James C. Smith - Chairman, Chief Executive Officer, Chairman of Executive Committee, Chairman of Webster Bank and Chief Executive Officer of Webster Bank Gerald P. Plush - President, Chief Operations Officer of Webster Bank, Chief Operating Officer, President of Webster Bank and Director of Webster Bank Glenn I. MacInnes - Chief Financial Officer, Executive Vice President, Chief Financial Officer of Webster Bank and Executive Vice President of Webster Bank

Bob Ramsey - FBR Capital Markets & Co., Research Division Steven A. Alexopoulos - JP Morgan Chase & Co, Research Division Mark T. Fitzgibbon - Sandler O'Neill + Partners, L.P., Research Division David Rochester - Deutsche Bank AG, Research Division Ken A. Zerbe - Morgan Stanley, Research Division Jason A. O’Donnell - Merion Capital Group Matthew J. Keating - Barclays Capital, Research Division Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division Casey Haire - Jefferies & Company, Inc., Research Division John G. Pancari - Evercore Partners Inc., Research Division Collyn Bement Gilbert - Keefe, Bruyette, & Woods, Inc., Research Division Dan Werner - Morningstar Inc., Research Division Michael Rosado

Good morning, and welcome to Webster Financial Corporation's First Quarter 2013 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 Financial's 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 might 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 differ materially 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 first quarter of 2013. It is now my pleasure to introduce your host, Jim Smith, Chairman and CEO of Webster. Please go ahead, Mr. Smith.

Good morning, everyone. Welcome to Webster's First Quarter Earnings Call and Webcast. Our earnings release, tables and slides are in the Investor Relations section of our website at wbst.com. I'll provide highlights of the quarter and a strategic overview, Jerry Plush will discuss business unit performance, Glenn MacInnes will review the quarter's financial results and then we'll take your questions. Webster delivered solid first quarter earnings, driven by strong commercial banking and mortgage banking results and constrained by a couple of special charges. Earnings per share were $0.44, up $0.02 from the year-ago period. Results included $3.1 million of unusual or nonrecurring pretax charges amounting to $0.02 a share, with $1.6 million relating primarily to severance and outsourcing contracts that we announced during the quarter and $1.5 million resulting from a write-down of a loan in a held-for-sale account, which reduced other income. Core pretax preprovision net revenue, or PPNR, rose 16% year-over-year. Total revenue grew 3.5% and expenses declined 2.2%, generating positive operating leverage of more than 5.5% year-over-year. The efficiency ratio came in just above 62%, 347 basis points better than a year ago. The seasonal costs we see in Q1 each year will not be a factor in subsequent quarters, and we remain committed to achieving a 60% or better efficiency ratio beginning this quarter. The net interest margin came in about where we expected at 323 basis points, down 4 basis points from Q4 and 13 basis points from a year ago. Still, net interest income declined by only 1/3 of 1% linked-quarter and rose 1.7% year-over-year due primarily to 6% loan growth, which was fully funded by core deposit growth. Loan-to-deposit ratio is nearly flat year-over-year at 82%, a positive metric that will assure funding for expected ongoing loan growth. Regarding asset quality, nonperforming loans…

Thanks, Jim, and good morning, everyone. You'll notice a change from prior quarters in our business segments. As of January 1, we combined our mass market consumer lines of business into a newly created personal bank. The personal bank brings together consumer deposits, consumer lending, Webster investment services and also our newly created distribution division, which consists of our Customer Care Center, our branches, the ATM network, mobile, online and social media. In addition, our Business Banking division, which serves small businesses across our 4-state footprint, is now an independent reporting unit. This change recognizes the increasingly important role that this valued group of customers and line of business has in Webster's future. Both the Personal Bank and Business Bank now report to me. Let's turn now to Slide 3 to review our Personal Banking results, which had $5.6 billion in mostly residential mortgage and home equity loans and lines and $8.4 billion in consumer deposits. So if you look at the chart at the top right, you can see the overall loan balances have declined by about 2.4% over the past year, and that's led by a decline of 4.8% in home equity from ongoing customer delevering and refinancing activity. Our resi mortgages are essentially flat over the past year, and that's largely driven by our strategy of selling conforming long-term, fixed-rate loans. The increased sale activity has contributed to substantially higher noninterest revenue over the past year, which totaled $6.7 million in Q1, $8.3 million in the very strong fourth quarter and about $4.4 million a year ago. Our overall Personal Bank portfolio yield declined by just 1 basis point in the first quarter. A 6 basis point decline in the resi yield was almost offset by an 8 basis point increase in the consumer yield. And keep…

