UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION


                             Washington, D.C. 20549


                                    FORM 10-Q

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999

                           COMMISSION FILE NO. 0-11786


                              VILLAGE BANCORP, INC.
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)


          Connecticut                                          06-1076844
(State or other jurisdiction of                              (IRS Employer
 incorporation or organization)                           Identification Number)


                25 Prospect Street Ridgefield, Connecticut 06877


Registrant's telephone number, including area code            (203) 438-9551



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.

                 YES   _X_                     NO  ____

Indicate the number of shares  outstanding  of each of the  Issuer's  classes of
common stock, as of the latest practicable date.

            Class                                  Outstanding at April 30, 1999
--------------------------------------------------------------------------------
Common Stock, $3.33 Par Value                               1,973,034


<PAGE>


                              VILLAGE BANCORP, INC.

                                TABLE OF CONTENTS


                                                                        PAGE NO.
                                                                        --------

PART I. FINANCIAL INFORMATION

     ITEM 1.  Financial Statements

       Condensed Consolidated Balance Sheets
         March 31, 1999 and December 31, 1998 (unaudited).....................1

       Condensed Consolidated Statements of Income For The
         Three Months Ended March 31, 1999 and 1998 (unaudited)...............2

       Condensed Consolidated Statements of Comprehensive Income For The
         Three Months Ended March 31, 1999 and 1998 (unaudited)...............3

       Condensed Consolidated Statements of Cash Flows For The
         Three Months Ended March 31, 1999 and 1998 (unaudited)...............4

       Notes to Condensed Consolidated Financial Statements (unaudited).......5


     ITEM 2.      Management's Discussion and Analysis of Financial
                    Condition and Results of Operations.......................10



PART II. OTHER INFORMATION:

     ITEM 1.      Legal Proceedings...........................................14

     ITEM 2.      Changes in Securities.......................................14

     ITEM 3.      Defaults Upon Senior Securities.............................14

     ITEM 4.      Results of Votes of Security Holders........................14

     ITEM 5.      Other Information...........................................14

     ITEM 6.      (a)  Exhibits...............................................14

                  (b)  Reports on Form 8-K....................................14

SIGNATURES        ............................................................15

<PAGE>

VILLAGE BANCORP, INC.
--------------------------------------------------------------------------------
PART I.  -  FINANCIAL INFORMATION


<TABLE>
<CAPTION>
VILLAGE BANCORP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS - (UNAUDITED)
---------------------------------------------------------------------------------------------------------------------


ASSETS                                                                     Mar. 31, 1999              Dec. 31, 1998
------                                                                     -------------              --------------
                                                                                          (in thousands)
<S>                                                                        <C>                       <C>           
Cash and due from banks                                                    $      16,357             $       13,092
Federal funds sold                                                                22,050                     18,150
---------------------------------------------------------------------------------------------------------------------
Total cash and cash equivalents                                                   38,407                     31,242

Securities:
   Available-for-sale (at fair value)                                             14,625                     12,726
   Held-to-maturity (fair value of $28,403 at
     March 31, 1999, and $34,421 at Dec. 31, 1998                                 28,020                     33,936

Federal Home Loan Bank stock, at cost                                                901                        901
Loans, net of deferred loan fees                                                 147,216                    149,386
Allowance for credit losses                                                       (1,153)                    (1,178)
---------------------------------------------------------------------------------------------------------------------
Loans, net                                                                       146,063                    148,208

Loans held for sale                                                                  718                      1,874
Bank premises and equipment - net                                                  5,132                      5,230
Accrued income and other assets                                                    3,269                      3,039
---------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS                                                               $     237,135             $      237,156
=====================================================================================================================


LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
   Non-interest bearing                                                    $      23,120             $       22,162
   Interest bearing                                                              193,399                    195,015
---------------------------------------------------------------------------------------------------------------------
     Total deposits                                                              216,519                    217,177

Accrued interest payable                                                           1,117                      1,302
Other liabilities                                                                  1,336                      1,148
---------------------------------------------------------------------------------------------------------------------
   Total liabilities                                                             218,972                    219,627

