Webster Financial (WBS)

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Webster Financial (WBS) - 2025 Q2 - Earnings Call Presentation
2025-07-17 13:00
Financial Performance - Reported PPNR was $370.1 million[4] - Net income applicable to common shareholders was $251.7 million[4] - Diluted EPS reached $1.52[4] - ROAA stood at 1.29%[4, 5] - ROATCE was 17.96%[4, 5] Balance Sheet Highlights - Loans increased by $0.6 billion, a 1.2% LQ increase[5] - Excluding loans moved to held for sale, loan growth would have been $0.9 billion, or 1.6%[5, 14] - Total deposits grew by $0.7 billion, representing a 1.1% LQ increase[5] - TBVPS grew 3.4% to $35.13 LQ[5] - Total loans as a % of earning assets is 73%[83] Key Ratios - The loan-to-deposit ratio was 80.9%[5, 7] - The efficiency ratio improved to 45.4%, down 0.4% LQ[5] - CET1 was 11.33%[5, 7] - TCE was 7.46%[5, 7] Loan Portfolio - Total loans reached $53.672 billion[7] - Commercial loans totaled $42.652 billion[7] - Consumer loans amounted to $11.020 billion[7] - C&I loans increased by $420 million LQ, or 3.0%, reaching $14.232 billion[11] - CRE decreased by $44 million LQ, or -0.2%, reaching $21.111 billion[11] Deposit Portfolio - Total deposits reached $66.314 billion[7] - Transactional deposits totaled $19.164 billion[7] - Healthcare Financial Services deposits were $10.180 billion[7] - interSYNC deposits were $8.719 billion[16] - Ametros accounts were $1.115 billion[16] Net Interest Income and Margin - Net interest income totaled $621.2 million, up $9.0 million or 1.5% LQ[21, 26] - Net interest margin was 3.44%, down 4 bps LQ[5, 21] Commercial Real Estate Portfolio - The commercial real estate portfolio totaled $18.8 billion[57, 61] - Classified loans were 3.9%[57]
Webster Financial (WBS) - 2025 Q2 - Quarterly Results
2025-07-17 11:34
Second Quarter 2025 Earnings Highlights [Q2 2025 Performance Summary](index=2&type=section&id=Q2%202025%20Performance%20Summary) Webster Financial Corporation reported strong Q2 2025 financial results, with net income and diluted EPS significantly increasing year-over-year, alongside solid growth in loans, deposits, and revenue Q2 2025 vs Q2 2024 Performance | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income (Common Stockholders) | $251.7 million | $175.5 million | | Diluted EPS | $1.52 | $1.03 | Key Financial Metrics for Q2 2025 | Metric | Value | | :--- | :--- | | Revenue | $715.8 million | | Period End Loans and Leases | $53.7 billion (+1.2% QoQ) | | Period End Deposits | $66.3 billion (+1.1% QoQ) | | Provision for Credit Losses | $46.5 million | | Return on Average Assets (ROA) | 1.29% | | Return on Average Tangible Common Equity (ROTCE) | 17.96% | | Net Interest Margin (NIM) | 3.44% (-4 bps QoQ) | | Common Equity Tier 1 (CET1) Ratio | 11.33% | | Efficiency Ratio | 45.40% | - Management expressed confidence in the company's future success, citing **impressive financial and strategic results** and new opportunities for business growth. The CFO highlighted **improved asset quality**, **capital returns to shareholders**, and continued investments for future growth[4](index=4&type=chunk) Consolidated Financial Performance [Net Interest Income](index=3&type=section&id=Net%20Interest%20Income) Net interest income increased to $621.2 million in Q2 2025, with net interest margin expanding to 3.44% driven by lower deposit costs Net Interest Income and Margin (YoY Comparison) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Interest Income | $621.2 million | $572.3 million | | Net Interest Margin | 3.44% | 3.39% | | Avg. Interest-Earning Assets | $74.0 billion | $69.6 billion | | Avg. Loans and Leases | $53.3 billion | $51.4 billion | | Avg. Deposits | $66.0 billion | $61.7 billion | [Provision for Credit Losses](index=3&type=section&id=Provision%20for%20Credit%20Losses) Provision for credit losses decreased to $46.5 million in Q2 2025, with net charge-offs at 0.27% and allowance for credit losses at 1.35% Credit Loss Metrics | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Provision for Credit Losses | $46.5 million | $77.5 million | $59.0 million | | Net Charge-offs | $36.4 