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 quarter ended June 30, 1999

                                       OR

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

         Commission File Number:   0-23513


                      WEBSTER PREFERRED CAPITAL CORPORATION
                      -------------------------------------
             (Exact name of registrant as specified in its charter)


                     Connecticut                     06-1478208
                     -----------                     ----------
            (State or other jurisdiction of      (I. R. S. Employer
             incorporation or organization)     Identification Number)


            145 Bank Street, Waterbury, Connecticut        06702
            ---------------------------------------        -----
            (Address of principal executive offices)     (Zip Code)

       Registrant's telephone number, including area code: (203) 578-2286


         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      .
     ---       ---

         The number of shares outstanding of the registrant's common stock as of
July 31, 1999 is 100 shares.




<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION



                                      INDEX


<TABLE>
<CAPTION>
                                                                                                                Page
                                                                                                                ----
<S>                                                                                                          <C>
PART I - FINANCIAL INFORMATION


Condensed Statements of Condition at June 30, 1999 and December 31, 1998.....................................    3

Condensed Statements of Income for the Three and Six Months Ended June 30, 1999 and June 30, 1998 ...........    4

Condensed Statements of Cash Flows for the Six Months Ended June 30, 1999 and June 30, 1998..................    5

Notes to the Condensed Financial Statements..................................................................    6

Management's Discussion and Analysis of Financial Statements.................................................    9

Quantitative and Qualitative Disclosures About Market Risk...................................................   13

Forward Looking Statements...................................................................................   13

PART II - OTHER INFORMATION..................................................................................   14

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

INDEX TO EXHIBITS ...........................................................................................   16
</TABLE>



                                       2



<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION
CONDENSED STATEMENTS OF CONDITION (unaudited)
(Dollars in Thousands, Except Share Data)
<TABLE>
<CAPTION>
                                                                                  June 30, 1999      December 31, 1998
                                                                             ===================== =====================
<S>                                                                             <C>                  <C>
Assets

Cash                                                                                     $  23,355            $  26,964
Mortgage-Backed Securities Available for Sale, at Fair Value (Note 2)                      104,083              118,262
Residential Mortgage Loans, Net (Note 3)                                                   854,841              819,634
Accrued Interest Receivable                                                                  5,372                5,422
Prepaid Expenses and Other Assets                                                              509                  679
                                                                             ---------------------- --------------------
        Total Assets                                                                     $ 988,160           $  970,961
                                                                             ====================== ====================

Liabilities and Shareholders' Equity

Accrued Dividends Payable                                                                  $   794            $   1,019
Accrued Expenses and Other Liabilities                                                         267                  224
                                                                             ---------------------- --------------------
        Total Liabilities                                                                    1,061                1,243
                                                                             ---------------------- --------------------

Mandatorily Redeemable Preferred Stock (Note 4)

        Series A  7.375%  Cumulative  Redeemable  Preferred  Stock,  Liquidation
           preference $1,000 per share; par value $1.00 per
           share; 40,000 shares authorized, issued and outstanding                          40,000               40,000

Shareholders' Equity

        Series B  8.625%  Cumulative  Redeemable  Preferred  Stock,  Liquidation
           preference $10 per share; par value $1.00 per
           share; 1,000,000 shares authorized, issued and outstanding                        1,000                1,000
        Common Stock, par value $.01 per share:
           Authorized - 1,000 shares
           Issued and Outstanding - 100 shares                                                   1                    1
        Paid-in Capital                                                                    928,799              928,799
        Distributions in Excess of Accumulated Earnings                                         -                (1,198)
        Retained Earnings                                                                   18,078                    -
        Accumulated Other Comprehensive Income (Loss)                                        (779)                1,116
                                                                             ---------------------- --------------------
        Total Shareholders' Equity                                                         947,099              929,718
                                                                             ---------------------- --------------------
        Total Liabilities and Shareholders' Equity                                      $  988,160            $ 970,961
                                                                             ====================== ====================
</TABLE>

