SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
------------------------------------------
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED).
Commission file number 0-15213
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Webster Bank Employee Investment Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Webster Financial Corporation
Webster Plaza
Waterbury, CT 06720
Telephone (203) 753-2921
<PAGE>
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
--------------------------------
FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1998, 1997 AND 1996
(WITH INDEPENDENT AUDITORS' REPORT THEREON)
<PAGE>
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
-------------------------------------------------
INDEX
<TABLE>
<CAPTION>
<S> <C>
Independent Auditors' Report ........................................................................ 1
Financial Statements
Statements of Net Assets Available for Benefits................................................. 2
Statements of Changes in Net Assets Available for Benefits...................................... 3
Notes to Financial Statements .................................................................. 4-14
Supplemental Schedules
Schedule 1 - Line 27a - Schedule of Assets Held for Investment Purposes ........................ 15
Schedule 2 - Line 27d - Schedule of Reportable Transactions..................................... 16-17
Signatures .......................................................................................... 18
Independent Auditors' Consent ....................................................................... Exhibit 23
</TABLE>
Note: The following schedules, as required by Section 103(c)(5) of the Employee
Retirement Income Security Act, are not applicable:
Line 27a - Schedule of Assets Held for Investment Purposes that were Both
Acquired and Disposed of Within The Plan Year,
Line 27b - Schedule of Loans or Fixed Income Obligations,
Line 27c - Schedule of Leases in Default or Classified as Uncollectible,
Line 27e - Schedule of Non-Exempt Transactions.
<PAGE>
KPMG LLP
CityPlace II
Hartford, CT 06103-4103
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Webster Bank:
We have audited the accompanying statements of net assets available for benefits
of the Webster Bank Employee Investment Plan as of December 31, 1998 and 1997,
and the related statements of changes in net assets available for benefits for
each of the years in the three-year period ended December 31, 1998. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Webster Bank
Employee Investment Plan, as of December 31, 1998 and 1997, and the changes in
net assets available for benefits for each of the years in the three-year period
ended December 31, 1998, in conformity with generally accepted accounting
principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental schedules of assets held for
investment purposes and reportable transactions are presented for purposes of
additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedules have been
subjected to the auditing procedures applied in the audit of the basic financial
statements, and, in our opinion, are fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
/s/ KPMG LLP
Hartford, Connecticut
June 21, 1999
<PAGE>
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1998 and 1997
------------------------------------------
<TABLE>
<CAPTION>
1998 1997
------------ ------
<S> <C> <C>
ASSETS
Investments (Cost basis of $ 30,409,446 $ 25,470,558
$25,425,245 in 1998 and
$19,818,595 in 1997) (Note 3)
Loans to Participants 659,725 598,418
Receivables - 241,839
Cash 22,767 4,669
--------- --------
Total Assets $ 31,091,938 $ 26,315,484
========== ==========
Net Assets Available for
Benefits $ 31,091,938 $ 26,315,484
========== ==========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
-------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
ADDITIONS
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Net Investment Income:
Net Appreciation in Fair
Value of Investments $ 679,521 $ 5,670,768 $ 1,320,242
Interest and Dividends 451,356 359,842 345,517
Contributions:
Participants 3,393,855 3,374,353 2,856,883
Employer 1,135,331 835,701 622,532
Transfers from Other Plans (Notes 1 and 7) 724,973 4,659,785 -
---------- ---------- ----------
Total Additions 6,385,036 14,900,449 5,145,174
---------- ---------- ----------
DEDUCTIONS
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits Paid to Participants $ 1,603,794 $ 1,729,293 $ 781,825
Miscellaneous Expenses 4,788 1,050 20,561
---------- ---------- ----------
Total Deductions 1,608,582 1,730,343 802,386
Net Increase $ 4,776,454 $ 13,170,106 $ 4,342,788
---------- ---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of Year $ 26,315,484 $ 13,145,378 $ 8,802,590
---------- ---------- ----------
End of Year $ 31,091,938 $ 26,315,484 $ 13,145,378
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
------------------------------------------
1. DESCRIPTION OF THE PLAN
The following brief description of the Webster Bank Employee Investment
Plan (the "Plan") is provided for general information purposes only.