Thank you, Jerry, and good morning, everyone. I'll begin on Slide 9 which summarizes our quarterly trend of net income available to common shareholders, our return on average tangible common shareholders' equity and our return on average common shareholders' equity. Of note is the increase in earnings by $1 million over prior year despite approximately $2 million of after-tax onetime expense items in Q1. Our return on average assets was 84 basis points in Q1, and the return on average tangible common shareholders' equity was 11.28%. As noted, the decline in our tangible common equity ratio was the result of $116 million increase in shareholders' equity. Slide 10 highlights our core earnings drivers. This excludes non-core categories as noted on the bottom of the slide. So starting with average interest earning assets. Average earning assets grew $278 million or 1.5%, the majority of which was in our loan portfolio, which grew $232 million or 2% compared to the fourth quarter. The key drivers of this growth were commercial and commercial real estate loans. Average commercial loans grew from the fourth quarter by $198 million or 6.3%, in line with the guidance we provided earlier in the year. Versus prior year, average earning assets grew by $1 billion or 6%. Of that, 75% of the growth was the result of an increase in loan balances with the remainder in the securities portfolio. Net interest margin for the quarter was 323 basis points compared to 327 basis points in the fourth quarter and 336 basis points in the prior year. The results are in line with guidance previously provided as NIM compression remained in the 4 basis point range, consistent with much over the past year. The compression during the quarter was driven by an 8 basis point reduction in earning asset…

Thanks, Glenn. First quarter was a solid quarter with a positive outlook and strong momentum. Our strategies in pursuit of generating economic profits are clear as is our progress towards achieving them, and we believe we're on path to be a high-performing regional bank. We'd now like to open it up for your questions.

[Operator Instructions] Our first question is from the line of Bob Ramsey of FBR Capital Markets. Bob Ramsey - FBR Capital Markets & Co., Research Division: I was wondering if you could just talk a little bit about loan growth. I know the average growth in the quarter was strong at 2% and your end-of-period balances were down a touch, but it sounds as if you expect average growth in the second quarter to be pretty good, too, if it's 1% to 2%. Just -- is that based on where the pipeline is, sort of going into the second quarter? Because end-of-period balances would seem to be a little bit lighter than that.

Yes. Hey, Bob, it's Jerry. Definitely, we're seeing a very nice uptick. And throughout the comments that Jim made, as well as myself, we try to give a little bit of color of where it was still strong quarter-to-quarter in terms of comparison. But clearly, in commercial and business banking, we rebuilt the pipelines, so we're back up overall in the $1 billion plus range. So we were at a low point at 12/31. So we knew that, in particular, there were a lot of customers that wanted to get transactions done at year end. We made those comments in the calls in Q4. We're trying to highlight certain areas this quarter where it was. But I think one of the things you're hearing us express is that the team really has got a lot of momentum. There's no question. There's no -- all the competition out there in terms of pricing and all the different markets. But clearly, the rebuilding took place during the quarter, and so we feel very comfortable going into the second quarter, that we're heading into it with a much, much stronger pipeline. Bob Ramsey - FBR Capital Markets & Co., Research Division: Okay. And then just sort of taking little bit of a step back. When we look at the Fed data, we can see that the industry, as a whole, was down slightly in the first quarter. Do you think that really is the trend that you talked about earlier, of volume being pulled forward into the fourth quarter? Or do you think that this quarter, the customers that you talked to, is there any sort of slowdown in their need or desire to borrow?

It's Jim. I'll comment that we think that most of it was the pull forward into the fourth quarter, and we haven't seen a material shift in attitude from our clients.

Our next question is coming from the line of Steven Alexopoulos of JPMorgan Chase. Steven A. Alexopoulos - JP Morgan Chase & Co, Research Division: I want to start with the efficiency. With the operating efficiency ratio down you said around 350 basis points year-over-year, one, is there as much focus on improving that ratio this year as there was last year? And secondly, could we see another improvement somewhere in that similar range for this year?

