Webster Financial Q4 Earnings Beat on Higher NII & Lower Expenses

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].