Welcomes to the Webster Financial Corporations First Quarter 2008 Earnings Result Conference Call. At this time all participants on listen-only mode. Later we will conduct the question-and-answer session, and instructions will follow at that time. (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. Thank you, please go ahead sir.

Good morning, everyone. Welcome to Webster's first-quarter 2008 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 first quarter results, and Jerry will provide comments on our financial performance. Our remarks will last about 30 minutes, and then we will invite your questions. First, I want to report on yesterday's announcement that Bill Bromage will retire from Webster at the end of this year. Bill will continue as President and COO until June and will then service Vice Chairman of Webster Bank for the balance of 2008 and will assist me in the organizational transition. We have several important projects; we will be working on together for the balance of the year. As we note our strategic focus in recent quarters, Bill and I looked at the job of President and COO and agreed they really no longer fit our operating models. It was eight years ago that we named Bill to this position. He was a key leader of our transformation to a commercial bank and of our growth as a regional competitor, and he was a huge help in recruiting a senior talent that we now have on board. Press releases are understandably brief and to the point. They aren’t conducive to an expression of feelings. So I want to take to this opportunity to express a few well earned accolades regarding Bill. Bill is a personal friend, and he has been a real source of strength to Webster. I am indeed for his service to Webster and for his support over more than a decade. I deeply appreciate all the Bill has contributed and start this call by saluting him and thanking him.

Good morning, everyone. Welcome to Webster's first-quarter 2008 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 first quarter results, and Jerry will provide comments on our financial performance. Our remarks will last about 30 minutes, and then we will invite your questions. First, I want to report on yesterday's announcement that Bill Bromage will retire from Webster at the end of this year. Bill will continue as President and COO until June and will then service Vice Chairman of Webster Bank for the balance of 2008 and will assist me in the organizational transition. We have several important projects; we will be working on together for the balance of the year. As we note our strategic focus in recent quarters, Bill and I looked at the job of President and COO and agreed they really no longer fit our operating models. It was eight years ago that we named Bill to this position. He was a key leader of our transformation to a commercial bank and of our growth as a regional competitor, and he was a huge help in recruiting a senior talent that we now have on board. Press releases are understandably brief and to the point. They aren’t conducive to an expression of feelings. So I want to take to this opportunity to express a few well earned accolades regarding Bill. Bill is a personal friend, and he has been a real source of strength to Webster. I am indeed for his service to Webster and for his support over more than a decade. I deeply appreciate all the Bill has contributed and start this call by saluting him and thanking him.

The first quarter results have two distinct components. First is with core operating results not including provisions and charge-offs net expectations. The net interest margin improved from Q4 '07, and primarily for this reason revenues grow $2 million. Non-interest expense has actually declined on a linked quarter and on a year-over-year basis. Especially positive for loan growth and quality is the reader mediation taking place in the credit markets, as high quality customers are returning to banks from the capital markets, and we expect this trend to last for some time. You can see that our commercial real estate and C&I loan portfolios in Q1. Core deposits are growing. And given recent market conditions, we can choose to advantage between CD's and short term borrowings to meet our funding goals. Despite higher provisioning and marks against the securities portfolio, our capital ratios remain closed to our published targets and well above well capitalized requirements. Our solid capital position is strength during uncertain times. The other distinct component in the first quarter results is the impact of the down leg in the credit cycle and quality is measured by provisions and charge-offs. First quarter results included provision expense of $15.8 million, which matched net charge-offs and a continuing loan portfolio, and resulted in credit reserves at 1.21% against the $12.2 billion continuing loan portfolio. The $15.8 million of charge-offs founded being higher than originally anticipated, primarily as a result of two large credits in the commercial portfolio and a single large borrower in the retail portfolio. These three loans comprised two-thirds of the charge-offs. It’s important to note that we don’t see any systemic problems in continuing portfolio and that in occasional blowup is expected when a cycle turns down. One investor might look at Q4'07 versus Q1'08 results, you can…

