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

                                    FORM 10-Q

[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 for the quarter ended September 30, 2000

                                       OR

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

     Commission File Number:   0-23513


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


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


    145 BANK STREET, WATERBURY, CONNECTICUT                   06702
    ---------------------------------------                   -----
   (Address of principal executive offices)                (Zip Code)

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


         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.
 Yes  X     No      .
     ----      ----
          The number of shares outstanding of the registrant's common  stock  as
of the latest practicable date is: 100 shares.


<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

                                      INDEX

<TABLE>
<CAPTION>

                                                                                                                PAGE

<S>                                                                                                             <C>
PART I - FINANCIAL INFORMATION

Statements of Condition at September 30, 2000 and December 31, 1999..........................................    3

Statements of Income for the Three and Nine Months Ended September 30, 2000 and September 30, 1999 ..........    4

Statements of Cash Flows for the Nine Months Ended September 30, 2000 and September 30, 1999.................    5

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

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

Quantitative and Qualitative Disclosures About Market Risk...................................................   12

Forward Looking Statements...................................................................................   12

PART II - OTHER INFORMATION..................................................................................   13

SIGNATURES...................................................................................................   14

INDEX TO EXHIBITS ...........................................................................................   15

</TABLE>


                                       2

<PAGE>


WEBSTER  PREFERRED  CAPITAL  CORPORATION
STATEMENTS  OF  CONDITION  (UNAUDITED)
(Dollars in Thousands, Except Share Data)

<TABLE>
<CAPTION>

                                                                                   September 30,          December 31,
                                                                                      2000                   1999
----------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>                     <C>
ASSETS

Cash                                                                              $       99,721          $     16,667
Mortgage-Backed Securities Available for Sale, at Fair Value (Note 2)                     75,936                95,647
Residential Mortgage Loans, Net (Note 3)                                                 801,998               849,210
Accrued Interest Receivable                                                                4,616                 5,285
Other Real Estate Owned                                                                      192                    60
Prepaid Expenses and Other Assets                                                            493                   340
----------------------------------------------------------------------------------------------------------------------
      TOTAL ASSETS                                                                $      982,956         $     967,209
======================================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY

Accrued Dividends Payable                                                         $          794         $         885
Accrued Expenses and Other Liabilities                                                        87                    97
----------------------------------------------------------------------------------------------------------------------
      TOTAL LIABILITIES                                                                      881                   982
----------------------------------------------------------------------------------------------------------------------

MANDATORILY REDEEMABLE PREFERRED STOCK (NOTE 4)

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

SHAREHOLDERS' EQUITY

      Series  B  8.625%  Cumulative  Redeemable  Preferred  Stock,
        Liquidation preference $10 per share; par value $1.00 per share;
        1,000,000 shares authorized, issued and outstanding                               1,000                  1,000
      Common Stock, par value $.01 per share:
          Authorized - 1,000 shares
          Issued and Outstanding - 100 shares                                                 1                      1
      Paid-in Capital                                                                   928,799                928,799
      Distributions in Excess of Accumulated Earnings                                        --                 (2,134)
      Retained Earnings                                                                  13,488                     --
      Accumulated Other Comprehensive Loss                                               (1,213)                (1,439)
----------------------------------------------------------------------------------------------------------------------
      TOTAL SHAREHOLDERS' EQUITY                                                        942,075                926,227
----------------------------------------------------------------------------------------------------------------------
      TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                  $     982,956          $     967,209
======================================================================================================================

</TABLE>


See accompanying notes to the financial statements


                                       3

<PAGE>



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

<TABLE>
<CAPTION>

                                                                    Three Months Ended            Nine Months Ended
                                                                       September 30,                 September 30,
                                                                   2000            1999           2000          1999
----------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>                <C>            <C>        <C>
Interest Income:
Loans                                                         $    14,130        $ 14,367       $ 42,776   $    42,411
Securities                                                          2,239           1,813          6,205         5,475
----------------------------------------------------------------------------------------------------------------------
        Total Interest Income                                      16,369          16,180         48,981        47,886
Provision for Loan Losses (Note 3)                                     30             120            160           360
----------------------------------------------------------------------------------------------------------------------
Interest Income After Provision for Loan Losses                    16,339          16,060         48,821        47,526

