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

                                    FORM 10-Q

[X]      Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the quarter ended June 30, 2002

                                       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 each of the registrant's classes of
common stock, as of July 31, 2002 is: 100 shares.


<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION



                                      INDEX

<TABLE>
<CAPTION>


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

Item 1.  Interim Financial Statements:

             Statements of Condition at June 30, 2002 (unaudited) and December 31, 2001......................    3

             Statements of Income for the Three and Six Months Ended June 30, 2002 and 2001 (unaudited) .....    4

             Consolidated Statements of Comprehensive Income for the Three and Six Months
             Ended June 30, 2002 and 2001 (unaudited)........................................................    4

             Statements of Cash Flows for the Six Months Ended June 30, 2002 and 2001 (unaudited)............    5

             Notes to the Interim Financial Statements.......................................................    6

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

Item 3.  Quantitative and Qualitative Disclosures About Market Risk..........................................   14

PART II - OTHER INFORMATION..................................................................................   15

SIGNATURES ..................................................................................................   16


</TABLE>



                                       2
<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

ITEM 1. INTERIM FINANCIAL STATEMENTS

                             STATEMENTS OF CONDITION
<TABLE>
<CAPTION>

                                                                                  (unaudited)
(Dollars in thousands, except share data)                                        June 30, 2002     December 31, 2001
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>                 <C>
ASSETS

Cash                                                                               $ 18,177           $  3,850
Interest-bearing deposits                                                            86,500            167,500
Mortgage-backed securities available for sale, at fair value (Note 2)               144,898            158,543
Residential mortgage loans, net (Note 3)                                            488,167            588,747
Accrued interest receivable                                                           2,414              3,562
Other real estate owned                                                                  79                 88
Prepaid expenses and other assets                                                       925              6,382
-----------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS                                                                       $741,160           $928,672
=======================================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY

Accrued dividends payable                                                          $    181           $    181
Accrued expenses and other liabilities                                                   59                 65
-----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES                                                                       240                246
=======================================================================================================================

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                                                             728,799            928,799
Retained earnings (distributions in excess of accumulated earnings)                   7,838             (2,586)
Accumulated other comprehensive income                                                3,282              1,212
----------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY                                                          740,920            928,426
======================================================================================================================
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                        $ 741,160           $928,672
======================================================================================================================
</TABLE>

See accompanying notes to interim financial statements


                                       3

<PAGE>

WEBSTER PREFERRED CAPITAL CORPORATION


                                          STATEMENTS OF INCOME (unaudited)

<TABLE>
<CAPTION>

                                                   Three  Months Ended June 30,         Six Months Ended June 30,
(Dollars in thousands, except per share data)            2002        2001              2002              2001
--------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>          <C>               <C>             <C>
Interest Income:
Loans (Note 4)                                        $  8,319     $ 12,397          $ 17,363        $ 25,588
Securities and interest bearing deposits                 2,757        2,171             6,169           3,991
--------------------------------------------------------------------------------------------------------------------
        Total interest income                           11,076       14,568            23,532          29,579
Provision for loan losses (Note 3)                          --           30                --              60
--------------------------------------------------------------------------------------------------------------------
Interest income after provision for loan losses         11,076       14,538            23,532          29,519

Noninterest Expense:
Advisory fee expense paid to parent                         46           40                93              79
Dividends on mandatorily redeemable preferred stock         --           --                --             123
Other noninterest expense                                   46           41                70              60
--------------------------------------------------------------------------------------------------------------------
        Total noninterest expense                           92           81               163             262
--------------------------------------------------------------------------------------------------------------------
Income before taxes                                     10,984       14,457            23,369          29,257
Income taxes                                                --           --                --              --
--------------------------------------------------------------------------------------------------------------------
NET INCOME                                              10,984       14,457            23,369          29,257
Preferred stock dividends                                  215          215               431             431
--------------------------------------------------------------------------------------------------------------------

Net income available to common shareholder            $ 10,769     $ 14,242          $ 22,938        $ 28,826
====================================================================================================================

Net income per common share:
               Basic                                  $107,690     $142,420          $229,380        $288,260
               Diluted                                $107,690     $142,420          $229,380        $288,260

--------------------------------------------------------------------------------------------------------------------
</TABLE>



                 STATEMENTS OF COMPREHENSIVE INCOME (unaudited)