The first quarter results have two distinct components. First is with core operating results not including provisions and charge-offs net expectations. The net interest margin improved from Q4 '07, and primarily for this reason revenues grow $2 million. Non-interest expense has actually declined on a linked quarter and on a year-over-year basis. Especially positive for loan growth and quality is the reader mediation taking place in the credit markets, as high quality customers are returning to banks from the capital markets, and we expect this trend to last for some time. You can see that our commercial real estate and C&I loan portfolios in Q1. Core deposits are growing. And given recent market conditions, we can choose to advantage between CD's and short term borrowings to meet our funding goals. Despite higher provisioning and marks against the securities portfolio, our capital ratios remain closed to our published targets and well above well capitalized requirements. Our solid capital position is strength during uncertain times. The other distinct component in the first quarter results is the impact of the down leg in the credit cycle and quality is measured by provisions and charge-offs. First quarter results included provision expense of $15.8 million, which matched net charge-offs and a continuing loan portfolio, and resulted in credit reserves at 1.21% against the $12.2 billion continuing loan portfolio. The $15.8 million of charge-offs founded being higher than originally anticipated, primarily as a result of two large credits in the commercial portfolio and a single large borrower in the retail portfolio. These three loans comprised two-thirds of the charge-offs. It’s important to note that we don’t see any systemic problems in continuing portfolio and that in occasional blowup is expected when a cycle turns down. One investor might look at Q4'07 versus Q1'08 results, you can…

Thank you Jim and good morning everyone. Lets first cover capital and where we stand as the quarter ends. The tangible capital ratio as of March 31 was 5.77% compared to 5 at the end of the fourth quarter and 6.99% a year ago. Capital declined from the fourth quarter even with the contribution of net earnings in Q1, due to a $46.7 million increase in unrealized losses of which 32.3 million occurred from value declines in capital trust securities and are available for sale portfolio as credit spreads of widening this asset class and caused the significant valuation to climb. As previously disclosed we did not buy back stock during the quarter and we do not intend to do so in the near term. Regarding dividends, we did announce today that we will maintain our current dividend at $0.30 per share. We recognize that strong capital levels are even more critical in the current economic environment. We want to know that Webster remains well capitalized as our projective leverage ratio of 7.88% at March 31 and our projected total risk ratio of 11.2% exceed the regulatory standards of 5 and 10% respectively. Turing now to the loan to the deposit ratio, it increased to 104% from March 31, that’s in comparison to a 101% at December 31 and 98% a year ago. While we have been diligently working to improve this ratio, this was a proactive move on our part to allow for this increase. We are working to change our deposit mix and lower the cost to deposits and we also took the opportunity to utilize lower cost borrowings for our funding needs as well. Regarding the deposit mix, certificates of deposits decreased by 208 million and broker deposits decreased by 25 million. While our core deposits increased…

Thanks Jerry. Webster first quarter operating results are beginning to reflect positive results from our narrowed focused on doing well what we do best. Our capital and human resources are focused commercial and retail banking business in our core franchise and on our four specialty businesses, equipment finance, asset base lending, commercial real estate lending and health savings accounts, these are direct-to customer businesses centrally operated serving customer in market as well as regional internationally and generating relatively high returns. The One Webster earnings optimization initiative will help us to enhance revenue and eliminate expenses as we bring our operating efficiency ratio down. And as we have said I guess repeatedly this program will have a meaningful positive impact on our future operating results. When today's challenging economic environment eventually gives way to comer times we are confident that our narrowed focused on core franchise activities will lead us to success as a regional and commercial bank. We are well positioned for success. Thank you for being with us today. We will now be pleased to respond to your questions.

Thank you. (Operator Instructions). Our first question comes from Ken Zerbe with Morgan Stanley. Please state your question.

Thanks. If I understood correctly, your provision expense of 15.8 matched your charge-offs with the continuing portfolio. Can you just talk about how you came to the decision not to increase the reserve ratio in your continuing portfolio given that -- I guess, given the deterioration we are seeing in the credit environment, in fact, that most of your peers have been increasing the ratios? Thanks.

