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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

OR

WEBSTER FINANCIAL CORPORATION

Registrant’s telephone number, including area code: (203) 578-2476

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act - Not Applicable

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [   ] No

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

     Indicate by checkmark whether the registrant is an accelerated filer (as defined in Rule 12B-2 of the Act). Yes [X] No [   ]

     The aggregate market value of voting and non-voting common equity held by non-affiliates of Webster Financial Corporation as of June 30, 2003 was $1,669,888,105.

     The number of shares of common stock outstanding, as of February 27, 2004: 46,282,601.

DOCUMENTS INCORPORATED BY REFERENCE
Part III: Portions of the Definitive Proxy Statement for the Annual Meeting of Shareholders to be held on April 22, 2004.

Table of Contents

WEBSTER FINANCIAL CORPORATION
2003 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS

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Forward Looking Statements

This Annual Report contains forward-looking statements within the meaning of the Securities and Exchange Act of 1934, as amended. Actual results could differ materially from management expectations, projections and estimates. Factors that could cause future results to vary from current management expectations include, but are not limited to, general economic conditions, legislative and regulatory changes, monetary and fiscal policies of the federal government, changes in tax policies, rates and regulations of federal, state and local tax authorities, changes in interest rates, deposit flows, the cost of funds, demand for loan products, demand for financial services, competition, changes in the quality or composition of Webster’s loan and investment portfolios, changes in accounting principles, policies or guidelines, and other economic, competitive, governmental and technological factors affecting Webster’s operations, markets, products services and prices. Such developments, or any combination thereof, could have an adverse impact on Webster’s financial position and results of operations.

PART I

ITEM 1. Business

General

Webster Financial Corporation (“Webster” or the “Company”), through its subsidiaries, Webster Bank, Webster Insurance, Inc. (“Webster Insurance”), Webster D&P Holdings, Inc. (“Duff & Phelps”), and Fleming, Perry & Cox (“Fleming”), delivers financial services to individuals, families and businesses primarily in Connecticut and equipment financing, asset-based lending, mortgage origination and financial advisory services to public and private companies throughout the United States. Webster Bank provides business and consumer banking, mortgage origination and lending, trust and investment services and insurance services through 119 banking and other offices, 233 ATM’s and its Internet website (www.websteronline.com). Webster Bank was founded in 1935 and converted from a federal mutual to a federal stock institution in 1986. Since October 17, 2002, Webster’s common stock has traded on the New York Stock Exchange under the symbol of “WBS”. Prior to that date, the common stock was traded on the NASDAQ under the symbol of “WBST”.

Webster announced in September 2003 that its principal subsidiary, Webster Bank, was filing an application with the Office of the Comptroller of the Currency (“OCC”) to convert to a national bank charter. In February 2004, the OCC approved the application, subject to customary conditions. As part of the conversion, Webster has filed notice with the Board of Governors of the Federal Reserve System to become a bank holding company and a declaration to be a financial holding company. Webster expects to complete the conversions during the second quarter of 2004.

Webster, on a consolidated basis, at December 31, 2003 and 2002 had total assets of $14.6 billion and $13.5 billion, total securities of $4.3 billion and $4.1 billion and net loans receivable of $9.1 billion and $7.8 billion, respectively. At December 31, 2003 and 2002, total deposits were $8.4 billion and $7.6 billion, respectively. At December 31, 2003 and 2002, shareholders’ equity was $1.2 billion and $1.0 billion, respectively. During 2003, Webster repurchased 331,722 common shares at a total cost of $12.4 million.

At December 31, 2003, the assets of Webster, on an unconsolidated basis (“Parent Company”), consisted primarily of its investments in subsidiaries of $1.3 billion, investment securities of $111.8 million, cash and short-term investments of $58.4 million, other direct investments of $13.2 million and loans receivable of $6.5 million. Primary sources of income to Webster, on an unconsolidated basis, are dividend payments received from Webster Bank, investment securities interest and gains on the sale of investment securities. Primary expenses are interest expense on borrowings and capital securities and allocated operating expenses. See Notes 14 and 20 of Notes to Consolidated Financial Statements included elsewhere within this report for additional information.

Deposits in Webster Bank are federally insured by the Federal Deposit Insurance Corporation (“FDIC”). It is a Bank Insurance Fund (“BIF”) member institution and, at December 31, 2003, approximately 80% of the deposits were subject to BIF assessment rates and 20% were subject to Savings Association Insurance Fund (“SAIF”) assessment rates. See the “Supervision and Regulation” section under this Item for additional information.

