Webster Financial (WBS) shares ended the last trading session 11.6% higher at $46.66. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 14.2% loss over the past four weeks.Webster Financial witnessed a strong price increase following President Donald Trump's unanticipated announcement on April 9, 2025, of a 90-day suspension of reciprocal tariffs for most trading partners, excluding China. The tariff pause eased imme ...

Back in October of last year, one financial firm that I thought remained interesting was none other than Webster Financial Corporation (NYSE: WBS ). The stock had been on a tear, with shares rising 11.6% on October 17th afterCrude Value Insights offers you an investing service and community focused on oil and natural gas. We focus on cash flow and the companies that generate it, leading to value and growth prospects with real potential.Subscribers get to use a 50+ stock model account, in-depth cash flow ana ...

Employee and Workforce - As of December 31, 2024, the Company employed 4,297 full-time and 110 part-time employees, with a gender distribution of 61% female and 39% male[35] - The average employee tenure at the Company is approximately 8.8 years, indicating a stable workforce[35] - In 2024, the Company conducted 12 webinars to enhance internal communication and employee understanding of business operations[37] - The Company offers a comprehensive benefits package, including medical, dental, vision plans, and a matching 401(k) retirement savings plan[40] - The Company has implemented significant investments in formal development programs, including an Internship Program and a RISE Emerging Talent Program for high-potential individuals[42] Regulatory and Capital Requirements - The Company must maintain "well-capitalized" and "well-managed" status to retain its financial holding company designation[51] - Under Basel III Capital Rules, the Company is required to maintain a CET1 capital ratio of at least 4.5% plus a capital conservation buffer of 2.5% of risk-weighted assets[59] - The Company’s regulatory capital ratios are detailed in the Management's Discussion and Analysis of Financial Condition and Results of Operations[60] - The Company is required to receive prior approval for acquisitions exceeding $10 billion in total consolidated assets[53] - As of December 31, 2024, the Bank was categorized as "well-capitalized" under all capital ratio categories[61] Financial Performance and Dividends - The Bank declared and paid $600.0 million in dividends to the Holding Company during the year ended December 31, 2024, with $747.3 million of undistributed net income available for future dividends[77] - The Bank had $2.1 billion in FHLB advances outstanding as of December 31, 2024, and held a FHLB stock investment of $91.7 million[68] - The Bank's capital stock investment in the FRB of New York was $229.6 million as of December 31, 2024[67] - The Bank's compliance with the Community Reinvestment Act was rated as Outstanding in its most recent examination[86] Risk Management - The Company is required to maintain a risk committee, led by an independent director, to oversee its enterprise risk management framework due to its total consolidated assets exceeding $50 billion[99] - The Chief Executive Officer is responsible for all of Webster's risk-taking activities and ensuring an effective enterprise risk management framework is adopted and executed[104] - The Company has adopted the Three Line Model of enterprise risk management to enhance efficiency and effectiveness in risk management[105] - Webster proactively manages information risk through robust data security programs and tools, including maintaining a comprehensive asset inventory and implementing endpoint defenses[109] - The Company mitigates operational risk through an operational risk management framework that identifies, assesses, monitors, controls, and reports on operational risk[119] Credit and Compliance Risks - Webster's loan portfolio is diversified across commercial and industrial, specialty finance, commercial real estate, and residential lending to manage credit risk effectively[123] - The company maintains robust credit processes and underwriting standards consistent with its desired risk profile[122] - Compliance risk is inherently high for banks due to regulatory scrutiny, and Webster has a comprehensive Compliance Management Program to mitigate this risk[127] - The Chief Compliance Officer is responsible for compliance risk oversight, ensuring adherence to laws and regulations[129] - Webster's activities include monitoring compliance with consumer protection and regulatory risk