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]

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]

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]

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]

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].

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 a 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] - Nonperforming assets (NPAs) increased by 22%, largely due to healthcare and office portfolios [30] Market Data and Key Metrics Changes - The company experienced robust core deposit growth, with every major business area growing deposits except for corporate deposits, which declined [15] - The overall criticized loans actually declined in the first quarter, indicating a material slowdown in negative migration [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] - The management is committed to investing in differentiated businesses, risk management, technology, and back-office infrastructure [9][10] - The company plans to continue share repurchases while also considering organic growth and potential acquisitions in the healthcare vertical [46] 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] - The company remains optimistic about its clients' financial health and their strategies to manage costs and supply chain issues [13][129] - The outlook for 2025 remains unchanged, with expectations of a slowing, non-recessionary economic environment [32][34] Other Important Information - The company increased its provision for credit losses by approximately $20 million due to a higher probability of recession [10][29] - The tangible book value per common share grew to $33.97, up over 3% from the previous quarter [17][32] 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 [40][44] 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 [46] Question: What is the outlook for provisioning and charge-offs? - Management expects charge-offs to be in the range of 25 to 35 basis points for the year, with provisioning potentially aligning with charge-offs if economic conditions stabilize [58][94] Question: How is the company managing higher-cost deposit products? - The company is confident in its ability to reduce costs in higher-rate products and has flexibility in adjusting deposit pricing based on market conditions [116] Question: What is the company's strategy regarding loan growth in commercial real estate? - The company is being selective in commercial real estate lending and expects to see growth while maintaining capital ratios [85][139]

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]

Core Insights - Webster Financial (WBS) reported revenue of $704.8 million for the quarter ended March 2025, reflecting a year-over-year increase of 5.7% but falling short of the Zacks Consensus Estimate of $714.9 million by -1.41% [1] - The earnings per share (EPS) for the quarter was $1.30, a decrease from $1.35 in the same quarter last year, and below the consensus estimate of $1.38, resulting in an EPS surprise of -5.80% [1] Financial Performance Metrics - Net Interest Margin was reported at 3.5%, exceeding the five-analyst average estimate of 3.4% [4] - The Efficiency Ratio stood at 45.8%, better than the average estimate of 48.3% from five analysts [4] - Net charge-offs as a percentage of average loans and leases (annualized) were 0.4%, slightly above the average estimate of 0.3% [4] - Average balance of Total interest-earning assets was $72.85 billion, surpassing the estimate of $71.90 billion [4] - Total nonperforming loans and leases amounted to $564.40 million, higher than the average estimate of $481.93 million [4] - Total Non-Interest Income was $92.61 million, slightly below the average estimate of $93.68 million [4] - Net Interest Income reported was $612.19 million, compared to the estimate of $616.12 million [4] - Wealth and investment services income was $7.79 million, below the average estimate of $8.53 million [4] - Loan and lease related fees totaled $17.62 million, lower than the average estimate of $19.09 million [4] - Deposit service fees were $38.90 million, compared to the average estimate of $40.48 million [4] - Increase in cash surrender value of life insurance policies was $7.99 million, exceeding the estimate of $7.28 million [4] - Non-interest income from Other income was $20.09 million, above the average estimate of $19.17 million [4] Stock Performance - Webster Financial's shares have returned -9.8% over the past month, compared to a -5.1% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Viewpoint - Webster Financial (WBS) reported quarterly earnings of $1.30 per share, missing the Zacks Consensus Estimate of $1.38 per share, representing an earnings surprise of -5.80% [1][2] Financial Performance - The company posted revenues of $704.8 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 1.41%, compared to year-ago revenues of $667.09 million [2] - Over the last four quarters, Webster Financial has surpassed consensus EPS estimates only once [2] Stock Performance - Webster Financial shares have declined approximately 14.6% since the beginning of the year, while the S&P 500 has decreased by 8.6% [3] - The current consensus EPS estimate for the upcoming quarter is $1.44 on revenues of $721.62 million, and for the current fiscal year, it is $5.75 on revenues of $2.89 billion [7] Industry Outlook - The Zacks Industry Rank for Banks - Northeast is currently in the top 22% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - The performance of Webster Financial may be influenced by the overall industry outlook, as empirical research shows a strong correlation between near-term stock movements and earnings estimate revisions [5][8]

