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, 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:   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

   SECURITIES REGISTERED PURSUANT TO SECTION 12(a) OF THE ACT: Not Applicable

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

               Title of Class                          Exchange where listed
               --------------                          ---------------------
        Preferred Stock, $1 par value                           NASDAQ

         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 Exchange Act Rule 12b-2). Yes      No  X  .
                                            ----    ----
             The number of shares outstanding of each of the registrant's
classes of common stock, as of July 31, 2003 is: 100 shares.


<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

                                      INDEX

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

ITEM 1.  Interim Financial Statements (unaudited):

             Statements of Condition at June 30, 2003 and December 31, 2002..................................    3

             Statements of Income for the Three and Six Months Ended June 30, 2003 and 2002..................    4

             Consolidated Statements of Comprehensive Income for the Three and Six Months
             Ended June 30, 2003 and 2002....................................................................    4

             Statements of Cash Flows for the Six Months Ended June 30, 2003 and 2002........................    5

             Notes to the Interim 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..........................................   13

ITEM 4.  Controls and Procedures.............................................................................   14

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

SIGNATURE  ..................................................................................................   16

EXHIBITS   ..................................................................................................   17

</TABLE>








                                       2
<PAGE>

WEBSTER PREFERRED CAPITAL CORPORATION

ITEM 1. INTERIM FINANCIAL STATEMENTS

                       STATEMENTS OF CONDITION (UNAUDITED)


<TABLE>
<CAPTION>

(Dollars in thousands, except share data)                                         June 30, 2003  December 31, 2002
--------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>              <C>
ASSETS

Cash                                                                                 $  15,448        $  28,292
Interest-bearing deposits                                                               71,500          110,500
Mortgage-backed securities available for sale, at fair value (Note 2)                   84,200          110,061
Residential mortgage loans, net (Note 3)                                               368,248          379,590
Accrued interest receivable                                                                538            1,192
Other real estate owned                                                                     96               79
Prepaid expenses and other assets                                                        1,557            1,523
--------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS                                                                         $ 541,587        $ 631,237
====================================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY

Accrued dividends payable                                                            $     180        $     180
Accrued expenses and other liabilities                                                      53               65
--------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES                                                                          233              245
--------------------------------------------------------------------------------------------------------------------

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                                                                        538,799          628,799
Retained earnings (distributions in excess of accumulated earnings)                     (1,086)          (3,037)
Accumulated other comprehensive income                                                   2,640            4,229
--------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY                                                             541,354          630,992
--------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                           $ 541,587        $ 631,237
====================================================================================================================

</TABLE>


See accompanying notes to interim financial statements.

                                       3
<PAGE>



WEBSTER PREFERRED CAPITAL CORPORATION

                              STATEMENTS OF INCOME
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                     Three Months Ended June 30,   Six Months Ended June 30,
(Dollars in thousands, except per share data)            2003           2002           2003           2002
--------------------------------------------------------------------------------------------------------------------
<S>         <C>                                       <C>            <C>            <C>            <C>
Interest Income:
Loans (Note 4)                                        $  5,617       $  8,319       $ 11,992       $ 17,363
Securities and interest bearing deposits                 1,566          2,757          3,392          6,169
--------------------------------------------------------------------------------------------------------------------
        Total interest income                            7,183         11,076         15,384         23,532
Provision for loan losses (Note 3)                          --             --             --             --
--------------------------------------------------------------------------------------------------------------------
Interest income after provision for loan losses          7,183         11,076         15,384         23,532

Noninterest Expense:
Advisory fee expense paid to parent                         50             46             98             93
Other                                                       30             46             62             70
--------------------------------------------------------------------------------------------------------------------
        Total noninterest expense                           80             92            160            163
--------------------------------------------------------------------------------------------------------------------

NET INCOME                                               7,103         10,984         15,224         23,369
Preferred stock dividends                                  215            215            431            431
--------------------------------------------------------------------------------------------------------------------

Net income available to common shareholder            $  6,888       $ 10,769       $ 14,793       $ 22,938
====================================================================================================================

Net income per common share:
               Basic                                  $ 68,880       $107,690       $147,930       $229,380
               Diluted                                $ 68,880       $107,690       $147,930       $229,380
--------------------------------------------------------------------------------------------------------------------

