O

Comptroller of the Currency

Administrator of National Banks

Northeastern District

1114 Avenue of the Americas, Suite 3900

New York, New York 10036

February 5, 2004 **Conditional Approval #622**

#### March 2004

Harriet M. Wolfe, Esq.

EVP and General Counsel

Webster Bank

145 Bank Street, Webster Plaza

Waterbury, CT 06702

Re: Application from Webster Bank, Waterbury, Connecticut, to convert to
a national bank charter with the title Webster Bank, National
Association (Webster or Bank) and retain branches in Connecticut.

Application Control Numbers: 2003-NE-01-0019 and 2003-NE-12-0288

Dear Ms. Wolfe:

The Office of the Comptroller of the Currency (OCC) has reviewed your
application, dated September 19, 2003, as amended, to convert Webster
Bank to a national bank and retain all of its Connecticut branches.
After a thorough review of all information available, and reliance upon
the representations and commitments made in the application and by the
bank's representatives, we find that the conversion application meets
the requirements for approval to convert to a national bank as discussed
below.

Title: Webster Bank, National Association

Location: Waterbury, Connecticut

A federal savings bank that was chartered and in operation and which
operated one or more branches before November 12, 1999, may convert to a
national bank and retain branches if, upon conversion, the resulting
national bank will meet all applicable financial, management, and
capital requirements (12 U.S.C. 1464(i)(5)). Moreover, regulations of
both the OCC (12 C.F.R. 5.24) and the Office of Thrift Supervision (12
C.F.R. 552.2-7) permit the direct conversion of a federal savings bank
to a national bank. OCC regulations provide that a conversion will be
permitted if the financial institution can operate safely and soundly as
a national bank and in compliance with applicable laws (12 C.F.R.
5.24(d)). OCC regulations further provide that a conversion application
may be denied if a significant supervisory or compliance concern exists;
if approval is inconsistent with law, regulation, or OCC policy; if the
applicant fails to provide requested information; or if the conversion
would permit the applicant to escape supervisory action by its current
regulator (12 C.F.R. 5.13 & 5.24(d)).

The OCC has determined that the Bank satisfies the requirements set
forth in 12 U.S.C. 1464(i)(5) and 12 C.F.R. 5.24(d) and that none of the
factors set forth in OCC regulations that would justify denial are
present. Additionally, the Community Reinvestment Act ("CRA") requires
the OCC to take into account an applicant's record of helping to meet
the credit needs if its entire community, including low- and
moderate-income neighborhoods, when evaluating certain applications,
including conversions. At its most recent Performance Evaluation, dated
January 14, 2002, the Office of Thrift Supervision assigned the Bank an
"Outstanding" CRA rating. Based upon the OTS' evaluation, we find that
approval of the proposed transaction is consistent with the CRA.
Consequently, the OCC determined that the conversion may be approved.

Moreover, we have determined that retention, following conversion, of
the Connecticut branches also is permissible under the standards set
forth in 12 U.S.C. 1464(i)(5), as set forth above, and 12 U.S.C. 36(c),
which permits a national bank to establish and operate branches at any
point within the state in which the bank's main office is situated if
branching is so authorized by state statutory law for state banks.

This conversion approval is subject to the following conditions:

1.  Within sixty (60) days of consummating the conversion, Webster shall
    submit to the Supervisory Office for its written determination of no
    supervisory objection, a written Information Technology
    Infrastructure Plan to ensure the safe and sound operation of the
    Bank. The Plan must include technology, staffing and budgetary
    needs, as well as an implementation time line. After securing the
    OCC's supervisory non-objection to the Plan, the Board of the Bank
    shall immediately adopt, implement, and thereafter ensure adherence
    to the Plan.

2.  Within sixty (60) days of consummating the conversion, Webster shall
    submit to the Supervisory Office for its written determination of no
    supervisory objection, a written credit risk strategy that defines
    the Bank's credit risk tolerance/appetite. The strategy should
    establish such benchmarks as portfolio limits, risk rating
    segmentation limits, and underwriting exception triggers. After
    securing the OCC's supervisory non-objection to the Plan, the Board
    of the Bank shall immediately adopt, implement, and thereafter
    ensure adherence to the strategy.

