Executive Summary

EPS of $1.30 missed the Street’s $1.38 consensus; SPGI “Revenue” (post‑provision) of $627.3M missed the $701.5M consensus, with the shortfall driven by a higher provision ($77.5M) after management raised recession scenario weighting to 30% *. Company-reported revenue (NII + noninterest income) was $704.8M .
Net interest margin expanded 4 bps q/q to 3.48% and efficiency ratio remained strong at 45.8% as deposits grew 1.3% and loans grew 1.0% q/q .
Credit costs stayed elevated but improved sequentially: net charge-offs fell to $55.0M (0.42% of average loans) with nonperforming assets rising to 1.06% of loans, concentrated in office CRE and health care; allowance increased to 1.34% of loans, largely from macro weighting changes rather than deterioration .
Full-year 2025 outlook is largely unchanged vs January: loans/deposits +4–5%, NII $2.45–$2.50B, efficiency 45–47%, tax ~21%, NIM ~3.40% (raised from 3.35–3.40% in January); deposit beta now expected ~33% vs ~30% previously, a modest tightening .
Potential catalysts: continued buybacks (3.6M shares repurchased in Q1), deposit cost reductions, credit inflection mid-2025, and Marathon JV timing (target late Q2/early Q3) .

What Went Well and What Went Wrong

What Went Well

Diverse deposit growth and NIM expansion: total deposits +$0.8B q/q; NIM +4 bps to 3.48%, reflecting lower deposit costs and stable funding mix . “We grew total deposits by over $800 million… NII was up slightly… NIM… up 4 basis points” (CFO) .
Segments: Healthcare Financial Services delivered 7% y/y operating revenue growth and 7.6% pre‑tax net revenue growth; HSA deposits +8% y/y with stable costs (~15–16 bps) . “Enrollment season for ’25 was good… deposit costs are staying in line” (COO) .
Capital return and resilience: ROA 1.15%, ROATCE ~15.9%, CET1 11.26%; repurchased ~3.6M shares on “significant excess capital and stable fundamentals” (CEO) .

What Went Wrong

Consensus misses: EPS of $1.30 vs $1.38*, and SPGI Revenue (post‑provision) of $627.3M vs $701.5M*, driven primarily by a provision increase tied to macro scenario weighting (added ~$20M to provision) *.
Asset quality optics: NPAs rose to 1.06% of loans (from 0.88% in Q4), with concentration in office and health care; ACL/NP loans coverage decreased to 126% from 149% in Q4 as NP loans grew .
Noninterest income down y/y (-$6.8M), with higher operating investments and risk infrastructure spend pushing noninterest expense up y/y (+$7.7M) .

Financial Results

Headline Results vs Prior Periods and Consensus

Metric	Q3 2024	Q4 2024	Q1 2025
Diluted EPS ($)	$1.10	$1.01	$1.30
EPS Consensus Mean ($)	$1.34*	$1.35*	$1.38*
Company Revenue (NII + Noninterest) ($MM)	$647.6	$661.0	$704.8
SPGI Revenue (Post‑Provision) ($MM)	$535.9*	$596.0*	$627.3*
Net Interest Margin (%)	3.36	3.39	3.48
Efficiency Ratio (%)	45.49	44.80	45.79
Provision for Credit Losses ($MM)	$54.0	$63.5	$77.5

Notes: EPS and SPGI revenue consensus values marked with * are Values retrieved from S&P Global.

Year-over-Year

Metric	Q1 2024	Q1 2025
Diluted EPS ($)	$1.23	$1.30
Company Revenue (NII + Noninterest) ($MM)	$667.1 (567.7 + 99.4)	$704.8
SPGI Revenue (Post‑Provision) ($MM)	$621.6*	$627.3*
ROA (%)	1.15	1.15
ROATCE (%)	16.30	15.93

Notes: SPGI values marked with * are Values retrieved from S&P Global.

