Webster Financial (WBS) Q4 2024 earnings summary

Executive summary

• Achieved strategic milestones in 2024, including optimizing asset risk weightings, reducing CRE concentration, and improving securities yield profile, supported by the Ametros acquisition which added over $1 billion in low-cost, long-duration deposits.

• Loans grew 3.5% and deposits 6.5% year-over-year, with Q4 loan growth of 1.1% and deposit growth of 0.4% sequentially, led by C&I, residential mortgages, and Healthcare Financial Services.

• Maintained a differentiated funding profile and enhanced liquidity through off-balance sheet funding and digital channels.

• Reported Q4 adjusted net income to common shareholders of $244.7 million and diluted EPS of $1.43, with an efficiency ratio of 44.8%.

• Q4 results included a $56.9 million pre-tax securities repositioning loss and $29.4 million deferred tax asset valuation adjustment.

Financial highlights

• Full-year adjusted net income available to common was $923.7 million, with adjusted diluted EPS of $5.38.

• Net interest income for Q4 was $608.5 million, up 3.2% sequentially and 6.6% year-over-year; net interest margin increased 3 bps to 3.39%.

• Adjusted non-interest income was $109 million, up $16 million sequentially, driven by investment gains and derivative valuation adjustments.

• Adjusted non-interest expense increased $11.9 million sequentially, mainly due to higher incentives, seasonal benefits, and Ametros-related costs.

• Efficiency ratio improved to just below 45% in Q4 and was 45.4% for the full year.

Outlook and guidance

• 2025 outlook projects 4%-5% loan and deposit growth, net interest income of $2.45-$2.5 billion, and adjusted non-interest income of $370-$390 million.

• Full-year adjusted expenses expected at $1.39-$1.41 billion, with an efficiency ratio between 45%-47%.

• Guidance assumes two 25 bps Fed cuts beginning in March; effective tax rate expected at ~21%.

• Near-term CET1 ratio target remains 11%, with a long-term target of 10.5%.