See accompanying notes to the condensed financial statements





                                       3


<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION
CONDENSED STATEMENTS OF INCOME (unaudited)
(Dollars In Thousands, Except Share Data)

<TABLE>
<CAPTION>
                                                              Three Months Ended June 30,      Six Months Ended June 30,

                                                                     1999            1998           1999          1998
                                                           --------------- --------------- -------------- --------------
<S>                                                             <C>             <C>            <C>            <C>
Interest Income:
Loans                                                            $ 14,427        $ 13,140       $ 28,044       $ 25,114
Securities                                                          1,773           2,895          3,662          5,075
                                                           --------------- --------------- -------------- --------------
          Total Interest Income                                    16,200          16,035         31,706         30,189
Provision for Loan Losses (Note 3)                                    120               -            240              -
                                                           --------------- --------------- -------------- --------------
Interest Income After Provision for Loan Losses                    16,080          16,035         31,466         30,189

Noninterest Expenses:
Advisory Fee Expense Paid to Parent                                    37              38             75             75
Dividends on Mandatorily Redeemable Preferred Stock                   737             738          1,475          1,475
Start-up Costs                                                          -             137              -            259
Other Noninterest Expenses                                            109              33            209             63
                                                           --------------- --------------- -------------- --------------
          Total Noninterest Expenses                                  883             946          1,759          1,872

Income Before Taxes                                                15,197          15,089         29,707         28,317
Income Taxes                                                            -               -              -              -
                                                           --------------- --------------- -------------- --------------
Net Income                                                         15,197          15,089         29,707         28,317
Preferred Stock Dividends                                             215             216            431            431
                                                           --------------- --------------- -------------- --------------

Net Income Available to Common Shareholder                       $ 14,982        $ 14,873       $ 29,276       $ 27,886
                                                           =============== =============== ============== ==============
Net Income Per Common Share:
           Basic                                                $ 149,820       $ 148,730       $292,760       $278,860
           Diluted                                              $ 149,820       $ 148,730       $292,760       $278,860
                                                           =============== =============== ============== ==============
</TABLE>

See accompanying notes to the condensed financial statements


                                       4
1




<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS (unaudited)
(Dollars In Thousands)
<TABLE>
<CAPTION>
                                                                                    Six Months Ended June 30,
                                                                                   1999                   1998
                                                                            ------------------      ------------------
<S>                                                                           <C>                    <C>
Operating Activities:
Net Income                                                                        $ 29,707               $ 28,317
Adjustments to Reconcile Net Cash Provided by Operating Activities:
           Provision for Loan Losses                                                   240                      -
           Accretion of Securities Discount                                            (24)                (1,021)
           Amortization of Deferred Loan Cost (Fees) and Premiums                      683                   (196)
           Decrease (Increase) in Accrued Interest Receivable                           50                   (827)
           Increase in Accrued Liabilities                                              43                  1,668
           Increase in Prepaid Expenses and Other Assets                               169                     95
                                                                              -------------          -------------
Net Cash Provided by Operating Activities                                           30,868                 28,036
                                                                              -------------          -------------
Investing Activities:
Purchase of  Mortgage-Backed Securities                                                  -                (51,682)
Principal Collected on Mortgage-Backed Securities                                   12,308                  1,927
Purchase of Loans                                                                 (134,532)              (213,655)
Principal Repayments of Loans, Net                                                  98,403                 95,580
                                                                              -------------          -------------
Net Cash Used by Investing Activities                                              (23,821)              (167,830)
                                                                              -------------          -------------
Financing Activities:
Dividends Paid on Common and Preferred Stock                                       (10,656)                (1,603)
Contributions from Parent                                                                -                142,841
                                                                              -------------          -------------
Net Cash (Used) Provided by Financing Activities                                   (10,656)               141,238
                                                                              -------------          -------------

(Decrease) Increase in Cash and Cash Equivalents                                    (3,609)                 1,444
Cash and Cash Equivalents at Beginning of Period                                    26,964                 26,167
                                                                              -------------          -------------
Cash and Cash Equivalents at End of Period                                        $ 23,355               $ 27,611
                                                                              =============          =============

