Webster Financial (US:WBS)2025-05-09 21:06Financial 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]