</TABLE>


                 STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

<TABLE>
<CAPTION>
                                                    Three Months Ended June 30,      Six Months Ended June 30,
-------------------------------------------------------------------------------------------------------------------
(In thousands)                                          2003           2002            2003          2002
-------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>            <C>            <C>            <C>
Net Income                                            $  7,103       $ 10,984       $ 15,224       $ 23,369

Other comprehensive (loss) income:
    Unrealized net holding (loss) gain on securities
    available for sale arising during the period        (1,034)         3,472         (1,589)         2,070

------------------------------------------------------------------------------------------------------------------
Comprehensive income                                  $  6,069       $ 14,456       $ 13,635       $ 25,439
==================================================================================================================

</TABLE>

See accompanying notes to interim financial statements.


                                       4
<PAGE>





WEBSTER PREFERRED CAPITAL CORPORATION

                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                               Six Months Ended June 30,
(In thousands)                                                                   2003             2002
--------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>              <C>
OPERATING ACTIVITIES:
Net income                                                                    $  15,224        $  23,369
Adjustments to reconcile net income to net cash provided by
    operating activities:
         Amortization of mortgage premiums                                           58              100
         Amortization (accretion) of securities premiums/discount                   171             (117)
         Amortization of net deferred loan costs                                    243              465
         Decrease in accrued interest receivable                                    654            1,148
         Decrease in accrued liabilities                                            (12)              (6)
         (Increase) decrease in prepaid expenses and other assets                   (34)           5,457
--------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities                                        16,304           30,416
--------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchase of mortgage-backed securities                                          (30,530)              --
Principal repayments on mortgage-backed securities                               54,631           15,832
Purchase of loans                                                               (70,302)              --
Principal repayments of loans                                                    81,247           99,833
Decrease in interest-bearing deposits                                            39,000           81,000
Proceeds from OREO sale                                                              79              191
--------------------------------------------------------------------------------------------------------------
Net cash provided by investing activities                                        74,125          196,856
--------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Return of capital dividend                                                      (90,000)        (200,000)
Dividends paid on common and preferred stock                                    (13,273)         (12,945)
--------------------------------------------------------------------------------------------------------------
Net cash used by financing activities                                          (103,273)        (212,945)
--------------------------------------------------------------------------------------------------------------

(Decrease) increase in cash and cash equivalents                                (12,844)          14,327
Cash and cash equivalents at beginning of period                                 28,292            3,850
--------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                                    $  15,448        $  18,177
==============================================================================================================

SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITY:
       Transfer of residential mortgage loans to other real estate
           owned                                                              $      96        $     182

--------------------------------------------------------------------------------------------------------------

</TABLE>

See accompanying notes to interim financial statements.


                                       5
<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

NOTES TO INTERIM FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1: BASIS OF PRESENTATION

The accompanying interim financial statements represent the accounts of Webster
Preferred Capital Corporation (the "Company" or "WPCC") and have been prepared
in conformity with accounting principles generally accepted in the United States
of America. The 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 interim periods are not necessarily indicative of the
results which may be expected for the year as a whole. These interim financial
statements should be read in conjunction with the financial statements and notes
thereto included in WPCC's 2002 Annual Report on Form 10-K. The Company has no
subsidiaries.

NOTE 2: MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE, AT FAIR VALUE

The following table sets forth certain information regarding the mortgage-backed
securities:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
                                        Amortized            Gross Unrealized          Estimated
(In thousands)                               Cost          Gains        Losses        Fair Value
----------------------------------------------------------------------------------------------------
<S>                                      <C>            <C>           <C>              <C>
June 30, 2003
      Available for Sale Portfolio       $ 81,560       $  2,640      $     --         $  84,200
====================================================================================================

December 31, 2002
      Available for Sale Portfolio       $105,832       $  4,229      $     --         $ 110,061
====================================================================================================

</TABLE>


At June 30, 2003 and December 31, 2002, all mortgage-backed securities available
for sale were issued by government or government-sponsored agencies. There were
no sales of mortgage-backed securities during the three and six months ended
June 30, 2003 and 2002.