Yes, Steve, it's Glenn. So we think, as we've indicated, that we'll get to 60 -- or back to 60 in Q2. And I think if you look at it, and you look at our core expenses, a fair amount of what you saw, the pop up in Q1, was seasonality, about $2 million to $2.5 million in expenses. And you also heard the examples of JLL and FIS, so we continue to rationalize our expense base to further improve efficiency.

And I'll add to that, that it is a constant with us. We talk about pathway to 60, P260 or better. It's a way of life. Every day, we're thinking about it, we're talking about it. I mentioned 3 of the initiatives that we're undertaking where we expanded our relationship with our item processor to gain efficiencies and we outsourced some of our facilities management. And we got an eForms project, and we have a project management team and operating review team that spend all of their time looking for ways to improve our efficiency, a large part of which is to continue to rationalize expenses even as we're trying to drive revenue growth.

Yes, and Steve, it's Jerry. One other thing that we've mentioned in prior calls but we've actually now really built up the team, we've got a dedicated, continuous improvement unit that's staffed with Six Sigma experts. We're actually rolling out in the second quarter a Green Belt training for a number of our players in different functions across the organization. We're -- just to echo the comments you just heard from Glenn and Jim is we're going to be relentless about this. I think we have been and we're really, really going to work through. And at the end of the day, this will squeeze out not only real dollars, but also make it a lot easier to do business, for our customers to do business with us and for us to actually deliver on everything to them, both internally and externally, so a lot, a lot of work going on in this area. Steven A. Alexopoulos - JP Morgan Chase & Co, Research Division: Okay. And maybe to follow up on that Jones Lang LaSalle agreement. Is there any initial look as to the branches you might close or consolidate this year?

Yes, it's Jerry, and we're working hard on that. I think we're going to have probably some more clarity on that in the second quarter call. Steven A. Alexopoulos - JP Morgan Chase & Co, Research Division: Okay. Just my final question was on the margin. I thought you said you expect the margin down around 5 basis points in 2Q and then getting close to a bottom, so does that imply the rest of the year you expect relatively flat from that level?

Right. We think if the 10-year swap goes back up around 2, that it will stabilize the margin. Now the 10-year swap this morning is at 1.89, right? But we think then the margin will be stabilized in the second half of 2013.

But we want to be careful not to be suggesting that it would be flat in Q3. We don't know. More likely, it would be attaining a trough in Q3, so you could see further diminishment in that quarter.

Our next question is from the line of Mark Fitzgibbon of Sandler O'Neill. Mark T. Fitzgibbon - Sandler O'Neill + Partners, L.P., Research Division: I wondered if you could talk a little bit about charge-offs. Charge-offs have been relatively flattish for the last 4 quarters at around $16 million. Do you think we'll see charge-offs beginning to taper off in incoming quarters? And in that same vein, I was curious if you're still targeting sort of a reserve-to-loan ratio of around 1.25.

So I think with respect to charge-offs, I mean, we're optimistic given the leading indicators of past due loans. And so we need to build a little more of a history there. But if you follow it through, it should have an eventual impact on reducing our charge-offs. With respect to the allowance, I think we're staying pretty consistent with -- we think it's in the 1.20, 1.25 range. Mark T. Fitzgibbon - Sandler O'Neill + Partners, L.P., Research Division: Okay. And in your internal modeling, when do you forecast that net charge-offs are going to sort of cross over with provisioning where we'll see those start to even up?

I'm not going to give specific quarter, but it's later in the year.

And Mark, I'll add that we're optimistic about what may happen in the charge-offs, but reticent to predict that they'd come down because you never know when you're going to get some lumpiness. You just can't tell and that's why we haven't made a projection. Mark T. Fitzgibbon - Sandler O'Neill + Partners, L.P., Research Division: Okay. And then lastly and I don't know if you can comment on this, but is it your understanding that Warburg intends to pull the remaining 9% position in the company?

We know -- we don't know of any plans to reduce it. I guess I'd put it that way and that would be strictly up to them.

Our next question is from the line of Dave Rochester with Deutsche Bank.

How much lower do you think the expense run rate can go, given you're still investing in the business and your reducing other costs? I know you talked about the seasonal bump kind of unwinding as we go into 2Q. Are you thinking there's a good chance that expenses could actually stabilize in the second half of the year with the other items that you mentioned?

I'd say I think that we're committed to getting it back to the 60 in Q2. And as Jerry indicated, Jim as well, we continue to reinvest in the business, too. So we're not putting out a target that we'd be sub-60 or any other number at this point.