Sure. Ken, I will comment briefly that Webster for long time has reserved more than its charge-offs in a quarter, and during a period of a couple of years where a lot of our peers were not doing that, we continually with the exception I think of only one or two quarters reserved at or greater than the charge-offs, and therefore we built up our overall ratio to over 120 which we think compares relatively, favorably with the peers. The other reason is and I try to cover this in my remarks that embedded in the 15.8 million of the charges are three specific loan charge-offs that accounted for over two-thirds of the total charge-offs. So we’re saying that we want to be sure that in this environment we cover at least what we charged-off, but we believe that looking ahead that the 15.8 million was the right number to handle for this quarter. We don’t expect to let our ratios fall behind and I made the comment we expect it will target range of around 120 going forward.

Okay, great. And then the second question I have, can you just remind us quickly on the liquidating portfolio, how fast is that running off, and also at what point would you consider increasing your special reserves, like what types of things would you be looking for that we could see?

Well, we try to breakout the numbers. So you can track it pretty closely. And one comment we made was that the overall liquidating portfolio declined at about $30 million in the quarter from 425 to 395. The construction loan piece is dropping as you would expect at a faster rate than the home equity lending piece, which frankly is dropping at a little bit less than we originally had expected that it would. We setup the reserves in that portfolio back in Q4 with the idea that the default rates would rise throughout 2008 particularly in the home equity portfolio and that there would a high loss given default. As we look at the actual performance of the portfolio in Q1, I made the comment that the delinquency ratio is rising a bit faster than we had anticipated, but the loss given the defaults have been a little less than we anticipated. So we are pretty much within range of what we originally had anticipated for the performance of that portfolio. We also indicated that we thought that the bulk of the losses would occur in the first two years after setting up the portfolio and then a portion of the reserve was against the tail that would run out in future years. So, I guess, the best I could respond is, we will try to give you good information, and because we are breaking out the portfolio you can track what's happening to delinquencies and non-accrual rates and charge-offs in that portfolio directly against the reserves that we have set up for.

Thank you very much.

Our next question comes from Andrea Jao with Lehman Brothers. Please state your question.

Andrea Jao from Lehman. Good morning everyone.

Hello Andrea.

Good morning Andrea.

I was hoping to get a little more detail on your outlook regarding loan growth. I know you are shifting the mix to more 50/50 mix between consumer and commercial, but what are the conditions out there and what kind of competition in pricing are you facing?

Well Andrea, if I talked about the segments of the portfolio, first I would say that in that we are discontinuing of course the indirect out of market lending that we expect that the actual origination rate for consumer loans and for resi loans will be lower than it was in the past. The in-market rate of originations given the focus that we have will be a little bit higher than it was, but still it's unlikely that we will have much growth in resi or the consumer portfolio, let's say, through the balance of 2008. We believe there is opportunity for growth in the middle market portfolio on the commercial side and in the CRE portfolio as well in part because of what's happening with what I refer to as a reintermediation from capital markets of high quality credits back into banks where we are able to do commercial real estate relative to loan to value ratios at significantly higher spreads than we were before, same effect on some of the market opportunities, and what's happening to us is that the pay downs that we were experiencing are less because our existing customers are moving toward the capital markets. So, we see a continuing opportunity to book high quality commercial loans in particular over the foreseeable future at expanded spreads. So, on the one hand we think spreads will widen to some degree, we think there will be the opportunity for loan growth particularly in middle market and commercial real estate lending and those would be the areas we will focus on for growth. So, we would be talking about perhaps mid-to-high single-digit growth rates in those portfolios with the consumer and the resi portfolios being relatively flat. Another driver of this is that we want to calibrate our own spreads to make sure that every dollar of additional asset that we put on the books is generating a high return on the precious capital that supports it.

Great, how about on the deposit side, are you seeing; do you think there was again markets driving more of your consumers to the safety of bank deposits? Can you talk about your outlook there?