Stockholders' Equity:
   Common stock,  par value $3.33 per share;  
     authorized - 10,000,000  shares, issued and 
     outstanding, 1,959,034 at March 31, 1999
     and 1,946,534 at December 31, 1998                                            6,523                      6,482
   Additional paid-in capital                                                      5,088                      4,998
   Retained earnings                                                               6,546                      6,002
   Accumulated other comprehensive income                                              6                         47
---------------------------------------------------------------------------------------------------------------------
   Total stockholders' equity                                                     18,163                     17,529
---------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                 $     237,135             $      237,156
=====================================================================================================================
</TABLE>


SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.


                                      -1-
<PAGE>

VILLAGE BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - (UNAUDITED)
--------------------------------------------------------------------------------

                                                  Three Months Ended March 31,
                                               (in thousands, except share data)
                                                      1999         1998
                                                     ------       ------
INTEREST INCOME:
   Loans, including fees                             $3,104       $3,184
   Securities:
     Taxable                                            472          551
     Tax-exempt                                         122          123
   Federal funds sold                                   156           69
--------------------------------------------------------------------------------
   Total interest income                              3,854        3,927

INTEREST EXPENSE                                      1,341        1,585
--------------------------------------------------------------------------------

NET INTEREST INCOME                                   2,513        2,342
PROVISION FOR LOAN LOSSES                                --           30
--------------------------------------------------------------------------------

NET INTEREST INCOME AFTER PROVISION
   FOR LOAN LOSSES                                    2,513        2,312
--------------------------------------------------------------------------------

OTHER INCOME:
   Other operating income                               165          145
   Security gains, net                                 --             43
--------------------------------------------------------------------------------
   Total other income                                   165          188

OTHER EXPENSES:
   Salaries and employee benefits                       883        1,003
   Net occupancy                                        233          251
   Furniture and equipment                               92          100
   Data processing services                             177          195
   Regulatory assessments                                 6            6
   Printing, stationery and supplies                     15           65
   Other operating expenses                             291          336
--------------------------------------------------------------------------------
   Total other expenses                               1,697        1,956

INCOME BEFORE PROVISION FOR INCOME TAXES                981          544
PROVISION FOR INCOME TAXES                              262           62
--------------------------------------------------------------------------------
NET INCOME                                           $  719       $  482
================================================================================

PER SHARE DATA
Cash dividends paid                                  $  .09       $  .09
Net income - basic earnings                             .37          .25
Net income - diluted earnings                           .36          .24


SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


                                      -2-
<PAGE>


VILLAGE BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - (UNAUDITED)
--------------------------------------------------------------------------------

                                                  Three Months Ended March 31,
                                                       (in thousands)
                                                     1999         1998
                                                    ------       ------
Net income                                           $719         $482

Other comprehensive income, net of tax:
Unrealized holding gains (losses)on securities
   available-for-sale arising during the period       (41)          14
--------------------------------------------------------------------------------

Reclassification adjustment, net of tax, for
   net gains realized on available-for-sale
   securities that were held at the beginning
   of the year                                        --          (26)
--------------------------------------------------------------------------------

Other comprehensive loss                             (41)         (12)
--------------------------------------------------------------------------------

Comprehensive income                                $678         $470
================================================================================



SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


                                      -3-
<PAGE>

VILLAGE BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (UNAUDITED)
-------------------------------------------------------------------------------
                                                           Three Months Ended 
                                                                March 31,
                                                              (in thousands)
                                                             1999        1998
                                                           --------    --------
OPERATING ACTIVITIES:
Net income                                                 $    719    $    482
Adjustments to reconcile net income to net cash
   provided (used) by operating activities:
     Provision for loan losses                                   --          30
     Provision for depreciation and amortization                111         107
     Accretion of security discounts - net                      (88)        (95)
Security gains - net                                             --         (43)
Decrease in deferred loan fees                                   (5)        (23)
Decrease in accrued interest payable                           (185)       (233)
(Increase) decrease in accrued income and other assets         (155)        366
Increase (decrease) in other liabilities                        188        (595)
Origination of loans held for sale                           (5,730)     (3,192)
Proceeds from sales of loans                                  6,886       4,628
-------------------------------------------------------------------------------
Net cash provided by operating activities                     1,741       1,432