<TABLE>
<CAPTION>

                                                   Three  Months Ended June 30,         Six Months Ended June 30,
--------------------------------------------------------------------------------------------------------------------
(In thousands)                                              2002           2001            2002              2001
--------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>            <C>               <C>             <C>
Net Income                                            $   10,984     $   14,457        $ 23,369        $   29,257

Other comprehensive income (loss):
    Unrealized net holding gain (loss) on
    securities available for sale arising
    during the period                                      3,472           (486)          2,070               367

-----------------------------------------------------------------------------------------------------------------------
Comprehensive income                                  $   14,456     $   13,971        $ 25,439        $   29,624
=======================================================================================================================
</TABLE>

See accompanying notes to interim financial statements



                                       4
<PAGE>

WEBSTER PREFERRED CAPITAL CORPORATION


                      STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                              Six Months Ended June 30,
                                                                              2002                   2001
---------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>                    <C>
OPERATING ACTIVITIES:
Net income                                                                $  23,369              $  29,257
Adjustments to reconcile net income to net cash provided by
    operating activities:
         Provision for loan losses                                               --                     60
         Amortization of mortgage premiums                                      100                    100
         Accretion of securities discount                                      (117)                  (134)
         Amortization of net deferred loan costs                                465                    419
         Decrease in accrued interest receivable                              1,148                    527
         Decrease in accrued liabilities                                         (6)                  (604)
         Decrease (increase) in prepaid expenses and other assets             5,457                 (1,476)
---------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities                                    30,416                 28,149
---------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Principal repayments on mortgage-backed securities                           15,832                  6,700
Proceeds from OREO sale                                                         191                    301
Decrease (increase) in interest-bearing deposits                             81,000                (16,570)
Principal repayments of loans, net                                           99,833                 72,842
---------------------------------------------------------------------------------------------------------------
Net cash provided by investing activities                                   196,856                 63,273
---------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Redemption of Series A preferred stock                                           --                (40,000)
Return of capital dividend                                                 (200,000)                    --
Dividends paid on common and preferred stock                                (12,945)               (50,431)
---------------------------------------------------------------------------------------------------------------
Net cash used by financing activities                                      (212,945)               (90,431)
---------------------------------------------------------------------------------------------------------------
Increase in cash and cash equivalents                                        14,327                    991
Cash and cash equivalents at beginning of period                              3,850                 16,996
---------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                                $  18,177              $  17,987
===============================================================================================================

SUPPLEMENTAL DISCLOSURES:
       Income taxes paid                                                  $      --              $      --
       Interest paid                                                      $      --              $      --

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

See accompanying notes to interim financial statements



                                       5
<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

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


NOTE 1: BASIS OF PRESENTATION

The accompanying interim financial statements represent the accounts of Webster
Preferred Capital Corporation (the "Company" or "WPCC") and have been prepared
in conformity with accounting principles generally accepted in the United States
of America. The statements include all adjustments which are, in the opinion of
management, necessary for a fair presentation of the results for the interim
periods presented. All adjustments were of a normal recurring nature. The
results of operations for interim periods are not necessarily indicative of the
results which may be expected for the year as a whole. These interim financial
statements should be read in conjunction with the financial statements and notes
thereto included in WPCC's 2001 Annual Report on Form 10-K. The Company has no
subsidiaries. The Company has no changes in or disagreements with its outside
accountants on accounting and financial disclosures.


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


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

<TABLE>
<CAPTION>

(In Thousands)                                                    Mortgage-Backed Securities
--------------------------------------------------------------------------------------------------------------------
                                                Amortized       Unrealized           Unrealized       Estimated Fair
June 30, 2002                                        Cost            Gains               Losses                Value
--------------------------------------------------------------------------------------------------------------------
      <S>                                       <C>             <C>                  <C>                   <C>
      Available for Sale Portfolio              $141,616        $  3,282             $      --             $144,898
====================================================================================================================
</TABLE>


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
                                                Amortized       Unrealized          Unrealized        Estimated Fair
December 31, 2001                                    Cost            Gains              Losses                 Value
--------------------------------------------------------------------------------------------------------------------
      <S>                                       <C>             <C>                  <C>                   <C>
      Available for Sale Portfolio              $ 157,331       $  1,326             $    (114)            $158,543
====================================================================================================================
</TABLE>


The weighted average expected yield at June 30, 2002 is 6.49%. At June 30, 2002
and December 31, 2001, all mortgage-backed securities available for sale were
issued by government or government-sponsored agencies.

