outstanding at March 24, 2000

DOCUMENTS INCORPORATED BY REFERENCE

Part I and II: Portions of the Annual Report to Shareholders
for fiscal year ended December 31, 1999

Part III: Portions of the Definitive Proxy Statement
for the Annual Meeting of Shareholders to be held on April 27, 2000.

WEBSTER FINANCIAL CORPORATION
1999 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS

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PART I Page
----

Item 1. Business 3
General 3
Business Combinations 3
Lending Activities 4
Investment Activities 9
Trust Activities 12
Insurance Activities 12
Sources of Funds 12
Bank Subsidiaries 14
Employees 14
Market Area and Competition 15
Regulation 15
Taxation 16

Item 2. Properties 17
Item 3. Legal Proceedings 17
Item 4. Submission of Matters to a Vote of Security Holders 17

PART II

Item 5. Market for Registrant's Common Equity and
Related Stockholder Matter 18
Item 6. Selected Financial Data 19
Item 7. Management's Discussion and Analysis of Financial Condition
& Results of Operations 20
Item 7a. Quantitative and Qualitative Disclosures About Market Risk 20
Item 8. Financial Statements and Supplementary Data 20
Item 9. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosures 20

PART III

Item 10. Directors and Executive Officers of the Registrant 20
Item 11. Executive Compensation 20
Item 12. Security Ownership of Certain Beneficial Owners and Management 21
Item 13. Certain Relationships and Related Transactions 21

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 21

Signatures 25

Exhibit Index 27

PART I

ITEM 1. BUSINESS
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GENERAL

Webster Financial Corporation ("Webster" or the "Corporation"), through its
subsidiaries, Webster Bank (the "Bank") and Damman Associates, Inc. ("Damman"),
delivers financial services to individuals, families and businesses primarily in
Connecticut. Webster emphasizes five business lines - consumer banking, business
banking, mortgage lending, trust and investment services, and insurance
services, each supported by centralized administration and operations. Webster
has grown significantly in recent years, primarily through a series of
acquisitions which have expanded and strengthened its franchise.

Webster on a consolidated basis at December 31, 1999 and 1998 had total
assets of $9.9 billion and $9.8 billion, total securities of $3.1 billion and
$3.7 billion and net loans receivable of $6.0 billion and $5.5 billion,
respectively. Total deposits and shareholders' equity at December 31, 1999 and
December 31, 1998 were $6.2 billion and $6.3 billion and $635.7 million and
$626.5 million, respectively.

At December 31, 1999, the assets of Webster, on an unconsolidated basis
consisted primarily of its investments in the Bank and Damman that totaled
$732.1 million, investment securities of $118.6 million and $7.3 million of cash
and interest-bearing deposits. Primary sources of income to Webster, on an
unconsolidated basis are dividend payments received from the Bank and interest
and dividends from investment securities. Primary expenses to Webster, on an
unconsolidated basis are interest expense from borrowings and interest expense
related to the capital securities. See Note 22 to the Consolidated Financial
Statements contained in the 1999 Annual Report to Shareholders incorporated
herein by reference for additional information concerning Webster on an
unconsolidated basis.

The Bank's deposits are federally insured by the Federal Deposit Insurance
Corporation ("FDIC"). The Bank is a Bank Insurance Fund ("BIF") member
institution and at December 31, 1999, approximately 74% of the Bank's deposits
were subject to BIF assessment rates and 26% were subject to Savings Association
Insurance Fund ("SAIF") assessment rates. (See "Regulation").

Webster, as a holding company, and the Bank are subject to comprehensive
regulation, examination and supervision by the Office of Thrift Supervision (the
"OTS"), as the primary federal regulator. Webster is also subject to regulation,
examination and supervision by the FDIC as to certain matters. Webster's
executive offices are located at Webster Plaza, Waterbury, Connecticut 06702.
Its telephone number is (203) 753-2921. Webster's internet website is
www.websterbank.com.

BUSINESS COMBINATIONS

Information concerning business combinations is contained in the 1999
Annual Report to Shareholders within "Management's Discussion and Analysis of
Financial Condition & Results of Operations" ("MD&A") section and incorporated
herein by reference.

3

LENDING ACTIVITIES

General

Webster, through its consolidated Bank subsidiary, originates various types
of residential, business and consumer loans. Total gross loans receivable before
the allowance for loan losses were $6.1 billion and $5.6 billion at December 31,
1999 and 1998, respectively. The Bank offers commercial and residential
permanent and construction mortgage loans, commercial and industrial loans and
various types of consumer loans including home equity credit lines, home equity
loans and other types of small business and household loans. At December 31,
1999, residential mortgage loans and commercial loans comprised 64% and 27%,
respectively of gross outstanding loans as compared to 70% and 21%,
respectively, at December 31, 1998. Consumer loans have remained relatively
stable over recent years and represent 9% of the gross outstanding loan
portfolio at December 31, 1999 and 1998. At December 31, 1999 and 1998,
residential loans represented the primary part of Webster's total loan
portfolio. Over recent years, Webster has placed a stronger emphasis on
originating and developing its commercial loan portfolio. In order to obtain
geographic and industry diversification within our commercial loan portfolio,
the Bank is participating in the specialized lending market. At December 31,
1999, the Bank held $297 million in the specialized lending market, which
includes approximately $86 million in the manufacturing industry, $53 million in
the cable industry, $43 million in wireless communication, $26 million in radio
broadcasting and $89 million in other industries. At December 31, 1999, the
Bank's specialized lending portfolio represented 18% of the total commercial
loan portfolio. The change in the loan portfolio mix brings an inherent higher
level of credit risk that is monitored by credit administration management.
Credit administration considers credit risk in addition to other factors in its
determination of required loan loss allowances. The Bank, at December 31, 1999,
had loan loss allowances that were 191% of nonaccrual loans and 1.2% of gross
loans receivable.

The Bank originates both fixed-rate and adjustable-rate residential
mortgage loans. At December 31, 1999, approximately $1.9 billion or 49% of
Webster's total residential mortgage loans were adjustable-rate loans. Webster
offers adjustable-rate mortgage loans at initial interest rates discounted from
the fully indexed rate. Adjustable-rate loans originated during 1999, when fully
indexed, will be 2.75% above the constant maturity one-year U.S. Treasury yield
index. At December 31, 1999, approximately $2.0 billion or 51% of Webster's
total residential mortgage loans, before net items, had fixed rates. Webster
sells mortgage loans in the secondary market when such sales are consistent with
its asset/liability management objectives. At December 31, 1999 Webster had $7.0
million of residential mortgage loans held for sale.

The loan portfolio table that follows provides further information
concerning loan types, percentages and allowance detail.

Nonaccrual loans, which include loans delinquent 90 days or more, were
$38.4 million at December 31, 1999, compared to $30.7 million at December 31,
1998. The ratio of nonaccrual loans to total loans was 0.63% and 0.55% at
December 31, 1999 and 1998, respectively. Nonaccrual assets, which include
nonaccrual loans and foreclosed properties were $43.3 million and $35.9 million
at December 31, 1999 and 1998, respectively. For additional information
concerning nonaccrual and past due loans, see the MD&A section contained in the
1999 Annual Report to Shareholders incorporated herein by reference. Also see
"Business" and "Nonaccrual Assets and Delinquencies" within this report for more
information about Webster's asset quality, allowance for loan losses and
provisions for loan losses.

4

The following table sets forth the composition of the Bank's loan portfolio
in dollar amounts and in percentages at the dates shown.

At December 31,
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1999 1998 1997
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(Dollars in thousands) Amount % Amount % Amount %
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Residential mortgage loans:
1-4 family units $3,544,060 58.85% $3,679,213 66.81% $3,900,224 70.60%
Multi-family units 52,573 0.87 689 0.01 16,736 0.30
Construction 302,310 5.02 200,417 3.64 117,619 2.13
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Total residential mortgage loans 3,898,943 64.74 3,880,319 70.46 4,034,579 73.03
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Commercial and commercial
real estate loans:

Commercial real estate 695,520 11.55 548,487 9.96 530,080 9.59
Commercial construction 45,648 0.76 67,717 1.23 58,888 1.07
Commercial non-mortgage 915,035 15.20 548,734 9.96 369,658 6.69
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Total commercial loans 1,656,203 27.51 1,164,938 21.15 958,626 17.35
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Consumer loans:
Home equity credit loans 492,684 8.18 458,981 8.33 494,537 8.95
Other consumer 47,064 0.78 68,081 1.24 108,775 1.97
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Total consumer loans 539,748 8.96 527,062 9.57 603,312 10.92
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Loans receivable (net of fees
and costs) 6,094,894 101.21 5,572,319 101.18 5,596,517 101.30
Allowance for loan losses (72,658) (1.21) (65,201) (1.18) (71,599) (1.30)
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Loans receivable, net $6,022,236 100.00% $5,507,118 100.00% $5,524,918 100.00%
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At December 31,
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1996 1995
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(Dollars in thousands) Amount % Amount %
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Residential mortgage loans:
1-4 family units $3,720,878 70.66% $3,312,756 74.31%
Multi-family units 39,257 0.75 48,369 1.09
Construction 109,923 2.09 75,096 1.68
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Total residential mortgage loan 3,870,058 73.50 3,436,221 77.08
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Commercial and commercial
real estate loans:

Commercial real estate 525,697 9.98 418,019 9.38
Commercial construction 34,749 0.66 34,954 0.78
Commercial non-mortgage 328,375 6.24 169,633 3.81
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Total commercial loans 888,821 16.88 622,606 13.97
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Consumer loans:
Home equity credit loans 465,220 8.83 377,225 8.46
Other consumer 104,681 1.99 90,783 2.04
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Total consumer loans 569,901 10.82 468,008 10.50
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Loans receivable (net of fees
and costs) 5,328,780 101.20 4,526,835 101.55
Allowance for loan losses (63,047) (1.20) (69,091) (1.55)
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Loans receivable, net $ 5,265,733 100.00% $ 4,457,744 100.00%
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5

The following table sets forth the contractual maturity and interest-rate
sensitivity of residential and commercial construction mortgage loans and
commercial non-mortgage loans at December 31, 1999.

