Webster Financial Corp (WBS) Q3 2024 Earnings Call Highlights: Strong Deposit Growth and ...

GuruFocus News
4 min read

In This Article:

  • Deposit Growth: Increased by 3.6% in the quarter, with significant growth in DDA, commercial deposits, and HSA.

  • Loan Growth: Increased by 0.7% in the quarter, excluding a $300 million securitization, growth was 1.3%.

  • Net Interest Income: Increased quarter over quarter, aligning with full-year expectations.

  • Efficiency Ratio: Maintained at 45%, indicating well-managed expenses.

  • Return on Average Assets: 1.22% on an adjusted basis for the quarter.

  • Return on Tangible Common Equity: 17.3% on an adjusted basis for the quarter.

  • Adjusted EPS: $1.34 for the quarter.

  • Net Income to Common Shareholders: $230 million on an adjusted basis.

  • Total Assets: $79 billion at period end, an increase of $2.6 billion from the second quarter.

  • Common Equity Tier 1 Ratio: 11.23%, an increase of 64 basis points from the previous quarter.

  • Tangible Common Equity Ratio: 7.48%.

  • Loan to Deposit Ratio: 80.5%.

  • Net Interest Margin: Increased by 4 basis points to 336 basis points.

  • Allowance for Credit Losses: Increased by $19 million, with coverage to loans at 132 basis points.

  • Net Charge-Offs: $36 million for the quarter.

Release Date: October 17, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Webster Financial Corp (NYSE:WBS) reported a 3.6% growth in deposits for the quarter, including growth in DDA, overall commercial deposits, and HSA.

  • Net interest income grew quarter over quarter, aligning with full-year expectations, benefiting from asset growth and balance sheet repositioning.

  • The company maintained strong capital levels, with a CET 1 ratio exceeding the operating target of 11%, providing capital flexibility.

  • Webster Financial Corp (NYSE:WBS) achieved an industry-leading efficiency ratio of 45%, indicating well-managed expenses.

  • The company successfully reduced its commercial real estate (CRE) concentration, with pre-outstandings as a percentage of tier one capital and reserves declining from 285% to approximately 265%.

Negative Points

  • Webster Financial Corp (NYSE:WBS) experienced continued negative risk rating migration, particularly in the office segment of the CRE portfolio.

  • Non-accrual loans increased by $50 million this quarter, primarily driven by the office portfolio migration.

  • The company faced pressure on core fee growth, with adjusted noninterest income only up by $1 million.

  • There was a $20 million securities repositioning charge, a $16 million impact from the exit of noncorporate factoring operations, and $22 million in strategic restructuring costs.

  • Webster Financial Corp (NYSE:WBS) anticipates a decline in deposits by around 1% in the fourth quarter due to seasonality in the public funds business.

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