million | $55.0 million | $33.1 million | | NCOs / Avg. Loans Ratio | 0.27% | 0.42% | 0.26% | | Allowance / Total Loans | 1.35% | 1.34% | 1.30% | [Non-Interest Income](index=3&type=section&id=Non-Interest%20Income) Total non-interest income significantly increased to $94.7 million in Q2 2025, mainly due to the absence of a prior-year investment securities loss - Total non-interest income rose by **$52.4 million** year-over-year to **$94.7 million**. A key factor was the absence of a **$49.9 million loss** on investment securities sales that occurred in Q2 2024[8](index=8&type=chunk) - Excluding the prior-year securities loss, non-interest income increased by **$2.5 million**, mainly from higher bank-owned life insurance income, direct investment gains, and Healthcare Financial Services income, partially offset by lower loan and lease-related fees[8](index=8&type=chunk) [Non-Interest Expense](index=4&type=section&id=Non-Interest%20Expense) Non-interest expense increased to $345.7 million in Q2 2025, driven by strategic investments in human capital and risk management - Total non-interest expense increased by **$19.7 million** year-over-year to **$345.7 million**[10](index=10&type=chunk) - The primary drivers for the expense increase were investments in **human capital** and **risk management infrastructure**[10](index=10&type=chunk) [Income Taxes](index=4&type=section&id=Income%20Taxes) Income tax expense was $64.8 million in Q2 2025, with the effective tax rate decreasing to 20.0% due to a discrete tax benefit Income Tax Comparison (YoY) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Income Tax Expense | $64.8 million | $47.9 million | | Effective Tax Rate | 20.0% | 20.9% | | Discrete Tax Benefit | $3.9 million | $0.3 million | Balance Sheet and Capital Analysis [Investment Securities](index=4&type=section&id=Investment%20Securities) Total net investment securities reached $17.8 billion as of June 30, 2025, with net unrealized losses decreasing in the available-for-sale portfolio Investment Securities Portfolio (June 30, 2025) | Portfolio | Carrying Value | Net Unrealized Losses | | :--- | :--- | :--- | | Total Investment Securities | $17.8 billion | N/A | | Available-for-Sale | $9.6 billion | $568.3 million | | Held-to-Maturity | $8.2 billion | $901.6 million (not reflected in carrying value) | [Loans and Leases](index=4&type=section&id=Loans%20and%20Leases) Total loans and leases grew to $53.7 billion in Q2 2025, driven by commercial and residential mortgage growth, with strong quarterly originations Loan Portfolio Growth | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Total Loans and Leases | $53.7 billion | $53.1 billion | $51.6 billion | | Loan Originations | $3.8 billion | $2.7 billion | $3.0 billion | - Compared to the prior year, commercial loans and leases increased by **$1.8 billion** and residential mortgages by **$1.0 billion**, while commercial real estate loans decreased by **$919.0 million**[15](index=15&type=chunk) [Asset Quality](index=5&type=section&id=Asset%20Quality) Asset quality improved in Q2 2025, with non-performing loans decreasing to $534.5 million (1.00% of total loans) and past due loans declining Asset Quality Ratios | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Non-Performing Loans | $534.5 million | $564.4 million | $368.8 million | | NPLs / Total Loans | 1.00% | 1.06% | 0.72% | | Past Due Loans | $54.8 million | $87.2 million | $166.3 million | [Deposits and Borrowings](index=5&type=section&id=Deposits%20and%20Borrowings) Total deposits increased to $66.3 billion at quarter-end, maintaining a stable loan-to-deposit ratio of 80.9% with core deposits at 88.1% Deposits and Borrowings Summary | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Total Deposits | $66.3 billion | $65.6 billion | $62.3 billion | | Core Deposits / Total Deposits | 88.1% | 88.5% | 87.5% | | Loan to Deposit Ratio | 80.9% | 80.9% | 82.8% | | Total Borrowings | $4.6 billion | $3.9 billion | $4.0 billion | [Capital](index=5&type=section&id=Capital) Capital ratios remained strong and improved, with the CET1 ratio increasing to 11.33% and tangible