Webster Financial (WBS) Q3 2024 earnings summary

Executive summary

• Q3 2024 net income available to common stockholders was $188.8M ($1.10 EPS), with adjusted EPS of $1.34, reflecting $56.2M in repositioning and restructuring costs.

• Total assets reached $79.45B, up 6% year-over-year, driven by increases in cash, investment securities, and loans.

• Deposit growth was strong, with total deposits up $2.2B (3.6% LQ) to $64.5B, aided by seasonal public funds and HSA inflows.

• CRE concentration was reduced through a $300M securitization and reclassification, lowering CRE to 265% of Tier 1 capital and reserves.

• Capital ratios improved, with CET1 at 11.23% and tangible common equity ratio at 7.48%.

Financial highlights

• Net interest income was $589.9M, up $17.6M (3.1%) sequentially; net interest margin was 3.36%.

• Adjusted net income to common shareholders was $230M; adjusted EPS $1.34.

• Non-interest income was $57.7M, down $32.7M year-over-year, mainly due to $19.6M in securities losses and $16M loss on exit of non-core operations.

• Provision for credit losses rose to $54M, with net charge-offs of $35.4M (0.27% of average loans and leases), office loans accounting for 55%.

• Book value per common share was $52.00; tangible book value per share was $33.26.

Outlook and guidance

• Q4 loan growth expected at 1%-1.5%; deposits to decline ~1% due to seasonality.

• Net interest income guidance: $590M-$600M; assumes 50 bps rate cuts in Q4.

• Adjusted non-interest income expected at $85M-$90M; adjusted expenses ~$335M; efficiency ratio to remain in mid-40s.

• CET1 ratio to remain at 11% near-term; long-term target 10.5%.

• Management anticipates continued regulatory focus on liquidity and capital adequacy.