Noninterest Income:
Gain on Sale of Investments                                            --              --             94            --

Noninterest Expenses:
Advisory Fee Expense Paid to Parent                                    39              38            118           113
Dividends on Mandatorily Redeemable Preferred Stock                   738             737          2,213         2,212
Other Noninterest Expenses                                            113             107            316           316
----------------------------------------------------------------------------------------------------------------------
        Total Noninterest Expenses                                    890             882          2,647         2,641
----------------------------------------------------------------------------------------------------------------------
Income Before Taxes                                                15,449          15,178         46,268        44,885
Income Taxes                                                           --              --             --            --
----------------------------------------------------------------------------------------------------------------------
NET INCOME                                                         15,449          15,178         46,268        44,885
Preferred Stock Dividends                                             216             216            647           647

Net Income Available to Common Shareholder                    $    15,233    $     14,962    $    45,621   $    44,238
======================================================================================================================

Net Income Per Common Share:
               Basic                                          $   152,330    $    149,620    $   456,210   $   442,380
               Diluted                                        $   152,330    $    149,620    $   456,210   $   442,380

----------------------------------------------------------------------------------------------------------------------
See accompanying notes to the financial statements

</TABLE>


                                       4

<PAGE>



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

<TABLE>
<CAPTION>

                                                                                    Nine Months Ended September 30,
                                                                                       2000                   1999
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>                     <C>
OPERATING ACTIVITIES:
Net Income                                                                         $  46,268               $   44,885
Adjustments to Reconcile Net Cash Provided by Operating Activities:
         Provision for Loan Losses                                                       160                      360
         Accretion of Securities Discount                                                (17)                     (34)
         Amortization of Deferred Loan Cost and Premiums                                 608                      942
         Gains on Sale of Securities                                                     (94)                      --
         Decrease (Increase) in Accrued Interest Receivable                              669                      (25)
         (Decrease) Increase in Accrued Liabilities                                     (101)                     257
         (Increase) Decrease in Prepaid Expenses and Other Assets                       (153)                     254
---------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities                                             47,340                   46,639
---------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchase of Mortgage Backed Securities                                               (34,192)                      --
Proceeds Collected from Sale of Mortgage Backed Securities                            47,388                       --
Principal Collected on Mortgage-Backed Securities                                      6,853                   17,241
Purchase of Loans                                                                    (31,087)                (194,929)
Proceeds from REO Sale                                                                    92                       --
Purchase of Deferred Fees                                                                657                       --
Principal Repayments of Loans, Net                                                    76,650                  136,410
---------------------------------------------------------------------------------------------------------------------
Net Cash Provided (Used) by Investing Activities                                      66,361                  (41,278)
---------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Dividends Paid on Common and Preferred Stock                                         (30,647)                 (15,872)
---------------------------------------------------------------------------------------------------------------------
Net Cash Used by Financing Activities                                                (30,647)                 (15,872)
---------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Cash and Cash Equivalents                                      83,054                  (10,511)
Cash and Cash Equivalents at Beginning of Period                                      16,667                   26,964
---------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period                                         $  99,721               $   16,453
=====================================================================================================================

SUPPLEMENTAL DISCLOSURES:
       Income Taxes Paid                                                           $      --              $       --
       Interest Paid                                                               $      --              $       --
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITY:
       Transfer of Residential Loans to Other Real Estate Owned                    $      266              $       26

</TABLE>


See accompanying notes to the financial statements

                                       5

<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

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

NOTE 1: BASIS OF PRESENTATION

The accompanying  financial statements include all adjustments which are, in the
opinion of management,  necessary for a fair presentation of the results for the
interim periods  presented.  All adjustments were of a normal recurring  nature.
The results of operations  for the three and nine month periods ended  September
30, 2000 are not necessarily indicative of the results which may be expected for
the year as a whole.  These financial  statements  should be read in conjunction
with  the  financial  statements  and  notes  thereto  included  in the  Webster
Preferred Capital Corporation 1999 Annual Report to shareholders.