Supplemental Disclosures:
        Income Taxes Paid                                                         $      -               $      -
        Interest Paid                                                             $      -               $      -
Supplemental Schedule of Non-Cash Financing Activity:
        Transfer of Residential Mortgage Loans to Other Real Estate
            Owned                                                                 $      -               $    110
</TABLE>


See accompanying notes to the condensed financial statements




                                       5

<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION


NOTES TO THE CONDENSED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



NOTE 1: BASIS OF PRESENTATION


The Company is a subsidiary of Webster Bank (see Note 1 to 1998 Annual  Report).
The Company has elected to be treated as a real estate investment trust ("REIT")
under the Internal Revenue Code of 1986 (the "Code"),  and will generally not be
subject to federal income tax for as long as it maintains its qualification as a
REIT, requiring among other things, that it currently distribute to stockholders
at least 95% of its "REIT  taxable  income"  (not  including  capital  gains and
certain items of noncash income). The Company and Webster Bank will also benefit
significantly  from federal and state tax  treatment  of  dividends  paid by the
Company as a result of its qualification as a REIT. The following  discussion of
the Company's  financial  condition and results of operations  should be read in
conjunction  with the Company's  financial  statements and other  financial data
included elsewhere herein.


The accompanying  condensed  financial  statements include all adjustments which
are, in the opinion of  management,  necessary  for a fair  presentation  of the
results for the interim  periods  presented.  All  adjustments  were of a normal
recurring nature.  The results of operations for the three and six month periods
ended June 30, 1999 are not  necessarily  indicative of the results which may be
expected for the year as a whole.  These financial  statements should be read in
conjunction  with the financial  statements  and notes  thereto  included in the
Webster Preferred Capital Corporation 1998 Annual Report to shareholders.

NOTE 2: MORTGAGE-BACKED SECURITIES

The following table sets forth certain information regarding the mortgage-backed
securities, which are classified as available for sale:

<TABLE>
<CAPTION>
(In Thousands)                                            Mortgage-Backed Securities
                                       ---------------- ----------------- ------------- ----------------
                                        Amortized Cost  Unrealized Gains    Unrealized   Estimated Fair
June 30, 1999                                                                   Losses            Value
                                       ---------------- ----------------- -------------- ---------------
<S>                                    <C>               <C>              <C>             <C>
       Available for Sale Portfolio          $ 104,862           $   673      $ (1,452)       $ 104,083
                                       ================ ================= ============== ===============
</TABLE>



<TABLE>
<CAPTION>
                                        Amortized Cost  Unrealized Gains    Unrealized   Estimated Fair
December 31, 1998                                                               Losses            Value
                                       ---------------- ----------------- ------------- ----------------
<S>                                    <C>              <C>               <C>           <C>
       Available for Sale Portfolio          $ 117,146          $  1,116         $   -        $ 118,262
                                       ================ ================= ============== ===============
</TABLE>



All mortgage-backed securities have a contractual maturity of over 10 years. The
weighted  average  yield at June 30, 1999 is 6.77%.  Although  the stated  final
maturity of these  obligations are long-term,  the weighted average life is much
shorter due to scheduled  repayments  and  prepayments.  Gains and losses on the
sales of securities are recorded using the specific identification method.


                                       6

<PAGE>

WEBSTER PREFERRED CAPITAL CORPORATION

CONDENSED NOTES TO FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------

NOTE 3:  RESIDENTIAL  MORTGAGE LOANS, NET

A summary of the Company's residential mortgage loans, net, follows:

<TABLE>
<CAPTION>
                                                              June 30,           December 31,
                                                                1999                1998
                                                           -------------        -------------
                                                              Carrying            Carrying
(In Thousands)                                                 Amount              Amount
                                                           -------------        -------------
<S>                                                        <C>                  <C>
Fixed-Rate Loans:
     15 yr. Loans                                           $ 116,709            $ 114,924
     20 yr. Loans                                               5,223                3,213
     25 yr. Loans                                               2,857                1,849
     30 yr. Loans                                             219,570              192,490
                                                          -------------        -------------

