<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2003

                                       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 1-12305

                         FIRSTFED AMERICA BANCORP, INC.
   -------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

              DELAWARE                                 04-3331237
   -------------------------------------------------------------------------
   (State or other jurisdiction of      (I.R.S. Employer Identification No.)
   incorporation or organization)

       ONE FIRSTFED PARK, SWANSEA, MASSACHUSETTS                02777
   -------------------------------------------------------------------------
        (Address of principal executive offices)              (Zip Code)

       Registrant's telephone number, including area code: (508) 679-8181

   -------------------------------------------------------------------------
   (Former name, former address and former fiscal year, if changed since last
                                     report)

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 by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes (X) No ( )

As of February 5, 2004, there were 18,973,099 shares of the Registrant's Common
Stock outstanding.

<PAGE>

                         FIRSTFED AMERICA BANCORP, INC.

                               INDEX TO FORM 10-Q

<TABLE>
<CAPTION>
                                                                                                     PAGE
                                                                                                     ----
<S>                                                                                                  <C>
PART I     FINANCIAL INFORMATION...............................................................        2

  Item 1.  Financial Statements................................................................        2

           Consolidated Balance Sheets.........................................................        2

           Consolidated Statements of Income...................................................        3

           Consolidated Statements of Changes in Stockholders' Equity..........................        4

           Consolidated Statements of Cash Flows...............................................        5

           Notes to Unaudited Consolidated Financial Statements................................        6

  Item 2.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations. .........................................................        9

  Item 3.  Quantitative and Qualitative Disclosures about Market Risk..........................       17

  Item 4.  Controls and Procedures.............................................................       17

PART II    OTHER INFORMATION...................................................................       17

  Item 1.  Legal Proceedings...................................................................       17

  Item 2.  Changes in Securities and Use of Proceeds...........................................       18

  Item 3.  Defaults Upon Senior Securities.....................................................       18

  Item 4.  Submission of Matters to a Vote of Security Holders.................................       18

  Item 5.  Other Information...................................................................       18

  Item 6.  Exhibits and Reports on Form 8-K....................................................       18

           SIGNATURES..........................................................................       19
</TABLE>

                                        1
<PAGE>

PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

                 FIRSTFED AMERICA BANCORP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                      DECEMBER 31,        MARCH 31,
                                                                                          2003              2003
                                                                                      ------------      ------------
<S>                                                                                   <C>               <C>
                                        ASSETS
Cash on hand and due from banks .................................................     $     44,642      $     53,529
Short-term investments ..........................................................            2,113             2,000
                                                                                      ------------      ------------
  Total cash and cash equivalents ...............................................           46,755            55,529
Mortgage loans held for sale ....................................................           57,103           245,745
Investment securities available for sale, at fair value
     (amortized cost of $6,441 and $16,659) .....................................           11,715            22,730
Mortgage-backed securities available for sale, at fair value
     (amortized cost of $815,772 and $623,841) ..................................          817,749           634,965
Mortgage-backed securities held to maturity (fair value of $715 and $956) .......              715               934
Stock in Federal Home Loan Bank of Boston, at cost ..............................           58,433            58,433
Loans receivable
      Residential mortgages .....................................................          665,271           605,507
      Commercial real estate mortgages ..........................................          192,608           142,974
      Construction and land mortgages ...........................................           44,539            43,946
      Commercial ................................................................          275,768           282,955
      Consumer ..................................................................          235,958           185,284
      Allowance for loan losses .................................................          (19,362)          (19,335)
                                                                                      ------------      ------------
         Loans receivable, net ..................................................        1,394,782         1,241,331
Accrued interest receivable .....................................................            8,102             7,588
Mortgage servicing rights, net of valuation allowance of $2,074 and $3,095 ......            7,743             5,971
Office properties and equipment, net ............................................           36,744            38,298
Bank-owned life insurance .......................................................           38,807            37,513
Goodwill and other intangible assets ............................................           52,000            53,659
Prepaid expenses and other assets ...............................................           25,791            11,782
                                                                                      ------------      ------------
         Total assets ...........................................................     $  2,556,439      $  2,414,478
                                                                                      ============      ============

                       LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Deposits
      Demand ....................................................................     $    601,064      $    573,344
      Savings ...................................................................          316,076           286,719
      Time ......................................................................          548,921           567,044
                                                                                      ------------      ------------
         Total deposits .........................................................        1,466,061         1,427,107
  FHLB advances and other borrowings ............................................          822,068           723,577
  Advance payments by borrowers for taxes and insurance .........................            4,346             5,974
  Accrued interest payable ......................................................            3,656             3,607
  Other liabilities .............................................................           31,210            61,129
                                                                                      ------------      ------------
         Total liabilities ......................................................        2,327,341         2,221,394
                                                                                      ------------      ------------
Stockholders' equity:
  Common stock ..................................................................              234               216
  Additional paid-in capital ....................................................          154,694           125,198
  Retained earnings .............................................................          107,387            97,100
  Accumulated other comprehensive income ........................................            4,627             9,777
  Unallocated ESOP shares .......................................................           (1,549)           (1,549)
  Unearned 1997 stock-based incentive plan ......................................              (39)             (112)
  Treasury stock ................................................................          (36,256)          (37,546)
                                                                                      ------------      ------------
         Total stockholders' equity .............................................          229,098           193,084
                                                                                      ------------      ------------
         Total liabilities and stockholders' equity .............................     $  2,556,439      $  2,414,478
                                                                                      ============      ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                        2
<PAGE>

                 FIRSTFED AMERICA BANCORP, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                      FOR THE THREE MONTHS        FOR THE NINE MONTHS
                                                                       ENDED DECEMBER 31,          ENDED DECEMBER 31,
                                                                     ----------------------      ---------------------
                                                                       2003          2002          2003         2002
                                                                     --------      --------      --------     --------
<S>                                                                  <C>           <C>           <C>          <C>
Interest and dividend income:
      Loans                                                          $ 19,907      $ 22,477      $ 66,302     $ 64,920
      Mortgage-backed securities                                        6,449         8,677        18,901       27,617
      Investment securities                                               167           693           740        2,862
      Federal Home Loan Bank stock                                        405           515         1,313        1,614
                                                                     --------      --------      --------     --------
            Total interest and dividend income                         26,928        32,362        87,256       97,013
                                                                     --------      --------      --------     --------
Interest expense:
      Deposits                                                          5,317         6,397        16,751       21,253
      Borrowed funds                                                    7,910        10,275        25,176       31,339
                                                                     --------      --------      --------     --------
            Total interest expense                                     13,227        16,672        41,927       52,592
                                                                     --------      --------      --------     --------
            Net interest income before provision for loan losses       13,701        15,690        45,329       44,421
Provision for loan losses                                                 275           150           650          400
                                                                     --------      --------      --------     --------
            Net interest income after provision for loan losses        13,426        15,540        44,679       44,021
                                                                     --------      --------      --------     --------
Non-interest income:
      Service charges on deposit accounts                                 978         1,311         2,711        2,605
      Trust fee income                                                    430           350         1,207        1,063
      Loan servicing income (expense)                                     (41)         (834)          105       (1,703)
      Insurance commission income                                         452           363         1,119          802
      Earnings on Bank-Owned Life Insurance                               423           484         1,293        1,447
      Gain on sale of mortgage loans, net                               5,674         7,569        22,289       19,133
      Gain on sale of investment securities available for sale          5,033         1,057         7,171        2,628
      Other income                                                      1,084           778         3,049        2,120
                                                                     --------      --------      --------     --------
            Total non-interest income                                  14,033        11,078        38,944       28,095
                                                                     --------      --------      --------     --------
Non-interest expense:
      Compensation and employee benefits                               12,267         9,223        34,665       26,280
      Office occupancy and equipment                                    2,333         2,109         6,647        6,172
      Data processing                                                     716           702         2,021        2,352
      Advertising and business promotion                                  402           408         1,184          799
      Amortization of intangible assets                                   553           607         1,659        1,821
      Other expense                                                     3,721         2,318         9,490        7,012
                                                                     --------      --------      --------     --------
            Total non-interest expense                                 19,992        15,367        55,666       44,436
                                                                     --------      --------      --------     --------
            Income before income tax expense                            7,467        11,251        27,957       27,680
Income tax expense                                                      2,995         4,325        11,303       10,673
                                                                     --------      --------      --------     --------
            Net income                                               $  4,472      $  6,926      $ 16,654     $ 17,007
                                                                     ========      ========      ========     ========

