WEBSTER REPORTS RECORD THIRD QUARTER NET INCOME, DECLARES REGULAR QUARTERLY DIVIDEND

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1 FOR IMMEDIATE RELEASE Webster Contacts: Media: Michael G. Bazinet, Investors: James M. Sitro, WEBSTER REPORTS RECORD THIRD QUARTER NET INCOME, DECLARES REGULAR QUARTERLY DIVIDEND WATERBURY, Conn., October 20, Webster Financial Corporation (Nasdaq: WBST), holding company for Webster Bank, today reported record net income of $24.2 million, or $.63 per diluted share, for the third quarter ended Sept. 30, 1999, an increase of 20 percent compared to $20.1 million, or $.52 per diluted share, for the third quarter of There were no acquisition related or special charges in either period. Consistent with the trend of recent quarters, the earnings improvement is due primarily to increases in net interest income and revenue from fee-based services. Noninterest income, excluding gains on sales of securities and loans, increased 41 percent to $21.2 million from $15 million in the year-ago period due to increased revenue from trust and investment management services and insurance services, and from expanded product offerings to Webster s growing customer base. As banking in New England undergoes unprecedented consolidation, Webster s strategic transformation as a leading financial services provider continues to gain momentum, said chairman and chief executive officer James C. Smith. Our record results clearly demonstrate that by building strong customer relationships, Webster is steadily increasing shareholder value. Our acquisition of New England Community Bancorp later this quarter will further enhance our commercial banking capabilities while strengthening and extending our Connecticut franchise. Webster Financial also announced today that it has declared a regular quarterly cash dividend of $.12 per common share. The dividend is payable on Nov. 15, 1999, to shareholders of record on Nov. 1, This is the 49th consecutive quarterly dividend since Webster first paid a dividend in In April, Webster increased its regular quarterly cash dividend to $.12 cents per common share from $.11 per common share, its eighth dividend increase. -- more

2 2 Third Quarter Financial Highlights Return on average shareholders' equity for the third quarter was 17.1 percent, up from 14.7 percent in the third quarter of Interest rate spread (the difference between the average yield on interest-earning assets and the average rate paid on interest-bearing liabilities) was 3.10 percent in the third quarter, up from 3.07 percent in the second quarter of 1999 and 2.61 percent in the third quarter of We are seeing the positive effects of the diversification of our revenue stream and are pleased by the sizeable increase in revenue from fee-based services. said John V. Brennan, chief financial officer. Loan originations totaled $410 million for the quarter, up from $396 million in the year ago period. For the nine-month period ended Sept. 30, 1999, loan originations totaled $1.4 billion, up from $1.1 billion in the first nine months of The allowance for loan losses as a percent of nonaccrual loans was 195 percent, up from 193 percent a year earlier. Allowances for nonaccrual assets as a percent of nonaccrual assets were 166 percent, up from 159 percent. Income tax expense for the third quarter was $10.9 million, compared to $8.5 million for the year-ago period. Webster recorded a reduction in income tax expense of $1 million and $2.5 million in the 1999 and 1998 quarters, respectively, related to net tax benefits from prior acquisitions. Webster reported a loss on the sale of securities of $939,000 in the third quarter of 1999, compared to a gain of $1.1 million in the year-ago-period. Webster had 38 million common shares outstanding at Sept. 30, Book value per common share increased to $ Recent News Highlights: In July, Webster Bank formed its own investment services operation -- Webster Investment Services, Inc., a wholly owned, broker-dealer subsidiary of Webster Bank. Webster Investment Services, Inc. offers mutual funds and fixed and variable annuities, in addition to individual securities transactions as requested by customers. Earlier, the bank received National Association of Securities Dealers, Inc. (NASD) approval to operate its own investment services program. Webster Investment Services, Inc. has chosen BHC Securities as its clearing broker to provide operating systems and trading support. Also in July, Mark J. Tarmy joined Webster as executive vice president and chief information officer. In this role, Tarmy manages all aspects of Webster s Information Systems Group, including strategic technology planning, enterprise wide systems and telecommunications facilities. Prior to joining Webster, Tarmy was chief technology officer/coo at Thomson Securities Information Services.

