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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q







|x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2009

OR



| ̈ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------------

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 incorporation or organization) |  | (I. R. S. Employer Identification Number)



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

Registrants telephone number, including area code: (203) 465-4366





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.    x  Yes     ̈  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web
site, if any, every interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to
submit and post such files).     ̈  Yes     ̈  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  |  ̈
|                        |  |                                                  | 
|Non-accelerated filer   |  | x  (Do not check if a smaller reporting company) |  | Smaller reporting company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x

The number of outstanding shares of the registrants of common stock, $.01 par value, as of April 30, 2009 was 100.









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WEBSTER PREFERRED CAPITAL CORPORATION

INDEX



|                               |  |                                                                                       |  |   
|------------------------------ |  | ------------------------------------------------------------------------------------- |  | --
|                               |  | Page                                                                                 
|PART I - FINANCIAL INFORMATION |  |                                                                                      
|                               |  |                                                                                      
|Item 1.                        |  | Financial Statements (unaudited):                                                     |  |   
|                               |  |                                                                                      
|                               |  | Balance Sheets                                                                        |  | 3 
|                               |  |                                                                                      
|                               |  | Statements of Income                                                                  |  | 4 
|                               |  |                                                                                      
|                               |  | Statements of Changes in Shareholders Equity                                         |  | 5 
|                               |  |                                                                                      
|                               |  | Statements of Cash Flows                                                              |  | 6 
|                               |  |                                                                                      
|                               |  | Notes to Financial Statements                                                         |  | 7 
|                               |  |                                                                                      
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 11
|                               |  |                                                                                      
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 14
|                               |  |                                                                                      
|Item 4.                        |  | Controls and Procedures                                                               |  | 15
|                               | 
|PART II - OTHER INFORMATION    |  | 15                                                                                   
|                               |  |                                                                                      
|Item 1.                        |  | Legal Proceedings                                                                     |  | 15
|                               |  |                                                                                      
|Item 1A.                       |  | Risk Factors                                                                          |  | 15
|                               |  |                                                                                      
|Item 2.                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 15
|                               |  |                                                                                      
|Item 3.                        |  | Defaults Upon Senior Securities                                                       |  | 15
|                               |  |                                                                                      
|Item 4.                        |  | Submission of Matters to a Vote of Security Holders                                   |  | 15
|                               |  |                                                                                      
|Item 5.                        |  | Other Information                                                                     |  | 15
|                               |  |                                                                                      
|Item 6.                        |  | Exhibits                                                                              |  | 16
|                               | 
|SIGNATURE                      |  | 17                                                                                   
|                               | 
|EXHIBITS                       |  | 18                                                                                   



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|Item 1. | FINANCIAL STATEMENTS (UNAUDITED)
|------- | --------------------------------

WEBSTER PREFERRED CAPITAL CORPORATION

BALANCE SHEETS

(Unaudited)



|                                                                                                                        |  |               |         |   |                  |   |         |  
|----------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | - | ---------------- | - | ------- | -
|(In thousands, except share and per share data)                                                                         |  | March 31,2009 |         |   | December 31,2008 |  
|                                                                                                                        | 
|Assets                                                                                                                  |  |               |         |   |                  |   |         |  
|                                                                                                                        |  |              
|Cash                                                                                                                    |  | $             | 9,738   |   |                  | $ | 8,680   |  
|Residential mortgage loans, net                                                                                         |  |               | 176,083 |   |                  |   | 187,696 |  
|Accrued interest receivable                                                                                             |  |               | 766     |   |                  |   | 809     |  
|Prepaid expenses and other assets                                                                                       |  |               | 23      |   |                  |   |        |  
|                                                                                                                        |  |               |         |   |                  |   |         |  
|Total assets                                                                                                            |  | $             | 186,610 |   |                  | $ | 197,185 |  
|                                                                                                                        |  |               |         |   |                  |   |         |  
|                                                                                                                        |  |              
|Liabilities                                                                                                             |  |               |         |   |                  |   |         |  
|Accrued dividends payable to preferred shareholders                                                                     |  | $             | 180     |   |                  | $ | 180     |  
|Accrued expenses and other liabilities                                                                                  |  |               | 477     |   |                  |   | 34      |  
|                                                                                                                        |  |               |         |   |                  |   |         |  
|Total liabilities                                                                                                       |  |               | 657     |   |                  |   | 214     |  
|                                                                                                                        |  |               |         |   |                  |   |         |  
|                                                                                                                        |  |              
|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                                                                                                         |  |               | 188,799 |   |                  |   | 198,799 |  
|Distributions in excess of accumulated earnings                                                                         |  |               | (3,847  | ) |                  |   | (2,829  | )
|                                                                                                                        |  |               |         |   |                  |   |         |  
|Total shareholders equity                                                                                              |  |               | 185,953 |   |                  |   | 196,971 |  
|                                                                                                                        |  |               |         |   |                  |   |         |  
|Total liabilities and shareholders equity                                                                              |  | $             | 186,610 |   |                  | $ | 197,185 |  
|                                                                                                                        |  |               |         |   |                  |   |         |  