                                       6
<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

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

NOTE 3: RESIDENTIAL MORTGAGE LOANS, NET

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

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
(In thousands)                                     June 30, 2003  December 31, 2002
-----------------------------------------------------------------------------------
<S>                                                  <C>              <C>
Fixed-rate loans:
       15 yr. loans                                  $  63,958        $  55,956
       20 yr. loans                                      4,375            3,132
       25 yr. loans                                      3,575            2,542
       30 yr. loans                                    165,777          138,008
-----------------------------------------------------------------------------------

        Total fixed-rate loans                         237,685          199,638
-----------------------------------------------------------------------------------
Variable-rate loans:
       15 yr. loans                                        928            1,605
       20 yr. loans                                      2,277            3,127
       25 yr. loans                                      2,353            2,680
       30 yr. loans                                    125,933          173,482
-----------------------------------------------------------------------------------

        Total variable-rate loans                      131,491          180,894
-----------------------------------------------------------------------------------

Total residential mortgage loans                       369,176          380,532

     Premiums and deferred costs on loans, net           1,178            1,164
     Less: allowance for loan losses                    (2,106)          (2,106)
-----------------------------------------------------------------------------------

Residential mortgage loans, net                      $ 368,248        $ 379,590
===================================================================================

</TABLE>

As of June 30, 2003, 64.4% of the Company's residential mortgage loans are
fixed-rate loans and 35.6% are adjustable-rate loans.

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


<TABLE>
<CAPTION>
                                                                  Six Months Ended   Six Months Ended
(In thousands)                                                      June 30, 2003     June 30, 2002
---------------------------------------------------------------------------------------------------------
<S>                                                                    <C>               <C>
Balance at beginning of period                                         $ 2,106           $ 2,139
Charge-offs                                                                 --               (33)
---------------------------------------------------------------------------------------------------------
Balance at end of period                                               $ 2,106           $ 2,106
=========================================================================================================

</TABLE>



                                       7
<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

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

NOTE 4: SERVICING


The mortgage loans owned by the Company are serviced by Webster Bank pursuant to
the terms of a servicing agreement. Webster Bank in its role as servicer under
the terms of the servicing agreement is herein referred to as the "Servicer."
The Servicer receives fees at an annual rate of (i) 8 basis points for
fixed-rate loan servicing and collection, (ii) 8 basis points for variable-rate
loan servicing and collection and (iii) 5 basis points for all other services to
be provided, as needed, in each case based on the daily outstanding balances of
all the Company's loans for which the Servicer is responsible. The Company
estimates that the fees paid to Webster Bank for servicing approximate fees that
would be paid if the Company operated as an unaffiliated entity. Servicing fees
paid for the three and six months ended June 30, 2003 were $78,000 and $172,000,
and for the three and six months ended June 30, 2002 were $101,000 and $212,000,
respectively. Servicing fees are reflected as a charge against interest income
on the Statements of Income, as they are classified as a reduction in yield to
the Company.


The Servicer is entitled to retain any late payment charges, prepayment fees,
penalties and assumption fees collected in connection with mortgage loans
serviced by it. The Servicer receives the benefit, if any, derived from interest
earned on collected principal and interest payments between the date of
collection and the date of remittance to the Company and from interest earned on
tax and insurance impound funds with respect to mortgage loans serviced by it.
At the end of each calendar month, the Servicer is required to invoice the
Company for all fees and charges due to the Servicer.


                                       8
<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

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

GENERAL
-------

The Company is a subsidiary of Webster Bank and has elected to be treated as a
real estate investment trust ("REIT") under the Internal Revenue Code of 1986
(the "Code"). The Company 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 90% of its "REIT
taxable income" (not including capital gains and certain items of noncash
income). 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 and in conjunction
with the Company's 2002 Annual Report on Form 10-K.

FORWARD LOOKING STATEMENTS
--------------------------

This report contains 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, legislative and
regulatory changes, changes in tax laws and policies, and changes in accounting
policies, principles or guidelines. Such developments could have an adverse
impact on the Company's financial position and results of operations. An example
of such a forward-looking statement is the "Quantitative and Qualitative
Disclosures About Market Risk" section.