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
September 30, 2000                                     Cost        Gains         Losses            Value
--------------------------------------------------------------------------------------------------------
<S>                                                <C>            <C>         <C>               <C>
      Available for Sale Portfolio                 $ 77,149       $  244      $ (1,457)         $ 75,936
========================================================================================================


                                                  Amortized   Unrealized    Unrealized    Estimated Fair
December 31, 1999                                      Cost        Gains        Losses             Value
--------------------------------------------------------------------------------------------------------
      Available for Sale Portfolio                 $ 97,086       $  989      $ (2,428)         $ 95,647
========================================================================================================

</TABLE>


All mortgage-backed securities have a contractual maturity of over 10 years. The
weighted average yield at September 30, 2000 is 6.37%. Although the stated final
maturity of these  obligations are long-term,  the weighted average life is much
shorter due to scheduled  repayments  and  prepayments.  Gains and losses on the
sales of securities are recorded using the specific identification method.



                                       6

<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

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

NOTE 3:  RESIDENTIAL MORTGAGE LOANS, NET

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

                                                    September 30,   December 31,
                                                        2000           1999
--------------------------------------------------------------------------------
                                                      Carrying        Carrying
(In Thousands)                                         Amount          Amount
--------------------------------------------------------------------------------
Fixed-Rate Loans:
       15 yr. Loans                                   $ 105,528       $ 113,950
       20 yr. Loans                                       5,150           5,322
       25 yr. Loans                                       2,916           2,758
       30 yr. Loans                                     226,599         227,977
--------------------------------------------------------------------------------

        Total Fixed-Rate Loans                          340,193         350,007
--------------------------------------------------------------------------------
Variable-Rate Loans:
       15 yr. Loans                                       5,406           6,108
       20 yr. Loans                                       8,115           7,839
       25 yr. Loans                                       6,561           6,759
       30 yr. Loans                                     441,256         476,647
--------------------------------------------------------------------------------

        Total Variable-Rate Loans                       461,338         497,353
--------------------------------------------------------------------------------

       Total Residential Mortgage Loans                 801,531         847,360

       Premiums and Deferred Costs on Loans, Net          2,496           3,762
       Less: Allowance for Loan Losses                   (2,029)         (1,912)
--------------------------------------------------------------------------------

        Residential Mortgage Loans, Net               $ 801,998       $ 849,210
================================================================================

As of  September  30, 2000,  approximately  42.4% of the  Company's  residential
mortgage loans are fixed-rate loans and approximately  57.6% are adjustable-rate
loans.

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

<TABLE>
<CAPTION>

                                                      Three Months Ended                  Nine Months Ended
(In Thousands)                                           September 30,                      September 30,
                                                     2000            1999                2000              1999
------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>            <C>                  <C>                <C>
Balance at Beginning of Period                      $ 2,017        $ 1,742              $ 1,912            $ 1,555
Provision Charged to Operations                          30            120                  160                360
Charge-offs                                             (18)           (71)                 (43)              (124)
------------------------------------------------------------------------------------------------------------------
Balance at End of Period                            $ 2,029        $ 1,791              $ 2,029            $ 1,791
==================================================================================================================

</TABLE>

                                       7

<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

NOTES TO FINANCIAL STATEMENTS (continued)

NOTE 4: MANDATORILY REDEEMABLE PREFERRED STOCK
--------------------------------------------------------------------------------

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

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

NOTE 5: OTHER COMPREHENSIVE INCOME

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

<TABLE>
<CAPTION>


                                                                        BEFORE             INCOME TAX
  THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999                         TAX               (EXPENSE)          NET-OF-TAX
  (In Thousands)                                                        AMOUNT             OR BENEFIT           AMOUNT
  ------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>                 <C>               <C>
  Unrealized gain on available for sale securities:
      Unrealized holding gains arising during the period               $   1,026                 --           $   1,026
      Less: Reclassification adjustment for losses
        realized during the period                                            --                 --                  --
  ------------------------------------------------------------------------------------------------------------------------

      Other comprehensive gain at September 30, 2000                   $   1,026                 --           $   1,026
  ========================================================================================================================