3.  Webster (i) shall give the Supervisory Office at least sixty (60)
    days prior written notice of Webster's intent to significantly
    deviate or change from its business plan or operations and (ii)
    shall obtain the OCC's written determination of no objection before
    the Bank engages in any significant deviation or change from its
    business plan or operations.[^1] The OCC may impose additional
    conditions it deems appropriate in a written determination of no
    objection to a Bank's notice.

Please be advised that the conditions of this approval are conditions
\"imposed in writing by the agency in connection with the granting of
any application or other request\" within the meaning of 12 U.S.C. 1818
and, as such, are enforceable under 12 U.S.C. 1818.

This approval is based in part upon the institution's representation
that, prior to conversion, the capital structure will be realigned to
comply with the minimum capital requirements of 12 U.S.C. 35, 36, 52,
and 371d to the extent applicable.

Webster Bank, National Association will also retain two previously-made
community development investments under the investment authority of 12
U.S.C. 24(Eleventh) (the "Statute") and 12 C.F.R. Part 24 (the
\"Regulation") concerning national bank investments in community and
economic development entities, community development projects, and other
public welfare investments.

First, the Bank made an equity investment of \$1,000,000 in the
Community Economic Development Fund 1, LLC (the "LLC"), which provides
funding to the Community Economic Development Fund Foundation, Inc. (the
"CEDFF"). The CEDFF is a nonprofit organization whose primary
beneficiaries are communities targeted for redevelopment and job growth
in Connecticut, including those that are state-designated Urban
Enterprise Zones or Enterprise Corridor Zones. Second, Webster Bank made
an investment of \$500,000 in the Connecticut Housing Investment Fund,
Inc. (the "Fund.") The Fund is a nonprofit organization established to
finance affordable housing and neighborhood revitalization projects
throughout Connecticut. The aggregate amount of Webster National Bank's
investments under the Statute and the Regulation will total \$1,500,000,
which is less than 5 percent of its capital and surplus, and the
investments do not expose the Bank to unlimited liability. The
investments, therefore, are consistent with the Statute and the
Regulation.

This letter also constitutes official OCC authorization for Webster to
operate its existing 111 branches located in Connecticut and one
previously authorized, but unopened, branch to be located in Norwalk,
Connecticut.[^2] Attachment A lists each branch and assigns an OCC
Branch Number for the 112 branches. Please retain this letter and
Attachment A as the official branch authorization. Also, please notify
this office within 10 days after you open the Norwalk branch. If the
unopened Norwalk, Connecticut branch is not opened within 18 months from
the approval date, the authorization and approval for the unopened
branch shall automatically terminate unless the OCC grants an extension
of the time period. If, at some time in the future, the bank desires to
close a branch, it must file a 90-day advance notice of the proposed
branch closing with the OCC pursuant to 12 U.S.C. 1831r-1. Following the
branch closing, a final closing notice should be submitted to this
office.

Prior to or as of the date of the conversion:

1.  Directors must own qualifying shares in conformance with 12 U.S.C.
    72 and

12 C.F.R. 7.2005.

2.  The institution must purchase adequate fidelity bond coverage in
    accordance with

> 12 C.F.R. 7.2013, which lists four factors the directors should
> consider to determine adequacy.

3.  The board of directors must adopt and have in place policies,
    practices, and procedures to ensure the safe and sound operation of
    the bank. The board also must review those policies, practices, and
    procedures continually and ensure bank compliance with them.
    Attached are the minimum policies and procedures applicable to
    national banks.

4.  Webster Bank, National Association must maintain liquidation
    accounts established when Webster Bank acquired institutions that
    converted from mutual to stock form.

5.  The converting institution must notify the OCC if the facts
    described in the filing materially change at any time prior to
    consummation of the conversion.

6.  The converting institution must apply to the Federal Reserve for
    membership.

7.  The converting institution must ensure that all other required
    regulatory approvals have been obtained.

8.  Webster holds a loan that is secured by shares of its parent,
    Webster Financial Corporation. Webster acquired the loan in its
    acquisition of The North American Bank & Trust Company on November
    7, 2003. Webster shall determine whether this loan creates a
    violation of the limits on transactions with affiliates under 12
    U.S.C. 371c. If the loan does create a violation, Webster shall
    conform or divest the loan prior to or as of the date of the
    conversion.

