UNITED STATES
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, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission file number 001-31486
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 06702
Telephone (203) 578-2476
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
YEAR ENDED DECEMBER 31, 2003,
ONE DAY ENDED DECEMBER 31, 2002 AND
YEAR ENDED DECEMBER 30, 2002
(WITH REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM THEREON)
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
INDEX
Report of Independent Registered Public Accounting Firm ...................................................... 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 ............................................................................. 4-16
Supplemental Schedules:
Schedule H, Line 4i - Schedule of Assets (held at December 31, 2003) ...................................... 17
Note: Schedules of reportable transactions, nonexempt transactions, loans
or fixed income obligations in default or classified as uncollectible,
leases in default or classified as uncollectible and investment assets both
acquired and disposed of within the plan year as required by the Employee
Retirement Income Security Act of 1974 (ERISA) and Department of Labor
Regulations have not been included herein as the information is not
applicable.
Signatures ..................................................................................................... 19
Exhibit Index................................................................................................... 20
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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, 2003 and 2002,
and the related statements of changes in net assets available for benefits for
the year ended December 31, 2003 and the one-day ended December 31, 2002 and the
year ended December 30, 2002. 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 the Standards of the Public Company
Oversight Board (United States). 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, 2003 and 2002, and the changes in
net assets available for benefits for the year ended December 31, 2003 and the
one day ended December 31, 2002 and the year ended December 30, 2002 in
conformity with United States generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
at December 31, 2003 is presented for the purpose of additional analysis and is
not a required part of the basic financial statements but is 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. This supplemental schedule is the responsibility of the Plan's management.
This supplemental schedule has been subjected to the auditing procedures applied
in the audit of the basic financial statements, and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ KPMG LLP
Hartford, Connecticut
June 11, 2004
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, December 31,
2003 2002
------------------ -------------
ASSETS
Investments (cost of $78,828,134 $ 78,547,875 53,114,577
and $58,467,938)
Loans to participants 1,629,530 1,482,141
Receivables:
Participants 713,679 872,990
Employer 240,019 306,335
Interest-bearing cash 57,426 16,589
--------------- -------------
Total assets $ 81,188,529 55,792,632
=============== =============
NET ASSETS AVAILABLE FOR BENEFITS $ 81,188,529 55,792,632
=============== =============
See accompanying notes to financial statements.
2
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
2003 2002
January 1, 2003 One day ended December 31, 2001
December 31, 2003 December 31, 2002 December 30, 2002
------------------- ----------------- -------------------
ADDITIONS TO NET ASSETS:
Net appreciation (depreciation) in fair
value of investments $ 13,815,583 38,160 (5,328,082)
Interest and dividends 1,222,634 782 802,836
---------------------------------------------------------------------
Net investment income (loss) 15,038,217 38,942 (4,525,246)
Contributions:
Participant contributions 7,864,761 33,896 6,339,323
Participant rollover transfers 1,549,100 - 1,602,428
Employer 3,687,988 12,113 2,381,527
---------------------------------------------------------------------
Total additions 28,140,066 84,951 5,798,032
DEDUCTIONS FROM NET ASSETS:
Benefits paid to participants 2,720,500 - 2,773,187
Miscellaneous expenses 23,669 - 9,360
---------------------------------------------------------------------
Total deductions 2,744,169 - 2,782,547
---------------------------------------------------------------------
Net increase 25,395,897 84,951 3,015,485
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of period 55,792,632 55,707,681 52,692,196
---------------------------------------------------------------------
END OF PERIOD $ 81,188,529 55,792,632 55,707,681
=====================================================================
See accompanying notes to financial statements.
3
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
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 and deferred compensation 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 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, plan year changes and various
acquisitions. The Plan is sponsored and administered by Webster Bank (the
"Bank"), a subsidiary of Webster Financial Corporation ("Webster" or the
"Company"). Effective April 21, 2004, the Plan sponsor changed its name to
Webster Bank, N.A. The Plan covers all eligible employees who are employed by
the Bank and its subsidiaries, who are members of the controlled group. The Plan
also covers certain subsidiaries of Webster who are members of the controlled
group. 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).
