Good morning and welcome to Webster Financial Corporation’s Fourth Quarter 2014 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 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 materially differ from those in the forward-looking statements is contained in Webster Financial’s public filings within the Securities and Exchange Commission, including our Form 8-K containing our earnings release for the fourth quarter of 2014. I would now introduce your host, Jim Smith, Chairman and CEO of Webster. Please go ahead, sir.

Thank you, Kevin. Good morning, everyone. Welcome to Webster’s fourth quarter earnings call and webcast. CFO, Glenn MacInnes, and I will review business and financial performance, after which President Joe Savage, Glenn and I will take questions. Webster moved further along the path to high performance in the fourth quarter and for the full year 2014 with our sustained growth and progress driven by a succession of solid strategic choices. We’ve invested our capital and resources and energy and growth strategies that are adding value for customers and shareholders. Beginning on Slide 2, record quarterly net income of $51 million increased 6% year-over-year excluding Volcker Rule OTTI Q4 2013. Well, earnings per share also increased 6% on this basis. Full year net income reached the milestone of $200 million. Return on average common equity in the quarter was 8.8% and return on average tangible common equity was 11.8% holding steady due to higher capital levels resulting from earnings growth. All my further comments will be based on core operating earnings. Looking at Slides 3 and 4, year-over-year results were driven by solid Q4 loan growth. Overall loan balances grew 3% linked quarter and over 9% year-over-year with originations across the bank in near record levels. Once again, strength in commercial and commercial real-estate loans up 5% linked quarter and 15% year-over-year accounted for most of the growth. Quite notably, the net interest margin was unchanged at 3.17% which speaks to our rigorous pricing discipline predicated on relationship profitability and validated by independent outside sources. The strong loan growth and stable NIM produced record quarterly net interest income. Non-interest income grew 5% linked quarter and 4% year-over-year with particular strength in loan fees. Apart from the $1.8 million year-over-year decline in mortgage banking revenue, growth was almost 8%. Core Pre-Provision Net…

Thanks, Jim. I’ll begin on Slide 16 which summarizes our core earnings drivers. Our average interest-earning assets grew $445 million compared to third quarter, almost 75% of what was attributable to our loan portfolio. Net interest margin of 317 basis points was unchanged from Q3. Taken together this resulted in record quarterly net interest income of $160.6 million up over 2% from prior quarter and almost 4% from prior year. Core non-interest income increased by $2.6 million or 5% on a linked quarter basis with the primary drivers being, loan fees and BOLI proceeds. Core expenses were $2.7 million higher than Q3 with the majority of the increase related to compensation and benefits. Taken together, our record core pre-provision net revenue totaled $86.6 million and was up 4% linked quarter and 8% from prior year. Our pretax GAAP reported income totaled $74.6 million for the quarter and our reported record net income of $51 million includes an effective tax rate of 31.6%. Slide 17 highlights the drivers of net interest margin versus prior quarter. As highlighted, we achieved quarterly growth and average interest earning assets of $445 million. The securities portfolio had average linked quarter growth of $92 million as we began to purchase securities related to the HSA acquisition. The yield on securities decreased by 2 basis points and interest income was about $400,000 higher. Cash flow from securities totaled $242 million during the quarter with a yield of 330 basis points. In addition, we sold $62 million of securities that generated gains of $1.1 million while there was $899,000 of OTTI related to spread widening in our non-Volcker compliant CLL portfolio. Securities purchased during the quarter totaled $464 million with an average yield of 280 basis points and duration of 4.5 years. Average loan balances grew $324 million…

Thanks, Glenn. Before we begin Q&A, I just want to take a moment to acknowledge the recent high-recognition of Glenn, Terry and Webster’s overall investor relations program is nominated by sell-side analysts who cover us in Institutional Investor magazine’s 2015 company rankings. Congratulations, John. We’ll now take your comments and questions

[Operator Instructions]. Our first question today is coming from Bob Ramsey from FBR Capital Markets. Please proceed with your question.