Financial Performance - Net income applicable to common stockholders for Q1 2025 was $220.4 million, or $1.30 per diluted share, compared to $210.1 million, or $1.23 per diluted share in Q1 2024, representing a 5.6% increase in earnings per share [3]. - Total revenue for Q1 2025 was $704.8 million, with net interest income of $612.2 million, up from $567.7 million in Q1 2024, indicating an increase of 7.7% [5][9]. - Non-interest income totaled $92.6 million, a decrease of $6.8 million from $99.4 million in Q1 2024, primarily due to credit valuation adjustments [8]. - Net income for the three months ended September 30, 2025, was $226,917 thousand, an increase from $177,766 thousand in the previous quarter [33]. - Earnings per common share (diluted) rose to $1.30, compared to $1.01 in the prior quarter, reflecting a significant increase of 28.7% [33]. - Adjusted net income for Q1 2025 was $229,486,000, up from $181,251,000 in Q4 2024, representing a 26.6% increase [44]. Loan and Deposit Growth - Period end loans and leases balance reached $53.1 billion, an increase of $0.6 billion, or 1.0% from the prior quarter, while deposits increased by $0.8 billion, or 1.3%, to $65.6 billion [5][13]. - Total loans and leases increased to $53,056,223 thousand, compared to $52,505,168 thousand in the previous quarter, marking a growth of 1.04% [35]. - Total deposits increased to $64,966,959 thousand in Q1 2025, compared to $60,565,366 thousand in Q1 2024, showing a growth of 7.9% [38]. - Total deposits rose by 3.3% to $27.8 billion, compared to $26.9 billion in Q1 2024 [23]. - Core deposits amounted to $58,052,837,000 in Q1 2025, up from $56,518,126,000 in Q4 2024, representing a growth of 2.7% [47]. Credit Quality and Loss Provisions - The provision for credit losses was $77.5 million, contributing to a $23.8 million increase in the allowance for credit losses on loans and leases from the prior quarter [9]. - Total non-performing loans and leases increased to $564.4 million, representing 1.06% of total loans and leases, compared to 0.88% at December 31, 2024 [17]. - Provision for credit losses increased to $77,500,000 in Q1 2025, up from $45,500,000 in Q1 2024, indicating a rise of 70.5% [36]. - Non-performing assets rose to $564,708 thousand, up from $461,751 thousand in the previous quarter, indicating a deterioration in asset quality [33]. Operational Efficiency - The efficiency ratio was 45.79%, compared to 44.80% in the previous quarter, indicating a slight decline in operational efficiency [33]. - Non-interest expense increased by $2.5 million to $122.7 million, driven by higher investments in technology and professional services [23]. - The company is focused on expanding its market presence and enhancing technology investments to improve operational efficiency [24]. - Efficiency ratio improved to 45.79% in Q1 2025 from 44.80% in Q4 2024, indicating better cost management [44]. Asset Growth - Webster's total assets exceed $80 billion, indicating a strong financial position within the commercial banking sector [24]. - Total assets reached $80,279,750 thousand, an increase from $79,025,073 thousand in the previous quarter [35]. - Total interest-earning assets increased to $72,854,574 thousand in Q1 2025, up from $68,740,440 thousand in Q1 2024, reflecting a growth of 3.1% [38]. Interest Income and Margin - Total interest income for Q1 2025 was $973,487,000, an increase of 2.7% from $951,850,000 in Q1 2024 [36]. - Net interest income for Q1 2025 was $612,192 thousand, compared to $567,739 thousand in Q1 2024, representing an increase of 7.8% [38]. - The net interest margin for the quarter was reported at 3.48%, slightly up from 3.44% in the previous quarter [33]. - The average yield on loans and leases decreased to 5.84% in Q1 2025 from 6.24% in Q1 2024 [38].