Webster Financial Corporation · NYSE:WBS
Webster Financial — Q3 2024 Earnings Presentation
38 slides from Webster Financial's earnings presentation, Oct 17, 2024
Slide 1: Earnings Conference Call Third Quarter 2024
Earnings Conference Call Third Quarter 2024 October 17, 2024 WEBSTER FINANCIAL CORPORATION
Slide 2: Third Quarter 2024 Highlights
Third Quarter 2024 Highlights REPORTED ADJUSTED • Highlighted results: ◦ Core deposit growth of $2.6 billion, or 4.8% LQ $298.7M $354.9M ◦ Loans up $0.4 billion, or 0.7% LQ PPNR PPNR ◦ Efficiency ratio of 45.5% ◦ Adjusted ROAA 1.22% ◦ Adjusted ROATCE 17.28% $188.8M $229.8M NET INCOME AVAILABLE TO CO
Slide 3: Diversified and Stable Deposit Profile
Diversified and Stable Deposit Profile Consumer Bank / Commercial Bank Corporate • 195+ financial • Sophisticated • Longstanding top • Leading • Tech-enabled cash • Specialized centers serving treasury services player nationally, professional sweep program treasury activities consumers and offering
Slide 4: Commercial Real Estate Portfolio
Commercial Real Estate Portfolio Investor CRE portfolio remains well diversified Investor CRE Portfolio Rent Regulated Multifamily Detail • $1.4 billion in exposure represents properties where > 50% of NOI is RR • $91 million in additional exposure where RR NOI between 25-50% ADC / Construction 14.2
Slide 5: 3Q24 Net Income Available to Common
3Q24 Net Income Available to Common GAAP to Adjusted Reconciliation ($ in millions) Pre-Tax After Tax Diluted EPS Reported (GAAP) $ 244.7 $ 188.8 $ 1.10 Securities repositioning loss 19.6 14.3 0.08 Exit of non-core operations 16.0 11.6 0.07 Strategic restructuring costs and other 22.2 16.2 0.10 FDIC
Slide 6: Balance Sheet — End of Period
Balance Sheet — End of Period ($ in millions) 3Q24 2Q24 Increase / (Decrease) 3Q23 Key Observations Interest-bearing deposits $ 2,476 $ 1,274 $ 710 • Securities portfolio: Securities 17,161 714 2,632 ◦ AFS $8.6 billion, 4.30% yield, duration of 4.1 years Commercial loans 41,812 42 1,538 ◦ HTM $8.6 b
Slide 7: Loans
Loans ($ in millions, balances end of period) Loan Growth of 0.7% LQ LQ growth of $0.7 billion or 1.3% ex. securitization • Total loans up $0.4 billion from the prior quarter, with growth LQ Change YOY Change LQ Change YOY Change Portfolio 3Q24 driven by residential and C&I categories ($) ($) (%) (%
Slide 8: Deposits
Deposits ($ in millions, balances end of period) Deposit Growth of 3.6% LQ LQ growth of $2.2 billion or 3.6% LQ Change YOY Change LQ Change YOY Change • Deposit growth of $2.2 billion, driven by growth from 3Q24 ($) ($) (%) (%) diverse core deposit categories benefited from seasonality Demand $ 10,7
Slide 9: Income Statement
Income Statement Reported to Adjusted Favorable / Reported Adjusted ($ in millions, except EPS) 3Q24 Adjustments 1 3Q24 (Unfavorable) 2Q24 2 Key Observations Net interest income $ 589.9 $ — $ 589.9 $ 17.6 Reported GAAP: Non-interest income 57.7 35.6 93.3 1.1 • Net income of $193.0 million, up from $
Slide 10: Net Interest Income