Basic earnings per share                                             $   0.25      $   0.43      $   0.96     $   1.07
                                                                     ========      ========      ========     ========
Diluted earnings per share                                           $   0.24      $   0.41      $   0.95     $   1.03
                                                                     ========      ========      ========     ========
Weighted average shares outstanding - basic                            18,051        16,271        17,274       15,961
                                                                     ========      ========      ========     ========
Weighted average shares outstanding - diluted                          18,254        16,801        17,453       16,489
                                                                     ========      ========      ========     ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                        3
<PAGE>

                 FIRSTFED AMERICA BANCORP, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                   FOR THE NINE MONTHS ENDED DECEMBER 31, 2003
                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                               UNEARNED
                                                                                                                 1997
                                                                                   ACCUMULATED                STOCK-BASED
                                                            ADDITIONAL                OTHER      UNALLOCATED   INCENTIVE
                                                    COMMON   PAID-IN    RETAINED  COMPREHENSIVE     ESOP      PLAN (SIP)   TREASURY
                                                    STOCK    CAPITAL    EARNINGS      INCOME       SHARES       SHARES       STOCK
                                                    ------  ----------  --------  -------------  -----------  -----------  ---------
<S>                                                 <C>     <C>         <C>       <C>            <C>          <C>          <C>
Balance at March 31, 2003.........................  $  216   $125,198   $ 97,100    $  9,777     $  (1,549)   $    (112)   $(37,546)
  Earned SIP stock awards.........................      --         (5)        --          --            --           73          --
  Earned ESOP shares charged to expense...........      --      1,754         --          --            --           --          --
  Stock options exercised, including
      related tax benefits of $9,601..............      18     24,822         --          --            --           --          --
  Cash dividends declared and paid
      (1st quarter at $0.10 per share; 2nd and
       3rd quarters at $0.13 per share)...........      --         --     (6,367)         --            --           --          --
  Common stock acquired for certain
     employee benefit plans (5,396 shares at
     an average price of $14.85 per share)........      --         --         --          --            --           --         (80)
  Common stock sold for certain employee
     benefit plans (176,150 shares at an
     average price of $24.38 per share)...........      --      2,925         --          --            --           --       1,370
  Comprehensive income:
    Net income....................................      --         --     16,654          --            --           --          --
    Other comprehensive income (loss),
      net of tax
       Unrealized holding losses on
         available for sale securities,
         net of taxes of ($1,337).................      --         --         --      (1,436)           --           --          --
       Reclassification adjustment for
         gains included in net income,
         net of taxes of $3,457...................      --         --         --      (3,714)           --           --          --
                                                                                    --------
       Net unrealized losses......................      --         --         --      (5,150)           --           --          --

         Total comprehensive income...............      --         --         --          --            --           --          --
                                                    ------   --------   --------    --------     ---------    ---------    --------
Balance at December 31, 2003......................  $  234   $154,694   $107,387    $  4,627     $  (1,549)   $     (39)   $(36,256)
                                                    ======   ========   ========    ========     =========    =========    ========

<CAPTION>

                                                       TOTAL
                                                    STOCKHOLDERS'
                                                       EQUITY
                                                    -------------
<S>                                                 <C>
Balance at March 31, 2003.........................    $193,084
  Earned SIP stock awards.........................          68
  Earned ESOP shares charged to expense...........       1,754
  Stock options exercised, including
      related tax benefits of $9,601..............      24,840
  Cash dividends declared and paid
      (1st quarter at $0.10 per share; 2nd and
       3rd quarters at $0.13 per share)...........      (6,367)
  Common stock acquired for certain
     employee benefit plans (5,396 shares at
     an average price of $14.85 per share)........         (80)
  Common stock sold for certain employee
     benefit plans (176,150 shares at an
     average price of $24.38 per share)...........       4,295
  Comprehensive income:
    Net income....................................      16,654
    Other comprehensive income (loss),
      net of tax
       Unrealized holding losses on
         available for sale securities,
         net of taxes of ($1,337).................          --
       Reclassification adjustment for
         gains included in net income,
         net of taxes of $3,457...................          --

       Net unrealized losses......................      (5,150)
                                                      --------
         Total comprehensive income...............      11,504
                                                      --------
Balance at December 31, 2003......................    $229,098
                                                      ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                        4
<PAGE>

                 FIRSTFED AMERICA BANCORP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                     FOR THE NINE MONTHS
                                                                                      ENDED DECEMBER 31,
                                                                                 ----------------------------
                                                                                     2003            2002
                                                                                 ------------    ------------
<S>                                                                              <C>             <C>
Cash flows from operating activities:
  Net income .................................................................   $     16,654    $     17,007
    Adjustments to reconcile net income to net cash provided by (used in)
      operating activities:
      Amortization (accretion) of:
         Discounts, net ......................................................         (2,020)         (2,658)
         Deferred loan origination costs .....................................          1,270             813
         Mortgage servicing rights ...........................................          2,466           2,334
         Intangible assets ...................................................          1,659           1,821
      Provision for loan losses ..............................................            650             400
      Provision for estimated impairment on mortgage servicing rights ........            171           2,605
      Gains on sales of:
         Mortgage loans ......................................................        (22,289)        (19,133)
         Investment and mortgage-backed securities available-for-sale ........         (7,171)         (2,627)
         Office property and equipment .......................................             (2)            (13)
      Net proceeds from sales of mortgage loans ..............................      2,529,631       1,831,813
      Origination of mortgage loans held for sale ............................     (2,326,060)     (2,013,985)
      Earnings on bank-owned life insurance ..................................         (1,293)         (1,447)
      Depreciation of office properties and equipment ........................          3,358           3,170
      Appreciation in fair value of ESOP shares ..............................          1,754             872
      Earned SIP shares ......................................................             68           1,281
      Increase or decrease in:
         Accrued interest receivable .........................................           (514)            (68)
         Other assets ........................................................         (6,205)            114
         Accrued interest payable ............................................             49            (626)
         Other liabilities ...................................................        (29,919)         21,509
                                                                                 ------------    ------------
         Net cash provided by (used in) operating activities .................        162,257        (156,818)
                                                                                 ------------    ------------
Cash flows from investing activities:
  Purchase of investment securities available for sale .......................         (3,010)         (1,725)
  Purchase of mortgage-backed securities available for sale ..................       (541,550)       (348,080)
  Payments received on mortgage-backed securities ............................        263,029         230,951
  Proceeds from sale of investments securities available for sale ............         14,996          49,837
  Proceeds from sale of mortgage-backed securities available for sale ........         87,777          46,403
  Maturities of investment securities available for sale .....................          3,689           2,886
  Net increase in loans ......................................................       (156,286)        (99,849)
  Proceeds from sale of office properties and equipment ......................             12             679
  Purchases of office properties and equipment ...............................         (1,814)         (4,084)
                                                                                 ------------    ------------
         Net cash used in investing activities ...............................       (333,157)       (122,982)
                                                                                 ------------    ------------
Cash flows from financing activities:
  Net increase in deposits ...................................................         39,212          58,667
  Proceeds from FHLB advances and other borrowings ...........................     17,247,941       4,875,057
  Repayments on FHLB advances and other borrowings ...........................    (17,146,087)     (4,743,748)
  Net change in advance payments by borrowers for taxes and insurance ........         (1,628)           (832)
  Cash dividends paid ........................................................         (6,367)         (3,658)
  Proceeds from sale of (payments to acquire) common stock, net ..............          4,215             (85)
  Common stock issued in private placement ...................................             --           5,000
  Stock options exercised, including related tax benefits ....................         24,840           1,289
                                                                                 ------------    ------------
         Net cash provided by financing activities ...........................        162,126         191,690
                                                                                 ------------    ------------
Net decrease in cash and cash equivalents ....................................         (8,774)        (88,110)
Cash and cash equivalents at beginning of period .............................         55,529         145,049
                                                                                 ------------    ------------
Cash and cash equivalents at end of period ...................................   $     46,755    $     56,939
                                                                                 ============    ============
Supplemental disclosures of cash flow information:
  Cash paid during the period for:
    Interest .................................................................   $     41,878    $     53,218
                                                                                 ============    ============
    Income taxes .............................................................   $      4,527    $     13,718
                                                                                 ============    ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                        5

<PAGE>

                 FIRSTFED AMERICA BANCORP, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(1) BASIS OF PRESENTATION

         The accompanying unaudited consolidated financial statements include
the accounts of FIRSTFED AMERICA BANCORP, INC. (the "Company"), its wholly-owned
subsidiaries, First Federal Savings Bank of America (the "Bank"), FAB FUNDING
CORPORATION ("FAB FUNDING") and FIRSTFED INSURANCE AGENCY, LLC (the "Agency"),
People's Bancshares Capital Trust II ("Capital Trust II"), and the Company's 65%
interest in FIRSTFED TRUST COMPANY, N.A. (the "Trust Company"). The remaining
35% interest of the Trust Company is held by M/D Trust, LLC, a minority owner.
The Bank includes its wholly-owned subsidiaries, People's Mortgage Corporation
("PMC"), FIRSTFED INVESTMENT CORPORATION, and CELMAC INVESTMENT CORPORATION.