Participants in the Plan may change their contribution amounts and cease
contribution at any time during the plan year. All investments in the Plan are
participant directed with the exception of the unvested value sharing portion of
participants' accounts. Participation in the Plan is completely voluntary. Refer
to Notes 1(b), (c) and 9 within this report for further information on the
value sharing component of the Plan.
On November 7, 2003, Webster acquired North American Bank and Trust
Company ("NABT"). The Plan was amended during the 2003 plan year to cover the
former employees of NABT. All services provided by the former employees of NABT
prior to the acquisition date will constitute services rendered for the purpose
of meeting eligibility requirements for participation and vesting under the
Plan. The former employees of NABT became eligible to participate in the Plan on
or about December 4, 2003. NABT became a member of the Plan's controlled group.
Prior to the acquisition, NABT maintained a 401(k) Plan. The NABT plan was
scheduled to be terminated and did not merge with the Plan.
Effective November 1, 2003, the following investment funds were eliminated
as investment options under the Plan: American New Perspective Fund, American
Fundamental Investors Fund, American Bond Fund of America, American Europacific
Growth Fund, American Balanced Fund, UBS PaineWebber Trust Stable Value Fund,
Seligman Capital Fund, UBS Tactical Allocation Fund, Dreyfus Founders Discovery
Fund and MFS Mass Investors Growth Stock Fund.
Effective November 1, 2003, the following investment funds were added:
PIMCO Total Return Fund-Administrative Class, Fidelity Equity Income Fund,
Fidelity Growth Company Fund, Fidelity Balanced Fund, Fidelity Worldwide Fund,
Fidelity Diversified International Fund, Fidelity Dividend Growth Fund, Fidelity
Mid-Cap Stock Fund, Fidelity Small-Cap Stock Fund, Fidelity Freedom Income Fund,
Fidelity Freedom 2000 Fund, Fidelity Freedom 2010 Fund, Fidelity Freedom 2020
Fund, Fidelity Freedom 2030 Fund, Spartan Total Market Index, Fidelity
Short-Term Bond Fund, Fidelity Retirement Money Market, Fidelity Managed Income
Portfolio, Fidelity Freedom 2040 Fund and Fidelity Inflation Protected Bond.
These changes in the investment fund options were made in conjunction with the
change in the Plan trustee and record keeper during the 2003 plan year.
4
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
The Plan was amended and restated for several new provisions effective
November 1, 2003. Newly-hired employees will become eligible to participate in
the Plan as soon as they have completed one year of service and have reached age
21. Employees can change the amount of their pre-tax contributions at any time
during the plan year. The Plan had additional amendments during the 2003 plan
year that are further discussed in Note 8 within this report.
During the 2003 plan year, the record keeper was changed from Wystar
Global Retirement Solutions to Fidelity Investments Institutional Operations
Company, Inc. and the trustee was changed to Fidelity Management Trust Company
from Riggs Bank, N.A. Refer to Note 8 within this report for further information
concerning the record keeper and trustee change.
On July 23, 2003, Webster acquired LJF Insurance Services ("LJF"). The
Plan was amended during the 2003 plan year to cover the employees of LJF. All
services provided by the employees of LJF prior to the acquisition date will
constitute services rendered for the purpose of meeting eligibility requirements
for participation and vesting under the Plan. LJF became a member of the Plan's
controlled group. Prior to the acquisition, LJF maintained a 401(k) plan. The
LJF plan was scheduled to be terminated and did not merge with the Plan.
On April 30, 2003, Webster filed a Form S-8 with the Securities and
Exchange Commission for the purpose of registering an additional 375,000 shares
of Webster common stock, par $.01 to be issued pursuant to the Plan.