Net Interest Income ($ in millions) Linked Quarter NII • Net interest income totaled $589.9 million, up from prior quarter by $587.1 $589.9 $17.6 million or 3.1%, driven by balance sheet growth and an increase in $572.3 earning asset yields 5.65% 5.69% • Net interest income excluding accretion total
Slide 11: Well Positioned for Down Rate Scenario
Well Positioned for Down Rate Scenario Interset Rate NII Sensitivity Rising vs. Flat Rate NII Scenarios Falling vs. Flat Rate NII Scenarios 1.7% —% 0.9% (0.2)% (0.7)% 0.2% 0.3% (1.5)% 2Q24 3Q24 Ramp Up 100 bps Ramp Up 200 bps 2Q24 3Q24 Shock Down 100 bps Ramp Down 100 bps * Assumes given rate ramps
Slide 12: Non-Interest Income
Non-Interest Income ($ in millions) $93.3 $92.2 $92.2 $93.3 (adj) $90.4 (adj) $92.2 $93.3 Adjusted non-interest income increased $1.1 million LQ • Adjusted income was effectively flat, with a seasonal decline in HSA interchange income and reduction in the credit valuation adjustment offset by an inc
Slide 13: Non-Interest Expense
Non-Interest Expense ($ in millions) $362.6 $349.1 $326.0 Adjusted expense increased $2.4 million LQ $61.6 $20.6 $— • 3Q24 has been adjusted for $20.6 million in strategic restructuring costs including a $1.5 million reduction to our prior FDIC special assessment charge • The increase in adjusted ex
Slide 14: Allowance for Credit Losses on Loans & Leases
Allowance for Credit Losses on Loans & Leases ($ in millions) Provision: $61 Provision: $54 $55 $669 $50 $688 $641 $4 $6 $(35) $(33) Coverage % 1.26% 1.30% 1.32% 3/31/2024 2Q Net Charge- Loan Balances 2Q Macro/ 6/30/2024 3Q Net Charge- Loan Balances 3Q Macro/ 9/30/2024 Offs Credit Offs Credit 2Q24 A
Slide 15: Key Asset Quality Metrics
Key Asset Quality Metrics ($ in millions) Nonperforming Loans, OREO, NPL Ratio Net Charge-Offs (Recoveries) $36.0 $427 $33.0 $375 $27.1 $426 $369 0.82% $218 0.72% $2.2 $0.1 $215 0.43% $(0.6) 0.23% 0.26% 0.27% 3Q23 2Q24 3Q24 3Q23 2Q24 3Q24 Nonperforming Loans OREO/Repossessed NPL Ratio Commercial Con
Slide 16: Strong Capital Levels
Strong Capital Levels Hold Co Capital Levels Hold Co Capital Ratios 14.03% At Sep 30, At Jun 30, At Sep 30, 11.75% 2024* 2024 2023 11.23% Common Equity Tier 1 risk-based capital 11.23% 10.59% 11.12% 8.68% Tangible common equity 7.48% 7.18% 7.22% 10.00% Tangible equity 7.85% 7.56% 7.62% 8.00% 6.50% T
Slide 17: Fourth Quarter 2024 Outlook
Fourth Quarter 2024 Outlook Outlook assumes no material changes to the regulatory environment or macro environment / rate assumptions Loan Growth • Linked quarter loan growth of 1% to 1.5% Deposit Growth • Linked quarter deposits will decline ~1% primarily due to seasonality in public funds • $590 t
Slide 18: Supplemental Information
Supplemental Information pg. 19 to 20 Commercial Real Estate Portfolio pg. 21 to 24 Lines of Business Summary pg. 25 Net Interest Margin - Linked Quarter pg. 26 Earning Asset & Funding Mix pg. 27 to 28 Investment Portfolio pg. 29 Loan Originations & Mix pg. 30 Deposit Mix & Rate pg. ## Income Statem
Slide 19: Commercial Real Estate Portfolio