Hi, this is Martinos Dreskin [ph] for Bob Ramsey. Could you highlight some of your expectation for non-interest income going forward? I saw that it was, showed some growth this year. And how should we think about it going forward?

Well, I think you have to -- first you have to factor in the acquisition, which will grow sub non-interest income. And the guidance we gave is 10% to 11% quarter-over-quarter, given that we have high expectations for growth in the HSA. I think you would see that increase as the year goes on and we fully on-board the seasonal enrollment. And then I think you’d see increase in wealth and investment management as the year progresses. So I would use that as general guideline.

Got it. Thank you very much.

Thank you.

Thank you. Our next question today comes from Dave Rochester from Deutsche Bank. Please proceed with your question.

Hi, good morning guys.

Hi, good morning.

Good morning.

Hi. Regarding your NIM guidance, I was just curious what your outlook was for securities premium AM expense, how you are baking that in and what that expense was for the fourth quarter?

So, the expense for fourth quarter was $13 million. And we’re thinking it’s generally flat right now going into the first quarter.

Great, thanks. And you mentioned BOLI proceeds, in that other income line. I was just wondering, is that line item going to remain fairly stable from here, or was that just a one-time kind of payoff and we’ll see that line decline next quarter?

Well, it depends on volume. But I think there will be lumpiness in there. In the fourth quarter, it’s definitely a one-time item I wouldn’t build it in as reoccurring.

Yes, but is it that -- all of that, in sum, is included in your 10% to 11% growth guidance?

Yes, it’s all inclusive, I don’t include BOLI, I don’t forecast BOLI increases. So the 10% to 11% I gave Dave is core revenue, our core non-interest income.

Got you. And switching to the HSA Bank deal, it sounds like you already bought or pre-bought half of that $500 million in securities you were planning to purchase. And sorry if I missed this, but what were the securities reinvestment rates on those purchases, and then where are investment rates today?

So, what we bought was say about $250 million at 2.87.

Great. And where are you seeing rates today, generally?

Within that range.

Okay.

So, when we buy the second piece, I think we’d expect it to be somewhere from 2.75 to 3, somewhere around that.

And what is that mix of securities that you guys purchased?

It’s all primarily agency CMBS, CFOs, COOs and there is some muni, very small amount of munis in there.

Perfect. And then just to your comments on extending durational liability side. I was just wondering if you guys think you are pretty much done with that or we should expect to see some growth in CDs or maybe termed-out borrowings, something like that?

No, we think we have more opportunity there. I think some of it will come from the pay-down from the HSA acquisition. But we have a product set that includes some additional CDs, retail CDs, we have a bump-up CD that we just launched. It’s a three-year CD. We also have our five-year offering out there. We also have another $150 million in forward swaps that will help extend that as well.

Okay. Thanks for that. And then just one housekeeping item, I was just curious what the breakdown of that intangible for the bank would be, HSA Bank deal, goodwill versus CVI and then what your expectation is for the amortization expense, if it’s baked into that $5 million?

We’re not final on that analysis yet. So, we’ll be, over the next couple of weeks we’ll be out with that, obviously for the K.

Is that $5 million an increased expense roughly incorporate your thoughts on that, your general thoughts at this point?

Yes, it does.

Okay, perfect. All right. Thanks, guys.

Thank you.

Thank you.

Thank you. Our next question today is coming from Casey Haire from Jefferies. Please proceed with your question.

Hi, good morning guys.

Good morning.

Just a question, I guess, on the loan pipeline. It sounds like a strong fourth-quarter production kind of pulled forward some of the loan growth in the first quarter. I was just curious if you could quantify the size of the pipeline versus September 30. And just broadly speaking, as we look forward to 2015, your view on whether or not you would be able to do better than the $1.3 billion of loan growth that you saw in 2014?

Hi, Casey, this is Joe. How are you?

Doing well.