Participants should refer to the full Plan document for a more complete
description of the Plan's provisions.
(a) General
The Plan is a qualified profit-sharing plan under Section 401(a) of the
Internal Revenue Code of 1986. The Plan is also subject to the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA") as amended. The Plan
was initially adopted by the Board of Directors of Webster Bank's predecessor,
First Federal Bank, effective as of October 1, 1984. Subsequent to this date,
the Plan has been amended on various dates for reasons that include: certain
legislative and regulatory changes, employer name change, plan merger, plan name
change and for various acquisitions. The Plan covers all eligible employees who
are employed by Webster Financial Corporation and its' subsidiaries. To be
eligible to participate in the Plan, an employee must have attained age 21 and
have completed one year of service (at least 1,000 hours of service). An
eligible employee may join the Plan on the first day of any calendar quarter.
Participants in the Plan may change their contribution amounts up to four times
per year on specific dates and cease contribution at any time during the Plan
year. Participation in the Plan is completely voluntary.
Webster Financial Corporation ("Webster" or the "Corporation"), through
its subsidiaries, Webster Bank (the "Bank") and Damman Insurance Associates,
delivers financial services to individuals, families and businesses throughout
Connecticut. Webster emphasizes five business lines - consumer banking, business
banking, mortgage lending, trust and investment services, and insurance
services, each supported by centralized administration and operations. Webster
has grown significantly in recent years, primarily through a series of
acquisitions which have expanded and strengthened its franchise. The Bank was
founded in 1935 and converted from a federal mutual to a federal stock
institution in 1986.
On April 15, 1998, Webster acquired Eagle Financial Corporation ("Eagle")
and its subsidiary, Eagle Bank. The Plan was amended effective April 15, 1998 to
add provisions for the former members of the Eagle Bank Thrift Plan. On August
12, 1998, certain assets and liabilities of the Eagle Bank Thrift Plan were
transferred to, and assumed by, the Plan. All service by employees with Eagle
prior to acquisition date constitutes service rendered for the purpose of
meeting eligibility requirements for participation under the Plan.
On June 1, 1998, Webster acquired Damman Associates, Inc. ("Damman"). The
Plan was amended effective July 1, 1998, to add provisions for the former
members of the Damman Associates, Inc. 401k Profit Sharing Plan (the "Damman
401k Plan"). Effective as of July 1, 1998, the Damman 401k Plan was frozen and
no further contributions thereafter have been made to the Damman 401k Plan. It
is expected that during the third quarter of 1999, certain assets and
liabilities of the Damman 401k Plan will be transferred to, and assumed by, the
Plan. Further, during the second quarter of 1998, Damman became a subsidiary of
the corporation. All service by employees with Damman prior to the acquisition
date shall
4
<PAGE>
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
------------------------------------------
constitute service rendered for the purpose of meeting eligibility requirements
for participation under the Plan.
The Plan was amended effective December 31, 1998 to add provisions for
the employees of the recently acquired Access National Mortgage, Inc.
("Access"). Further, effective December 31, 1998, Access became a member of the
corporation. All services with Access prior to the acquisition date shall
constitute services rendered for the purpose of meeting eligibility requirements
for participation under the Plan.
(b) Contributions
Employees who are members of the Plan, may make contributions of 1%
through 10% of their pay on a before tax basis. Total salary deferrals are
limited to $10,000 for 1998 and $9,500 for 1997 and 1996 calendar years. The
Employer contributes a matching contribution to the Plan equal to 50% of the
first 6% of a participant's salary deferral contribution. The Bank may also make
a discretionary contribution to the Plan on behalf of employee participants. The
investment alternatives available under the Plan for the 1998 plan year are
summarized below:
<TABLE>
<CAPTION>
<S> <C>
* AIM Constellation Fund: This fund invests in common stocks with emphasis on
medium-sized and smaller emerging growth companies.