You made a really good point, Dave, because when you look at our expenses and you look at us just on the expense side relative to peers, we're reasonably efficient. And the biggest issue for us has to do with the relationship of the expenses to the revenue. So we're working very hard on driving the revenue, as well as some of the initiatives that we've described that will help us to further keep the expenses in check.

Okay. And as you're heading into the back half of this year, I think you had mentioned potentially switching to neutral check ordering. Is that still on the table? Is that something you're thinking about? And are there any other offsets that you can think of to that on the fee income side?

Yes, David, we believe that just given the timeline to put something like that in place, it probably would be the very tail end of the year. You wouldn't see much of an impact in 2013.

Okay. Great. And one last one on the margin. Is your outlook assuming basically stable premium amortization at this point?

Yes.

Our next question is from the line of Ken Zerbe from Morgan Stanley.

Just a question on expenses. I know you're very focused on getting back to the 60%. But in the grander scheme of things, do you guys feel that you're giving up anything in terms of growth initiatives? Or are there other potential initiatives that you would like to pursue that you're not able to because you're more focused on keeping the expenses low?

No, I would just echo that we continue to invest in the business. I mean, all through last year and going into this year, you saw the initiatives. Jerry highlighted some of those Private Banking, commercial build-out, Treasury and Payment services. All those are expenses that, as we look at the return and the economic profit and lay those out, we continue to invest in. So really, when you're looking at our expense base, we're not -- it's not a burn the furniture. We're rationalizing our expenses, and we take out capacity, and we do it through outsourcing agreements, whether it's with FIS and JLL, or just looking at how efficiently our spend is.

And once you feel good about the 60% or you're at a very stable level of the 60%, should you -- should we expect more investment in growth initiatives?

Ken, it's Jerry. My sense is that throughout the last several years, I think Glenn's point was really spot on because we have been heavily investing. In each of these calls that we've been on, and I could talk for Joe Savage and John Guy and Dan FitzPatrick, every one of these guys are adding business development officers. What we're talking about doing is the rationalization of everything that we have today, so we are investing in people. We're rolling out a lot new -- a lot of new things from the technology side. I mean, we talked about mobile deposit capture. We've completely refreshed the online experience and just rolled that out for our customers where it's going to continue to make enhancements to the ATM network. We're adding new banking centers. There's a couple that we'll get into a lot more detail of that, and again, as I had mentioned to one of the earlier questions in the second quarter. But there's a lot though that's here today that's got to be rationalized and we've got to make decisions as to whether can we do it effectively ourselves? Can we partner with folks that can help us do it more effectively? But there's a lot here that you have to justify. Part of what we're doing, and I think you can tell there's a very disciplined approach that we're taking, is we're looking at every single dollar that's getting spent and what it's being spent on and are we getting a return for that dollar. So whether it's a sponsorship, whether it's to add a person to the organization, every single dollar is being rationalized. And it's great to be in this position of where we're spending so much time and energy on it. So -- and I used the word relentless earlier to respond to a question, but that's the way we are right now about this.

So can I just -- I think this is a really good question to talk about. Say that we know that we're not going to be a high-performing regional bank or return access of our cost to the capital if we run an efficiency ratio over 60%, which makes that an overarching goal. And I think that, though your point is well taken, that you don't want to deny future revenue growth because of what you're doing in a particular period. But I think there's got to be a balance here, and that's what we're keeping in mind. I think the beauty of what we've done so far is that we've been adding revenue-producing people while becoming more efficient in terms of how we deliver the services, which has allowed us to actually have core reduction in expenses over comparable periods. Once we get under 60% sustainably, I think the answer is, yes, we will be able to invest more aggressively even than we are now in adding bankers that will produce more revenue that will help to drive the positive operating leverage that we see in the future periods.

Our next question is coming from the line of James O'Donnell of Merion Capital. Jason A. O’Donnell - Merion Capital Group: Jerry, if I heard you correctly, you mentioned in your prepared remarks the 25% of deposit volume is being conducted through the ATM network, up from 16% a year ago, which seems like a remarkable improvement. Do you have a target in mind here? And is there a minimum level that you all feel you need to maintain in order for the Universal Banker model to be viable?