          Total Fixed-Rate Loans                              344,359              312,476
                                                          -------------        -------------
Variable-Rate Loans:
     15 yr. Loans                                               5,478                5,222
     20 yr. Loans                                               8,298                6,504
     25 yr. Loans                                               7,423                8,578
     30 yr. Loans                                             487,032              484,824
                                                          -------------        -------------

          Total Variable-Rate Loans                           508,231              505,128
                                                          -------------        -------------

        Total Residential Mortgage Loans                    $ 852,590             $817,604

        Premiums and Deferred Costs on Loans, Net               3,993                3,585
        Less: Allowance for Loan Losses                        (1,742)              (1,555)
                                                          -------------        -------------

          Residential Mortgage Loans, Net                   $ 854,841            $ 819,634
                                                          =============        =============
</TABLE>

During 1998, Webster Bank contributed $182.8 million of cash to the Company,  of
which $142.8 million was contributed  during the six months ended June 30, 1998.
Of the $182.8 million in cash,  $131.0  million was used to purchase  additional
residential  loans.  As of June 30, 1999,  approximately  40.4% of the Company's
residential  mortgage loans are  fixed-rate  loans and  approximately  59.6% are
adjustable-rate loans.

A detail  of the  change  in the  allowance  for loan  losses,  for the  periods
indicated follows:

<TABLE>
<CAPTION>
                                    Three Months Ended June 30,            Six Months Ended June 30,
(In Thousands)                             1999            1998                  1999           1998
                                  --------------  --------------        --------------  -------------
<S>                                 <C>             <C>                   <C>            <C>
Balance at Beginning of Period          $ 1,675         $ 1,539               $ 1,555        $ 1,538
Provision Charged to Operations             120               -                   240              -
Charge-offs                                 (53)           (157)                  (53)          (157)
Recoveries                                    -               -                     -              1
                                  --------------  --------------        --------------  -------------
Balance at End of Period                $ 1,742         $ 1,382               $ 1,742        $ 1,382
                                  ==============  ==============        ==============  =============
</TABLE>

                                       7

<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION


CONDENSED NOTES TO FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------



NOTE 4: MANDATORILY REDEEMABLE PREFERRED STOCK

The Company is required to redeem all outstanding  Series A Preferred  Shares on
January 15, 2001 at a  redemption  price of $1,000 per share,  plus  accrued and
unpaid dividends.

The Series A  Preferred  Shares may be  redeemed at the option of the Company at
any time on and after January 15, 1999 through January 14, 2001.

NOTE 5: OTHER COMPREHENSIVE INCOME

The  following   table   summarizes   reclassification   adjustments  for  other
comprehensive income and the related tax effects:

<TABLE>
<CAPTION>
                                                             Before             Income tax
Three months ended June 30, 1999 and 1998                      Tax               (expense)         Net-of-tax
(In Thousands)                                               Amount             or benefit           Amount
                                                        ---------------     -----------------   ----------------
<S>                                                        <C>                 <C>                <C>
Unrealized loss on available for sale securities:
    Unrealized holding losses arising during the period       $  (1,703)                   -         $   (1,703)
    Less: Reclassification adjustment for gains
      realized during the period                                      -                    -                  -
                                                        ---------------     -----------------   ----------------

    Other comprehensive loss at June 30, 1999                 $  (1,703)                   -         $   (1,703)
                                                        ===============     =================   ================

Unrealized loss on available for sale securities:
    Unrealized holding losses arising during the period     $       (64)                   -          $     (64)
    Less: Reclassification adjustment for gains
      realized during the period                                      -                    -                  -
                                                        ---------------     -----------------   ----------------

    Other comprehensive loss at June 30, 1998               $       (64)                   -          $     (64)
                                                        ===============     =================   ================
</TABLE>