American New Perspective Fund: This fund invests primarily in the common stocks of
companies based around the world.
American Fundamental Investors This fund invests primarily in diversified common
Fund: stocks.
American Bond Fund of America: This fund invests in diversified bond fixed income
securities.
Fidelity Advisor Growth This fund invests in common stocks of smaller to
Opportunities Fund: medium-sized companies. The fund may also invest
in debt securities and cyclicals.
Paine Webber Stable Value: This fund invests in units of the Guaranteed
Investment Contract (GIC) portfolio
under the Paine Webber Trust
Company pooled trust.
</TABLE>
5
<PAGE>
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Webster Financial Corporation This fund invests 100% in the common stock of
Common Stock: Webster.
** Evergreen Small Cap Equity This fund invests primarily in small growth companies
Income Fund: that have higher than average yields. The companies
generally have a total market capitalization less than
$500 million.
** Evergreen Growth & Income Fund: This fund invests primarily in investment alternatives which
seek to provide capital growth income and diversification.
* Fund eliminated from Plan during 1998.
** New Funds added to Plan during 1998.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(c) Vesting
All amounts contributed to the 401(k) Plan by the participant, and
employer, are fully vested and non-forfeitable at all times. The participant's
vested balance is affected by any investment gains or losses that their account
incurs.
(d) Payment of Benefits
Under the Plan, a participant's "normal retirement date" is the date age
65 is attained. Payment of a participant's account balance begins not later than
60 days following the end of the Plan year during which retirement occurs.
Payment options available under the Plan are: Single Lump Sum; Lump
Sum/Installment; Installment; Joint and Survivor Annuity; Life Annuity and Life
Annuity with Term Certain Guaranteed. If a participant's employment with the
Bank terminates before normal retirement date, the participant is always 100%
vested for their account balance. In the event of termination, if the
participant's account balance does not, and has never exceeded $5,000, payment
will be an automatic lump sum. If the account balance exceeds or has ever
exceeded $5,000, then the participant may elect to defer payment not later than
when age 65 is reached. In the event of death, while a participant is actively
employed, the account balance will be paid to the designated beneficiary or
beneficiaries. In the event of total and permanent disability, a participant
will receive payment of their account balance as if retirement had occurred.
6
<PAGE>
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
------------------------------------------
(e) Loans
Employees have the ability to borrow up to 50% of their account balances,
not to exceed $50,000. Interest is paid by the Plan participants to their
account at prevailing interest rates through payroll deductions. Loans must
generally be repaid within five years or, if earlier, by normal retirement date
of the borrower.
(f) Rollovers
Under the Plan, transfers from other tax-qualified retirement plans are
permitted even if the employee is not currently participating in the Plan.
Rollovers must be deposited to the Plan trust fund within 60 days of receipt.
All rollovers will be invested and distributed in accordance with the rules of
the Plan.
(g) Hardship Withdrawals
Hardship withdrawals are permitted under the Plan for specific reasons
when the participant has met conditions required by the Plan.
(h) Domestic Relation Orders
The Plan Administrator may be required by law to recognize obligations
the participant incurs as a result of court-ordered support or alimony payments.
The Plan Administrator must honor a qualified domestic relations order ("QDRO").
If a QDRO is received by the Plan Administrator, all or a portion of the Plan
participant's account balance may be used to satisfy the obligation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following are the significant accounting policies followed by the
Plan:
(a) Basis of Accounting
The accompanying financial statements of the Plan are prepared in
accordance with the accrual basis of accounting.
(b) Purchases and Sales Transactions
Transactions are recorded on a trade-date basis.
(c) Valuation of Assets
Investments are stated at current market values. Quoted market values are
used to value investments. Loans to participants are stated at amortized cost,
which approximates their market values.