See accompanying notes to financial statements



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WEBSTER PREFERRED CAPITAL CORPORATION

STATEMENTS OF INCOME

(Unaudited)



|                                                      |  |                             |        |      |   |       
|----------------------------------------------------- |  | --------------------------- | ------ | ---- | - | ------
|                                                      |  | Three Months EndedMarch 31,
|(Dollars in thousands, except per share data)         |  | 2009                        |        | 2008
|Interest income:                                      |  |                             |        |      |   |       
|Loans, net of servicing fees                          |  | $                           | 2,533  |      | $ | 3,838 
|Securities and interest-bearing deposits              |  |                             |       |      |   | 355   
|                                                      |  |                             |        |      |   |       
|Total interest income                                 |  |                             | 2,533  |      |   | 4,193 
|Provision for loan losses                             |  |                             | 250    |      |   |      
|                                                      |  |                             |        |      |   |       
|Total interest income after provision for loan losses |  |                             | 2,283  |      |   | 4,193 
|                                                      |  |                            
|Noninterest expense:                                  |  |                             |        |      |   |       
|Advisory fee expense paid to Parent                   |  |                             | 51     |      |   | 51    
|Other                                                 |  |                             | 40     |      |   | 28    
|                                                      |  |                             |        |      |   |       
|Total noninterest expense                             |  |                             | 91     |      |   | 79    
|                                                      |  |                             |        |      |   |       
|Net income                                            |  |                             | 2,192  |      |   | 4,114 
|Preferred stock dividends                             |  |                             | 216    |      |   | 216   
|                                                      |  |                             |        |      |   |       
|                                                      |  |                            
|Net income available to common shareholder            |  | $                           | 1,976  |      | $ | 3,898 
|                                                      |  |                             |        |      |   |       
|                                                      |  |                            
|Net income per common share:                          |  |                             |        |      |   |       
|Basic                                                 |  | $                           | 19,760 |      | $ | 38,980

See accompanying notes to financial statements



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WEBSTER PREFERRED CAPITAL CORPORATION

STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY

(Unaudited)



|                             |  |                             |         |   |      |   |         |  
|---------------------------- |  | --------------------------- | ------- | - | ---- | - | ------- | -
|                             |  | Three Months EndedMarch 31, |        
|(In thousands)               |  | 2009                        |         |   | 2008 |  
|Beginning Balance            |  | $                           | 196,971 |   |      | $ | 327,683 |  
|Net Income                   |  |                             | 2,192   |   |      |   | 4,114   |  
|Return of capital to Parent  |  |                             | (10,000 | ) |      |   | (50,000 | )
|Dividends on preferred stock |  |                             | (216    | ) |      |   | (216    | )
|Dividends on common stock    |  |                             | (2,994  | ) |      |   | (4,074  | )
|                             |  |                             |         |   |      |   |         |  
|Ending Balance               |  | $                           | 185,953 |   |      | $ | 277,507 |  
|                             |  |                             |         |   |      |   |         |  

See accompanying notes to financial statements.