On January 24, 2003, Webster acquired Budget Installment Corporation
("BIC"). The Plan was amended during the 2003 plan year to cover the employees
of BIC. All services provided by the employees of BIC prior to the acquisition
date will constitute services rendered for the purpose of meeting eligibility
requirements for participation and vesting under the Plan. BIC became a member
of the Plan's controlled group. Prior to the acquisition, BIC maintained a
401(k) plan. The BIC plan was scheduled to be terminated and did not merge with
the Plan.
On January 6, 2003, Webster acquired The Mathog and Moniello Holding Co.,
Inc. ("Mathog"). The Plan was amended during the 2003 plan year to cover the
employees of Mathog. All services provided by these employees prior to the
acquisition date will constitute services rendered for the purpose of meeting
eligibility requirements for participation and vesting under the Plan. Mathog
became a member of the Plan's controlled group. Prior to the acquisition, Mathog
maintained a 401(k) plan. The Mathog plan was terminated and did not merge with
the Plan.
5
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(b) Contributions
Employees who are members of the Plan, could make contributions of 1% to
20% of their pay on a pre-tax basis up to a limit of $12,000 for the 2003 plan
year and 1% to 15% on a pre-tax basis up to a limit of $11,000 for the 2002 plan
year. Highly compensated employees could make contributions of 1% to 8% of their
pre-tax pay for the 2003 and 2002 plan years. Highly compensated employees, as
defined in the Internal Revenue Code, are limited in the percent of their
compensation which they can defer to the Plan based upon the average percent of
compensation deferred by the non-highly compensated group of employees. The Bank
contributes a matching contribution to the Plan equal to 50% of the first 6% of
a participant's salary deferral contribution. The cost of the matching
contribution is allocated among the Bank and the participating subsidiaries of
the Bank and Webster. The Bank may also make discretionary contributions to the
Plan on behalf of employee participants.
During 2002, the Plan was amended to incorporate a value sharing
component. Under the value sharing component of the Plan, the Bank can make a
discretionary profit sharing contribution to the Plan for the benefit of
eligible participants below the level of senior vice president. The
contributions are invested in Webster common stock and remain invested in such
until the participant becomes fully vested in his or her account under Plan
guidelines. The value sharing component of the Plan became first effective for
the plan year beginning December 31, 2001 and ending December 30, 2002. The
first discretionary contribution was made in February 2003. Discretionary profit
sharing contributions credited to a value sharing account in the Plan vest based
on a graduated vesting schedule with one-third vesting after 2 years, another
third after 3 years and the remaining third after 4 years. Any participant who
had three or more years of service on December 30, 2002, was considered 100%
vested in their value sharing account.
The nonvested portion of the value sharing accounts totaled $9,193 at
December 31, 2003. There was no nonvested portion at December 31, 2002. These
funds are not participant directed, as they are invested in Webster common stock
until vesting occurs. During 2003, Webster contributed $66,121 to non-vested
value sharing accounts, with $2,115 of earnings, $1,899 of forfeitures and
$60,942 was transferred to vested accounts.
The Bank's Board of Directors approved discretionary profit sharing
contributions in the amount of $500,000 for the 2003 plan year and $799,288 for
the 2002 plan year. These contributions are made in the first quarter of the
subsequent year. Refer to Note 9 within this report for further information
concerning value sharing discretionary profit sharing contributions.
6
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
The investment alternatives available under the Plan for the 2003 plan year are
summarized below:
FOR THE PERIOD JANUARY 1, 2003 TO OCTOBER 31, 2003
American New Perspective Fund This fund invests primarily in the
common stocks of companies located
around the world.
American Fundamental Investors Fund This fund invests primarily in common
stock of large established companies.
This fund may also invest in non-U.S.
securities.
American Bond Fund of America This fund invests in diversified fixed
income securities.
American Growth Fund of America This fund invests primarily in common
Class R4 stocks of companies that seek long-term
capital growth.
American Europacific Growth Fund This fund invests primarily in stocks of
issuers located in Europe and the
Pacific Rim.
American Balanced Fund This fund invests in a broad range of
securities, including stocks and bonds.
Washington Mutual Investors Fund This fund invests primarily in common
Class R4 stock of larger, more established
companies that have a strong record of
earnings and dividends.