There were no sales of mortgage-backed securities during the three and six
months ended June 30, 2002 and 2001.



                                       6
<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION


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


NOTE 3: RESIDENTIAL MORTGAGE LOANS, NET

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

<TABLE>
<CAPTION>

                                                             June 30,          December 31,
                                                              2002                2001
------------------------------------------------------------------------------------------
                                                            Carrying           Carrying
(In thousands)                                               Amount             Amount
------------------------------------------------------------------------------------------
<S>                                                         <C>                <C>
Fixed-rate loans:
       15 yr. loans                                         $ 69,682           $ 78,772
       20 yr. loans                                            4,262              4,533
       25 yr. loans                                            2,344              2,510
       30 yr. loans                                          164,429            184,505
------------------------------------------------------------------------------------------

        Total fixed-rate loans                               240,717            270,320
------------------------------------------------------------------------------------------
Variable-rate loans:
       15 yr. loans                                            2,221              3,109
       20 yr. loans                                            4,107              5,534
       25 yr. loans                                            3,727              4,723
       30 yr. loans                                          237,884            305,019
------------------------------------------------------------------------------------------

        Total variable-rate loans                            247,939            318,385
------------------------------------------------------------------------------------------

Total residential mortgage loans                             488,656            588,705

     Premiums and deferred costs on loans, net                 1,617              2,181
     Less: allowance for loan losses                          (2,106)            (2,139)
------------------------------------------------------------------------------------------

Residential mortgage loans, net                             $488,167           $588,747
==========================================================================================
</TABLE>



As of June 30, 2002, approximately 49.3% of the Company's residential mortgage
loans are fixed-rate loans and approximately 50.7% are adjustable-rate loans.

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

<TABLE>
<CAPTION>

                                                                   Six Months Ended
(In thousands)                                            June 30, 2002       June 30, 2001
---------------------------------------------------------------------------------------------
<S>                                                         <C>                <C>
Balance at beginning of period                              $  2,139           $  2,059
Provision charged to operations                                   --                 60
Charge-offs                                                      (33)               (10)
Recoveries                                                        --                 --
---------------------------------------------------------------------------------------------
Balance at end of period                                    $  2,106           $  2,109
=============================================================================================
</TABLE>



                                       7
<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

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

NOTE 4: SERVICING

The mortgage loans owned by the Company are serviced by Webster Bank pursuant to
the terms of a servicing agreement. Webster Bank in its role as servicer under
the terms of the servicing agreement is herein referred to as the "Servicer."
The Servicer receives fees at an annual rate of (i) 8 basis points for
fixed-rate loan servicing and collection, (ii) 8 basis points for variable-rate
loan servicing and collection and (iii) 5 basis points for all other services to
be provided, as needed, in each case based on the daily outstanding balances of
all the Company's loans for which the Servicer is responsible. The services
provided to the Company by Webster Bank are at the level of a sub-servicing
arrangement. As such, the Company estimates that the fees paid to Webster Bank
for servicing approximate fees that would be paid if the Company operated as an
unaffiliated entity. Servicing fees paid for the three and six months ended June
30, 2002 were $101,000 and $212,000, and for the three and six months ended June
30, 2001 were $144,000 and $295,000, respectively. Servicing fees are included
in interest income on the Statements of Income, as they are classified as a
reduction in yield to the Company.

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







                                       8
<PAGE>

WEBSTER PREFERRED CAPITAL CORPORATION

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

GENERAL
-------

The Company is a subsidiary of Webster Bank and was incorporated in March 1997
to provide a cost-effective means of raising funds, including capital, on a
consolidated basis for Webster Bank. Total assets at June 30, 2002 and December
31, 2001 were $741.2 million and $928.7 million, respectively, consisting
primarily of residential mortgage loans and mortgage-backed securities.

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 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 interim financial statements and other financial data included
elsewhere herein.