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WEBSTER PREFERRED CAPITAL CORPORATION

STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                                  |  |                             |         |   |      |   |         |  
|--------------------------------------------------------------------------------- |  | --------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                  |  | Three Months endedMarch 31, |        
|(In thousands)                                                                    |  | 2009                        |         |   | 2008 |  
|Cash flow from operating activities:                                              |  |                             |         |   |      |   |         |  
|Net income                                                                        |  | $                           | 2,192   |   |      | $ | 4,114   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                             |         |   |      |   |         |  
|Net amortization and accretion                                                    |  |                             | (21     | ) |      |   | 46      |  
|Provision for loan losses                                                         |  |                             | 250     |   |      |   |        |  
|Decrease in accrued interest receivable                                           |  |                             | 43      |   |      |   | 70      |  
|Increase in accrued expenses and other liabilities                                |  |                             | 443     |   |      |   | 148     |  
|(Increase) decrease in prepaid expenses and other assets                          |  |                             | (23     | ) |      |   | 290     |  
|                                                                                  |  |                             |         |   |      |   |         |  
|Net cash provided by operating activities                                         |  |                             | 2,884   |   |      |   | 4,668   |  
|                                                                                  |  |                             |         |   |      |   |         |  
|                                                                                  |  |                            
|Cash flow from investing activities:                                              |  |                             |         |   |      |   |         |  
|Net decrease in short-term investments                                            |  |                             |        |   |      |   | 40,000  |  
|Net decrease in residential mortgage loans                                        |  |                             | 11,384  |   |      |   | 9,486   |  
|                                                                                  |  |                             |         |   |      |   |         |  
|Net cash provided by investing activities                                         |  |                             | 11,384  |   |      |   | 49,486  |  
|                                                                                  |  |                            
|Cash flow from financing activities:                                              |  |                             |         |   |      |   |         |  
|Dividends paid on preferred stock                                                 |  |                             | (216    | ) |      |   | (216    | )
|Dividends paid on common stock                                                    |  |                             | (2,994  | ) |      |   | (4,074  | )
|Return of capital to Parent                                                       |  |                             | (10,000 | ) |      |   | (50,000 | )
|                                                                                  |  |                             |         |   |      |   |         |  
|Net cash used in financing activities                                             |  |                             | (13,210 | ) |      |   | (54,290 | )
|                                                                                  |  |                             |         |   |      |   |         |  
|Net increase (decrease) in cash and cash equivalents                              |  |                             | 1,058   |   |      |   | (136    | )
|Cash and cash equivalents at beginning of year                                    |  |                             | 8,680   |   |      |   | 2,543   |  
|                                                                                  |  |                             |         |   |      |   |         |  
|Cash and cash equivalents at end of period                                        |  | $                           | 9,738   |   |      | $ | 2,407   |  
|                                                                                  |  |                             |         |   |      |   |         |  

See accompanying notes to financial statements.



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WEBSTER PREFERRED CAPITAL CORPORATION

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

NOTE 1: Basis Of Presentation

The accompanying unaudited interim financial statements represent the accounts of Webster Preferred Capital Corporation (the Company or WPCC), a subsidiary of Webster Bank, National Association
(Webster Bank) and have been prepared in conformity with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by U.S. generally accepted accounting principles (GAAP) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. Amounts in prior period financial statements are reclassified whenever necessary to conform to current period presentations. The results of operations for the three months
ended March 31, 2009 are not necessarily indicative of the results which may be expected for the year as a whole.

The preparation of the Interim
Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, as of the date of the Interim
Financial Statements, and the reported amounts of revenues and expenses for the periods presented. Actual results could differ from those estimates. These Interim Financial Statements should be read in conjunction with the audited Financial
Statements and Notes thereto included in WPCCs Annual Report on Form 10-K for the year ended December 31, 2008.



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NOTE 2: Residential Mortgage Loans and Allowance for Loan Losses

Loans represent assets that the Company acquired from Webster Bank at carrying value. While these transfers represent legal sales by Webster Bank, Webster Bank may not
record the transfers as sales for GAAP purposes because of its 100% direct ownership interest in the Company. Accordingly, the Companys assets represent non-recourse receivables from Webster Bank which are fully collateralized by the
underlying loans. The underlying loans are whole loans secured by first mortgages or deeds of trust on single family (one-to-four unit) residential real estate properties located primarily in Connecticut. The assets continue to be classified as
residential loans in the Companys financial statements because the returns on and the recoverability of these non-recourse receivables are entirely dependent on the performance of the underlying residential loans.

