Webster Financial Corporation · NYSE:WBS
Webster Financial — Q4 2024 Earnings Presentation
41 slides from Webster Financial's earnings presentation, Jan 17, 2025
Slide 1: Earnings Conference Call Fourth Quarter 2024
Earnings Conference Call Fourth Quarter 2024 January 17, 2025 WEBSTER FINANCIAL CORPORATION
Slide 2: Full Year 2024 Highlights
Full Year 2024 Highlights REPORTED ADJUSTED • Strategic accomplishments: ◦ Ametros acquisition added source of low- $1.2B $1.4B cost, fast growing long-duration deposits PPNR PPNR ◦ Balance sheet optimization activities improved capital ratios, reduced commercial real estate concentration, enhanced
Slide 3: Fourth Quarter 2024 Highlights
Fourth Quarter 2024 Highlights REPORTED ADJUSTED • Highlighted results: ◦ Total deposits grew $0.2 billion, or 0.4% LQ ◦ Loans up $0.6 billion, or 1.1% LQ $320.6M $377.5M PPNR PPNR ◦ Efficiency ratio of 44.8% ◦ Adjusted ROAA 1.27% ◦ Adjusted ROATCE 17.73% $173.6M $244.7M • NIM of 3.39%, up 3 bps, re
Slide 4: 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 treasury services player nationally, professional sweep program treasury activities complemented by an offering for
Slide 5: Commercial Real Estate Portfolio
Commercial Real Estate Portfolio Investor CRE portfolio remains well diversified Investor CRE Portfolio Rent Regulated Multifamily Detail • $1.5 billion in exposure represents properties where > 50% of NOI is RR • $91 million in additional exposure where RR NOI between 25-50% ADC / Construction 13.7
Slide 6: 4Q24 Net Income Available to Common
4Q24 Net Income Available to Common GAAP to Adjusted Reconciliation ($ in millions) Pre-Tax After Tax Diluted EPS Reported (GAAP) $ 257.1 $ 173.6 $ 1.01 Securities repositioning loss 56.9 41.8 0.25 Deferred tax asset valuation adjustment N/A 29.4 0.17 Adjusted (non-GAAP) $ 314.0 $ 244.7 $ 1.43 Impac
Slide 7: Balance Sheet — End of Period
Balance Sheet — End of Period ($ in millions) 4Q24 3Q24 Increase / (Decrease) 4Q23 Key Observations Cash and interest-bearing deposits $ 2,074 $ (1,123) $ 359 • Securities portfolio: Securities 17,451 290 1,416 ◦ AFS $9.0 billion, 4.57% yield, duration of 4.5 years Commercial loans 42,068 256 1,138
Slide 8: Loans
Loans ($ in millions, balances end of period) Loan Growth of 1.1% LQ LQ growth of $0.6 billion or 1.1% LQ Change YOY Change LQ Change YOY Change • Total loans up $0.6 billion from the prior quarter, with growth Portfolio 4Q24 driven by C&I and residential categories ($) ($) (%) (%) C&I $ 13,735 $ 30
Slide 9: Deposits
Deposits ($ in millions, balances end of period) Deposit Growth of 0.4% LQ LQ growth of $0.2 billion or 0.4% LQ Change YOY Change LQ Change YOY Change • Deposit growth of $0.2 billion, as seasonal declines in 4Q24 ($) ($) (%) (%) municipal deposits were offset by short-duration time Demand $ 10,313
Slide 10: Income Statement
Income Statement Reported to Adjusted Favorable / Reported Adjusted ($ in millions, except EPS) 4Q24 Adjustments 1 4Q24 (Unfavorable) 3Q24 2 Key Observations Net interest income $ 608.5 $ — $ 608.5 $ 18.6 Reported GAAP: Non-interest income 52.5 56.9 109.4 16.1 • Net income of $177.8 million, down fr