across various services, including lending and investment management[126] Economic and Market Conditions - The company faces significant risks from fraud, including theft and electronic fraud, which may lead to financial losses and reputational harm despite substantial resources allocated to prevention[152] - The allowance for credit losses (ACL) on loans and leases may be insufficient, requiring significant estimates of current credit risks and trends, which can change frequently[159] - The company is subject to extensive government regulation, which may interfere with business operations and lead to additional costs or regulatory uncertainty[165] - Changes in federal regulatory agency leadership and policies could result in stricter enforcement and increased compliance costs, negatively impacting profitability[167] - The company faces risks from difficult economic conditions, including inflation and interest rate volatility, which could adversely affect business performance[173] Financial Results - Total interest income for 2024 reached $3,927,286, an increase of 8.3% from $3,628,260 in 2023[433] - Net interest income after provision for credit losses was $2,116,387, a decrease of 3.2% compared to $2,186,522 in 2023[433] - Non-interest income decreased to $251,899 in 2024, down 19.8% from $314,337 in 2023[433] - Total non-interest expense was $1,351,279, a reduction of 4.6% from $1,416,355 in 2023[433] - Net income available to common stockholders for 2024 was $752,057, a decline of 11.6% from $851,190 in 2023[433] Asset and Liability Management - The total allowance for credit losses as of December 31, 2024, was $689.6 million, with a portion related to commercial loans and leases evaluated on a collective basis[422] - The company's loans and leases net amount to $51.8 billion as of December 31, 2024, compared to $50.1 billion in 2023, reflecting an increase of approximately 3.4%[430] - Total assets increased to $79.0 billion in 2024 from $74.9 billion in 2023, representing a growth of about 4.5%[430] - Total deposits rose to $64.8 billion in 2024, up from $60.8 billion in 2023, indicating an increase of approximately 6.5%[430] - The company's retained earnings increased to $3.76 billion in 2024 from $3.28 billion in 2023, marking a growth of about 14.5%[430]

Core Viewpoint - Webster Financial (WBS) reported mixed financial results for the fourth quarter of 2024, with adjusted earnings per share (EPS) of $1.43, surpassing estimates but declining from the previous year [1]. Financial Performance - Adjusted EPS for 2024 was $5.38, missing the consensus estimate of $5.71 and down from $6 in the prior year [2]. - Net income applicable to common shareholders was $173.6 million, a decrease of 4.2% year over year, with full-year net income at $752.1 million, down 11.6% [3]. - Total revenues for the fourth quarter increased by 4.1% year over year to $661 million, but fell short of the consensus estimate of $687.2 million. Full-year revenues reached $2.6 billion, up 2.3% but also missing estimates [4]. - Net interest income (NII) rose 6.6% year over year to $608.5 million, while the net interest margin decreased to 3.39% [4]. Non-Interest Income and Expenses - Non-interest income was $52.5 million, down 17.7% year over year, primarily due to a net loss on the sale of investment securities. Excluding this loss, non-interest income increased by 35.7% to $109.4 million [5]. - Non-interest expenses decreased by 9.8% year over year to $340.4 million, driven by lower deposit insurance expenses and reduced professional fees [6]. Loan and Deposit Growth - Total loans and leases increased by 1.1% sequentially to $52.5 billion, while total deposits rose marginally to $64.7 billion as of December 31, 2024 [7]. Credit Quality - Total non-performing assets rose significantly to $461.8 million from $218.6 million year over year. The allowance for loan losses increased to 1.31% of total loans [8]. - The provision for credit losses was $63.5 million, reflecting a year-over-year increase of 76.4% [8]. Capital Ratios - The Tier 1 risk-based capital ratio improved to 12.01% from 11.62% year over year, while the total risk-based capital ratio rose to 14.20% from 13.72% [10]. Profitability Ratios - Return on average assets declined to 0.91% from 1.01% year over year, and return on average common stockholders' equity fell to 7.8% from 9.03% [11]. Strategic Outlook - The company anticipates that rising NII and non-interest income will enhance its top line, supported by strategic acquisitions and growth in deposits and loans. However, deteriorating credit quality poses a near-term concern [12].

