Good morning and welcome to Webster Financial Corporation's Second Quarter 2010 Results Conference Call. This conference is being recorded. Also this presentation includes forward-looking statements within the Safe Harbor Provision 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 the future events. Actual results may defer 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 statement is contained in Webster Financial's public filings with the Securities and Exchange Commission including our Form 8-K containing our earnings releases for the second quarter of 2010. I'll now introduce your host Jim Smith, Chairman and CEO of Webster. Please go ahead sir.

Good morning and welcome to Webster's second quarter earnings call and webcast. You can find our earnings release that was issued earlier this morning and the slides and in depth supplemental information to accompany the presentation in the investor relations section of our website at wbst.com I'll provide an overview for the quarter and Jerry Plush, our Chief Financial Officer will provide a more granular look at the quarter. And then we will invite your questions. We continue to make progress in what I will characterize as a solid quarter as net income improved to diluted EPS at $0.15 a share. Revenue grew by 6% year-over-year and by 1% on a linked quarter basis. The net interest margin was essentially flat to the first quarter and a touch over of our estimate and core pre-tax, pre-provision earnings held steady at $57 million. The principle driver our second quarter results was and is improving credit quality across all loan categories. The provision for loan losses declined to the lowest level in two years while still covering net charge offs which were at the lowest level in five quarters. Non-performing loans continued to downturn trend to less 3% of the loan portfolio registering their lowest levels since Q1, '09. The allowance for loan lease losses rose slightly and is well in excess of non-performing loans. The quality of NPL coverage is especially strong considering that NPLs already have been charged down by 30% and fully one third of NPLs are currently making payments. At the front end delinquencies declined to the lowest level in two years. While we're resistant to predict future credit trends, we're encouraged by the stable to improving risk migration across the portfolio. Our liquidating portfolio is now below $200 million compared to $424 million at year end 2007,…

Thank you, Jim. Good morning everyone. Turning to slide 8, as we have done in prior quarters, we'll provide a view of core earnings for the second quarter. We're very pleased to report the positive results for Q2 as Jim noted the pre-tax, pre-provision earnings of 57 million. Please note that the 57 million includes the negative impact of Fannie Mae buyouts of 1.8 million. We will provide some more detail on this and other items in a few minutes. Adjustments in the slide includes non-core items such as the 4.4 million in gains on the sale of investment securities generated in large part to offset an incremental provision for loan repurchases of 3.5 million, the loss of 1.2 million on the write-down of certain pool trust preferred securities and $900,000 of severance we recorded in the quarter. We also exclude 900,000 in OREO and repossessed equipment write downs. Lastly, we have a $19.7 million provision for litigation reserve, and the $15 million Higher One IPO gain each as previously announced. The litigation reserve that was established stemmed from a judgment in Ohio project involving the National Construction Lending business. We believe we’ve fulfilled our obligations to the borrowers, and respectfully disagree with the court’s decision. We also believe that there are numerous reversible errors during the trial, and we will ask the Trial Court and the Appellate Courts if necessary to correct them. Webster will take whatever steps appropriate to vacate the court's decision or otherwise resolve the case. Also the gain, we realized in the quarter from our direct investment was Higher One, a New Haven based provider payment systems for colleges and their students as they launch their IPO in June. Let's turn now to slide nine, and provide some more detail on our core earnings drivers…

Thanks Jerry. That concludes our prepared remarks; we would be pleased to take your questions.

Thank you. We will now be conducting a question-and-answer-session. (Operators Instruction). Our first question is from Mark Fitzgibbon with Sandler O'Neill. Please proceed with your question.

Good morning gentlemen, first - you Jim - I think you had mentioned your pipeline is really robust. Could you give us a sense for how big that is and what types of loans it's concentrated in?

I would say - I probably wouldn't give a number as to the size of the pipeline except to say that it's - it leads to a sizeable as the originations that we're reporting in terms of what we would expect to close in Q3 and say that it's broadly across our business lines and in particular in commercial and business and professional banking.

Okay and then secondly, I know you said that earlier in your comments, that you continue the orderly repayments of TARP, is it likely that you will need to raise capital to complete the repayment of TARP in your view?