3 3 -- more -- In August, Webster was named to the Standard & Poor s MidCap 400 Index of mid-size market capitalization stocks. The S&P MidCap 400 Index measures the performance of the mid-size company segment of the U.S. stock market with $1 billion to $4 billion in market capitalization. The index is used by more than 95 percent of U.S. mutual fund managers and pension plan sponsors. Some $20 billion is indexed to the S&P MidCap 400. In September, William T. Bromage was promoted to the newly created position of senior executive vice president. In his new position, Bromage will continue to have responsibility for Webster s commercial banking activities and he will assume interim responsibility for corporate development, including mergers and acquisitions, and for the corporation s Best Practices initiative. Earlier this month, Webster s Internet mortgage lender, formerly doing business as discountmortgages.com, was upgraded and renamed as nowlending.com. Nowlending.com allows more of the application process to be completed on-line and offers loan approvals with rate lock within 24 hours and complete disclosure of all fees. Since its inception in 1996, nowlending.com has processed nearly $1 billion in mortgage applications. NECB Acquisition Pending regulatory and shareholder approvals, Webster expects to close on its acquisition of New England Community Bancorp, Inc. (Nasdaq: NECB) later this quarter. NECB is a Windsor, Conn.-based multi-bank holding company with three subsidiary Connecticut banks, one New Hampshire bank and a mortgage company. New England Community Bancorp s banking subsidiaries are state-chartered commercial banks with total assets of approximately $800 million, and 18 banking offices. The New England Community Mortgage Corporation recorded $160 million in loan originations in With the addition of NECB, Webster will have approximately $10 billion in assets. The acquisition is expected to contribute positively to Webster s earnings per share in the first year. Webster expects to account for the transaction as a pooling of interests. # # # Webster Financial Corporation, headquartered in Waterbury, Conn., is the holding company for Webster Bank, which was founded in Webster Bank delivers consumer, commercial, mortgage, insurance, and trust and investment management services to individuals, families and businesses through a network of 115 banking offices, three commercial banking centers, two insurance offices, and 180 ATMs, in

4 4 addition to telephone banking, video banking and PC banking. Total assets at Sept. 30, 1999, were $9 billion, total deposits were $5.6 billion and total loans were $5.4 billion. Webster Bank has the number one or number two deposit market share in its primary markets of Hartford, New Haven and Litchfield counties. Webster is also a full-service commercial lender and the second-largest mortgage lender in Connecticut. -- more -- Webster Trust, the bank s trust and investment management subsidiary, is a leading Connecticut-based trust company. Webster s insurance subsidiary, Damman Insurance Associates, is one of the largest agencies in the state. Webster s subsidiary originates low-cost mortgages over the Internet for customers across the United States. Conference Call The third quarter earnings conference call will be held on Oct. 20, 1999 at 1 p.m., Eastern Time and may be heard through Webster s investor relations website at The call will be archived on the website and available for future retrieval. For more information on Webster, including past press releases and the latest Annual Report, visit the Webster Bank website at Statements in this press release regarding Webster Financial Corporation s business that are not historical facts are forward looking statements that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statement, see "Forward Looking Statements in the Company s Annual Report for the most recently ended fiscal year. # # #

5 Consolidated Statements of Condition (unaudited) September 30, September 30, (Dollars in thousands) Assets: Cash and due from depository institutions $ 170,200 $ 127,795 Interest-bearing deposits 785 8,728 Securities: Trading, at fair value 63,146 97,849 Available for sale, at fair value 2,529,198 3,150,556 Held to maturity, (fair value:$315,143 in 1999; $444,726 in 1998) 327, ,836 Loans receivable: Residential loans 3,788,183 3,793,405 Commercial real estate loans 498, ,138 Commercial and industrial loans 666, ,868 Home equity loans 456, ,654 Other consumer loans 41,343 43,820 Allowance for loan losses (62,785) (57,000) Loans receivable, net 5,388,249 4,931,885 Accrued interest receivable 60,002 55,863 Premises and equipment, net 88,567 79,372 Foreclosed properties, net 5,338 6,153 Intangible assets 135,126 81,037 Cash surrender value of life insurance 146, ,146 Prepaid expenses and other assets 82,633 45,466 Total assets $ 8,997,052 $ 9,163,686 Liabilities and Shareholders' Equity: Deposits: Checking and NOW $ 1,082,449 $ 1,102,833 Savings and MMDAs 1,576,125 1,221,493 Certificates of deposit 2,905,436 3,297,045 Total Deposits 5,564,010 5,621,371 Borrowed funds 2,555,355 2,654,126 Accrued expenses and other liabilities 105, ,696 Total liabilities 8,224,692 8,398,193 Corporation-obligated mandatorily redeemable capital securities of subsidiary trusts 150, ,000 Preferred stock of subsidiary corporation 49,577 49,577 Shareholders' Equity 572, ,916 Total liabilities and shareholders' equity $ 8,997,052 $ 9,163,686