Financial Data and Key Metrics - Adjusted return on tangible common equity for Q4 2024 was 17.7%, up from 17.5% for the full year [10][11] - Adjusted return on assets for Q4 2024 was 1.27%, up from 1.23% for the full year [10][11] - Efficiency ratio for Q4 2024 was just below 45%, compared to 45.4% for the full year [10][11] - Net income to common shareholders on an adjusted basis was $240 million, with diluted EPS of $1.43 [18] - Total assets were $79 billion, effectively flat compared to the previous quarter [19] - Loan-to-deposit ratio increased modestly to 81.1% [20] Business Line Data and Key Metrics - Loan growth was driven by C&I and residential mortgage categories, with total loans up $558 million or 1.1% linked quarter [20] - CRE concentration levels declined to 255%, with office exposure down to less than $825 million [15][20] - Deposit growth was driven by Ametros, which grew its deposit balances to just over $1 billion from $800 million at acquisition [13] - HSA Bank grew its deposits by $800 million, partly due to the launch of the HSA Invest platform [13] - Consumer deposit growth accelerated through digital channels, and commercial bank deposit growth benefited from the expansion of the 1031 exchange business [14] Market Data and Key Metrics - Net interest margin (NIM) expanded to 3.39%, up 3 basis points from the previous quarter [25] - Total revenues increased by $35 million, with a $19 million increase in interest income and a $60 million increase in noninterest income [23] - Noninterest income was $109 million, up $16 million over the prior quarter [28] - Net charge-offs totaled just over $60 million, with 60% coming from traditional office-related or healthcare services credits [16] Company Strategy and Industry Competition - The company optimized asset risk weightings for regulatory capital ratios, reduced commercial real estate asset concentration, and improved the yield profile of its securities portfolio [7] - The acquisition of Ametros added a new source of low-cost, long-duration deposits and expanded the company's addressable market [8][9] - The company is investing in data and analytics capabilities to prepare for a large bank regulatory regime and to enhance operational efficiency [36] - Investments are being made to grow existing businesses, including enhancing treasury management capabilities, digital banking channels, and client acquisition tools [37][38] Management Commentary on Operating Environment and Future Outlook - The company anticipates a mid-2025 inflection point on overall credit metrics, with a normalized annualized charge-off rate of 25 to 30 basis points [16][17] - For 2025, the company expects loan growth of 4% to 5%, deposit growth of 4% to 5%, and net interest income of $2.45 billion to $2.5 billion [32] - The company is preparing for a transition to a Category 4 bank, with incremental run-rate operating expenses of $15 million to $20 million in 2025 [34] - The company remains well-positioned for the future with a strong capital position and diverse balance sheet [39] Other Important Information - The company made a charitable contribution to the Webster Foundation and saw higher performance-based incentive accruals and seasonal benefit expenses in Q4 [29] - The company expressed sympathies for colleagues and clients impacted by natural disasters, including floods in North Carolina and fires in Los Angeles [39] Q&A Summary Question: Potential for M&A activity if Category 4 regulations are eased [42] - The company is focused on organic growth but would consider inorganic growth if regulatory restrictions are lessened [43][44] Question: C&I NPLs and industry concentration [46] - The $53 million increase in C&I NPLs was spread across 3-4 credits, with some concentration in office-related credits [47][48] Question: Margin trajectory and securities repositioning [50] - The company expects NIM for 2025 to be in the range of 3.35% to 3.40%, with minimal impact from securities repositioning in Q4 [51] Question: Capital management and buybacks [53] - The company anticipates returning capital to shareholders in 2025, with loan growth and tuck-in acquisitions as priority uses of capital [55][56] Question: Deposit costs and betas [58] - Deposit costs were 2.2% in Q4, with a beta of approximately 30 basis points expected for the rate cut cycle [60][61] Question: Geographic expansion plans [62] - The company has no specific plans for geographic expansion outside its current footprint but will continue to invest in national businesses [64][65] Question: Credit inflection and CRE tail risk [72] - The company expects charge-offs to normalize around 25 to 30 basis points in 2025, with moderating credit migration trends [76][77] Question: Loan growth trends and sponsor book [82] - The company is seeing stronger pipeline activity in the sponsor