2006 was a challenging year with measured growth and profitability, the result of an inverted yield curve and a noteworthy shift in the mix of deposits and wholesale funding. Our assets grew by $19 million to $485 million. Deposits grew by $20 million to $344 million. Loans grew by $18 million to $323 million. Our surplus grew by $4.7 million to $62.8 million, representing 12.98% of total assets.

We expanded our branch network to position our bank for continued growth and financial success. On February 14, 2006, we opened our ninth branch, located at 261 Grafton Street in Shrewsbury, MA. The benefits of establishing a new branch will be the creation of jobs, and the reinvestment of local deposits back into our community.

President and CEO Richard C. Lawton announced his retirement effective August 31, 2006. Also announced was the retirement of our Chairman of the Board, George J. Robinson, in October. Webster Five thanks George and Rick for the vision and leadership that they brought to the bank throughout their many years of service. Our new Chairman, Dr. Daniel W. Ivascyn, has been a strong contributor to the bank since 1980 when he was elected Corporator. He has served as a member of the Executive Committee since 1996.

At Webster Five, we believe our customers deserve the best financial products and services along with reasonable fees. That’s why we’re always looking for ways to improve on our existing products and services. Lowering the minimum balance requirement on our Premium Choice Savings Account was one of the ways we accomplished this.

We believe 2007 will continue the challenges we faced in 2006 but also offer exciting opportunities to move the bank forward. Community banking is about people and relationships. We have an excellent record of employee retention, largely due to the fact that we treat our team members as the important asset they are. We concentrate on hiring individuals who can communicate with customers effectively and have the sales and service skills to be able to determine and satisfy customer needs. We have established ourselves as a leader in providing outstanding customer service, and we will continue to concentrate on designing and improving our products and services.

In today’s financial marketplace, the internet is not only an informational resource, but it also has become one of the main tools for people to conduct their banking activities. Because the internet has become such a key element to business, we will be enhancing our website in the first quarter of 2007. New technology continues to improve the customer experience, and we are committed to keeping current with new advances.

We want to make a difference for customers by providing a consistently distinguished level of service and responsiveness. You get more than great products when you choose to bank with Webster Five. You get a team of friendly financial problem solvers who care about your financial success.

The consolidated balance sheets are prepared in the accrual basis of accounting in recording all significant amounts of income and expenses.

Available-for-sale securities are reported at fair value with any unrealized appreciation of depreciation in value of these securities, net of tax effects, reported in other comprehensive income.

Loans are stated at amortized costs net of unearned premiums and discounts, un-advanced portions of loans, and deferred loan origination fees and expenses.

The allowance for possible loan losses is maintained at a level which management considers adequate to provide for potential loan losses based upon continuing evaluation of known and inherent risks in the loan portfolio. Provisions for loan losses are charged to operations.

Land is stated at original cost. Premises and equipment are stated at cost, less accumulated depreciation. Depreciation is computed principally under the straight-line method based on estimated useful lives. Maintenance and repair costs are included in operating expenses while major expenditures for betterments are capitalized and depreciated.

The Bank accounts for certain revenue and expense items in time periods which are different for financial purposes then for deferral income tax purposes. Deferred federal income taxes are provided in recognition of timing differences

The Bank provides a non-contributory defined benefit pension plan and 401(k) plan administered by the Savings Bank Employees Retirement Association.

Bank Examinations