INVESTING ACTIVITIES:
Proceeds from sales of available-for-sale securities             --       1,279
Proceeds from maturities of available-for-sale securities     2,035       3,020
Proceeds from maturities of held-to-maturity securities       5,936       6,027
Purchases of available-for-sale securities                   (3,934)       (988)
Purchases of held-to-maturity securities                         --      (3,946)
Purchase of Federal Home Loan Bank stock                         --        (119)
Net decrease (increase) in loans, net                         2,102        (341)
Purchases of premises and equipment                             (13)       (174)
-------------------------------------------------------------------------------
Net cash provided by investing activities                     6,126       4,758

FINANCING ACTIVITIES:
Net decrease in time deposits                                (8,704)     (1,708)
Net increase in other deposits                                8,046       8,058
Cash dividends                                                 (175)       (172)
Net proceeds from issuance of common stock                      131          55
-------------------------------------------------------------------------------
Net cash (used in) provided by financing activities            (702)      6,233

INCREASE IN CASH AND CASH EQUIVALENTS                         7,165      12,423
-------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                 31,242      11,153
-------------------------------------------------------------------------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                   $ 38,407    $ 23,576
===============================================================================

SUPPLEMENTAL CASH FLOW DISCLOSURES:
   Interest paid on deposits                               $  1,156    $  1,110
   Income tax payments                                           85          65
   Change in net unrealized gain on available-
     for-sale securities, net of tax                            (41)        (12)
   Transfer of loan to other real estate owned                   48          --


SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


                                      -4-
<PAGE>


VILLAGE BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
--------------------------------------------------------------------------------


NOTE A - BASIS OF PRESENTATION

     In  the  opinion  of  management,   the  accompanying  unaudited  condensed
consolidated financial statements reflect all adjustments necessary,  consisting
only of normal recurring accruals, to present fairly the financial position, the
results of operations,  cash flows and changes in financial  position of Village
Bancorp,  Inc. (the  "Company")  for the periods  presented.  In preparing  such
financial  statements,  management is required to make estimates and assumptions
that effect the reported amounts. Actual results could differ significantly from
those estimates.

     The Company's  consolidated  financial  statements  include the accounts of
Village Bancorp, Inc. and its wholly-owned subsidiary,  The Village Bank & Trust
Company  ("Village"),  and have  been  prepared  in  accordance  with  generally
accepted  accounting  principles  and conform with  predominant  practices  used
within the banking industry.

     Village is engaged in the business of  commercial  banking and operates six
branch banking offices in Fairfield and Litchfield counties in Connecticut,  and
is principally engaged in lending and deposit gathering  activities within these
counties. Village also operates a trust department and offers trust services.

     While management believes that the disclosures presented are adequate so as
not to make the  information  misleading,  it is suggested that these  financial
statements be read in conjunction with the consolidated financial statements and
notes included in the Company's 1998 Annual Report on Form 10-K.

     In June 1998,  the FASB  issued SFAS No. 133,  "Accounting  for  Derivative
Instruments and Hedging Activities." This statement  establishes  accounting and
reporting  standards  for  derivative  instruments  and hedging  activities.  It
requires,  among  other  things,  that  all  derivatives  be  recognized  in the
statement  of  condition,  either as assets or  liabilities,  and be measured at
their fair value and that changes in a derivative's  fair value be recognized in
current  earnings  unless  specific hedge  accounting  criteria are met. For the
Company,  SFAS No. 133 will be effective  January 1, 2000.  The Company does not
anticipate  that adoption of this statement  will have a material  impact on its
financial position or results of operations.