Loans are stated at the principal amounts outstanding, adjusted by net deferred loan costs, fees, premiums, and the allowance for loan losses. Interest on loans is
credited to income as earned based on the rate applied to principal amounts outstanding. Interest which is more than 90 days past due is not accrued. Such interest ultimately collected, if any, is credited to income in the period received. At
March 31, 2009 there were $2.1 million of non-accruing loans. Deferred loan costs, fees and premiums on loans acquired are recognized in interest income over the lives of the loans using a method approximating the interest method. Servicing
fees paid to the Servicer (as defined in Note 3 below) are recorded as a component of interest income.



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A summary of the Companys residential mortgage loans by type and original maturity follows:



|                                          |  |               |         |   |                  |   |         |  
|----------------------------------------- |  | ------------- | ------- | - | ---------------- | - | ------- | -
|(In thousands)                            |  | March 31,2009 |         |   | December 31,2008 |  
|Fixed-rate loans:                         |  |               |         |   |                  |   |         |  
|15 yr. loans                              |  | $             | 6,601   |   |                  | $ | 7,591   |  
|20 yr. loans                              |  |               | 5,481   |   |                  |   | 5,991   |  
|25 yr. loans                              |  |               | 3,002   |   |                  |   | 3,029   |  
|30 yr. loans                              |  |               | 87,891  |   |                  |   | 93,329  |  
|                                          |  |               |         |   |                  |   |         |  
|Total fixed-rate loans                    |  |               | 102,975 |   |                  |   | 109,940 |  
|                                          |  |               |         |   |                  |   |         |  
|Adjustable-rate loans:                    |  |               |         |   |                  |   |         |  
|15 yr. loans                              |  |               | 919     |   |                  |   | 438     |  
|20 yr. loans                              |  |               | 552     |   |                  |   | 557     |  
|25 yr. loans                              |  |               | 432     |   |                  |   | 444     |  
|30 yr. loans                              |  |               | 72,767  |   |                  |   | 77,704  |  
|                                          |  |               |         |   |                  |   |         |  
|Total adjustable-rate loans               |  |               | 74,670  |   |                  |   | 79,143  |  
|                                          |  |               |         |   |                  |   |         |  
|                                          |  |              
|Total residential mortgage loans          |  |               | 177,645 |   |                  |   | 189,083 |  
|                                          |  |              
|Premiums and deferred costs on loans, net |  |               | 817     |   |                  |   | 796     |  
|Less: allowance for loan losses           |  |               | (2,379  | ) |                  |   | (2,183  | )
|                                          |  |               |         |   |                  |   |         |  
|                                          |  |              
|Residential mortgage loans, net           |  | $             | 176,083 |   |                  | $ | 187,696 |  
|                                          |  |               |         |   |                  |   |         |  

As of March 31, 2009, 58.0% of the Companys residential mortgage loans are fixed-rate loans and 42.0%
are adjustable-rate loans.

A summary of the changes in the allowance for loan losses follows:



|                             |  |                             |       |   |      |   |       |  
|---------------------------- |  | --------------------------- | ----- | - | ---- | - | ----- | -
|                             |  | Three months endedMarch 31, |      
|(In thousands)               |  | 2009                        |       |   | 2008 |  
|Balance at beginning of year |  | $                           | 2,183 |   |      | $ | 1,772 |  
|Provision for loan losses    |  |                             | 250   |   |      |   |      |  
|Charge-offs                  |  |                             | (54   | ) |      |   | (9    | )
|                             |  |                             |       |   |      |   |       |  
|Balance at end of period     |  | $                           | 2,379 |   |      | $ | 1,763 |  
|                             |  |                             |       |   |      |   |       |  

There was a provision for loan losses of $250,000 recorded for the three months ended March 31, 2009. There
was no provision recorded for the three months ended March 31, 2008. Charge-offs totaled $54,000 and $9,000 for the three months ended March 31, 2009 and 2008, respectively.

Total delinquent loans at March 31, 2009 were $5.8 million, an increase of $3.9 million from March 31, 2008. A loan is deemed to be delinquent for reporting purposes when it is more than 30 days past due.
The increase in delinquency is a direct result of the difficult economic conditions that exist in the U.S. economy and housing markets.