UBS PaineWebber Trust Stable This fund invests in units of the
Value Fund* Guaranteed Investment Contract portfolio
under the UBS PaineWebber Trust Company
pooled trust.
Webster Financial Corporation Invested primarily in the common stock
Common Stock Fund* of Webster Financial Corporation.
Seligman Capital Fund This fund invests primarily in common
stock of medium-sized U.S. companies.
UBS Tactical Allocation Fund* This fund invests in stocks in the S&P
500 and short-term U.S. Treasury
securities.
Dreyfus Founders Discovery Fund This fund invests primarily in common
stocks of small-cap companies. The fund
may also invest in foreign securities.
MFS Mass Investors Growth Stock Fund This fund invests in common stocks of
U.S. companies for long-term growth.
7
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD NOVEMBER 1, 2003 TO DECEMBER 31, 2003
Webster Financial Corporation Invested primarily in the common
Common Stock Fund* stock of Webster Financial
Corporation.
Fidelity Managed Income Portfolio* This is a stable value fund. It is
a commingled pool of the Fidelity
Group Trust for Employee Benefit
Plans and is managed by Fidelity
Management Trust Company .
Fidelity Inflation-Protected Bond Fund* This fund is an income mutual fund
that seeks a total return that
exceeds the rate of inflation over
the long term.
Fidelity Short-Term Bond Fund* This fund is an income mutual fund
that seeks to provide a high level
of current income that is
consistent with the preservation of
capital.
PIMCO Total Return Fund - This fund is an income mutual fund
Administrative Class that seeks to provide high total
return that exceeds general bond
market indices.
Fidelity Balanced Fund* This fund is a balanced mutual fund
that seeks to provide income and
capital growth consistent with
reasonable risk.
Fidelity Equity-Income Fund* This fund is a growth and income
mutual fund that seeks to provide
reasonable income.
Washington Mutual Investors Fund This fund is a growth and income
Class R4 mutual fund that seeks to produce
current income and to provide an
opportunity for growth.
Fidelity Dividend Growth Fund* This fund is a growth mutual fund
that seeks to provide capital
appreciation.
Spartan Total Market Index Fund This fund is an index mutual fund
that seeks to provide investment
results that correspond to the
total returns of a broad range of
U.S. stocks.
Fidelity Growth Company Fund* This fund is a growth mutual fund
that seeks to provide capital
appreciation.
American Growth Fund of America Class This fund is a growth mutual fund
R4 that looks to increase value over
the long term through capital
growth.
Fidelity Mid-Cap Stock Fund* This fund is a growth mutual fund
that seeks to provide long-term
growth of capital.
Fidelity Small Cap Stock Fund* This fund is a growth mutual fund
that seeks to provide long-term
capital growth.
8
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
Fidelity Diversified International Fund* This fund is a growth mutual fund
that invests internationally and
seeks to provide capital growth.
Fidelity Worldwide Fund* This fund is a growth mutual fund
that invests globally, including in
the U.S. and seeks to provide
capital growth.
Fidelity Freedom Income Fund* This fund is an asset allocation
mutual fund that seeks to provide
high current income and, as a
secondary objective, some capital
appreciation for those already in
retirement.
Fidelity Freedom 2000 Fund* This fund is an asset allocation
mutual fund that seeks to provide
high total returns for those
planning to retire around 2000.
Fidelity Freedom 2010 Fund* This fund is an asset allocation
mutual fund that seeks to provide
high total returns for those
planning to retire around 2010.
Fidelity Freedom 2020 Fund* This fund is an asset allocation
mutual fund that seeks to provide
high total returns for those
planning to retire around 2020.
Fidelity Freedom 2030 Fund* This fund is an asset allocation
mutual fund that seeks to provide
high total returns for those
planning to retire around 2030.
Fidelity Freedom 2040 Fund* This fund is an asset allocation
mutual fund that seeks to provide
high total returns for those
planning to retire around 2040.
* Indicates party-in-interest to the Plan.