Slide 11: Net Interest Income
Net Interest Income ($ in millions) Linked Quarter NII • Net interest income totaled $608.5 million, up from prior quarter by $589.9 $608.5 $571.0 $18.6 million or 3.2%, driven by balance sheet growth and modest NIM expansion 5.69% • Net interest income excluding accretion totaled $606.8 million, up
Slide 12: Interest Rate Positioning
Interest Rate Positioning Balance sheet well positioned for up and down rate scenarios Rising vs. Flat Rate NII Scenarios Falling vs. Flat Rate NII Scenarios 0.6% 0.4% 0.3% 0.2% —% —% (0.1)% (0.2)% 3Q24 4Q24 3Q24 4Q24 Ramp Up 100 bps Ramp Up 200 bps Shock Down 100 bps Ramp Down 100 bps * Assumes giv
Slide 13: Non-Interest Income
Non-Interest Income ($ in millions) $109.4 $93.3 (adj) $109.4 (adj) $109.4 $80.6 (adj) $93.3 Adjusted non-interest income increased $16.1 million LQ $93.3 • Adjusted income was primarily due to benefits from direct investment gains and the credit valuation adjustment $63.8 $63.8 • The modeled credit
Slide 14: Non-Interest Expense
Non-Interest Expense ($ in millions) $377.2 $349.1 $340.4 $47.2 $20.6 $— Adjusted expense increased $11.9 million LQ $30.7 $— • The increase in adjusted expenses was driven by higher performance incentive accruals, seasonal increases in employee benefit costs, and a $2.3 million contribution to the
Slide 15: Allowance for Credit Losses on Loans & Leases
Allowance for Credit Losses on Loans & Leases ($ in millions) Provision: $54 Provision: $63 $50 $688 $58 $690 $669 $4 $5 $(35) $(61) Coverage % 1.30% 1.32% 1.31% 6/30/2024 3Q Net Charge- Loan Balances 3Q Macro/ 9/30/2024 4Q Net Charge- Loan Balances 4Q Macro/ 12/31/2024 Offs Credit Offs Credit 3Q24
Slide 16: Key Asset Quality Metrics
Key Asset Quality Metrics ($ in millions) Nonperforming Loans, OREO, NPL Ratio Net Charge-Offs (Recoveries) $60.5 $462 $428 $36.0 $28.4 $461 $426 $219 0.82% 0.88% $5.6 $0.4 $210 $(0.6) 0.41% 0.27% 0.27% 0.47% 4Q23 3Q24 4Q24 4Q23 3Q24 4Q24 Nonperforming Loans OREO/Repossessed NPL Ratio Commercial Con
Slide 17: Strong Capital Levels
Strong Capital Levels Hold Co Capital Levels Hold Co Capital Ratios 14.20% At Dec 31, At Sep 30, At Dec 31, 12.01% 2024* 2024 2023 11.50% Common Equity Tier 1 risk-based capital 11.50% 11.25% 11.11% 8.70% Tangible common equity 7.45% 7.48% 7.73% 10.00% Tangible equity 7.82% 7.85% 8.12% 8.00% 6.50% T
Slide 18: 2025 Full Year Outlook
2025 Full Year Outlook Outlook assumes no material changes to the regulatory environment or macro environment / rate assumptions Loan Growth • Full year loan growth of 4% to 5% Deposit Growth • Deposit growth of 4% to 5% • Full year NII of $2.45 billion to $2.50 billion (non-FTE), excluding ~$55 mil
Slide 19: Supplemental Information
Supplemental Information pg. 20 to 21 Commercial Real Estate Portfolio pg. 22 to 25 Lines of Business Summary pg. 26 Net Interest Margin - Linked Quarter pg. 27 Earning Asset & Funding Mix pg. 28 to 29 Investment Portfolio pg. 30 Loan Originations & Mix pg. 31 Deposit Mix & Rate pg. 32 Impact of Ste
Slide 20: Commercial Real Estate Portfolio