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

Total assets, consisting primarily of residential mortgage loans and
mortgage-backed securities, were $741.2 million at June 30, 2002, a decrease of
$187.5 million from $928.7 million at December 31, 2001. The primary factors
causing the decline in total assets were decreases in net loans of $100.6
million and interest-bearing deposits of $81.0 million. These funds were
primarily used for a $200 million return of capital dividend to the Company's
common shareholder and the $12.5 million payment of a common stock dividend. As
a result of the return of capital dividend, shareholders' equity declined to
$740.9 million at June 30, 2002 from $928.4 million at December 31, 2001.

Reductions in loans and securities was due to scheduled payments as well as
prepayments. Prepayments accelerated during the later half of 2001 and the first
half of 2002 due to the low interest rate environment. The decline in accrued
interest receivable of $1.1 million is due to the decline in earning assets, as
previously mentioned. The decrease in other assets from $6.4 million to $925,000
was due to a reduction in the balance of mortgage payments collected by Webster
Bank, the Company's loan servicer, but remitted subsequent to quarter end.

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

The Company maintains asset quality by investing in residential real estate
loans that have been conservatively underwritten and by aggressively managing
nonperforming assets. At June 30, 2002, residential real estate loans comprised
the entire loan portfolio. The Company also invests in government agency or
government-sponsored agency issued mortgage-backed securities.

The following table details the Company's nonperforming assets at June 30, 2002
and December 31, 2001:

<TABLE>
<CAPTION>
                                                                                         June 30,     December 31,
(In thousands)                                                                             2002           2001
------------------------------------------------------------------------------------------------------------------------
<S>                                                                                       <C>             <C>
Loans accounted for on a nonaccrual basis:
        Residential fixed-rate loans                                                      $289            $120
        Residential variable-rate loans                                                    327             425
------------------------------------------------------------------------------------------------------------------------
                 Total nonperforming loans                                                 616             545
Other real estate owned                                                                     79              88
------------------------------------------------------------------------------------------------------------------------
        Total nonperforming assets                                                        $695            $633

========================================================================================================================
</TABLE>

At both June 30, 2002 and December 31, 2001, the allowance for loan losses was
approximately $2.1 million, or 342% and 392% of nonperforming loans,
respectively. Management believes that the allowance for loan losses is adequate
to cover probable losses inherent in the current portfolio.


                                       9
<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

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

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

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

While scheduled loan amortization, maturing securities, short-term investments
and securities repayments are predictable sources of funds, loan and
mortgage-backed security prepayments 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.

Dividends on the Series B Preferred Stock are payable at the rate of 8.625% per
annum (an amount equal to $.8625 per annum per share), in all cases if, when and
as declared by the Board of Directors of the Company. Dividends on the preferred
shares are cumulative and, if declared, payable on January 15, April 15, July 15
and October 15 in each year. The Company periodically makes dividend payments on
its common stock in accordance with Company by-laws. Common stock dividends are
paid to comply with REIT qualification rules. REIT qualification rules require
that 90% of net taxable income for the year be distributed to shareholders. In
April 2002, the Company declared and paid a return of capital dividend to the
Company's common shareholder of $200 million. Accelerated prepayments during the
second half of 2001 and the first quarter of 2002 resulted in increased cash
levels for the Company. This dividend returns the cash to the Company's common
shareholder.

ASSET/LIABILITY MANAGEMENT
--------------------------

The goal of the Company's asset/liability management policy is to manage
interest-rate risk so as to maximize net interest income over time in changing
interest-rate environments while maintaining acceptable levels of market risk.
The Company prepares estimates of the level of prepayments and the effect of
such prepayments on the level of future earnings due to reinvestment of funds at
rates different than those that currently exist. The Company is unable to
predict future fluctuations in interest rates. The market values of the
Company's financial assets are sensitive to fluctuations in market interest
rates. The market values of fixed-rate loans and mortgage-backed securities tend
to decline in value as interest rates rise. If interest rates decrease, the
market value of loans and mortgage-backed securities generally will tend to
increase with the level of prepayments also normally increasing. The interest
income earned on the Company's variable-rate interest-sensitive instruments,
which represent primarily variable-rate mortgage loans, may change due to
changes in quoted interest-rate indices. The variable-rate mortgage loans
generally reprice based on a stated margin over U.S. Treasury Securities indices
of varying maturities, the terms of which are established at the time that the
loan is closed. At June 30, 2002, 50.7% of the Company's residential mortgage
loans were variable-rate loans. Refer to Item 3, Quantitative and Qualitative
Disclosure about Market Risk, for more information on WPCC's current
asset/liability position.