7
<PAGE>
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
------------------------------------------
(d) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make estimates and
assumptions that affect the reported amounts of assets, liabilities and changes
therein, and disclosure of contingent assets and liabilities. Actual results
could differ from those estimates.
(e) Administrative Expenses
Trustee fees and other administrative expenses of the Plan are paid by
the Bank. Fees for 1998, 1997 and 1996 Plan years were: $79,823, $93,960 and
$63,971, respectively.
3. INVESTMENTS
The Plan's assets are invested in various mutual funds and Webster common
stock through the Plan's investment advisor, Paine Webber, and record keeper,
Benefit Concepts Incorporated. The Plan is sponsored and administered by the
Bank. Plan participants have the ability to direct their account balances to
several selected mutual funds or Webster common stock. As of December 31, 1998,
the funds included the: American New Perspective Fund, American Fundamental
Investors Fund, American Bond Fund of America, Fidelity Advisor Growth
Opportunities Fund, Paine Webber Stable Value Fund, Evergreen Small Cap Equity
Income Fund, and Evergreen Growth & Income Fund. The two Evergreen Funds were
newly added mutual funds during 1998 while the AIM Constellation Fund was
discontinued as an investment option. The AIM Money Market account holds cash
which is designated primarily for the purchase of Webster common stock until the
purchase is made. The Pioneer Cash Reserve Fund is a general cash account.
Single and series of transactions for each fund that are in excess of 5% of the
fair value of the Plan's 1998 beginning balance for net assets available for
benefits are presented in Line 27d, Schedule of Reportable Transactions within
this document.
The fair value of individual investments that represent 5% or more of the
Plan's net assets available for benefits at December 31, 1998 and 1997 is as
follows:
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
AIM Constellation Fund $ - $ 1,638,466
American New Perspective Fund 2,122,144 -
American Fundamental Investor Fund 6,345,862 5,207,004
American Bond Fund of America 3,034,201 2,697,636
</TABLE>
8
<PAGE>
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Fidelity Advisor Growth
Opportunities Fund 4,429,849 2,594,499
Webster Financial
Corporation Common Stock* 8,614,230 8,938,664
Paine Webber Stable Value Fund 3,272,067 3,131,436
Evergreen Growth & Income Fund 2,567,536 -
</TABLE>
* Indicates party-in-interest to the Plan.
Activity in the investment funds during 1998, 1997 and 1996 was as follows:
9
<PAGE>
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
------------------------------------------
<TABLE>
<CAPTION>
American American Fidelity Webster Paine
AIM New Fundamental American Advisor Financial Webber
1998 Fund Activity Constellation Perspective Investor Bond Fund Growth Oppor. Corporation Stable
Fund Fund Fund Of America Fund Stock * Value Fund
- ------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at Beg. Year $ 1,638,466 $ 1,262,853 $ 5,207,004 $ 2,697,636 $ 2,594,499 $ 8,938,664 $ 3,131,436
Interest & Dividends - 22,524 77,614 193,096 29,211 122,745 -
Expenses (423) (432) (881) (509) (701) (1,155) (663)
Contributions 454,767 574,170 714,837 355,999 953,356 - 383,717
Gains and (Losses), Net 114,075 394,457 807,229 (51,337) 736,750 (1,754,463) 176,074
Benefits Paid to Participants (85,737) (158,326) (322,631) (178,384) (275,330) (416,186) (353,918)
Transfers, Net (2,121,148) 26,898 (137,310) 17,700 392,064 1,724,625 (64,579)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance at 12/31/98 $ 0 $ 2,122,144 $ 6,345,862 $ 3,034,201 $ 4,429,849 $ 8,614,230 $ 3,272,067
=========== =========== =========== =========== =========== =========== ===========
<CAPTION>
Evergreen Evergreen
Small Cap Growth & Cash Funds
1998 Fund Activity Equity Income Income Total Loan (AIM and
(continued) Fund Fund Investments Fund * Pioneer) Total
- --------------------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at Beg. Year $ - $ - $ 25,470,558 $ 598,418 $ 4,669 $ 26,073,645
Interest & Dividends 206 5,033 450,429 - 927 451,356
Expenses - - (4,764) - (24) (4,788)
Contributions 12,858 285,566 3,735,270 (192,917) 1,228,672 4,771,025
Gains and (Losses), Net 801 133,117 556,703 - 122,818 679,521
Benefits Paid to Participants - (65,999) (1,856,511) 254,224 (1,507) (1,603,794)
Transfers, Net 9,692 2,209,819 2,057,761 - (1,332,788) 724,973
----------- ----------- ----------- ----------- ----------- -----------
Balance at 12/31/98 $ 23,557 $ 2,567,536 $ 30,409,446 $ 659,725 $ 22,767 $ 31,091,938
=========== =========== =========== =========== =========== ===========
</TABLE>
* Indicates party-in-interest to the Plan.