Contractual Maturity
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More Than
One Year One to More Than
(In thousands) or Less Five Years Five Years Total
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CONTRACTUAL MATURITY
Construction loans:
Residential mortgage $300,285 $ 958 $ 1,067 $ 302,310
Commercial mortgage 14,407 16,459 14,782 45,648
Commercial non-mortgage loans 488,758 279,962 146,315 915,035
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Total $803,450 $297,379 $162,164 $1,262,993
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INTEREST-RATE SENSITIVITY

Fixed rates $668,715 $179,960 $ 73,340 $ 922,015
Variable rates 134,735 117,419 88,824 340,978
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Total $803,450 $297,379 $162,164 $1,262,993
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Purchase and Sale of Loans and Loan Servicing
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The Bank has been a seller and purchaser of whole loans and participations
in the secondary market. Webster, in general, sells fixed-rate mortgage loans
and retains servicing for the loans sold whenever possible. Loans purchased in
the secondary market by Webster are typically adjustable-rate mortgage loans and
purchased, in most cases, with servicing retained by the seller. See Note 4 to
the Consolidated Financial Statements contained in the 1999 Annual Report to
Shareholders incorporated herein by reference for further discussion.

6

The table below shows for the Bank, residential and commercial first
mortgage loan origination, purchase, sale and repayment activities for the
periods indicated.

Years ended December 31,
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(In thousands) 1999 1998 1997
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FIRST MORTGAGE LOAN ORIGINATIONS AND PURCHASES:
Permanent:
Mortgage loans originated $ 913,693 $ 960,322 $ 598,862
Construction:
Mortgage loans originated 422,823 291,833 194,772
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Total permanent and construction loans originated 1,336,516 1,252,155 793,634
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Loans and participations purchased 9,948 66,173 191,078
Loans acquired through acquisition 157,156 - 34,503
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Total loans originated, acquired and purchased 1,503,620 1,318,328 1,019,215
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FIRST MORTGAGE LOAN SALES AND PRINCIPAL REDUCTIONS:
Loans sold 104,227 222,165 135,338
Loan principal reductions 1,218,361 1,237,173 359,754
Reclassified to foreclosed properties 9,022 13,250 13,202
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Total loans sold and principal reductions 1,331,610 1,472,588 508,294
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Increase (decrease) in gross mortgage loans receivable $ 172,010 $(154,260) $ 510,921
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Nonaccrual Assets and Delinquencies

When an insured institution classifies problem assets as either
"substandard" or "doubtful," it is required to establish general allowances for
loan losses in an amount deemed prudent by management. General allowances
represent loss allowances which have been established to recognize the inherent
risk associated with lending activities, but which, unlike specific allowances,
have not been allocated to particular problem assets. When an insured
institution classifies problem assets as "loss," it is required either to
establish a specific allowance for losses equal to 100% of the amount of the
asset so classified or to charge-off such amount. An institution's determination
as to the classification of its assets and the amount of its valuation
allowances is subject to review by the OTS which can order the establishment of
additional valuation allowances. See "Classification of Assets" below.

Interest on nonaccrual loans that would have been recorded as additional
income for the years ended December 31, 1999, 1998 and 1997 had the loans been
current in accordance with their original terms approximated $3.0 million, $2.8
million, and $4.6 million, respectively.

The following table shows the Bank's loans ninety days or more past due and
accruing at the indicated year ends.

Years ended December 31,
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(In thousands) 1999 1998 1997 1996 1995
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LOANS PAST DUE 90 DAYS OR MORE AND ACCRUING

Residential Mortgage $ -- $ -- $ -- $ -- $ --
Commercial Mortgage -- -- -- -- --
Commercial 698 1,209 1,060 395 273
Consumer -- -- -- -- --
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Total $698 $1,209 $1,060 $395 $273
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See "Asset Quality" within the MD&A section and Note 1(d) to the
Consolidated Financial Statements contained in the 1999 Annual Report to
Shareholders incorporated herein by reference for further nonaccrual loan
information and a description of Webster's nonaccrual loan policy.

7

The following table sets forth information as to the Bank's loans
past due 30-89 days and still accruing interest.

December 31,
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1999 1998 1997 1996 1995
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Principal Principal Principal Principal Principal
(Dollars in thousands) Balances % Balances % Balances % Balances % Balances %
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Past due 30-89 days and
still accruing:

Residential real estate $20,499 0.34% $26,727 0.48% $31,479 0.56% $29,826 0.56% $32,952 0.74%
Commercial real estate 11,865 0.19 12,369 0.22 8,686 0.16 4,138 0.08 11,406 0.26
Commercial non-mortgage 7,104 0.12 5,613 0.10 4,061 0.07 794 0.01 16 --
Consumer 4,746 0.08 6,873 0.13 6,466 0.12 4,074 0.08 3,140 0.07
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Total $44,214 0.73% $51,582 0.93% $50,692 0.91% $38,832 0.73% $47,514 1.07%
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Troubled Debt Restructuring

At December 31, 1999 and 1998, the Bank had total troubled debt
restructurings of approximately $5.9 million and $11.0 million, respectively.
Interest income booked for 1999 under the restructured terms totaled $421,000 as
compared to $746,000 that would have been booked had the restructured loans been
under their original terms during 1999. Interest income booked for 1998 under
the restructured terms totaled $612,000 as compared to $997,000 that would have
been booked had the restructured loans been under their original terms during
1998.

Potential Problem Loans

At December 31, 1999, the Bank had a commercial loan relationship with an
outstanding balance of approximately $9.7 million that was classified as a watch
loan and identified as a potential problem loan. The loan relationship is
comprised of approximately $6.3 million of lines of credit and a commercial
mortgage of approximately $3.4 million. The loan is on an accrual basis and
current at December 31, 1999. This loan continues to be closely monitored by
credit administration.

Classification of Assets

Under the OTS' problem assets classification system, a savings
institution's problem assets are classified as "substandard," "doubtful" or
"loss" (collectively "classified assets"), depending on the presence of certain
characteristics. An asset is considered "substandard" if inadequately protected
by the current net worth and paying capacity of the obligor or of the collateral
pledged, if any. "Substandard" assets include those characterized by the
"distinct possibility" that the institution will sustain "some loss" if the
deficiencies are not corrected. Assets classified as "doubtful" have all of the
weaknesses inherent in those classified "substandard" with the added
characteristic that the weaknesses that are present make "collection or
liquidation in full" on the basis of currently existing facts, conditions and
values, "highly questionable and improbable." Assets classified "loss" are those
considered "uncollectible" and of such little value that to continue to report
them as assets without the establishment of a specific loss reserve is not
warranted. In addition, assets that do not currently warrant classification in
one of the foregoing categories but which are deserving of management's close
attention are designated as "special mention" assets.

At December 31, 1999, the Bank's classified loans totaled $40.0 million,
consisting of $38.3 million in loans classified as "substandard," $1.7 million
in loans classified as "doubtful" and none classified as "loss". At December 31,
1998, the Bank's classified loans totaled $48.3 million, consisting of $45.7
million in loans classified as "substandard," $2.6 million in loans classified
as "doubtful" and none classified as "loss." In addition, at December 31, 1999
and 1998, the Bank had $30.3 million and $29.9 million, respectively, of special
mention loans.

Allowance for Loan Losses

The Bank's allowance for loan losses at December 31, 1999 totaled $72.7
million. See MD&A "Asset Quality" and "Comparison of 1999 and 1998 Years"
contained in the 1999 Annual Report to Shareholders incorporated herein by
reference. In assessing the specific risks inherent in the portfolio, management
takes into consideration the risk of loss on the Bank's nonaccrual loans,
classified loans and watch list loans including an analysis of the collateral
for the loans. Other factors considered are the Bank's loss experience, loan
concentrations, local economic conditions and other factors.

8

The following table presents an allocation of the Bank's allowance for loan
losses at the dates indicated and the related percentage of loans in each
category to the Bank's loan receivable portfolio.

December 31,
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1999 1998 1997 1996 1995
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(Dollars in thousands) Amount % Amount % Amount % Amount % Amount %
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Balance at end of
period applicable to:

Residential mortgage loans $25,197 63.97% $23,237 69.64% $30,635 72.09% $22,397 72.63% $34,658 75.91%
Commercial mortgage loans 20,629 12.16 22,309 11.06 17,702 10.52 17,948 10.52 17,627 10.01
Commercial non-mortgage loans 13,049 15.01 13,430 9.85 12,096 6.61 12,923 6.16 5,779 3.75
Consumer loans 13,783 8.86 6,225 9.45 11,166 10.78 9,779 10.69 11,027 10.33
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Total $72,658 100.00% $65,201 100.00% $71,599 100.00% $63,047 100.00% $69,091 100.00%
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INVESTMENT ACTIVITIES

Webster, as a Delaware corporation, has the authority to invest in any type
of investment permitted under Delaware law. As a unitary holding company,
however, its investment activities are subject to certain regulatory
restrictions.