common equity ratio improving to 7.46% Key Capital Ratios and Returns | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | CET1 Ratio | 11.33% | 11.25% | 10.59% | | Tangible Common Equity Ratio | 7.46% | 7.43% | 7.18% | | Return on Avg. Tangible Common Equity | 17.96% | 15.93% | 14.17% | | Tangible Book Value per Share | $35.13 | $33.97 | $30.82 | Reportable Segments [Commercial Banking](index=6&type=section&id=Commercial%20Banking) Commercial Banking reported a 10.0% decrease in pre-tax, pre-provision net revenue to $240.8 million, driven by lower net interest and non-interest income Commercial Banking Operating Results (Q2 2025 vs Q2 2024) | Metric (in thousands) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Net interest income | $318,518 | $337,588 | (5.6)% | | Non-interest income | $30,628 | $34,510 | (11.2)% | | Pre-tax, pre-provision net revenue | $240,774 | $267,510 | (10.0)% | - The segment had **$41.2 billion** in loans and leases and **$16.2 billion** in deposits as of June 30, 2025[20](index=20&type=chunk) - The decrease in net interest income was primarily due to lower spreads on loans and leases, while the decrease in non-interest income was driven by lower factoring, prepayment, and syndication fees[21](index=21&type=chunk) [Healthcare Financial Services](index=7&type=section&id=Healthcare%20Financial%20Services) Healthcare Financial Services delivered a 4.4% increase in pre-tax net revenue to $70.9 million, driven by higher net interest and non-interest income Healthcare Financial Services Operating Results (Q2 2025 vs Q2 2024) | Metric (in thousands) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Net interest income | $97,625 | $91,664 | 6.5% | | Non-interest income | $28,687 | $27,465 | 4.4% | | Pre-tax net revenue | $70,859 | $67,862 | 4.4% | Healthcare Financial Services Key Metrics (YoY) | Metric | June 30, 2025 | June 30, 2024 | % Change | | :--- | :--- | :--- | :--- | | Deposits | $10,180 million | $9,392 million | 8.4% | | Total Footings | $15,931 million | $14,914 million | 6.8% | - The segment includes HSA Bank, a leading administrator of health savings accounts, and Ametros, a professional administrator of medical insurance claim settlements[22](index=22&type=chunk) [Consumer Banking](index=8&type=section&id=Consumer%20Banking) Consumer Banking reported a 2.7% increase in pre-tax, pre-provision net revenue to $114.2 million, driven by higher net interest income and strong loan growth Consumer Banking Operating Results (Q2 2025 vs Q2 2024) | Metric (in thousands) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Net interest income | $212,672 | $202,679 | 4.9% | | Non-interest income | $24,591 | $24,392 | 0.8% | | Pre-tax, pre-provision net revenue | $114,219 | $111,166 | 2.7% | Consumer Banking Balance Sheet (YoY) | Metric | June 30, 2025 | June 30, 2024 | % Change | | :--- | :--- | :--- | :--- | | Loans | $12,472 million | $11,239 million | 11.0% | | Deposits | $27,790 million | $27,108 million | 2.5% | - Non-interest expense increased by **$7.1 million**, primarily due to investments in technology, employee-related expenses, and professional services[25](index=25&type=chunk) Financial Tables and Reconciliations [Forward-Looking Statements and Non-GAAP Measures](index=10&type=section&id=Forward-Looking%20Statements%20and%20Non-GAAP%20Measures) This section outlines forward-looking statement disclaimers and defines non-GAAP financial measures used to assess performance and provide investors with business insights - The report includes forward-looking statements subject to risks and uncertainties, including economic conditions, regulatory changes, and market volatility, which could materially affect actual results[29](index=29&type=chunk) - The company uses non-GAAP measures like the efficiency ratio, ROTCE, and tangible book value per share to provide investors with information useful for understanding its financial position and performance[30](index=30&type=chunk)[31](index=31&type=chunk) - Investors are encouraged to review the consolidated financial statements in their entirety and not rely on any single financial measure, as