There has been
significant disruption and volatility in the financial and capital markets. Turmoil in the mortgage market adversely impacted both domestic and global markets, and led to a significant credit and liquidity crisis. The disruption has been exacerbated
by the continued value declines in the real estate and housing market. The Company is not immune to some negative consequences arising from overall economic weakness and, in particular, a sharp downturn in the housing market. Decreases in real
estate values could adversely affect the value of property used as collateral for our loans. Adverse changes in the economy may have a negative effect on the ability of our borrowers to make timely loan payments, which would have an adverse impact
on our earnings. A further increase in loan delinquencies may increase non-accrual loans decreasing our net interest income and adversely impact our loan loss experience, causing potential increases in our provision for loan losses and allowance for
loan losses.



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NOTE 3: 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 services provided to the Company by Webster Bank are at the level of a
sub-servicing agreement. As such, the Company estimates that the fees paid to Webster Bank for servicing approximates fees that would be paid if the Company operated as an unaffiliated entity. Servicing fees paid for the three months ended
March 31, 2009 were $37,000 and for the three months ended March 31, 2008 were $54,000. Servicing fees are netted against interest income in the Statements of Income, as they are considered 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 escrow
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.



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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, as amended (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 2008 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 in Managements Discussion
and Analysis. Except as required by law, the Company does not undertake to update any such forward looking statements.

Summary

Total interest income net of servicing fees of $2.5 million for the three months ended March 31, 2009 decreased $1.7 million or, 40.5%, compared to $4.2 million
for the three months ended March 31, 2008.

For the three months ended March 31, 2009 average loans decreased $84.6 million and average short
term investments decreased by $40.0 million compared to the three months ended March 31, 2008. The yield on earning assets for the three months ended March 31, 2009 was 5.45% compared to 5.40 % for the three months ended
March 31, 2008.

Changes in Financial Condition

Total assets, consisting primarily of residential mortgage loans, were $186.6 million at March 31, 2009, a decrease of $10.6 million from $197.2 million at December 31, 2008. Residential mortgage loans decreased $11.6 million
primarily as a result of principal repayments. There were no loan transactions with Webster Bank during the three months ended March 31, 2009. Cash increased by $1.1 million compared to December 31, 2008. Shareholders equity
decreased by $11.0 million to $186.0 million at March 31, 2009 from $197.0 million at December 31, 2008, the decrease was caused by a $10.0 million in return of capital to the Parent and $3.2 million in common and preferred dividends
partially offset by net income of $2.2 million for the three months ended March 31, 2009.



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Asset Quality

At March 31, 2009 and December 31, 2008, residential real estate loans comprised the entire loan portfolio. All residential loans were acquired from Webster Bank. The Company from time to time also invests in short-term
investments.

The following table details the Companys past due loans:



|                     |  |                  |       |            |                   |   |                  |   |            |  |      |  
|-------------------- |  | ---------------- | ----- | ---------- | ----------------- | - | ---------------- | - | ---------- |  | ---- | -
|                     |  | March 31, 2009   |       |            | December 31, 2008 |  
|(In thousands)       |  | PrincipalBalance |       | % of Loans |                   |   | PrincipalBalance |   | % of Loans | 
|                     |  |                  |      
|Past Due 30-89 days  |  |                  |       |            |                   |   |                  |   |            |  |      |  
|Residential loans    |  | $                | 3,631 |            | 2.04              | % |                  | $ | 4,785      |  | 2.53 | %
|                     |  |                  |       |            |                   |   |                  |   |            |  |      |  
|Total past due loans |  | $                | 3,631 |            | 2.04              | % |                  | $ | 4,785      |  | 2.53 | %
|                     |  |                  |       |            |                   |   |                  |   |            |  |      |  

The following table details the Companys nonperforming loans:



|                           |  |               |       |                  |   |    
|-------------------------- |  | ------------- | ----- | ---------------- | - | ---
|(In thousands)             |  | March 31,2009 |       | December 31,2008
|Nonaccrual loans           |  | $             | 2,145 |                  | $ | 823
|                           |  |               |       |                  |   |    
|Total non-performing loans |  | $             | 2,145 |                  | $ | 823
|                           |  |               |       |                  |   |    

At March 31, 2009 and December 31, 2008, the allowance for loan losses was approximately $2.4 million
and $2.2 million, respectively. Management believes that the allowance for loan losses is adequate to cover probable losses inherent in the portfolio.