10
<PAGE>
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
------------------------------------------
<TABLE>
<CAPTION>
American Fidelity American Webster Paine
AIM New Advisor Fundamental American Financial Webber
1997 Fund Activity Constellation Perspective Growth Oppor. Investor Bond Fund Corporation Stable
Fund Fund Fund Fund Of America Stock * Value Fund
- --------------------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at Beg. Year $ 811,611 $ 468,586 $ 777,003 $ 3,305,939 $ 1,801,473 $ 3,814,246 $ 1,672,184
Interest & Dividends 0 16,431 26,876 64,330 153,809 97,486 0
Expenses (81) (75) (99) (252) (164) (218) (161)
Contributions 634,216 464,480 818,782 535,483 315,581 0 522,568
Gains, Net 113,226 103,997 497,866 874,231 43,398 3,799,793 140,288
Benefits Paid to Participants (138,235) (130,666) (408,868) (349,642) (208,785) (398,990) (440,727)
Transfers, Net 217,729 340,100 882,939 776,915 592,324 1,626,347 1,237,284
--------- ---------- --------- --------- --------- --------- ---------
Balance at 12/31/97 $ 1,638,466 $ 1,262,853 $ 2,594,499 $ 5,207,004 $ 2,697,636 $ 8,938,664 $ 3,131,436
========= ========= ========= ========= ========= ========= =========
<CAPTION>
1997 Fund Activity Total Loan Cash
(continued) Investments Fund * Funds Total
- ------------------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at Beg. Year $ 12,651,042 $ 321,714 $ 5,695 $ 12,978,451
Interest & Dividends 358,932 0 910 359,842
Expenses (1,050) 0 0 (1,050)
Contributions 3,291,110 (172,445) 1,016,477 4,135,142
Gains, Net 5,572,799 0 97,969 5,670,768
Benefits Paid to
Participants (2,075,913) 348,052 (1,432) (1,729,293)
Transfers, Net 5,673,638 101,097 (1,114,950) 4,659,785
----------- ----------- ----------- -----------
Balance at 12/31/97 $ 25,470,558 $ 598,418 $ 4,669 $ 26,073,645
=========== =========== =========== ===========
</TABLE>
* Indicates party-in-interest to the Plan.