book, with balanced loan growth expected across categories [84][85] Question: Expense outlook and regulatory investments [110] - The company is prioritizing investments that enhance operational efficiency and regulatory readiness, with $40 million to $60 million in incremental run-rate expenses expected over the next several years [112][113] Question: Direct lending partnership with Marathon [116] - The partnership is expected to be active in Q2 2025, with potential upside to loan growth and investment income [117][118] Question: Expense growth contributions [120] - The company is investing in business lines, technology infrastructure, and regulatory preparation, with $30 million year-over-year growth supporting these initiatives [121][122] Question: Deposit growth and digital channels [123] - The company expects growth in the 1031 exchange business and digital channels, with investments in product offerings and service propositions [124][125] Question: Expense guidance and synergies [128] - The $40 million to $60 million in incremental expenses is a net number, with potential synergies from investments in technology and infrastructure [132][133] Question: Deposit beta assumptions [137] - The company assumes a 30% deposit beta for the rate cut cycle, with potential for improvement if DDA balances grow [139][140] Question: Long-term margin outlook [141] - The company believes a NIM of 3.35% to 3.40% is a reasonable midterm margin level [143] Question: Office portfolio stabilization [145] - The company is seeing more natural resolution of office credits, with improvements in classified and nonaccrual metrics [147][148] Question: Regulatory wish list [150] - The company hopes for more tailored supervision and a lifting of artificial asset size thresholds [152][153]

Core Insights - Webster Financial (WBS) reported revenue of $660.98 million for the quarter ended December 2024, reflecting a year-over-year increase of 4.1% but a revenue surprise of -3.64% compared to the Zacks Consensus Estimate of $685.95 million [1] - The earnings per share (EPS) for the quarter was $1.43, slightly down from $1.46 in the same quarter last year, with an EPS surprise of +5.15% against the consensus estimate of $1.36 [1] Financial Metrics - Net Interest Margin was reported at 3.4%, exceeding the average estimate of 3.3% from six analysts [4] - The Efficiency Ratio stood at 44.8%, better than the average estimate of 48.1% from six analysts [4] - Net charge-offs/average loans and leases (annualized) were 0.5%, higher than the average estimate of 0.3% from five analysts [4] - Average balance of Total interest-earning assets was $71.86 billion, surpassing the estimated $71.52 billion from five analysts [4] - Total nonperforming loans and leases amounted to $461.33 million, slightly above the estimated $443.36 million from two analysts [4] - Total Non-Interest Income was $52.51 million, significantly lower than the estimated $88.53 million from six analysts [4] - Net Interest Income reached $608.47 million, slightly above the estimated $598.29 million from five analysts [4] - Wealth and investment services income was $8.39 million, compared to the average estimate of $8.71 million from five analysts [4] - Loan and lease related fees totaled $18.77 million, in line with the average estimate of $18.69 million from five analysts [4] - Deposit service fees were $38.67 million, below the estimated $39.64 million from five analysts [4] - Increase in cash surrender value of life insurance policies was $7.39 million, compared to the estimated $7.78 million from four analysts [4] - Non-interest income from Other income was $36.18 million, significantly higher than the estimated $14.32 million from four analysts [4] Stock Performance - Webster Financial's shares have returned +7% over the past month, outperforming the Zacks S&P 500 composite, which saw a -2.1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Core Viewpoint - Webster Financial (WBS) reported quarterly earnings of $1.43 per share, exceeding the Zacks Consensus Estimate of $1.36 per share, but down from $1.46 per share a year ago, indicating a 5.15% earnings surprise [1] Financial Performance - The company posted revenues of $660.98 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 3.64%, compared to $634.84 million in the same quarter last year [2] - Over the last four quarters, Webster Financial has surpassed consensus EPS estimates only once and has not beaten consensus revenue estimates during this period [2] Stock Performance - Webster Financial shares have increased approximately 4.9% since the beginning of the year, outperforming the S&P 500's gain of 1% [3] Future Outlook - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $1.32 for the coming quarter and $5.71 for the current fiscal year, with revenues expected to be $687.16 million