CHANGES IN FINANCIAL CONDITION
------------------------------

Total assets, consisting primarily of residential mortgage loans and
mortgage-backed securities, were $541.6 million at June 30, 2003, a decrease of
$89.6 million from $631.2 million at December 31, 2002. The primary factors
causing the decline in total assets were decreases in net loans of $11.3
million, mortgage-backed securities of $25.9 million and interest-bearing
deposits of $39.0 million. These funds were primarily used for a $90.0 million
return of capital dividend to the Company's common shareholder and the $13.3
million payment of common and preferred stock dividends. As a result of the
return of capital dividend, shareholders' equity declined to $541.4 million at
June 30, 2003 from $631.0 million at December 31, 2002.

Reductions in loans and securities were due to a high volume of prepayments as
well as scheduled payments. Prepayments accelerated during the later half of
2002 and the first half of 2003 due to the low interest rate environment. The
decline in accrued interest receivable of $654,000 is due to the decline in
earning assets, as previously mentioned.

ASSET QUALITY
-------------

The Company maintains asset quality by investing in residential real estate
loans that have been conservatively underwritten and by aggressively managing
nonperforming assets. At June 30, 2003, residential real estate loans comprised
the entire loan portfolio. The Company also invests in government agency or
government-sponsored agency issued mortgage-backed securities.



                                       9
<PAGE>



WEBSTER PREFERRED CAPITAL CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
--------------------------------------------------------------------------------

The following table details the Company's nonperforming assets at June 30, 2003
and December 31, 2002:

                                               June 30,    December 31,
(In thousands)                                   2003         2002
-------------------------------------------------------------------------------
Loans accounted for on a nonaccrual basis:
        Residential fixed-rate loans             $283       $247
        Residential variable-rate loans           313        209
-------------------------------------------------------------------------------
                 Total nonperforming loans        596        456
Other real estate owned                            96         79
-------------------------------------------------------------------------------
        Total nonperforming assets               $692       $535
===============================================================================

At both June 30, 2003 and December 31, 2002, the allowance for loan losses was
approximately $2.1 million, or 353% and 462% of nonperforming loans,
respectively. Management believes that the allowance for loan losses is adequate
to cover probable losses inherent in the current portfolio.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

The primary sources of liquidity for the Company are principal and interest
payments from the residential mortgage loans and mortgage-backed securities
portfolios. The primary uses of liquidity are purchases of residential mortgage
loans and mortgage-backed securities and the payment of dividends on the common
and preferred stock.

While scheduled loan amortization, maturing securities, short-term investments
and securities repayments are predictable sources of funds, loan and
mortgage-backed security prepayments can vary greatly and are influenced by
factors such as 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.

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, if declared, payable on January 15, April 15, July 15
and October 15 in each year. The Company periodically makes dividend payments on
its common stock in accordance with Company by-laws. Common stock dividends are
paid to comply with REIT qualification rules. REIT qualification rules require
that 90% of net taxable income for the year be distributed to shareholders. In
June 2003, the Company declared and paid a return of capital dividend to the
Company's common shareholder of $90.0 million. Accelerated prepayments during
the second half of 2002 and the first quarter of 2003 resulted in increased cash
levels for the Company. This dividend returns the cash to the Company's common
shareholder.

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 market risk.
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. The market values of the
Company's financial assets are sensitive to fluctuations in market interest
rates. The market values of fixed-rate loans and mortgage-backed securities tend
to decline in value as interest rates rise. If interest rates decrease, the
market value of loans and mortgage-backed securities generally will tend to
increase with the level of prepayments also normally increasing. The interest
income earned on the Company's variable-rate interest-sensitive instruments,
which are primarily variable-rate mortgage loans, may change due to changes in
quoted interest rate indices. The variable-rate mortgage loans generally reprice
based on a stated margin over U.S. Treasury Securities indices of varying
maturities, the terms of which are established at the time that the loan is
closed. At June 30, 2003, 35.6% of the Company's residential mortgage loans were
variable-rate loans.