                                      -5-
<PAGE>

VILLAGE BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
--------------------------------------------------------------------------------


NOTE B - SECURITIES

     The amortized cost,  gross  unrealized  gains and losses and estimated fair
values of securities were as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                 March 31, 1999
                                                                                 --------------

                                                                           Gross            Gross           Estimated
                                                       Amortized        Unrealized       Unrealized           Fair
                                                          Cost             Gains           Losses             Value
                                                     -------------     -------------    -------------     -------------
<S>                                                  <C>               <C>              <C>               <C>          
SECURITIES HELD-TO-MATURITY
U.S. Treasury Securities                             $      13,359     $          98    $         (12)    $      13,445
Mortgage-backed securities
   of U.S. Government agencies                               4,349                23               (1)            4,371
Obligations of states and
   political suddivisions                                   10,312               277               (2)           10,587
------------------------------------------------------------------------------------------------------------------------
TOTAL                                                $      28,020     $         398    $         (15)    $      28,403
========================================================================================================================


SECURITIES AVAILABLE-FOR-SALE
U.S. Treasury securities                             $      14,448     $          40    $         (31)    $      14,457
Mortgage-backed securities
   of U.S. Government agencies                                 153                 1                -               154
Other                                                           14                 -                -                14
------------------------------------------------------------------------------------------------------------------------
TOTAL                                                $      14,615     $          41    $         (31)    $      14,625
========================================================================================================================

                                                                               December 31, 1998
                                                                               -----------------

                                                                           Gross            Gross           Estimated
                                                       Amortized        Unrealized       Unrealized           Fair
                                                          Cost             Gains           Losses             Value
                                                     -------------     -------------    -------------     -------------
<S>                                                  <C>               <C>              <C>               <C>          
SECURITIES HELD-TO-MATURITY
U.S. Treasury Securities                             $      18,801     $         183    $          (4)    $      18,980
Mortgage-backed securities
   of U.S. Government agencies                               4,377                35               (3)            4,409
Obligations of states and
   political suddivisions                                   10,758               275               (1)           11,032
------------------------------------------------------------------------------------------------------------------------
TOTAL                                                $      33,936     $         493    $          (8)    $      34,421
========================================================================================================================


SECURITIES AVAILABLE-FOR-SALE
U.S. Treasury securities                             $      12,446     $          98    $         (22)    $      12,522
Mortgage-backed securities
   of U.S. Government agencies                                 186                 2                -               188
Other                                                           16                 -                -                16
------------------------------------------------------------------------------------------------------------------------
TOTAL                                                $      12,648     $         100    $         (22)    $      12,726
========================================================================================================================
</TABLE>


                                      -6-
<PAGE>

VILLAGE BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED) (Continued)
--------------------------------------------------------------------------------

     At March 31, 1999 and December 31,  1998,  securities  with a book value of
$1,127,000 and $1,129,000,  respectively, were pledged to secure public deposits
and for other purposes as required by law and banking regulation.



NOTE C - LOANS

   The composition of the loan portfolio is summarized as follows:

<TABLE>
<CAPTION>
                                        March 31, 1999                      Dec. 31, 1998
                                       ----------------                    ----------------
                                                          (in thousands)
<S>                                     <C>                                <C>               
Real estate                             $     120,373                      $      121,814    
Commercial and financial                       20,736                             19,312
Installment and consumer credit                 6,231                              8,389
Deferred loan fees                               (124)                              (129)
-------------------------------------------------------------------------------------------
TOTAL                                   $     147,216                      $     149,386
===========================================================================================
</TABLE>

The recorded investment in loans considered to be impaired at March 31, 1999 and
December  31,  1998  was  $1,615,000  and  $1,275,000,   respectively.  Specific
valuation  allowances  for these loans were  $263,000  and $179,000 at March 31,
1999 and December 31, 1998,  respectively.  Generally the fair value of impaired
loans was determined using the fair value of the underlying collateral.


NOTE D - COMMITMENTS

     On March 31, 1999, standby letters of credit approximated $1,992,000.