The Bank has the authority to acquire, hold and transact various types of
investment securities that are in accordance with applicable federal
regulations, state statutes and within the guidelines of the Bank's internal
investment policy. The types of investments that the Bank may invest in include
in general: interest-bearing deposits of federal insured banks, federal funds,
U.S. government treasuries and agencies including agency mortgage-backed
securities ("MBS") and collateralized mortgage obligations ("CMOs"), private
issue MBS and CMOs, municipal securities, corporate debt, commercial paper,
banker's acceptances, structured notes, trust preferred securities (investment
grade only), mutual funds and equity securities subject to restrictions
applicable to federally chartered institutions. Investment types acquired by
Webster are also subject to the guidelines of internal investment policy. The
Corporation's asset/liability management objectives also influence investment
activities at both the holding company and bank levels. The Bank is required to
maintain liquid assets at regulatory minimum levels which vary from time to
time. The Bank uses various investments as permitted by regulation for meeting
its liquidity requirement. See "Regulation" section within this report.

Webster, directly or through its bank subsidiary, maintains an investment
portfolio that is primarily structured to provide a source of liquidity for
operating demands, generate net interest income as well as provide a means to
balance interest-rate sensitivity. In accordance with generally accepted
accounting principles, the investment portfolio is classified into three major
categories consisting of: held to maturity, available for sale and trading
securities.

The Bank uses interest-rate financial instruments within internal policy
guidelines to hedge and manage interest-rate risk as part of its asset/liability
strategy. See Note 10 to the Consolidated Financial Statements in the 1999
Annual Report to Shareholders incorporated herein by reference.

At December 31, 1999, the combined investment portfolios of Webster and the
Bank totaled $3.1 billion, with $2.9 billion and $119 million held by the Bank
and Webster, respectively. Webster's portfolio was all classified as available
for sale and consisted primarily of equity, mutual funds and corporate trust
preferred securities. The Bank's portfolio consisted primarily of
mortgage-backed securities and other debt securities.

The securities portfolio of Webster and the Bank are managed by the Bank's
Treasury Group in accordance with established corporate investment policy. See
Note 3 to the Consolidated Financial Statements in the 1999 Annual Report to
Shareholders incorporated herein by reference.

9

At December 31, 1999, the Bank held securities with the following single
issuers whose aggregate book value exceed ten percent of total stockholders'
equity at current year end.

At December 31, 1999
- ------------------------------------------------------------------------------------------------
Aggregate Aggregate 10 %
Issuer Book Value Market Value Threshold
- ------------------------------------------------------------------------------------------------

FHLMC $504,058 $487,851 $63,567
FNMA 827,271 804,152 63,567
GNMA 401,671 402,510 63,567
Nomura Asset
Security Corp 100,444 90,459 63,567

10

A summary of securities follows:

December 31,
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1999 1998
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Amortized Unrealized Estimated Amortized Unrealized Estimated
(In thousands) Cost Gains Losses Fair Value Cost Gains Losses Fair Value
- -----------------------------------------------------------------------------------------------------------------------------------

TRADING SECURITIES:
Mortgage-backed securities (a) $ 50,854(b) $ -- $ -- $ 50,854 $ 91,114(b) $ -- $ -- $ 91,114
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AVAILABLE FOR SALE PORTFOLIO:
U.S. Treasury notes $ 17,070 $ 18 $ (233) $ 16,855 $ 25,617 $ 400 $ -- $ 26,017
U.S. Government Agency 92,733 -- (4,338) 88,395 106,427 1,018 (109) 107,336
Municipal bonds and notes 27,591 3 (1,463) 26,131 27,874 776 (29) 28,621
Corporate bonds and notes 75,068 -- (9,895) 65,173 92,062 601 (2,178) 90,485
Equity securities (c) 201,352 7,684 (11,060) 197,976 244,670 8,107 (4,763) 248,014
Mortgage-backed securities (a) 2,379,491 6,330 (88,848) 2,296,973 2,616,695 40,469 (5,299) 2,651,865
Purchased interest-rate
contracts (Note 10) 10,874 -- (1,792) 9,082 15,985 -- (3,437) 12,548
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$2,804,179 $14,035 $(117,629) $2,700,585 $3,129,330 $51,371 $(15,815) $3,164,886
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HELD TO MATURITY PORTFOLIO:
U.S. Treasury Notes $ 10,396 $ -- $ (112) $ 10,284 $ 2,955 $ 18 $ -- $ 2,973
U.S. Government Agency 1,520 -- (6) 1,514 7,399 24 -- 7,423
Municipal bonds and notes 24,861 39 (783) 24,117 15,339 477 -- 15,816
Corporate bonds and notes 135,476 405 (12,322) 123,559 151,801 2,631 (1,171) 153,261
Mortgage-backed securities (a) 143,209 544 (2,945) 140,808 229,335 2,432 (1,044) 230,723
Preferred Stock -- -- -- -- -- -- -- --
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$ 315,462 $ 988 $ (16,168) $ 300,282 $ 406,829 $ 5,582 $ (2,215) $ 410,196
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Total $3,170,495 $15,023 $(133,797) $3,051,721 $3,627,273 $56,953 $(18,030) $3,666,196
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December 31,
- ------------------------------------------------------------------------------
1997
- -----------------------------------------------------------------------------
Amortized Unrealized Estimated
(In thousands) Cost Gains Losses Fair Value
- -----------------------------------------------------------------------------

TRADING SECURITIES:
Mortgage-backed securities (a) $ 84,749 $ -- $ -- $ 84,749
- -----------------------------------------------------------------------------
AVAILABLE FOR SALE PORTFOLIO:
U.S. Treasury notes $ 46,760 $ 266 $ (30) $ 46,996
U.S. Government Agency 120,310 809 (79) 121,040
Municipal bonds and notes 21,745 76 (136) 21,685
Corporate bonds and notes 21,445 122 (262) 21,305
Equity securities (c) 225,120 16,289 (1,285) 240,124
Mortgage-backed securities (a) 2,771,458 36,698 (7,754) 2,800,402
Purchased interest-rate
contracts (Note 10) 15,079 -- (7,262) 7,817
- -----------------------------------------------------------------------------
$3,221,917 $54,260 $(16,808) $3,259,369
- -----------------------------------------------------------------------------
HELD TO MATURITY PORTFOLIO:
U.S. Treasury Notes $ 3,067 $ 31 $ (2) $ 3,096
U.S. Government Agency 40,452 57 (96) 40,413
Municipal bonds and notes 15,341 196 (1) 15,536
Corporate bonds and notes 1,414 7 -- 1,421
Mortgage-backed securities (a) 365,278 2,533 (2,787) 365,024
Preferred Stock 1,000 4 -- 1,004
- -----------------------------------------------------------------------------
$ 426,552 $ 2,828 $ (2,886) $ 426,494
- -----------------------------------------------------------------------------
Total $3,733,218 $57,088 $(19,694) $3,770,612
- -----------------------------------------------------------------------------

(a) Mortgage-backed securities, which are guaranteed by Fannie Mae, Federal
Home Loan Mortgage Corporation and Government National Mortgage
Association, represent participating interests in direct pass through pools
of mortgage loans originated and serviced by the issuers of the securities.

(b) Stated at fair value, including the effect of short futures positions.

(c) The fair value of equity securities at December 31, 1999 consisted of
Federal Home Loan Bank ("FHLB") stock of $103.9 million, mutual funds of
$13.6 million, preferred stock of $24.3 million and common stock of $56.2
million. As of December 31, 1998, the fair value of equity securities
consisted of FHLB stock of $102.5 million, mutual funds of $35.1 million,
preferred stock of $45.7 million and common stock of $64.7 million.

11

TRUST ACTIVITIES

The Bank, through its wholly-owned subsidiary, Webster Trust Company, N.A.,
manages the assets of and provides a comprehensive range of trust, custody,
estate and administrative services to individuals, small to medium size
companies and not-for-profit organizations (endowments and foundations). At
December 31, 1999, there were approximately $810.0 million of assets under
management.

Additional information related to the trust subsidiary is included in the MD&A
and Notes to the Consolidated Financial Statements contained in the 1999 Annual
Report to Shareholders incorporated herein by reference.

INSURANCE ACTIVITIES

Webster, through its wholly-owned subsidiary, Damman, offers a full range
of insurance plans to both individuals and businesses. The insurance subsidiary
is a regional insurance brokerage with three operating divisions: individual and
family insurance, financial services, and business and professional insurance.

As of February 1, 2000, Webster acquired through Damman, The Levine
Companies, a privately owned Connecticut-based insurance company. The
acquisition was accounted for as a purchase transaction. Additional information
on this acquisition can be referenced in the MD&A section contained in the 1999
Annual Report to Shareholders incorporated herein by reference.

Additional information related to the insurance subsidiary is included in
the MD&A and Notes to Consolidated Financial Statements contained in the 1999
Annual Report to Shareholders incorporated herein by reference.

SOURCES OF FUNDS

Deposits, loan repayments, securities payments and maturities, as well as
earnings, are the primary sources of the Bank's funds for use in its lending and
investment activities. While scheduled loan repayments and securities payments
are a relatively stable source of funds, deposit flows and loan prepayments are
influenced by prevailing interest rates and local economic conditions. The Bank
also derives funds from Federal Home Loan Bank ("FHLB") advances and other
borrowings, as necessary, when the cost of these alternative sources of funds
are favorable.