Non-performing loans consist of twelve loans at March 31, 2009. Non-performing loans increased by $1.3 million to $2.1 million at March 31, 2009 compared to $0.8 million at December 31, 2008. There were six loans that became
non-performing during the three months ended March 31, 2009.

The provision for loan losses for the three months ended March 31, 2009 was
$250,000 compared with no provision for the three months ended March 31, 2008. Total delinquent loans at March 31, 2009 were $5.8 million, an increase of $0.2 million from December 31, 2008. A loan is deemed to be delinquent for
reporting purposes when it is more than 30 days past due. The increase in delinquencies in this current period of economic uncertainty is reflected in the increased provision for the three months ended March 31, 2009.

Liquidity and Capital Resources

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

While scheduled loan amortization and maturities of short-term investments are predictable sources of funds, loan prepayments can vary greatly and are
influenced by factors such as general interest rates and economic conditions. One of the inherent risks of investing in loans is the possibility 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.

In the unlikely event that principal and interest payments on its
mortgage assets are insufficient to meet its operating needs, WPCC has the ability to raise additional funds. For example, WPCCs residential mortgage loans are underwritten to meet secondary market requirements and could be sold or securitized
as mortgage-backed securities and used as borrowing collateral, although the Company had no plans to do so at March 31, 2009.



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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 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 fair market values of the Companys financial assets are sensitive to fluctuations in market interest rates. The market values of fixed-rate loans tend to decline in value as interest rates
rise. If interest rates decrease, the market value of loans and 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 represent primarily variable-rate mortgage loans, may change due to changes in quoted interest-rate indices. The variable-rate mortgage loans generally re-price 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 March 31, 2009, 42.0% of the Companys residential mortgage loans were adjustable-rate loans.

Results of Operations

For the three months ended
March 31, 2009, the Company reported net income available to common shareholder of $2.0 million, a decrease of $1.9 million, or 49.3%, compared to the same period in 2008.

Interest income net of servicing fees for the three months ended March 31, 2009 was $2.5 million, a decrease of $1.7 million, or 39.6%, compared to $4.2 million for the three months ended March 31, 2008. The
decrease in interest income was primarily related to a reduction in average interest earning assets of $124.7 million for the three months ended March 31, 2009 compared to the three months ended March 31, 2008. The average yield for
mortgage loans declined by 23 basis points. There were no short-term investments during the first quarter of 2009.

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



|                       |  |                                  |         |                |                                  |              |  |      |                |  |                |         |              |   |       |  |      |  
|---------------------- |  | -------------------------------- | ------- | -------------- | -------------------------------- | ------------ |  | ---- | -------------- |  | -------------- | ------- | ------------ | - | ----- |  | ---- | -
|                       |  | Three Months EndedMarch 31, 2009 |         |                | Three Months EndedMarch 31, 2008 |             
|(In thousands)         |  | AverageBalance                   |         | InterestIncome |                                  | AverageYield |  |      | AverageBalance |  | InterestIncome |         | AverageYield |  
|Mortgage loans         |  | $                                | 185,856 |                | $                                | 2,533        |  | 5.45 | %              |  | $              | 270,479 |              | $ | 3,838 |  | 5.68 | %
|Short-term investments |  |                                  |        |                |                                  |             |  |     |                |  |                | 40,033  |              |   | 355   |  | 3.55 |  
|                       |  |                                  |         |                |                                  |              |  |      |                |  |                |         |              |   |       |  |      |  
|Total                  |  | $                                | 185,856 |                | $                                | 2,533        |  | 5.45 | %              |  | $              | 310,512 |              | $ | 4,193 |  | 5.40 | %
|                       |  |                                  |         |                |                                  |              |  |      |                |  |                |         |              |   |       |  |      |  

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 have impacted interest income 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.