Webster, as a holding company, and Webster Bank are subject to comprehensive regulation, examination and supervision by the Office of Thrift Supervision (“OTS”), as its primary federal regulator. Webster Bank is also subject to regulation, examination and supervision by the FDIC as to certain matters. Webster’s executive offices are located at Webster Plaza, Waterbury, Connecticut 06702. The telephone number is (203) 578-2476.

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Acquisitions

The following acquisitions were completed during 2003 and their results of operations are included in the Consolidated Financial Statements for periods subsequent to the date of acquisition.

North American Bank and Trust

On November 7, 2003, Webster acquired North American Bank and Trust Company (“NABT”) in a combination cash and stock transaction valued at approximately $30 million, or $11.25 per common share of NABT stock. NABT was a state-chartered, commercial bank with $195 million in assets and 8 offices in the Greater Waterbury region. Goodwill of $16.7 million and identified intangible assets of $3.0 million were recorded in this transaction.

LJF Insurance Services

On July 23, 2003, Webster Insurance announced the acquisition of LJF Insurance Services (“LJF”), a full service insurance agency with offices in Southport and Norwalk, Connecticut. LJF has served the Fairfield County area for over 100 years. Webster Insurance merged both offices into its Wesport location. Goodwill of $1.4 million and identified intangible assets of $1.2 million were recorded in this transaction.

Budget Installment Corporation

On January 24, 2003, Webster Bank acquired Budget Installment Corporation (“BIC”). BIC is an insurance premium financing company based in Rockville Centre, New York. It finances commercial property and casualty premiums so businesses can pay their premiums on an installment basis. A majority of its borrowers are located in the Long Island, New York City and Northern New Jersey areas. Goodwill of $3.2 million and identified intangible assets of $1.7 million were recorded in this transaction.

The Mathog and Moniello Holding Company, Inc.

On January 6, 2003, Webster announced that it acquired The Mathog and Moniello Holding Co., Inc. (“Mathog”). Mathog is a commercial property and casualty insurance agency that specializes in providing risk management products and services to self-insured businesses and groups. It is based in East Haven, Connecticut with offices in West Hartford, Connecticut and Harrison, New York. Goodwill of $16.2 million and identified intangible assets of $5.9 million were recorded in this transaction.

Pending Transactions

Phoenix National Trust Company

On December 18, 2003, Webster announced a definitive agreement to acquire Phoenix National Trust Company, (“Phoenix”), a wholly-owned subsidiary of the Phoenix Companies, Inc. The transaction’s closing is subject to receipt of regulatory approval and other customary closing conditions and is expected to close in the second quarter of 2004. Upon completion of the transaction, Phoenix will become part of Webster Financial Advisors, the investment and trust division of Webster Bank. Phoenix offers trust, custody and other financial services.

FIRSTFED AMERICA BANCORP, INC.

On October 7, 2003, Webster announced a definitive agreement to acquire FIRSTFED AMERICA BANCORP, INC. (“FIRSTFED”), headquartered in Swansea, Massachusetts, the holding company of First Federal Savings Bank of America. The agreement is a combination of cash and stock transaction valued at approximately $465 million, or $24.50 per common share of FIRSTFED stock, payable 60% in Webster stock and 40% in cash. FIRSTFED is a federally chartered thrift with $2.6 billion in assets as of December 31, 2003 with 26 branches; 19 in Massachusetts and 7 in Rhode Island. The merger is subject to customary closing conditions, including approval by regulatory authorities and FIRSTFED shareholders, and is expected to close in the second quarter of 2004.

Lending Activities

General

Webster Bank originates various types of residential, commercial and consumer loans. Total loans receivable were $9.2 billion and $7.9 billion at December 31, 2003 and 2002, respectively. It offers commercial and residential permanent and construction mortgage loans, commercial loans, equipment financing, insurance premium financing, asset-based loans and various types of consumer loans including home equity lines of credit, home equity loans and other types of small business and consumer loans.