non-GAAP measures are not standardized and may not be comparable to those of other companies[33](index=33&type=chunk) [Selected Financial Highlights](index=12&type=section&id=Selected%20Financial%20Highlights) Selected financial highlights show positive trends in profitability and capital strength, with diluted EPS and key performance ratios peaking in Q2 2025 Five-Quarter Performance Trend | Metric | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Diluted EPS | $1.52 | $1.30 | $1.01 | $1.10 | $1.03 | | ROA (annualized) | 1.29% | 1.15% | 0.91% | 1.01% | 0.96% | | ROTCE (annualized) | 17.96% | 15.93% | 12.73% | 14.29% | 14.17% | | CET1 Ratio | 11.33% | 11.25% | 11.54% | 11.25% | 10.59% | [Consolidated Balance Sheets](index=13&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheet as of June 30, 2025, shows total assets of $81.9 billion, driven by increases in loans, leases, and deposits Balance Sheet Summary (YoY Comparison) | Balance Sheet Item (in billions) | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total Assets | $81.9 | $76.8 | | Total Loans and Leases, net | $52.9 | $50.9 | | Total Investment Securities, net | $17.8 | $16.4 | | Total Deposits | $66.3 | $62.3 | | Total Liabilities | $72.6 | $68.0 | | Total Stockholders' Equity | $9.3 | $8.8 | [Consolidated Statements of Income](index=14&type=section&id=Consolidated%20Statements%20of%20Income) Consolidated statements of income show Q2 2025 net income of $258.8 million, a substantial increase driven by higher net interest income and non-interest income Income Statement Summary (YoY Comparison) | Income Statement Item (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Interest Income | $621,182 | $572,297 | | Provision for Credit Losses | $46,500 | $59,000 | | Total Non-interest Income | $94,657 | $42,298 | | Total Non-interest Expense | $345,714 | $326,021 | | Net Income | $258,848 | $181,633 | | Diluted EPS | $1.52 | $1.03 | [Analysis of Net Interest Margin](index=16&type=section&id=Analysis%20of%20Net%20Interest%20Margin) Analysis of net interest margin shows a NIM of 3.44% for Q2 2025, improving due to a larger decrease in deposit costs offsetting asset yield declines Net Interest Margin Components (YoY Comparison) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Interest Margin (Tax-equivalent) | 3.44% | 3.39% | | Average Yield on Interest-Earning Assets | 5.44% | 5.65% | | Average Rate on Total Deposits | 2.07% | 2.35% | | Average Rate on Total Deposits and Interest-Bearing Liabilities | 2.18% | 2.49% | [Loan Portfolio and Credit Quality](index=18&type=section&id=Loan%20Portfolio%20and%20Credit%20Quality) This section details the loan portfolio and credit quality metrics, showing total loans at $53.7 billion and non-performing loans decreasing to $534.5 million Loan Portfolio Composition (June 30, 2025) | Loan Category | Balance (in thousands) | | :--- | :--- | | Commercial non-mortgage | $19,943,097 | | Commercial real estate | $21,358,775 | | Residential mortgages | $9,332,413 | | Consumer | $1,687,668 | | **Total loans and leases** | **$53,671,959** | Non-Performing Assets (June 30, 2025) | Metric | Value (in thousands) | | :--- | :--- | | Total non-performing loans and leases | $534,522 | | Total other real estate owned | $2,528 | | **Total non-performing assets** | **$537,050** | - The allowance for credit losses on loans and leases increased from **$713.3 million** in Q1 2025 to **$722.0 million** in Q2 2025, after accounting for a **$45.1 million** provision and **$36.4 million** in net charge-offs[46](index=46&type=chunk) [Non-GAAP to GAAP Reconciliations](index=20&type=section&id=Non-GAAP%20to%20GAAP%20Reconciliations) This section provides detailed reconciliations of non-GAAP financial measures to GAAP, including efficiency ratio, ROTCE, and tangible equity ratios Tangible Common Equity Reconciliation (June 30, 2025) | Item (in thousands) | Value | | :--- | :--- | | Stockholders' equity (GAAP) | $9,337,617 | | Less: Goodwill and other intangible assets | $3,184,039 | | Less: Preferred stock | $283,979 | | **Tangible common stockholders' equity (Non-GAAP)** | **$5,869,599** | Return on Average Tangible Common Equity (Q2 2025) | Item (in thousands) | Value | | :--- | :--- | | Net income (GAAP) | $258,848 | | Adjustments (Preferred dividends, tax-effected amortization) | $2,465 | | **Adjusted net income (Non-GAAP)** | **$261,313** | | Average tangible common stockholders' equity | $5,821,098 | | **Return on Average Tangible Common Equity** | **17.96%** |