                                       10
<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
--------------------------------------------------------------------------------

RESULTS OF OPERATIONS
---------------------

For the three and six months ended June 30, 2003, the Company reported net
income of $7.1 million and $15.2 million, respectively, or $68,880 and $147,930,
respectively, per common share on a diluted basis, compared to the three and six
months ended June 30, 2002 which amounted to $11.0 million and $23.4 million,
respectively, or $107,690 and $229,380, respectively, per common share on a
diluted basis.

The following table shows the major categories of average interest-earning
assets, together with their respective interest income and the rates earned by
the Company:

<TABLE>
<CAPTION>
                                          THREE MONTHS ENDED JUNE 30, 2003       THREE MONTHS ENDED JUNE 30, 2002
                                      Average        Interest        Average   Average        Interest         Average
(In thousands)                        Balance         Income          Yield    Balance         Income           Yield
------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>               <C>            <C>      <C>               <C>            <C>
Mortgage loans                       $396,092          5,617          5.67%    $514,390          8,319          6.47%
Mortgage-backed securities (a)         89,146          1,213          5.44%     143,840          2,353          6.54%
Interest bearing deposits             121,374            353          1.16%      91,016            404          1.78%
------------------------------------------------------------------------------------------------------------------------
     Total                           $606,612          7,183          4.74%    $749,246         11,076          5.91%
========================================================================================================================
</TABLE>


<TABLE>
<CAPTION>

                                           SIX MONTHS ENDED JUNE 30, 2003           SIX MONTHS ENDED JUNE 30, 2002
                                      Average        Interest        Average   Average        Interest         Average
(In thousands)                        Balance         Income          Yield    Balance         Income           Yield
------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>               <C>            <C>      <C>               <C>            <C>
Mortgage loans                       $416,475          11,992         5.76%    $541,098          17,363         6.42%
Mortgage-backed securities (a)         99,786           2,828         5.67%     147,673           4,845         6.56%
Interest bearing deposits              97,870             564         1.15%     147,850           1,324         1.79%
------------------------------------------------------------------------------------------------------------------------
     Total                           $614,131          15,384         5.01%    $836,621          23,532         5.63%
========================================================================================================================

</TABLE>

(a) Unrealized gains are excluded from average balance

The decline in interest income for the current three and six months periods of
$3.9 million and $8.1 million or 35.1% and 34.6%, respectively, was due to a
reduction in earning assets due to the return of capital dividend as well as a
decline in yield on earning assets. Due to the declining interest rate
environment during 2002 and 2003, mortgage prepayments accelerated. Those assets
that were reinvested, were with ones earning a lower yield. The Company also
returned capital to its common stockholder in 2002 and 2003. In addition, this
lower interest rate environment effected the yield earned on deposits, which
declined for the three and six months by 62 and 64 basis points, respectively.

Net interest income also can be understood in terms of the impact of changing
rates and changing volumes. The following table describes the extent to which
changes in interest rates and changes in volume of interest-earning assets and
interest-bearing liabilities have impacted interest income and interest expense
during the periods indicated. Information is provided in each category with
respect to (i) changes attributable to changes in volume (changes in volume
multiplied by prior rate), (ii) changes attributable to changes in rates
(changes in rates multiplied by prior volume) and (iii) the net change. The
change attributable to the combined impact of volume and rate has been allocated
proportionately to the change due to volume and the change due to rate.


<TABLE>
<CAPTION>
                                                  Three months ended June 30,           Six months ended June 30,
                                                          2003 V. 2002                        2003 V. 2002
----------------------------------------------------------------------------------------------------------------------
                                                   Increase (Decrease) due to          Increase (Decrease) due to
(In thousands)                                    Rate       Volume       Total       Rate      Volume       Total
----------------------------------------------------------------------------------------------------------------------
<S>                                              <C>          <C>         <C>        <C>          <C>         <C>
Interest on interest-earning assets:
  Mortgage loans, net                            $  (945)     (1,757)     (2,702)    $(1,658)     (3,713)     (5,371)
  Mortgage-backed securities                        (350)       (790)     (1,140)       (595)     (1,422)     (2,017)
  Interest-bearing deposits                         (578)        527         (51)       (390)       (370)       (760)
----------------------------------------------------------------------------------------------------------------------
Net change in fully taxable-equivalent
  net interest income                            $(1,873)     (2,020)     (3,893)    $(2,643)     (5,505)     (8,148)
======================================================================================================================

</TABLE>

                                       11
<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
--------------------------------------------------------------------------------

There were no provisions for loan losses for the three and six months ended June
30, 2003 and 2002.