Residential Mortgage Loans and Mortgage Banking Activity

Webster Bank is dedicated to providing a full compliment of residential mortgage loan products that meet the financial needs of its customers. While its primary lending markets are Connecticut and the northeastern United States, its markets also include all states except Alaska and Hawaii. It offers its customers a full range of products including conventional conforming and jumbo fixed rate loans, conforming and jumbo adjustable rate loans, Federal Housing Authority (“FHA”), Veterans Administration (“VA”) and state agency mortgage loans through Connecticut Housing Finance Authority (“CHFA”). Various programs are offered to support the Community Reinvestment Act goals at the state level. Types of properties consist of one-to-four family residences, owner and non-

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owner occupied, second homes, construction, permanent and improved single family building lots. Additionally, Webster Bank provides certain customers with an option to modify their existing loan in order to enhance portfolio retention strategies. During 2003 and 2002, it originated total residential mortgage loans of $3.9 billion and $2.6 billion, respectively. Distribution channels for these loans include its network of branches, referrals, loan officers, and its call center, as well as third party licensed mortgage brokers in targeted areas of the United States through its National Wholesale Lending Group. Established in 2001, National Wholesale Lending enhances the level of mortgage banking activity through the development of third party originations throughout the United States. In 2003, it originated $2.7 billion in total residential mortgages compared to $1.7 billion in 2002.

Both fixed rate and adjustable rate residential mortgage loans are originated. At December 31, 2003, approximately $982.8 million, or 26%, of total residential mortgage loans held in portfolio were adjustable rate loans. Adjustable rate mortgage loans are generally offered at initial interest rates discounted from the fully-indexed rate. Loans originated during 2003 and 2002, when fully-indexed, will generally be 2.75% above the constant maturity one-year U.S. Treasury yield index. At December 31, 2003, approximately $2.8 billion, or 74% of total residential mortgage loans had a fixed rate. Approximately 92% of the residential mortgage portfolio is secured by properties located in Connecticut. At December 31, 2003 and 2002, residential loans represented 41% and 43% of the loan portfolio, respectively.

At December 31, 2003, $4.3 million of mortgage servicing rights, net, included in other assets, had a market value of approximately $8.5 million. These servicing rights are carried at the lower of cost or market determined on an individual pool basis. The pools are tested for impairment quarterly with any adjustment to the valuation allowance included in noninterest income. Webster services approximately $584.6 million of residential mortgage loans for others. See Note 10 of Notes to Consolidated Financial Statements included elsewhere within this report for additional information.

National Wholesale Lending

The National Wholesale Lending platform continued to post strong results in 2003 with total originations exceeding $2.7 billion of one-to-four family residential loans. This loan production represents a full range of products primarily consisting of fixed rate conventional loans, fixed rate jumbo loans, conforming and jumbo adjustable rate loans, FHA/VA loans as well as consumer loans.

The wholesale loan production is originated by approved licensed mortgage brokers located throughout the United States and is underwritten, closed and funded by Webster Bank. Additionally, the majority of this production is sold into the secondary market as mortgage-backed securities. The National Wholesale channel is headquartered in Cheshire, Connecticut and has four regional offices located in Chicago, Illinois; Atlanta, Georgia; Phoenix, Arizona; and Seattle, Washington. Through this distribution network, National Wholesale Lending has developed client relationships designed to originate and submit new loan applications through this business channel.

The strong production results in 2003 were attributed to the continued growth of the business channel combined with another year of a favorable interest rate environment. Production was generated from 43 different states with the top five producing states by origination volume being Connecticut, Illinois, Arizona, Massachusetts and Washington.

Commercial Lending

The commercial loan portfolio grew 13.5% to $2.0 billion at December 31, 2003 from $1.8 billion a year earlier. Within the various lending units, loan officers are responsible for following underwriting guidelines and managing customer relationships in accordance with policy. When a lending opportunity arises, the loan officer is responsible for determining the desirability of engaging in business with the borrower and in general, the underwriting process should reveal the credit worthiness of the borrower and protect Webster Bank’s best interest. Credit underwriting requests are reviewed by lending unit management with appropriate lending authority and are then presented to Credit Administration for final approval.

While every loan request entails different informational requirements, minimum requirements have been established in order to provide consistency to the underwriting and renewal process. Consistency is also enhanced through a standard underwriting format and approval process, which requires higher approval authority as exposure or risks increase. Appropriate analysis is performed for each credit action including, but not limited to, analysis of financial performance (past and projected), the borrower’s ability to service debt at current and proposed levels, industry evaluation, evaluation of guarantor financial condition (as applicable) and analysis of collateral valuation. Credit analysis is enhanced by the use of a scoring model on loans up to $250,000, which is used predominately in the Small Business Lending Division.