Webster Financial (WBS) Earnings Expected to Grow: What to Know Ahead of Next Week's Release
ZACKS· 2025-07-10 15:01
Core Viewpoint - The market anticipates Webster Financial (WBS) will report a year-over-year increase in earnings driven by higher revenues for the quarter ended June 2025, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - The upcoming earnings report is expected to be released on July 17, with a consensus EPS estimate of $1.43, reflecting a year-over-year increase of +13.5%. Revenues are projected at $712.23 million, up 15.9% from the previous year [3]. Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating that analysts have not significantly altered their initial projections during this period [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model compares the Most Accurate Estimate to the Zacks Consensus Estimate, suggesting that recent analyst revisions may provide more accurate insights into earnings expectations [8][9]. Current Earnings ESP and Zacks Rank - For Webster Financial, the Most Accurate Estimate is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -0.50%. The stock currently holds a Zacks Rank of 3, complicating predictions for an earnings beat [12]. Historical Performance - In the last reported quarter, Webster Financial was expected to post earnings of $1.38 per share but delivered only $1.30, resulting in a surprise of -5.80%. Over the past four quarters, the company has only beaten consensus EPS estimates once [13][14]. Conclusion - While the company may not appear to be a strong candidate for an earnings beat, investors should consider other factors when making decisions regarding the stock ahead of the earnings release [17].
Webster Financial: A Bit More Upside Is Warranted
Seeking Alpha· 2025-07-05 10:58
Group 1 - Webster Financial Corporation (NYSE: WBS) was upgraded from 'hold' to 'buy' in early April 2023, indicating a positive outlook for the company [1] - The focus of Crude Value Insights is on cash flow and companies that generate it, highlighting the importance of value and growth prospects in the oil and natural gas sector [1] Group 2 - Subscribers to Crude Value Insights benefit from a 50+ stock model account and in-depth cash flow analyses of exploration and production (E&P) firms, which enhances their investment decision-making [2] - The service includes live chat discussions about the oil and gas sector, fostering a community for investors [2] - A two-week free trial is available for new subscribers, promoting engagement with the oil and gas investment community [3]
WBS or WASH: Which Is the Better Value Stock Right Now?
ZACKS· 2025-07-01 16:41
Core Viewpoint - Investors in the Banks - Northeast sector should consider Webster Financial (WBS) and Washington Trust Bancorp (WASH) for potential value opportunities [1] Group 1: Zacks Rank and Earnings Outlook - Webster Financial has a Zacks Rank of 2 (Buy), indicating a stronger earnings outlook compared to Washington Trust Bancorp, which has a Zacks Rank of 3 (Hold) [3] - WBS has likely experienced a more significant improvement in its earnings outlook than WASH recently [3][7] Group 2: Valuation Metrics - WBS has a forward P/E ratio of 9.57, while WASH has a forward P/E of 10.86 [5] - The PEG ratio for WBS is 0.71, compared to WASH's PEG ratio of 0.89, indicating WBS may offer better value considering expected earnings growth [5] - WBS has a P/B ratio of 1.03, slightly lower than WASH's P/B ratio of 1.04, suggesting WBS is more favorably valued relative to its book value [6] Group 3: Value Grades - Based on the aforementioned valuation metrics, WBS has earned a Value grade of B, while WASH has a Value grade of C [6]
Is the Options Market Predicting a Spike in Webster Financial Stock?