NOTE E - STOCKHOLDERS' EQUITY

     A $.09  per  share  cash  dividend  was  distributed  February  5,  1999 to
stockholders of record on January 29, 1999.

     A $.09  per  share  cash  dividend  was  distributed  February  6,  1998 to
stockholders of record on January 30, 1998.

     Stock options exercised during the three month period ended March 31, 1999,
totaled  12,500  shares at prices  ranging  from $9.50 to $13.50.  There were no
stock options granted during this three month period.


                                      -7-
<PAGE>

VILLAGE BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED) (Continued)
--------------------------------------------------------------------------------

NOTE F - EARNINGS PER SHARE

     SFAS No. 128,  "Earnings  Per  Share",  requires  that "Basic EPS"  exclude
dilution and be computed by dividing income available to common  stockholders by
the  weighted-average  number  of common  shares  outstanding  for that  period;
"Diluted EPS" reflects the potential  dilution that could occur if securities or
other  contracts to issue common stock were  exercised or converted  into common
stock or resulted in the  issuance of common  stock that would then share in the
earnings of the entity.  A summary of the basic and diluted  earnings  per share
calculations for March 31, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
                                                     Income           Shares        Per Share
                                                     ------           ------        ---------
<S>                                                 <C>              <C>              <C>
   1999
Basic EPS                                           $719,000         1,949,684        $.37

Effect of Dilutive Securities - Stock Options                           46,035

Diluted EPS                                         $719,000         1,995,719        $.36

   1998
Basic EPS                                           $482,000         1,915,027        $.25

Effect of Dilutive Securities - Stock Options                           60,785

Diluted EPS                                         $482,000         1,975,812        $.24
</TABLE>

NOTE G - REPORTING COMPREHENSIVE INCOME

     SFAS No. 130, "Reporting  Comprehensive Income",  establishes standards for
the reporting and display of  comprehensive  income and its components in a full
set of general purpose  financial  statements,  requires that all items that are
required  to  be  recognized  under   accounting   standards  as  components  of
comprehensive income be reported in a financial statement that is displayed with
the same  prominence as are the financial  statements.  Comprehensive  income is
defined as "the change in equity (net assets) of a business  enterprise during a
period from  transactions  and other  events and  circumstances  from  non-owner
sources.  It  includes  all  changes  in equity  during a period,  except  those
resulting from investments by owners and distributions to owners."

NOTE H - PENDING ACQUISITION

     On  November  11,  1998,  the Company  and  Webster  Financial  Corporation
("Webster")  announced  that they had reached a  definitive  agreement,  whereby
Webster would acquire the Company,  for the  equivalent of $23.50 per share in a
tax-free,  stock-for-stock  exchange valued at approximately $46.4 million, with
stockholders  permitted to elect to receive cash-in-lieu of Webster stock for up
to 20% of the Company's shares.



                                      -8-
<PAGE>


VILLAGE BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED) (Continued)
--------------------------------------------------------------------------------

     The definitive  agreement,  has been approved by the boards of directors of
both  companies,  the Company's  stockholders  at a special  meeting held May 4,
1999, and all of the  appropriate  regulatory  authorities.  The  transaction is
expected to close on May 19, 1999.

     Due to directors  and  management's  contracts  that  include,  among other
things,  change of control  clauses,  it is  expected  that such  directors  and
members of Village  management would in the aggregrate,  be paid $1,364,000 upon
consummation  of the  merger  and that those  members  of  management  receiving
payments would no longer be employed by Village.



                                      -9-
<PAGE>

VILLAGE BANCORP, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 
OPERATIONS
--------------------------------------------------------------------------------

GENERAL

     Village  Bancorp,  Inc. (the "Company")  through its only  subsidiary,  The
Village  Bank & Trust  Company  ("Village"  or the "Bank")  had total  assets of
$237,135,000  on March 31, 1999 in comparison to total assets of $237,156,000 on
December 31, 1998, a decrease of $21,000.

