Good morning, and welcome to Webster Financial Corporation's fourth quarter 2009 results conference call. This conference is being recorded. Also, this presentation includes forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 with respect to Webster's financial condition, results of operations, and business and financial performance. Webster has based these forward-looking statements on current expectations and projections about future events. Actual results may differ materially from those projected in the forward-looking statements. Additional information concerning risks, uncertainties, assumptions, and other factors that could cause actual results to materially differ from those in the forward-looking statements is contained in Webster Financial’s public filings with the Securities and Exchange Commission, including our Form 8-K containing our earnings release for the fourth quarter of 2009. I will now introduce your host, Jim Smith, Chairman and CEO of Webster. Please go ahead, sir.

Good morning, everyone, and welcome to Webster's fourth quarter earnings call and webcast. You can find our earnings release that was issued earlier this morning and the slides and supplemental information that accompany this presentation in the Investor Relations section of our website, www.websterbank.com. As usual, I’ll provide an overview for the quarter and to some degree the year, and Gerry Plush, our Chief Financial Officer and Chief Risk Officer, will provide a detailed review of our financials. Afterwards I’ll offer some closing remarks and then open it up for your questions. We’ll begin with slide three, and what a difference a year makes. I’m struck by how different the atmosphere is from a year ago, how much more positive the general attitude is, and how much stronger the economic fundamentals appear to be. The Zeitgeist had shifted more than 90 degrees. Confidence is gradually supplanting fear, and the credit markets continue to heal and function in a more orderly fashion. GDP is growing again. Instead of talking about a decelerating rate of deterioration in the economy, the public discourse NOW is about how the economy is better and we see that trend continuing, especially in New England. These trends and attitudes are evident in our fourth quarter results. The fourth quarter was marked by many significant improvements in Webster's operating fundamentals, especially as seen in stabilizing and improved credit metrics. Including lower delinquencies, a reduced provision for losses, lower net charge-offs, and higher loan loss coverage. Other positive trends include improved pretax pre-provision earnings, expanded net interest margin, and continuing strong core deposit growth. While our results do not yet reflect a return to profitability, our solid performance and improving trends are encouraging. Our recently announced lending and hiring initiatives reflect our positive outlook for continuing improvement throughout 2010.…

Thank you, Jim, and good morning, everyone. On slide nine, here we’ve provided a view of core earnings for the fourth quarter. We’ve noted several items to take into consideration when looking to see what the pre-tax, pre-provision earnings of the company were in the fourth quarter. So we’re pleased report an increase to $57.4 million in Q4, primarily from higher revenue. There were four material items that impacted the quarter, and resulted in a net pre-tax loss so, on this slide we’ve backed out such items including $3.5 million for the fair value of adjustment of warrants in connection with the final accounting for the Warburg Pincus investment. We’ve also excluded $6.5 million in severance and other costs and $2.7 million in already owned, repossessed equipment write-downs in addition to the $67 million of provision that we recorded for the quarter. Note that the provision consisted of $62.2 million related to our continuing portfolio and only $4.8 million related to the liquidating portfolios. So, exclusive of these four items, there’s clear evidence of the positive momentum in our underlying operating performance in the quarter, and again primarily from continued margin improvement. On our next slide, here’s a summary view of our income statement. First, the increase in net interest income reflects a significantly improved net interest margin up 3.26% as the cost of interest bearing liabilities declined 18 basis points, while the earning asset yields declined only 11%. Our core non-interest income, apart from the sale of securities and the gain on warrants, declined modestly. An increase of almost $1 million in loan fees offset an anticipated decrease of $868,000 in other income as the third quarter included a collection of some insurance proceeds. The remaining non-interest revenue categories were fairly comparable to third quarter levels. Our core non-interest…