Great question. My sense is, it really is picking up because there's 2 things that are happening. One, is customers who previously would never have thought to use those machines even though they obviously had deposit-taking capabilities more and more of getting comfortable. And what our bankers are doing is they're making sure that they walk our customers over and demonstrate and show. So there's a lot more that's happening there, and we think that, that upside can continue. And I would dare say that you'll continue to hear us report on this on a quarterly basis because its priority one. We're trying to make sure -- and that's also you've got the Remote Deposit Capture. And Jason, that's the part of why it's going to be really hard to give you sort of a target because I think once you roll out RDC, now you've got a customer having all that optionality and I think that, that will take away from maybe what one would perceive would be so much of the volume that would migrate naturally just to the ATMs. You'll now have to -- it'll be hard to be able to say that it would be one versus the other that is going to drive it. But our view is that's why the Universal Banker model can work. There's going to be locations where we're going to still be a heavily transacted -- transaction-oriented banking center. That's just the demographics. But in all the areas where we possibly can do this, we obviously want to adopt that Universal Banker model because that gets us much more into sales and services as opposed to what tends to be much more with the transactional nature of really a service-oriented first branch. Jason A. O’Donnell - Merion Capital Group: Okay, that makes sense. But my follow-up was going to be on the mobile RDC, and it sounds as though from your comments that that's an integral part of the strategy and that you all are sort of thinking about that as being critical component of kind of pushing transaction volumes further out of the network. Is that fair?

Yes, it's fair. And one of the goals we're talking about from an active online customer standpoint, we've got 60% of the customers using our online services. I want 60% of our customers as an initial target using our mobile services. So the goal is, is that this is where we're out and we're going to be deploying iPads in locations and demoing for customers every single moment we can. It's all to empower the customer. At the end of the day, this is to provide them with all the tools, and they have the option of which channel they want to do business with us. And you think about the things that we rolled out over the course of 2012 and into this year when we rolled out our eChecking product and you follow it up with rollout of all these image capture ATMs and you follow it up with the mobile app and now you're following it up with Remote Deposit Capture, you can see where we're headed. We want to make sure that our customers have the freedom to bank when, where and how they want. And the adoption rates are very, very encouraging. Jason A. O’Donnell - Merion Capital Group: Okay, that's helpful. And then how should we think about sticking with the Universal Banker model, the impact? Is there a potentially meaningful impact here going forward on comp and benefits expense as a result of the strategy? Or alternatively, does your cost per FTE actually increase as branch employees assume presumably greater responsibility in their work and the skill set is more significant under the model? How do you look at the opportunity from an absolute standpoint in terms of comp and benefits expense?

Yes, a good question. You can clearly see between the transactions coming out of the branch to the ATMs. You couple that with the rollout of these other electronic ways that customers can do business with us and you roll out the Universal Banker. Just answering the specific question of, yes, your cost per FTE will go up per Universal Banker versus the platform personnel that are in place. But you're going to expect that the number of people necessary, because a lot of those transactions are migrating, to go down, so you've got a clear offset nationally. In our mind, there's going to be savings to that, and that's payoff for why you want to have all those transactions take place on mobile devices or at the ATM machine.

Our next question is from the line of Matthew Keating with Barclays.

Just wanted to clarify, I know you mentioned that the share -- you didn't buy back any shares in the quarter, but in terms of the Warburg warrant transaction, the foregone shares in lieu of them, paying the exercise price on those warrants, so those didn't count at all against your $50 million remaining share buyback authorization, is that correct?

That's correct, yes.

Okay. And then again on given your capital ratio is continuing to build, you continue to target a 30%-type payout ratio this year and maybe you could just comment on how you're thinking about capital return.

Sure. I'll just say -- and we mentioned this briefly in the discussion, but we do have the $50 million buyback authority on the one hand. We also have signaled our intent to continue gradually raising the dividend up to around 30% or so on a payout ratio, and in fact, the board will be taking up that question next week.

Okay. Then finally, on the $1.5 million nonrecurring write-down on that loan that was recognized in the other income, can you just explain, perhaps more color on that and maybe perhaps explain why that's onetime in nature?

It's onetime in nature. It was held in -- it was in held for sale. So by accounting standards, you have to -- we marked it down to the revised value. So by accounting standards, we had to account for that. It's in other income. So the reduction of $1.5 million is in other income. That loan should clear this second quarter as well.

Yes, we thought we had taken a conservative mark on it. It turns out that the market wasn't as receptive as we would have thought, and so we went ahead and addressed it.