Webster's main sources of liquidity are dividends from the Bank, interest
and dividends on securities and net proceeds from capital offerings and
borrowings, while the main outflows are the payments of dividends to common
stockholders and interest expense on the capital securities, senior notes and
other borrowings.

Webster attempts to control the flow of funds in its deposit accounts
according to its need for funds and the cost of alternative sources of funds.
Webster controls the flow of funds primarily by the pricing of deposits, which
is influenced to a large extent by competitive factors in its market area and
overall asset/liability management strategies.

Deposit Activities

Webster has developed a variety of innovative deposit programs that are
designed to meet depositors needs and attract both short-term and long-term
deposits from the general public. Webster's checking account programs offer a
full line of accounts with varying features that include noninterest-bearing and
interest-bearing account types. Webster's savings account programs include
statement and passbook accounts, money market savings accounts, club accounts
and certificate of deposit accounts that offer short and long-term maturity
options. Webster offers IRA savings and certificate of deposit accounts that
earn interest on a tax-deferred basis. Webster also offers special rollover IRA
accounts for individuals who have received lump-sum distributions. Webster's
checking and savings deposit accounts have several features that include: ATM
Card and Check Card use, direct deposit, combined statements, 24-hour automated
telephone banking services, bank by mail services and overdraft protection.
Deposit customers can access their accounts in a variety of ways including ATMs,
PC banking, telephone banking or by visiting a nearby branch. Webster had $50.0
million of brokered certificate of deposits at December 31, 1999.

12

Webster receives retail and commercial deposits through its 118
full-service banking offices in Connecticut and 2 full-service offices in New
Hampshire. Webster relies primarily on competitive pricing policies and
effective advertising to attract and retain deposits while emphasizing the
objectives of quality customer service and customer convenience. The WebsterOne
Account is a banking relationship that affords customers the opportunity to
avoid fees, receive free checks, earn premium rates on savings and simplify
their bookkeeping with one combined account statement that links account
balances. Webster's Check Card can be used at over fifteen million Visa
merchants worldwide to pay for purchases with money in a linked checking
account. The Check Card also serves as an ATM Card for receiving cash, for
processing deposits and transfers, and obtaining account balances 24 hours per
day. Customer services also include ATM facilities that use state-of-the-art
technology with membership in NYCE and PLUS networks and provide 24-hour access
to linked accounts. The Bank's Internet Banking service allows customers the
ability to transfer money between accounts, review statements, check balances
and pay bills through personal computer use. The Bank's telephone banking
service provides automated customer access to account information 24 hours per
day, seven days per week, and also to service representatives at certain
established hours. Customers can transfer account balances, process stop
payments and address changes, place check reorders, open deposit accounts,
inquire about account transactions and request general information about
Webster's products and services. Webster's services provide for automatic loan
payment features from its accounts as well as for direct deposit of Social
Security, payroll, and other retirement benefits. Additional information
concerning the deposits of Webster is included in Note 7 to the Consolidated
Financial Statements contained in the 1999 Annual Report to Shareholders
incorporated herein by reference.

The following table sets forth the deposit accounts of the Bank in dollar
amounts and as percentages of total deposits at the dates indicated.

At December 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997
-------------------------------------------------------------------------------------------------------
Weighted % of Weighted % of Weighted % of
average total average total average total
(Dollars in thousands) rate Amount deposits rate Amount deposits rate Amount deposits
- ------------------------------------------------------------------------------------------------------------------------------------

BALANCE BY ACCOUNT TYPE:
Demand deposits --% $ 675,449 10.9% --% $ 626,996 9.9% --% $ 568,843 8.9%
NOW accounts 1.20 700,243 11.3 1.24 694,074 11.0 1.22 619,995 9.7
Regular savings and money
market deposit accounts 2.56 1,719,562 27.8 2.52 1,582,424 25.1 2.46 1,555,003 24.3
Time deposits 4.84 3,095,837 50.0 5.07 3,409,480 54.0 5.34 3,667,664 57.1
- ------------------------------------------------------------------------------------------------------------------------------------
Total 3.26% $6,191,091 100.0% 3.53% $6,312,974 100.0% 3.77% $6,411,505 100.0%
- ------------------------------------------------------------------------------------------------------------------------------------

Time deposits of $100,000 or more amounted to $493.6 million and represented
approximately 8.0% of total deposits at December 31, 1999.

The following table represents the amount of time deposits of $100,000 or more
maturing during the periods indicated:

- ----------------------------------------------------------------------------------------
(In thousands) Totals
- ----------------------------------------------------------------------------------------

Maturing:
January 1, 2000 to March 31, 2000 $184,419
April 1, 2000 to June 30, 2000 104,193
July 1, 2000 to December 31, 2000 73,706
January 1, 2001 and beyond 131,282
- ----------------------------------------------------------------------------------------
$493,600
- ----------------------------------------------------------------------------------------

13

Borrowings

The FHLB system functions in a reserve credit capacity for savings
institutions and certain other home financing institutions. Members of the FHLB
system are required to own capital stock in the FHLB. Members are authorized to
apply for advances on the security of such stock and certain home mortgages and
other assets (principally securities which are obligations of, or guaranteed by,
the United States Government) provided certain creditworthiness standards have
been met. Under its current credit policies, the FHLB limits advances based on a
member's assets, total borrowings and net worth.

The Bank uses long-term and short-term FHLB advances as a primary source of
funding to meet liquidity and planning needs when the cost of these funds are
reasonable as compared to alternate funding sources. At December 31, 1999, FHLB
advances totaled $1.7 billion and represented 61% of total outstanding borrowed
funds.

Additional sources of funding through borrowing transactions were available
to the Bank through securities sold under agreement to repurchase, purchased
federal funds and lines of credit with correspondent banks. Webster, in general,
utilizes various lines of credit with correspondent banks when the need for
borrowed funds arises. Borrowings through securities sold under agreement to
repurchase transactions are originated through the Bank's Funding and Treasury
Sales Desk operations. Outstanding securities sold under agreement to repurchase
borrowings totaled $943.8 million at December 31, 1999 and represented
approximately 34% of total outstanding borrowed funds.

Additional information concerning FHLB advances, securities sold under
agreement to repurchase and other borrowings is included in Notes 8 and 9 to the
Consolidated Financial Statements contained in the 1999 Annual Report to
Shareholders incorporated herein by reference.

BANK SUBSIDIARIES

The Bank's direct investment in its service corporation subsidiary, Webster
Investment Services, Inc., totaled $1.5 million at December 31, 1999. The
activities of this broker-dealer subsidiary consisted primarily of the selling
of mutual funds and annuities. Webster Investment Services plans to introduce
new products and services, including asset management products and various
financial planning tools.

The Bank's direct investment in its trust subsidiary corporation, Webster
Trust Company, N.A., totaled $8.6 million at December 31, 1999. The trust had
approximately $810.0 million in trust assets under management at December 31,
1999.

The Bank's direct investment in its operating subsidiary corporation, FCB
Properties, Inc., totaled $2.0 million at December 31, 1999. The primary
function of this operating subsidiary is to dispose of foreclosed properties.

The Bank's direct investment in its real estate investment trust ("REIT")
operating subsidiary corporation, Webster Preferred Capital Corporation, totaled
$916.7 million at December 31, 1999. The primary function of the REIT is to
provide a cost-effective means of raising funds, including capital, on a
consolidated basis for the Bank. The REIT's strategy is to acquire, hold and
manage real estate mortgage assets.

The Bank's investment in its internet lending subsidiary, Nowlending LLC,
totaled $2.3 million at December 31, 1999. The primary function of this
subsidiary is to provide an efficient national network for the origination of
residential mortgages through the internet.

The Bank's direct investment in its passive investment subsidiary, Webster
Mortgage Investment Corporation totaled $2.1 billion at December 31, 1999. The
primary function of this subsidiary is to provide servicing on passive
investments, which include loans secured by real estate, that yields state tax
benefits.

EMPLOYEES

At December 31, 1999, Webster had 2,253 employees (including 340
part-time employees), none of whom were represented by a collective bargaining
group. Webster maintains a comprehensive employee benefit program providing,
among other benefits,

14

group medical and dental insurance, life insurance, disability insurance, a
pension plan, an employee 401(k) investment plan and an employee stock ownership
plan. Management considers Webster's relations with its employees to be good.

MARKET AREA AND COMPETITION

The Bank is headquartered in Waterbury, Connecticut (New Haven County) and
conducts business from its home office in downtown Waterbury and 120 branch
offices that are located in the states of Connecticut and New Hampshire. The
Connecticut branches are in Waterbury, Ansonia, Bethany, Branford, Cheshire,
Derby, East Haven, Hamden, Madison, Meriden, Milford, Naugatuck, New Haven,
North Haven, Orange, Oxford, Prospect, Seymour, Southbury Wallingford and West
Haven (New Haven County); New Milford, Torrington, Watertown and Winsted
(Litchfield County); Danbury, Fairfield, Ridgefield, Shelton, Stratford,
Trumbull, Westport and Wilton (Fairfield County); Avon, Berlin, Bloomfield,
Bristol, Canton, East Hartford, East Windsor, Enfield, Farmington, Forestville,
Glastonbury, Hartford, Kensington, Manchester, New Britain, Newington,
Plainville, Rocky Hill, Simsbury, Southington, South Windsor, Suffield,
Terryville, West Hartford, Wethersfield, Windsor and Windsor Locks (Hartford
County); Cromwell, Essex, Middletown and Old Saybrook (Middlesex County); Old
Lyme (New London County) and Ellington, Somers and Vernon (Tolland County). The
New Hampshire branches are located in Portsmouth and Hampton of Rockingham
County. Waterbury is approximately 30 miles southwest of Hartford and is located
on Route 8 midway between Torrington and the New Haven and Bridgeport
metropolitan areas. Most of the Bank's depositors live, and most of the
properties securing its mortgage loans are located, in the same area or the
adjoining counties. The Bank's market area has a diversified economy with the
workforce employed primarily in manufacturing, financial services, healthcare,
industrial and technology companies.