So on the deposit side, and I also think this coincides with having very good products and services from a cash management standpoint that are enabling us to win over more commercial relationships and more government finance relationships. So, I think what we'll see is, when you see spots of this, or signs of this, I should say in our first quarter, we expect to see more of that in the second, third, and the fourth quarter of '08, we’ll be reporting back. I just wanted to add a comment to the earlier question which is, we've talked also about changing our plan mix in and around the balance between a commercial banking and the consumer banking. For purposes of that conversation, it's really consumer bank residential and consumer, we're seeing that this is again a plan we went from about 59:41 ratio to being closer at year end being about 54 to 46% in terms of the mix, again more consumer bank than commercial , and what we're migrating towards is much more of a 50-50 mix. And I think that we are at a very good time in this cycle that we are seeing some good opportunities, as Jim indicated in the commercial markets to take the advantage of bringing in some higher quality loan relationships and I think we are equally positioned to not only just get the loan relationship, but the entirely other relationship of these commercial customers. So, some of this is really very bought out planned attack and approach from our standpoint and just some final ships in the way we are looking at the balance sheet both from a loan side as well as from the deposit side. Hope that's helpful. So on the deposit side, and I also think this coincides with…

It was helpful. Thank you so much.

Thank you. Our next question comes from James Abbott with FBR Capital Markets. Please state your question.

Yeah, hi good morning.

Good morning Jim.

Good morning Jim.

On the home equity in your slide that you have a really good detail slide on some of the delinquency trends and the continuing portfolio based on loan-to-values, and I don't know if you mentioned it earlier in the call, but if you did I apologize, do you have any updates on that table as to how, especially like in the 95 to 100% combined loan-to-value part of the portfolio, what the non-accrual rate in the 30 to 89 days delinquency, are we seeing a lot of migration there or fairly stable?

Yes, we do actually, I have information. And as of March 31, breaking down the continuing portfolio and the liquidating portfolio by combining loan-to-value ratio, but I need to be sure as to when these loan-to-value ratios were….

Yeah, at origination….

Yeah, at origination, right. So, I don't have the numbers to show the updated estimated loan-to-values based on the AVMs, but I can tell you which -- are you interested in the liquidating portfolio?

Well, I am trying to understand a little bit about how things are developing. So if liquidating portfolio is a better indication of how things to come then I would be interested in that.

Sure, let me say this, in my remarks I said that the 30–89 day past due rate and the continuing portfolio was 0.72 which was down from 0.76 at the end of the year and the nonaccrual rate was 0.60 which was up from 0.50. In the liquidating portfolio, the 30 to 89 day past due rate is 3.21%, and by the way you can deduct these figures from looking at the charts that are in the deck today, and then the non-accrual rate is 2.87%. And I think that the charge-off rate was around…

4, 4.17%.

4.17% annualized in Q1.

For the liquidating portfolio…

For the liquidating portfolio and let me also say that Jim if we'll have these slides updated and available, we'll put them out on the web so you can get a look at them.

Yeah, so the short version is that you are seeing some modest improvement in the continuing portfolios home equity, but further deterioration in the liquidating portfolio.

No, the improvement was in the 30 to 89 days past due, but it was only about 4 basis points from 76 to 72, but that’s great to see, but we’re not going to see that makes a trend yet, I think that could be final because we've been managing the collections extremely well. We've got a full group it’s on that, and I think they have done a very, very good job and that's part of our lowest mitigation strategy. So, that's a good development. You are right. And the liquidating portfolio, as I've mentioned in my comment today, the trend toward higher default rates is consistent with what we had expected.

Okay, I appreciate that. And then another question, and then I’ve got a housekeeping type of issue I want to clarify a comment you made earlier. But on the C&I credits that went in non-performing status or net charge-off status, where there any specific industries or can you give us some color as to what was behind the defaults on those?

Again, we mentioned that we had two credits specifically. I'm going to ask John Ciulla who is our Chief Credit Risk Officer to comment.

Good morning. The $9.5 million were in the commercial loan group. There were two credits $6.1 million charge related to a fabric manufacturer housed in our asset-based Webster Business Credit and the $3.35 million was middle market credit, a commercial cleaning company in our footprint in Connecticut.

It sounds like those could be related to the housing industry, is it?

