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 September 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
October 31, 1999 is 100 shares.


<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION



                                                        INDEX

<TABLE>
<CAPTION>

                                                                                                                Page
                                                                                                                ----
PART I - FINANCIAL INFORMATION


<S>                                                                                                             <C>
Condensed Statements of Condition at September 30, 1999 and December 31, 1998................................    3

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

Condensed Statements of Cash Flows for the Nine Months Ended September 30, 1999
and September 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>
                                                                                    September 30,         December 31,
                                                                                        1999                  1998
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>                  <C>
Assets

Cash                                                                                    $  16,453            $  26,964
Mortgage-Backed Securities Available for Sale, at Fair Value (Note 2)                      98,766              118,262
Residential Mortgage Loans, Net (Note 3)                                                  876,825              819,634
Accrued Interest Receivable                                                                 5,447                5,422
Other Real Estate Owned                                                                        26                    -
Prepaid Expenses and Other Assets                                                             425                  679
-----------------------------------------------------------------------------------------------------------------------
      Total Assets                                                                      $ 997,942           $  970,961
-----------------------------------------------------------------------------------------------------------------------

Liabilities and Shareholders' Equity

Accrued Dividends Payable                                                                 $   794            $   1,019
Accrued Expenses and Other Liabilities                                                        481                  224
-----------------------------------------------------------------------------------------------------------------------
      Total Liabilities                                                                     1,275                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                                                                    28,040                    -
      Accumulated Other Comprehensive Income (Loss) (Note 5)                               (1,173)               1,116
-----------------------------------------------------------------------------------------------------------------------
      Total Shareholders' Equity                                                          956,667              929,718
-----------------------------------------------------------------------------------------------------------------------
      Total Liabilities and Shareholders' Equity                                       $  997,942            $ 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             Nine Months Ended
                                                                     September 30,                  September 30,
                                                                  1999           1998            1999          1998
----------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>            <C>             <C>           <C>
Interest Income:
Loans                                                           $ 14,367       $ 13,412        $ 42,411      $ 38,526
Securities                                                         1,813          2,746           5,475         7,821
----------------------------------------------------------------------------------------------------------------------
        Total Interest Income                                     16,180         16,158          47,886        46,347
Provision for Loan Losses (Note 3)                                   120            150             360           150
----------------------------------------------------------------------------------------------------------------------
Interest Income After Provision for Loan Losses                   16,060         16,008          47,526        46,197
Noninterest Income:
Gain on Sale of Securities                                             -            261               -           261
----------------------------------------------------------------------------------------------------------------------
        Total Noninterest Income                                       -            261               -           261
----------------------------------------------------------------------------------------------------------------------

Noninterest Expenses:
Advisory Fee Expense Paid to Parent                                   38             38             113           113
Dividends on Mandatorily Redeemable Preferred Stock                  737            738           2,212         2,213
Start-up Costs                                                         -            137               -           396
Other Noninterest Expenses                                           107             20             316            83
----------------------------------------------------------------------------------------------------------------------
        Total Noninterest Expenses                                   882            933           2,641         2,805

Income Before Taxes                                               15,178         15,336          44,885        43,653
Income Taxes                                                           -              -               -             -
----------------------------------------------------------------------------------------------------------------------
Net Income                                                        15,178         15,336          44,885        43,653
Preferred Stock Dividends                                            216            216             647           647
----------------------------------------------------------------------------------------------------------------------

Net Income Available to Common Shareholder                      $ 14,962       $ 15,120        $ 44,238      $ 43,006
----------------------------------------------------------------------------------------------------------------------

Net Income Per Common Share:
               Basic                                           $ 149,620      $ 151,200        $442,380      $430,060
               Diluted                                         $ 149,620      $ 151,200        $442,380      $430,060

----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the condensed financial statements


                                       4
<PAGE>

WEBSTER PREFERRED CAPITAL CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS (unaudited)
(Dollars In Thousands)