Good, good. Yes, pipeline – actually, we were delighted, pipeline ended the year at a little over $200 million. Of course, we are happy to have the business in-house. And, in fact, did a download with the team yesterday. And we’re already starting to see a rebuild. I would mention that that $200 million-plus is not inconsistent with some prior periods or prior end of years in times past. So we’re not particularly concerned about it rebuilding. It does remain to be seen, with respect to the growth that we will be achieving and whether or not we can replicate that this year. But what is really, really good news is, and I should probably take a pause to say that John Hewitt took over the lead for the Commercial Bank, and he’s a year in. And if you’ll not the transaction or the change in the transition has been absolutely seamless. I would say that we would expect consistent performance. And that really has everything to do with having the, adding the RMs, we’ve grown our RMs, and we’ve got about 70-plus that are in the marketplace today. And they all are doing very, very well. So, long answer to your short question, expect us to perform at about those levels, could be more churn in the book. But we’re in a good place.

And Casey, let me just add one thing to that. If I look at the total pipeline and Joe’s highlighting all the progress on the commercial. But I think we’re probably looking at a pipeline 650 to 675 at the quarter end. And that’s, I think we ended the year somewhere around 800, a little over 800. And a lot of that came in and it was pulled down as you see in our 3% loan growth. So, I think yes, we’re rebuilding it across the business, right.

Okay, great. And then, Glenn, just one for you, on slide 23, the asset sensitivity, I’m assuming that that is not pro forma for the HSA transaction. So I’m just curious what would that look like, pro forma?

Yes. So, and the 8.5%, if that’s what you’re referencing...

Right.

About 2% of that is HSA. So that is in there because we model that going forward. So, about 2% of the 8.5% is relevant to HSA. The rest of it is…

For the deal that just closed on January 13?

That’s right. We look, and we model that and the rest of it, if you look at 2% is due to organic growth and portfolio positioning. Another 1% from floating rate securities. So there is a few but the answer is about 2% on the 8.5% is HSA.

Understood. Thank you.

Sure.

Thank you. Our next question today is coming from Mark Fitzgibbon from Sandler O’Neill Partners. Please proceed with your question.

Hi, guys, good morning.

Good morning, Mark.

Good morning, Mark.

You guys have done a great job driving the cost structure lower, and your expense metrics certainly look favorable relative to your peers. I guess I’m wondering is there room longer-term to drive cost lower, or do you think sort of the expense run rate is going to flatten out for a while here?

So, we appreciate your compliment, Mark, and we have had a lot of success driving down expenses. And I think we’ve been saying more and more on calls recently that we look to keep the efficiency ratio under 60%, as we continue to invest in our strategies and our businesses that are generating economic profit. So it’s less about squeezing more out of the ratio and it’s more about level setting and investing in the business as we go forward with the idea, increasing revenues will absorb the expenses required to advance the strategy. So, less about significant positive operating leverage and more about keeping the efficiency ratio under 60% so we can continue to invest in our businesses.

And let me, if I may just add, Mark, as you know there is, pluses and minuses as we continue to rationalize our branch network. In fact, as far as the $2.7 million one-time, there is a couple of hundred thousand is due to restacking of five or six offices and consolidation. So the Community Bank and the businesses continuing to rationalize distribution, that money is being reinvested in revenue generating type of businesses. So that’s a process, it’s continuing all while we keep the efficiency ratio at or below 60%.

Okay. And then secondly, I wonder if you could share with us your thoughts on your capital ratios. Obviously, you’ve had good growth as well. Do you envision needing to raise capital in 2015?

No, we feel good about where we are. We are in excess I mean we have a slide way in the back of the deck on page 50 that shows where we are versus well capital. But even by our own internal targets, we’re in excess of capital by a couple of hundred million. So we feel good about our structure right now.

Okay. And then lastly, my question is on sort of commercial lending. We’ve been hearing a lot about sort of tight spreads in that space. And I noticed that your commercial loan yields actually rose a little bit this quarter. I wonder if you could tell us what was driving that?

Mark, this is Joe. I’m sorry, yields in the commercial bank, I think it’s the biz bank may have gone up a little bit. But overall, in the commercial bank they were down a little bit. I think the story there would be that we’re delighted that we are holding the line with respect to yields and spreads. Jim made the comment earlier there’s just a lot of discipline in the organizations regarding how we price, getting RAROC, and S&P has corroborated all that. But I would hate to have you think that things are going to get better on the yields and spreads. It’s, I think, Glenn, you want to jump in.