The Bank faces substantial competition for deposits and loans throughout
its market areas. The primary factors stressed by the Bank in competing for
deposits are interest rates, personalized services, the quality and range of
financial services, convenience of office locations, automated services and
office hours. Competition for deposits comes primarily from other savings
institutions, commercial banks, credit unions, mutual funds and other investment
alternatives. The primary factors in competing for loans are interest rates,
loan origination fees, the quality and range of lending services and
personalized service. Competition for origination of first mortgage loans comes
primarily from other savings institutions, mortgage banking firms, mortgage
brokers, commercial banks and insurance companies. The Bank faces competition
for deposits and loans throughout its market area not only from local
institutions but also from out-of-state financial institutions which have opened
loan production offices or which solicit deposits in its market area.

Webster has trust offices located in the towns of Kensington and Westport.
The trust company manages the assets of and provides a comprehensive range of
trust, custody, estate and administrative services to individuals, small to
medium size companies and non-profit organizations.

Webster offers a full array of insurance services to its consumer and
commercial customer base through its subsidiary Damman Associates, Inc. Damman
is a full-service Westport based insurance agency, providing property-casualty,
life and group coverage to commercial and individual customers. Damman has
offices in Westport and Wallingford.

REGULATION

Webster, as a savings and loan holding company, and Webster Bank, as a
federally chartered savings bank, are subject to extensive regulation,
supervision and examination by the OTS as their primary federal regulator.
Webster Bank is also subject to regulation, supervision and examination by the
FDIC and as to certain matters by the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"). See MD&A and Notes to the Consolidated
Financial Statements, incorporated herein by reference in the 1999 Annual Report
to Shareholders, as to the impact of certain laws, rules and regulations on the
operations of the Corporation and the Bank. Set forth below is a description of
certain regulatory developments.

The Bank is subject to substantial regulatory restrictions on its ability
to pay dividends to Webster. Under OTS capital distribution regulations that
became effective in early 1999, as long as the Bank meets the OTS capital
requirements before and after the payment of dividends, the Bank may pay
dividends to Webster, without prior OTS approval, equal to the net income to
date over the calendar year, plus retained net income over the preceding two
years. In addition, the OTS has discretion to prohibit any otherwise permitted
capital distribution on general safety and soundness grounds, and must be given
30 days' advance notice of all capital distributions, during which time it may
object to any proposed distribution.

15

On November 12, 1999, President Clinton signed the Gramm-Leach-Blilely Act
that reforms the U.S. banking laws to allow full affiliation between commercial
banks, insurance companies and securities firms. The legislation primarily
addresses permissible activities of bank holding companies and national banks by
expanding the permissible nonbanking activities of these entities. Since Webster
is a unitary saving and loan holding company, it is not currently subject to
restrictions on its nonbanking activities, so the expanded activities of bank
holding companies should not put Webster at a competitive disadvantage. Prior to
the passage of the legislation, any type of company, including commercial
companies, could acquire Webster. The ability of companies that engage in
nonfinancial activities to acquire federal savings banks and their holding
companies has been terminated by the legislation. Now, a company may acquire
Webster or the Bank and be treated as a savings and loan holding company only if
it restricts its activities to those financial activities permissible for bank
holding companies.

Provisions of the Gramm-Leach-Bliley Act permit national banks to establish
financial subsidiaries that may engage in a broad range of financial activities,
including securities underwriting activities. State-chartered commercial banks
may also engage in these expanded activities if permitted by relevant state law.
As a result of the legislation, the Bank's national and state commercial bank
competitors may be able to engage in additional financial activities not
permissible for the Bank and its subsidiaries.

The Gramm-Leach-Bliley Act also imposes certain obligations on financial
institutions, including federal savings banks such as the Bank, to develop
privacy policies, restrict the sharing of nonpublic customer data with
nonaffiliated parties at the customer's request, and establish procedures and
practices to protect and secure customer data. These privacy provisions will be
implemented by regulations that will take effect on or after November 12, 2000.

TAXATION

Federal

Webster, on behalf of itself and its subsidiaries, files a calendar tax
year consolidated federal income tax return, except for the Bank's REIT
Subsidiary and Nowlending, which file stand alone returns. Webster and its
subsidiaries report their income and expenses using the accrual method of
accounting. Tax law changes were enacted in August 1996 to eliminate the thrift
bad debt method of calculating bad debt deductions for tax years after 1995 and
to impose a requirement to recapture into taxable income (over a six-year
period) all bad debt reserves accumulated after 1987. Since Webster previously
recorded a deferred tax liability with respect to these post-1987 reserves, its
total tax expense for financial reporting purposes will not be affected by the
recapture requirement. The tax law changes also provide that taxes associated
with the recapture of pre-1988 bad debt reserves would become payable under more
limited circumstances than under prior law. Under the tax laws, as amended,
events that would result in recapture of the pre-1988 bad debt reserves include
stock and cash distributions to the holding company from the Bank in excess of
specified amounts. Webster does not expect such reserves to be recaptured into
taxable income. At December 31, 1999, Webster had pre-1988 reserves of
approximately $41.0 million.

Depending on the composition of its items of income and expense, a savings
institution may be subject to the alternative minimum tax. For tax years
beginning after 1986, a savings institution must pay an alternative minimum tax
equal to the amount (if any) by which 20% of alternative minimum taxable income
("AMTI"), as reduced by an exemption varying with AMTI, exceeds the regular tax
due. AMTI equals regular taxable income increased or decreased by certain
adjustments and increased by certain tax preferences, including depreciation
deductions in excess of those allowable for alternative minimum tax purposes,
tax-exempt interest on most private activity bonds issued after August 7, 1986
(reduced by any related interest expense disallowed for regular tax purposes),
the amount of the bad debt reserve deduction claimed in excess of the deduction
based on the experience method and, for tax years after 1989, 75% of the excess
of adjusted current earnings over AMTI. AMTI may be reduced only up to 90% by
net operating loss carryovers, but the payment of alternative minimum tax will
give rise to a minimum tax credit which will be available with an indefinite
carry forward period, to reduce federal income taxes of the institution in
future years (but not below the level of alternative minimum tax arising in each
of the carry forward years).

Webster's federal income tax returns have been examined by the Internal
Revenue Service for tax years through 1993.

16

State

The State of Connecticut enacted tax law changes in May 1998, allowing for
the formation of a Passive Investment Company ("PIC") by financial institutions.
This legislation exempts Passive Investment Companies from state income taxation
in Connecticut, and exempts from inclusion in Connecticut taxable income the
dividends paid from a passive investment company to a related financial
institution. Webster Bank qualifies as a financial institution under the
statute, and has organized a PIC that began operations in the first quarter of
1999. The legislation is effective for tax year beginning on or after January 1,
1999. Webster's formation of a PIC has reduced its Connecticut tax expense in
1999 and, as a result of the PIC's formation, a deferred tax charge was taken in
the fourth quarter of 1998. State income taxation is in accordance with the
corporate income tax laws of the State of Connecticut and other states on an
apportioned basis. For the State of Connecticut, the Corporation and its
subsidiaries, exclusive of the REIT subsidiary and PIC subsidiary, are required
to pay taxes under the larger of two methods but no less than the minimum tax of
$250 per entity. Method one is 8.50% (scheduled to decrease to 7.5% by 2000) of
the year's taxable income (which, with certain exceptions, is equal to taxable
income for federal purposes) or method two (additional tax on capital), an
amount equal to 3 and 1/10 mills per dollar on its average capital. The Bank is
not required to compute tax under method two, method one only.

Webster expects to pay no state taxes to Connecticut for the foreseeable
future, due to the operation of its PIC subsidiary. Webster also pays state tax
in the State of Massachusetts and New Hampshire due to having business locations
in New Hampshire and business activity in Massachusetts. These state taxes are
minimal.

ITEM 2. PROPERTIES

At December 31, 1999, Webster had 33 banking offices in New Haven County,
57 banking offices in Hartford County, 11 banking offices in Fairfield County, 8
banking offices in Litchfield County, 4 banking offices in Middlesex County, 3
banking offices in Tolland County, 2 banking offices in New London County, and 2
banking offices in the state of New Hampshire. Of these, 66 offices are owned
and 54 offices are leased. Lease expiration dates range from 1 to 33 years with
renewal options of 3 to 35 years. Additionally, the Bank maintains two trust
offices: one in Fairfield County and one in Hartford County.

The total net book value of properties and furniture and fixtures owned
and used for banking offices at December 31, 1999 was $103.4 million, which
includes the aggregate net book value of leasehold improvements on properties
used for offices of $5.8 million at that date.

ITEM 3. LEGAL PROCEEDINGS

At December 31, 1999, there were no material pending legal proceedings,
other than ordinary routine litigation incidental to the business, to which
Webster or any of its subsidiaries was a party to or of which any of their
property was the subject.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

(a) A special meeting of Webster's shareholders was held on November 9, 1999.