ZACKS· 2025-06-23 15:11
Group 1 - The stock of Webster Financial Corporation (WBS) is experiencing significant attention due to high implied volatility in the options market, particularly the Dec 19, 2025 $25 Call option [1] - Implied volatility indicates the market's expectation of future price movement, suggesting that investors anticipate a significant price change or an upcoming event that could impact the stock [2] - Currently, Webster Financial holds a Zacks Rank 3 (Hold) in the Banks - Northeast industry, which is in the top 24% of the Zacks Industry Rank, with no analysts increasing earnings estimates for the current quarter and one analyst revising the estimate downward from $1.44 to $1.43 per share [3] Group 2 - The high implied volatility surrounding Webster Financial may indicate a developing trading opportunity, as options traders often seek to sell premium on options with high implied volatility to capture decay [4]
Webster Financial (WBS) - 2025 Q1 - Quarterly Report
2025-05-09 21:06
Financial Performance - Net income for the three months ended March 31, 2025, was $226,917,000, an increase from $216,323,000 in 2024, representing a growth of approximately 2.7%[22] - Earnings per common share (diluted) increased to $1.30 in 2025 from $1.23 in 2024, reflecting a growth of about 5.7%[22] - The return on average tangible common stockholders' equity (annualized) decreased to 15.93% in 2025 from 16.30% in 2024[22] - The efficiency ratio (non-GAAP) was 45.79% in 2025, slightly higher than 45.25% in 2024[22] - Commercial Banking's pre-tax, pre-provision net revenue (PPNR) decreased by $28.5 million, or 10.6%, from $270.0 million in Q1 2024 to $241.5 million in Q1 2025, due to declines in net interest income and non-interest income[48] - Consumer Banking's PPNR decreased by $14.0 million, or 11.7%, from $119.6 million in Q1 2024 to $105.6 million in Q1 2025, due to declines in net interest income and non-interest income[56] Credit Quality - The allowance for credit losses (ACL) on loans and leases rose to $713,321,000 in 2025, compared to $641,442,000 in 2024, indicating a 11.2% increase[22] - Non-performing assets increased to $564,708,000 in 2025 from $289,254,000 in 2024, showing a significant rise of approximately 95%[22] - The total provision for credit losses increased by $32.0 million, or 70.3%, from $45.5 million for the three months ended March 31, 2024, to $77.5 million for the three months ended March 31, 2025[35] - Non-performing loans and leases rose to $564.4 million as of March 31, 2025, representing 1.06% of total loans and leases, up from 0.88% at December 31, 2024[94] - Net charge-offs increased by $17.5 million, or 46.6%, to $55.0 million for the three months ended March 31, 2025, compared to $37.5 million for the same period in 2024[97] - The qualitative portion of the collective ACL remained stable, primarily relating to credit quality trends and credit concentration factors[90] Asset and Liability Management - The tangible common equity ratio improved to 7.43% in 2025 from 7.15% in 2024[26] - The net interest margin increased to 3.48% in 2025 from 3.41% in 2024[22] - Average total interest-earning assets increased by $4.1 billion, or 6.0%, while average interest-bearing liabilities increased by $3.7 billion, or 5.8%[32] - Total assets increased by $1.3 billion, or 1.6%, from $79.0 billion at December 31, 2024, to $80.3 billion at March 31, 2025[60] - Total deposits increased by $0.8 billion to $65.6 billion at March 31, 2025, driven by growth in money market deposits and savings accounts[114] - The Bank's loan to total deposit ratio was 80.9% at March 31, 2025, slightly down from 81.1% at December 31, 2024[106] Income and Expenses - Total non-interest income decreased by $6.8 million, or 6.8%, from $99.4 million for the three months ended March 31, 2024, to $92.6 million for the three months ended March 31, 2025[37] - Total non-interest expense increased by $7.7 million, or 2.3%, from $335.9 million in Q1 2024 to $343.6 million in Q1 2025, primarily due to increases in Compensation and benefits and Professional and outside services[41] - Compensation and benefits rose by $10.1 million, or 5.4%, from $188.5 million in Q1 2024 to $198.6 million in Q1 2025, driven by higher compensation and performance-based incentives[42] - Professional and outside services increased by $4.2 million, or 32.7%, from $13.0 million in Q1 2024 to $17.2 million in Q1 2025, mainly due to higher technology consulting fees[43] Capital and Dividends - The Holding Company repurchased 3,569,454 shares at a weighted-average price of $50.70 per share, totaling $181.0 million during the three months ended March 31, 2025[104] - The Holding Company declared a quarterly cash dividend of $0.40 per share on common stock for the three months ended March 31, 2025[103] - The Bank paid $100.0 million in dividends to the Holding Company during the three months ended March 31, 2025[102] Regulatory and