     For the three month  periods  ended March 31, 1999 and 1998,  the Company's
net income  increased from $482,000 for the 1998 period to $719,000 for the 1999
period.  Net interest income  increased  $171,000 (7.3%) from $2,342,000 for the
1998 period to $2,513,000 for the 1999 period.

ASSETS AND RELATED INCOME ANANLYSIS

     Loans  outstanding  on March  31,  1999  totaled  $147,216,000,  which is a
decrease of $2,170,000 (1.5%) from the $149,386,000  outstanding at December 31,
1998. Loan income  decreased  $80,000 (2.5%) from $3,184,000 for the 1998 period
to  $3,104,000  for the 1999 period.  This  decrease is due to a decrease in the
average rate earned from 8.58% for the 1998 period to 8.30% for the 1999 period,
offset by a slight increase in average  outstanding  loans, from $148,455,000 in
the 1998 period to $149,678,000 for the 1999 period.

     Securities,  which consists of securities  held-to-maturity  and securities
available-for-sale, decreased $4,017,000 (8.6%) from $46,662,000 at December 31,
1998 to $42,645,000 at March 31, 1999. Security income decreased $80,000 (11.9%)
from  $674,000 in the period  ending  March 31,  1998 to  $594,000  for the 1999
period.  This  decrease  was due to a decrease in the average  dollar  amount of
securities held, from $48,738,000 for the 1998 period to $46,330,000 in the 1999
period,  coupled  with a decrease in the  average  rate earned from 5.53% in the
1998 period to 5.13% in the 1999 period.  The Bank has the  positive  intent and
ability to hold  securities  designated as  held-to-maturity  until maturity and
does   not   engage   in   trading   activities.    Securities   classified   as
available-for-sale are used to compensate for liquidity forecasting deviations.

     Federal funds sold increased  $3,900,000  from  $18,150,000 at December 31,
1998 to  $22,050,000  at March 31,  1999.  Federal  funds sold income  increased
$87,000  (126.1%)  from  $69,000 for the 1998  period to  $156,000  for the 1999
period,  primarily due to an increase in the average  dollar amount  outstanding
from $5,211,000 in the 1998 period to $13,599,000 in the 1999 period,  offset by
a decrease in the average  rate earned from 5.30% in the 1998 period to 4.59% in
the 1999 period.

LIABILITIES AND RELATED EXPENSE ANALYSIS

     Deposits decreased $658,000 (.3%) from $217,177,000 at December 31, 1998 to
$216,519,000 at March 31, 1999.  Interest on deposits decreased $244,000 (15.4%)
from  $1,585,000  for the 1998 period to  $1,341,000  for the 1999 period.  This
decrease was primarily  attributable to a decrease in the average rate paid from
3.14% in the 1998 period to 2.56% in the 1999  period,  offset by an increase in
the average outstandings,  from $201,878,000 for the 1998 period to $209,930,000
in the 1999 period.


                                      -10-
<PAGE>

VILLAGE BANCORP, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 
OPERATIONS - (Continued)
--------------------------------------------------------------------------------

     Salary and  employee  benefits  expense  decreased  $120,000  (12.0%)  from
$1,003,000 in the 1998 period to $883,000 in the 1998 period.

     Net occupancy  expenses  decreased $18,000 (7.2%) from $251,000 in the 1998
period to $233,000 in the 1999.

     Furniture and equipment  expense  decreased  $8,000 (8.0%) from $100,000 in
the 1998 period to $92,000 in the 1999 period.

     Data processing  services expense decreased $18,000 (9.2%) from $195,000 in
the 1998  period to $177,000  in the 1999  period and other  operating  expenses
decreased  $45,000  (13.4%) from  $336,000 in the 1998 period to $291,000 in the
1999 period.

     All of the items above  decreased due to the positive  effect of an ongoing
cost containment program.