Mark, you may have missed it in my comments but I highlighted there was about $1 million in the quarter-over-quarter increase, which is probably worth about 3 basis points on the loan yield, the total book, 3 basis points I would say on the loan yield and probably 1.5 on NIM. So that that – some of that will always happen every quarter but I think that was a spike out quarter-over-quarter as well.

Yes. Mark Fitzgibbon - Sandler O’Neill: I did miss that, Glenn. What was that, prepayment?

Yes. No, in the quarter we had $1 million of income that came in on non-accrual loans. Mark Fitzgibbon - Sandler O’Neill: Got you.

So, it went from, yes. And so, $1 million on the loan portfolio is worth about 3 basis points, right? And then if you go all the way to NIM you’re probably about 1.5, somewhere around there.

Mark, this is Joe again. I mean, I think the story with respect to yields would be, we talked to all our people. They think pricing is stabilizing a little bit. And that’s good news for us. And we held on pretty well last year with respect to our spread business. We think that that’s probably a good way to look at it. The challenge that we face of course is the stuff that’s rolling in, is at these current market rates and when we have a roll-off that puts some pressure on yields and spreads. But we’ve managed it pretty well as you’ve noted. Mark Fitzgibbon - Sandler O’Neill: Great. Thank you.

Our next question today is coming from Jared Shaw from Wells Fargo. Please proceed with your question.

Hi, good morning. This is actually [indiscernible] filling in for Jared.

Good morning.

Hi, good morning. I guess my first question goes back to the asset sensitivity picture. With the acquisition of the HSA deposit, it certainly improved your overall asset sensitivity profile. Might there be any opportunity on the asset side to try and pick-up some yield today or will that just be held on to until rates finally start to move?

Well, I think that, I think some of that will happen obviously when rates begin to move. We did invest or will invest about $0.5 million in the investment portfolio relative to HSA. So, we’ll pick up some income from that.

And you’re paying down the loan?

And we’ll be paying down the loan fees during the first quarter and it’s probably about $800 million to $900 million at the FHLB borrowing. So we’ll pick up some there as well.

Okay. But as far as changing the strategy, particularly in the investment securities portfolio, that’s not going to happen?

No, I don’t see us doing that.

Okay. And then, looking at the linked quarter increase within comp and benefits, it looks like it’s a little bit higher than that of the year ago quarter. I’m just wondering, what portion of that increase has any was attributed to the new incentive plan rolled out during 2014?

Yes. A bigger piece of it was related to the strong volume and the strong finish we saw in the commercial side. So that piece and then the other piece I would highlight is we did see a pop-in in medical expense. And typically we do see one in the fourth quarter but even on a year-over-year basis probably we’re at $500,000 to $750,000. So that was something that we hadn’t anticipated a quarter or two quarters ago. But that’s the way it came in.

Okay. And then lastly...

The retail -- I’m sorry for interrupting. But the community bank’s incentive program is quarterly so it’s running this monthly payment. So it’s not as much, you’re not going to see as much of a pop there, although we have seen more productivity and we have higher payouts. And so it’s hitting on all cylinders. But the bigger driver was the strong, really strong finish on the commercial bank side.

Right. What’s happening is the consumer incentive program is not net increasing payouts, its allocating them better to value derived.

Okay. And I guess, just a quick follow-up on the incentive plan. Can you maybe just touch on where that program is on a roll-out perspective versus the original plan?

Sure. We’re fully rolled out on the community bank side and have been for three quarters now. And we’re getting traction I think our productivity is up. Our productivity is up about 11%. And we’re selling, what we’re so tightly lined up with profitability, that we’re selling the right product so, a lot of those things happening there. I think we continue to look at where we roll it out next, whether it’s our call-center or other lines of business. But I think we’ve been very satisfied with where we’re on the community bank side.

Okay, great. Nice quarter.

Sure. Thank you.

Thank you.