Gerry; thanks very much. Just to clarify a point made earlier, we reported on the net effect of the issuance price for various capital raises in 2009. I want to be clear that was at $12.43 per share and that the tangible book value per share was $12.57 at year end. Now moving up to the slide on 2010 priorities, we wanted to provide some perspective on key areas of focus. Similar to the past year we plan to report on our progress on each of these initiatives as we release quarterly earnings and participate at investor conferences throughout the year. In this way we hold ourselves accountable for our performance. In keeping with our recent announcement to nearly double our business lending volume in 2010 and add 150 Webster bankers, we believe that core footprint business banking expansion with specific emphasis on small business and middle market is essential in keeping with our goal to be the leading regional commercial bank serving New England. We intend to focus our asset based lending efforts within the Northeast similar to how we conduct our commercial real estate activities and have already streamlined our previously national equipment finance business. We intend to increase share in existing markets, especially newer markets and work to optimize all of our delivery channels. In other words, we will maximize the efficiency and accessibility of our entire system based on the way our customers prefer to conduct their banking business. Areas of focus for market expansion include renewed investment in marketing and people in Westchester County and execution of initiatives already underway in the Providence to Boston corridor. Among the activities we will implement and invest in are the rollout of extended hours, investment in mobile banking and online banking enhancements in customer acquisition. We will heighten…

(Operator Instructions) Your first question comes from Ken Zerbe - Morgan Stanley.

My first question is could you just speak to the types of borrowers generally that drove the increases in the non-performers and the asset based lending and CRE portfolios, obviously, the biggest concern is just you get these new NPLs, or the rising NPLs will that lead to additional credit losses?

In ABL, we had three manufacturers, again no specific industry or geographic trend. We believe in many of these instances, we still have good collateral coverage. So obviously, while you’re right an increase in NPLs can signal future credit losses, there’s nothing particular in asset based lending in the fourth quarter that was unique or disturbing. In fact, one of the new inflows was actually resolved in the quarter resulting in a net increase of lower than the actual inflows in ABL. In center cap, it's really across the board, we continue to see, as a Gerry had indicated, performance in all sectors; challenged in small business and on equipment valuations. So I don't think there’s any underlying specific trend and we continue to do a good job on the remediation in the exit side trying to offset the inflows.

Ken, I also think it's important to note that, we take all of that into consideration in the establishment of the reserves that can set at quarter end. So in terms of how we felt about any potential loss content in any of those NPLs it’s been reflected in the allowance numbers that we established at the end of Q4.

Then the second question I had, have you guys considered taking any actions to help accelerate, I guess, the resolution of your discontinued portfolio? I don't know if that’s even possible or not, but maybe you could just address selling the portfolio, trying to take a big reserve build?

Yes, Ken, I think the reserve at this stage is approximately 24% of the outstandings. We’ve seen over the course of the last several months some very encouraging trends in terms of reduced levels of delinquency and charge-off. So, while four months is not enough in our mind to declare that we’ve got this past us, certainly at this point our view is that we’ve recorded what we see going forward, a very strong reserve that could take care of what we project, on a row forward basis, exposure. So, while to your point, it will create some noise if we continue to hold the portfolio over the course of 2010. I think we feel very good about the reserve levels that are established and some of these leading indicators that maybe some of the worst in this particular out-of-market loans is behind us.

Would that indicate that you might actually see the reserve continue to decline overtime?

I think probably the most encouraging news that we can provide is that we only recorded such a small amount towards the liquidating portfolio as part of our provision this quarter. Our expectation is that at this stage, we’ve got in excess of 18 months worth of forward charges. So we may continue to be conservative on that in the first quarter to two quarters, but I would expect that we should be in a fairly good position as it relates to the reserve levels associated with the risk in that portfolio. Again, that’s based on the information that we’ve got, sort of the most recent trends that we see in that portfolio.

May I just had to that, Ken, that to your point that, if there were a price that approached what we deemed to be the value of that portfolio, of course we would take a look at it, but the gap is significant.

Your next question comes from Gerard Cassidy - RBC Capital Markets.

The question has to do with the DTAs. Can you guys share with us, I think the rules are fairly clear on the regulatory side where you’re not permitted to use the DTAs in the tangible, the Tier 1 capital unless you can prove that you’ll be profitable in, I think, a 12 month period. Then they are limited to, I believe, 10% of the Tier 1 capital. How about on the GAAP side? What are the restrictions? Because, this is where it seems to be fuzzy here, can you guys share with us your understanding of how the public accounts treat them?

I think, and as we reported in last quarter, we try to align both, and I think we took a very conservative tact last quarter in reporting this and basically had a much stronger disallowance. Clearly, as we look at the evidence that we outlined on the page, we’ve got a better outlook as it relates to when you look forward in terms of our view on earnings as well as some of the other items that we’ve listed there. So I think in terms of the evidence that’s laid out, we’re feeling pretty good at year end. I don't think that there’s really a material difference other than the timeframe that you look for recovery. So for regulatory purposes, clearly there’s a 12 month rule from an accounting perspective or from a management perspective, we’ve got a little bit longer time horizon associated with that.