                                       10
<PAGE>

WEBSTER PREFERRED CAPITAL CORPORATION

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


Results of Operations
---------------------

For the three and six months ended June 30, 2002, the Company reported net
income of $11.0 million and $23.4 million, respectively, or $107,690 and
$229,380, respectively, per common share on a diluted basis, compared to the
three and six months ended June 30, 2001 which amounted to $14.5 million and
$29.3 million, respectively, or $142,420 and $288,260, respectively, per common
share on a diluted basis.


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


<TABLE>
<CAPTION>

                                          THREE MONTHS ENDED JUNE 30, 2002         THREE MONTHS ENDED JUNE 30, 2001
                                         Average      Interest       Average      Average     Interest      Average
(In thousands)                           Balance       Income         Yield       Balance      Income        Yield
------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>            <C>             <C>        <C>           <C>           <C>
Mortgage loans                         $514,390       $ 8,319         6.47%      $728,208      $12,397       6.81%
Mortgage-backed securities (a)          143,840         2,353         6.54%        72,910        1,244       6.83%
Interest bearing deposits                91,016           404         1.78%        90,871          927       4.08%
------------------------------------------------------------------------------------------------------------------------
     Total                             $749,246       $11,076         5.91%      $891,989      $14,568       6.53%
========================================================================================================================
</TABLE>


<TABLE>
<CAPTION>



                                           SIX MONTHS ENDED JUNE 30, 2002           SIX MONTHS ENDED JUNE 30, 2001
                                         Average      Interest       Average     Average     Interest       Average
(In thousands)                           Balance       Income         Yield      Balance      Income         Yield
------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>            <C>             <C>        <C>           <C>           <C>
Mortgage loans                         $541,098       $17,363         6.42%      $746,386      $25,588       6.86%
Mortgage-backed securities (a)          147,673         4,845         6.56%        74,450        2,463       6.62%
Interest bearing deposits               147,850         1,324         1.79%        68,696        1,528       4.45%
------------------------------------------------------------------------------------------------------------------------
     Total                             $836,621       $23,532         5.63%      $889,532      $29,579       6.65%
========================================================================================================================
</TABLE>
(a)      Unrealized gains are excluded from average balance


The decline in interest income for the current three and six months periods, of
$3.5 million and $6.0 million or 24.0% and 20.4%, respectively, was due to a
reduction in earning assets due to the return of capital dividend as well as a
decline in yield on earning assets. Due to the declining interest rate
environment during 2001 and 2002, mortgage prepayments accelerated. These assets
were replaced with ones earning a lower yield. In addition, this lower interest
rate environment effected the yield earned on deposits, which declined for the
three and six months by 230 and 266 basis points, respectively.

There was no provision for loan losses for the three and six months ended June
30, 2002. The provision for loan losses for three and six months ended June 30,
2001, amounted to $30,000 and $60,000, respectively. The decline in the
provision for loan losses is reflective of the decrease in the total residential
portfolio, due to accelerated prepayments in mortgage loans, as well as the
continued low level of nonperforming loans and charge-offs. The ratio of the
allowance for loan losses to total loans has increased to 0.43% at June 30, 2002
from 0.36% at December 31, 2001 and 0.30% at June 30, 2001.

There were no sales of mortgage-backed securities for the three and six months
ended June 30, 2002 and 2001.

Noninterest expenses (which include advisory fees) for the three and six months
ended June 30, 2002 amounted to $92,000 and $163,000, respectively, compared to
$81,000 and $262,000, respectively, for the same periods in the previous year.
Noninterest expenses for the six months ended June 30, 2002 were lower than the
same period in 2001 due to the inclusion in 2001 of $123,000 in Series A
Preferred Stock dividends. This was partially offset for the three and six
months ended June 30, 2002 by increases in advisory fees of $6,000 and $14,000,
respectively. No significant income tax expense was recorded for either three or
six month periods ended June 30, 2002 and 2001.