There were no sales of mortgage-backed securities for the three and six months
ended June 30, 2003 and 2002.

RECENT FINANCIAL ACCOUNTING STANDARDS
-------------------------------------

In April 2003, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS" or "Statement") No. 149,
"Accounting for Derivative Instruments and Hedging Activities - an amendment of
FASB Statement No. 133." This Statement amends SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," to provide a clearer definition
of a derivative, especially in regards to a contract involving an initial net
investment. In addition, this Statement amends the meaning of underlying to be
accounted for in accordance with FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others." This amendment should promote more
consistency as to the reporting of contracts that fall under the scope of
derivatives or hybrids. SFAS No. 149 is to be applied prospectively to all
hedging activities and contracts revised or created after June 30, 2003. This
statement is not expected to have a material impact on the Company's financial
statements.

SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics
of both Liabilities and Equity." SFAS 150 establishes standards for how an
issuer clarifies, measures and discloses in its financial statements certain
financial instruments with characteristics of both liabilities and equity. SFAS
150 requires that an issuer classify financial instruments that are within its
scope as liabilities, in most circumstances. Such financial instruments include
(i) financial instruments that are issued in the form of shares that are
mandatorily redeemable; (ii) financial instruments that embody an obligation to
repurchase the issuer's equity shares, or are indexed to such obligation, and
that require the issuer to settle the obligation by transferring assets; (iii)
financial instruments that embody an obligation that the issuer may settle by
issuing a variable number of its equity shares if, at inception, the monetary
value of the obligation is predominantly based on a fixed amount, variations in
something other than the fair value of the issuer's equity shares or variations
inversely related to changes in the fair value of the issuer's equity shares;
and (iv) certain freestanding financial instruments. SFAS 150 is effective for
contracts entered into or modified after May 31, 2003, and is otherwise
effective at the beginning of the first interim period beginning after June 15,
2003. Adoption of SFAS 50 on July 1, 2003 is not expected to have any
impact on the Company's results of operations.



                                       12

<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
--------------------------------------------------------------------------------

The following table summarizes the estimated market value of the Company's
interest-sensitive assets at June 30, 2003 and December 31, 2002 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)                          Amortized Cost    Market Value         -100 BP        +100 BP
-----------------------------------------------------------------------------------------------------------------
<S>                                         <C>            <C>                <C>            <C>
AT JUNE 30, 2003
Interest sensitive assets:
      Mortgage-backed securities            $  81,560      $  84,200          $   2,330      $  (2,864)
      Variable-rate residential loans         131,491        133,843              1,226           (505)
      Fixed-rate residential loans            237,685        249,857              2,569         (5,015)
-----------------------------------------------------------------------------------------------------------------
                                                                              $   6,125      $  (8,384)
                                                                        =========================================

AT DECEMBER 31, 2002
Interest sensitive assets:
      Mortgage-backed securities            $ 105,832      $ 110,061          $   1,942      $  (2,912)
      Variable-rate residential loans         180,894        186,182              1,629         (1,610)
      Fixed-rate residential loans            199,638        211,622              1,110         (5,741)
-----------------------------------------------------------------------------------------------------------------
Total net assets                                                              $   4,681      $ (10,263)
                                                                        =========================================

</TABLE>


Interest-sensitive assets, when impacted by an instantaneous 100 basis point
rate decrease results in a projected increase in net market value of $6.1
million at June 30, 2003 compared to a projected increase in net market value of
$4.7 million at December 31, 2002. These changes in net market value represent
1.31% of interest-sensitive assets at June 30, 2003 and 0.92% of
interest-sensitive assets at December 31, 2002. Interest-sensitive assets, when
impacted by an instantaneous 100 basis point rate increase results in a
projected decrease in net market value of $8.4 million at June 30, 2003
compared to a projected decrease in net market value of $1.79% million at
December 31, 2002. These changes in net market value represent 5.04% of
interest-sensitive assets at June 30, 2003 and 2.02% of interest-sensitive
assets at December 31, 2002. Changes in the projected net market value due to an
instantaneous 100 basis point rate increase or decrease when comparing such
amounts at June 30, 2003 and December 31, 2002 are a result of changes in
outstanding balances of the assets, and an overall decline in market interest
rates.