I would say that, that’s probably not the case. The commercial cleaning company actually had issues with respect to an acquisition and some pension liability and we have a personal guarantor there, and we’re actually confident that overtime we will be able to recover a portion of that charge. With respect to the asset-based credit, it really had to do with a dramatic devaluation in inventory. It was a retail supplier or a retail home goods company. So I guess there, there was a slight connection to the housing market, but not entirely related.

Okay, I guess you give me the opportunity to make another point I have made before which is -- that's two credits comprising 60% of the total charge-offs for the quarter. One is in the asset-based lending group; one is in the middle market group. There is a systemic issue as to deterioration that we know.

Okay and the last is a real quick housekeeping, just you motioned that in the press release there is some seasonal expenses I think of $5 million but then you mentioned in the Q&A or later in the outlook I guess that expenses should go up in the second quarter. Am I interpreting that correctly that the seasonal expenses will be offset by some increases elsewhere?

Yeah Jim, it's Jerry. We have planned marketing expenses in the second quarter. So if you just look specifically at the marking line and that was what my comment was around you should see an increase just in relation to some of the campaigns that we are doing in deposit gathering as well as in some of the loan areas

Okay thanks. Just want make sure I interpreted correctly. Thank you.

And it’s specific to that line when I make that comment.

Super.

Okay thanks.

Thanks Jim.

Thank you.

Our next question comes from Collyn Gilbert with Stifel Nicolaus. Please state your question.

Thanks, good morning guys.

Hi Collyn

Just a follow up actually while we are on the discussion of expenses. Jerry, can you just give a kind of an indication of where you think the quarterly run rate is on expenses over the next couple of quarters?

Collyn, I think when you look at the lines, while first I want to prophesies my response by saying we do believe there will be some charges in terms of related to our One Webster initiative. And as such, once we've completed that process and have evaluated what we will continue to do what we want would have to come back out and tell you a lit bit more about what expenses look like on an ongoing basis. So I would have to almost and I don't want sound like I'm side stepping, there will be some dramatic changes in the expenses in terms of run rate post One Webster. Some will be immediate and we will see those in the third and the fourth quarters, others will take place over 18 to 24 months. And, we're going to do our best to spend some time as I'd indicated to make sure that everyone is thoroughly versed on the types of decisions that we’re making and what kind of impacts that would have. So I would have to say that for now the guidance I was able to provide around expense really is only for the second quarter and its difficult to project forward the type of savings that you might be able to see in specific line items. And so, we really get to the conclusion of One Webster. So I hope to be able to come back with Jim and others and provide an update, if not before the earnings calls, certainly by the next earnings call on an absolute latest.

Okay. So by you -- mentioning dramatic changes, is that how you're going to get to that 60% efficiency ratio?

You know the combination for One Webster is enhancing revenue and systemically reducing expenses. So it’s a combination of the two that gets you to that ratio.

Okay. And you are sticking to that goal by year end?

For the fourth quarter of year end, that's what we would like to stick to.

Okay. And then Jim, just to talk about credit for a second, could you just give some colors as to the life cycle of these three credits that were charged off, because I thought that the guidance post the fourth quarter was that the provision or at least the core provision was going to be fairly comparable to the fourth quarter, and I think at that time you said too that you didn't necessarily see sort of systemic risks or significant deterioration in the outlook for credit, but yet, we had a pretty sizable jump in the provision, and I'm just trying to quantify what you mean by no systemic problem?

Yes Collyn, I am going to comment that and I have John Ciulla who will comment specifically on these credits. But the point that I am trying to make is that in the down leg there are going to be blow ups that occur here and there and that’s what happened. And so that’s why we have sighted the two commercial relationships and the one other relationship that accounted for two-thirds of the charge-offs, and I have to acknowledge that a couple of these came up on us pretty fast in Q1 which is the reason that the charge offs were higher and therefore we elected to boost provision as well. And it may well be more of these that we don't see that are going to pop up which is why we are being very careful now to predict that we've reached the peak or we'll see a diminution of the charge-offs in the immediate future. We are in a down cycle, we don't how deep it's going to be and so, we just have to wait and see what's going to happen. But I would stick to my comment that we don't see a growing systemic threat in any parts of the portfolio. We see higher delinquency rates; we see higher non-accrual rates. It's what we would expect, and then occasionally there may be a blow or may be there won't. But I think we have to assume that in this kind of an environment it’s more likely that there will be, than that there would not. As to the particular credits I will ask John Ciulla to comment.