                                       11
<PAGE>

WEBSTER PREFERRED CAPITAL CORPORATION

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

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

In April 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 145, "Rescission of
FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and
Technical Corrections." This statement amends FASB Statement No. 13, "Accounting
for Leases," to eliminate an inconsistency between the required accounting for
sale-leaseback transactions and the required accounting for certain lease
modifications that have economic effects that are similar to sale-leaseback
transactions. This statement also amends other existing authoritative
pronouncements to make various technical corrections, clarify meanings, or
describe their applicability under changed conditions. SFAS No. 145 is effective
for fiscal years beginning after May 15, 2002, with early application
encouraged. Management does not expect any material impact on its financial
statements when this statement is adopted.

On October 3, 2001, the FASB issued SFAS No. 144 "Accounting for the Impairment
or Disposal of Long-Lived Assets". This Statement addresses financial accounting
and reporting for the impairment or disposal of long-lived assets. This
Statement supersedes SFAS No. 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of." This Statement also
supersedes the accounting and reporting provisions of APB Opinion No. 30
"Reporting the Results of Operations-Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions." The changes in this Statement improve financial
reporting by requiring that one accounting model be used for long-lived assets
to be disposed of by broadening the presentation of discontinued operations to
include more disposal transactions. This Statement is effective for financial
statements issued for fiscal years beginning after December 15, 2001 and interim
periods within those fiscal years. The provisions of this Statement are to be
applied prospectively. The Company adopted SFAS No. 144 effective January 1,
2002 without any material impact on its financial statements.

On August 16, 2001, the FASB issued SFAS No. 143 "Accounting for Asset
Retirement Obligations." Statement 143 addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. Statement 143 applies to all
entities. This Statement requires that the fair value of a liability for an
asset retirement obligation be recognized in the period in which it is incurred
if a reasonable estimate of fair value can be made. The associated asset
retirement costs are capitalized as part of the carrying amount of the
long-lived asset. Under this Statement, the liability is discounted and the
accretion expense is recognized using the credit-adjusted risk-free interest
rate in effect when the liability was initially recognized. The FASB issued this
Statement to provide consistency for the accounting and reporting of liabilities
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs. This Statement is effective for financial statements
issued for fiscal years beginning after June 15, 2002. Earlier application is
permitted. The Company does not expect any material impact on its financial
statements when this Statement is adopted.

In July 2001, the FASB issued SFAS No. 141, "Business Combinations," and SFAS
No. 142, "Goodwill and Other Intangible Assets." Statement No. 141 requires that
the purchase method of accounting be used for all business combinations
initiated after June 30, 2001 as well as all purchase method business
combinations completed after June 30, 2001. Statement No. 141 also specifies
criteria intangible assets acquired in a purchase method business combination
must meet to be recognized and reported apart from goodwill. Statement No. 142
requires that goodwill and intangible assets with indefinite useful lives no
longer be amortized, but instead be tested for impairment at least annually in
accordance with the provisions of Statement No. 142. Statement No. 142 also
requires that intangible assets with definite useful lives be amortized over
their respective estimated useful lives to their estimated residual values, and
reviewed for impairment in accordance with SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
The Company adopted the provisions of Statement No. 141 effective July 1, 2001
and the provisions of Statement No. 142 effective January 1, 2002, without a
material impact on its financial statements.


                                       12
<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

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

In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities", a replacement
of SFAS No. 125. SFAS No. 140 addresses implementation issues that were
identified in applying SFAS No. 125. This statement revises the standards for
accounting for securitizations and other transfers of financial assets and
collateral and requires certain disclosures, but it carries over most of the
provisions of SFAS No. 125 without reconsideration. SFAS No. 140 is effective
for transfers and servicing of financial assets and extinguishments of
liabilities occurring after March 31, 2001. SFAS No. 140 is effective for
recognition and reclassification of collateral and for disclosures relating to
securitization transactions and collateral for fiscal years ending after
December 15, 2000. This statement is to be applied prospectively with certain
exceptions. Other than those exceptions, earlier or retroactive application is
not permitted. The Company implemented SFAS No. 140 effective April 1, 2001
without any material impact on its financial statements.


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.


SARBANES-OXLEY ACT OF 2002
--------------------------

On July 30, 2002 President Bush signed into law the Sarbanes-Oxley Act of 2002,
landmark legislation on accounting reform and corporate governance. Although
much of the Act is still being assessed, we do not anticipate any significant
changes in the operations of, and reporting by, the Company as a result of the
Act. In accordance with the requirements of the Sarbanes-Oxley Act, written
certifications for this quarterly report on Form 10-Q by the chief executive
officer and chief financial officer accompany this report as filed with the SEC.