<TABLE>
<CAPTION>
                                                             Before             Income tax
Six months ended June 30, 1999 and 1998                        Tax               (expense)         Net-of-tax
(In Thousands)                                               Amount             or benefit           Amount
                                                        ---------------     -----------------   ----------------
<S>                                                        <C>                 <C>                <C>
Unrealized loss on available for sale securities:
    Unrealized holding losses arising during the period       $  (1,896)                   -         $   (1,896)
    Less: Reclassification adjustment for gains
      realized during the period                                      -                    -                  -
                                                        ---------------     -----------------   ----------------

    Other comprehensive loss at June 30, 1999                 $  (1,896)                   -         $   (1,896)
                                                        ===============     =================   ================

Unrealized gain on available for sale securities:
    Unrealized holding gains arising during the period      $       955                    -          $     955
    Less: Reclassification adjustment for gains
      realized during the period                                      -                    -                  -
                                                        ---------------     -----------------   ----------------

    Other comprehensive income at June 30, 1998             $       955                    -          $     955
                                                        ===============     =================   ================
</TABLE>




                                       8

<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL STATEMENTS
--------------------------------------------------------------------------------



CHANGES IN FINANCIAL CONDITION

Total  assets,   consisting   primarily  of   residential   mortgage  loans  and
mortgage-backed securities, were $988.2 million at June 30, 1999, an increase of
$17.2  million from $971.0  million at December 31, 1998.  The increase in total
assets is  primarily  attributable  to the  purchase of  additional  residential
mortgage loans of $134.5 million, offset by loan repayments of $98.4 million and
principal   collected   on   mortgage-backed   securities   of  $12.3   million.
Shareholders'  equity was $947.1  million at June 30, 1999 and $929.7 million at
December 31, 1998.

ASSET QUALITY

The Company  maintains high asset quality by acquiring  residential  real estate
loans  that  have  been  conservatively   underwritten,   aggressively  managing
nonaccrual assets and maintaining  adequate reserve coverage.  At June 30, 1999,
residential  real estate loans comprised the entire loan portfolio.  The Company
also invests in highly rated mortgage-backed securities.

The aggregate  amount of nonaccrual loans was $1.4 million at June 30, 1999. The
following  table  details the  Company's  nonaccrual  loans at June 30, 1999 and
December 31, 1998:

<TABLE>
<CAPTION>
                                                         June 30,     December 31,
(In Thousands)                                              1999              1998
                                                 ----------------- -----------------
<S>                                                  <C>              <C>
Loans Accounted for on a Nonaccrual Basis:
      Residential Fixed-Rate Loans                        $   255            $  71
      Residential Variable-Rate Loans                       1,177            1,206
                                                 ----------------- -----------------
               Total Nonaccrual Loans                     $ 1,432          $ 1,277
                                                 ================= =================
</TABLE>


At June 30, 1999 the allowance for loan losses was  approximately  $1.7 million,
or 122% of nonaccrual  assets.  Management  believes that the allowance for loan
losses is adequate to cover expected losses in the portfolio.








                                       9

<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------

LIQUIDITY AND CAPITAL RESOURCES

The  primary  sources  of  liquidity  for the  Company  are net cash  flows from
operating activities,  investing activities and financing  activities.  Net cash
flows from operating  activities  primarily  include net income,  net changes in
prepaid expenses and other assets,  accrued interest  receivable and adjustments
for noncash  items such as  amortization  on  deferred  fees and  premiums,  and
mortgage-backed  securities net amortization and accretion.  Net cash flows from
investing   activities   primarily   include  the  purchase  and  repayments  of
residential real estate loans and mortgage backed securities that are classified
as  available  for sale.  Net cash flows  from  financing  activities  primarily
include net changes in capital  generally  related to stock  issuances,  capital
contributions from Webster Bank and dividend payments.