Based on the Company's asset/liability mix at June 30, 2003, simulation analyses
project that an instantaneous 100 basis point increase in interest rates would
increase net interest income over the next twelve months by approximately 7.6%,
compared to a projected increase of 8.6% at December 31, 2002. An instantaneous
100 basis point decrease in interest rates would decrease net interest income by
approximately 9.3% at June 30, 2003, compared to a decrease of 10.0% at December
31, 2002.

In particular, the Company's interest rate sensitive assets are subject to
prepayment risk. Prepayment risk is inherently difficult to estimate and is
dependent upon a number of economic, financial and behavioral variables. The
Company uses a sophisticated mortgage prepayment modeling system to estimate
prepayments and the corresponding impact on market value and net interest
income. The model uses information that includes the instrument type, coupon
spread, loan age and other factors in its projections.

These assumptions are inherently uncertain and, as a result, the simulation
analyses cannot precisely estimate the impact that higher or lower rate
environments will have on net interest income. Actual results will differ from
simulated results due to timing, magnitude and frequency of interest rate
changes, changes in cash flow patterns and market conditions, as well as changes
in management's strategies. Management believes that the Company's interest rate
risk position at June 30, 2003, represents a reasonable level of risk.



                                       13
<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

ITEM 4.  CONTROLS AND PROCEDURES
--------------------------------------------------------------------------------

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
------------------------------------------------

The Company's management, including the Principal Executive Officer and
Principal Financial Officer, evaluated the effectiveness of the design and
operation of the Company's disclosure controls and procedures (as defined in
Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) (the
"Exchange Act") as of the end of the period covered by this report. Based upon
that evaluation, the Company's management, including the Principal Executive
Officer and Principal Financial Officer concluded that the Company's disclosure
controls and procedures were effective in alerting them in a timely manner to
any material information relating to the Company required to be included in the
Company's Exchange Act filings.

CHANGES IN INTERNAL CONTROLS
----------------------------

There were no significant changes made in the Company's internal controls over
financial reporting that occurred during the Company's most recent fiscal
quarter that has materially affected or is reasonably likely to materially
affect, the Company's internal controls over financial reporting or in other
factors that could significantly affect these internal controls subsequent to
the date of the evaluation performed by the Company's Principal Executive
Officer and Principal Financial Officer.

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

ITEM 1. LEGAL PROCEEDINGS

There are no material pending legal proceedings, other than ordinary routine
litigation incident to the registrant's business, to which the Company is a
party or of which any of its property is subject.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

Not Applicable.

ITEM 3. DEFAULT UPON SENIOR SECURITIES

Not Applicable.

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

The Company held an annual meeting of stockholders on April 16, 2003. Each of
the Company's three directors, William J. Healy, 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 5. OTHER INFORMATION

Not Applicable

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

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

         31.1           Certification pursuant to Section 302 of the
                        Sarbanes-Oxley Act of 2002, signed by the Company's
                         Principal Executive Officer.


                                       14
<PAGE>

         31.2           Certification pursuant to Section 302 of the
                        Sarbanes-Oxley Act of 2002, signed by the Company's
                        Principal Financial Officer.

         32.1           Additional Exhibit - Written Statement pursuant to
                        Section 906 of the Sarbanes-Oxley Act of 2002, signed
                        by the Company's Principal Executive Officer.

         32.2           Additional Exhibit - Written Statement pursuant to
                        Section 906 of the Sarbanes-Oxley Act of 2002, signed
                        by the Company's Principal Financial Officer.

(b) No reports on Form 8-K were filed during the quarter ended June 30, 2003.



                                       15

<PAGE>

                                    SIGNATURE

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/ Gregory S. Madar
                                 --------------------------------------------
                                      Gregory S. Madar,
                                      Senior Vice President,
                                      Treasurer & Assistant Secretary
                                      Principal Financial and Accounting Officer

                               Date: August 13, 2003



                                       16