Then second, when you guys look at the 2010 outlook, if the U.S. economy maintains itself as in the expansion, what metrics are you looking to determine when your loan loss reserves or the loan loss reserve building is sufficient? Is it the inflows of the new non-performing assets? Is it net charge-offs? Is it your customers? Can you share with us some color around, what you guys are specifically looking at to determine that, “Okay, we’ve got enough in the reserves?”

I think it's a combination depending on portfolio type. Certainly, we’re looking at delinquency and roll rate analysis as it were and unemployment rates, when you look at the residential and consumer portfolios and we’ve certainly seen some stabilization there. I think the very positive news you can see in our numbers is declines in delinquency in those portfolios. I think as it relates on the commercial side, Gerard. Now, I’ll ask John to add a comment, I think it's a function of our very proactive risk rating that goes on. In particular exposure that I think most people are reflecting on right now or have the greatest level of concern is around commercial real estate. I think that throughout the course of the year between John's team, Bill Rang, Joe Savage, and that Commercial Bank team there has just been a very strong effort in conjunction also with our credit review folks led by Tony DeSantos. I think we feel good that we’ve done a good job of proactively risk rating, taking the appropriate approach, and again that is all reflected in our reserves at year end. If I had to say, I think just in terms of the next follow-on question, our clear view is that our provision and charge-off numbers should be coming much closer, if not literally being on top of one another, as we move forward . Again, assuming that we don't see material degradation here going into Q1, but where we sit today our expectation would be a much, much narrower band in those numbers in the first quarter. John if you would comment.

No, I would agree with those comments entirely. I think that we’ve got good trends in delinquencies, the NPA trends are positive, albeit we added slightly, but then specifically with commercial the risk rating is really a key and you’ve heard us say on several prior calls that we continue to see negative risk rating migration as a general comment. While we still have some of it, it's really more focused in the commercial real estate sectors and we are starting to see a change in portfolio performance from a risk rating perspective in the non-CRE categories, which is certainly encouraging. So I would angry agree with Gerry, that we’re getting much closer to the point, if these current trends continue to aligning the provision with the charge-off levels and as Gerry said, we take into consideration all of those credit metrics and the trending in trying to reach that conclusion.

There’s no simple rule of thumb, Gerard, as you know, but if we were looking for one particular connection, we would say that when non-performing assets started to decline that we would see less need for a reserve build.

Just finally, I know it's only January 22, but the comments about as long as you don't see any big degradation in credit quality in the first quarter. Is there any early sign on directionally? Is it just continuation of the fourth quarter trend or a material improvement or material deterioration?

I think it's too early to try to suggest any trend change at this point. We don't have enough information.

Your next question comes from Bruce Harting - Barclays Capital.

: It looks like all, but really two categories, what have we got here? The asset-backed lending and commercial real estate, NPAs have flattened out, but the 30 to 89 delinquency trends are down for all of those, almost every category, so what’s the disconnect, why are the NPAs still rising but 30 to 89 delinquencies down? Is it just a matter of a quarter or two lag before those 30 to 89 day trends result in more substantial drops in NPLs? : It looks like all, but really two categories, what have we got here? The asset-backed lending and commercial real estate, NPAs have flattened out, but the 30 to 89 delinquency trends are down for all of those, almost every category, so what’s the disconnect, why are the NPAs still rising but 30 to 89 delinquencies down? Is it just a matter of a quarter or two lag before those 30 to 89 day trends result in more substantial drops in NPLs?