Yeah, I would say that there's significant volatility, so in terms of our visibility on the two credits that comprise the 9.5 million. We were well into the first quarter, we obviously had identified the two credits, but our embedded loss numbers even halfway through the quarter had projected a charge-off number significantly less than where we ended up. So what we had a sort of fast moving results, we had anticipated a lower amount for the asset base credit, and as I said some M&A activity that we are hoping would arise and a dramatic shift in inventory value lead to a larger and swifter charge on that credit than we had thought, and we actually had relative confidence that the other credit , the middle market credit would continue to perform and survive throughout the first quarter as some drastic changes were being made in the management of that company and unfortunately some of the external factors made it impossible for the company to continue to meet its obligations.

Okay. So where these on non-accrual status at the end of the year?

The middle market credit was not and I do not believe the Webster business credit was either.

Okay. And then just finally, Jim, if you could just sort of give some color as to sort of how the executive team is laying out now with you know, there is a pending departure of Bill and with Joe having left. And just how you see the management, the executive management team structured going forward.

Well let me comment that Bill is still the full fledged President and Chief Operating Officer and will be till the end of June. And then you will continue as Vice Chair until the end of the year and I try to make clear that we would be in a transition period and that he and I and others on the executive team would be working out what the new organization would be. So I want to be careful not to be trying to lay that out at this time. I think that there is a couple of things to say, one is that we have narrowed our focus on core franchise activities and that’s why I made the comment that the Chief Operating Officer was not central to the operating model anymore. Bill also has been of great value in recruiting high quality people to run our business units. So we're much a stronger company than we were 5 or 7 or 10 years ago when we first started down this path. So we're looking at whether some of these responsibilities will be assumed by others that are currently in the organization and that is likely, and maybe that we need to do some recruiting as well to make sure that the totality of Bill's responsibilities get transferred properly throughout the organization. There is no doubt there's a significant void that's created particularly because of the contributions that Bill has made and that’s what he and I are going to working on as we lay out the organizational change here over the next couple of months. So I rather not try to nail for you right now, but say that we will provide that information later on.

Okay, great. Thank you very much guys.

Our next question comes from Gerard Cassidy with RBC Capital Markets. Please state your question.

Thank you, good morning.

Good morning Gerard.

I apologize that you have answered some of these question, I’ve been jumping on and off your call. So I apologize if you have to repeat them.

Okay.

Regarding the Visa gain on that you reported of about $0.03 a share. Did that include the reversal of any expenses that you may have taken in the fourth quarter on the Visa litigation?

Yes, there is a partial release of about $650,000 from the liability we recorded in the fourth quarter.

And that….?

So, we reported about a 1.5 million in the fourth quarter and 650,000 of that is in that $0.03.

Okay there's been the $0.03.

Yes.

The next question is on the loan to deposit ratio, is there any target that you guys would like to be at by the end of '08?

We've been coveting being in and around the 100%, so that in effect we've got our full funding for loan growth coming from deposit growth. I think in my remarks we've seen that we are shifting away from CDs and have pushed and really have made a concerted push across all lines of business in the organization on either no interest bearing or low interest bearing transaction accounts and we've seen some good success here in the first quarter. We keen to kind of continue that. That coupled with the attractive rates that we can get in terms of borrowings and you could see that in what a substantial decrease we had in the cost of borrowings from quarter to quarter. We deliberately say that we would allow ourselves to go back up over that 100% and stay in and around where we are today. In terms of target, I would have to tell you that we love to be at a 100%, but at this point in time we just see at attractive alternatives out there and think it's in our best interest as we build the low and no cost interest-bearing accounts under our books and the tap in the borrowings market is a good thing to do here.

Thank you. And then on the net charge-offs that you guys just addressed, the three commercial net charge-offs I guess, where two of those in the asset-backed portfolio?

