WBS
#So <UNK>, it's <UNK>.
Good morning.
We do expect or anticipate a Fed rate hike December 14 up to 75 basis points.
And really what's driving the margins, so we're at 310, we continue to see as the securities portfolio reprices, to give you an example of that, our purchases are coming on at say 256 with a 5.3-year duration.
They are coming off still a little above 3.
So that's going to continue to put pressure on the margin, about 2 basis points in NIM.
On the other hand, as we've seen live or increase both on the CRE and C&I portfolio we will claw back 2 basis points.
To give you an example, CRE, 91% of the CRE portfolio is floating or periodic.
So that benefits, and it's LIBOR-based so that benefits from the increase in LIBOR that we've seen over the last couple of months.
Likewise on C&I, 84% is floating and periodic.
So we claw back another basis point.
So you have 2 basis points pressure from the securities portfolio and then you claw back 2 on the commercial portfolio.
And so you end up, and that's broad-based, you end about 310.
Hey, <UNK>, it's <UNK>.
Again, that's a hard line to forecast.
And we had terrific swap revenue, record swap revenue in the second quarter, $4.6 million, and this quarter it was more like $2 million, which is still put a good.
That was offset by some of the loan fees, the syndication fees that you saw.
So it's a really hard line to predict on an annual basis.
And as <UNK> indicated it's very lumpy, but I don't know, <UNK>, if you want to add something.
Yes, it is.
It's almost impossible to do it by category.
I mean, I think we target, along with our PPNR and loan growth we target low double-digit growth year over year.
So we make our internal forecasts and we are aspirational to get a 10% to 12% increase in total non-interest income from the various categories.
I would say within the range of 32% to 33%.
<UNK>, it's <UNK>.
So there are things in the quarter.
We have indicated that we are investing more aggressively in the HSA business.
I wouldn't give guidance on a full-year basis, but I think going into the fourth quarter we expect it to be around 62%.
I think a lot of the gains that we will get on the efficiency ratio will be on the revenue side as opposed to the expense side given our appetite for investing in strategic initiatives.
I want to add to that.
It's <UNK>.
We've reiterated the comments that we've made about investing in our businesses, which will provide us with higher revenue, better efficiency ratio over time.
So the idea of having a sustainably lower efficiency ratio was a goal.
In the meantime, we've done a very good job of managing our expenses.
And so the point we are making is as we invest in our highly differentiated businesses, particularly HSA Bank and Commercial Banking, that there may be some investments sooner rather than later.
And as a result of that you could get a little bit of lumpiness in the ratio but the trend is still very positive.
So when you look at it over the intermediate term we are going to do better as a result of the investments that we make today by delivering a sustainably lower efficiency ratio over time.
And that's what we are focused on.
Well, what we are saying is you've got Boston, you've got investment in HSA, Commercial Banking.
There may be some quarters where it's under 60% and others where it may be a little bit over 60%.
Longer term we think it will be well under 60%.
So instead of trying to nail a prediction on efficiency ratio quarter over quarter, what we are saying is that expense discipline is ingrained in every decision we make here at Webster but we also recognize there's an opportunity to invest.
And sometimes we want to invest now rather than trying to smooth that out over a longer period of time.
So I'm not trying to avoid your question.
I'm saying we will manage our expenses tightly and we will invest in our businesses as appropriate and we will deliver better performance and a better sustainable, lower efficiency ratio over time.
No, it was $1 billion in deposits over five years and $0.5 billion in loans.
And we have no doubt that we are going to be able to achieve those goals.
We don't want to predict it, but clearly we are on track to be able to achieve that.
We originally had thought we would be somewhere between 250 and 300 at the end of 2016.
We think that's going to be closer to 200 at this point.
Yes, in deposits.
But over the five-year horizon where we had estimated what we thought we could achieve we said $1 billion in deposits and $500 million in loans we were holding (technical difficulty)
<UNK>.
Good morning.
We had a couple of opportunities as we looked across the portfolio.
One we were originally anticipating rates would start to go up but given the current environment that we took a hard look at all of our tiers and then some of our partner agreements.
And so we adjusted in just a few minor areas within our pricing structure and that's what drove the 2% or the 2 basis point increase.
And I think I don't see any changes in the near term, but as we see opportunities we make those decisions and make those changes.
No, it was elsewhere, it was spread around the organization.
Some of that is more of annuity but some of it is one-time, as well.
But it was in the other areas as opposed to HSA.
Mark I just want to say, too, that your question about the cost of the HSA deposits reinforces what's so important about those deposits is that they are stable, they are long, term and they are low-cost deposits with less elasticity than other deposit categories.
So, no, we don't think deciding that we should push rate to gain deposit share.
In fact, that is exactly what we are not doing.
I want to be clear about that.
We could have kept our promotional rates relatively high, extended the periods.
We said, no, we are not going to do that.
That's not the right call.
But as we assess the market we think the potential is as great or greater than initially estimated, which is why we still have confidence that we will make the goals we originally had estimated.
And not just for deposit and loan growth but for profitability, as well.
The environment, <UNK>, was such that, particularly when Citi deposits were in the minds of many up for grabs, that that was one of the developments that I think encouraged people to promote very heavily and we think that is going to subside and so that was an unusual period.
I think, importantly, as we noted, we actually have more accounts open than we had expected that we would at this point.
We've got a great team of people in Boston that's going to develop those relationships.
And in the end that's what it's all about.
So for those reasons we remain highly confident we will achieve our goals.
And let me just add to that, <UNK>.
It's <UNK>.
We also are just starting to get traction on things like small business banking and commercial where there's definitely some upside there.
So that's not going to impact the pricing.
But small business banking, as an example, I think they just started to get a lot more traction on that.
The halo effect of our expansion into Boston on the commercial <UNK> can probably highlight, but I think we are definitely getting a lot more looks at things as a result of our presence being there.
Part of it, <UNK>, is just timing.
So business banking, we've hired out our group of business bankers and we are starting to see a big pipeline for business deposits there and it is just taken a little bit longer in our initial assumptions.
We are seeing activity in government banking around the municipalities where our branches are located which will give us additional momentum.
Commercial bankers are seeing a lot more momentum.
Our private banker and wealth manager there, who we really have a lot of confidence in, is starting to gain significant traction.
So I think part of this is just timing.
It's why we remain confident, but we are in that blocking and tackling phase where we are fully staffed, positioned and now we just have to continue to get it done.
One thing about Boston is that they really have the right type of customers.
When we think about emphasizing mass affluent focus there's no question about that being a very, the most attractive market, no question about it for us.
So that holds.
And we are assessing the quality of the deposit opportunity and we think it's as high as we originally had expected.
And I think the point is already made here is that it's not simply what's happening on consumer deposit side, it is also what's happening in business deposits and what's happening on the mortgage banking side and what's happening in Webster investment services and the private bank.
And the commercial bank is benefiting, as well, as is government banking.
So basically the totality of Webster is being delivered in the market.
Our brand awareness is increasing every day.
So when we think about what's happening over the longer term there is no doubt that we are going to be able to achieve our goals and have the quality of relationships that we had envisioned.
And let me say the average balances are pretty good for these relationships, as well.
Well, we're still getting the benefit of the LIBOR increases I highlighted.
So I think we'd be relatively flat going into just the fourth quarter.
Maybe a half a basis point assuming if they raise (multiple speakers).
Yes, it's two weeks and it really, it doesn't, I guess, it's $300,000 at the end of the day.
So it's not a big number.
So it's about a half a basis point.
Thank you, Michelle.
Thank you all for being with us today.
Have a good day.