I'd say, it's reasonable likely at some point down the line before we complete the process that we would, but we're taking it a step at a time, you saw that in the first quarter we were able to repay a $100 million of it without having to raise any capital at all, as our profitability and credit matrix continue to improve, we anticipate that we will have to raise less capital, then might otherwise have been the case in order to ultimately complete the repayment. But I want to make it clear; we are not in a tearing rush to do it. We are taking a balanced approach that very directly considers the best interest of our shareholders and our objective is to raise the absolute, de minims amount of capital, it's maybe requited to complete the repayment. It's hard to say at this time around.

Got you and then lastly, we've seen some deals in New England recently, I'm wondering if you think the pace of consolidation is going to pick up in New England and also if you think that Webster is ready to get back on the acquisition trail.

We are not surprised that acquisitions are starting to perk up a little bit and we do expect that we will see significant consolidation over the next couple of years. From our perspective, we are focused on our core model, we are focused on increasing our market share and our wallet share, in our markets by continuingly improving our service quality and I hope that really came though loud and clear in my remarks today. We are not likely to participate in auctions; we are very interested of course in negotiated stock based transactions with likeminded partners that share our view of what our institutions could be together. At the same time I'd say that, I think that our currency would have to appreciate from here in order for us to want to use it in a transaction and we are really not interested in cash deals at this point, so the focus is on internal activities and to the extent that there are likeminded partners that share our views, we'll be very interested in that kind of a combination.

Thank you.

Thank you, our next question is from Damon DelMonte with Keefe, Bruyette & Wood. Please proceed with your question. Damon DelMonte - Keefe, Bruyette & Wood: Hi, good morning how are you guys.

Good morning, Damon. Damon DelMonte - Keefe, Bruyette & Wood: Jerry could you remind this - exactly how much you have in TRUPs?

Damon, there is a - I think we have a slide post of it, but I want to say it's around 55 - $57 million or so in - are you referring to the investment portfolio? Damon DelMonte - Keefe, Bruyette & Wood: No, I didn't refer to -

The capital? 232. Damon DelMonte - Keefe, Bruyette & Wood: 232? Okay and you said that there was one issue.

Sorry I had to think about both ends of the balance sheet. Damon DelMonte - Keefe, Bruyette & Wood: Sorry, I should have been a little bit more clear with my question and you said there is one security that's approximately 50% of that balance.

Right, there is the - we've got a - roughly a $132 million left of the issuance that we did in 2007. Damon DelMonte - Keefe, Bruyette & Wood: Okay, okay, great and then could you guys just give us a little update on your flagship office in Boston. Are you happy with the progress so far, and do you have any additional plans maybe support that branch with other (inaudible).

Yeah Damon, the branch is right on target as it relates to where our plan results were. We had good deposit growth again in the quarter. We actually are saying some very strong opportunities on the loan side. We're fully staffed, so we would expect greater and greater contribution as you think about Q3, Q4 etcetera and again our intent in the not too distant future is to begin to start to report out a little bit more about our activities in the seven regions, so clearly we would focus in on performance related to Boston. Regarding the expansion in the area, we're continuously evaluating what our next steps are. Again, I think we made it clear that we establish a flagship there. We wanted to conduct mostly small business, commercial and government municipal business sort of that's the first step and follow with through with more on the retail in consumer side, and we'll continue to update you guys as we formalize our plans there. Damon DelMonte - Keefe, Bruyette & Wood: Great, thank you very much.

Sure.

Thank you. Our next question is from Bob Ramsey with FBR Capital Markets. Please proceed with your question.

Hey, good morning.

Good morning, Bob.

Hey real quick, I just, I didn't catch which is what tax rate should we expect to next quarter? Was it 25%?

19.

19 thank you.

Sure.

And then I appreciate the slide you will include showing the new non-accrual formation. I see that new non-accruals of 75 million in change are the lowest level we've seen in some time. How much of that reflects sort of early auction on the liquidating portfolios, and how much of that data you really seen some signs of stabilization kind of in your core portfolios?