Loan officers are held fully responsible for monitoring their loan portfolios. These responsibilities include initial and continual risk rating of loans, adherence to covenants, completeness and existence of documentation, maintenance of the loan system, maintaining customer contact and updating the credit file with substantive credit analysis. A quarterly review of the portfolio is conducted by each officer to assign a risk rating grade to the loans and identify potential impaired or nonaccrual loans. The assigned grades are reviewed by both internal loan review and by the divisional credit policy officer. In addition, the loan officer is responsible for reviewing the loan annually to ensure that it continues to meet the quality standards of Webster Bank.

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Middle Market

The Middle Market Division provides a full array of financial services to a diversified group of companies with revenues greater than $10 million, primarily privately held and located within the State of Connecticut and nearby regions. Total loans administered by the Division increased to $701.1 million at December 31, 2003 from $538.9 million outstanding at the prior year end. Included in the loans administered were $516.9 million and $371.8 million of commercial loans and $184.2 million and $167.1 million of commercial real estate loans at December 31, 2003 and 2002, respectively. Typical loan facilities include lines of credit for working capital, term loans to finance purchases of equipment and commercial real estate loans for owner-occupied buildings. Unit and relationship managers within the Middle Market Division average over 20 years of experience in the Connecticut market.

In an effort to offer the broadest range of banking products to our customer base, the Middle Market Division facilitates access to other specialists within Webster Bank. These specialists include Webster Financial Advisors, Center Capital Corporation, Webster Insurance and a team of cash management professionals offering customized solutions and competitive products. Investment banking services may be provided in close collaboration with Duff & Phelps. During 2003, the Division funded loans of $226.5 million against commitments of $373.6 million, compared to funding of $112.4 million and commitments of $232.8 million a year earlier.

Asset-Based Lending

Webster Business Credit Corporation (“WBCC”) is Webster Bank’s asset-based lending division with offices in New York, New York; Braintree, Massachusetts; Chicago, Illinois and Atlanta, Georgia. WBCC was previously named Whitehall Business Credit Corporation and changed its name effective January 5, 2004. Asset-based loans are generally secured by accounts receivable and inventories of the borrower and, in some cases, also include additional collateral such as property and equipment. At December 31, 2003 and 2002, total asset-based loans were $526.9 million and $465.4 million, respectively. The loan portfolio is diversified both geographically, as the loans are located throughout the United States with some concentration in the Northeast, and by industry, at levels consistent with the average of the asset-based lending industry.

WBCC originates as agent, loans for its portfolio and sells participations to other financial institutions. In addition, it purchases participations from other banks and financial entities. In its capacity as agent, it generally establishes depository relationships with the borrower in the form of cash management accounts. At December 31, 2003, the total of these deposits was $26.4 million. Asset-based loans funded in 2003 were $200.0 million with commitments of $421.1 million.

Specialized Lending

Webster Bank participates in the syndicated loan market through a diversified portfolio of loans, which represent transactions with large national borrowers whose businesses command significant market share and help to diversify the overall portfolio. These loans generally consist of participations in revolving lines of credit and term loans with maturities up to 7 years. Corporate utilization of the syndicated market has grown dramatically in the last 10 years as a means of providing large credit facilities to companies through consortiums of banks and other financial service companies. Webster Bank entered this market as a means of providing geographic and industry diversification to its commercial loan portfolio. It has staffed the function with highly knowledgeable individuals with extensive experience in credit and leveraged lending at major banks and insurance companies.

The underwriting criteria identified above in the Commercial Lending section is followed for each borrower in the portfolio. In addition, exposure to individual borrowers generally will not exceed $10 million. The Chief Credit Policy Officer and the Head of Commercial Lending must approve exceptions to these limits. All loans are evaluated in accordance with the Risk Assessment Policy, with external ratings (S&P and Moody’s) used as additional guides. Loans in the portfolio primarily represent borrowings of public companies and are actively monitored through quarterly reviews that include analysis of current financial statements, comparison of results to other companies in the same industry and monitoring of market trading levels.

During 2003, the quality of the portfolio strengthened significantly through repayments at par and upgrades of previously lower-rated loans, especially in the telecommunications sector. The portfolio declined in accordance with Webster’s strategic plan.

At December 31, 2003 and 2002, the Specialized loan portfolio had $173.3 million and $299.8 million of funded loans against commitments of $324.9 million and $500.5 million, respectively.

