Good morning, ladies and gentlemen, and welcome to the Webster Financial Corporation's fourth-quarter earnings conference call. (Operator Instructions). As a reminder, ladies and gentlemen, this conference is being recorded. Also, this presentation includes forward-looking statements within the Safe Harbor provisions of the Private Securities Litigation and Reform Act of 1995 with respect to Webster Financials condition, results of operations, and business and financial performance. Webster has based these forward-looking statements on current expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties and assumptions as described in Webster Financials public filings with the Securities and Exchange Commission, which could cause future results to differ materially from historical performance or future expectations. I would now like to introduce your host for today's conference, Mr. James C. Smith, Chairman and Chief Executive Officer. Please go ahead sir.

Good morning, everyone. Welcome to Webster's fourth-quarter investor call and webcast. Joining me today are Bill Bromage, our President; Jerry Plush, our CFO; and Terry Mangan, Investor Relations. I'll provide some highlights and context for the fourth quarter results, Jerry will provide comments on our financial performance. We will also provide comments on our outlook and focus for 2008 in conjunction with some slides that we posted on our website this morning. And we will talk more about the special provisions and establishment of the liquidating portfolio for the discontinued indirect lending channels. Our remarks will last for about 40 minutes, and then we will invite your questions. In our fourth quarter earnings release we reported $0.10 in diluted earnings per share from continuing operations, which include the impact of $0.49 per share from the $40 million special provision for discontinued indirect lending channels and $0.13 per share for other charges in the quarter. This compares to continuing EPS at $0.64 in Q3, which included $0.14 per share effect from the $11 million increased provision for home equity and compares with the adjusted EPS of $0.78 a year ago. Our insurance operations, which are now shown separate from continuing operations, had a loss of $0.26 in the quarter including the previously announced write-down of $14 million. Let me first speak to trends in business activity in the quarter. Webster continues to show momentum in both commercial and consumer lending. Total commercial loans and consumer loans grew at a combined rate of 4% from a year ago and now represent 71% of total loans compared to 66% a year ago. Our emphasis is on direct originations. Commercial loans including commercial real estate loans totaled $5.6 billion and grew by 5% combined from a year ago and now comprised 45% of the…

Thank you Jim. And good morning everyone. We focused in prior calls on key performance ratios first. We are going to continue that track this and take a look at some of key stats for the quarter ending 12/31/07. First regarding capital. Our tangible capital ratio as of December 31, was 5.89% as compared to 6.17% in the third quarter and 6.72% a year ago. Our tangible capital ratio for the fourth quarter was slightly lower than our target ratio of 6%. We were anticipating back at our established target levels in early to mid-2008. Now regarding stock buybacks. We repurchased 1.3 million shares early in the fourth quarter and over 4.3 million shares throughout 2007. However, we do not expect to continue to buyback stock in the near-term, given our desire to restore our ratios at or above the target levels. It’s important to note that Webster remains well capitalized, as our projected leverage ratio at 7.99% at December 31 of ’07 and our projected total risk ratio of 11.5% significantly exceed regulatory standards of 5% and 10% respectively. Next, our loan to deposit ratio, we came in at 101% for December 31 of 2007, compared to99% at September 30th and a 104% at December 31 of ‘06. We stated our goal is to fund our loan growth and total loan portfolio via deposits. In the fourth quarter our deposits decreased $200 million, primarily in the certificates of deposit, the results of our pricing decisions regarding CDs, and loans increased $22 million. Broker deposits declined $51 million by quarter end as well, as we continue to minimize the use of this source of funds. Warrants increase $650 million in the fourth quarter, as FHLB advances represented the majority of this increase. We found this to be a very attractively…

Thanks Jerry. And now let us look to the future. You can see from our Form 8-K and from our earnings release today that we have cleanly separated the 3% or so of our loan portfolio that we now call liquidating asset portfolio, from the 97% of Webster, which is a pure-play regional commercial bank. We want the analysts and investors to be able to compartmentalize the liquidating portfolio, understand our reserving assumptions and then value it as you will. Separately, we want to as clear as possible on what you should expect from us going forward, our business model, our focus and our outlook. As we enter 2008, having narrowed and refined our strategy and sharpened our focus on core franchise activities, Webster is a pure-play regional commercial bank. I should reference that, that we posted a [deck] on the website this morning that I hope you’ll be able to refer to, for this portion of our discussion. Even if you don’t have it, I think it should be pretty clear. Webster has a strong franchise across southern New England into New York State, that some refer to as the gateway to New England. By emphasizing core operating accounts, we are acquiring, broadening and deepening customer relationships or maintaining a very low attrition rate. Our ability to acquire, develop and retain customer is the primary reason we gain market share, year in and year out. Meanwhile, we’ve learned once and for all that direct to the customer, particularly on the loan side is the most sustainable and value creating model for us. The year 2008 will likely be characterized by continuing modest pressure on the net interest margin as Jerry has commented and by the natural erosion in credit quality that a companies at economic downturn. Such an operating…