Yeah. I would say that you're seeing stabilization as well. It's a combination of both rather than repeat everything. Then I also think that it's reflective of, you can see the improvement that's taken place in the past too, so the inflows are lower, so I think as you think about we continue to be pro-active in risk rating to portfolio in the commercial side clearly and taking steps as necessary so there has been any change there, so I think you can take it as a positive sign of better performance both in the quarter and in the liquidating.

Okay, and how you guys kind of thinking about reserve adequacy, now that the allowances is more than over 3% of loans, and your charge-off seem to be rapidly approaching 1%.

Yeah. I would say that we are evaluating what we should do in Q3 and Q4. Again we're going to take the approach of determining adequacy based on what we determine is the underlying risk in each of the segments, totaled it up. if we don't need the provision to match the charge-offs or exceed the charge-offs, you guys will see charge-offs in excess provision in those quarters if we for some reason were to see any type of uptick, again we got to be cautious given the economy and particularly employment rates, I think it's important to know that there could be continue that, you would see that provision could be at those levels or greater but our view right now, we are very pleased with the performance to-date and our thinking would be as we said that if these trends continue you will see us be able to charge off at whatever the levels are and just access adequacy and we will assume that the provision would need to be either at or above the charge off levels.

Okay. Thank you guys.

Sure.

Thank you. Our next question is from Collyn Gilbert with Stifel Nicolaus & Company. Please proceed with your question. Collyn Gilbert - Stifel Nicolaus & Company: Thanks. Good morning gentlemen.

Hi Collyn.

Hi Collyn. Collyn Gilbert - Stifel Nicolaus & Company: Jerry, just wanted to clarify a couple of the points you made in kind of your concluding comments. So, the expectation was that you would see average earning asset growth in the third quarter but yet you would probably maintain the – at a minimum maintain the securities balances. So, then do we then extrapolate from that, that there will be loan growth tying in also Jim to your comment on the pipeline.

Yeah, Collyn, what I stated was given the pipeline update and with the increased number of business development officers, we expect that if we continue to see the kind of effort on top of the existing pipeline that we have got an opportunity to see some overall loan growth in the third quarter. You should know that we have been boarding our residential loan production and you could see that the uptick that occurred quarter-over-quarter there but we are really pleased to see that we have made some strong strides in the commercial non-mortgage area in particular both in small business and the middle market. So, I think we are at the stage where we don't want to grow the investment portfolio, I think, we have been talking about that, I know there was slight growth quarter-over-quarter. We may make some composition changes to the portfolio as we move forward but our thoughts are to maintain it most and certainly not grow it. Collyn Gilbert - Stifel Nicolaus & Company: Okay, that's very helpful. And then also on your comments with the expectation that non-interest income will be down just because of the regulatory concerns, issues. Should we be thinking about in terms of quantifying how much of a decline when you commented on 20 million in the annual debit transactions, I mean is that what we should be looking for? I know the expectation probably is you're going to try to find offsets to that but just initially is that the kind of the dollars we should be thinking about?

I think you should be thinking about a several million dollar impact just given the timing of when things take place in the third quarter and our thoughts are to provide some additional clarity when we release or at some presentations that we have scheduled late in the third quarter to provide an update of some of the other action steps. I think as Jim noted clearly we have got some repositioning of the product offering that we are seriously evaluating and expect to launch and also we are going to do pretty much a full view of all of the fees that are assessed and also all of the expenses. So, we're looking certainly very proactively for offsets. Collyn Gilbert - Stifel Nicolaus & Company: Okay.

And just to add a little bit to that say one way to look at it is August 15 is the real date here, so you could look at the impact being about 50% in Q3, the biggest gap is going to be in Q4. There will be some response by Q1 into Q2 and we should come back up the other side of that by Q2. Collyn Gilbert - Stifel Nicolaus & Company: Okay, that's very helpful. And then just a final question and if you guys have touched on this I apologize but the $3.5 million provision for loan repurchases what - could you just give a little bit more color into that and then is that a number that we should expect could continue going forward.