9
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(c)Vesting
All amounts contributed to the 401(k) Plan by the participant and the
employer matching contributions are fully vested and non-forfeitable at all
times. The employer discretionary contributions to the participants' value
sharing accounts are subject to a four year vesting period. Refer to Notes 1(b)
and 9 for further information on employer discretionary contributions. The
participant's vested balance is increased or decreased by any investment gains
or losses generated by the participant's account.
(d) Payment of Benefits
Under the Plan, effective December 31, 2002, a participant's "normal
retirement date" is the date age 65 is attained. Previously, normal retirement
age was 59 1/2. Payment options under the Plan for distributions through
December 31, 2003 are either a single lump sum payment or a series of equal
periodic payments in the form of an annuity. If the participant's vested account
balance is no more than $5,000, the balance will be paid in a single lump sum
payment within 90 days after the end of the plan year in which the participant
becomes eligible to receive the payment. If the participant's vested account
balance is more than $5,000, the payout will be in the form of an annuity unless
the annuity option is waived. Participants who have an account balance of more
than $5,000 may have their balance remain in the Plan. Participants may also
elect to have the vested account balance directly rolled over to another
qualified plan. The Plan was amended during the 2003 plan year to eliminate the
annuity form of payment effective for distributions on or after January 1, 2004.
Any installment payments under the 401(k) Plan will be provided directly from
the participant's account rather than through the purchase of an annuity
contract.
In the event of a participant's total and permanent disability, a
participant would receive their vested account balance as if normal retirement
had occurred. All benefit payments to participants are recorded upon
distribution.
(e) Loans
Employees have the ability to borrow up to 50% of their account balances
up to $50,000. Interest on the loan is paid by Plan participants to their
account at prevailing interest rates through payroll deductions. Loans must
generally be repaid within five years or by the normal retirement date of the
borrower, if earlier. In the event of a default, the outstanding loan balance is
considered a distribution to the participant 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.
Eligible rollovers must be deposited to the Plan trust fund within 60 days of
receipt. All eligible rollovers will be invested and distributed in accordance
with the rules of the Plan. Refer to Note 4 within this report for further
information concerning rollovers to the Plan.
(g) Withdrawals
Hardship withdrawals are permitted under the Plan.
The Plan administrator is required by law to recognize obligations the
participant incurs as a result of court-ordered support or alimony payments. The
Plan administrator is obligated to 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.
10
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(h) Forfeitures
Forfeitures totaled $57,270 and $16,569 at December 31, 2003 and 2002,
respectively. The Plan allows for forfeited funds to be used to reduce employer
contributions and/or plan expenses. During the 2003 plan year, no forfeited
funds were used by the Plan.
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
conformity with accounting principles generally accepted in the United States of
America.
(b) Purchases and Sales Transactions
Transactions are recorded on a trade-date basis.
(c) Valuation of Assets
Investments are stated at current market values based upon quoted values.
Loans to participants and short-term investments are stated at amortized cost,
which approximates market value. Interest and dividend income is recorded as
earned.
(d) Payment of Benefits
Benefits are recorded when paid.
(e) Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
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.
(f) Administrative Expenses
Total administrative fees during 2003 were $104,269, of which $80,600 was
paid by the Bank and $23,669 was paid by the Plan. During 2002, administrative
fees were $76,090, of which $66,730 was paid by the Bank and $9,360 was paid by
the Plan. The $23,669 and $9,360 paid by the Plan during 2003 and 2002,
respectively, represent loan and investment fund administrative costs charged
directly to the Plan. There were no administrative fees charged to the Plan for
the one day ended December 31, 2002.
11
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
3. INVESTMENTS
The Plan's assets are invested in various mutual funds, a stable value
fund and Webster common stock through Fidelity Management and Research Company,
the Plan's investment advisor. Fidelity Investments Institutional Operations
Company became the record keeper effective as of November 1, 2003. PFPC, Inc.
was the record keeper for the Plan for the period of 2001 through October 31,
2003. PFPC, Inc. changed its name to Wystar Global Retirement Solutions on June
30, 2003. Fidelity Management Trust Company was appointed the new Plan trustee
effective November 1, 2003. UBS PaineWebber was the trustee for the Plan for the
period from December 31, 2001 through May 31, 2002 and Riggs Bank, N.A. was the
Plan trustee effective June 1, 2002 through October 31, 2003. UBS PaineWebber,
changed its name to UBS Financial Services on June 9, 2003. Plan participants
have the ability to direct and allocate their account balances among the
investment options available under the Plan that includes Webster common stock.