There were a lot of questions in that one question. Let me see if we can go back on the yields first and then let's come back specifically on the NPAs and the delinquency and some of our thoughts there. In terms of the investment portfolio and some of the decline in the yield, I think it's really a composition shift. We are being very conservative as it relates to and I made a couple of remarks on this when I covered the slide around the very short duration, limited extension risk type of securities, very good liquidity securities that we have been adding into the portfolio. So you are not seeing I mean we are certainly giving a not to the fact that there is going to be a need for the use of some of those securities as we begin to build the loan portfolio throughout 2010. I also think that it's a function of we have looked at the mix of what is 15 and a 30 year fixed in that portfolio and are beginning to signal to, not only internally and externally, we have made some shifts about how our thinking is for interest rate risk. : Thinking about the loan portfolio, really we’re down just a couple basis points in resi; that would be expected. It's predominantly in the jumbos and some of the other asset types that are in there. You’ve got a great deal of fixed rate mortgages that are there. You continue to see some of the higher rate refinance out so, that takes some of the pressure or would show you why there was some downward pressure on the yields in that portfolio. When you look at all the other portfolios, you have got a much greater proportion of variable rate loans. I think that the good side, or I would take as sort of the good note there, is we have got upward potential overtime as we begin to see rates start to back up. So I think that there’s a real positive opportunity there and I think only with the exception of our equipment finance portfolio, which is predominantly fixed, you have got much more of a variable mix in the rest of our commercial and consumer portfolios. So I think we’re in a good place as it relates to that. Then I’d ask if Jim or John had a comment on that.

No, I am good with that. The only thing I would add is to your question about non-performing assets and then the delinquencies is that, what’s happening is the flow from delinquency to non-performing asset continues, but the fact that new delinquencies are down significantly may bode well for the future migration into non-performing loans.

Bruce, one other specific comment on that as we have mentioned several times on the call the delinquency category on the commercial categories is not necessarily always perfectly linked with non-performers. So we’ve said we take a very proactive approach on identifying non-performing assets. In fact, a majority of our commercial non-performing assets are still paying us current interest. So we have many situations in the larger commercial categories and it’s the case in the anomaly that you’re looking at where we have CRE and asset-based loans that we identified, because we have financial information or liquidity situations where we believe the borrower can no longer for a sustained period of time service its debt, while they’re still paying us move them to non-accrual. They’ll never end up in that 30 to 89 day bucket, but they’ll go into the non-accrual bucket.

Your next question comes from Mark Fitzgibbon - Sandler O'Neill.

Based on the trends you guys are, seeing when do you think or when are you forecasting that Webster will return to profitability?

I think it's clear our view of the first step that I made an earlier comment on is around the provision expense, which clearly with the improvements that we’re seeing in our pretax, pre-provision earnings, our next big challenge is to ensure that we get continue to provide, continue to make sure that reserved levels are maintained appropriately at risk, but at some point in time begin to see that crisscross where we feel comfortable that given the business that’s being booked to replace the business that’s rolling off. We feel more comfortable with the overall reserve levels and therefore, not necessary to continue to add either in additions to charge-offs or that we’re still continuing to be look at the reserve levels as being adequate and therefore not need to continue to replenish. So I think it would be safe to say that our view is that in the latter part of 2010 that’s certainly the internal view that we’ve got at this point in time. Of course that takes into account a lot of things have to happen. We need to continue to see the positive trends in the economy. Obviously not see any other type of down leg here of risk, but I think that would be the view from us.

Yes, and we’d like to surprise on the upside.

Secondly, for modeling purposes how should we be thinking about the effective tax rate over, say, the next couple quarters?

Yes, for a placeholder I would tell you that it's probably around 18% or so.

Then as you get into, say, 2011 when profitability is restored you’d revert back to sort of a normalized tax rate in the low 30%s?

Yes, I certainly think that you could be talking about high 20s, the low 30s.

Last question for you, do you think Webster is currently in a position to get back on the acquisition trail if FDIC-assisted deals presented themselves or non-FDIC- assisted deals?

I think our focus continues to be, Mark, to execute on all the things that we laid out that Jim was talking about in 2010. Certainly, if there’s an opportunity that presented itself that was extremely attractive in footprint we would consider, but I do not think that given our focus and the discipline that we have around the activities in and around our footprint that to do something out of market for us is anything you can be thinking about us doing in 2010 or beyond.

Also, our view is that our currency is valued at significantly less than it may be worth and we take that into consideration in deciding whether to use it should an opportunity arise, so it may be a bit early for us.

Your next question comes from Damon DelMonte - KBW.

Jim, I was wondering if you could give us a little perspective as to where in your footprint you expect to see the most growth opportunities in the next, call it, 12 to 18 months?