(b) Not applicable.

(c) The following matters were voted on and approved by Webster's shareholders
at the special meeting held on November 9, 1999: (i) to approve and adopt
the agreement and plan of merger, dated as of June 29, 1999, between
Webster Financial Corporation and New England Community Bancorp., Inc., the
merger of NECB into Webster and the other transactions contemplated by the
merger agreement, as described in the joint proxy statement/prospectus
(Proposal 1); and (ii) to amend Webster's Second Amended and Restated
Certificate of Incorporation to increase the number of authorized shares of
common stock from 50,000,000 to 200,000,000 (Proposal 2). As to Proposal 1,
shareholders cast 28,905,285 votes for, 423,161 votes against, 221,714
abstentions and 88,440 broker non-votes. As to Proposal 2, shareholders
cast 20,657,843 votes for, 8,704,329 votes against, 276,412 abstentions and
16 broker non-votes. The record date for the special meeting was September
24, 1999.

(d) Not applicable.

17

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The common stock of Webster is traded over-the-counter on the Nasdaq
National Market System under the symbol "WBST."

The following table shows dividends declared and the market price per share
by quarter for 1999 and 1998. Webster increased its quarterly dividend to $.12
per share in 1999.

- ------------------------------------------------------------------------------------------------------------
COMMON STOCK (PER SHARE)

Cash
Dividends Market Price End of
1999 Declared Low High Period
- ------------------------------------------------------------------------------------------------------------

Fourth $.12 $21 7/8 $28 3/4 $23 9/16
Third .12 24 3/4 28 13/16 25 1/2
Second .12 26 3/16 32 27 1/8
First .11 27 7/16 31 1/8 28 7/8

Cash
Dividends Market Price End of
1998 Declared Low High Period
- ------------------------------------------------------------------------------------------------------------

Fourth $.11 $18 7/8 $28 1/8 $27 7/16
Third .11 20 5/8 34 5/8 24 3/8
Second .11 31 7/16 36 1/4 33 1/4
First .11 28 9/16 35 34 3/4

Payment of dividends from the Bank to Webster is subject to certain
regulatory and other restrictions. Payment of dividends by Webster on its stock
is subject to various restrictions, none of which is expected to limit any
dividend policy which the Board of Directors may in the future decide to adopt.
Under Delaware law, Webster may pay dividends out of surplus or, in the event
there is no surplus, out of net profits for the fiscal year in which the
dividend is declared and/or the preceding fiscal year. Dividends may not be paid
out of net profits, however, if the capital of Webster has been diminished to an
amount less than the aggregate amount of capital represented by all classes of
issued and outstanding preferred stock.

OTHER EVENTS

The annual meeting of shareholders of Webster will be held on April 27,
2000.

See page 72 of the 1999 Annual Report to Shareholders incorporated herein
by reference for additional information concerning Webster's annual meeting and
common stock.

18

ITEM 6. SELECTED FINANCIAL DATA

- ------------------------------------------------------------------------------------------------------------------------------
December 31,
- -------------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share data) 1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------

STATEMENT OF CONDITION DATA
Total assets $9,931,744 $9,836,029 $9,902,775 $8,061,569 $7,063,945
Loans receivable, net 6,022,236 5,507,118 5,524,918 5,265,733 4,353,976
Securities 3,066,901 3,662,829 3,770,670 2,263,374 2,141,773
Intangible assets 138,829 83,227 83,731 86,400 27,122
Deposits 6,191,091 6,312,974 6,411,505 6,441,412 5,588,053
Shareholders' equity 635,667 626,454 585,603 535,087 509,808

OPERATING DATA
Net interest income $ 303,513 $ 282,611 $ 285,758 $ 252,643 $ 210,866
Provision for loan losses 9,000 8,103 26,449 15,741 11,989
Noninterest income 92,630 82,638 47,723 56,833 36,962
Noninterest expenses:
Acquisition-related expenses 9,500 20,993 31,989 500 4,271
Other noninterest expenses 234,961 208,440 197,544 196,686 161,271
- -------------------------------------------------------------------------------------------------------------------------------
Total noninterest expenses 244,461 229,433 229,533 197,186 165,542
- -------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 142,682 127,713 77,499 96,549 70,297
Income taxes 47,332 49,694 29,887 35,713 24,122
- -------------------------------------------------------------------------------------------------------------------------------
Net income 95,350 78,019 47,612 60,836 46,175
Preferred stock dividends -- -- -- 1,149 1,296
- -------------------------------------------------------------------------------------------------------------------------------
Income available to common shareholders $ 95,350 $ 78,019 $ 47,612 $ 59,687 $ 44,879
===============================================================================================================================
SIGNIFICANT STATISTICAL DATA
Interest-rate spread 3.18% 2.83% 3.18% 3.22% 3.04%
Net interest margin 3.32 2.97 3.35 3.40 3.26
Return on average shareholders' equity 15.33 12.82 8.61 11.44 10.30
Return on average assets .98 .77 .53 .75 .65
Net income per common share:
Basic $ 2.14 $ 1.72 $ 1.06 $ 1.38 $ 1.15
Diluted 2.10 1.69 1.04 1.32 1.10
Dividends declared per common share 0.47 0.44 0.40 0.33 0.31
Dividend payout ratio 22.38% 26.04% 38.46% 25.00% 28.18%
Noninterest expenses to average assets 2.51 2.28 2.57 2.52 2.46
Noninterest expenses to average assets,
adjusted (a) 2.07% 1.78% 2.04% 2.40% 2.22%
Diluted weighted average shares 45,393 46,118 45,966 46,434 42,069
Book value per common share $ 14.09 $ 14.02 $ 13.15 $ 12.08 $ 11.61
Tangible book value per common share 11.02 12.16 11.27 10.10 10.96
Shareholders' equity to total assets 6.40% 6.37% 5.91% 6.64% 7.22%

(a) Noninterest expenses excluding foreclosed property, intangible
amortization, acquisition-related, non-recurring tax, capital securities
and preferred dividend expenses divided by average assets.

On December 1, 1999, under the pooling of interests method of accounting,
Webster acquired New England Community Bancorp., Inc. All financial data is
presented as if the combination occurred at the beginning of the earliest period
presented.

All per share data and the number of outstanding shares of common stock have
been adjusted retroactively to give effect to stock dividends and a stock split
effected in the form of a stock dividend.

19

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

"Management's Discussion and Analysis of Financial Condition & Results of
Operations" on pages 23 through 33 of the Corporation's 1999 Annual Report to
Shareholders is incorporated herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The required information is incorporated herein by reference to pages 27
through 28 of the Corporation's 1999 Annual Report to Shareholders.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The required information is incorporated herein by reference to pages 34
through 69 of the Corporation's 1999 Annual Report to Shareholders.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information regarding the directors and executive officers of the
Corporation is omitted from this report as the Corporation has filed its
definitive proxy statement within 120 days after the end of the fiscal year
covered by this Report, and the information included therein is incorporated
herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

Information regarding compensation of executive officers and directors is
omitted from this Report as the Corporation has filed a definitive proxy
statement within 120 days after the end of the fiscal year covered by this
Report, and the information included therein (excluding the Personnel Resources
Committee Report on Executive Compensation and the Comparative Company
Performance information) is incorporated herein by reference.

20

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information required by this Item is omitted from this Report as the
Corporation has filed a definitive proxy statement within 120 days after the end
of the fiscal year covered by this Report, and the information included therein
is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information regarding certain relationships and related transactions is
omitted from this Report as the Corporation has filed a definitive proxy
statement within 120 days after the end of the fiscal year covered by this
Report, and the information included therein is incorporated herein by
reference.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1) The following Consolidated Financial Statements of the Registrant
and its subsidiaries included in its Annual Report to Shareholders for the year
ended December 31, 1999, are incorporated herein by reference in Item 8. The
remaining information appearing in the Annual Report to Shareholders is not
deemed to be filed as part of this Report, except as expressly provided herein.

Consolidated Statements of Condition - December 31, 1999 and 1998
Consolidated Statements of Income - Years Ended December 31, 1999, 1998 and
1997
Consolidated Statements of Shareholders' Equity - Years Ended December 31,
1999, 1998 and 1997
Consolidated Statements of Comprehensive Income - Years Ended December 31,
1999, 1998 and 1997
Consolidated Statements of Cash Flows - Years Ended December 31, 1999, 1998
and 1997
Notes to Consolidated Financial Statements
Independent Auditors' Report

(a)(2) All schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and therefore have
been omitted.

(a)(3) The following exhibits are either filed as part of this Report or
are incorporated herein by reference; references to First Federal Bank now mean
Webster Bank:

EXHIBIT NO. EXHIBIT DESCRIPTION

Exhibit No. 2. Plan of Acquisition, Reorganization, Arrangement, Liquidation
or Succession.

2.1 Agreement and Plan of Merger, dated as of December 1, 1999, by
and between the Corporation and MECH Financial, Inc. (filed as
Exhibit 2.1 to the Corporation's Current Report on Form 8-K
filed with the SEC on December 10, 1999 and incorporated
herein by reference).

2.2 Option Agreement, dated as of December 1, 1999, between MECH
Financial, Inc. and the Corporation (filed as Exhibit 2.2 to
the Corporation's Current Report on Form 8-K filed with the
SEC on December 10, 1999 and incorporated herein by
reference).

21

Exhibit No. 3. Certificate of Incorporation and Bylaws.