Commercial Real Estate Portfolio ($ in millions) Commercial Real Estate Portfolio ex. Owner Occupied Portfolio Characteristics Loan-to- Amortizing Classified Non- 12-Month • Portfolio balance of $18.8 billion Property Type Balances Value 1 DSCR 2 % Accrual % Maturities • Weighted Average LTV / Amort
Slide 21: Commercial Real Estate Portfolio
Commercial Real Estate Portfolio ($ 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 27 % 21 % 10 % 10 % 8% 7% 15 % Multifamily Multifamil
Slide 22: Commercial Banking
Commercial Banking ($ in millions) Total Loans Key Business Metrics Increase / (Decrease) $39,481 $40,372 $40,616 4Q24 3Q24 4Q23 $337 $338 Loan originations $ 2,777 $ 579 $ (82) $359 Loan fundings $ 2,030 $ 771 $ 39 Coupon on fundings 6.61% (0.52)% (0.91)% $20,385 $20,079 $19,793 Deposits $ 16,252 $
Slide 23: Healthcare Financial Services
Healthcare Financial Services ($ in millions) Total Footings Key Business Metrics Increase / (Decrease) 4Q24 3Q24 4Q23 $15,146 $15,289 HSA accounts ('000) 3,297 (16) 113 $12,930 HSA new accounts ('000) 98 (13) (6) $5,205 $5,322 Ametros accounts ('000) 29 1 N/A $4,642 Ametros new accounts ('000) 1 —
Slide 24: Healthcare Financial Services — PTNR Detail
Healthcare Financial Services — PTNR Detail ($ in millions) Favorable / HSA Bank PTNR Favorable / (Unfavorable) Ametros PTNR (Unfavorable) 4Q24 3Q24 4Q23 4Q24 3Q24 Net interest income $ 83.2 $ 1.2 $ 5.1 Net interest income $ 12.0 $ 0.1 Interchange revenue 11.6 (0.7) 0.5 Medical services fees 5.6 (0.
Slide 25: Consumer Banking
Consumer Banking ($ in millions) Total Loans $11,571 $11,886 $11,235 $1,808 $1,783 $1,796 Key Business Metrics Increase / (Decrease) 4Q24 3Q24 4Q23 Loan originations - Consumer Lending $ 492 $ (33) $ 274 $9,427 $9,788 $10,090 Loan originations - Small Business $ 99 $ 17 $ 6 Coupon on fundings 6.61 %
Slide 26: Net Interest Margin — Linked Quarter
Net Interest Margin — Linked Quarter 4Q24 3Q24 Increase / (Decrease) Average Yield/ Adjusted Average Adjusted 1 ($ in millions) Balance Interest Rate Yield/Rate Balance Interest BPs BPs 2 Securities $ 17,983 $ 192.3 4.28 % 4.29 % $ 499 $ 13.0 18 17 Money market & other 1,503 19.3 5.05 5.05 533 6.6 (
Slide 27: 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: Interest-bearing deposits $ 1,686 2% 100 % —% —% Securities 17,451 24 5 — 95 ◦ Floating rate lo
Slide 28: Investment Portfolio
Investment Portfolio ($ in millions, end of period balances) Investment Securities Duration / Yield $17,161 $17,451 $16,035 4.5 4.8 $8,595 $9,007 4.4 4.1 $8,960 3.7 3.3 $8,566 $8,444 $7,075 4Q23 3Q24 4Q24 4Q23 3Q24 4Q24 HTM Securities AFS Securities Portfolio Duration (years) Purchase Duration (year
Slide 29: Investment Securities
Investment Securities ($ in millions, end of period balances; portfolio duration in years) Available-for-Sale December 31, 2024 September 30, 2024 Increase / (Decrease) Balances Portfolio Duration Balances Portfolio Duration Balances Portfolio Duration Government Agency Debentures $ 186 $ 275 $ (89)
Slide 30: Loan Originations & Mix
Loan Originations & Mix ($ in millions) Originations by Loan Portfolio 4Q24 3Q24 4Q23 End of period balances Full quarter originations Balance Originations Balance Originations Balance Originations Commercial non-mortgage $ 19,273 $ 2,288 $ 18,657 $ 1,655 $ 18,214 $ 1,563 Asset-based lending 1,404 —