If we do a good job on all the things that we’ve laid out, we should grow throughout the footprint. The point I was making earlier was that, we have a significant investment we intend to make in the Westchester County franchise, where we’re going to invest additional marketing and invest in additional people in that market. We think we have just a very big opportunity to grow that market, albeit it's relatively small at this point as compared to the market overall and significant opportunity also in the Boston and Providence areas, but the things we’re talking about in terms of achieving superior service delivery status based on the metrics that we will be tracking and doing a better job with the enhanced capabilities we have for direct marketing using our now in-house database marketing capabilities. Making sure that we invest properly, and making all of our delivery channels accessible when our customers want to do business. Those are the kinds of investments that create the opportunity to increase share in existing, even the denser markets, like Connecticut where we already have nearly 14% market share significant growth potential there. Then the idea of doing a good job at selling more products and services to each customer, which is another metric we’ll be tracking very closely, enhances the opportunities to grow in the very core footprint. So I would say there’s opportunity for growth fully in and around the footprint and we intend to make the most of it.

Gerry, with respect to expenses, could you help us from a modeling perspective frame out what a good run rate is? I know you had some higher expenses related to repossession of some property and what not, and I didn't know how we should look at that going forward.

Sure. If you turn to the way we laid things out, I guess it was on slide 13, I think what you could look for is a normalization in the comp and benefit line. I’ve spiked out some of the key items that created some of that noise. Certainly, in our first quarter, there’s still the rewind of taxes, so for FICO purposes everyone rewinds. So there’s a little bit more expense that you’re going to see associated with that, but you should be looking at the normalized levels and I think you could easily pick that up from the payment from the quarterly reports. If you were to look back at Q1 or the fourth quarter, there were reversals that took place that made those quarters look abnormally low in comparison with where you see the trend in comp and benefits, which is more in that $59 million or so range that you see in terms of the trends and you saw a number similar to that in the third quarter. In terms of occupancy, I think you’d see some elevated level there. We have talked about that just based on the Boston and Providence expansion, but on the flip side, you’ll start to see as we take some of these other steps where we took charges some things could begin to come off. So there’s more that we’ll talk about in future quarters around there, but I think you can see where the level ought to be there; just a comparison, again, and to take my comments into account. I think marketing is clearly going to stay at least, if not higher, than the levels. Certainly we’re going to be doing some elevated efforts here in Q1 and in Q2 and then begin to see a little bit…

I guess just lastly with respect to the margin, you had a nice bump up this quarter and you guys laid out nicely how you got that increase. What are your expectations in the upcoming quarters?

I think right now, we certainly would expect to maintain and then improve. We do have a significant number of CD maturities, again, in the quarter. We do not have, I believe, any borrowing maturities happening within the quarter so there would be very little help there. The slight offset would be Bruce and I and other members of the asset liability committee are certainly very focused on extending out some liabilities at this point as they begin to hedge towards what we think are the coming of rising rates at some point over the course of the year. All I have to do is look at the blue chip forecast and think about the fact that there’s got to be some leveling off here of rates. So while I think there’s improvement of several basis points potential there that would be in and around the range of where we are to up a couple basis points in Q1. I think that’s probably a safe range to be thinking about.

Your next question comes from Bob Ramsey - Friedman, Billings, Ramsey.

To follow on Damon's question about margin, could you talk about maybe to what extent you have got loans that are at floors and when the fed does begin to raise rates will there be any lag to the benefits you could see in asset yields?

Yes, I think there is certainly been some floors established in 2009, but there would be some lag effect during the course of upward repricing, but the vast majority of the portfolio would re price up. Again, remember the single biggest component of our portfolio that is variable rate is on the consumer side. So you would begin to see the repricing take effect there. Let me see if I can comeback with a number that you guys could have on that one in a second.

Then I saw you all said you had submitted a capital plan to regulators to begin an orderly repayment of TARP. Within that capital plan is there any further conversions or rising or is there anything else on the capital front you all have planned, or are you happy with where the ratios are today?

I think at this point that we’re not contemplating additional capital steps. Clearly, we have the optionality through our direct stock purchase plan. We’ve got significant capacity there. There are additional opportunities for exchanges, but I think at this point we’re at pencils down on any additional rising until we see how things play out here. I would believe that our view is we’ve got great capital ratios and the way to begin to bolster those is to start having it come through earnings in future periods.