No, one of them was asset-backed Gerard, and the other was middle market.

Okay. And in the asset-backed portfolio, is there any degradation in the portfolio geographically, are you seeing a stronger part of the portfolio in the northeast, weaker in the west or something like that?

I would say no, we are not. Actually, the overall portfolio is pretty strong and I don’t know whether you heard the portion of our comments, but we think we’re in a pretty strong position there. 92% of our outstandings are secured by AR and inventory for example. The NPAs and the whole ABL portfolio were 1% at the end of March and we also did say that close to 60% of the portfolio was in the northeast, but pretty much the credit stats are fairly similar across the whole portfolio.

Okay. And then finally on the liquidating home equity portfolio that you guys mentioned. In a recent presentation you made in February, you gave a nice breakout of the loan to value, the consolidated loan to value, the portion of 95 to 100% are you seeing higher charge-offs in that when they go delinquent, are they showing higher charge-offs in the liquidating portfolio that part of it versus less than 80% or 80 to 85?

Yeah, generally speaking, the higher the CLTV at the time of origination, the higher the charge-off given default. And we will update that and we will put it out so you get a look at it.

And what kind of severity are you seeing in that 95 to 100%, when it does go delinquent, are you seeing upwards of 100% type of charge-off?

I am not sure we have that number right now.

Case by case.

Yeah, I would say it's on a case by case basis and I wouldn’t want to just blank it and say that, yes, that it is.

Okay.

But I will say that we will have the updated in our slide presentation within the next couple of weeks.

Okay. And then just finally, some of the larger banks are alluding to the fact that the consumer is having a behavioral change in that when their house falls below the value of their first and second mortgage, they have the capability of paying, but they are choosing not to pay. Are you seeing any of that? Or can you dig into that at all and say if you are being affected by that if that's happening?

Well, it's hard to determine what the psychology is on a case by case basis. I mean we know that there is a rise in non-accruals and that maybe and probably is one of the elements particularly given all of the publicity that the downturn in the cycle has received. So we will say we imagine that that's out there but we can't point to specific cases where we think that that has occurred. We also think that the longer somebody has lived in a home, the more likely they are to want to continue to meet their obligations, so part of this maybe that people haven't been there very long or they bought it on sort of a sense of being able to flip it or whatever the particular behavioral influence was that in those segments that the probability of just stopping payment or trying to walk away is going to be considerably higher. But in the core market of people that bought their homes to live in them and tended to do their best to make their payments, we’re not not seeing that behavior.

Thank you.

Thank you.

Our next question comes from Damon DelMonte with KBW. Please state your question.

Hi. Good morning guys. How are you?

Damon, good morning.

Pretty much all of my questions have been answered, but just one last one regarding the tax rate. I know the rate this quarter was higher than - it would have been 31% but it was higher because of the FIN48. What are you guys forecasting for a rate going forward?

31%.

31%, okay. Thank you.

Thank you, Damon.

Thank you. Our next question comes from Andrea Jao with Lehman Brothers. Please state your question.

Hello again.

Hi Andrea.

Just circling back on deposit service fees. I know those were seasonally weak this quarter, but if you are making an effort to bring in more deposits, are you more willing to waive fees and therefore the ramp-up in service fees should be slower going forward?

No actually Andrea, we are trying to systematize the collection of fees the best that we can so that we have less leakage perhaps then we have today. And we are making a considered effort to bring in operating or transaction accounts and so we hope that actually the ability to attract new relationships will have a positive impact on fees. And as we pointed out we generally have a seasonal decline in Q1, that has occurred again in 2008 and we expect that there will be a ramp up in those fees through the balance of the year. Andrea Jao Fantastic. Now on page 14 in the press release it did show a 30 to 90 days past dues for the continuing portfolio and those have gone up between year end at March 31, what this been translates into with respect to the NPA ratio under continuing portfolio?

You mean the flow through rate.

Yeah.

It's hard to say some of those cure relatively early on depending upon on which category they are in, others of them are more predictable to flow through such as the consumer in the resi type. I am a little hesitant to try to make the prediction on that.