|                                     |  |                                                                    |      |   |        |   |      |       |  |   |        |  
|------------------------------------ |  | ------------------------------------------------------------------ | ---- | - | ------ | - | ---- | ----- |  | - | ------ | -
|                                     |  | Three Months Ended March 31,2009 v. 2008Increase (Decrease) due to |     
|(In thousands)                       |  | Rate                                                               |      |   | Volume |   |      | Total | 
|Interest on interest-earning assets: |  |                                                                    |      |   |        |   |      |       |  |   |        |  
|Mortgage loans                       |  | $                                                                  | (446 | ) |        | $ | (859 | )     |  | $ | (1,305 | )
|Short-term investments               |  |                                                                    | (284 | ) |        |   | (71  | )     |  |   | (355   | )
|                                     |  |                                                                    |      |   |        |   |      |       |  |   |        |  
|Net change in net interest income    |  | $                                                                  | (730 | ) |        | $ | (930 | )     |  | $ | (1,660 | )
|                                     |  |                                                                    |      |   |        |   |      |       |  |   |        |  



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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 March 31, 2009 and December 31, 2008 and the projected change in market values if interest rates instantaneously increase by 100 basis points.



|                                  |  |                |         |              |   |                               |  |         |  |   |        |  
|--------------------------------- |  | -------------- | ------- | ------------ | - | ----------------------------- |  | ------- |  | - | ------ | -
|                                  |  |                |         |              |   | Estimated Market Value Impact | 
|(In thousands)                    |  | Amortized Cost |         | Market Value |   | -100 BP                       |  | +100 BP | 
|At March 31, 2009                 |  |                |         |              |   |                               |  |         |  |   |        |  
|Interest sensitive assets:        |  |                |         |              |   |                               |  |         |  |   |        |  
|Fixed-rate residential loans      |  | $              | 102,975 |              | $ | 106,225                       |  | N/A     |  | $ | (3,490 | )
|Adjustable-rate residential loans |  |                | 74,670  |              |   | 75,163                        |  | N/A     |  |   | (670   | )
|                                  |  |                |         |              |   |                               |  |         |  |   |        |  
|                                  |  | $              | 177,645 |              | $ | 181,388                       |  | N/A     |  | $ | (4,160 | )
|                                  |  |                |         |              |   |                               |  |         |  |   |        |  
|                                  |  |                |         |             
|At December 31, 2008              |  |                |         |              |   |                               |  |         |  |   |        |  
|Interest sensitive assets:        |  |                |         |              |   |                               |  |         |  |   |        |  
|Fixed-rate residential loans      |  | $              | 109,940 |              | $ | 112,627                       |  | N/A     |  | $ | (3,669 | )
|Adjustable-rate residential loans |  |                | 79,143  |              |   | 78,144                        |  | N/A     |  |   | (786   | )
|                                  |  |                |         |              |   |                               |  |         |  |   |        |  
|                                  |  | $              | 189,083 |              | $ | 190,771                       |  | N/A     |  | $ | (4,455 | )
|                                  |  |                |         |              |   |                               |  |         |  |   |        |  

Interest-sensitive assets, when shocked by a plus 100 basis point rate change, results in an unfavorable $4.2
million, or 2.3%, change in market value at March 31, 2009 compared to an unfavorable $4.5 million, or 2.3%, market value change at December 31, 2008. Changes in the projected market value due to the instantaneous rate changes at
March 31, 2009 compared to December 31, 2008 are a result of changes in outstanding balances of the assets, and do not represent a significant change due to interest rates since year end.

Based on the asset/liability mix at March 31, 2009, management estimates that a gradual 200 basis point increase in interest rates over a 12 month period would
increase net income over that period by approximately 3.6%. At December 31, 2008, a projected 200 basis point increase in rates produced a net income increase of 4.1%.

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 March 31, 2009 , represents a reasonable level of risk.



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##### Table of Contents

|Item 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

As of March 31, 2009 the Company carried out an evaluation, under the supervision and with the participation of the Companys management, including its principal executive officer and its principal financial
officer, of the design and operation of the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934). Based on this evaluation, the Companys principal executive
officer and principal financial officer concluded that the Companys disclosure controls and procedures are effective for gathering, analyzing and disclosing the information the Company is required to disclose in the reports it files under the
Securities Exchange Act of 1934, within the time periods specified in the SECs rules and forms. There was no change in the Companys internal control over financial reporting that occurred during the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.