(Operator Instructions) Our first question is from Andrea Jao from Lehman Brothers. Please proceed with your question.

Hello.

Andrea.

Yes.

Good morning.

Good morning. The goal of decreasing your efficiency ratio to 60% from what's currently 65%, it’s pretty aggressive and is a tough environment to generate revenues. So may be you could talk about what would drive that decrease, should we expect a rapid decrease in expenses?

Andrea, good morning, its Jerry. To address that, the goal is set to reach that ratio by the end of 2008. The program in which we are undertaking and actually kicks off next week, it formally kicks off next week is approximately 100 to 120 day process. It’s an employee led program with the assistance of Harvest Earnings who are nationally recognized for their work in this field, to help us improve take a look at all our, every area of pricing, every area, and that’s not only just and how we structure our pricing in the loans and deposits, but also all of our fee-related products. And we would expect there would be some opportunity there, as well as to look at all of the processes in the way that we spend our money in terms of each line of business and our share services are central areas. We expect that we as organization will be very dedicated, I think as Jim indicated there’s a eleven leaders that are dedicated fulltime to the program and there are a significant number of people associated with each of those things dedicated to support the program as well. It is very intense I think there’s a good benchmark in the market that you can take a look at. PNC had gone through a very similar process and they generated some rather substantial results. Our expectations given our size are not at the level, but they generated what we believe that there are lots of opportunities for us as an organization. Particularly, that this process is really being driven by our employees, to [further our] cost savings in 2008 and make them sustainable costs savings on a go forward basis. I think it is really important to know this is not a across-the-board cost-cutting exercise where we just reduce areas by some percentage in order to achieve a goal. Our goal here in this program is something that more sustainable, and systemic and we think after looking at a lot of alternatives that the firm that we selected and particularly the approach that this particular process takes would be extremely beneficial to Webster.

Okay. And then the…

I just want to comment that a lot of this may depend upon what your revenue assumptions are, and if we end in a environment where there is a lot pressure on revenues then it is going to be harder to achieve that ratio. Given what we know now and with our forward look, we think that a combination of some modest revenue growth combined with the sale of the insurance business and the shutdown of the mortgage wholesale mortgage banking business both high efficiency ratio businesses and this intensive review and I think every organization benefits every 4 or5 years, even as we are trying for continuous improvements, can take a good hard look at every dollar of expense and every way of trying to increase revenue and we expect therefore to have a positive impact as we go through the quarters, in ‘08and that’s why we set the target for 60% by Q4.

Okay great, now just a follow up and this is related to revenue growth, what kind of balance sheet growth should we expect next year and what kind of loan growth should drive that, and how do you think it should be funded?

Andrea, on the funding side, our focus and clearly you could see what we have started to do in the fourth quarter was to look at more favorably priced funding sources, which is why we elected to utilize FHLB advances and not aggressively price to retain certificates of deposits, particularly, where the relationships was not deep within Webster, i.e. that they were not multiple products relationships there. I think in terms of from a focus point, one of their competitive advantages is having HAS, which has already experienced very significant growth and we just released to share some of that information yesterday. I think that the other opportunities for us really o the commercial and government finance side, particularly around operating account opportunities, in and around the markets that we serve. so I think from the funding perspective hopefully, that’s helpful to give you some flavor that particularly in the environment, the competitive environment, we have made a very conscious decision to be very precise and surgical about how we look at pricing and it really is looking at customer relationship not on just deposits for per se and we really want to look at the diversified sources that we have in order to provide our source of funds in 2008. Turning to the loan growth side, I think that we would expect very modest growth. I think we are in the process of retooling how we look at the mortgage banking business. So with the shutdown with in the quarter of an international wholesale arm and to build up on the retail side, I would expect for us to see very, very modest growth is not more of just to maintain a view in the residential side. On the consumer side I would think that given that we have segregated $314 million into liquidating status, you would see that we would be looking to maintain or just a $2.8 billion or so that’s in footprint and by the way, we think that we showed very significant progress and really an opportunity in focusing on in-foot print, direct-to-customer, direct to consumer originations and we still think that there is some opportunity in the market place for us there, but I would tend to think that you would see that’s relatively flat as well and so from a growth perspective the real opportunities for us is more of the diversification that we have in the commercial side and in the small business side and again we would expect that overall there would low single-digit.