11
<PAGE>
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
------------------------------------------
<TABLE>
<CAPTION>
American Fidelity American Webster Paine
AIM New Advisor Fundamental American Financial Webber
1996 Fund Activity Constellation Perspective Growth Oppor. Investor Bond Fund Corporation Stable
Fund Fund Fund Fund Of America Stock * Value Fund
- ------------------------ --------- --------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at Beg. Year $ - $ - $ - $ - $ - $ 2,561,315 $ -
Interest & Dividends - 7,309 11,282 51,354 123,492 64,309 86,723
Expenses (86) (59) (59) (403) (256) (189) (239)
Contributions 660,878 436,802 620,661 616,858 289,124 - 242,509
Gains and (Losses), Net 23,042 33,531 72,094 540,197 (17,252) 661,669 -
Benefits Paid to
Participants (84,323) (46,430) (28,282) (387,127) (211,081) (149,079) (121,588)
Transfers, Net 212,100 37,433 101,307 2,485,060 1,617,446 676,221 1,464,779
--------- --------- --------- --------- --------- --------- ---------
Balance at 12/31/96 $ 811,611 $ 468,586 $ 777,003 $ 3,305,939 $ 1,801,473 $ 3,814,246 $ 1,672,184
========= ========= ========= ========= ========= ========= =========
<CAPTION>
Corporate Federal Basic Retirement
1996 Fund Activity Ready Bond Securities Value Systems Total
(continued) Asset Fund ** Fund ** Trust ** Fund ** Group Inc.** Investments
- ---------------------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at Beg. Year $ 1,480,886 $ 1,078,752 $ 603,192 $ 2,798,030 $ 3,250 $ 8,525,425
Interest & Dividends - - - - - 344,469
Expenses - - - - - (1,291)
Contributions - - - - - 2,866,832
Gains and (Losses), Net - (10,934) (617) (45,935) 453 1,256,248
Benefits Paid to
Participants - - - - - (1,027,910)
Transfers, Net (1,480,886) (1,067,818) (602,575) (2,752,095) (3,703) 687,269
----------- ----------- ----------- ----------- ----------- -----------
Balance at 12/31/96 $ 0 $ 0 $ 0 $ 0 $ 0 $ 12,651,042
=========== =========== =========== =========== ========== ===========
<CAPTION>
1996 Fund Activity Loan Cash
(continued) Fund * Funds Total
- ------------------------ ---------- ---------- ----------
<S> <C> <C> <C>
Balance at Beg. Year $ 160,978 $ 581 $ 8,686,984
Interest & Dividends - 1,048 345,517
Expenses (19,261) (9) (20,561)
Contributions (67,995) 629,257 3,428,094
Gains and (Losses), Net - 63,994 1,320,242
Benefits Paid to
Participants 247,992 (1,907) (781,825)
Transfers, Net - (687,269) -
---------- ---------- ----------
Balance at 12/31/96 $ 321,714 $ 5,695 $ 12,978,451
========== ========== ==========
</TABLE>
* Indicates party-in-interest to the Plan.
** Merrill Lynch Funds available through 1995 Plan year.
12
<PAGE>
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
------------------------------------------
4. PLAN TERMINATION
Although the Bank has not expressed any intent to terminate the Plan
Agreement, it has the right to do so at any time. The rights of all employees to
benefits accrued under the Plan as of the date of such termination, partial
termination or discontinuation of contribution are fully vested and will be
nonforfeitable. After providing for the expenses of the Plan, the remaining
assets of the Plan will be allocated by the Human Resources Committee appointed
by the Board of Directors.
5. TAX STATUS
The Internal Revenue Service has determined and informed the Bank by a
letter dated June 5, 1997, that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code ("IRC").
Accordingly, no provision for income taxes has been made in the accompanying
financial statements. It is the opinion of the Plan administrator, that the Plan
is designed and is currently being operated in compliance with the applicable
requirements of the IRC.
6. YEAR 2000 ISSUES (UNAUDITED)
Computer systems impacting the Plan are primarily those maintained by the
third parties that provide Plan recordkeeping, investment and other services.
The Corporation has received notification from such third parties that they have
completed Year 2000 readiness procedures on the computer equipment and software
used to service the Plan's activities. In addition, the Corporation has
completed other initiatives intended to ensure that the internal equipment and
software used to administer the Plan will function properly with respect to the
date in the Year 2000 and thereafter.
7. AMENDMENTS
The Plan was amended as follows during 1998.
(1) Effective January 1, 1998, sections 6.4(a) and 6.5(c), 6.5(d) and
6.6(e) of the Plan were modified. The primary reason for these modifications was
to increase the threshold from $3,500 to $5,000 as it pertains to certain
benefit payments of the Plan.