and $2.83 billion respectively [7] - The estimate revisions trend for Webster Financial is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Banks - Northeast industry, to which Webster Financial belongs, is currently in the top 20% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Financial Performance - Fourth quarter 2024 net income available to common stockholders was $173.6 million, or $1.01 per diluted share, compared to $181.2 million, or $1.05 per diluted share in Q4 2023[2]. - Adjusted earnings per diluted share for Q4 2024 was $1.43, down from $1.46 in Q4 2023, excluding securities repositioning losses of $56.9 million and a deferred tax asset valuation adjustment of $29.4 million[3]. - Net income for Q4 2024 was $177,766,000, a decrease of 10.4% from $192,985,000 in Q3 2024[35]. - Earnings per diluted common share for Q4 2024 was $1.01, down from $1.10 in Q3 2024, representing a decline of 8.2%[35]. - Net income available to common stockholders for the full year 2024 was $752,057,000, a decrease of 11.6% from $851,190,000 in 2023[38]. - Adjusted net income for the quarter was $181,251 thousand, down from $195,531 thousand in the prior quarter, reflecting a decrease of 7.3%[47]. - Adjusted net income for the three months ended December 31, 2024, was $252,364,000, with an annualized basis of $1,009,456,000[50]. - Adjusted return on average tangible common stockholders' equity was reported at 17.73% for the quarter[50]. Revenue and Income - Total revenue for Q4 2024 was $661.0 million, with net interest income of $608.5 million, an increase from $571.0 million in Q4 2023[5]. - Total interest income for Q4 2024 was $995,087,000, an increase of 6.7% from $933,147,000 in Q4 2023[38]. - Net interest income after provision for loan and lease losses for Q4 2024 was $544,968,000, compared to $535,021,000 in Q4 2023, reflecting a growth of 1.8%[38]. - Total non-interest income decreased to $52.5 million from $63.8 million in Q4 2023, primarily due to losses on sales of investment securities[8]. - Non-interest income decreased to $52,507,000 in Q4 2024 from $63,815,000 in Q4 2023, a decline of 17.7%[38]. - Operating revenue declined by 5.1% to $229.1 million from $241.3 million year-over-year[24]. Assets and Liabilities - Total assets as of December 31, 2024, were $79,025,073, a slight decrease from $79,453,900 in Q3 2024[37]. - Webster Financial Corporation has $79 billion in total assets[25]. - Total deposits rose to $64.82 billion in Q4 2024, with interest expenses of $358.90 million, compared to $59.98 billion and $325.79 million in Q4 2023[40]. - Total stockholders' equity increased to $9.19 billion in Q4 2024 from $8.31 billion in Q4 2023[40]. - Total loans and leases increased to $52,505,168 thousand as of December 31, 2024, up from $51,947,015 thousand in the previous quarter, representing a growth of 1.07%[44]. - The allowance for credit losses on loans and leases was $689,566,000, slightly up from $687,798,000 in Q3 2024[37]. Credit Quality - Provision for credit losses was $63.5 million, contributing to a $1.8 million increase in the allowance for credit losses on loans and leases from the prior quarter[9]. - Provision for credit losses increased to $63,500,000 in Q4 2024 from $36,000,000 in Q4 2023, representing a significant rise of 76.4%[38]. - Nonperforming assets rose to $461,751,000, an increase of 8.0% from $427,274,000 in Q3 2024[35]. - Nonperforming loans and leases totaled $461,326 thousand as of December 31, 2024, an increase from $425,617 thousand in the previous quarter, indicating a rise of 8.3%[46]. - The total net charge-offs for the quarter were $60,871 thousand, compared to $35,426 thousand in the previous quarter, indicating an increase of 71.5%[46]. Efficiency and Ratios - Total non-interest expense was $340.4 million, a decrease of $36.8 million from Q4 2023, excluding prior year special assessments and merger-related expenses[10]. - The efficiency ratio improved to 44.80% in Q4 2024, compared to 45.49% in Q3 2024[35]. - The common equity tier 1 ratio was 11.50%, compared to 11.25% at September 30, 2024, and 11.11% at December 31, 2023[18]. - The return on average tangible common stockholders' equity was 12.73% for the quarter, compared to 14.29% in the previous quarter, indicating a decline in profitability[47]. Segment Performance - Healthcare Financial Services segment reported total footings of $15.3 billion, with deposits of $10.0 billion and assets under administration of $5.3 billion[21]. - Commercial Banking segment had $40.6 billion in loans and leases and $16.3 billion in deposits as of December 31, 2024[19]. - Consumer Banking segment had $11.9 billion in loans and $27.3 billion in deposits as of December 31, 2024[23]. Future Outlook - The company plans to continue investing in technology and expanding its market presence[28].