Very helpful, thank you

Our next question is from Collyn Gilbert with Stifel Nicolaus. Please proceed with your question.

Thanks, good morning gentlemen.

Yeah. Collyn.

Jerry, huts a follow-up, I want to make sure I caught it. You had said that the loan loss provision, you expected the loan loss provision to be $6 million to -$8 million?

That’s what I said Collyn, for the first quarter.

Okay. And I apologies…

Collyn if could clarify, I just want to make sure if that is for the continuing loan portfolios. So as we look, at in the piece I think its important of what we are basing that on is we recorded a provision for the [four or five] in a quarter and our charge-offs awesome around 2.8 from our ongoing lines of business. So we feel that assessing where growth is coming in, just given that the response I gave to the earlier question, coupled with where we see the mix of business and the risk inherent in that business that we think that is saying that range is appropriate for guidance for the quarter.

Okay. And in that I apologize for I missed the beginning of the call, but that’s for the ongoing business. Did you give any color as to what to your expectation are for the discontinued businesses and where we could see that the provision going related to charge-off?

No, and in terms of, and that’s a great question. And I’m glad that I have the opportunity to provide some clarity. Our intend is to that we have set aside allowance in each of those respective portfolios and you will see charges against those allowances on as we work our way through, particularly when you look at the construction loan, the indirect construction loan portfolio for home equity. Construction loan I would think will be a much sure a period the time given the nature of the asset. And home equity in the indirect out-of-footprint home equity, you will see charge-off over a period of time as we work our way through. But really there should be at this stage charge-offs against allowance in those portfolios in the coming quarters.

Okay.

Collyn, let me just say that we went into a lot of detail on that, so when you see the transcript I think you will get a full explanation.

Okay. All right. Thanks. And then just quickly, in terms of, I think when you have said that you most anticipated having captured most of the charges in the fourth quarter related to these discontinued businesses. I mean, where I m going with this is just trying to get a sense of how clean we can expect the first quarter to be or subsequent quarters thereafter or where the risk is that maybe there are some things that pop-up.

Yes. I just say again, that I keep recurring to the wording that we chose very carefully in the 8-K that I mentioned again this morning which is that, we reserved against the estimated losses and hearing in those portfolios using default rates and loss rates that reflect our view that those rates will significantly worsen from current levels. So that was the approach that we took in trying to identify and reserve against what we believed, given for the deterioration would be the likely losses over the remaining lives of the assets in those portfolios. So we did not put up this reserve with contemplation that we would have to put up the additional reserves. Who knows ultimately how the world will perform. And what we've said is we want you to have the best possible information that you can, so you can assess our methodology and than draw your own conclusions about it. We are not expecting that we're going to have any kind of impact on those portfolios in the foreseeable future.

Okay.

So, when Jerry is talking about the provision, he is talking about for the continuing portfolio. We have gone to great pains to separate one for the other. So you can look at us as the pure play commercial bank that we are.

Great. Okay. Thank you.

Our next question is from Jared Shaw from KBW. Please proceed with your question.

Hi. Good morning.

Hi, Jared.

Good morning, Jared.

I just have a couple of questions, first on the Walgreens' ATM imitative, what's the incremental expense I guess what we should be looking for, as you expand the ATM network set dramatically?

It should be less than, it should be about a 125,000 or so a quarter.

Okay.

Yeah. It's not a -- and I don't want to disclose anything further than that, but I would say in the round numbers that's just what we would say. And it's branding expenses, Jared. So you'll see that flow through marketing.

Okay. So that won't come through. Are you…

No. Just to clarify, I mean if you were looking at a line item where you'll see that the incremental bounce within marketing.

Okay.

The play for us in particular in this is, this gives us a very unique opportunity from a brand awareness perspective, to get our brand into a lot of markets where we don't already have the physical presence. And we think that, in Webster customers existing customers benefit from these no fee to Webster customer machines as well.