                                       13
<PAGE>
WEBSTER PREFERRED CAPITAL CORPORATION

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

The following table summarizes the estimated market value of the Company's
interest-sensitive assets at June 30, 2002 and December 31, 2001 and the
projected change to market values if interest rates instantaneously increase or
decrease by 100 basis points.



<TABLE>
<CAPTION>

                                                                                        Estimated Market Value Impact
                                                                                        -----------------------------
(In thousands)                                  Book Value        Market Value            -100 BP             +100 BP
----------------------------------------------------------------------------------------------------------------------
<S>                                            <C>                 <C>                    <C>               <C>
AT JUNE 30, 2002
Interest sensitive assets:
      Mortgage-backed securities               $144,898            $144,898               $ 3,228           $ (5,995)
      Variable-rate residential loans           247,939             250,685                 2,590             (4,765)
      Fixed-rate residential loans              240,717             249,151                 6,813             (9,654)
----------------------------------------------------------------------------------------------------------------------
Total net assets                               $633,554            $644,734               $12,631           $(20,414)
======================================================================================================================

AT DECEMBER 31, 2001
Interest sensitive assets:
      Mortgage-backed securities               $158,543            $158,543               $ 6,175           $ (7,605)
      Variable-rate residential loans           318,385             308,533                 4,186             (4,829)
      Fixed-rate residential loans              270,320             287,009                10,579            (13,841)
----------------------------------------------------------------------------------------------------------------------
Total net assets                               $747,248            $754,085               $20,940           $(26,275)
======================================================================================================================
</TABLE>

Interest-sensitive assets, when impacted by an instantaneous 100 basis point
rate decrease results in a projected increase in net market value of $12.6
million at June 30, 2002 compared to a projected increase in net market value of
$20.9 million at December 31, 2001. These changes in net market value represent
1.96% of interest-sensitive assets at June 30, 2002 and 2.78% of
interest-sensitive assets at December 31, 2001. Interest-sensitive assets, when
impacted by an instantaneous 100 basis point rate increase results in a
projected decrease in net market value of $20.4 million at June 30, 2002
compared to a projected decrease in net market value of $26.3 million at
December 31, 2001. These changes in net market value represent 3.17% of
interest-sensitive assets at June 30, 2002 and 3.48% of interest-sensitive
assets at December 31, 2001. Changes in the projected net market value due to an
instantaneous 100 basis point rate increase or decrease when comparing such
amounts at June 30, 2002 and December 31, 2001 are a result of changes in
outstanding balances of the assets, and an overall decline in market interest
rates.

Based on the Company's asset/liability mix at June 30, 2002, simulation analyses
project that an instantaneous 100 basis point increase in interest rates would
increase net interest income over the next twelve months by approximately 4.0%.
An instantaneous 100 basis point decrease in interest rates would decrease net
interest income by approximately 5.0%.

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

These assumptions are inherently uncertain and, as a result, the simulation
analyses cannot precisely estimate the impact that higher or lower rate
environments will have on net interest income. Actual results will differ from
simulated results due to timing, magnitude and frequency of interest rate
changes, changes in cash flow patterns and market conditions, as well as changes
in management's strategies. Management believes that the Company's interest-rate
risk position at June 30, 2002, represents a reasonable level of risk.



                                       14
<PAGE>

WEBSTER PREFERRED CAPITAL CORPORATION

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

ITEM 1. LEGAL PROCEEDINGS

None

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULT UPON SENIOR SECURITIES

None

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

The Company held an annual meeting of stockholders on April 5, 2002. Each of the
Company's three directors, William J. Healy, Harriet Munrett Wolfe and Ross M.
Strickland, was elected at the meeting, and each such director received 100
votes cast for election (which votes constitute 100% of the issued and
outstanding common stock).

ITEM 5. OTHER INFORMATION

None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

            Not applicable


(b) No reports on Form 8-K were filed during the quarter ended June 30, 2002.



                                       15
<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/ Gregory S. Madar
                                   ---------------------------------------------
                                      Gregory S. Madar,
                                      Senior Vice President,
                                      Treasurer & Assistant Secretary
                                      Principal Financial and Accounting Officer

                               Date: August 13, 2002





                                       16