LIQUIDITY

     Liquidity  is the ability to provide  funds for loan  requests,  unexpected
deposit  outflows and meeting other recurring  financial  obligations.  Cash and
cash  equivalents at March 31, 1999 were $38,407,000 or 16.2% of total assets as
compared to  $31,242,000 or 13.2% of total assets at December 31, 1998. The Bank
also  maintains  excess stored  liquidity  reserves to compensate  for liquidity
forecasting  deviations.  These  reserves  are  comprised  of  investment  grade
securities  that are  highly  marketable  and  liquid.  The  primary  source  of
liquidity,  cash and due from banks and federal  funds sold,  have  historically
surpassed the liquidity needs of the Company.  Management  closely  monitors the
Bank's  liquidity/cash  flow  position  and does not  anticipate  any  liquidity
problems in the foreseeable future.

CAPITAL RESOURCES

     The table  below  lists the  minimum  capital  requirements  along with the
Company's capital position at March 31, 1999:

           Capital             Minimum Capital       Company's Capital
          Standard               Requirement             Position
          --------               -----------             --------

Total Capital to risk
   weighted assets                  8.00%                 14.43%

Stockholders' equity to
risk weighted assets                4.00%                 13.56%

Leverage ratio                    3.0 - 5.0%               7.83%


                                      -11-
<PAGE>

VILLAGE BANCORP, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 
OPERATIONS - (Continued)
--------------------------------------------------------------------------------

YEAR 2000

     The Company and the Bank are aware of the significant impact that Year 2000
("Y2K")  will  have on  financial  service  companies,  as  such,  the  Bank has
established a program to address Y2K issues. The Board of Directors  established
a Y2K Committee to oversee  activities of management  and others in dealing with
Y2K issues.  This committee  reports to the Board on a regular basis.  The Board
monitors the project and its ongoing implementation.  The potential problem with
year 2000  concerns the inability of  information  systems,  primarily  software
programs,  to properly recognize and process date sensitive  information for the
year 2000 and beyond.

     The Bank  utilizes  the  services  of third  party  service  bureau for its
primary  data  processing  needs.  This  service  bureau  is  well on its way to
addressing  the Y2K  project  and has  completed  the first and second  phase of
testing of its  processing  system.  The Bank has also  completed  its first two
phases of testing on all applications that are provided by the third party. This
first phase tested the actual  change of dates from  December,  1999 to January,
2000. The second phase tested month end, quarter end and odd date (i.e. February
29, 2000) processing.

     The Bank has developed  contingency plans to deal with the possibility that
our third party processor will not be Y2K compliant on January 1, 2000. One plan
takes into account our role in the contingency plan that has been adopted by our
processor.  The  second  plan  which  the  Bank has  developed  will  deal  with
processing if our third party processor is not able to.

     The Bank has  completed  the  planned  upgrade of the  teller and  platform
systems in all branch offices.  This upgrade  included  enhancements to the back
office operational areas as well. All of these upgrades were Y2K compliant.  All
personal  computers  currently in use at the Bank have been tested to ensure Y2K
compliance.  In addition,  all critical  systems  software  used at the Bank not
directly  involved with system  processing  by the Bank's third party  processor
have been verified as being Y2K compliant.

     Another risk for the Company would be the temporary business disruptions of
its large borrowers due to their failure to be prepared for Y2K. The Company has
already polled these  customers to determine  their readiness for year 2000, and
has independently assessed their readiness.

     The worst case Y2K scenario would involve the breakdown of utility service,
critical  system  failure  and Federal  Reserve,  Automated  Clearing  House and
Clearing House failure. In this case, the Bank would have difficulty  continuing
operations in a manner  approaching  normal. The Company has not yet developed a
contingency plan for this scenario,  other than for the critical system failure.
It is expected that utilities,  the Federal Reserve and the Clearing Houses will
be Y2K compliant. All of these items will be closely monitored and a contingency
plan is expected to be completed prior to the end of the second quarter of 1999.

     The Federal  Deposit  Insurance  Corporation  ("FDIC") is  responsible  for
supervising  efforts by banks to prepare for the Y2K date  change.  The FDIC has
been  conducting  special  examinations  of insured  banks to make sure they are
taking  necessary  steps to get ready for the Y2K date change.  The FDIC is also
closely  monitoring  the progress  that the Bank is making to complete  critical
steps as required by Y2K plans.