The participant may not direct the unvested balance in their value sharing
account until it is fully vested.
Refer to Note 1(b) within this report for investment options that were
available for the 2003 plan year.
The fair value of fund investments that exceed 5% of net assets available
for benefits are as follows:
DECEMBER 31,
2003 2002
----------- ----------
Webster Financial Corporation Common Stock Fund * $20,788,726 15,121,003
UBS PaineWebber Trust Stable Value Fund * -- 8,261,583
American Growth Fund of America 8,406,176 5,274,640
American Fundamental Investors Fund -- 5,240,789
American Bond Fund of America -- 4,715,673
American New Perspective Fund -- 3,275,140
Fidelity Managed Income Portfolio* 9,909,897 --
Fidelity Equity Income Fund* 6,767,680 --
PIMCO Total Return Fund-Administrative Class 6,260,122 --
Fidelity Worldwide Fund* 4,553,560 --
Fidelity Mid-Cap Stock Fund* 4,488,309 --
* Indicates party-in-interest to the Plan
12
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
A summary of increases (decreases) in the value of the Plan's net investments
(including gains and losses on investments bought and sold within the plan year,
as well as held during the year) is as follows:
2003 2002
January 1, 2003 One day ended December 31, 2001
December 31, 2003 December 31, 2002 December 30, 2002
----------------- ----------------- -----------------
Mutual Funds $ 8,110,775 88,134 (6,784,352)
Webster Stock 5,704,808 (49,974) 1,456,270
-------------- ------- ---------------
$ 13,815,583 38,160 (5,328,082)
============== ======= ===============
4. TRANSFER FROM OTHER PLANS
During 2003 and 2002, the Plan did not directly receive any assets from
the former plans of companies that were acquired by Webster. The Plan did
receive rollover contributions from various participants of former plans
related to acquired companies. Refer to Note 1(f) for further information
concerning rollovers to the Plan.
5. 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 contributions are fully vested and
nonforfeitable. After providing for the expenses of the Plan, the remaining
assets of the Plan will be allocated by the Retirement Plans Committee appointed
by the Board of Directors.
6. TAX STATUS
The IRS has determined and informed the Bank in a letter dated September
13, 2002, that the Plan and related trust are designed in accordance with
applicable sections of the Internal Revenue Code, as amended. Accordingly, no
provision for income taxes has been made in the accompanying financial
statements. On December 17, 2002, a Form 5308 was filed with the IRS to request
a change in the plan year. The IRS approved the Form 5308 request on June 2,
2004. Refer to Note 9 within this report for further information concerning the
Form 5308. 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 Internal Revenue Code.
13
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
7. RELATED PARTY TRANSACTIONS
Certain investments are shares of mutual funds that are managed by
Fidelity Investments Institutional Operations Company. Additionally, Fidelity
Management Trust Company was the trustee for the Plan. Therefore, transactions
related to these companies qualify as party-in-interest transactions.
Webster Financial Corporation stock is an investment option under the
Plan. Webster Financial Corporation is the parent of Webster Bank, the Plan's
sponsor.
Certain investments are shares of mutual funds managed by UBS PaineWebber.
UBS PaineWebber was the trustee for the Plan for the period from December 31,
2001 through May 31, 2002, and therefore, these transactions qualify as
party-in-interest transactions. The Plan had maintained two money market
accounts at Riggs Bank, N.A., the Plan's prior trustee.
8. AMENDMENTS
The Plan was amended during the 2003 plan year as follows:
(1) To incorporate the Safe Harbor amendments issued by the Internal
Revenue Services, which relate to the final regulations governing
required minimum distributions under Section 404(a)(9) of the
Internal Revenue Code of 1986, as amended.