Core Insights - Analysts project Webster Financial (WBS) will report quarterly earnings of $1.36 per share, a decline of 6.9% year over year, with revenues expected to reach $685.95 million, an increase of 8.1% from the same quarter last year [1] Earnings Projections - The consensus EPS estimate for the quarter has remained unchanged over the past 30 days, indicating a reassessment of initial projections by covering analysts [1][2] - Revisions to earnings projections are critical for predicting investor behavior regarding the stock [2] Key Financial Metrics - Analysts estimate 'Net Interest Margin' will be 3.3%, down from 3.4% in the same quarter last year [4] - The 'Efficiency Ratio' is projected to be 48.1%, compared to 43% a year ago [4] - 'Average balance - Total interest-earning assets' is expected to reach $71.52 billion, up from $66.57 billion year over year [4] Nonperforming Loans and Non-Interest Income - 'Total nonperforming loans and leases' are projected at $443.36 million, significantly higher than $209.54 million from the previous year [5] - 'Total Non-Interest Income' is expected to be $88.53 million, compared to $63.82 million in the same quarter last year [5] Net Interest Income and Related Fees - 'Net Interest Income' is estimated at $598.29 million, up from $571.02 million year over year [6] - 'Loan and lease related fees' are expected to be $18.69 million, down from $21.36 million in the same quarter last year [7] - 'Deposit service fees' are projected at $39.64 million, compared to $37.46 million a year ago [7] Additional Income Metrics - 'Increase in cash surrender value of life insurance policies' is estimated at $7.78 million, up from $6.59 million year over year [8] - 'Non-interest income - Other income' is expected to be $14.32 million, compared to $6.46 million last year [8] - 'Tax-equivalent Net Interest Income' is projected at $610.95 million, compared to $588.85 million from the previous year [8] Stock Performance - Shares of Webster Financial have decreased by 7.1% over the past month, while the Zacks S&P 500 composite has moved down by 3.5% [9] - With a Zacks Rank 3 (Hold), WBS is expected to reflect the overall market performance in the near future [9]

Core Viewpoint - Webster Financial (WBS) is anticipated to report a year-over-year decline in earnings despite an increase in revenues for the quarter ended December 2024 [1][3] Earnings Expectations - The consensus estimate for Webster Financial's quarterly earnings is $1.36 per share, reflecting a year-over-year decrease of 6.9% [3] - Expected revenues are projected to be $685.95 million, which is an increase of 8.1% compared to the same quarter last year [3] Estimate Revisions - Over the last 30 days, the consensus EPS estimate has been revised down by 0.04%, indicating a slight bearish sentiment among analysts [4] - The Most Accurate Estimate for Webster Financial is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -2.38% [10][11] Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a negative Earnings ESP reading indicates a lower likelihood of an earnings beat, particularly when combined with a Zacks Rank of 3 (Hold) [8][11] - Webster Financial has not been able to exceed consensus EPS estimates in any of the last four quarters, with the last reported quarter showing a surprise of -0.74% [12][13] Industry Comparison - In the Zacks Banks - Northeast industry, Bank OZK (OZK) is expected to report earnings of $1.45 per share, indicating a year-over-year decline of 3.3% [17] - Bank OZK's expected revenue for the quarter is $408.04 million, which is a slight increase of 0.1% from the previous year [17]