Additionally, the portfolio contained $84.6 million and $84.9 million of funded Collateralized Loan Obligations against commitments of $91.7 million at December 31, 2003 and 2002, respectively. All of these loans carry an investment grade rating by at least one of the independent rating agencies.

Small Business Banking

Small Business Banking (“SBB”) provides a full array of commercial loan and deposit products to small businesses located throughout Connecticut. The SBB market consists of businesses with annual revenue of up to $10 million in order to provide commercial loan products with relationship exposures of up to $2 million and the portfolio of business deposit products. This market segment represents a significant percentage of commercial businesses located within the boundaries of Connecticut. SBB, through a dedicated group of business bankers as well as through the branch network, provides a full range of financial products and services to its existing customer base as well as potential new customers. It also plays a major role in supporting the Community Reinvestment Act goals by providing

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credit facilities to a wide range of small businesses, including many local not-for-profit organizations. A Fair Isaac-based credit scoring model is utilized, in whole or in part, in loan approvals of up to $250,000, and SBB offers a $100,000 same-day decision unsecured line of credit product. It also provides a comprehensive set of commercial loan products including lines of credit, letters of credit, term loans, and commercial mortgage loans. Throughout 2003, an automated “early warning” system was utilized to aid in the identification of potential portfolio or customer-level credit quality issues. During the fourth quarter of 2003 a risk management tool was implemented in the on-going efforts to monitor and anticipate portfolio performance. Through recent expansion efforts and focused training, SBB serves as a referral source for other products including cash management, insurance, international products and investments. Webster Bank also offers Small Business Administration (“SBA”) guaranteed loans under its Preferred Lender Program status. As of September 30, 2003 (the fiscal year end for the SBA), Webster Bank ranked third in Connecticut among SBA lenders with 113 loans totaling $12.1 million, a 29% increase over 2002. Customers may also take advantage of several loan programs provided through the Connecticut Development Authority.

SBB administered a portfolio of approximately $382.9 million at December 31, 2003, a 17% increase from $326.3 million the prior year end. As part of the acquisition of NABT, the portfolio increased by $32.0 million in late November 2003. Included in SBB’s portfolio are $171.5 million of commercial loans and $211.4 million of loans secured by commercial real estate. Webster Bank is a leader among Connecticut banks for providing loans of $1 million and under to small businesses in the state.

An objective of SBB’s strategic plan is to also focus on deposit growth as part of the overall customer relationship. It has developed a variety of innovative small business deposit products that are designed to meet depositors’ needs and attract both short-term and long-term deposits. Beginning in March of 2003, it introduced the market’s first Totally Free Checking product for small businesses. At December 31, 2003, small business deposit balances totaled $984.0 million up 14% from $864.0 million a year earlier.

Equipment Financing

Center Capital Corporation (“Center Capital”), an equipment financing subsidiary of Webster Bank, transacts business with end-users of equipment, either by soliciting this business on a direct basis or through referrals from various equipment manufacturers, dealers and distributors with whom it has relationships. Center Capital has grown its portfolio to $506.3 million at December 31, 2003 from $420.0 million at December 31, 2002, an increase of 21%. For 2003, it originated $268.3 million in equipment financing transactions.

Center Capital markets its products nationally through a network of dedicated equipment financing sales executives who are grouped by customer type or collateral-specific business. During 2003, financing initiatives encompassed five distinct industry/equipment niches, each operating as a division; Construction and Transportation Equipment Financing, Environmental Equipment Financing, Machine Tool Equipment Financing, Professional Practices Equipment Financing, and Aviation Equipment Financing.

Within each division, Center Capital seeks to finance equipment that retains good value throughout the term of the underlying transaction. Little, if any, residual value risk is taken and, in many instances, financing terms cover only half of the financed equipment’s useful life. As such, and in the exceptional instances where it is forced to repossess its collateral, that equipment may have value equal to or in excess of the defaulted contract’s remaining balance. All credit underwriting, contract preparation and closing as well as servicing (including collections) are performed centrally at Center Capital’s headquarters in Farmington, Connecticut.

Insurance Premium Financing

On January 24, 2003, Webster Bank acquired BIC, an insurance premium financing company based in Rockville Centre, New York. BIC finances commercial property and casualty premiums for businesses that pay their insurance premiums on an installment basis. The majority of its borrowers are located in the Long Island, New York City and Northern New Jersey areas. At December 31, 2003, total loans outstanding were $61.4 million. Originations during 2003 totaled $135.5 million. Generally, these loans are originated with a term of nine to twelve months.