Economic Considerations - The company anticipates that economic uncertainties may impact customer behavior, potentially affecting future financial results[20] - The Bank exceeded all regulatory liquidity requirements as of March 31, 2025[107] - CET1 Risk-Based Capital ratio was 11.25% as of March 31, 2025, compared to 11.54% on December 31, 2024, both exceeding the minimum requirement of 4.5%[110] - Total Risk-Based Capital ratio was 13.96% at March 31, 2025, down from 14.24% at December 31, 2024, exceeding the minimum requirement of 8.0%[110] Investment Securities - Total investment securities amounted to $17.7 billion at March 31, 2025, compared to $17.5 billion at December 31, 2024[64] - Gross unrealized losses on available-for-sale securities decreased from $0.7 billion at December 31, 2024, to $0.6 billion at March 31, 2025, primarily due to lower market interest rates[66] - The average FTE yield on the available-for-sale portfolio was 4.67% for the three months ended March 31, 2025, compared to 3.85% for the same period in 2024, reflecting an 82 basis point increase[65] Loan Portfolio - The amortized cost of total loans and leases was $53.1 billion at March 31, 2025, compared to $52.5 billion at December 31, 2024[72] - Total loans and leases amounted to $53.06 billion as of March 31, 2025, with fixed-rate loans at $22.26 billion and variable-rate loans at $30.80 billion[73] - Commercial non-mortgage loans accounted for 34.5% of total loans and leases at March 31, 2025, slightly up from 34.4% at December 31, 2024[72] - The ACL recorded on loans and leases was $713.3 million at March 31, 2025, compared to $689.6 million at December 31, 2024[72] Risk Management - The company actively monitors credit risk concentrations, with a significant portion of borrowers geographically concentrated in New York City[75] - The company’s credit policies are regularly reviewed and approved by management and the Board of Directors to support lending activities within acceptable risk levels[79] - The company's models for expected credit losses incorporate macroeconomic forecasts and qualitative adjustments based on management's judgment[89]
Webster Financial Q1 Earnings Miss on Higher Provisions & Expenses
ZACKS· 2025-04-25 14:26
Core Viewpoint - Webster Financial (WBS) reported first-quarter 2025 earnings per share (EPS) of $1.30, which was below the Zacks Consensus Estimate of $1.38 but improved from $1.23 a year ago. The results were impacted by higher non-interest expenses and provisions, along with lower non-interest income, although net interest income (NII) and higher loan and deposit balances provided some support [1][3][10]. Financial Performance - Net income applicable to common shareholders was $220.4 million, reflecting a 4.9% increase from the prior-year quarter [2]. - Total revenues increased by 5.7% year over year to $704.8 million, although this fell short of the Zacks Consensus Estimate of $714.9 million [3]. - NII rose by 7.8% year over year to $612.2 million, while the net interest margin decreased by 7 basis points to 3.48% [3]. - Non-interest income was reported at $92.6 million, down 6.8% year over year, primarily due to declines in most components except for cash surrender value of life insurance policies and net gains on investment securities [4]. - Non-interest expenses increased by 2.3% year over year to $343.6 million, driven by increases in nearly all components except for marketing expenses, deposit insurance costs, and other expenses [4]. - The efficiency ratio was 45.79%, up from 45.25% in the prior-year quarter, indicating a deterioration in profitability [5]. Asset and Deposit Growth - As of March 31, 2025, total loans and leases increased by 1% sequentially to $53.1 billion, while total deposits rose by 1.3% from the prior quarter to $65.6 billion [6]. Credit Quality - Total non-performing assets were $564.7 million as of March 31, 2025, significantly up from $289.3 million a year ago. The allowance for loan losses was 1.34% of total loans, an increase from 1.26% in the first quarter of 2024 [7]. - The ratio of net charge-offs to annualized average loans was 0.42%, up from 0.29% in the year-ago period, with the provision for credit losses rising by 70.3% year over year to $77.5 million [7]. Capital Ratios - As of March 31, 2025, the Tier 1 risk-based capital ratio improved to 11.77% from 11.08% a year earlier, while the total risk-based capital ratio increased to 13.98% from 13.21% [8]. Profitability Ratios - Return on average assets was stable at 1.15% compared to the prior-year quarter, while return on average common stockholders' equity fell to 9.9% from 10.01% in the prior-year quarter [9]. Strategic Outlook - The company anticipates that rising NII and non-interest income will enhance its top line, supported by strategic buyouts and continued growth in deposits and loans. However, deteriorating credit quality and elevated expenses pose near-term concerns [10].