<TABLE>
<CAPTION>
                                                                                 Nine Months Ended September 30,
                                                                                   1999                    1998
----------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>                    <C>
Operating Activities:
Net Income                                                                       $ 44,885               $ 43,653
Adjustments to Reconcile Net Income to Net Cash Provided by
     Operating Activities:
         Provision for Loan Losses                                                    360                    150
         Accretion of Securities Discount                                             (34)                (1,558)
         Amortization of Deferred Loan Costs and Premiums                             942                  1,048
         Gain on Sale of Securities                                                     -                   (261)
         Increase in Accrued Interest Receivable                                      (25)                  (941)
         Increase in Accrued Liabilities                                              257                  2,026
         Decrease in Prepaid Expenses and Other Assets                                254                    232
----------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities                                          46,639                 44,349
----------------------------------------------------------------------------------------------------------------------
Investing Activities:
Purchase of  Mortgage-Backed Securities                                                 -                (51,682)
Principal Collected on Mortgage-Backed Securities                                  17,241                  3,852
Proceeds from Sales of Mortgage-Backed Securities                                       -                 49,083
Increase in Interest Bearing Deposits                                                   -                   (525)
Purchase of Loans                                                                (194,929)              (306,332)
Principal Repayments of Loans, Net                                                136,410                143,990
----------------------------------------------------------------------------------------------------------------------
Net Cash Used by Investing Activities                                             (41,278)              (161,614)
----------------------------------------------------------------------------------------------------------------------
Financing Activities:
Dividends Paid on Common and Preferred Stock                                      (15,872)               (40,556)
Contributions from Parent                                                               -                142,841
----------------------------------------------------------------------------------------------------------------------
Net Cash (Used) Provided by Financing Activities                                  (15,872)               102,285
----------------------------------------------------------------------------------------------------------------------

Decrease in Cash and Cash Equivalents                                             (10,511)               (14,980)
Cash and Cash Equivalents at Beginning of Period                                   26,964                 26,167
----------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period                                       $ 16,453               $ 11,187
----------------------------------------------------------------------------------------------------------------------

Supplemental Disclosures:
       Income Taxes Paid                                                           $    -                  $   -
       Interest Paid                                                               $    -                  $   -
Supplemental Schedule of Non-Cash Financing Activity:
       Transfer of Residential Mortgage Loans to Other Real Estate
          Owned                                                                    $   26                  $   -
</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 nine month periods
ended September 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        Unrealized     Unrealized   Estimated Fair
September 30, 1999                                               Cost             Gains         Losses            Value
-----------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>                <C>          <C>             <C>
      Available for Sale Portfolio                           $ 99,939           $   502      $ (1,675)       $  98,766
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>

                                                            Amortized        Unrealized     Unrealized   Estimated Fair
December 31, 1998                                                Cost             Gains         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 September 30, 1999 is 6.78%. 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>
                                                       September 30,         December 31,
                                                            1999                 1998
------------------------------------------------------------------------------------------
                                                          Carrying             Carrying
(In Thousands)                                             Amount               Amount
------------------------------------------------------------------------------------------
<S>                                                        <C>                  <C>
Fixed-Rate Loans:
       15 yr. Loans                                        $ 117,703            $ 114,924
       20 yr. Loans                                            5,559                3,213
       25 yr. Loans                                            3,026                1,849
       30 yr. Loans                                          231,691              192,490
------------------------------------------------------------------------------------------

        Total Fixed-Rate Loans                               357,979              312,476
------------------------------------------------------------------------------------------
Variable-Rate Loans:
       15 yr. Loans                                            6,386                5,222
       20 yr. Loans                                            8,226                6,504
       25 yr. Loans                                            7,025                8,578
       30 yr. Loans                                          495,024              484,824
------------------------------------------------------------------------------------------

        Total Variable-Rate Loans                            516,661              505,128
------------------------------------------------------------------------------------------

       Total Residential Mortgage Loans                    $ 874,640             $817,604