(2) Effective November 1, 2003, Fidelity Management Trust Company became
the trustee for the Plan, replacing Riggs Bank, N.A.
(3) Effective November 1, 2003, Fidelity Investments Institutional
Operations Company became the record keeper for the Plan replacing
Wystar Global Retirement Solutions.
(4) a. Effective November 1, 2003, employees are eligible to
participate in the Plan as of the first pay date following
their satisfaction of the Plan's age and service eligibility
requirements.
b. Effective November 1, 2003, participants can change their
deferral elections at anytime.
c. Effective November 1, 2003, the Plan will accept rollovers
from a Section 403(b) annuity and a governmental Section 457
Plan, as well as from another qualified plan and a conduit
individual retirement account ("IRA"). However, the plan will
not accept rollovers from regular IRAs, SEP IRAs or simple
IRAs or rollovers of after-tax contributions.
d. Effective January 1, 2004, participants are no longer able to
receive a distribution of their account balance in the form of
a lifetime annuity. Installment payments will be provided
directly from the participant's account rather than through
the purchase of an annuity contract.
e. The definition of "compensation" was revised effective January
1, 2004, to include any amounts deferred under the
nonqualified deferred compensation plan maintained by the Bank
for its executive officers (other than amounts attributable to
bonuses payable to highly
14
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
compensated employees) and to exclude any amounts realized from
the exercise of stock options or the vesting of restricted stock.
(5) To add provisions for the former employees of Mathog. Refer to Item
1(a) within this report for further information on the Mathog
acquisition.
(6) To add provisions for the former employees of BIC. Refer to Item
1(a) within this report for further information on the BIC
acquisition.
(7) To add provisions for the former employees of LJF. Refer to Item
1(a) within this report for further information on the LJF
acquisition.
(8) To add provisions for the former employees of NABT. Refer to Item
1(a) within this report for further information on the NABT
acquisition.
The above information is meant to provide only a brief description of
amendments to the Plan during the 2003 plan year. The Webster Bank Employee
Investment Plan document should be referenced for complete information.
9. SUBSEQUENT EVENTS
On April 21, 2004, Webster Bank completed its conversion from a federal
savings bank to a national bank charter, regulated by the Office of the
Comptroller of the Currency. As a result of this conversion, Webster Bank
changed its name to Webster Bank, N.A.
Effective at the close of business on May 14, 2004, Webster acquired
FIRSTFED AMERICA BANCORP, INC. ("FIRSTFED"). During the second quarter of 2004,
the Plan will be amended to make provisions for the employees of FIRSTFED. The
provisions will become effective as of the first date to which the processing of
the payroll for FIRSTFED employees is performed in conjunction with the payroll
for the employees of the Bank. All services rendered by employees of FIRSTFED
prior to the acquisition date constitutes services rendered for the purpose of
meeting the eligibility requirements for participation and vesting under the
Plan. FIRSTFED will have their 401(k) plan merged into the Plan in 2004.
The Bank's Board of Directors approved at the February 2004 meeting a
value sharing discretionary profit sharing contribution to eligible employee
participants in the Plan. Employees were eligible for this discretionary profit
sharing contribution if they met eligibility requirements under the Plan during
the 2003 plan year. Employees at the senior vice president and higher levels
were not eligible for the discretionary profit sharing contribution. The
discretionary profit sharing contribution totaled $500,000. This contribution
was based on the financial performance of Webster for 2003 and therefore will be
credited to eligible participants' accounts during 2004. The discretionary
contribution was credited to a value sharing account in the Plan and will vest
based on a graduated vesting schedule with one-third vesting after 2 years,
another third after 3 years and the remaining third after 4 years. Any
participant who had three or more years of service on December 30, 2002, will be
considered 100% vested in their value sharing account.