While scheduled loan amortization,  maturing securities,  short-term investments
and  securities   repayments  are  predictable   sources  of  funds,   loan  and
mortgage-backed  security prepayments are greatly influenced by general interest
rates,  economic  conditions  and  competition.  One of the  inherent  risks  of
investing  in  loans  and  mortgage-backed  securities  is the  ability  of such
instruments to incur  prepayments  of principal  prior to maturity at prepayment
rates  different  than those  estimated at the time of purchase.  This generally
occurs  because of  changes  in market  interest  rates.  The  market  values of
fixed-rate loans and mortgage-backed securities are sensitive to fluctuations in
market  interest  rates,  declining in value as interest rates rise. If interest
rates  decrease,  the market value of loans generally will tend to increase with
the level of prepayments also normally increasing.

Dividends on the Series A Preferred  Stock are payable at the rate of 7.375% per
annum (an amount equal to $73.75 per annum per share),  and the dividends on the
Series B Preferred  Stock are payable at the rate of 8.625% per annum (an amount
equal to $.8625 per annum per  share),  in all cases if, when and as declared by
the Board of  Directors of the Company.  Dividends on the  preferred  shares are
cumulative  and payable on January 15,  April 15, July 15 and October 15 in each
year, if declared.

ASSET/LIABILITY MANAGEMENT

The  goal  of the  Company's  asset/liability  management  policy  is to  manage
interest-rate  risk so as to maximize net interest  income over time in changing
interest-rate  environments  while  maintaining  acceptable  levels of risk. The
Company must provide for sufficient liquidity for daily operations.  The Company
prepares  estimates  of  the  level  of  prepayments  and  the  effect  of  such
prepayments  on the level of future  earnings  due to  reinvestment  of funds at
rates  different  than  those that  currently  exist.  The  Company is unable to
predict future  fluctuations  in interest rates and as such the market values of
certain of the  Company's  financial  assets are  sensitive to  fluctuations  in
market  interest  rates.  Changes in interest  rates can affect the value of its
loans  and  other  interest-earning  assets.  At June  30,  1999,  59.6%  of the
Company's  residential  mortgage  loans were  variable-rate  loans.  The Company
believes these  residential  mortgage loans are less likely to incur prepayments
of principal.




                                       10

<PAGE>

WEBSTER PREFERRED CAPITAL CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL STATEMENTS  (continued)
--------------------------------------------------------------------------------

RESULTS OF OPERATIONS

For the three and six months  ended June 30,  1999,  the  Company  reported  net
income of $15.2  million  and  $29.7  million,  respectively,  or  $149,820  and
$292,760,  respectively,  per common share on a diluted  basis,  compared to the
three and six months  ended June 30, 1998 which  amounted  to $15.1  million and
$28.3 million, respectively, or $148,730 and $278,860,  respectively, per common
share on a diluted basis.

Total interest  income for the three and six months ended June 30, 1999 amounted
to $16.2  million  and  $31.7  million,  respectively,  net of  servicing  fees,
compared to the three and six months ended June 30, 1998 which amounted to $16.0
million and $30.2  million,  respectively.  The following  table shows the major
categories of average  interest-earning assets, their respective interest income
and the yields earned by the Company:

<TABLE>
<CAPTION>
                                   Three Months Ended June 30, 1999         Three Months Ended June 30, 1998
                                   Average    Interest       Average        Average      Interest     Average
(In Thousands)                     Balance     Income         Yield         Balance       Income       Yield
                             -------------- -------------- ----------- --------------- ------------ -----------
<S>                           <C>             <C>            <C>         <C>           <C>            <C>
Mortgage Loans                   $ 860,862       $ 14,427       6.70%       $ 750,944     $ 13,140       7.00%
Mortgage-Backed Securities         107,017          1,678       6.50%         172,233        2,882       6.69%
Interest Bearing Deposits            9,541             95       3.94%             929           13       5.60%
                             -------------- -------------- ----------- --------------- ------------ -----------
       Total                     $ 977,420       $ 16,200       6.65%       $ 924,106     $ 16,035       6.94%
                             ============== ============== =========== =============== ============ ===========
</TABLE>