Thank you. Our next question today is coming from Matthew Kelley from Sterne Agee. Please proceed with your question.

Yes. Hi, guys. Just to clarify a couple things on the fee income side. So it was a one-time or non-recurring BOLI gain in the other non-interest income. What was that, specifically?

Well, that’s proceeds received as a part of a debt benefit. I’m sorry.

I’m saying what was the dollar amount of that?

It was about $1.4 million.

Okay. And then what are your thoughts around the loan-related fee income? Big spike this quarter, do you think that gets back to the $5 million run rate you had been running at the last couple quarters or is that, are we going to see an increase there?

Hi Matt, Joe. I mean, I think it’s more and better, I guess would be the best way to describe it. I think it might not be at that level. I always like to think in terms of the year rather than specifically with respect to a quarter. Last year, we did very, very well on the swap side. We did very well on pre-pays, did very, very well on amendments. And I think we’re just always looking for that year-over-year performance. But will it be as good as 8% or as low as 5%? It’s something that we looked at all the time. There’s good momentum swap side, good momentum on the amendment fees. It’s a little skimpier and slower with respect to syndications. So, it is, there’s so many elements push-pull that are associated with it that it’s really hard to predict on a quarter-by-quarter basis. Cash management, stepping up very, very nicely for us, we’re happy with that. We saw a 7% year-on-year lift notwithstanding losing a large client. So these are good things that are heading our way.

Got you. And then a follow-up question for you, Joe. On slide 36, looking at the $380 million of commercial real estate originations, what was the yield on your pre-originations in the fourth quarter?

I’ll have to look for those originations that, while we’re trying to find the information, yes, we’re doing a lot of we’re doing a lot of multifamily. And that so, clearly, we came in at, if I’m reading it right, 266 was the yield on that business. Remember, that’s heavy swap and it’s all float, essentially. So we’re pretty happy with that.

Okay. And question for you Glenn, you talked about earlier, you think that the premium amortization expense would be flat in the first quarter. Obviously loan rates are down quite a bit, I mean, what’s driving that confidence level in it being flat?

Part of it is the spread between the 10-year and 30-year and the lag. So, those are sort of two factors. So we haven’t seen, we’ve seen the spread widen. And we look at this, we look at the 10-year versus the 30-year. And that’s sort of, we use it as our benchmark for CPRs. And we think they’ll either decrease or accelerate. So that’s a big factor. I think the spread is now at 150, 160, you go back a year and half ago, it was 125, 140 or somewhere around there. So, it’s actually widened. So you see the decrease in the 10-year but you don’t necessarily see at least as far as an indicator, the 30-year coming down as much. It’s not moving in lockstep, it’s widening. So that’s part of it, and then there is the lag. So we might see more of it, I think we’ll see 13 but you could see it accelerate as we get into the second and third quarter.

Got you, okay. And then last question, the FDIC came out with some guidance on what constitutes broker deposits that was guidance about two or three weeks ago. Do you think there’ll be any impact on the HSA deposit business, your business or your competitors’ in terms of how HSA deposits are classified? I know you guys have a direct operation, but some of your competitors operate through a trustee type of model. Can you talk about that and what you have learned since that memo came out from the FDIC?

Sure, actually it was a very interesting memo, good guidance. I know they made a couple of calls too with regard to certain portfolios at banks. I guess, what we want to focus on is our deposits are retail deposits. They are not broker deposits. I think I’ll let the other players speak for themselves. But I think it could have an impact on the competitive landscape.

Yes, got it.

We’ve always said that one of the most important aspects of HSA to us is the value of their deposits being able to fund our loans and be considered as retail transactional deposits. So we’re 100% confident that that’s the case. I think that’s part of the value of being a bank and being able to have a full vertical here in terms of all the way through enrollment and service and holding the deposit gives our model we think a competitive advantage over others.

Got it. Great. Thank you.

Thank you.

Thank you. We have reached the end of our question-and-answer session. I would like to turn the floor back over to management for any further or closing comments.

Thank you very much for being with us today. Thank you, Kevin. Good day.