3.1 Second Restated Certificate of Incorporation.

3.2 Certificate of Amendment.

3.3 Bylaws, as amended (filed as Exhibit 3 to the Corporation's
Quarterly Report on Form 10-Q filed with the SEC on August 13,
1999 and incorporated herein by reference).

Exhibit No. 4 Instruments Defining the Rights of Security Holders.

4.1 Specimen common stock certificate (filed as Exhibit 4.1 to the
Corporation's Registration Statement on Form S-3 (File No.
333-81563) filed with the SEC on June 25, 1999 and
incorporated herein by reference).

4.2 Rights Agreement, dated as of February 5, 1996, between the
Corporation and Chemical Mellon Shareholder Services, L.L.C.
(filed as Exhibit 1 to the Corporation's Current Report on
Form 8-K filed with the SEC on February 12, 1996 and
incorporated herein by reference).

4.3 Amendment No. 1 to Rights Agreement, entered into as of
November 4, 1996, by and between the Corporation and
ChaseMellon Shareholder Services, L.L.C. (filed as an exhibit
to the Corporation's Current Report on Form 8-K filed with the
SEC on November 25, 1996 and incorporated herein by
reference).

4.4 Amendment No. 2 to Rights Agreement, entered into as of
October 30, 1998, between the Corporation and American Stock
Transfer & Trust Company (filed as Exhibit 1 to the
Corporation's Current Report on Form 8-K filed with the SEC on
October 30, 1998 and incorporated herein by reference).

Exhibit No. 10. Material Contracts.

10.1 1986 Stock Option Plan of Webster Financial Corporation (filed
as Exhibit 10(a) to the Corporation's Annual Report on Form
10-K for the fiscal year ended December 31, 1986 and
incorporated herein by reference).

10.2 1992 Stock Option Plan of Webster Financial Corporation (filed
as Exhibit 10.2 to the Corporation's Annual Report on Form
10-K for the fiscal year ended December 31, 1993 and
incorporated herein by reference).

10.3 Amendment to [1992] Stock Option Plan (filed as Exhibit 10.3
to the Corporation's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998 and incorporated herein by
reference).

10.4 Amendment No. 1 to 1992 Stock Option Plan (filed as Exhibit
10.3 to the Corporation's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993 and incorporated herein by
reference).

10.5 Amendment No. 2 to 1992 Stock Option Plan (filed as Exhibit
10.4 to the Corporation's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997 and incorporated herein by
reference).

10.6 Amendment No. 3 to 1992 Stock Option Plan (filed as Exhibit
10.1 to the Corporation's Quarterly Report on Form 10-Q filed
with the SEC on August 14, 1998 and incorporated herein by
reference).

10.7 Amendment No. 4 to 1992 Stock Option Plan (filed as Exhibit
10.7 to the Corporation's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998 and incorporated herein by
reference).

10.8 Economic Value Added Incentive Plan (the description of the
plan in the last paragraph that begins on page 17 of the
Corporation's definitive proxy materials for the 2000 Annual
Meeting of Shareholders is incorporated herein by reference).

22

10.9 Performance Incentive Plan (filed as Exhibit A to the
Corporation's definitive proxy materials for the Corporation's
1996 Annual Meeting of Shareholders and incorporated herein by
reference).

10.10 Amendment to Webster Financial Corporation Performance
Incentive Plan as amended and restated effective January 1,
1996 (filed as Exhibit 10.11 to the Corporation's Annual
Report on Form 10-K for the fiscal year ended December 31,
1998 and incorporated herein by reference).

10.11 Amended and Restated Deferred Compensation Plan for Directors
and Officers of Webster Bank (filed as Exhibit 10.12 to the
Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 and incorporated herein by reference).

10.12 First Amended and Restated Directors Retainer Fees Plan (filed
as Exhibit 10.3 to the Corporation's Quarterly Report on Form
10-Q filed with the SEC on August 14, 1998 and incorporated
herein by reference).

10.13 Supplemental Retirement Plan for Employees of First Federal
Bank, as amended and restated effective as of October 1, 1994
(filed as Exhibit 10.26 to the Corporation's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994 and
incorporated herein by reference).

10.14 Amendment No. 1 to the Supplemental Retirement Plan for
Employees of First Federal Bank (filed as Exhibit 10.15 to the
Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 and incorporated herein by reference).

10.15 Amendment No. 2 to the Supplemental Retirement Plan for
Employees of First Federal Bank (filed as Exhibit 10.16 to the
Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 and incorporated herein by reference).

10.16 Amendment No. 3 to the Supplemental Retirement Plan for
Employees of Webster Bank (filed as Exhibit 10.17 to the
Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 and incorporated herein by reference).

10.17 Qualified Performance-Based Compensation Plan (filed as
Exhibit A to the Corporation's definitive proxy materials for
the Corporation's 1998 Annual Meeting of Shareholders and
incorporated herein by reference).

10.18 Employment Agreement, dated as of January 1, 1998, among James
C. Smith, the Corporation and Webster Bank (filed as Exhibit
10.27 to the Corporation's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997 and incorporated herein by
reference; see Schedule 10.27 to that Exhibit 10.27 for a list
of other executive officers of the Corporation and Webster
Bank who have an Employment Agreement substantially identical
in all material respects to the Employment Agreement of Mr.
Smith, except as to the name of the executive who is a party
to the agreement and as otherwise indicated on Schedule
10.27).

10.19 Amendment to Employment Agreement, entered into as of March
17, 1998, by and among Webster Bank, the Corporation and James
C. Smith (filed as Exhibit 10.28 to the Corporation's Annual
Report on Form 10-K for the fiscal year ended December 31,
1997 and incorporated herein by reference; see Schedule 10.28
to that Exhibit 10.28 for a list of other executive officers
of the Corporation and Webster Bank who have an Amendment to
Employment Agreement substantially identical in all material
respects to the Amendment to Employment Agreement of Mr.
Smith, except as to the name of the executive who is a party
to the agreement).

10.20 Change of Control Employment Agreement, dated as of December
15, 1997, by and between the Corporation and James C. Smith
(filed as Exhibit 10.29 to the Corporation's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997 and
incorporated herein by reference; see Schedule 10.29 to that
Exhibit 10.29 for a list of other executive officers of the
Corporation who have a Change of Control Employment Agreement
substantially identical in all material respects to the Change
of Control Employment Agreement of Mr. Smith, except as to the
name of the executive who is a party to the agreement).

23

10.21 Purchase and Assumption Agreement, dated as of October 2,
1992, among the Federal Deposit Insurance Corporation (the
"FDIC"), in its corporate capacity as receiver of First
Constitution Bank, the FDIC and First Federal Bank (filed as
Exhibit 2 to the Corporation's Current Report on Form 8-K
filed with the SEC on October 19, 1992 and incorporated herein
by reference).

10.22 Amendment No. 1 to Purchase and Assumption Agreement, made as
of August 8, 1994, by and between the FDIC, the FDIC as
receiver of First Constitution Bank, and First Federal Bank
(filed as Exhibit 10.36 to the Corporation's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994 and
incorporated herein by reference).

10.23 Indenture, dated as of June 15, 1993, between the Corporation
and Chemical Bank, as trustee, relating to the Corporation's
8 3/4% Senior Notes due 2000 (filed as Exhibit 99.5 to the
Corporation's Current Report on Form 8-K/A filed with the SEC
on November 10, 1993 and incorporated herein by reference).

10.24 Junior Subordinated Indenture, dated as of January 29, 1997
between the Corporation and The Bank of New York, as trustee,
relating to the Corporation's Junior Subordinated Deferrable
Interest Debentures (filed as Exhibit 10.41 to the
Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996 and incorporated herein by reference).

Exhibit No. 13. Portions of 1999 Annual Report to Shareholders.

Exhibit No. 21 Subsidiaries.

Exhibit No. 23. Consent of KPMG LLP.

Exhibit No. 27. Financial Data Schedules.

(b) Reports on Form 8-K

Webster filed the following Current Reports on Form 8-K with the Securities
and Exchange Commission (the "SEC") during the quarter ended December 31,
1999:

(i) Current Report on Form 8-K filed with the SEC on December 10, 1999
(date of report December 1, 1999) (announcing Webster's proposed
acquisition of MECH Financial, Inc.).

(ii) Current Report on Form 8-K filed with the SEC on December 9, 1999
(date of report December 1, 1999) (announcing the completion of
Webster's acquisition of New England Community Bancorp, Inc.)

(c) Exhibits to this Form 10-K are attached or incorporated herein by
reference as stated above.

(d) Not applicable.

24

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, as of March 29, 2000.

WEBSTER FINANCIAL CORPORATION

By /s/ James C. Smith
------------------------------------
James C. Smith
Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated as of March 29, 2000.

Name: Title:
----- ------

/s/ James C. Smith Chairman and Chief Executive Officer
- ---------------------------------- (Principal Executive Officer)
James C. Smith

/s/ Peter J. Swiatek Controller
- ---------------------------------- (Acting Principal Financial Officer and
Peter J. Swiatek Acting Principal Accounting Officer)

/s/ Richard H. Alden Director
- ----------------------------------
Richard H. Alden

/s/ Achille A. Apicella Director
- ----------------------------------
Achille A. Apicella

/s/ Joel S. Becker Director
- ----------------------------------
Joel S. Becker

/s/ O. Joseph Bizzozero, Jr. Director
- -----------------------------------
O. Joseph Bizzozero, Jr.