<TABLE>
<CAPTION>
                                    Six Months Ended June 30, 1999           Six Months Ended June 30, 1998
                                 Average      Interest       Average       Average       Interest     Average
(In Thousands)                   Balance       Income         Yield        Balance        Income       Yield
                             -------------- -------------- ----------- --------------- ------------ -----------
<S>                           <C>             <C>            <C>         <C>           <C>            <C>
Mortgage Loans                   $ 834,901       $ 28,044       6.72%       $ 706,022     $ 25,114       7.11%
Mortgage-Backed Securities         110,311          3,469       6.29%         150,902        5,033       6.64%
Interest Bearing Deposits            9,644            193       3.98%           1,454           42       5.78%
                             -------------- -------------- ----------- --------------- ------------ -----------
       Total                     $ 954,856       $ 31,706       6.66%        $858,378      $30,189       7.03%
                             ============== ============== =========== =============== ============ ===========
</TABLE>

The  provision for loan losses for the three and six months ended June 30, 1999,
amounted to $120,000 and $240,000, respectively. There was no provision for loan
losses for the three and six months ended June 30, 1998.  The provision for loan
losses reflects the increase in the total residential mortgage loan portfolio.

Noninterest  expenses for the three and six months ended June 30, 1999  amounted
to $883,000 and $1.8 million, respectively, compared to the noninterest expenses
for the three and six months ended June 30, 1998 which  amounted to $946,000 and
$1.9 million,  respectively.  Noninterest  expenses  included  advisory fees and
dividends on Series A Preferred Stock. The reduction in noninterest expenses for
the six months ended June 30,1999 compared to the six months ended June 30, 1998
of $113,000 is primarily due to the write-off of remaining start-up costs in the
fourth quarter of 1998. No income tax expense was recorded for either period.

RECENT FINANCIAL ACCOUNTING STANDARDS

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting Standard No. 133,  "Accounting for Derivative  Instruments
and Hedging  Activities."  This statement,  as amended,  is effective for fiscal
years  beginning  after June 15,  2000,  establishes  accounting  and  reporting
standards for derivative  instruments,  including certain derivative instruments
imbedded in other contracts,  (collectively  referred to as derivatives) and for
hedging  activities.  This statement is not expected to impact the Company since
the  Company  does not  engage  in  hedging  activities  or  utilize  derivative
instruments.

                                       11

<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------


YEAR 2000 READINESS DISCLOSURE STATEMENT

The "Year 2000" issue refers to the potential  impact of the failure of computer
programs and equipment to give proper  recognition of dates beyond  December 31,
1999 and other issues related to the Year 2000 century date change.

I.  The Company's State Of Readiness

The Company has  assessed the issues  regarding  Year 2000 and since the Company
depends on Webster Bank as Advisor and Servicer,  as agreed upon in the Advisory
Service Agreement and the Master Service Agreement,  the Company will be reliant
on  Webster  Bank  and  its  parent  company,   Webster  Financial   Corporation
("Webster"), to ensure proper date recognition.

The Company has reviewed  documentation  provided by Webster and has  determined
that Webster is taking the appropriate steps to become Year 2000 compliant.

II.  The Costs To Address The Company's Year 2000 Issues

The Company  currently pays a monthly servicing and managerial fee to Webster as
agreed upon in the Advisory Service Agreement and the Master Service  Agreement.
The Company is not expected to incur any costs  associated with Year 2000 issues
that are not covered under the Advisory Service Agreement and the Master Service
Agreement.  The Advisory  Service  Agreement  and the Master  Service  Agreement
include  technical  support,  and  administrative  services,  pursuant  to which
Webster  monitors  and  supervises  the  performance  of all  parties  who  have
contracts to perform services for the Company.

III.  The Risks of The Company's Year 2000 Issues

The Company is in the process of identifying and evaluating  potential Year 2000
related  worst case  scenarios  that could result from 1)  Webster's  failure to
identify,  test and  validate  all  critical  date  dependent  applications  and
embedded  microchips  that affect core business  processes and 2) the failure of
external forces,  such as third party vendors,  and utilities,  to have properly
remediated their systems.

Potential worst case scenarios being  addressed,  include:  extended  electrical
power  outage,  extended  telephone  communication  outage and  excessive  media
speculation and community fear.