         The interim consolidated financial statements reflect all normal and
recurring adjustments which are, in the opinion of management, considered
necessary for a fair presentation of the financial condition and results of
operations for the periods presented. Certain amounts previously reported have
been reclassified to conform to the current year's presentation. The results of
operations for the nine months ended December 31, 2003 are not necessarily
indicative of the results of operations that may be expected for all of fiscal
year 2004.

         Certain information and note disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted, pursuant to the
rules and regulations of the Securities and Exchange Commission. These unaudited
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 2003.

(2) STOCK SPLIT

         On June 26, 2003, the Company's Board of Directors declared a 2-for-1
common stock split that was distributed on July 17, 2003 to shareholders of
record as of July 7, 2003. In the accompanying unaudited consolidated financial
statements, Management's Discussion and Analysis of Financial Condition and
Results of Operation, and Other Information, the numbers of shares and per share
amounts of the Company's common stock have been retroactively restated to
reflect the increased number of common shares outstanding.

(3) RECENT DEVELOPMENTS

         On October 7, 2003, the Company announced that it had reached a
definitive agreement to be acquired by Webster Financial Corporation
("Webster"), headquartered in Waterbury, Connecticut. Webster is the holding
company for Webster Bank. Pursuant to the agreement, the Bank will be merged
with and into Webster Bank, and the Company's shareholders will be entitled to
receive either 0.5954 shares of Webster common stock or $24.50 in cash for each
share of the Company's common stock, subject to proration. On the day it was
announced, the transaction was valued at approximately $465 million, payable 60%
in Webster stock and 40% in cash. Following consummation of the merger, the
combined bank will rank as the 45th largest in the United States, with $16
billion in assets, market capitalization of $2.2 billion and a 141-branch retail
footprint in Connecticut, Massachusetts and Rhode Island. The transaction, which
is subject to approval by regulatory authorities and the Company's shareholders,
is expected to close in the second calendar quarter of 2004.

         The proposed transaction will be submitted to the Company's
shareholders for their consideration. Webster and the Company filed with the SEC
a registration statement, a preliminary proxy statement/prospectus and other
relevant documents concerning the proposed transaction with the SEC.
Shareholders of the Company are urged to read the registration statement and the
proxy statement/prospectus and any other relevant documents filed with the SEC,
as well as any amendments or supplements to those documents, because they will
contain important information.

                                        6

<PAGE>

(4) GOODWILL AND OTHER INTANGIBLE ASSETS

         The changes in the carrying amount of goodwill and other intangible
assets for the nine months ended December 31, 2003 are as follows (in
thousands):

<TABLE>
<CAPTION>
                                                      CORE                        TOTAL
                                                    DEPOSIT     NON-COMPETE   IDENTIFIABLE
                                                   INTANGIBLE    INTANGIBLE    INTANGIBLE
                                GOODWILL             ASSET         ASSET         ASSETS
                               ----------          ----------    ----------    -----------
<S>                            <C>                 <C>           <C>           <C>
Balance at March 31, 2003      $   43,825          $    9,596    $      238    $     9,834
Recorded during the period             --                  --            --             --
Amortization expense                   --              (1,464)         (195)        (1,659)
Impairment recognized                  --                  --            --             --
                               ----------          ----------    ----------    -----------
Balance at December 31, 2003   $   43,825          $    8,132    $       43    $     8,175
                               ==========          ==========    ==========    ===========
</TABLE>

<TABLE>
<S>                                                                     <C>        <C>      <C>
Estimated amortization expense for fiscal years ended March 31:
 2004                                                                   $ 1,933    $ 238    $ 2,171
 2005                                                                     1,717       --      1,717
 2006                                                                     1,500       --      1,500
 2007                                                                     1,283       --      1,283
 2008                                                                     1,066       --      1,066
 After 2008                                                               2,097       --      2,097
</TABLE>

         The components of identifiable intangible assets at December 31, 2003
are as follows (in thousands):

<TABLE>
<CAPTION>
                                GROSS CARRYING    ACCUMULATED   NET CARRYING
                                    AMOUNT       AMORTIZATION      AMOUNT
                                --------------   ------------   ------------
<S>                             <C>              <C>            <C>
Core deposit intangible asset   $       11,926   $      3,794   $      8,132
Non-compete intangible asset               520            477             43
                                --------------   ------------   ------------
                                $       12,446   $      4,271   $      8,175
                                ==============   ============   ============
</TABLE>

(5) STOCK OPTION PLANS

         The Company continues to follow the intrinsic value method for
accounting for its stock option plans. Accordingly, no compensation expense has
been recognized in the financial statements. Had the Company determined
compensation expense based on the fair value at the grant date for its stock
options, the Company's net income would have been reduced to the pro forma
amounts indicated below (dollars in thousands, except per share data):

<TABLE>
<CAPTION>
                                                            FOR THE THREE MONTHS  FOR THE NINE MONTHS
                                                              ENDED DECEMBER 31,   ENDED DECEMBER 31,
                                                            --------------------  -------------------
                                                              2003       2002       2003      2002
                                                            --------  ----------  --------  ---------
<S>                                                         <C>       <C>         <C>       <C>
Net income as reported...................................   $  4,472  $    6,926  $ 16,654  $  17,007
Pro forma net income.....................................      4,393       6,819    16,418     16,687
Basic earning per share as reported......................       0.25        0.43      0.96       1.07
Diluted earnings per share as reported...................       0.24        0.41      0.95       1.03
Pro forma basic earnings per share.......................       0.24        0.42      0.95       1.05
Pro forma diluted earnings per share.....................       0.24        0.41      0.94       1.01
</TABLE>

         The fair value of stock options was determined by using the trinomial
option pricing model. No stock options have been granted since fiscal year 2001.

(6) IMPACT OF RECENT ACCOUNTING STANDARDS

         In December 2003, the Financial Accounting Standards Board ("FASB")
issued FASB Interpretation ("FIN") 46-R, "Consolidation of Variable Interest
Entities - Revised." FIN 46-R revises FIN 46, "Consolidation of Variable
Interest Entities" which is an interpretation of Accounting Research Bulletin
51, "Consolidated Financial Statements." FIN 46-R provides guidance regarding
the consolidation of special purpose entities, and removed uncertainty over
whether FIN 46 required consolidation or deconsolidation of special purpose
entities that issue trust preferred securities. FIN 46-R clarified that even
those entities that issue trust preferred securities with call options must be
deconsolidated. FIN 46-R is effective for financial statements for periods
ending after December 15, 2003, with no requirement for restatement of previous
periods. The Company adopted FIN 46-R on December 31, 2003, and therefore has
deconsolidated its trust subsidiary as of that date. Adoption of this
Interpretation did not have a material impact on the Company's financial
position or results of operations.

                                        7

<PAGE>

         In April 2003, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 149 "Amendment of Statement 133 on Derivative Instruments
and Hedging Activities." SFAS No. 149 requires derivatives contracts with
comparable characteristics be accounted for similarly. In particular, SFAS No.
149 (1) clarifies under what circumstances a contract with an initial net
investment meets the characteristic of a derivative discussed in paragraph 6(b)
of Statement 133, (2) clarifies when a derivative contains a financing
component, and (3) amends the definition of an underlying event to conform it to
language used in FASB Interpretation No. 45, Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others, and (4) amends certain other existing pronouncements.
This Statement is effective for contracts entered into or modified after June
30, 2003. The Company does not believe the adoption of SFAS No. 149 will have a
material impact on the Company's Consolidated Financial Statements.

         In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity". SFAS
No. 150 establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. SFAS
No. 150, which was effective July 1, 2003, requires an issuer to classify a
financial instrument within the scope of the statement as a liability if the
financial instrument embodies an obligation of the issuer. The adoption of SFAS
No. 150 did not have a material impact on the Company's Consolidated Financial
Statements.