(2) Effective April 15, 1998, the Plan was amended to incorporate
benefits of the former members of the Eagle Bank Thrift Plan (the "Eagle Plan").
On April 15, 1998, Webster acquired Eagle Financial Corporation and its
subsidiary, Eagle Bank. Refer to Note 1(a) of this document for further
information.
(3) Effective July 1, 1998, the Plan was amended to incorporate benefits
of the former members of the Damman Associates, Inc. 401k Profit Sharing Plan
into the Plan. On June 1, 1998, Damman Associates, Inc. was acquired by Webster.
Refer to Note 1(a) of this document for further information.
(4) The Plan was amended to incorporate benefits of the employees of
Access National Mortgage, L.L.C. ("Access"), which was acquired by Webster on
January 1, 1999, into the Plan. Refer to Note 1a of this document for further
information.
The above information is meant to provide only a brief description of
amendments to the Plan during the 1998 year period. The Webster Bank Employee
Investment Plan full document should be referenced.
13
<PAGE>
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
------------------------------------------
8. SUBSEQUENT EVENTS
(1) During 1999, the Plan's record keeper, Benefit Concepts Incorporated
("BCI"), changed its name to USI Consulting Group ("USICG"). BCI became a
partner with USI in 1996. USICG is a strategic business unit of USI, now the
tenth largest distributor of financial services and insurance products in the
world.
(2) Effective January 1, 1999, a new Annex VI was added to the Plan to
provide provisions for employees of Webster Investment Services, Inc. ("WIS"), a
subsidiary of the Bank. Under the annex, WIS became a member of the corporation.
It is anticipated that effective on and after January 1, 1999, WIS will become
the employer of certain individuals previously employed by Independent Financial
Marketing Group, Inc. All services employees of WIS performed for Independent
Financial Marketing Group, Inc. prior to hire by WIS shall count as services,
rendered for purposes of eligibility to participate under the Plan.
(3) On April 21, 1999, Webster acquired Maritime Bank & Trust Company
("Maritime"). Effective April 21, 1999, the Plan was amended to provide
provisions for the former employees of Maritime. All service by employees with
Maritime prior to acquisition date constitutes service rendered for the purpose
of meeting eligibility requirements for participation under the Plan.
(4) On May 19, 1999, Webster acquired Village Bancorp, Inc. ("Village"),
the holding company for Village Bank & Trust Company ("Village Bank"). Effective
May 19, 1999, the Plan was amended to provide provisions for the former
employees of Village Bank. All service by employees with Village prior to
acquisition date constitutes service rendered for the purpose of meeting
eligibility requirements for participation under the Plan.
14
<PAGE>
SCHEDULE 1
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
Line 27a (Part I) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
------------------------------------------
<TABLE>
<CAPTION>
Number of Current
Identity of Issue Shares Held Cost Value
- ----------------- ----------- ---- -----
<S> <C> <C> <C>
American New Perspective 92,468.154 shares; net asset $ 1,859,499 $ 2,122,144
Fund value per share $22.95
American Fundamental 219,428.148 shares; net asset 5,575,853 6,345,862
Investor Fund value per share $28.92
American Bond Fund 222,939.099 shares; net asset 3,087,073 3,034,201
of America value per share $13.61
Fidelity Advisor Growth 88,173.752 shares; net asset 3,565,685 4,429,849
Opportunities Fund value per share $50.24
Webster Financial Corporation 313,953.000 shares; net asset 5,876,246 8,614,230
Common Stock (*) (**) value per share $27.44
Paine Webber Stable Value 262,100.829 shares; net asset 2,944,235 3,272,067
Fund value per share $12.48
Evergreen Small Cap Equity 1,587.426 shares; net asset 22,906 23,557
Income Fund value per share $14.84
Evergreen Growth & Income Fund 89,181.538 shares; net asset 2,493,748 2,567,536
---------- ----------
value per share $28.79
Total Investments $ 25,425,245 $ 30,409,446
========== ==========
Loans to Participants* $ 659,725 $ 659,725
=========== ===========
</TABLE>
* Indicates party-in-interest to the Plan.