PART II - OTHER INFORMATION



|Item 1. | LEGAL PROCEEDINGS
|------- | -----------------

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



|Item 1A. | RISK FACTORS
|-------- | ------------

During the first quarter of 2009, there were no material changes to the risk factors previously disclosed in the Companys Annual Report on Form 10-K for the year ended December 31, 2008.



|Item 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
|------- | -----------------------------------------------------------

Not Applicable.



|Item 3. | DEFAULTS UPON SENIOR SECURITIES
|------- | -------------------------------

Not Applicable.



|Item 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
|------- | ---------------------------------------------------

Not Applicable



|Item 5. | OTHER INFORMATION
|------- | -----------------

None



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##### Table of Contents

|Item 6. | Exhibits
|------- | --------



|              |  |                                                                                                                                                                                                                                                                            
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                                                                
|3.1           |  | Amended and Restated Certificate of Incorporation of Webster Preferred Capital Corporation (the Company) (incorporated herein by reference from Exhibit 3.1 to the Companys
Annual Report on Form 10-K for the fiscal year ended December 31, 1997).                    
|              | 
|3.2           |  | Certificate of Amendment of Rights and Preferences of the Series B 8.625% Cumulative Redeemable Preferred Stock of the Company (incorporated herein by reference from Exhibit 3.3 to the
Companys Annual Report on Form 10-K for the fiscal year ended December 31, 1997).
|              | 
|3.3           |  | Amended and Restated By-Laws of the Company (incorporated herein by reference from Exhibit 3.1 to the Companys Current Report on Form 8-K filed with the SEC on November 9,
2007).                                                                                        
|              | 
|4.1           |  | Specimen of certificate representing the Series B 8.625% Cumulative Redeemable Preferred Stock of the Company (incorporated herein by reference from Exhibit 4.2 to the Companys Annual
Report on Form 10-K for the fiscal year ended December 31, 1997).                 
|              | 
|31.1          |  | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                    
|              | 
|31.2          |  | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                    
|              | 
|32.1          |  | Written Statement pursuant to section 906 of the Sarbanes-Oxley Act of 2002, signed by the Companys Principal Executive Officer.                                                                                                                                          
|              | 
|32.2          |  | Written Statement pursuant to section 906 of the Sarbanes-Oxley Act of 2002, signed by the Companys Principal Financial Officer.                                                                                                                                          



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##### Table of Contents

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                           
|                   | 
|Date: May 13, 2009 |  |                                      
|                   |  |                                      
|                   |  | BY:                                   |  | /s/ Douglas O. Hart                           
|                   |  |                                       |  | Douglas O. Hart                               
|                   |  |                                       |  | Senior Vice President, Chief Financial Officer
|                   |  |                                       |  | (Principal Financial Officer)                 



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##### Table of Contents

EXHIBIT INDEX



|              |  |                                                                                                                                                                                                                                                                            
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                                                                
|3.1           |  | Amended and Restated Certificate of Incorporation of Webster Preferred Capital Corporation (the Company) (incorporated herein by reference from Exhibit 3.1 to the Companys
Annual Report on Form 10-K for the fiscal year ended December 31, 1997).                    
|              | 
|3.2           |  | Certificate of Amendment of Rights and Preferences of the Series B 8.625% Cumulative Redeemable Preferred Stock of the Company (incorporated herein by reference from Exhibit 3.3 to the
Companys Annual Report on Form 10-K for the fiscal year ended December 31, 1997).
|              | 
|3.3           |  | Amended and Restated By-Laws of the Company (incorporated herein by reference from Exhibit 3.1 to the Companys Current Report on Form 8-K filed with the SEC on November 9,
2007).                                                                                        
|              | 
|4.1           |  | Specimen of certificate representing the Series B 8.625% Cumulative Redeemable Preferred Stock of the Company (incorporated herein by reference from Exhibit 4.2 to the Companys Annual
Report on Form 10-K for the fiscal year ended December 31, 1997).                 
|              | 
|31.1          |  | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                    
|              | 
|31.2          |  | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                    
|              | 
|32.1          |  | Written Statement pursuant to section 906 of the Sarbanes-Oxley Act of 2002, signed by the Companys Principal Executive Officer.                                                                                                                                          
|              | 
|32.2          |  | Written Statement pursuant to section 906 of the Sarbanes-Oxley Act of 2002, signed by the Companys Principal Financial Officer.                                                                                                                                          



18