6 Consolidated Statements of Income (unaudited) Three months ended September 30, Nine months ended September 30, (Dollars in thousands, except per share data) Interest income: Loans $ 99,666 $ 95,056 $ 288,560 $ 287,949 Securities and interest-bearing deposits 48,173 57, , ,161 Total interest income 147, , , ,110 Interest expense: Deposits 45,649 55, , ,158 Borrowings 33,566 37,175 98, ,261 Total interest expense 79,215 92, , ,419 Net interest income 68,624 59, , ,691 Provision for loan losses 2,100 1,500 6,200 5,300 Net interest income after provision for loan losses 66,524 58, , ,391 Noninterest income: Fees and service charges 17,432 12,039 44,375 31,104 Gain on sale of loans and loan servicing, net ,792 2,800 Gain (loss) on sale of securities, net (939) 1,143 2,480 11,269 Other noninterest income 3,804 2,977 11,660 8,357 Total noninterest income 20,650 16,394 60,307 53,530 Noninterest expenses: Salaries and employee benefits 24,088 19,640 66,484 58,396 Occupancy expense of premises 4,288 4,251 13,059 12,018 Furniture and equipment expenses 5,070 4,352 14,551 12,990 Intangible amortization 3,840 2,512 9,450 7,174 Marketing expenses 2,134 1,837 6,484 5,866 Other operating expenses 7,978 8,659 26,055 26,288 47,398 41, , ,732 Acquisition-related expenses ,400 Capital securities expense 3,661 3,692 10,984 11,046 Dividends on preferred stock of subsidiary corporation 1,038 1,037 3,113 3,113 Total noninterest expenses 52,097 45, , ,291 Income before income taxes 35,077 28, ,226 76,630 Income taxes 10,924 8,474 34,095 27,426 Net income $ 24,153 $ 20,083 $ 69,131 $ 49,204 Net income per common share before acquisitionrelated expenses: Basic $0.64 $0.53 $1.86 $1.64 Diluted $0.63 $0.52 $1.83 $1.61 Net income per common share after acquisitionrelated expenses: Basic $0.64 $0.53 $1.86 $1.30 Diluted $0.63 $0.52 $1.83 $1.27

7 Selected Financial Highlights (unaudited) At or for the Three At or for the Nine Months Ended September 30, Months Ended September 30, (Dollars in thousands, except per share data) Operating and Performance Ratios (annualized): Return on average shareholders' equity before acquisition-related expenses % % % % Return on average shareholders' equity after acquisition-related expenses Cash return on average shareholders' equity (a) Return on average assets before acquisitionrelated expenses Return on average assets after acquisitionrelated expenses Noninterest expenses / average assets Noninterest expenses / average assets (b) Efficiency ratio (c) Efficiency ratio (b) Shareholders' equity / total assets Interest rate spread 3.10 % 2.61 % 3.02 % 2.59 % Net interest margin 3.25 % 2.79 % 3.16 % 2.76 % Loan originations: Residential $ 230,471 $ 239,229 $ 833,706 $ 770,420 Commercial 109,753 96, , ,284 Consumer 70,029 59, , ,534 Asset Quality: Nonaccrual loans $ 32,273 $ 29,579 $ 32,273 $ 29,579 Nonaccrual assets, net 37,611 35,734 37,611 35,734 Allowance for loan losses 62,784 57,000 62,784 57,000 Allowances for nonaccrual assets 63,046 57,312 63,046 57,312 Net loan charge-offs 685 1,104 2,163 10,421 Nonaccrual assets / total assets 0.42 % 0.39 % 0.42 % 0.39 % Allowance for loan losses / nonaccrual loans Allowances for nonaccrual assets / nonaccrual assets Share Related: Book value per common share $ $ $ $ Tangible book value per common share $ $ $ $ Common stock closing price $ $ $ $ Dividend declared per common share $ 0.12 $ 0.11 $ 0.35 $ 0.32 Common shares issued and outstanding 38,066,359 37,943,394 38,066,359 37,943,394 Basic shares 37,950,170 38,011,104 37,124,146 37,952,903 Diluted shares 38,509,362 38,663,761 37,719,340 38,650,302 (a) Net income, excluding tax effected intangible amortization, divided by average shareholders' equity. (b) Excludes acquisition-related, intangible amortization, capital securities, preferred dividend, foreclosed property expenses and non-recurring charges. (c) Excludes acquisition-related, intangible amortization, foreclosed property expenses and non-recurring charges.