Webster Financial (WBS) - 2025 Q1 - Earnings Call Transcript
2025-04-25 01:07
Webster Financial (WBS) Q1 2025 Earnings Call April 24, 2025 09:07 PM ET Company Participants Emlen Harmon - Director of Investor RelationsJohn Ciulla - Chairman & CEONeal Holland - EVP & CFOAndrew Leischner - Assistant Vice President - Equity ResearchJared Shaw - Managing DirectorMark Fitzgibbon - Head of FSG ResearchLuis Massiani - President & COOMatthew Breese - Managing DirectorTimur Braziler - Director - Mid-Cap Bank Equity ResearchDaniel Tamayo - Vice PresidentJon Arfstrom - Managing Director - Associ ...
Webster Financial (WBS) - 2025 Q1 - Earnings Call Transcript
2025-04-25 00:14
Financial Data and Key Metrics Changes - The company reported a deposit growth of 1.3% and a loan-to-deposit ratio of 81%, indicating a solid liquidity position [7][8] - Net interest margin (NIM) expanded by four basis points to 3.48%, with an efficiency ratio of 45.8% [9][23] - Reported earnings per share (EPS) was $1.30, with a return on assets (ROA) of 1.15% and return on tangible common equity (ROATC) just below 16% [9][20] Business Line Data and Key Metrics Changes - Total loans increased by $551 million, or 1% linked quarter, with significant growth in traditional full-relationship middle market banking [9][18] - Noninterest income decreased by $7 million to $93 million, primarily due to a unique transaction in the previous quarter [20][26] - Noninterest expenses rose to $343 million, up from $340 million in the previous quarter, driven by seasonal increases in benefits expense [20][27] Market Data and Key Metrics Changes - The company experienced robust core deposit growth, with total deposits increasing by over $800 million [17][19] - Commercial classified loans increased by 6%, while nonperforming assets rose by 22%, primarily due to issues in healthcare and office portfolios [30][12] Company Strategy and Development Direction - The company aims to maintain a strong liquidity profile and is focused on enhancing its funding profile through various operating environments [15][35] - The management is optimistic about the potential for organic growth and is considering tuck-in acquisitions, particularly in the healthcare vertical [46][35] - The company is preparing for a transition to a category four bank, with a goal to be compliant within approximately two years [72][74] Management's Comments on Operating Environment and Future Outlook - The management expressed a cautious view on economic activity, anticipating a stable but uncertain environment for the remainder of the year [34][35] - The company remains confident in its ability to manage credit risks and is not seeing significant impacts from recent tariff announcements [13][35] - The management noted that clients are generally healthy and optimistic, although macroeconomic uncertainties are delaying investment cycles [35][34] Other Important Information - The company increased its provision for credit losses by approximately $20 million due to a higher weighting of recessionary scenarios in its modeling [10][29] - The allowance for loan losses rose to $713 million, or 1.34% of loans, reflecting a proactive approach to potential economic downturns [29][30] Q&A Session Summary Question: Is the timing for credit stabilization still on track? - Management remains confident in seeing an inflection point in credit migration by midyear, with a decline in criticized assets noted [39][40] Question: How is the company approaching share buybacks given economic uncertainty? - The company believes its stock is undervalued and plans to continue share repurchases while also focusing on organic growth and potential acquisitions [45][46] Question: What is the outlook for provisioning in light of recent charge-offs? - Management indicated that the increase in provision was primarily due to changes in economic scenario weightings rather than asset quality trends [54][55] Question: How is the company managing its expense base in a potentially weaker revenue environment? - The company has flexibility in its expense management and can slow investments if necessary, while also focusing on efficiency improvements [134][135] Question: What are the expectations for loan growth in the coming quarters? - Management anticipates a diverse contribution to loan growth across various asset classes, with a focus on maintaining a balanced portfolio [138][140]