  Unrealized loss on available for sale securities:
      Unrealized holding losses arising during the period              $    (394)                --           $    (394)
      Less: Reclassification adjustment for gains
        realized during the period                                            --                 --                  --
  ------------------------------------------------------------------------------------------------------------------------

      Other comprehensive loss at September 30, 1999                   $    (394)                --           $    (394)
  ========================================================================================================================
                                                                        BEFORE             INCOME TAX
  NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999                          TAX               (EXPENSE)           NET-OF-TAX
  (In Thousands)                                                        AMOUNT             OR BENEFIT            AMOUNT
  ------------------------------------------------------------------------------------------------------------------------
  Unrealized gain on available for sale securities:
      Unrealized holding gains arising during the period               $     320                 --           $     320
      Less: Reclassification adjustment for gains
        realized during the period                                            94                 --                  94
  ------------------------------------------------------------------------------------------------------------------------

      Other comprehensive gain at September 30, 2000                   $     226                 --           $     226
  ========================================================================================================================

  Unrealized loss on available for sale securities:
      Unrealized holding losses arising during the period              $  (2,289)                --           $  (2,289)
      Less: Reclassification adjustment for gains
        realized during the period                                            --                 --                  --
  ------------------------------------------------------------------------------------------------------------------------
      Other comprehensive income at September 30, 1999                 $  (2,289)                --           $  (2,289)
  ========================================================================================================================

</TABLE>



                                       8

<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

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

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  September  30, 2000 and
December  31,  1999  were  $983.0  million  and  $967.2  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 95% of its "REIT  taxable  income"  (not  including  capital  gains and
certain items of noncash income).  Webster Bank also benefits significantly from
state  tax  treatment  of  dividends  paid by the  Company  as a  result  of its
qualification  as a REIT.  The following  discussion of the Company's  financial
condition  and  results of  operations  should be read in  conjunction  with the
consolidated  financial  statements and notes thereto  included in the Company's
1999 Annual Report to Shareholders  and other financial data included  elsewhere
herein.

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

Total  assets,   consisting   primarily  of   residential   mortgage  loans  and
mortgage-backed  securities,  were $983.0  million at  September  30,  2000,  an
increase of $15.8 million from $967.2 million at December 31, 1999. The increase
in total assets is primarily  attributable  to net income of $46.3  million less
the  payment  of  common  and  preferred   stock  dividends  of  $30.6  million.
Shareholders' equity was $942.1 million at September 30, 2000 and $926.2 million
at December 31, 1999.

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

The Company's asset quality reflects the residential real estate loans that have
been acquired from Webster Bank.  The Company  aggressively  manages  nonaccrual
assets.  At September  30, 2000,  residential  real estate loans  comprised  the
entire loan portfolio.  The Company also invests in highly rated mortgage-backed
securities.

The aggregate amount of nonaccrual loans was $528,000 at September 30, 2000. The
following table details the Company's nonaccrual loans at September 30, 2000 and
December 31, 1999:


                                                   September 30,   December 31,
(In Thousands)                                              2000           1999
----------------------------------------------------------------- --------------
Loans Accounted for on a Nonaccrual Basis:
        Residential Fixed-Rate Loans                      $  231         $  319
        Residential Variable-Rate Loans                      105            830
Other Real Estate Owned                                      192             60
------- --------------------------------------------------------- --------------
        Total Nonaccrual Assets                           $  528        $ 1,209
======= ========================================================= ==============


At  September  30, 2000 the  allowance  for loan losses was  approximately  $2.0
million,  or 384% of nonaccrual assets.  Management  believes that the allowance
for loan losses is adequate to cover expected losses in the portfolio.



<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

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

LIQUIDITY AND CAPITAL RESOURCES

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

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

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

The Series A Preferred  Stock will be redeemed on January 15, 2001.  The Company
has sufficient  cash to redeem the stock without  outside  funding.  The Company
expects sufficient cash flow from loan payment streams to replenish its cash.