Then the last question I have for you guys is more housekeeping than anything else, but I can't get the $0.84 diluted EPS loss using the $54 million loss to common and the basic share count. I guess what is the share count, that’s in the denominator there? What am I missing?

Bob, I know we have got it. We’ll put something out. I’ll have Terry follow-up with you guys as a group to put that out there. Just knowing other folks that are waiting for calls we will get that detail stat out.

Your next question comes from Matthew Kelly - Sterne, Agee.

It's actually Matt Kelly. On the consumer fees and the regular changes have you guys done any work to kind of quantify what type of decline you might be able to expect as you look into the back half of next year and in 2011 on that line item?

Absolutely, we have. Our expectation is there would be pressure in those lines for sure. I think it's safe to say that our modeling on a go forward basis is that you could easily see reductions of anywhere from $5 million to $7 million a quarter potentially in and around that line, but we’re still continuing to work, not only on that but also working on our responses to that, so more information will be coming out on that, Matt.

Then just one other question on some of the funding costs. The CD maturities you outlined in the presentation $900,000. What’s the rate on those that are maturing?

I want to say that on that $900 million or so I think we’re probably looking at 1.75% to 2% in that kind of range.

Then last question on the borrowings that you are considering. What are you looking at for structure and term and what did those cost you, and what was that at so far or recently?

I think for folks to get some comfort, I’m looking at a lot of granularity there. I’m not going to pull down $100 million borrowings. We’ve added in $25 million increments maybe three times some FHLB advances, none of which, I believe are greater than 2% at this stage. We were looking at terms anywhere between, I think I mentioned three to five years. As it relates to, we did take advantage of one of their blend and extend programs also last quarter, which I believe we fixed for the next four years a rate of around 3% and that’s actually a reduction in expense because I believe that was in excess of 4% in 2010 in the original plan that we had. So they are the types of steps that we are taking. Again, Matt, we’re looking at both sides of the balance sheet. You can see clearly with the much more liquid assets that we’re putting in the investment portfolio, some of these beginnings of what I’ll refer to as risk management steps on the borrowing side and certainly, we think we’ll start to see some pickup in terms of our CD promotions, not necessarily at high rates, but some type of attractive package more in a blend of products, lots more to come from us over the next couple of months that you will hear about.

Actually, just to ask one more question just on slide 16 on the investment portfolio. What were the yields and coupons there on the new purchases, the agency CMOs, and the CMBS structures? What type of coupons are those adding?

Yes, I think we’re probably looking at on the CMOs probably in the 3% to 3.5% range.

Your final question comes from Collyn Gilbert - Stifel Nicolaus.

Just a follow-up on the expense discussion, specifically are you guys anticipating future severance charges in the first quarter?

Collyn, I think that you won't see our expectation is not for the kind of numbers that were posted certainly this last quarter. As part of ongoing operations there are always minor restructurings that are taking place in the various departments throughout the company. So, I would expect it to be de minimise, when you look at Q1.

Then just in terms of how we should be modeling the preferred dividend expense going forward. Can you give us some color, at least into the first quarter?

At this stage other than the $5 million that you would be thinking about for the CPP, because there’s no word yet as to how that will play out, I don't really think I have got any other comment at this point. I know there’s a lot of noise in that line from the other true up from the Warburg transaction, but…

Otherwise 8.5%, on the remaining $29 million of convertible.

Right, and there’s roughly $28.5 million at the convert preferreds at the rate that Terry just mentioned that you can be thinking about there.

Then just along those lines, as you speak to the positive trends that are occurring on the pre-provision, pretax income, when do we start to see that improvement in the efficiency ratio? Do you have a targeted goal for the efficiency ratio?