8 Retail and Wholesale Interest Rate Spreads (unaudited) Three months ended, September June March December September Interest rate spread Total interest-earning assets 6.99 % 6.95 % 6.98 % 7.07 % 7.04 % Total interest-bearing liabilities Interest rate spread 3.10 % 3.07 % 2.91 % 2.82 % 2.61 % Net interest margin Retail interest rate spread Yield on loans 7.39 % 7.34 % 7.40 % 7.56 % 7.60 % Rate on deposits Spread 4.13 % 4.00 % 3.90 % 3.87 % 3.73 % Wholesale interest rate spread Yield on securities 6.28 % 6.31 % 6.34 % 6.40 % 6.27 % Rate on borrowings Spread 0.97 % 1.15 % 1.07 % 0.92 % 0.57 % Consolidated Average Statements of Condition (unaudited) Three months ended September 30, Fully tax Fully tax Average equivalent Average equivalent (Dollars in thousands) balance Interest yield/rate balance Interest yield/rate Assets: Interest-earning assets: Loans $ 5,379,609 $ 99, % $ 4,982,028 $ 95, % Securities and interest-bearing deposits 3,067,914 48, ,651,738 57, Total interest-earning assets 8,447, , ,633, , Noninterest-earning assets 517, ,426 Total assets $ 8,964,549 $ 9,117,192 Liabilities and Shareholders' Equity: Interest-bearing liabilities: Interest-bearing deposits $ 5,132,699 $ 45, % $ 5,314,678 $ 55, % Noninterest-bearing deposits 478, , Federal Home Loan Bank advances 1,558,666 21, ,473,172 21, Repurchase agreements and other borrowings 910,146 11, ,042,378 14, Senior notes 40, , Total interest-bearing liabilities 8,120,180 79, ,275,212 92, Noninterest-bearing other liabilities 130,298 95,042 Total liabilities 8,250,478 8,370,254 Capital securities and preferred stock of subsidiary corporation 150, ,577 Shareholders' Equity 564, ,361 Total liabilities and shareholders' equity $ 8,964,549 $ 9,117,192 Net interest income $ 68,624 $ 59,643 Interest rate spread 3.10 % 2.61 % Net interest margin 3.25 % 2.79 %

9 Consolidated Average Statements of Condition (unaudited) Nine months ended September 30, Fully tax Fully tax Average equivalent Average equivalent (Dollars in thousands) balance Interest yield/rate balance Interest yield/rate Assets: Interest-earning assets: Loans 5,220,141 $ 288, % $ 4,843,275 $ 287, % Securities and interest-bearing deposits 3,183, , ,031, , Total interest-earning assets 8,403, , ,874, , Noninterest-earning assets 545, ,399 Total assets $ 8,948,415 $ 9,352,342 Liabilities and Shareholders' Equity: Interest-bearing liabilities: Interest-bearing deposits $ 5,129,444 $ 141, % $ 5,373,033 $ 169, % Noninterest-bearing deposits 471, , Federal Home Loan Bank advances 1,548,625 61, ,625,423 70, Repurchase agreements and other borrowings 928,815 34, ,082,213 45, Senior notes 40,000 2, ,000 2, Total interest-bearing liabilities 8,118, , ,518, , Noninterest-bearing other liabilities 133, ,983 Total liabilities 8,251,489 8,641,499 Capital securities and preferred stock of subsidiary corporation 150, ,277 Shareholders' Equity 546, ,566 Total liabilities and shareholders' equity $ 8,948,415 $ 9,352,342 Net interest income $ 199,299 $ 182,691 Interest rate spread 3.02 % 2.59 % Net interest margin 3.16 % 2.76 %