Webster Financial (WBS) Q4 2024 earnings summary

Executive summary

• Achieved strategic milestones in 2024, including balance sheet optimization, CRE concentration reduction, and improved securities yield profile, supported by the Ametros acquisition which added over $1 billion in low-cost, long-duration deposits and expanded product offerings.

• 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, driven by C&I and residential mortgage lending.

• Reported Q4 2024 adjusted net income to common shareholders of $244.7 million and diluted EPS of $1.43, excluding $56.9 million securities repositioning losses and $29.4 million deferred tax asset valuation adjustment.

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

Financial highlights

• Full-year adjusted net income available to common was $923.7 million, with adjusted diluted EPS of $5.38; Q4 adjusted PPNR was $377.5 million.

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

• Efficiency ratio improved to 44.8% in Q4 and 45.4% for the full year.

• Loans ended Q4 at $52.5 billion, up 1.1% sequentially; deposits were $64.8 billion, up 0.4% sequentially.

• Non-interest income rose $16 million sequentially, driven by investment gains and derivative valuation adjustments.

Outlook and guidance

• Projecting 4%-5% loan and deposit growth for 2025, with net interest income expected at $2.45-$2.5 billion and non-interest income guidance of $370-$390 million.

• Full-year adjusted expenses forecasted at $1.39-$1.41 billion; efficiency ratio targeted between 45%-47%.

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

• Guidance assumes two 25 bps Fed cuts beginning in March; NIM for 2025 projected at 3.35%-3.40%.