Yes, and I think it's a combination. I don't think we’ve gone away from the fact that our belief, especially when you look at us against the peer group, is that there’s specific line items in our expense that need to be worked on, particularly in and around our occupancy and FF&E, which also includes some of our overall operating expense for IT. So we’re very focused on that. I think part of the function of continuous improvement is that we are constantly looking at are their ways that we can be more effective and more efficient. “Should we continue to do everything internally versus is there a better solution externally?” I think we’re just continuing to evaluate all our options, but I mean right now our strong view is just to continue to focus on area by area working across the company. Jeff Brown leads the continuous improvement team. It's very focused on how we look to help drive those numbers down. It's very important to think about the fact that what we really need is just continued generation of revenue on the other side of that. We’ve got a platform in a company that has got a strong build out infrastructure that can support a larger organization. Part of our challenge really is that we want to growth the company. We’ve had the last several years of flat growth in sort of a maintenance mode for a variety of reasons, obviously credit, capital, liquidity. Our focus now is to begin to grow the organization as we head into 2010. I think that takes a fair bit of the pressure off of just the expense side as we have got to go through and continue to reduce and reduce. Certainly, we’re very conscious of the fact those areas where we can be more efficient and I think the team is working on.

When you guys engaged in the Webster-1 initiative, I’m trying to remember, what did you layout from that as kind of a targeted efficiency goal?

There wasn't necessarily a targeted efficiency goal. I certainly think that our view just that in and of itself, but certainly overall our goal is to get back to a 60% or better range. So very clearly, I don't think that as you think about us in 2010 that we’re going to be getting to those kinds of levels, but certainly as we think more strategically that’s absolutely imperative for us as an organization. We’re acutely aware that as you all compare us against the peers, the top commercial banks, either $10 billion to $15 billion larger than us and slightly below our size and you sort of look at that $10 billion to $45 billion range that our ratio as it's currently reflected is just too high and it is a function of both on the revenue side of what enhancements we’ve got to do there as well as on the expense side. So, absolutely very focused on that achievement in the coming year to two years, but certainly not something that I can tell you that we’re going to be doing in the next several quarters; we’ve got to gain some momentum as we build asset growth, additional revenue generating capabilities and in addition some more efficiencies that come out from the expense side.

Collyn, let me just add a couple of things to that is to Gerry's point before, if you took out the occupancy and the equipment, we’d be pretty much at the median for the peer group. We also did achieve what we projected we would with regard to the total benefit from the One Webster initiative so every dollar that we committed to will have been achieved. I think the biggest outlier here is relative to what we originally were anticipating is the impact of credit. So you have the lost income on the one hand and you have the higher expenses that can be associated with that, a portion of which are included in the calculation of the efficiency ratio. So I would say overall we’ve made very good progress in our 1-Webster efforts and as we have a reiterated here today 1-Webster is allowing well and we’ll contribute to continuing earnings optimization as we go forward.

Then just one final question, Jim, maybe you could comment on your outlook. I know you started off the call obviously with a pretty optimistic view of where things could be heading, but specifically as it relates to CRE, that seemed to be one area that did see some deterioration as it relates to NPLs and net charge-offs. Just kind of your view as what you’re seeing in your current portfolio and then what you are saying in terms of pipeline for deals that are coming through?

Yes, the pipeline is not robust, but we think it may percolate a little bit here in 2010 and there maybe opportunities for us, particularly in Southern England, where if you saw the comment about the Beige Book there even were some commenter saying the commercial real estate market looked like it was stabilizing a bit though at levels significantly lower than before. So, first I want to say our commercial real estate portfolio has performed extremely well, very, very well. If you take at the res dev piece and look at the balance of it, we’ve had a good performance. I think it's a tribute to the experience and the discipline of our commercial real estate group. Yes, non-performers are higher and we have put up reserves because we’re realistic about what we expect may happen down the line. At the same time, there will be opportunities for us in commercial real estate in the market. We’re a strong regional player, people will migrate toward us naturally at a time like this, and there could be opportunities under very favorable terms to put some commercial real estate on the books, but it's not as if we would do it at an outsized level. The other thing we have going for us is our commercial real estate exposure, even today, is significantly less than you’d find in our peer group overall and the makeup of the commercial real estate book is much less oriented toward construction and we don't have a lot of leisure in there. So it's a very solid book that we have that we think we can build off of as we go forward. Having said that, when we talk about the investments that we’re making in business lending, most of that will be in business and professional banking as well as C&I middle market lending in 2010, but definitely some opportunity including commercial real estate.

So would you not necessarily subscribe to the view that commercial real estate, at least in the New England market, is falling off a cliff as some others might suggest? Do you see stabilization?

No, we would say, it's weak, challenged, but it is not falling off a cliff.

Thank you. We have no further questions. I’ll now turn the floor back over to management for closing comments.

Thank you. Thank you all for being with us today. Have a good day.