Commercial Real Estate Lending

The Commercial Real Estate Division provides variable rate and fixed rate financing alternatives for the purpose of acquiring, developing, constructing, improving or refinancing commercial real estate where the property is the primary collateral securing the loan and the income generated from the property is the primary repayment source. Typically it lends on investment quality real estate, including apartments, anchored retail, industrial and office properties. Loan types include construction, construction mini-perm and permanent loans, and loan amounts range from $2 million to $15 million and are diversified by property type and geographic location. The lending group consists of a team of professionals with a high level of expertise and experience. The majority of the lenders have more than 15 years of national lending experience in both construction and permanent lending with major banks and insurance companies.

Commercial Real Estate (“CRE”) loans increased 24% to $1.3 billion at December 31, 2003 from $1.0 billion a year earlier. Included in the $1.3 billion of outstanding CRE loans were $184.2 million administered by the Middle Market Division and $211.4 million by the SBB. They are primarily owner-occupied commercial real estate loans to commercial customers. The remaining $885.9 million of loans were administered by the CRE division. During 2003, the division funded loans of $233.0 million against commitments of $393.0 million, compared to fundings of $231.0 million and commitments of $365.0 million the previous year.

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Over the last several years, the Division has cultivated relationships with highly qualified regional and national developers in order to diversify the portfolio geographically as well as to seek repetitive business and cross sell opportunities. It controls risk by utilizing personnel familiar with the demographics of the area during the credit review process. As a result, it is able to obtain its desired geographical diversification, while maintaining knowledge of the specific areas when making its credit decisions.

Included in the total CRE portfolio were commercial construction loans of $220.7 million and $116.3 million at December 31, 2003 and 2002, respectively. The Division also makes acquisition, development and construction loans to residential builders. The collateral securing these loans is improved land, contract homes and a limited number of speculative homes in subdivision. At December 31, 2003, there were $95.2 million of such loans in the portfolio.

A breakdown of the CRE loan portfolio by property type is as follows:

Consumer Lending

Webster Bank is dedicated to providing a convenient and competitive selection of consumer loan products to its customers. It concentrates on providing its customers a range of products including home equity loans and equity lines of credit as well as second mortgages and direct installment lending programs. There are no credit card loans in the consumer loan portfolio. The loan distribution channels consist of the branch network, loan officers, call center, as well as third party licensed mortgage brokers. National Wholesale offers home equity loans, through its broker network in five regional offices located in Cheshire, Connecticut; Phoenix, Arizona; Atlanta, Georgia; Chicago, Illinois and Seattle, Washington. Additionally, consumer loan products may be offered periodically through direct mail programs. It also provides the convenience of the Internet for equity loan applications that are available in most states. Consumer loan products are underwritten in accordance with accepted industry guidelines including, but not limited to, the evaluation of the credit worthiness of the borrower(s) and collateral. Independent credit reporting agencies and the Fair Isaac scoring model and the analysis of personal financial information are utilized to determine the credit worthiness of potential borrowers. Also, it obtains and evaluates an independent appraisal of collateral value to determine the adequacy of the collateral.

Loan volume continued to increase significantly again in 2003 and, at December 31, consumer loans totaled $2.1 billion and represented 23.3% of the total loan portfolio, compared to $1.7 billion, or 21.5%, a year earlier. This growth is attributable to the popularity of home equity products in this low interest rate environment and the expansion of lending through a network of brokers in the regional offices and in contiguous states.

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The following table sets forth the composition of Webster’s loan portfolio in amounts and percentages at December 31.

[Additional columns below]

[Continued from above table, first column(s) repeated]

				2000								1999
(Dollars in thousands)				Amount				%				Amount				%
Residential mortgage loans:
	1-4 family units			$	3,760,792				55.3	%		$	3,537,038				58.8	%
	Construction				302,776				4.4				302,310				5.0
	Multi-family units				65,482				1.0				52,573				0.9
		Total			4,129,050				60.7				3,891,921				64.7
Commercial loans:
	Commercial non-mortgage				1,097,267				16.2				848,963				14.1
	Asset-based lending				110,131				1.6				66,072				1.1
	Equipment financing				—				—				—				—
		Total			1,207,398				17.8				915,035				15.2
Commercial real estate:
	Commercial real estate				784,817				11.5				695,520				11.5
	Commercial construction				72,216				1.1				45,648				0.8
		Total			857,033	&n