Webster Reports Q4 2024 EPS of $1.01 and Adjusted EPS of $1.43

Webster Financial Corporation Q4 2024 Earnings Report

Webster Financial Corporation (“Webster”) (NYSE: WBS), the holding company for Webster Bank, N.A., has released its financial results for the fourth quarter of 2024. The corporation reported net income available to common stockholders of $173.6 million, translating to earnings per diluted share (EPS) of $1.01. This compares to $181.2 million, or $1.05 per diluted share, for the same quarter in 2023.

John R. Ciulla, chairman and CEO of Webster, remarked, “Our financial performance for the quarter and full year 2024 illustrates the power and resiliency of Webster’s business model. At the same time, we are thoughtfully investing to facilitate future growth.”

Adjusted Earnings and Significant Events

Webster’s fourth-quarter 2024 results include:

  • Securities Repositioning Losses: $56.9 million pre-tax.
  • Deferred Tax Asset Valuation Adjustment: $29.4 million.

When excluding these items, adjusted EPS for the quarter was $1.43, slightly down from $1.46 in Q4 2023.

Financial Highlights for Q4 2024

  • Revenue: $661.0 million.
  • Loans and Leases: $52.5 billion at period end, reflecting a 1.1% increase from the prior quarter.
  • Deposits: $64.8 billion at period end, marking a 0.4% increase from the previous quarter.
  • Provision for Credit Losses: $63.5 million.
  • Return on Average Assets (ROA): 0.91%; adjusted ROA was 1.27%.
  • Return on Average Tangible Common Equity: 12.73%; adjusted return was 17.73%.
  • Net Interest Margin (NIM): 3.39%, up by 3 basis points from the prior quarter.
  • Common Equity Tier 1 (CET1) Ratio: 11.50% (preliminary).
  • Efficiency Ratio: 44.80%.
  • Tangible Common Equity Ratio: 7.45%.

Neal Holland, Webster’s executive vice president and CFO, stated, “The actions we took in 2024 to enhance Webster’s capital and liquidity, unique funding attributes, and investments in people and technology fortify the base for our company’s growth.”

Detailed Financial Performance

Quarterly Net Interest Income

  • Net Interest Income: $608.5 million, compared to $571.0 million in Q4 2023.
  • Net Interest Margin: 3.39%, slightly down from 3.42% in Q4 2023.
  • Interest-Earning Assets: $71.9 billion on average, a 6.4% increase year-over-year.
  • Loans and Leases: Averaged $52.3 billion, up 3.8% year-over-year.
  • Deposits: Averaged $64.8 billion, an 8.1% increase year-over-year.

Provision for Credit Losses

  • Provision: $63.5 million in Q4 2024, compared to $54.0 million in Q3 2024 and $36.0 million in Q4 2023.
  • Net Charge-Offs: $60.9 million, up from $35.4 million in the prior quarter and $34.0 million a year ago.
  • Allowance for Credit Losses: Represented 1.31% of total loans and leases.

Non-Interest Income

  • Total Non-Interest Income: $52.5 million, down $11.3 million from Q4 2023.
  • This figure includes $56.9 million of losses on sales of investment securities. Excluding these losses, non-interest income increased by $28.8 million.

Non-Interest Expense

  • Total Non-Interest Expense: $340.4 million, a $36.8 million decrease from Q4 2023.
  • Excluding one-time charges from Q4 2023, expenses increased by $41.0 million, driven by technology investments, performance-based incentives, and contributions to the Webster Charitable Foundation.

Income Taxes

  • Income Tax Expense: $79.3 million, compared to $36.2 million in Q4 2023.
  • The effective tax rate rose to 30.9%, influenced by a $29.4 million deferred tax asset valuation adjustment.

Business Segments

Commercial Banking

  • Loans and Leases: $40.6 billion, up 2.9% year-over-year.
  • Deposits: $16.3 billion, up 1.2% year-over-year.
  • Operating Revenue: $371.4 million, down 3.4% year-over-year.
  • Pre-Tax, Pre-Provision Net Revenue: $264.7 million, a 7.9% decrease from Q4 2023.

Healthcare Financial Services

  • Total Footings: $15.3 billion, an 18.2% year-over-year increase.
  • Net Interest Income: $95.2 million, a 22.0% year-over-year increase.
  • Operating Revenue: $120.3 million, up 22.5% year-over-year.
  • Pre-Tax Net Revenue: $63.7 million, a 13.0% year-over-year increase.

Consumer Banking

  • Loans: $11.9 billion, a 5.8% year-over-year increase.
  • Deposits: $27.3 billion, up 4.1% year-over-year.
  • Operating Revenue: $229.1 million, down 5.1% year-over-year.
  • Pre-Tax, Pre-Provision Net Revenue: $110.0 million, an 11.9% decrease from Q4 2023.

Capital and Asset Quality

  • Total Loans and Leases: $52.5 billion, up from $51.9 billion in Q3 2024 and $50.7 billion in Q4 2023.
  • Nonperforming Loans and Leases: $461.3 million, or 0.88% of total loans and leases, compared to 0.41% a year ago.
  • Deposits: $64.8 billion, up from $64.5 billion in Q3 2024 and $60.8 billion in Q4 2023.
  • Borrowings: $3.4 billion, down from $4.1 billion in Q3 2024 and $3.9 billion a year ago.

Investment Securities

  • Total Investment Securities: $17.5 billion, up from $17.2 billion in Q3 2024 and $16.0 billion in Q4 2023.
  • The available-for-sale portfolio’s carrying value included $712.9 million of net unrealized losses.

Business Investments and Strategic Initiatives

Webster remains focused on investing in technology to support its digital transformation strategy. Enhanced online platforms, mobile banking applications, and digital payment solutions are being developed to cater to evolving customer preferences. These initiatives have already contributed to the bank’s improved efficiency and customer satisfaction.

Additionally, Webster has expanded its outreach in underserved markets, leveraging its expertise in healthcare financial services and commercial banking. The emphasis on these specialized sectors is expected to drive significant growth in 2025 and beyond.

Corporate Social Responsibility

Webster Charitable Foundation’s contributions totaled $10 million in 2024. The bank’s focus on community development, education, and environmental sustainability has been a cornerstone of its long-term corporate responsibility strategy. Initiatives include:

  • Partnerships with local nonprofits to enhance financial literacy.
  • Investment in green banking projects, including renewable energy financing.
  • Employee volunteering programs that saw over 50,000 hours contributed in 2024.

Outlook

Webster’s strong performance in 2024 reflects its strategic focus on growth and resilience. The company continues to invest in technology and human capital while optimizing its capital and liquidity. With diversified business segments, Webster remains well-positioned to navigate challenges and capitalize on future opportunities. Management anticipates continued growth in loan and deposit volumes, coupled with disciplined cost management and risk oversight.

This report contains forward-looking statements subject to various risks and uncertainties. Readers are cautioned not to place undue reliance on these forward-looking statements, as actual results may differ materially due to various factors, including economic conditions, regulatory changes, and competition.

For additional details, please refer to Webster’s full earnings release and accompanying investor presentation available on the company’s website.

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