         In December 2003, the FASB issued SFAS No. 132 (revised 2003),
"Employers' Disclosures about Pensions and Other Postretirement Benefits--an
amendment of FASB Statements No. 87, 88, and 106". SFAS No. 132 (revised 2003)
revises employers' disclosures about pension plans and other postretirement
benefit plans. SFAS No. 132 (revised 2003), which is effective for financial
statements with fiscal years ending after December 15, 2003, does not change the
measurement or recognition of those plans required by SFAS No. 87, 88, and 106,
but augments the disclosure requirements of the original SFAS No. 132 with
additional disclosure requirements. The Company does not believe the adoption of
SFAS No. 132 (revised 2003) will have a material impact on the Company's
Consolidated Financial Statements.

                                        8

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

                                     GENERAL

         The Company's primary business is attracting retail deposits from the
general public and investing those deposits and other borrowed funds in loans,
mortgage-backed securities, U.S. Government securities and other securities. The
Company originates commercial, consumer, and mortgage loans for investment, and
mortgage loans for sale in the secondary market. The Company's primary sources
of funds are deposits, principal and interest payments on loans and
mortgage-backed securities, proceeds from the sale of loans and securities, FHLB
advances, and other borrowings.

         The Company's results of operations are primarily dependent on net
interest income, which is the difference between the income earned on its loan,
investment and mortgage-backed securities portfolios, and its cost of funds,
consisting of the interest paid on deposits and borrowings. Results of
operations are also affected by the Company's provision for loan losses and
non-interest income including gains on sale of loans and investment securities,
service charges on deposit accounts, loan servicing income, revenue from the
Trust Company and Agency operations, earnings on bank-owned life insurance
("BOLI"), and other income. The Company's non-interest expense consists of
compensation and employee benefits, office occupancy and equipment expense, data
processing expense, advertising and business promotion, amortization of
intangible assets, and other expenses. Results of operations of the Company are
also significantly affected by general economic and competitive conditions,
particularly changes in interest rates, government policies and the actions of
regulatory authorities.

         This report contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. The Company intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995, and is including this statement for purposes of these safe harbor
provisions. Forward-looking statements, which are based on certain assumptions
and describe future plans, strategies and expectations of the Company, are
generally identified by use of the words "believe," "expect," "intend,"
"anticipate," "estimate," "project," or similar expressions. The Company's
ability to predict results or the actual effect of future plans or strategies is
inherently uncertain. Factors which could have a material adverse effect on the
operations of the Company and the subsidiaries include, but are not limited to,
changes in: interest rates, general economic conditions, legislative/regulatory
changes, monetary and fiscal policies of the U.S. Government, including policies
of the U.S. Treasury and the Federal Reserve Board, the quality or composition
of the loan or investment portfolios, demand for loan products, deposit flows,
competition, demand for financial services in the Company's market area and
accounting principles and guidelines. These risks and uncertainties should be
considered in evaluating forward-looking statements and undue reliance should
not be placed on such statements. Further information on the Company and its
business, including additional factors that could materially affect the
Company's financial results, is included in the Company's filings with the
Securities and Exchange Commission.

         Subject to applicable laws and regulations, the Company does not
undertake - and specifically disclaims any obligation - to publicly release the
result of any revisions which may be made to any forward-looking statements to
reflect events or circumstances after the date of such statements or to reflect
the occurrence of anticipated or unanticipated events.

         The following discussion should be read in conjunction with the
financial statements, notes, discussion and tables included in the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 2003.

                              RESULTS OF OPERATIONS

OVERVIEW

         Net income decreased $2.5 million, or 35%, to $4.5 million for the
third quarter of fiscal year 2004 from $6.9 million for the third quarter of
fiscal year 2003. Diluted earnings per share ("EPS") decreased 41% to $0.24 for
the third quarter of fiscal year 2004 from $0.41 for the third quarter of fiscal
year 2003. Income before income tax expense decreased $3.8 million, or 34%, to
$7.5 million, the net result of a decrease in net interest income after
provision for loan losses of $2.1 million, and increases in non-interest income
of $3.0 million and non-interest expense of $4.6 million.

         For the first nine months of fiscal year 2004, net income was $16.7
million, a decrease of $353,000, or 2%, from $17.0 million for the first nine
months of fiscal year 2003. Diluted EPS decreased 8% to $0.95 for the first nine
months of fiscal year 2004 from $1.03 for the first nine months of fiscal year
2003. Income before income tax expense increased $277,000, or 1%, to $28.0
million, the net result of increases in net interest income after provision for
loan losses of $658,000, non-interest income of $10.8 million, and non-interest
expense of $11.2 million. Weighted average diluted shares outstanding increased
9% for the third quarter and 6% for the first nine months due primarily to 1.4
million of common shares issued for stock options exercised subsequent to the
announcement of the agreement to merge with Webster.

                                        9

<PAGE>

         Return on average stockholders' equity was 8.45% for the third quarter
of fiscal year 2004 and 10.90% for the first nine months of fiscal year 2004,
compared to 14.78% and 13.01% for the respective periods of fiscal year 2003.
Return on average assets was 0.72% for the third quarter of fiscal year 2004 and
0.86% for the first nine months of fiscal year 2004, compared to 1.08% and 0.93%
for the respective periods of fiscal year 2003.

NET INTEREST INCOME

         Net interest income before provision for loan losses decreased $2.0
million, or 13%, to $13.7 million for the third quarter of fiscal year 2004 from
$15.7 million for the third quarter of fiscal year 2003. The net interest rate
spread and net interest margin were 2.20% and 2.40%, respectively, for the third
quarter of fiscal year 2004, compared to 2.42% and 2.68%, respectively, for the
third quarter of fiscal year 2003. For the first nine months of fiscal year
2004, net interest income before provision for loan losses increased $908,000,
or 2%, to $45.3 million for the first nine months of fiscal year 2004 from $44.4
million for the first nine months of fiscal year 2003. The net interest rate
spread and net interest margin were 2.29% and 2.53%, respectively, for the first
nine months of fiscal year 2004, compared to 2.44% and 2.67%, respectively, for
the first nine months of fiscal year 2003. The decreases in the net interest
rate spread and net interest margin reflected declines in market interest rates,
with reductions in the Company's interest yields on interest-earning assets,
including the effects of reduced balances of mortgage loans held for sale,
exceeding the reductions in its interest costs on interest-bearing liabilities.

         The following tables set forth certain information relating to the
Company for the periods indicated. The annualized average yields and costs are
derived by dividing annualized income or expense by the average balance of
interest earning assets or interest bearing liabilities, respectively, for the
periods shown. Average balances are derived from the best available daily or
monthly data, which management believes approximates the average balances
computed on a daily basis. The yields and the costs include fees, premiums, and
discounts which are considered adjustments to yields.

<TABLE>
<CAPTION>
                                                                     FOR THE THREE MONTHS ENDED DECEMBER 31,
                                                   --------------------------------------------------------------------------
                                                                   2003                                  2002
                                                   ------------------------------------  ------------------------------------
                                                                                AVERAGE                               AVERAGE
                                                      AVERAGE                    YIELD/    AVERAGE                     YIELD/
                                                      BALANCE       INTEREST      COST     BALANCE        INTEREST      COST
                                                   ------------   ------------  -------  ------------   ------------  -------
                                                                              (DOLLARS IN THOUSANDS)
<S>                                                <C>            <C>           <C>      <C>            <C>           <C>
Assets:
     Interest-earning assets:
      Loans receivable, net and
         mortgage loans held for sale (1)          $  1,477,895   $     19,907    5.39%  $  1,462,294   $     22,477    6.15%
      Investment securities (2)                         108,335            572    2.10         99,632          1,208    4.81
      Mortgage-backed securities (3)                    689,231          6,449    3.74        758,711          8,677    4.57
                                                   ------------   ------------    ----   ------------   ------------    ----
            Total interest-earning assets             2,275,461         26,928    4.73      2,320,637         32,362    5.58
                                                                  ------------    ----                  ------------    ----
     Noninterest-earning assets                         202,672                               214,077
                                                   ------------                          ------------
            Total assets                           $  2,478,133                          $  2,534,714
                                                   ============                          ============

Liabilities and Stockholders' Equity:
     Interest-bearing liabilities:
      Deposits (4)                                 $  1,355,791          5,317    1.56   $  1,130,902          6,397    2.24
      FHLB advances and other borrowings                720,909          7,910    4.37        959,654         10,275    4.25
                                                   ------------   ------------    ----   ------------   ------------    ----
            Total interest-bearing liabilities        2,076,700         13,227    2.53      2,090,556         16,672    3.16
                                                                  ------------    ----                  ------------    ----
     Noninterest-bearing liabilities (5)                190,930                               258,293
                                                   ------------                          ------------
            Total liabilities                         2,267,630                             2,348,849
     Stockholders' equity                               210,503                               185,865
                                                   ------------                          ------------
            Total liabilities and stockholders'
                equity                             $  2,478,133                          $  2,534,714
                                                   ============                          ============
Net interest rate spread(6)                                       $     13,701    2.20%                 $     15,690    2.42%
                                                                  ============    ====                  ============    ====
Net interest margin (7)                                                           2.40%                                 2.68%
                                                                                  ====                                  ====
Ratio of interest-earning assets to interest-
  bearing liabilities                                    109.57%                               111.01%
                                                   ============                          ============
</TABLE>