       Premiums and Deferred Costs on Loans, Net               3,976                3,585
       Less: Allowance for Loan Losses                        (1,791)              (1,555)
------------------------------------------------------------------------------------------

        Residential Mortgage Loans, Net                     $876,825            $ 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 nine months ended September 30,
1998.  Of the  $182.8  million  in cash,  $131.0  million  was used to  purchase
additional  residential loans. As of September 30, 1999,  approximately 40.9% of
the Company's  residential mortgage loans are fixed-rate loans and approximately
59.1% 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                    Nine Months Ended
(In Thousands)                                                 September 30,                        September 30,
                                                           1999             1998                  1999           1998
----------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>              <C>                   <C>            <C>

Balance at Beginning of Period                          $ 1,742          $ 1,382               $ 1,555        $ 1,538
Provision Charged to Operations                             120              150                   360            150
Charge-offs                                                 (71)               -                  (124)          (157)
Recoveries                                                    -                -                     -              1
----------------------------------------------------------------------------------------------------------------------
Balance at End of Period                                $ 1,791          $ 1,532               $ 1,791        $ 1,532
----------------------------------------------------------------------------------------------------------------------
</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 September 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               $  (394)                    -          $   (394)
      Less: Reclassification adjustment for gains
        Realized during the period                                            -                     -                 -
  -----------------------------------------------------------------------------------------------------------------------

      Other comprehensive loss at September 30, 1999                    $  (394)                    -          $   (394)
  -----------------------------------------------------------------------------------------------------------------------

  Unrealized gain on available for sale securities:
      Unrealized holding gains arising during the period                $   990                     -          $    990
      Less: Reclassification adjustment for gains
        realized during the period                                          261                     -               261
  -----------------------------------------------------------------------------------------------------------------------

      Other comprehensive income at September 30, 1998                  $   729                     -          $    729
  -----------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                                      Before               Income tax
  Nine months ended September 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            $   (2,289)                    -        $   (2,289)
      Less: Reclassification adjustment for gains
        Realized during the period                                            -                     -                 -
  -----------------------------------------------------------------------------------------------------------------------

      Other comprehensive loss at September 30, 1999                 $   (2,289)                    -        $   (2,289)
  -----------------------------------------------------------------------------------------------------------------------

  Unrealized gain on available for sale securities:
      Unrealized holding gains arising during the period             $    1,945                     -       $     1,945
      Less: Reclassification adjustment for gains
        Realized during the period                                          261                     -               261
  -----------------------------------------------------------------------------------------------------------------------

      Other comprehensive income at September 30, 1998               $    1,684                     -       $     1,684
  -----------------------------------------------------------------------------------------------------------------------
</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 $997.9  million at  September  30,  1999,  an
increase of $26.9 million from $971.0 million at December 31, 1998. The increase
in total assets is primarily  attributable  to the purchase from Webster Bank of
residential  mortgage  loans of $194.9  million,  offset by loan  repayments  of
$136.4 million and principal  collected on  mortgage-backed  securities of $17.2
million.  Shareholders'  equity was $956.7  million at  September  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 September 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 $1.5 million at September 30, 1999.
The following table details the Company's nonaccrual loans at September 30, 1999
and December 31, 1998:

<TABLE>
<CAPTION>
                                                                                       September 30,      December 31,
(In Thousands)                                                                               1999             1998
----------------------------------------------------------------------------------------------------------------------
<S>                                                                                           <C>             <C>
Loans Accounted for on a Nonaccrual Basis:
        Residential Fixed-Rate Loans                                                        $    191        $    71
        Residential Variable-Rate Loans                                                        1,319          1,206
----------------------------------------------------------------------------------------------------------------------
              Total Nonaccrual Loans                                                        $  1,510        $ 1,277
----------------------------------------------------------------------------------------------------------------------
</TABLE>

At  September  30, 1999 the  allowance  for loan losses was  approximately  $1.8
million,  or 119% of nonaccrual assets.  Management  believes that the allowance
for loan losses is adequate to cover losses inherent 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  costs 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,  generally  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 September 30, 1999,  59.1% 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 nine months ended September 30, 1999, the Company reported net
income of $15.2  million  and  $44.9  million,  respectively,  or  $149,620  and
$442,380,  respectively,  per common share on a diluted  basis,  compared to the
three and nine months ended  September 30, 1998 which  amounted to $15.3 million
and $43.7 million,  respectively,  or $151,200 and $430,060,  respectively,  per
common share on a diluted basis.