Commercial Real Estate Portfolio ($ in millions) Commercial Real Estate Portfolio ex. Owner Occupied Portfolio Characteristics Loan-to- Amortizing Classified Non- 12-Month • Portfolio balance of $18.9 billion Property Type Balances Value 1 DSCR 2 % Accrual % Maturities • Weighted Average LTV / Amort
Slide 20: Commercial Real Estate Portfolio
Commercial Real Estate Portfolio ($ in millions) Balances by Geography & Property Type Portfolio Profile and Metrics Other NY Property Type NYC County CT Southeast NJ MA Other • Portfolio is concentrated in NYC/NY, particularly ADC / Construction 32 % 20 % 8% 11 % 8% 7% 14 % Multifamily Multifamily
Slide 21: Commercial Banking
Commercial Banking ($ in millions) Total Loans Key Business Metrics Increase / (Decrease) $40,331 $40,372 3Q24 2Q24 3Q23 $38,849 $355 $337 Loan originations $ 2,198 $ (312) $ 1,107 $355 Loan fundings $ 1,259 $ (476) $ 635 Coupon on fundings 7.13% (0.38)% (0.10)% $20,942 $20,385 Deposits $ 17,124 $ 1
Slide 22: Healthcare Financial Services
Healthcare Financial Services ($ in millions) Total Footings Key Business Metrics Increase / (Decrease) 3Q24 2Q24 3Q23 $14,914 $15,145 HSA accounts ('000) 3,313 3 127 HSA new accounts ('000) 111 11 (5) $12,325 $5,205 Ametros accounts ('000) 28 1 N/A $5,522 Ametros new accounts ('000) 1 — N/A $4,095
Slide 23: Healthcare Financial Services — PTNR Detail
Healthcare Financial Services — PTNR Detail ($ in millions) Favorable / HSA Bank PTNR Favorable / (Unfavorable) Ametros PTNR (Unfavorable) 3Q24 2Q24 3Q23 3Q24 2Q24 Net interest income $ 82.0 $ 1.6 $ 4.4 Net interest income $ 11.9 $ 0.7 Interchange revenue 12.3 (1.1) 0.5 Medical services fees 6.2 1.5
Slide 24: Consumer Banking
Consumer Banking ($ in millions) Total Loans $11,219 $11,239 $11,571 $1,770 $1,800 $1,783 Key Business Metrics Increase / (Decrease) 3Q24 2Q24 3Q23 Loan originations - Consumer Lending $ 525 $ 183 $ 196 $9,449 $9,439 $9,788 Loan originations - Small Business $ 82 $ (20) $ (5) Coupon on fundings 6.97
Slide 25: Net Interest Margin — Linked Quarter
Net Interest Margin — Linked Quarter 3Q24 2Q24 Increase / (Decrease) Average Yield/ Adjusted Average Adjusted ($ in millions) Balance Interest Rate Yield/Rate 1 Balance Interest BPs BPs Securities $ 16,886 $ 179.4 4.10 % 4.12 % $ 504 $ 14.4 24 24 Money market & other 970 12.8 5.18 5.18 149 1.0 (54)
Slide 26: Earning Asset & Funding Mix
Earning Asset & Funding Mix ($ in millions, end of period balances) Earning Asset Mix • Floating and periodic rate loans represent 42% of Type Balance Total % Floating % Periodic % Fixed % earning assets: Securities & Cash $ 19,998 28 % 17 % 2% 81 % ◦ Floating rate loans represent 33% of Loans HFS 1
Slide 27: Investment Portfolio
Investment Portfolio ($ in millions, end of period balances) Investment Securities Duration / Yield $16,447 $17,161 $14,529 $7,809 $8,595 4.4 4.6 4.5 $7,653 3.7 3.2 3.3 $8,638 $8,566 $6,876 3Q23 2Q24 3Q24 3Q23 2Q24 3Q24 HTM Securities AFS Securities Portfolio Duration (years) Purchase Duration (year
Slide 28: Investment Securities
Investment Securities ($ in millions, end of period balances; portfolio duration in years) Available-for-Sale September 30, 2024 June 30, 2024 Increase / (Decrease) Balances Portfolio Duration Balances Portfolio Duration Balances Portfolio Duration Government Agency Debentures $ 275 $ 264 $ 11 Munic