Then, will you capture the fee of non-Webster customers or is that, are you just…

There is no other impacts for us from P&L perspective and I can't comment further in the details I had just--

Okay. Turning to HSA, there is an article in the Banker, American Banker today, but the HSA products generally, industry-wide hasn't cut to the extent that was initially expected, initially hoped. What are your thought that's working out of the next few years with the adoption of HAS? And do you expect, are you expecting your growth, your initial growth expectations to come down or do you think that's just more of delayed implementation?

Jared, we think that it is catching on, our 41% growth into deposits and HSA bank, I think attested that the fact that we crossed a $500 million mark in total deposits and a linked brokerage accounts last year from little over a 100 million when we made that acquisitions, which was less than three years ago is a very significant growth. The adoption rate, it may not be as high as some people had projected but it is increasing. And we think that the corporate adoption will cause a significant ramp-up over the next 3 to 5 years. I also wanted to say, we were always very careful not to overlay what the growth rates would be, so I would say that our growth has been reasonably consistent with what we expected that it might be, and we are pleased with that growth. And we are especially pleased that the cost of these deposits is the same as our core deposits. So we care about $500 million of core funding through HSA bank.

Okay. Great. And then just finally on the margin, sure, you said that it looks like, I think I was a little confused, it sounded like you were saying it could stabilize into the current range or were you saying in '08 you could stabilize in wherever it turns out to be in the first quarter of '08?

No. It will stabilize in the current range. I think that to add some color to that, that we're being very proactive in managing our cost of funds. And I think it's -- all of you would readily agree, its very challenging, given in the environment particularly in the light of the percentage of assets that we priced immediately with a rate cut, but we've really put lot of energy in focus on looking at other sources of funds and really you are being very surgical and precise around how we look at CDs. So you could see an impact of our deposits, one of the deposit ratio, but we are looking at this from the standpoint of, we want to maintain, our goal right now is to maintain and ultimately improve where we are. So I mean from a look into next quarter to first quarter, that's our goal.

Okay. So even with the Fed cut, we should expect to see or hope to see margin not really taking another big hit from here?

As we working it on.

Great. Thank you.

Our next question from Mark Fitzgibbon from Sandler O'Neill. Please proceed with your question.

Good morning. Actually, this is Alex Twerdahl from Sandler O'Neill. My first question is have you seen home equity line utilization ratios rise at all.

You know they've stayed relatively flat.

Okay. Do you have arranged where they are right now?

Well, they are probably around, I think 60% or so would be.

Around 60% of -- okay. Thank you. And my second question is with respect to the sales insurance business, you've mentioned that there should be additional potential consideration over multi-year period.

Yes.

Is that something that we should see immediately following the sale or is it little bit of the lag effect?

Its something at this time we can’t comment on.

Okay.

What we’ve wanted to do is try and be as open as we could, in terms of how the deal structures are in the marketplace today and provide some clarity around why there would be a change in upfront value.

Okay.

But in terms of, we would hope to be able to announce something and provide some more clarity at that point in time.

Great. Thank you very much, that’s all from me.

Right.

We have a follow up question from Andrea Jao from Lehman Brothers. Please proceed with your question.

Hello again. Just wanted to do -- check in on a couple of things, first do you have an idea for additional FDIC insurance costs. Do you expect a material increase?

We expect that the FDIC premiums will likely be higher in ‘08 than it were in ‘07. And that we are likely to use up the balance of our assessment credits in ‘08. And so that it should become a real time event for us by either late in ‘08 or early in ‘09, depending upon what the levels are that are set by the FDIC.

Okay. And then as you look at your balance sheet and I am sure you are reviewing your capital structure, do you have any plans to issue hybrids during the course of ‘08?

Andrea its Jerry, no not at this time. Our intent I think is we’ve stated that we would like to maintain 6% tangible, 8% leverage and 12% risk-base. As we reported, we are virtually at the leverage ratio and very close on the total risk-base. On the total risk-base, we believe that there is opportunity already that we are working on regarding how our long commitments to improve that ratio, so we believe that – and again with our intangible we’re at roughly 5.9% as opposed to our stated goal in ‘06. So even withstanding the quarter and the results of the quarter and then think about our loan growth where we will be for 2008, again, assuming that we are in single digits on the lower end of the single digit side. We feel at this time our capital is at the appropriate levels.

Perfect, thank you so much.

(Operator Instructions) There are no more questions in the queue at this time. I would like to turn the floor back over to management for closing comments.

Again I would like to thank you for being with us today. Have a good day.

Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.