                                       10
<PAGE>

<TABLE>
<CAPTION>
                                                                  FOR THE NINE MONTHS ENDED DECEMBER 31,
                                                    -------------------------------------------------------------------
                                                                  2003                               2002
                                                    ---------------------------------   -------------------------------
                                                                              AVERAGE                           AVERAGE
                                                     AVERAGE                  YIELD/     AVERAGE                YIELD/
                                                     BALANCE      INTEREST     COST      BALANCE     INTEREST    COST
                                                    ---------------------------------   -------------------------------
                                                                           (DOLLARS IN THOUSANDS)
<S>                                                 <C>          <C>          <C>       <C>          <C>        <C>
Assets:
     Interest-earning assets:
      Loans receivable, net and
         mortgage loans held for sale (1)           $1,628,111   $   66,302      5.43%  $1,326,233   $ 64,920      6.53%
      Investment securities (2)                         93,644        2,053      2.92      126,135      4,476      4.71
      Mortgage-backed securities (3)                   661,282       18,901      3.81      753,920     27,617      4.88
                                                    ----------   ----------   -------   ----------   --------   -------
            Total interest-earning assets            2,383,037       87,256      4.88    2,206,288     97,013      5.86
                                                                 ----------   -------                --------   -------
     Noninterest-earning assets                        196,335                             220,253
                                                    ----------                          ----------
            Total assets                            $2,579,372                          $2,426,541
                                                    ==========                          ==========
Liabilities and Stockholders' Equity:
     Interest-bearing liabilities:
      Deposits (4)                                  $1,338,601       16,751      1.67   $1,149,734     21,253      2.45
      FHLB advances and other borrowings               815,749       25,176      4.11      889,959     31,339      4.67
                                                    ----------   ----------   -------   ----------   --------   -------
            Total interest-bearing liabilities       2,154,350       41,927      2.59    2,039,693     52,592      3.42
                                                                 ----------   -------                --------   -------
     Noninterest-bearing liabilities (5)               221,766                             213,376
                                                    ----------                          ----------
            Total liabilities                        2,376,116                           2,253,069
     Stockholders' equity                              203,256                             173,472
                                                    ----------                          ----------
            Total liabilities and stockholders'
                equity                              $2,579,372                          $2,426,541
                                                    ==========                          ==========
Net interest rate spread (6)                                     $   45,329      2.29%               $ 44,421      2.44%
                                                                 ==========   =======                ========   =======
Net interest margin (7)                                                          2.53%                             2.67%
                                                                              =======                           =======
Ratio of interest-earning assets to interest-
  bearing liabilities                                   110.62%                             108.17%
                                                    ==========                          ==========
</TABLE>

------------------------
(1)      Amount is net of deferred loan origination costs, undisbursed proceeds
         of construction mortgages in process, allowance for loan losses and
         includes non-performing loans.

(2)      Includes short-term investments, investment securities available for
         sale and FHLB stock.

(3)      Consists of mortgage-backed securities available for sale and held to
         maturity.

(4)      Includes the net effect of interest rate swaps.

(5)      Consists primarily of business checking accounts.

(6)      Net interest rate spread represents the difference between the weighted
         average yield on interest-earning assets and the weighted average cost
         of interest-bearing liabilities.

(7)      Net interest margin represents net interest income as a percentage of
         average interest-earning assets.

PROVISION FOR LOAN LOSSES

         The Company's provision for loan losses was $275,000 for the third
quarter of fiscal year 2004, compared to $150,000 for the third quarter of
fiscal year 2003. For the first nine months of fiscal year 2004, the provision
for loan losses was $650,000, compared to $400,000 for the first nine months of
fiscal year 2003. These provisions were based primarily on management's
assessment of several key factors, including portfolio growth and composition
changes, charge-offs, internal loan review classifications, and current economic
conditions. For additional information on the amount of the allowance and the
process for evaluating its adequacy, see "Financial Condition -- Asset Quality
-- Allowance for Loan Losses."

NON-INTEREST INCOME

         Non-interest income increased $3.0 million, or 27%, to $14.0 million
for the third quarter of fiscal year 2004 from $11.1 million for the third
quarter of fiscal year 2003, due primarily to increases of $4.0 million in gain
on sale of investment securities available for sale, and $793,000 in loan
servicing income, partially offset by a decrease of $1.9 million in gain on sale
of mortgage loans. For the first nine months of fiscal year 2004, non-interest
income increased $10.8 million, or 39%, to $38.9 million from $28.1 million for
the first nine months of fiscal year 2003, due primarily to increases of $4.5
million in gain on sale of investment securities available for sale, $3.2
million in gain on sale of mortgage loans, and $1.8 million in loan servicing
income.

         The decrease in gain on sale of mortgage loans for the third quarter
was due primarily to a lower volume of loans originated for sale, partially
offset by changes in fair value of derivative instruments utilized in secondary
market hedging activities, as required by SFAS No. 133, that resulted in an
addition to the gain of $1.3 million for the third quarter of fiscal year 2004,
compared to a reduction of $582,000 for the third quarter of fiscal year 2003.
This $1.3 million addition to the gain in the third quarter of fiscal year 2004
reflected declines in commitments to originate mortgage loans for sale and
commitments to sell mortgage loans. The increase in gain on sale of mortgage
loans for the first nine months was due primarily to a higher volume of loans
originated for sale, and changes in fair value of derivative

                                       11

<PAGE>

instruments utilized in secondary market hedging activities that resulted in an
addition to the gain of $388,000 for first nine months of fiscal year 2004,
compared to a reduction of $420,000 for the first nine months of fiscal year
2003. In accordance with generally accepted accounting principles, the Company
has not recognized $160,000 of unrealized gains as of December 31, 2003 on
mortgage loans held for sale that are carried at the lower of cost or market
value.

         The increase in loan servicing income for the third quarter of fiscal
year 2004 was due primarily to a $1.2 million addition to the valuation
allowance for mortgage servicing rights for the third quarter of fiscal year
2003. No valuation allowance adjustments were required for the third quarter of
fiscal year 2004. The increase in loan servicing income for the first nine
months was due primarily to a $1.4 million addition to the valuation allowance
offset by a $1.2 million recovery for the first nine months of fiscal year 2004,
compared to a $2.6 million addition to the valuation allowance for the first
nine months of fiscal year 2003. The valuation allowance adjustments were based
on estimated impairment due to a combination of actual payoff experience and
prepayment forecasts for the applicable periods. The recovery in the second
quarter of fiscal year 2004 resulted from an increase in the present value of
the Company's mortgage servicing rights. Amortization of mortgage servicing
rights totaled $903,000 for the third quarter of fiscal year 2004 and $2.5
million for the first nine months of fiscal year 2004, compared to $785,000 and
$2.3 million for the respective periods of fiscal year 2003.

NON-INTEREST EXPENSE

         Non-interest expense increased $4.6 million, or 30%, to $20.0 million
for the third quarter of fiscal year 2004 from $15.4 million for the third
quarter of fiscal year 2003, due primarily to increases of $3.0 million in
compensation and benefits and $1.4 million in other non-interest expense. For
the first nine months of fiscal year 2004, non-interest expense increased $11.2
million, or 25%, to $55.7 million from $44.4 million for the first nine months
of fiscal year 2003, due primarily to increases of $8.4 million in compensation
and benefits and $2.5 million in other non-interest expense. The increase in
non-interest expense for the third quarter was due primarily to expenses related
to the pending acquisition by Webster totaling approximately $2.7 million. In
addition, the increase in non-interest expense for the first nine months was due
primarily to higher costs related to growth in mortgage originations, the net
accounting impact of market price increases of FAB stock held by certain
employee benefit plans, and higher employee health and pension plan costs.

INCOME TAXES

         Income tax expense decreased $1.3 million, or 31%, to $3.0 million for
the third quarter of fiscal year 2004 from $4.3 million for the third quarter of
fiscal year 2003. For the first nine months of fiscal year 2004, income tax
expense increased $630,000, or 6%, to $11.3 million from $10.7 million for the
first nine months of fiscal year 2003. The Company's effective tax rate
increased to 40.4% for the first nine months of fiscal year 2004 from 38.6% for
the first nine months of fiscal year 2003, due primarily to the effects of
increased appreciation of FAB stock contributed to the ESOP that is not tax
deductible.