Yeah, Collyn, we have seen some repurchase activity. It generally takes somewhere between 24 to 36 months to comeback, so start to think about 2005, 06, 07 and even into 2008, loan production that was sold from the prior activities to national wholesale and then also thereafter just from the activities we have had and footprint of loans that are conforming and/or we go to private investors. Most of this though is related to say the '06, '07 and even into '08 timeframe. And it's just based on the experience that we have been having with having to reach settlements on some of that, with some of the investors that we have just determined that it would be a prudent step to take that experience, look at the volumes that are out there and provide some level of reserve. Generally speaking, you provide several basis points off of your gains on sales as a reserve. We felt that at this point, just given the level of activity, and certainly this is something that all mortgage bankers and all banks that have sold or conduct mortgage banking activities are seeing. Our thoughts were it's better to estimate that and put up a reserve and then we will continue to monitor that and report on it. But our expectations would not be that you’d expect to see a charge like that of this size but then again we are just going to continue to monitor the activity and continually access where we stand with this. Collyn Gilbert - Stifel Nicolaus & Company: Okay, so that was kind of a more of a proactive move as to what you might see coming down the pipe.

Yes. Collyn Gilbert - Stifel Nicolaus & Company: It wasn't reflective of purchased loans that came on this quarter?

Correct. Collyn Gilbert - Stifel Nicolaus & Company: Okay, that's helpful. Okay, I think that was all I had. Thanks.

Sure.

Thank you. Our next question is from Gerard Cassidy with RBC Capital Markets. Please proceed with your question.

Thank you. Good morning guys. The follow-up on the repurchase activity there might take place. Have you guys done any work on what you think the demand might be that you might be required to repurchase or have you -- it sounds like you haven't had to repurchase anything yet. Is that correct?

No, we have been, Gerald we have been repurchasing or reaching settlements. And generally speaking for clarity sake, this is not a repurchasing of loans, it's generally reaching settlements on that activity. What to keep in mind is that, the vast majority of this activity related to the long gone national wholesale business. So, there is some finite number obviously out there for that and we are just going to continue to -- and I would say 80% of our activity related back to, specifically back to the production that, that group had generated and that was sold into the market. So we have seen most of our settlement amounts were laid into that activity for '06 and '07. And as a percentage of sale we have got some statistics that we have based, how we extrapolated and came up with our reserves. So, I think hopefully that gives you a little bit more perspective on it.

Okay. And what are you finding for every $100,000 mortgage that comes back that has to be settled or negotiated, what is it costing you on the dollar? For example, JPMorgan Chase is saying that for every dollar that they have to take back, they are writing off $0.58 to settle that loan. What are you guys seeing?

Yeah, I think it's always going to be case by case right? But if you were to start to look at a range, you could be probably in the range of 30.

Okay. Regards to expenses and the way you guys look at expenses going forward?

And by the way just to clarify, that's when you look at it as a percentage of the sales of activity too. We look at this thing in a lot of different ways, but hopefully I’d give some flavor to that. If we see the activity pick up I think everyone knows we are incredibly transparent about these things. We will certainly provide more detailed information in terms of monitoring the adequacy of that reserve and updating that on a quarterly basis going forward.

Sure. Circling back actually to the capital, have you guys got any body language from your primary regulator where the tier 1 common ratios will end up or the tier 1 equity ratios?

No, I don't think we have got it.

To be well capitalized, that is.

Right, I was going to say, I don't think there has either been anything specifically stated or sort of framed there. I think, our view is based on where we see peer averages and peer medians and where some of the higher performers are in the sector and our view is that we've got a range around which, that we think we should be post all of the CPP. But our view is that that's going to be a combination of capital generation from obviously dropping earnings to the bottom line coupled with the improved performance that we have that certainly should help us from a evaluation standpoint. When we ultimately do something that would help boost, as Jim referred, we would be pretty good shape to try and do this with a minimum amount that we possibly have to raise.

They've been careful, Gerard, not to make any commitments as to what the changed levels might be or even if they're going to change them at all. But we think that they look at each individual institution now and want to be sure that they have a particular level of capital based on what they deem their risk to be. We think our tier 1 common at over 8% is at a very comfortable level. It's within our target range of 8 to 8.5 or so. And so we're pretty comfortable where we are and we think that even if they move what they call well capitalized, they won't move it all the way to that level. They will still leave themselves significant latitude on an individual institution basis. So 8 and 12 would be the key numbers we think that we would want to make sure we meet even though well capitalized will probably be less than that.