Slide 29: Loan Originations & Mix
Loan Originations & Mix ($ in millions) Originations by Loan Portfolio 3Q24 2Q24 3Q23 End of period balances Full quarter originations Balance Originations Balance Originations Balance Originations Commercial non-mortgage $ 18,657 $ 1,655 $ 18,022 $ 1,412 $ 18,059 $ 720 Asset-based lending 1,464 77
Slide 30: Deposit Mix & Rate
Deposit Mix & Rate ($ in millions) End of period balances 3Q24 2Q24 3Q23 Full quarter cost Balance Rate Balance Rate Balance Rate Demand $ 10,739 —% $ 9,994 —% $ 11,410 —% Interest-bearing checking 9,065 1.96 8,599 1.90 8,826 1.57 Health savings accounts 8,951 0.15 8,475 0.15 8,230 0.15 interLINK 7,
Slide 31: Impact of Sterling Purchase Accounting
Impact of Sterling Purchase Accounting Purchase Accounting Accretion (PAA) Summary Actuals Scheduled1 ($ in thousands) 1Q24 2Q24 3Q24 4Q24 FY24 FY25 FY26 Thereafter Loans & leases $ 7,129 $ 5,338 $ 3,509 $ 3,408 $ 19,384 $ 10,164 $ 6,186 $ 7,182 Securities (2,670) (589) (520) (503) (4,282) (1,593) (
Slide 32: Non-GAAP Reconciliations
Non-GAAP Reconciliations ($ in thousands, except per share amounts) Efficiency Ratio 3Q24 2Q24 3Q23 Non-interest expense $ 348,958 $ 326,021 $ 362,578 Less: Foreclosed property activity (687) (364) (492) Intangible assets amortization 8,491 8,716 8,899 Operating lease depreciation 197 560 1,146 FDIC
Slide 33: Non-GAAP Reconciliations
Non-GAAP Reconciliations ($ in thousands) Tangible Common Equity Ratio 3Q24 2Q24 3Q23 Stockholders' equity $ 9,198,050 $ 8,809,268 $ 8,199,201 Less: Goodwill and other intangible assets 3,212,050 3,242,193 2,843,217 Tangible stockholders' equity 5,986,000 5,567,075 5,355,984 Less: Preferred stock 28
Slide 34: Non-GAAP Reconciliations — Adjusted
Non-GAAP Reconciliations — Adjusted ($ in thousands) Adjusted Return on Average Assets 3Q24 Net income $ 192,985 Add: Loss on sale of investment securities, net, tax-effected 14,283 Exit of non-core operations, tax-effected 11,644 Strategic restructuring costs and other, tax-effected 16,158 FDIC spe
Slide 35: Non-GAAP Reconciliations — Adjusted
Non-GAAP Reconciliations — Adjusted ($ in thousands) Adjusted Return on Average Common Stockholders' Equity 3Q24 Average stockholders' equity $ 8,995,134 Less: Average preferred stock 283,979 Average common stockholders' equity $ 8,711,155 Net income $ 192,985 Less: Preferred stock dividends 4,162 L
Slide 36: Non-GAAP Reconciliations — Adjusted
Non-GAAP Reconciliations — Adjusted ($ in thousands) Adjusted Return on Average Tangible Common Stockholders' Equity 3Q24 Average stockholders' equity $ 8,995,134 Less: Average goodwill and other intangible assets 3,238,115 Average preferred stock 283,979 Average tangible common stockholders' equity
Slide 37: Forward-Looking Statements
WBS 3Q24 Financial Review Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “believes,” “anticipates,” “expects,” “intends,” “tar
Slide 38: Webster Financial Corporation
S) Webster Financial Corporation