                                       12

<PAGE>

                               FINANCIAL CONDITION

OVERVIEW

         Total assets increased $142.0 million, or 6%, to $2.556 billion at
December 31, 2003 from $2.414 billion at March 31, 2003, due primarily to an
increase of $153.5 million in loans receivable, net.

         The following table sets forth the composition of the Company's loan
portfolio in dollar amounts and as a percentage of the portfolio at the dates
indicated:

<TABLE>
<CAPTION>
                                  DECEMBER 31, 2003         MARCH 31, 2003
                                ---------------------   -----------------------
                                             PERCENT                  PERCENT
                                  AMOUNT     OF TOTAL     AMOUNT      OF TOTAL
                                ----------   --------   ----------   ----------
                                             (DOLLARS IN THOUSANDS)
<S>                             <C>          <C>        <C>          <C>
Mortgage Loans:
   Residential                  $  660,357      46.20%  $  601,063        47.21%
   Commercial real estate          192,608      13.47      142,974        11.23
   Construction and land            66,165       4.63       61,698         4.85
                                ----------   --------   ----------   ----------
         Total mortgage loans      919,130      64.30      805,735        63.29
                                ----------   --------   ----------   ----------
Commercial Loans                   275,683      19.29      283,137        22.24
                                ----------   --------   ----------   ----------
Consumer Loans:
   Home equity lines               194,513      13.61      140,189        11.01
   Second mortgages                 31,505       2.20       32,914         2.58
   Other consumer loans              8,650       0.60       11,158         0.88
                                ----------   --------   ----------   ----------
         Total consumer loans      234,668      16.41      184,261        14.47
                                ----------   --------   ----------   ----------
      Total loans receivable     1,429,481     100.00%   1,273,133       100.00%
                                             ========                ==========
Less:
   Allowance for loan losses       (19,362)                (19,335)
   Undisbursed proceeds of
     construction mortgages
        in process                 (21,626)                (17,752)
   Purchase premium on
          loans, net                 2,522                   3,377
   Deferred loan origination
       costs, net                    3,767                   1,908
                                ----------              ----------
      Loans receivable, net     $1,394,782              $1,241,331
                                ==========              ==========
</TABLE>

         Mortgage loan originations totaled $2.668 billion for the first nine
months of fiscal year 2004, including $2.326 billion originated for sale of
which $1.829 billion were originated by PMC. During this time, $2.492 billion of
mortgage loans were sold in the secondary market, including $1.929 billion sold
servicing released by PMC.

         Mortgage loans sold to others and serviced by the Bank on a fee basis
under various agreements decreased $126.0 million, or 9%, to $1.286 billion at
December 31, 2003 from $1.412 billion at March 31, 2003, due primarily to
refinancing activity. Loans serviced for others are not included in the
Consolidated Balance Sheets. Mortgage servicing rights, net of the valuation
allowance, increased $1.8 million, or 30%, to $7.7 million at December 31, 2003,
from $6.0 million at March 31, 2003. The valuation allowance related to the
impairment of mortgage servicing rights decreased $1.0 million to $2.1 million
at December 31, 2003, from $3.1 million at March 31, 2003, due to a valuation
recovery of $1.2 million and a write-down of $1.2 million for permanent
impairment, less an addition for estimated impairment of $1.4 million during the
first nine months of fiscal year 2004. Mortgage servicing rights were 0.60% of
loans serviced for others at December 31, 2003, compared to 0.42% at March 31,
2003.

         Balance sheet growth during the first nine months of fiscal year 2004
was primarily funded by increases of $98.5 million in FHLB advances and other
borrowings, and $39.0 million in deposit balances. The 3% increase in deposits,
to $1.466 billion at December 31, 2003, included increases in demand deposits of
$27.7 million, or 5%, and savings deposits of $29.4 million, or 10%, partially
offset by a decline in time deposits of $18.1 million, or 3%. The Company's
demand and savings accounts, or core deposits, were 62.6% of total deposits at
December 31, 2003, compared to 60.3% at March 31, 2003.

                                       13

<PAGE>

         Total stockholders' equity increased $36.0 million, or 19%, to $229.1
million at December 31, 2003, from $193.1 million at March 31, 2003. The
increase was due primarily to $16.7 million in net income and increases of $24.8
million from common shares issued for stock options exercised, including related
tax benefits, and $6.1 million from other stock-based employee benefit plans,
partially offset by $6.4 million in dividends paid to stockholders and a $5.2
million decrease in the fair market value of available for sale securities, net
of tax. Stockholders' equity to assets was 8.96% at December 31, 2003, compared
to 8.00% at March 31, 2003. Book value per share increased to $12.30 at December
31, 2003 from $11.63 at March 31, 2003. Tangible book value per share increased
to $9.51 at December 31, 2003 from $8.40 at March 31, 2003.

ASSET QUALITY

         Non-Performing Assets. The following table sets forth information
regarding non-accrual loans and real estate owned ("REO"). The Company ceases to
accrue interest on loans 90 days or more past due and charges off all accrued
interest. Foregone interest on non-accrual loans was $117,000 for the three
months ended December 31, 2003 and $136,000 for the nine months ended December
31, 2003.

<TABLE>
<CAPTION>
                                                                        DECEMBER 31,      MARCH 31,
                                                                            2003            2003
                                                                        -------------   -------------
                                                                           (DOLLARS IN THOUSANDS)
<S>                                                                     <C>             <C>
Non-accrual loans:
  Mortgage loans:
     One-to-four family..............................................   $         982   $       1,699
     Commercial real estate..........................................           7,643              96
                                                                        -------------   -------------
          Total mortgage loans.......................................           8,625           1,795
                                                                        -------------   -------------
  Commercial loans...................................................           1,065           1,388
                                                                        -------------   -------------
  Consumer loans:
     Second mortgages................................................              97             107
     Other consumer loans............................................              20              15
                                                                        -------------   -------------
          Total consumer loans.......................................             117             122
                                                                        -------------   -------------
          Total non-accrual loans....................................           9,807           3,305
REO, net (1).........................................................             140             194
                                                                        -------------   -------------
          Total non-performing assets................................   $       9,947   $       3,499
                                                                        =============   =============

Allowance for loan losses as a percent of loans (2)..................            1.37%           1.53%
Allowance for loan losses as a percent of non-performing loans (3)...             197%            585%
Non-accrual loans as a percent of loans (2)(3).......................            0.69%           0.26%
Non-performing assets as a percent of total assets...................            0.39%           0.14%
</TABLE>

--------------------------
(1)      REO balances are shown net of related valuation allowances.

(2)      Loans includes loans receivable, net, excluding allowance for loan
         losses.

(3)      Non-performing loans consist of all loans 90 days or more past due and
         other loans which have been identified by the Company as presenting
         uncertainty with respect to the collectability of interest or
         principal.

         The increase of $6.4 million in non-performing assets during the first
nine months of fiscal year 2004 was due primarily to one non-delinquent
commercial real estate loan placed on non-accrual status during the third
quarter of fiscal year 2004 based on the Company's uncertainty that it will
collect all amounts due under the terms of the loan.

         Allowance for Loan Losses. The allowance for loan losses is based on
management's ongoing review and estimate of the credit losses inherent in the
loan portfolio. Management's methodology to estimate loss exposure inherent in
the portfolio includes analysis of individual loans deemed to be impaired,
performance of individual loans in relation to contract terms, and allowance
allocations for various loan types based on payment status or loss experience.
An unallocated allowance is also maintained within an established range based on
management's assessment of many factors including current market conditions,
trends in loan delinquencies and charge-offs, the volume and mix of new
originations, and the current type, mix, changing risk profiles and balance of
the portfolio. In addition, the OTS, as an integral part of their examination
process, periodically reviews the Company's allowance for loan losses. The OTS
and the FDIC may require the Company to adjust the allowance for loan losses
based upon judgments different from those of management.