Okay. Thank you so much. Jerry Plush You know, Andrea, I just – I further comment that we do look at what it is, assuming that every loan that goes delinquent has a certain chance of curing, if it doesn't cure, it’s going to flow through and then at last given the fault would be x, I mean, we do look at that for purposes of trying to make our own projections, but I think we’re in uncharted waters here and it's hard to rely on any simple formula for that purpose.

Okay, fair enough. Thanks again.

Thank you. Our next questions comes from James Abbott with FBR capital markets. Please say your question.

Yeah, hi a real quick question again. On the commercial business lending, I am wondering if you could take us, as we kind of get into a weak economy here, can you take us through what you do as a company that maybe better than industry practices to help prevent losses there, what sort of policies or procedures do you have on that portfolio, its something that most of us has taken for granted over the last few years as being just a performing portfolio and maybe you give us some detail on how you manage that business?

Yes, it’s John Ciulla again. Our philosophy is we’ve got a signature approval process system in the bank, we have Credit Approval Officers, Senior Credit Approval Officers that have a specific asset class expertise, as you look at our balance sheet we have, as you know a fairly diverse set of commercial banking activities and we pair up very strong senior credit officers with the business lines to make sure that we’re doing appropriate credit positioning. We have a culture of credits with respect to the line managers who have come from a banks with their philosophy as the first line of credit, so the originators have a credit bias, and then we have strong loan review function, and obviously we feel aggressively risk rate and manage our portfolios on a periodic basis and then get special assets involved consulting on credits very early in the process so that we can appropriately react and react prospectively to credits as they migrate down the risk chain. I don’t know if I can give you any other additional granularity I am happy to, but I hope that gives a sort of context of our philosophy.

That helps. Can you may be give us a sense on what the loan valuation with you on equipment and then also an asset based lending, and then also frequency of monitoring, and how quickly can you collect the financial statements of the companies?

Yeah this is Bill and I will be with he equipment piece first. On the equipment side we would tend to finance relatively high percentage going into the particular asset, and then we would have an amortization casual that would match the depreciation of the realizable value of the underline collateral such that we are in balance and in fact grow the equity and the equipment relatively, quickly so that we’ve got a good strong position in the collateral and I think that we’re in If you look at our track record overtime in terms of the loss in that portfolio, it’s been quite good, meaning it’s been particularly, relatively low versus the industry and I think it is the underwriting of the individual collateral, as Jim pointed out, we are underwriting collateral that has a specific revenue generating purpose, and we understand that purpose going in. So early payment default is a typical of that, so we grow into an equity position and it works out well over the life of the loan. In ABL the loan to value tends to vary depending -- as Jim said, it’s principally receivable inventory financing and other that in the retail segment which we have a subsegment of it has performed well overtime, it tends to be skewed even in that case to receivables. The receivables will be dependent upon -- the advance rate will be depended upon the individual assessment of that underlying collateral, it’s typically in the 80% plus perhaps range, and the inventory would be dependent upon realizable value, and retail side we’re typically looking at going out of business sale values. So you are looking at a net realizable value if you had to liquidate that inventory in lending a relatively high percentage of that number, but a low percentage of the overall statement value if you will of the inventory. So there a very disciplined process there. That business is very much of a cash demonian business. So receivables are collected directly by us. And so, we’re monitoring that business daily in terms of monitoring, controlling the cash for those borrowers and we do regular audits when we go and we have monthly statements in that case and obviously receivables aging and the like. When you get into more of our -- what John was talking about in terms of our commercial middle market and small business lending we get quarterly statements, we typically have covenants on all of those and we’re tracking the covenants and doing covenant compliance, and if there are violations of covenants that get escalated up through the credit process, so there is a review of what the violation maybe and the determination of the wisdom of wavering or looking to secure our position more strongly if that is the appropriate action. So I think the active monitoring of the portfolio is pretty strong.

Thank you for expanding on that. Thank you.

There are no further questions. I will now turn the conference back over to management for any closing comments.

Thank you very much for being with us today. We appreciate your interest in Webster. Have a good day.

Thank you. This concludes today’s conference. All parties may disconnect now.