ASSET/LIABILITY MANAGEMENT

The  goal  of the  Company's  asset/liability  management  policy  is to  manage
interest-rate  risk so as to maximize net interest  income over time in changing
interest-rate  environments  while  maintaining  acceptable  levels of risk. The
Company must provide for sufficient liquidity for daily operations.  The Company
prepares  estimates  of  the  level  of  prepayments  and  the  effect  of  such
prepayments  on the level of future  earnings  due to  reinvestment  of funds at
rates  different  than  those that  currently  exist.  The  Company is unable to
predict future  fluctuations  in interest rates and as such the market values of
certain of the  Company's  financial  assets are  sensitive to  fluctuations  in
market  interest  rates.  Changes in interest  rates can affect the value of its
loans and other  interest-earning  assets.  At September 30, 2000,  57.6% of the
Company's  residential  mortgage  loans were  variable-rate  loans.  The Company
believes these  residential  mortgage loans are less likely to incur prepayments
of principal.




                                       10

<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

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

RESULTS OF OPERATIONS

For the three and nine months ended September 30, 2000, the Company reported net
income of $15.4  million  and  $46.3  million,  respectively,  or  $152,330  and
$456,210,  respectively,  per common share on a diluted  basis,  compared to the
three and nine months ended  September 30, 1999 which  amounted to $15.2 million
and $44.9 million,  respectively,  or $149,620 and $442,380,  respectively,  per
common share on a diluted basis.

Total  interest  income for the three and nine months ended  September  30, 2000
amounted to $16.4  million and $49.0  million,  respectively,  net of  servicing
fees,  compared  to the three and nine  months  ended  September  30, 1999 which
amounted to $16.2 million and $47.9 million,  respectively.  The following table
shows the major categories of average  interest-earning assets, their respective
interest income and the yields earned by the Company:

<TABLE>
<CAPTION>


                                           THREE MONTHS ENDED SEPTEMBER 30,         THREE MONTHS ENDED SEPTEMBER 30,
                                                      2000                                    1999
                                           Average      Interest     Average       Average       Interest      Average
(In Thousands)                             Balance        Income       Yield         Yield        Income         Yield
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>            <C>           <C>           <C>           <C>            <C>
Mortgage Loans                           $ 822,926      $ 14,130       6.87%        $ 862,179     $ 14,367       6.67%
Mortgage-Backed Securities                  69,297         1,105       6.38           101,852        1,596       6.27
Interest Bearing Deposits                   70,867         1,134       6.39            15,275          217       5.68
----------------------------------------------------------------------------------------------------------------------
     Total                               $ 963,090      $ 16,369       6.80%        $ 979,306     $ 16,180       6.61%
----------------------------------------------------------------------------------------------------------------------

                                            NINE MONTHS ENDED SEPTEMBER 30,          NINE MONTHS ENDED SEPTEMBER 30,
                                                       2000                                   1999
                                           Average      Interest     Average         Average      Interest     Average
(In Thousands)                             Balance        Income       Yield         Balance        Income       Yield
----------------------------------------------------------------------------------------------------------------------
Mortgage Loans                           $ 834,474      $ 42,776       6.84%        $ 844,091     $ 42,411       6.70%
Mortgage-Backed Securities                  73,354         3,658       6.65           107,460        5,064       6.28
Interest Bearing Deposits                   55,609         2,547       6.11            11,542          411       4.74
----------------------------------------------------------------------------------------------------------------------
     Total                               $ 963,437      $ 48,981       6.78%         $963,093      $47,886       6.63%
----------------------------------------------------------------------------------------------------------------------

</TABLE>

The provision for loan losses for the three and nine months ended  September 30,
2000, amounted to $30,000 and $160,000,  respectively,  compared to $120,000 and
$360,000 for the three and nine months ended  September 30, 1999.  The reduction
in the provision for loan losses  reflects the decline in the total  residential
mortgage loan portfolio.

Noninterest  expenses  for the three and nine months  ended  September  30, 2000
amounted to $890,000 and $2.6 million, respectively, compared to the noninterest
expenses for the three and nine months ended  September 30, 1999 which  amounted
to  $882,000  and $2.6  million,  respectively.  Noninterest  expenses  included
advisory fees and dividends on Series A Preferred  Stock.  No income tax expense
was recorded for either period.