/s/ George T. Carpenter Director
- ----------------------------------
George T. Carpenter

25

/s/ John J. Crawford Director
- ----------------------------------
John J. Crawford

/s/ Harry P. DiAdamo, Jr Director
- ----------------------------------
Harry P. DiAdamo, Jr.

/s/ Robert A. Finkenzeller Director
- ----------------------------------
Robert A. Finkenzeller

/s/ P. Anthony Giorgio Director
- ----------------------------------
P. Anthony Giorgio

/s/ C. Michael Jacobi Director
- ----------------------------------
C. Michael Jacobi

/s/ John F. McCarthy Director
- ----------------------------------
John F. McCarthy

/s/ Sister Marguerite F. Waite Director
- ----------------------------------
Sister Marguerite F. Waite

26

EXHIBIT INDEX

EXHIBIT NO. EXHIBIT DESCRIPTION
- --------------------------------------------------------------------------------

Exhibit No. 2. Plan of Acquisition, Reorganization, Arrangement, Liquidation
or Succession.

2.1 Agreement and Plan of Merger, dated as of December 1, 1999, by
and between the Corporation and MECH Financial, Inc. (filed as
Exhibit 2.1 to the Corporation's Current Report on Form 8-K
filed with the SEC on December 10, 1999 and incorporated
herein by reference).

2.2 Option Agreement, dated as of December 1, 1999, between MECH
Financial, Inc. and the Corporation (filed as Exhibit 2.2 to
the Corporation's Current Report on Form 8-K filed with the
SEC on December 10, 1999 and incorporated herein by
reference).

Exhibit No. 3. Certificate of Incorporation and Bylaws.

3.1 Second Restated Certificate of Incorporation.

3.2 Certificate of Amendment.

3.3 Bylaws, as amended (filed as Exhibit 3 to the Corporation's
Quarterly Report on Form 10-Q filed with the SEC on August 13,
1999 and incorporated herein by reference).

Exhibit No. 4 Instruments Defining the Rights of Security Holders.

4.1 Specimen common stock certificate (filed as Exhibit 4.1 to the
Corporation's Registration Statement on Form S-3 (File No.
333-81563) filed with the SEC on June 25, 1999 and
incorporated herein by reference).

4.2 Rights Agreement, dated as of February 5, 1996, between the
Corporation and Chemical Mellon Shareholder Services, L.L.C.
(filed as Exhibit 1 to the Corporation's Current Report on
Form 8-K filed with the SEC on February 12, 1996 and
incorporated herein by reference).

4.3 Amendment No. 1 to Rights Agreement, entered into as of
November 4, 1996, by and between the Corporation and
ChaseMellon Shareholder Services, L.L.C. (filed as an exhibit
to the Corporation's Current Report on Form 8-K filed with the
SEC on November 25, 1996 and incorporated herein by
reference).

4.4 Amendment No. 2 to Rights Agreement, entered into as of
October 30, 1998, between the Corporation and American Stock
Transfer & Trust Company (filed as Exhibit 1 to the
Corporation's Current Report on Form 8-K filed with the SEC on
October 30, 1998 and incorporated herein by reference).

Exhibit No. 10. Material Contracts.

10.1 1986 Stock Option Plan of Webster Financial Corporation (filed
as Exhibit 10(a) to the Corporation's Annual Report on Form
10-K for the fiscal year ended December 31, 1986 and
incorporated herein by reference).

10.2 1992 Stock Option Plan of Webster Financial Corporation (filed
as Exhibit 10.2 to the Corporation's Annual Report on Form
10-K for the fiscal year ended December 31, 1993 and
incorporated herein by reference).

10.3 Amendment to [1992] Stock Option Plan (filed as Exhibit 10.3
to the Corporation's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998 and incorporated herein by
reference).

10.4 Amendment No. 1 to 1992 Stock Option Plan (filed as Exhibit
10.3 to the Corporation's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993 and incorporated herein by
reference).

27

10.5 Amendment No. 2 to 1992 Stock Option Plan (filed as Exhibit
10.4 to the Corporation's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997 and incorporated herein by
reference).

10.6 Amendment No. 3 to 1992 Stock Option Plan (filed as Exhibit
10.1 to the Corporation's Quarterly Report on Form 10-Q filed
with the SEC on August 14, 1998 and incorporated herein by
reference).

10.7 Amendment No. 4 to 1992 Stock Option Plan (filed as Exhibit
10.7 to the Corporation's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998 and incorporated herein by
reference).

10.8 Economic Value Added Incentive Plan (the description of the
plan in the last paragraph that begins on page 17 of the
Corporation's definitive proxy materials for the 2000 Annual
Meeting of Shareholders is incorporated herein by reference).

10.9 Performance Incentive Plan (filed as Exhibit A to the
Corporation's definitive proxy materials for the Corporation's
1996 Annual Meeting of Shareholders and incorporated herein by
reference).

10.10 Amendment to Webster Financial Corporation Performance
Incentive Plan as amended and restated effective January 1,
1996 (filed as Exhibit 10.11 to the Corporation's Annual
Report on Form 10-K for the fiscal year ended December 31,
1998 and incorporated herein by reference).

10.11 Amended and Restated Deferred Compensation Plan for Directors
and Officers of Webster Bank (filed as Exhibit 10.12 to the
Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 and incorporated herein by reference).

10.12 First Amended and Restated Directors Retainer Fees Plan (filed
as Exhibit 10.3 to the Corporation's Quarterly Report on Form
10-Q filed with the SEC on August 14, 1998 and incorporated
herein by reference).

10.13 Supplemental Retirement Plan for Employees of First Federal
Bank, as amended and restated effective as of October 1, 1994
(filed as Exhibit 10.26 to the Corporation's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994 and
incorporated herein by reference).

10.14 Amendment No. 1 to the Supplemental Retirement Plan for
Employees of First Federal Bank (filed as Exhibit 10.15 to the
Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 and incorporated herein by reference).

10.15 Amendment No. 2 to the Supplemental Retirement Plan for
Employees of First Federal Bank (filed as Exhibit 10.16 to the
Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 and incorporated herein by reference).

10.16 Amendment No. 3 to the Supplemental Retirement Plan for
Employees of Webster Bank (filed as Exhibit 10.17 to the
Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 and incorporated herein by reference).

10.17 Qualified Performance-Based Compensation Plan (filed as
Exhibit A to the Corporation's definitive proxy materials for
the Corporation's 1998 Annual Meeting of Shareholders and
incorporated herein by reference).

10.18 Employment Agreement, dated as of January 1, 1998, among James
C. Smith, the Corporation and Webster Bank (filed as Exhibit
10.27 to the Corporation's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997 and incorporated herein by
reference; see Schedule 10.27 to that Exhibit 10.27 for a list
of other executive officers of the Corporation and Webster
Bank who have an Employment Agreement substantially identical
in all material respects to the Employment Agreement of Mr.
Smith, except as to the name of the executive who is a party
to the agreement and as otherwise indicated on Schedule
10.27).

28

10.19 Amendment to Employment Agreement, entered into as of March
17, 1998, by and among Webster Bank, the Corporation and James
C. Smith (filed as Exhibit 10.28 to the Corporation's Annual
Report on Form 10-K for the fiscal year ended December 31,
1997 and incorporated herein by reference; see Schedule 10.28
to that Exhibit 10.28 for a list of other executive officers
of the Corporation and Webster Bank who have an Amendment to
Employment Agreement substantially identical in all material
respects to the Amendment to Employment Agreement of Mr.
Smith, except as to the name of the executive who is a party
to the agreement).

10.20 Change of Control Employment Agreement, dated as of December
15, 1997, by and between the Corporation and James C. Smith
(filed as Exhibit 10.29 to the Corporation's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997 and
incorporated herein by reference; see Schedule 10.29 to that
Exhibit 10.29 for a list of other executive officers of the
Corporation who have a Change of Control Employment Agreement
substantially identical in all material respects to the Change
of Control Employment Agreement of Mr. Smith, except as to the
name of the executive who is a party to the agreement).

10.21 Purchase and Assumption Agreement, dated as of October 2,
1992, among the Federal Deposit Insurance Corporation (the
"FDIC"), in its corporate capacity as receiver of First
Constitution Bank, the FDIC and First Federal Bank (filed as
Exhibit 2 to the Corporation's Current Report on Form 8-K
filed with the SEC on October 19, 1992 and incorporated herein
by reference).

10.22 Amendment No. 1 to Purchase and Assumption Agreement, made as
of August 8, 1994, by and between the FDIC, the FDIC as
receiver of First Constitution Bank, and First Federal Bank
(filed as Exhibit 10.36 to the Corporation's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994 and
incorporated herein by reference).

10.23 Indenture, dated as of June 15, 1993, between the Corporation
and Chemical Bank, as trustee, relating to the Corporation's 8
3/4% Senior Notes due 2000 (filed as Exhibit 99.5 to the
Corporation's Current Report on Form 8-K/A filed with the SEC
on November 10, 1993 and incorporated herein by reference).

10.24 Junior Subordinated Indenture, dated as of January 29, 1997
between the Corporation and The Bank of New York, as trustee,
relating to the Corporation's Junior Subordinated Deferrable
Interest Debentures (filed as Exhibit 10.41 to the
Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996 and incorporated herein by reference).

Exhibit No. 13. Portions of 1999 Annual Report to Shareholders.

Exhibit No. 21 Subsidiaries.

Exhibit No. 23. Consent of KPMG LLP.

Exhibit No. 27. Financial Data Schedules.

29