                                       14


<PAGE>

         The allowance for loan losses totaled $19.4 million at December 31,
2003, compared to $19.3 million at March 31, 2003. The following table sets
forth activity in the Company's allowance for loan losses for the periods
indicated:

<TABLE>
<CAPTION>
                                                         FOR THE THREE MONTHS    FOR THE NINE MONTHS
                                                          ENDED DECEMBER 31,     ENDED DECEMBER 31,
                                                         ---------------------   ---------------------
                                                           2003        2002        2003        2002
                                                         ---------   ---------   ---------   ---------
                                                                    (DOLLARS IN THOUSANDS)
<S>                                                      <C>         <C>         <C>         <C>
Balance at beginning of period........................   $  19,318   $  19,321   $  19,335   $  19,237
Provision for loan losses.............................         275         150         650         400
                                                         ---------   ---------   ---------   ---------
Charge-offs:
   One-to-four family mortgage loans..................           -         (60)        (63)        (70)
   Commercial loans...................................        (191)       (117)       (489)       (203)
   Consumer Loans:
      Home equity lines...............................          (5)         (8)        (16)        (31)
      Other consumer..................................         (38)        (30)        (87)        (81)
                                                         ---------   ---------   ---------   ---------
             Total                                            (234)       (215)       (655)       (385)
Recoveries............................................           3          11          32          15
                                                         ---------   ---------   ---------   ---------
Balance at end of period..............................   $  19,362   $  19,267   $  19,362   $  19,267
                                                         =========   =========   =========   =========
Ratio of net charge-offs during the period to
   average loans outstanding during the period........        0.06%       0.07%       0.06%       0.04%
</TABLE>

         Management was influenced by several key factors as a basis for the
level of the Company's provisions for loan losses, which resulted in the changes
to the provision of loan losses and the allowance for loan losses during the
past year. Although the Company's non-performing loans and charge-offs have
remained low, there has been a shift in the composition of the loan portfolio at
December 31, 2003 as compared to December 31, 2002. The residential mortgage
portfolio has increased due primarily to the origination and retention of
certain adjustable-rate and fixed-rate mortgage loans with terms of 15 years or
less, and high refinancing activity reflecting the low fixed rate environment.
The commercial and consumer loan portfolios have also continued to show
significant growth. Commercial and consumer loans bear a higher degree of risk
than the one-to-four family mortgage loans that make up substantially all of the
Company's residential portfolio. Management also considered internal loan review
classifications and current economic conditions, including unemployment rates in
the Company's key market area of southeastern New England, which could have an
adverse affect on asset quality and result in higher non-performing loans and
charge-offs.

         The Company will continue to monitor and modify its allowances for loan
losses as conditions dictate. While management believes the Company's allowance
for loan losses was sufficient to absorb losses inherent in its loan portfolio
at December 31, 2003, no assurances can be given that the Company's level of
allowance for loan losses will be sufficient to cover future loan losses
incurred by the Company or that future adjustments to the allowance for loan
losses will not be necessary if economic and other conditions differ
substantially from the economic and other conditions used by management to
determine the current level of the allowance for loan losses.

MARKET RISK AND MANAGEMENT OF INTEREST-RATE RISK

         The principal market risk affecting the Company is interest-rate risk.
The principal objective of the Company's interest rate risk management function
is to evaluate the interest rate risk included in certain balance sheet
accounts, determine the level of risk appropriate given the Company's business
strategy, operating environment, capital and liquidity requirements and
performance objectives, and manage the risk consistent with Board of Directors'
approved guidelines. Through such management, the Company seeks to reduce the
vulnerability of its operations to changes in interest rates. The Company
monitors its interest rate risk as such risk relates to its operating
strategies. The Company's Board of Directors has established an Asset/Liability
Committee, responsible for reviewing its asset/liability policies and interest
rate risk position, which meets on a monthly basis and reports trends and
interest rate risk position to the Board of Directors on a quarterly basis. The
extent of the movement of interest rates is an uncertainty that could have a
negative impact on the earnings of the Company.

         The Company has primarily utilized the following strategies to manage
interest rate risk: (1) the origination and retention of certain adjustable-rate
and shorter-term (generally 15 years or less) fixed-rate, one-to-four family
mortgage loans; (2) selling mortgage loans originated for sale in the secondary
market with either servicing rights retained or servicing rights released; and
(3) investing primarily in adjustable-rate mortgage-backed securities and
short-term fixed-rate CMOs. In conjunction with its mortgage banking activities,
the Company uses forward contracts in order to reduce exposure to interest-rate
risk. The Company obtains commitments from investors on a loan-by-loan basis for
mortgage loans sold with servicing rights released. The amount of forward
coverage of the "pipeline" of mortgages is managed on a day-to-day basis, within
Board approved policy guidelines, based on the Company's assessment of the
general direction of interest rates and levels of mortgage origination activity.
In addition, the Company has engaged in interest rate swap agreements, from time
to time, to synthetically lengthen its liability maturities.

                                       15

<PAGE>

         The Company's interest rate risk is monitored by management through the
use of a model that generates estimates of the change in the Company's net
interest income and net portfolio value ("NPV") over a range of interest rate
scenarios. NPV is the present value of expected cash flows from assets,
liabilities, and off-balance sheet contracts. The NPV ratio, under any interest
rate scenario, is defined as the NPV in that scenario divided by the estimated
market value of assets in the same scenario. The OTS produces a similar analysis
for the Bank using its own model, based upon data submitted in the Bank's
quarterly Thrift Financial Report, the results of which may vary from the
Company's internal model primarily due to differences in assumptions utilized
between the Company's internal model and the OTS model, including estimated loan
prepayment rates, reinvestment rates and deposit renewal rates.

         The following table sets forth the Company's estimated NPV and NPV
ratios as of December 31, 2003 and March 31, 2003, as calculated by the Company.

<TABLE>
<CAPTION>
                        DECEMBER 31, 2003                  MARCH 31, 2003
                 -------------------------------   -------------------------------
  CHANGE IN      ESTIMATED               NPV       ESTIMATED               NPV
INTEREST RATES      NET              SENSITIVITY      NET              SENSITIVITY
   IN BASIS      PORTFOLIO    NPV      IN BASIS    PORTFOLIO    NPV      IN BASIS
    POINTS         VALUE     RATIO      POINTS       VALUE     RATIO      POINTS
--------------   ---------   -----   -----------   ---------   -----   -----------
                                      (DOLLARS IN THOUSANDS)
<S>              <C>         <C>     <C>           <C>         <C>     <C>
     300         $ 127,765    5.22%         (223)  $ 179,199    7.57%          123
     200           154,324    6.19          (126)    181,195    7.54           120
     100           177,459    6.99           (47)    172,562    7.09            75
  Unchanged        192,344    7.46            --     155,172    6.34            --
</TABLE>

         Certain shortcomings are inherent in the methodology used in the above
interest rate risk measurements. Modeling changes in NPV require certain
assumptions that may or may not reflect the manner in which actual yields and
costs respond to changes in market interest rates. In this regard, the NPV model
presented incorporates an assumption that the composition of the Company's
interest sensitive assets and liabilities existing at the beginning of a period
remains constant over the period being measured, and that a particular change in
interest rates is reflected uniformly across the yield curve regardless of the
term to maturity or repricing of specific assets and liabilities. Accordingly,
although the NPV measurements and net interest income models provide an
indication of the Company's interest rate risk exposure at a particular point in
time, such measurements are not intended to, and do not, provide a precise
forecast of the effect of changes in market interest rates on the Company's net
interest income.

LIQUIDITY AND CAPITAL RESOURCES

         The Bank's primary sources of funds are deposits, principal and
interest payments on loans and mortgage-backed securities, proceeds from the
sale of loans, FHLB advances, and other borrowings. While maturities and
scheduled amortization of loans are predictable sources of funds, deposit flows
and mortgage prepayments are influenced by general interest rates, economic
conditions and competition. The Bank expects to use deposits, FHLB advances and
other borrowings, and retained earnings to fund asset growth in the future,
depending on market conditions, the pricing of deposit products, and the pricing
of FHLB advances and other borrowings.

         The Bank's most liquid assets are cash, short-term investments,
mortgage loans held for sale, investment securities available for sale, and
mortgage-backed securities available for sale. The levels of these assets are
dependent on the Bank's operating, financing, lending and investing activities
during any given period. At December 31, 2003, cash, short-term investments,
mortgage loans held for sale, investment securities available for sale, and
mortgage-backed securities available for sale totaled $933.3 million, or 36.5%
of total assets.

         The Bank has other sources of liquidity if a need for additional funds
arises, including a $25.0 million FHLB secured line of credit, FHLB advances,
and other borrowings. At December 31, 2003, the Bank had $800.6 million in
advances outstanding from the FHLB and other borrowings, and an additional
borrowing capacity from the FHLB of $197.2 million including the $25.0 million
line of credit. At December 31, 2003, the portfolio of putable FHLB advances and
putable reverse repurchase agreements totaled $407.5 million, with an average
effective interest rate of 4.50%, and an average life to maturity and estimated
average life of 5.9 years. The estimated average life calculated by the Bank may
or may not mirror the counter-party's actual decision to exercise its option to
terminate the advances. The FHLB is required by regulation to offer replacement
funding to the Bank if the FHLB terminates a putable advance prior to the
maturity date of the advance, provided that the Bank is able to satisfy the
FHLB's normal credit and collateral requirements. Such replacement funding would
be for the remaining maturity of the putable advance, and at a market interest
rate or a predetermined interest rate agreed upon between the Bank and the FHLB.