The OCC also approved your proposal to conduct fiduciary powers pursuant
to 12 U.S.C. 92a. This approval constitutes a permit to conduct
fiduciary powers requested in your application. Accordingly, you may
begin exercising fiduciary powers simultaneously with your conversion to
a national bank.

The board of directors should provide for the establishment and
administration of the trust department (or fiduciary operation) either
through the adoption of amendments to the bylaws, by appropriate
resolutions, or both. After adoption, a copy of those provisions should
be furnished to the trust officer(s) for guidance. You will note that 12
C.F.R. 9.4 places responsibility on the board of directors for the
proper exercise of the bank's fiduciary powers. However, the board may
decide whether it shall supervise the administration of all such powers
directly or assign any function related to such powers to any director,
officer, employee, or committee.

The board should also provide for:

-   A proper delineation of duties for trust officer(s) and
    committee(s).

-   The pledging of securities to secure trust funds on deposit in the
    bank as required by 12 C.F.R. 9.10(b).

-   The designation of the officers or employees responsible for custody
    of the trust investments in conformity with 12 C.F.R. 9.13(a).

-   The deposit of securities with state authorities where required by
    local law, according to 12 C.F.R. 9.14.

Following its conversion, Webster will retain as operating subsidiaries
a number of entities that it currently owns. The Bank has represented
that all subsidiaries of the converted bank will be operated in
accordance with all applicable OCC regulations. In addition, you also
represented that prior to the conversion the Bank will transfer to its
parent holding company an 8 percent indirect interest in the Farmington
Avenue Association limited Partnership, which is engaged in the
development of a real estate parcel in Hartford, Connecticut.

You are also reminded that the OCC must review and have no objection to
any changes of executive officers or directors that Webster makes prior
to converting to a national bank.

Upon completion of the above procedures, please submit to the
Northeastern District Office a letter certifying that you have completed
all steps required to convert to a national banking association (see
sample enclosed). Your letter should include the following documents as
attachments if they have not already been submitted: Secretary's
Certificate certifying shareholder approval of the proposed conversion
(see sample enclosed); Articles of Association; Bylaws; Organization
Certificate properly signed and executed; Oath(s) of directors; and List
of directors.

When the institution has satisfactorily completed all of the above
steps, the OCC will issue a letter officially authorizing the
institution to commence business as a national banking association. At
that time, you will receive the charter certificate. If the conversion
is not consummated within six months from the approval date, the
approval shall automatically terminate unless the OCC grants an
extension of the time period.

The OCC will send to you under separate cover an appropriate set of OCC
handbooks, manuals, issuances, and selected other publications. This
information does not include the *Comptroller's Licensing Manual*, which
is available in electronic form on our website:
http://www.occ.treas.gov/corpapps/corpapplic.htm.

This approval, and the activities and communications by OCC employees in
connection with the filing, do not constitute a contract, express or
implied, or any other obligation binding upon the OCC, the United
States, any agency or entity of the United States, or any officer or
employee of the United States, and do not affect the ability of the OCC
to exercise its supervisory, regulatory and examination authorities
under applicable law and regulations. The foregoing may not be waived or
modified by any employee or agent of the OCC or the United States.

All correspondence regarding this application should reference the
application control numbers. If you have any questions concerning this
letter, please contact Senior Licensing Analyst Sandya R. Reddy or me at
(212) 790-4055.

Sincerely,

/s/ Anthony DosSantos

Anthony DosSantos

Licensing Manager

Enclosures: Attachment A -- List of Authorized Branches

Minimum Policies and Procedures

Sample Letter Certifying Conversion Completion

Sample Secretary's Certificate of Authority for Conversion to National
Bank

Survey Letter

[^1]: If such deviation is the subject of an application filed with the
    OCC, the OCC does not require any further notice to the supervisory
    office.

[^2]: We understand that Webster Bank, FSB, currently has one branch in
    New York and is also authorized to establish two additional New York
    branches. This approval does not address retention or operation of a
    branch at any New York site following consummation of the charter
    conversion. We understand, however, that Webster intends to file
    additional applications, which, if approved, would permit Webster
    Bank, N.A., to establish and operate branches at those sites.