                                      -12-
<PAGE>

VILLAGE BANCORP, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - (Continued)
--------------------------------------------------------------------------------

The costs associated with the  implementation of changes to deal with Y2K issues
is not  expected  to  have a  material  impact  on  the  Company's  consolidated
financial statements. Costs are being expensed as incurred. Expenses recorded to
date are  $57,000.  While  every  effort is being made to ensure the Bank is Y2K
compliant,  there can be no  assurances  that Y2K will not to some degree affect
the operations of the Bank.

FORWARD-LOOKING STATEMENTS

     The Company has made,  and may  continue to make,  various  forward-looking
statements  with respect to earnings,  credit  quality and other  financial  and
business matters for periods  subsequent to March 31, 1998. The Company cautions
that these forward-looking statements are subject to numerous assumptions, risks
and   uncertainties,   and  that  statements   relating  to  subsequent  periods
increasingly  are  subject  to  greater  uncertainty  because  of the  increased
likelihood  of changes in underlying  factors and  assumptions.  Actual  results
could differ materially from forward-looking statements.

     In addition to those factors previously  disclosed by the Company and those
factors  identified  elsewhere herein,  the following factors could cause actual
results to differ materially from such forward-looking  statements;  competitive
pressures on loan and deposit  product  pricing;  other actions of  competitors;
changes in economic conditions;  the extent and timing of actions of the Federal
Reserve  Board;  customer  deposit  disintermediation;   changes  in  customers'
acceptance of the Company's products and services;  and the extent and timing of
legislative and regulatory actions and reform.

     The Company's forward-looking statements speak only as of the date on which
such statements are made. By making any forward-looking  statements, the Company
assumes no duty to update them to reflect new, changing or unanticipated  events
or circumstances.




                                      -13-
<PAGE>

VILLAGE BANCORP, INC.
--------------------------------------------------------------------------------

PART II. - OTHER INFORMATION


Item 1.  Legal Proceedings                                   Not Applicable

Item 2.  Changes in Securities                               Not Applicable

Item 3.  Defaults Upon Senior Securities                     Not Applicable

Item 4.  Results of Votes of Security Holders

     (a) A  Special  Meeting  of  Stockholders  was  held on May 4,  1999 at the
Radisson Hotel, 42 Lake Avenue Extension,  Danbury,  Connecticut,  06811.  There
were no solicitations  in opposition to any of management's  motions acted on at
the meeting.

     (b) To  approve  and adopt an  Agreement  and Plan of  Merger,  dated as of
November 11, 1998,  between Webster  Financial  Corporation and Village Bancorp,
Inc., the merger provided for therein,  pursuant to which Village Bancorp,  Inc.
will be acquired by Webster Financial  Corporation,  and the other  transactions
contemplated by the Agreement and Plan of Merger.


                           Votes Cast:    For              1,381,923
                                          Against             42,602
                                          Abstain             10,767
                                                   
Item 5.  Other Information                                        Not Applicable

Item 6.  Exhibits and Reports on Form 8-K

          (a)  Exhibits - None

          (b)  Reports on Form 8-K - There were no reports on Form 8-K filed for
               the three months ended March 31, 1999.


                                      -14-
<PAGE>

                                   SIGNATURES


     Pursuant to the  requirements  of the  Securities and Exchange Act of 1934,
the  Registrant  has duly  caused  this Report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                              Village Bancorp, Inc.
                                              ---------------------
                                                   (Registrant)






Date:      May 14, 1999                      /s/  Robert V. Macklin
           ------------                      ----------------------
                                          Robert V. Macklin - President
                                           and Chief Executive Officer


Date:      May 14, 1999                       /s/ James R. Umbarger
           ------------                       ---------------------
                                       James R. Umbarger - Executive Vice
                                      President and Chief Financial Officer


                                      -15-