Our next question is from the line of Matthew Kelley of Sterne Agee. Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division: I know that your commercial real estate yield during the quarter was 402. What does the pipeline look like on a commercial yield front?

It's comparable to us. Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division: Okay, got you. And maybe just talk about what asset classes or geographies you're seeing, better yields coming in there as we look forward. Obviously, some stabilization in commercial loan yields helping out the margin. But where are you seeing some of those sales actually tick up?

I'd say that we're pretty comfortable. If you think about the production that took place in the first quarter, really there's a concentration of probably New York into Jersey. Again, our footprint is we've repeatedly stated, Boston to Philly. But that's where a fair bit of the production took place. There's a lot of competitive pressure in all the markets, and I think true to what the head of the group and all of us believe, we're sticking with the pricing discipline that we've got in place. Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division: Okay, got it. And then going to your efficiency initiatives and outsourcing the JLL, I know you want to have more commentary on that, next quarter sounds like, but I think during the first quarter you made -- you suggested that you wanted to take total square footage down from like 750,000 to 500,000. Over what time frame do you envision executing that plan?

That's a good question, and that's what we're working on now, is to decide exactly how long and what would it take. And rather at this point than try to project what that would be, we've got some work to do, as Jerry mentioned earlier, to figure it out. But we'll be talking about that probably in the next call. Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division: Okay. And last question, just your tax rate. How should we be thinking about that going forward and the changes might be occurring there as profitability looks a little higher?

31% is the guidance for Q2. Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division: Right. But what about beyond as you look out into full year '14?

Use 31% in your model.

Our next question is from the line of Casey Haire of Jefferies & Company. Casey Haire - Jefferies & Company, Inc., Research Division: I wanted to circle back to the NIM points you made, Glenn, on post second quarter, sort of stabilizing. I was just wondering, what are the key drivers? Is it remixing the balance sheet, more funding cost flexibility? Just a little more color there, if you could.

Yes, it's a balance, so it's the loan volume coming in, particularly on the commercial side. We could do a little bit more on the funding side as well, but I think the key is, is that if long-term rates start to pop up little bit. And again, we look at the 10-year swap at 1.89, 1.90. If that gets above 2 and stays there, then we think the second half of the year or toward the end of the year, we should start seeing some stabilization. Casey Haire - Jefferies & Company, Inc., Research Division: Okay. So I mean, assuming we stay at 1.75 here, what -- I mean, what kind of -- what rate of compression should we expect?

I'm not going out past the second quarter. I mean, we're sticking with 5 in Q2 and then we'll see where we are or where the factors add up and we'll talk to you as we get through Q2. Casey Haire - Jefferies & Company, Inc., Research Division: Okay, fair enough. Just a couple of housekeeping items on the fee side of things. The guide of 4% to 5%, does that bake in the charge in the first quarter here?

% Yes, yes, it does, and our outlook on mortgage banking and other fees. Casey Haire - Jefferies & Company, Inc., Research Division: Okay, great. And the gain on sale down at 297, I think you said is, where are we today sort of early on in the quarter versus that number?

I think we've been fairly, fairly flat to the 297. But I think you'll see some of the guarantee fees come in the second part of this quarter and that'll put some compression on the spread. Casey Haire - Jefferies & Company, Inc., Research Division: Okay. And then just lastly, the check ordering you mentioned, I think you mentioned that impact won't take place this year or maybe next year. What is the all-in impact of that on a fee basis?

Between $3 million and $4 million. It's a several million dollar item

Right. Casey Haire - Jefferies & Company, Inc., Research Division: $3 million to $4 million annually, and that's most likely coming in next year?

Yes.

Right. And just remember, Casey, the thing you got to think about is, the more that is going electronic and the more the customers are doing balance alerts and really actively managing, this is going to happen regardless so -- in the customer base. So there'll be a lot more being electronic and a lot more management of the money, and so as customers -- and we're putting more and more tools out for them to be aware and effectively manage, I would just say that I think you could see some drop-off regardless.

Our next question is from the line of John Pancari of Evercore.

Can you talk little bit about your plans around the acquisition front? I know you've been indicating a greater interest in recent quarters, so just give a couple of thoughts on that front.