RECENT FINANCIAL ACCOUNTING STANDARDS

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  ("SFAS") No. 133,  "Accounting  for Derivative
Instruments and Hedging Activities." This statement  establishes  accounting and
reporting  standards for derivative  instruments,  including certain  derivative
instruments   imbedded  in  other  contracts,   (collectively   referred  to  as
derivatives) and for hedging activities.  The accounting for changes in the fair
value of a  derivative  depends on the intended  use of the  derivative  and the
resulting  designation.  Under this  statement,  an entity  that elects to apply
hedge  accounting  is required to  establish  at the  inception of the hedge the
method it will use for assessing the effectiveness of the hedging derivative and


                                       11

<PAGE>


WEBSTER PREFERRED CAPITAL CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
the measurement  approach for  determining the ineffective  aspect of the hedge.
Those methods must be consistent  with the entity's  approach to managing  risk.
SFAS No.  133,  as  amended by SFAS No.  137,  is now  effective  for all fiscal
quarters of fiscal years beginning  after June 15, 2000. Upon adoption,  hedging
relationships must be designated anew and documented  pursuant to the provisions
of this statement. Early adoption is permitted; however, retroactive application
is prohibited. This SFAS is not expected to impact the Company since the Company
does not engage in hedging activities or utilize derivative instruments.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The  following  table  summarizes  the  estimated  market value of the Company's
interest-sensitive  assets and  interest-sensitive  liabilities at September 30,
2000 and the projected change to market values if interest rates instantaneously
increase or decrease by 100 basis points.

<TABLE>
<CAPTION>


                                                                                        Estimated Market Value Impact
                                                                                --------------------------------------
(In Thousands)                                  Book Value        Market Value            -100 BP             +100 BP
----------------------------------------------------------------------------------------------------------------------
<S>                                               <C>               <C>                    <C>               <C>
AT SEPTEMBER 30, 2000
Interest Sensitive Assets:
      Mortgage-Backed Securities                  $ 77,149            $ 75,936           $  1,521           $ (2,027)
      Variable-Rate Residential Loans              461,338             425,762              7,248             (9,007)
      Fixed-Rate Residential Loans                 340,193             332,938              9,877            (12,201)
Interest-Sensitive Liabilities:
      Series A Preferred Stock                      40,000              40,000              2,297             (2,961)
----------------------------------------------------------------------------------------------------------------------

                                                                                        Estimated Market Value Impact
                                                                                --------------------------------------
(In Thousands)                                  Book Value        Market Value            -100 BP             +100 BP
----------------------------------------------------------------------------------------------------------------------

AT SEPTEMBER 30, 1999
Interest Sensitive Assets:
      Mortgage-Backed Securities                  $ 99,939            $ 98,766            $ 2,201           $ (3,065)
      Variable-Rate Residential Loans              516,661             517,466             10,083            (12,498)
      Fixed-Rate Residential Loans                 357,979             356,312             10,847            (14,108)
Interest-Sensitive Liabilities:
      Series A Preferred Stock                      40,000              40,000              2,269             (2,850)
----------------------------------------------------------------------------------------------------------------------

</TABLE>


FORWARD LOOKING STATEMENTS

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

                                       12

<PAGE>



WEBSTER PREFERRED CAPITAL CORPORATION

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

Item 6:  Exhibits and Reports on Form 8-K

(a)  Exhibits

     Exhibit Numbers       Description
     ---------------       -----------
           27              Financial Data Schedule

(b) No reports on Form 8-K were filed  during the quarter  ended  September  30,
    2000.




                                       13

<PAGE>



                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

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



                                           BY:  /s/ Peter J. Swiatek
                                               ---------------------------------
                                                    Peter J. Swiatek,
                                                    Vice President & Treasurer
                                                    Principal Financial Officer
                                                    Principal Accounting Officer
                                                    Director

                                           Date: November   , 2000





                                       14

<PAGE>



                                INDEX TO EXHIBITS

    EXHIBIT NUMBER       DESCRIPTION
    --------------       -----------
          27             Financial Data Schedule.















                                       15