Slide 31: Deposit Mix & Rate
Deposit Mix & Rate ($ in millions) End of period balances 4Q24 3Q24 4Q23 Full quarter cost Balance Rate Balance Rate Balance Rate Demand $ 10,313 —% $ 10,739 —% $ 10,733 —% Interest-bearing checking 8,829 1.88 9,065 1.96 8,994 1.81 Health savings accounts 8,951 0.16 8,951 0.15 8,288 0.15 interLINK 7
Slide 32: 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 $ 1,517 $ 17,493 $ 10,518 $ 6,464 $ 8,303 Securities (2,670) (589) (520) (374) (4,153) (1,082) (
Slide 33: Non-GAAP Reconciliations
Non-GAAP Reconciliations ($ in thousands, except per share amounts) Efficiency Ratio 4Q24 3Q24 4Q23 Non-interest expense $ 340,377 $ 348,958 $ 377,221 Less: Foreclosed property activity (32) (687) (96) Intangible assets amortization 9,681 8,491 8,618 Operating lease depreciation 121 197 900 FDIC spe
Slide 34: Non-GAAP Reconciliations
Non-GAAP Reconciliations ($ in thousands) Tangible Common Equity Ratio 4Q24 3Q24 4Q23 Stockholders' equity $ 9,133,214 $ 9,198,050 $ 8,689,996 Less: Goodwill and other intangible assets 3,202,369 3,212,050 2,834,600 Tangible stockholders' equity 5,930,845 5,986,000 5,855,396 Less: Preferred stock 28
Slide 35: Non-GAAP Reconciliations — Adjusted
Non-GAAP Reconciliations — Adjusted ($ in thousands) Adjusted Return on Average Assets 4Q24 2024 Net income $ 177,766 $ 768,707 Add: Loss on sale of investment securities, net, tax-effected 41,763 102,126 Deferred tax asset valuation adjustment 29,350 29,350 Exit of non-core operations, tax-effected
Slide 36: Non-GAAP Reconciliations — Adjusted
Non-GAAP Reconciliations — Adjusted ($ in thousands) Adjusted Return on Average Common Stockholders' Equity 4Q24 2024 Average stockholders' equity $ 9,186,082 $ 8,919,675 Less: Average preferred stock 283,979 283,979 Average common stockholders' equity $ 8,902,103 $ 8,635,696 Net income $ 177,766 $
Slide 37: Non-GAAP Reconciliations — Adjusted
Non-GAAP Reconciliations — Adjusted ($ in thousands) Adjusted Return on Average Tangible Common Stockholders' Equity 4Q24 2024 Average stockholders' equity $ 9,186,082 $ 8,919,675 Less: Average goodwill and other intangible assets 3,207,554 3,195,988 Average preferred stock 283,979 283,979 Average t
Slide 38: Non-GAAP Reconciliations — YTD
Non-GAAP Reconciliations — YTD ($ in thousands) Full Year Efficiency Ratio 2024 2023 Non-interest expense $ 1,351,279 $ 1,416,355 Less: Foreclosed property activity (1,413) (1,282) Intangible assets amortization 36,082 36,207 Operating lease depreciation 1,541 5,569 FDIC special assessment 10,318 47
Slide 39: Non-GAAP Reconciliation
Non-GAAP Reconciliation Full Year 2024 GAAP to Adjusted ($ in millions) Pre-Tax After Tax EPS Reported (GAAP) $ 1,017.0 $ 752.1 $ 4.37 Securities repositioning loss 136.2 102.1 0.60 Exit of non-core operations 16.0 11.6 0.07 Strategic restructuring costs and other 22.2 16.2 0.10 FDIC special assessm
Slide 40: Forward-Looking Statements
WBS 4Q24 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 41: Webster Financial Corporation
S) Webster Financial Corporation