Total  interest  income for the three and nine months ended  September  30, 1999
amounted to $16.2  million and $47.9  million,  respectively,  net of  servicing
fees,  compared  to the three and nine  months  ended  September  30, 1998 which
amounted to $16.2 million and $46.3 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 September 30,        Three Months Ended September 30,
                                                         1999                                    1998
                                           Average      Interest    Average         Average      Interest      Average
(In Thousands)                             Balance       Income      Yield          Balance       Income        Yield
-----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>            <C>            <C>          <C>           <C>            <C>
Mortgage Loans                           $ 862,179      $ 14,367       6.67%        $ 783,696     $ 13,412       6.85%
Mortgage-Backed Securities                 101,852         1,596       6.27%          150,367        2,517       6.69%
Interest Bearing Deposits                   15,275           217       5.68%           20,066          229       4.57%
-----------------------------------------------------------------------------------------------------------------------
     Total                               $ 979,306      $ 16,180       6.61%        $ 954,129     $ 16,158       6.77%
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
                                           Nine Months Ended September 30,           Nine Months Ended September 30,
                                                         1999                                    1998
                                           Average      Interest    Average         Average      Interest      Average
(In Thousands)                             Balance       Income      Yield          Balance       Income        Yield
-----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>            <C>            <C>          <C>           <C>            <C>
Mortgage Loans                           $ 844,091      $ 42,411       6.70%        $ 732,197     $ 38,526       7.02%
Mortgage-Backed Securities                 107,460         5,064       6.28%          149,845        7,521       6.69%
Interest Bearing Deposits                   11,542           411       4.74%            8,667          300       4.58%
-----------------------------------------------------------------------------------------------------------------------
     Total                               $ 963,093      $ 47,886       6.63%        $ 890,709     $ 46,347       6.94%
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

The provision for loan losses for the three and nine months ended  September 30,
1999,  amounted to $120,000 and $360,000,  respectively.  The provision for loan
losses for both the three and nine months ended September 30, 1998,  amounted to
$150,000.  The  provision  for loan losses  reflects  the  increase in the total
residential mortgage loan portfolio.

Noninterest  expenses  for the three and nine months  ended  September  30, 1999
amounted to $882,000 and $2.6 million, respectively, compared to the noninterest
expenses for the three and nine months ended  September 30, 1998 which  amounted
to  $933,000  and $2.8  million,  respectively.  Noninterest  expenses  included
advisory  fees and  dividends  on Series A Preferred  Stock.  The  reduction  in
noninterest  expenses for the nine months ended  September  30, 1999 compared to
the nine months  ended  September  30, 1998 of $164,000 is due  primarily 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 has completed 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  addressed,  included:  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 has been completed 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  have  been  formulated.
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 September 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 September 30, 1999
Interest Sensitive Assets:
      Mortgage-Backed Securities                  $ 99,939           $  98,766           $  2,201          $  (3,065)
      Variable-Rate Residential Loans              516,661             517,466             10,083            (12,498)
      Fixed-Rate Residential Loans                 357,979             356,312             10,847            (14,108)
Interest-Sensitive Liabilities:
      Series A Preferred Stock                      40,000              40,000              2,269             (2,850)
----------------------------------------------------------------------------------------------------------------------
</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 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  September  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: November 9, 1999



                                       15
<PAGE>

                                INDEX TO EXHIBITS

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


                                       16