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 $1.1B in deposits, $228.2M in goodwill, and $182.8M in core deposit intangibles, and drove segment realignment.

• Continued investment in technology and digital offerings, particularly at HSA Bank and Ametros, driving deposit growth and client wins.

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

Financial highlights

• GAAP net income to common shareholders was $177.5M; adjusted net income was $216.2M for Q2 2024.

• Net interest income was $572.3M, down 2.0% year-over-year; net interest margin was 3.32%, down 3 bps sequentially.

• Core deposits grew by $700M; total deposits increased $1.5B quarter-over-quarter and $3.5B year-over-year.

• Loans grew by $500M (0.9%) over the linked quarter, mainly in commercial categories; loans and leases ended at $51.6B.

• Tangible book value per share increased to $30.82.

Outlook and guidance

• Full-year 2024 loan growth expected at 4%-5%, with C&I driving growth in the second half; deposit growth anticipated at 5%.

• Net interest income guidance set at $2.32–$2.34B (non-FTE/GAAP), flat year-over-year, assuming one Fed rate cut in December.

• Adjusted non-interest income expected at $375M; adjusted expenses guided to $1.3–$1.325B; efficiency ratio projected in the mid-40% range.

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

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