Webster Financial (WBS) Q2 2024 earnings summary

Executive summary

• Announced a private credit joint venture with Marathon Asset Management to enhance balance sheet flexibility and fee income opportunities.

• Hired Neil Holland as incoming CFO and added Bill Haas, former OCC Deputy Comptroller, to the Board, strengthening leadership and regulatory expertise.

• The Ametros acquisition expanded Healthcare Financial Services, adding $228.2M in goodwill and $182.8M in core deposit intangibles, and contributed to segment growth.

• Net income for Q2 2024 was $177.5M, or $1.03 per diluted share, down from $230.8M, or $1.32 per share, a year ago; adjusted EPS was $1.26, excluding $49.9M in securities repositioning losses.

• Loans and deposits grew sequentially, with total assets reaching $77B.

Financial highlights

• Net interest income was $572.3M, down from $583.8M year-over-year; net interest margin was 3.32%, down 3 bps sequentially.

• Adjusted return on average assets was 1.16% and return on tangible common equity was 17.15% for the quarter.

• Efficiency ratio was 46.22%; tangible book value per share was $30.82.

• Provision for credit losses was $59M, up from $31.5M a year ago; net charge-offs were $33.1M.

• Core deposits grew by $700M; total deposits up $1.5B sequentially, driven by InterLINK, Ametros, and Consumer Banking.

Outlook and guidance

• Full-year 2024 loan growth expected at 4–5%, deposit growth at 5%, and NII of $2.32–$2.34B, assuming one Fed rate cut in December.

• Adjusted non-interest income projected at $375M, with adjusted expenses between $1.3–$1.325B and efficiency ratio in the mid-40% range.

• CET1 ratio target of 11% by year-end 2024, with a long-term target of 10.5%.

• Management expects continued focus on core deposit growth, expense control, and credit quality amid economic uncertainty.

• Anticipates increased regulatory scrutiny on liquidity and capital following 2023 bank failures; company remains well-capitalized.