Right, right. Regarding the non performing loan reconciliation table that you guys have, new non accruals as you indicated were about 75, $76 million down obviously from the prior periods. Is there any mix change or what are you seeing in the new non accruals? Is it more skewed to commercial real estate today versus resi or some sort of construction loan into the second quarter of '09?

No, it’s broad based. We see it across the portfolio which is probably the most positive sign.

And are you finding that when you look at these loans, is it because of poor underwriting or weaker underwriting versus just general economic problems that your borrower ran into because of the recession? Is there any of that mix when you go back and look at it over the last year that maybe a year ago it’s just more shoddy underwriting that was causing it versus an economic problem whereas today is it more an economic problem?

Yeah, I think it’s -- clearly the economy has affected borrowers, not only within the footprint but then also in some of the other businesses that we've had that have been more national. And I think that that's clearly the primary driver of all the issues that we have seen in the portfolio.

Thank you.

Sure.

Thanks Gerard.

Thank you. Our next question is from Bruce Harting with Barclays Capital. Please proceed with your question.

On figure 8, the reconciliation of core earnings, the -- just maybe clarification you've got for closed and repossessed asset expenses of 1 million but I don't see that. I see that in the income statement but I don't see that in that table. I do see the 900, the 0.9 foreclosure rate and I'm just wondering why that's not in there. And then you also see the 3.5 on the loan repurchases. Can you just, in the last, in Gerard’s Q&A, you talked about the provision for loan repurchases but I haven't seen that accounting before. So what's behind the new line item and will that be a recurring line item? And then how do we think about sizing those three line items, the foreclosed and repossessed asset expense, the write down and then this repurchase on a sort of go forward basis. Thanks.

Yeah. We'll take those one at a time. Thanks, Bruce. On the, we think clearly that the writedowns are something that occurs within the period. They're true non-recurring. We think that the reason that we split out the expenses related to the foreclosed property is that the vast majority of that activity is still ongoing. So we have taken what we think is probably the most conservative way to look at this, split them apart so you can truly see what we're writing down and that the performance there is getting better and better because with the proactive management before anything is going in or in terms of some valuation recovery that's happened to the existing portfolio. I think that's really what the intent is there. We also don't spike out all our workout expenses. We also continue to keep those in our core operations. So I would say that, I know that when you look at this table there's just an awful lot of items we're trying to explain. But generally speaking we think we're taking a, what I think is probably a fairly conservative approach of trying to say, hey look, our core operations have to carry the expenses of that asset and foreclosure expense activity that takes place as well as our loan workout expenses. So I hope that's helpful. Regarding the reserving, our view was that based on what we expect to see in terms of potential, again based on what's been presented back to us and taking a look at our total population of what's sold, this is a reserve. And again just Bruce, in fairness, Collyn Gilbert had asked this question as well, we look at this much more as a one line, as a one time, that we'll look at and determine on a quarter end basis are we seeing anything different from the assumptions that we made? Our expectation is that that wouldn't have material volatility but we will be talking about it because again, from a transparency standpoint we want folks to know. We conducted mortgage banking activities. There's clearly loans that are being put back to us or asking for some level of settlement for whatever reason or another, and that's being negotiated. That's been done. Most folks that have ongoing mortgage banking operations see this. This is just from, with the ramp up in activity that's taken place, our view is, let’s take a look at the total population, do our best estimate on what we think that reserve size should be, add this addition to the existing reserves that we have and then continue to monitor it on a go forward basis.

Okay. And what you and your peers, bank management level thinking about in terms of offsets to some of the regulatory actions on debit and over limit and can you give any indication? I mean is a annual debit card fee likely or I know you don't want to give away strategic plans but if you could just talk a little bit about that. Thanks.