Sure. We have indicated a greater interest, but we are focusing really 98% to 100% of our time on improving our own performance. And to the extent that opportunities come along to do negotiated transactions under our guiding principles, we'd be very interested for sure. But we're not out soliciting, but we are looking at what the potential opportunities may be. And we do believe that consolidation is going to pick up sometime over the next few quarters.

And what would your ideal targets be again? Can you remind us in terms of the size of the bank from a whole bank acquisition perspective?

Sure. Well, ideally, I do size and location and say the best deals that realize most synergies are going to be the ones that are in market and a lot of this would be about generating those efficiencies, which could be reliable, and therefore, you got to figure that in terms of what the premium would be. Size would be anything from around $1 billion, maybe a touch less depending upon the quality of the institution up to significantly larger than that, even up to something that is truly strategic. And then we would look not only within the market but contiguous to the market for opportunity.

Okay. Then lastly, on the margin, what is the average yield of the loans that you brought on to the balance sheet this quarter? I'm just trying to get an idea of how the continued loan growth that you indicated is going to help the margin in the back half of the year. It just seems to be more dilutive at this point still and I'm just trying to reconcile that.

The average yield of everything originated in the quarter was 3.89, weighted.

Okay. So that, combined with your expectation on the bond portfolio with the swap rates maybe heading up, you think that's enough to provide a good flow to the margin then?

Yes.

Our next question is from Collyn Gilbert of Keefe, Bruyette, Woods. Collyn Bement Gilbert - Keefe, Bruyette, & Woods, Inc., Research Division: Jim, just a quick follow-up on the M&A question and you said significantly larger. And I know you've always said look at partners of similar -- like-minded partners or whatever the term was that you've used. Could you -- there was a deal in the New York area, 2 smaller banks merged together of similar sizes and took out significant cost saves from the same -- from the combined institution. Is that -- when you say synergy-focused, I mean, could you look at something of that type of magnitude where you see 2 similar size come together and then -- and really cut the pro forma really, I guess, sort of exploit the synergies?

We're very open minded about what would work and I look at that transaction and say, that's great for them, because there's 2 like-minded institutions for sure. They came together, gone away to make that happen. They'll have a bigger presence in their market. There's so many positives that come out of that. And then you've seen others like SCBT combination made and 2 or 3 others over the last several quarters or so where people have realized that the greatest value they may be able to deliver is through consolidating with one another. So yes, we're very open minded to that possibility.

Okay, okay, that's helpful. And just the board thoughts here on the dividend and I know you said 30% payout was the target. I mean, is that a target like a near-term target that we could see with the announcement this month? Or is that -- it's more like a year away?

No, I don't want to put a time limit on it. Let's go through the process here, and the board will have this discussion. They will have more to say about that next week. Collyn Bement Gilbert - Keefe, Bruyette, & Woods, Inc., Research Division: Okay, okay. And then just...

Collyn, I will say this. If you're looking at the sooner or later side of it, it's more likely to be sooner than later. Collyn Bement Gilbert - Keefe, Bruyette, & Woods, Inc., Research Division: Okay. Okay. And then just quickly on the competitive side in pricing and structure. On the C&I side and the market that you're seeing in the C&I loans, are you guys kind of being forced to do more term loans on the C&I side? Or are those structures still staying pretty short and pretty variable?

It kind of goes across the spectrum. I wouldn't say that there's a -- something in the market that's forcing us to do anything. I don't think the mix has changed materially and most of it short.

Our final question this morning from the line of Michael Rosado of Crédit Suisse.

Just with the cost of deposits at around 36 basis points, do you feel that you guys can continually move that rate lower throughout the year? Or we starting to approach the bottom here?

Yes, we -- if there's one leverage, it's going to be the CD maturities that we indicated and that we have $1.1 billion in maturities for the remainder of the year at 106 basis points. And provided they stay and roll over, they come back in at 31 basis points. So that's at least one lever. With respect to the others, I mean, we continue to look at that, so the other products, may be less so.

Okay, great. And then just on general loan pricing in the market, are you guys seeing any stabilization? Or is pricing still pretty aggressive for those higher-quality credits?

I think that it's safe to say that it depends on the transaction, it depends on the line of business, in some markets we're seeing people be very aggressive, in other markets, we're seeing it being rational. It's hard to generalize it, say, across the footprint that it's comparable.

There are no further questions at this time. I would like to turn the floor back to management for closing comments.

Rob, thank you very much. Thank you all for being with us today. Have a good day.

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