Webster Financial (US:WBS) ZACKSยท2025-04-25 14:26Core 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].