The Company is unable to estimate  lost revenue  related to Year 2000 issues due
to the  uncertainties  of the impact and  effects of  external  forces and their
potential extended disruptions.

IV.  The Company's Contingency Plans

A contingency  plan is being  drafted by the Company to address each  identified
potential worst case scenario. Alternative solutions for business resumption and
approaches  to  minimize  the  impact of each  scenario  are  being  formulated.
Proposed  approaches  to  address  potential   scenarios  include:   designating
alternate  offices as  emergency  locations  with  alternate  power  sources and
identifying alternate communication methods.

Availability of Webster's Disclosure

Webster's Year 2000 Readiness Disclosure Statement is available in detail in its
December 31, 1998 Annual Report on Form 10-K and subsequent Quarterly Reports on
Form 10-Q.



                                       12

<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
--------------------------------------------------------------------------------


The  following  table  summarizes  the  estimated  market value of the Company's
interest-sensitive  assets and  interest-sensitive  liabilities at June 30, 1999
and the  projected  change to market  values if interest  rates  instantaneously
increase or decrease by 100 basis points.


<TABLE>
<CAPTION>
                                                                               Estimated Market Value Impact
                                                                             --------------------------------
(In Thousands)                              Book Value        Market Value       -100 BP          +100 BP
                                          ------------   ------------------- --------------- ----------------
<S>                                       <C>                 <C>               <C>            <C>
At June 30, 1999
Interest Sensitive Assets:
       Mortgage-Backed Securities           $ 104,862             104,084           2,524          (3,671)
       Variable-Rate Residential Loans        508,231             511,287           9,308         (12,939)
       Fixed-Rate Residential Loans           344,359             345,088          11,726         (16,029)
Interest-Sensitive Liabilities:
       Series A Preferred Stock                40,000              40,000           2,230          (2,929)
                                        ==============   =================== =============== ================
</TABLE>


FORWARD LOOKING STATEMENTS

Statements  in  Management's  Discussion  and Analysis in the section  captioned
"Year 2000 Readiness Disclosure  Statement" and in "Quantitative and Qualitative
Disclosures About Market Risk" are forward-looking statements within the meaning
of the Securities Exchange Act of 1934, as amended. Actual results,  performance
or  developments  may differ  materially from those expressed or implied by such
forward-looking  statements  as a  result  of  market  uncertainties  and  other
factors.  Some important  factors that would cause actual results to differ from
those in any  forward-looking  statements  include changes in interest rates and
the general economy in the Connecticut  market area where a substantial  portion
of the real estate securing the Company's loans are located.  Such  developments
could have an adverse impact on the Company's  financial position and results of
operations.




                                       13

<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

PART II - OTHER INFORMATION
--------------------------------------------------------------------------------



Item 4:   Submission of Matters to a Vote of Security Holders

                  The Company held an annual meeting of stockholders on April 5,
         1999. Each of the Company's three directors,  John V. Brennan,  Harriet
         Munrett Wolfe and Ross M. Strickland,  was elected at the meeting,  and
         each such  director  received 100 votes cast for election  (which votes
         constitute 100% of the issued and outstanding common stock).

Item 6:  Exhibits and Reports on Form 8-K

(a)      Exhibits


<TABLE>
<CAPTION>
     Exhibit Numbers       Description
     ---------------       -----------
       <S>               <C>
           27              Financial Data Schedule
</TABLE>

(b) No reports on Form 8-K were filed during the quarter ended June 30, 1999.


                                       14

<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.



                                        WEBSTER PREFERRED CAPITAL CORPORATION
                                        -------------------------------------
                                                     Registrant


                                        BY: /s/ Peter J. Swiatek
                                            ---------------------------------
                                            Peter J. Swiatek,

                                            Vice President & Treasurer

                                            Principal Financial Officer

                                            Principal Accounting Officer


                                       Date: August 12, 1999





                                       15

<PAGE>


                                INDEX TO EXHIBITS


     Exhibit Number                Description
     --------------                -----------

           27                      Financial Data Schedule.





                                       16