** Restated retroactively for effect of 2-for-1 stock split granted on April 6,
1998.
15
<PAGE>
SCHEDULE 2
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
Line 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
DECEMBER 31, 1998
------------------------------------------
<TABLE>
<CAPTION>
Current Value
of Assets on Net
Number of Purchase Sale Cost of Transaction Gain
Identity of Issue (a) Transactions Price Price Assets Date (Loss)
- ----------------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
SINGLE TRANSACTION:
AIM Constellation Fund (b)
1 - 2,235,618 2,135,934 2,235,618 99,684
SERIES OF TRANSACTIONS:
AIM Cash Reserve Fund 180 $1,801,051 $ - $1,801,051 $1,801,501 $ -
79 - 1,718,597 1,718,597 1,718,597 -
AIM Constellation Fund 132 $ 674,009 $ - $ 674,009 $ 674,009 $ -
101 - 2,426,546 2,313,992 2,426,546 112,554
American Fundamental 198 $1,453,137 $ - $1,453,137 $1,453,137 $ -
Investor Fund 176 - 605,626 529,578 605,626 76,048
Fidelity Advisor Growth 236 $1,647,094 $ - $1,647,094 $1,647,094 $ -
Opportunities Fund 159 - 397,088 337,923 397,088 59,165
Webster Financial 46 $1,716,536 $ - $1,716,536 $1,716,536 $ -
Corporation Common Stock (c) 107 - 492,111 335,949 492,111 156,162
</TABLE>
16
<PAGE>
SCHEDULE 2
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
Line 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
DECEMBER 31, 1998
------------------------------------------
<TABLE>
<CAPTION>
Current Value
of Assets on Net
Number of Purchase Sale Cost of Transaction Gain
Identity of Issue Transactions Price Price Assets Date (Loss)
- ----------------- ------------ ---------- ------- --------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
SERIES OF TRANSACTIONS (CONTINUED):
Paine Webber Stable 132 $ 693,115 $ - $ 693,115 $ 693,115 $ -
Value Fund 174 - 728,574 684,774 728,574 43,800
Evergreen Growth & Income Fund 69 $2,620,566 $ - $2,620,566 $ 2,620,566 $ -
63 - 120,687 126,817 120,687 (6,130)
</TABLE>
(a) All Funds listed are mutual funds.
(b) The fund was closed to the Plan in 1998.
(c) Indicates party-in-interest to the Plan.
17
<PAGE>
SIGNATURES
------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
administrative committee of the Plan has duly caused this annual report to be
signed by the undersigned thereunto duly authorized.
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
------------------------
Date: June 28, 1999 By: /s/ James C. Smith
---------------------------- ----------------------------
James C. Smith
Executive Member of the
Retirement Plan Committee
Date: June 28, 1999 By: /s/ Renee P. Seefried
---------------------------- ----------------------------
Renee P. Seefried
Member of the Retirement
Plan Committee
18
<PAGE>
EXHIBIT INDEX
------------------------------------------
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- ------------------------
<S> <C>
23 Consent of KPMG LLP
</TABLE>
19
<PAGE>
KPMG LLP
CityPlace II
Hartford, CT 06103-4103
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Webster Bank:
We consent to the incorporation by reference in the registration statement (No.
33-38286) on Form S-8 of Webster Financial Corporation of our report dated June
21, 1999, relating to the statements of net assets available for benefits of the
Webster Bank Employee Investment Plan as of December 31, 1998 and 1997 and the
related statements of changes in net assets available for benefits for each of
the years in the three-year period ended December 31, 1998, which report appears
in the December 31, 1998 annual report on Form 11-K of the Webster Financial
Corporation.
/s/ KPMG LLP
Hartford, Connecticut
June 28, 1999
20