Well let's say it's something Bruce but we haven't been definitive about it yet. There's, you can imagine a lot of ongoing review internally that we're reminiscent to discuss it until we've decided absolutely what it will be and what the timing will be but I think I tried to make the comment that the costs will be more broadly absorbed by base than in the past because you won't have a smaller portion of the base subsidizing others as a result of the fees that they pay and so we are looking at the mitigators there. On the Durbin Amendment we just don't know what the impact is going to be on that so we are not going to take any particular action on that until we do. The biggest focus is on the Reg E changes right now and first getting the maximum amount of people who have been then telling the market how favorable our program is and attracting new customers as a result of that and then when we go into Q1 and certainly into Q2 we would have rolled out our new program through product redesign and that will help spread the cost across the base.

Okay. Thanks Jim.

Thank you. Our next question is from Ken Zerbe with Morgan Stanley. Please proceed with your question.

Great thanks. I guess given our things going on with finance reform and when you think about your business, I mean that doesn't change I think for you, but when you think about your business I mean broadly speaking what is sort of your core run-rate of return on equity, return on assets and obviously this is couple of years out and then when do you really expect to get there? Thanks.

Ken I made a comment about, we absolutely, we got to be able to earn our cost to capital. Our cost to capital is somewhere in the 10% maybe a little bit higher range or so. If we were setting a number out there but what we think ought to be able to do we would say that we would say that we ought to be able to exceed a 12% return on shareholders equity. As I said in my remarks, we're reminiscent to put a hard number out or put a timeline on it expect to say we know that's what we ought to be able to do when we believe that we can and our focus on our service quality model and the way that we invest our capital and our other resources to drive economic profit, is what's going to take us there. I am reminiscent to say it's 2012 or sometime in 2013 but you think that out into that timeframe would be a reasonable time to be able to get to that level and I also gave the caveat that let's remember that there are head wins out there that if it's a negative impact on overall revenue as a result of a regulatory reform including the overdraft changes that are been made, plus we have the impact of higher FDIC premiums for a long period of time. So, you would love to be able to say that we do at least 1% return on assets but I think it's pretty mature to be able to make that commitment and we like to be able to suggest a higher return on shareholders equity but I think that would be the prudent thing to do right now either. We have got to see how it goes, the progress that we made with our particular service model which we think is the right model in this environment because we are trying to deliver better banking to our consumers and time will tell how well we will do but I think we have got the right plans, we certainly got the right attitude, we got the right strategic and financial discipline. We are allocating our capital and our resources appropriately and so we are confident we ought to be able to generate the kind of shareholder returns that we have discussed.

Okay great. Thank you very much.

Thank you. Our next question is from Matthew Kelley with Sterne, Agee & Leach. Matthew Kelley - Sterne, Agee & Leach: How are you doing guys?

Hey good morning. Matthew Kelley - Sterne, Agee & Leach: I was just curious to hear, what charges off severity has been like this quarter compared to where it was three, six months ago preferably by loan buckets if you could.

I think that if you take a look at the breakouts that we have given in the tables, we give you charge-offs by quarter, by loan category and I don't know if you've had a chance to take a look through that but that would just give you, I think your question of what charge-offs look like by bucket by quarter, I think its detailed there. Matthew Kelley - Sterne, Agee & Leach: I'm just saying are you guys in terms of the non-performing are you recovering 50, 60, 70, $0.80 on a dollar?

No. And again I'm not sure I follow your question. Matthew Kelley - Sterne, Agee & Leach: Okay. Well I'm just curious as to, in terms of non-performing recoveries, have they done better or worse over the past six months?

Oh recoveries clearly have gotten better and you can see that through the numbers. I think that was just in terms of where we have seen in terms of lost content. I don't think it's gotten materially -- it certainly hasn't worsened whatsoever. I think it has been fairly stable. Matthew Kelley - Sterne, Agee & Leach: Okay, thank you.

Thank you. Mr. Smith, there are no further questions at this time. I'd like to turn the floor back over to you for closing comments.

Okay, thank you very much. Before concluding I just want to remind everyone about our upcoming investor day at our flagship office in Boston. We'll be hosting a dinner on the evening of September 22 and then we'll have presentations on the 23rd. Please contact Terry Mangan in our Investor Relations group for further information. Thank you all for joining us today.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.