         At December 31, 2003, the Company deconsolidated Capital Trust II.
Capital Trust II had $10.0 million of 11.695% trust preferred securities
outstanding, with an average interest cost of 10.29%, that mature in July 2030
unless the Company elects and obtains regulatory approval to accelerate the
maturity date to as early as July 2010.

                                       16

<PAGE>

         At December 31, 2003, the Bank had commitments to originate loans and
unused outstanding lines of credit and undistributed balances of construction
loans totaling $387.8 million. The Bank anticipates that it will have sufficient
funds available to meet its current loan origination commitments. Certificate of
deposit accounts scheduled to mature in less than one year from December 31,
2003 totaled $400.9 million. Based on its prior experience and other factors,
the Bank currently expects that it will retain a majority of maturing
certificate accounts.

         At December 31, 2003, the consolidated capital to total assets ratio of
the Company was 8.59%. During fiscal year 2004, the Company paid a quarterly
cash dividend to stockholders of $0.10 per share in the first quarter and $0.13
per share in the second and third quarters, and announced the declaration of a
cash dividend of $0.13 per share to stockholders for payment in the fourth
quarter. The Company's primary sources of funding for dividends, and payments
for periodic stock repurchases, have been dividends from the Bank and proceeds
from exercises of employee stock options. The Bank's ability to pay dividends
and other capital distributions to the Company is generally limited by OTS
regulations.

         As of December 31, 2003, the Company had repurchased 360,616 shares of
Company stock at an average price of $7.09 per share, or 56% of the 640,056
shares authorized for repurchase under the Company's seventh stock repurchase
program announced on September 29, 2000. There was no stock repurchase activity
during the first nine months of fiscal year 2004. The Company has repurchased
4,973,806 shares since May 15, 1998.

         At December 31, 2003, the Bank exceeded all of its regulatory capital
requirements. The Bank's Tier 1 core capital of $159.7 million, or 6.42% of
total adjusted assets, was above the required level of $99.6 million, or 4.0%;
risk-based capital of $170.8 million, or 11.69% of risk-weighted assets, was
above the required level of $116.9 million or 8.0%, and Tier 1 risk-based
capital of $159.7 million, or 10.59% of risk-weighted assets, was above the
required level of $58.4 million or 4.0%. The Bank also continued to exceed the
regulatory capital requirements for designation as a "well capitalized"
institution under the OTS prompt corrective action regulations of 5.0% for Tier
1 core capital, 10.0% for risk-based capital and 6% for Tier 1 risk-based
capital. The Trust Company is subject to similar regulatory capital
requirements, and exceeded all of its capital requirements at December 31, 2003.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         See the Section of Item 2 captioned, "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Financial Condition
- Market Risk and Management of Interest-Rate Risk" for quantitative and
qualitative information about market risk and its potential effect on the
Company.

ITEM 4. CONTROLS AND PROCEDURES.

         The Company's management, including the Company's principal executive
officer and principal financial officer, have evaluated the effectiveness of the
Company's "disclosure controls and procedures," as such term is defined in Rule
13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended,
(the "Exchange Act"). Based upon their evaluation, the principal executive
officer and principal financial officer concluded that, as of the end of the
period covered by this report, the Company's disclosure controls and procedures
were effective for the purpose of ensuring that the information required to be
disclosed in the reports that the Company files or submits under the Exchange
Act with the Securities and Exchange Commission (the "SEC") (1) is recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms, and (2) is accumulated and communicated to the Company's
management, including its principal executive and principal financial officers,
as appropriate to allow timely decisions regarding required disclosure. In
addition, based on that evaluation, no change in the Company's internal control
over financial reporting occurred during the quarter ended December 31, 2003
that has materially affected, or is reasonably likely to materially affect, the
Company's internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

         In the normal course of the Company's business, there are various
outstanding legal proceedings. In the opinion of management, based on
consultation with legal counsel, the financial position of the Company will not
be affected materially as a result of the outcome of such legal proceedings.

         In January 2003, a claim was filed against the Trust Company, of which
the Company owns a 65% equity interest, seeking recovery of approximately $1
million in unidentifiable damages resulting from the foreclosure of a property
the mortgage of which was held by an account holder of the Trust Company. During
the third quarter of fiscal year 2004, the claim was settled without the Trust
Company incurring any expenses or losses in connection with the action.

                                       17

<PAGE>

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

     Not Applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

     Not Applicable.

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

     Not Applicable.

ITEM 5. OTHER INFORMATION.

     Not Applicable.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

     a)   Exhibits

               2.1  Agreement and Plan of Merger by and among Webster Financial
                    Corporation and FIRSTFED AMERICA BANCORP, INC. (1)

               3.1  Certificate of Incorporation of FIRSTFED AMERICA BANCORP,
                    INC. (2)

               3.2  Bylaws of FIRSTFED AMERICA BANCORP, INC. (3)

               4.0  Stock Certificate of FIRSTFED AMERICA BANCORP, INC. (2)

               10.1 Employment Agreement by and between Robert F. Stoico,
                    FIRSTFED AMERICA BANCORP, INC., First Federal Bank of
                    America and Webster Financial Corporation (filed herewith)

               10.2 Employment Agreement by and between Edward A. Hjerpe, III,
                    FIRSTFED AMERICA BANCORP, INC., First Federal Bank of
                    America and Webster Financial Corporation (filed herewith)

               10.3 Employment Agreement by and between Kevin J. McGillicuddy,
                    FIRSTFED AMERICA BANCORP, INC., First Federal Bank of
                    America and Webster Financial Corporation (filed herewith)

               10.4 Employment Agreement by and between Frederick R. Sullivan,
                    FIRSTFED AMERICA BANCORP, INC., First Federal Bank of
                    America and Webster Financial Corporation (filed herewith)

               10.5 Employment Agreement by and between Terrence M. Tyrrell,
                    FIRSTFED AMERICA BANCORP, INC., First Federal Bank of
                    America and Webster Financial Corporation (filed herewith)

               31.1 Certification of CEO Pursuant to Section 302 of the
                    Sarbanes-Oxley Act of 2002 (filed herewith)

               31.2 Certification of CFO Pursuant to Section 302 of the
                    Sarbanes-Oxley Act of 2002 (filed herewith)


               32.1 Certification of CEO and CFO Pursuant to 18 U.S.C. Section
                    1350, as adopted Pursuant to Section 906 of the
                    Sarbanes-Oxley Act of 2002 (filed herewith)

-------------------------
(1)  Incorporated by reference into this document from the Exhibit to the Form
     8-K filed by Webster Financial Corporation (Commission File Number
     001-31486) on November 4, 2003.

(2)  Incorporated by reference into this document from the Exhibits to Form S-1,
     Registration Statement, and any amendments thereto, filed on September 27,
     1996, Registration No. 333-12855.

(3)  Incorporated by reference into this document from the Exhibits to the
     Annual Report on Form 10-K for the fiscal year ended March 31, 2002.


b)   Reports on Form 8-K

     A current report on Form 8-K was filed on October 9, 2003, attaching a
     press release dated October 7, 2003 announcing that the Company had reached
     a definitive agreement to be acquired by Webster Financial Corporation and
     certain other information regarding the Merger.

     A current report on Form 8-K was filed on November 5, 2003 that
     incorporated by reference the Agreement and Plan of Merger to the Current
     Report on Form 8-K filed by Webster Financial Corporation on November 4,
     2003.

                                       18

<PAGE>

                                   SIGNATURES

        Pursuant to the requirements 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.

                                    FIRSTFED AMERICA BANCORP, INC.
                                    Registrant

Date: February 12, 2004             /s/ Robert F. Stoico
                                    --------------------------------
                                    Robert F. Stoico
                                    Chairman of the Board, President
                                    and Chief Executive Officer
                                    (Principal Executive Officer)

Date: February 12, 2004             /s/ Edward A. Hjerpe, III
                                    --------------------------------
                                    Edward A. Hjerpe, III
                                    Executive Vice President, Chief
                                    Operating Officer and Chief
                                    Financial Officer
                                    (Principal Accounting and Financial Officer)

                                       19