On March 31, 2004, Webster completed its acquisition of Phoenix National
Trust Company ("Phoenix"), a wholly owned subsidiary of the Phoenix Companies,
Inc. The former employees of Phoenix who joined Webster will become eligible to
participate in the Plan after meeting the Plan's new employee
15
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
eligibility requirements. Service provided by the former employees of Phoenix
will not count for eligibility in the Plan.
On June 2, 2004, the IRS approved the Form 5308 that was submitted by the
Plan on December 17, 2002 that requested that the plan year be changed back to a
calendar year from a fiscal year that ended on December 30. This resulted in a
short plan year that began and ended on December 31, 2002.
16
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
SCHEDULE H - LINE 4i
DECEMBER 31, 2003
IDENTITY OF ISSUE NUMBER OF SHARES HELD CURRENT VALUE
Pimco Total Return Fund-Administrative 584,511.858 shares; $6,260,122
Class value per share $ 10.71
American Growth Fund of America Class R4 343,810.879 shares; 8,406,176
value per share $ 24.45
Washington Mutual Investors Fund Class R4 109,171.737 shares; 3,136,504
value per share $ 28.73
Webster Financial Corporation 453,308.460 shares; 20,788,726
Common Stock Fund* value per share $ 45.86
Fidelity Equity Income Fund * 136,033.789 shares; 6,767,680
value per share $ 49.75
Fidelity Growth Company Fund * 65,376.812 shares; 3,273,417
value per share $ 50.07
Fidelity Balanced Fund * 138,173.851 shares; 2,314,412
value per share $ 16.75
Fidelity Worldwide Fund * 278,164.936 shares; 4,553,560
value per share $ 16.37
Fidelity Diversified International Fund * 147,673.549 shares; 3,561,886
value per share $ 24.12
Fidelity Dividend Growth Fund * 55,103.04 shares; 1,504,313
value per share $ 27.30
Fidelity Mid-Cap Stock Fund * 208,081.085 shares; 4,488,309
value per share $ 21.57
Fidelity Small Cap Stock Fund * 188,164.211 shares; 3,217,608
value per share $ 17.10
Fidelity Freedom Income Fund * 5.140 shares; 56
value per share $ 11.09
Fidelity Freedom 2000 Fund * 609.932 shares; 7,185
value per share $ 11.78
Fidelity Freedom 2010 Fund * 6,853.610 shares; 89,234
value per share $ 13.02
17
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
SCHEDULE H - LINE 4i
DECEMBER 31, 2003
IDENTITY OF ISSUE NUMBER OF SHARES HELD CURRENT VALUE
Fidelity Freedom 2020 Fund * 2,862.135 shares; 37,265
value per share $ 13.02
Fidelity Freedom 2030 Fund * 1,841.390 shares; 23,846
value per share $ 12.95
Spartan Total Market Index Fund 3,669.575 shares; 109,757
value per share $ 29.91
Fidelity Short-Term Bond Fund * 3,538.496 shares; 31,988
value per share $ 9.04
Fidelity Managed Income Portfolio * 9,909,897.00 shares; 9,909,897
value per share $ 1.00
Fidelity Freedom 2040 Fund * 7,473.016 shares; 56,496
value per share $ 7.56
Fidelity Inflation Protected Bond Fund * 857.221 shares; 9,438
value per share $ 11.01
Total $ 78,547,875
Fidelity Retirement Money Market Portfolio * $ 57,426
Loans to Participants Rate Range 5.00% to 10.50% $ 1,629,530
* Indicates party-in-interest to the Plan.
18
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 hereunto duly authorized.
WEBSTER BANK
EMPLOYEE INVESTMENT PLAN
---------------------------
Date: June 25, 2004 By: /s/ R. David Rosato
----------------------
R. David Rosato
Member of the Retirement
Plans Committee
Date: June 25, 2004 By: /s/ Patrick T. Murphy
----------------------
Patrick T. Murphy
Member of the Retirement
Plans Committee
Date: June 25, 2004 By: /s/ William J. Healy
----------------------
William J. Healy
Member of the Retirement
Plans Committee
19
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
23 Consent of Independent Registered Public
Accounting Firm
20