Segment Operating Revenue and PTPP (Q1 2025 vs Q1 2024)

Segment	Operating Revenue Q1’24 ($000)	Operating Revenue Q1’25 ($000)	PTPP Q1’24 ($000)	PTPP Q1’25 ($000)
Commercial Banking	$376,222	$348,081	$269,997	$241,499
Healthcare Financial Services	$117,199	$125,751	$65,072	$70,031
Consumer Banking	$239,755	$228,268	$119,634	$105,612

Key KPIs and Balance Sheet

KPI	Q3 2024	Q4 2024	Q1 2025
Period-End Loans ($B)	$51.9	$52.5	$53.1
Period-End Deposits ($B)	$64.5	$64.8	$65.6
NPLs / Loans (%)	0.82	0.88	1.06
Net Charge-offs / Avg Loans (annualized, %)	0.27	0.47	0.42
ACL / Loans (%)	1.32	1.31	1.34
ACL / NPLs (%)	161.6	149.5	126.4
CET1 (%)	11.23	11.50	11.26
TBV per Share ($)	$33.26	$32.95	$33.97

Guidance Changes

Metric	Period	Previous Guidance (Jan Q4 call)	Current Guidance (Q1 call)	Change
Net Interest Income ($B)	FY 2025	$2.45–$2.50	$2.45–$2.50	Maintained
Net Interest Margin (%)	FY 2025	3.35–3.40	~3.40 (closer to top of range)	Raised within range
Loans Growth (EOP)	FY 2025	+4–5%	+4–5%	Maintained
Deposits Growth (EOP)	FY 2025	+4–5%	+4–5%	Maintained
Noninterest Income ($MM)	FY 2025	$370–$390	$370–$390	Maintained
Expenses ($MM)	FY 2025	$1,390–$1,410	$1,390–$1,410	Maintained
Efficiency Ratio (%)	FY 2025	45–47	45–47	Maintained
Effective Tax Rate (%)	FY 2025	~21	~20	Slightly lower run-rate in Q1; full-year unchanged
Deposit Beta (cycle terminal, %)	2025 cycle	~30	~33	Raised
CET1 Target (%)	Near-term	~11	~11 (willing to dip quarter-to-quarter)	Maintained with flexibility

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024)	Previous Mentions (Q4 2024)	Current Period (Q1 2025)	Trend
Credit trajectory	Elevated but managing; CRE concentration lowered; NCOs ~27 bps	Expect mid‑2025 inflection; NCOs ~30 bps FY, concentrated in office/health care	Inflection expected mid‑2025; NCOs 0.42% annualized; criticized loans declined q/q	Improving trajectory; inflection approaching
Deposit costs & beta	Core deposits +$2.6B; seasonal public funds impacted mix	Beta ~30%; spot margin 3.45% Dec; deposit costs down	Beta to ~33%; deposit costs -16 bps q/q; strong Q1 margin	Slightly higher beta; continued cost relief
Category 4 readiness	CRE concentration to ~255%; capital optimization	$40–$60MM multi‑year costs; $15–$20MM in 2025; tech/data investments	~$5MM Q1 spend; cloud‑native GL implemented; 2‑year compliance timeline	Execution underway; investments ramping
Tariffs/supply chain	Not highlighted	Macro “higher for longer,” preparedness	Client resilience; selective delays; monitoring tariff impacts	Vigilance; limited direct exposure
Office/Health care CRE	CRE securitization to reduce concentration	Office exposure down to <$825MM; green shoots	NPAs rise driven by office & health care; proactive downgrades	Resolution efforts ongoing; concentrated pockets
Marathon JV (Direct Lending)	Announced prior	Live in Q2; no economics in guide yet	Target late Q2/early Q3 go‑live; upside optionality	Near‑term launch pending

Management Commentary

“We reported EPS of $1.30… Our sound operating position allows us to be opportunistic. Given significant excess capital and stable fundamentals, we elected to repurchase 3.6 million shares during the quarter.” (CEO)
“We increased our recession case probability to 30%, resulting in us adding approximately $20 million to this quarter’s provision… Absent the macro‑driven additional reserves, our ROATCE… ~17% and ROAA ~1.25%.” (CEO)
“We grew total deposits by over $800 million… NIM… up 4 basis points… we changed the annualization factors for the NIM calculation… prior periods recast.” (CFO)
“We anticipate the partnership [Marathon JV] to be alive and active in 2Q… no economic benefit in our forecast.” (CEO) ; reaffirmed timing to late Q2/early Q3
“Our NIM… looking more at a 3.40-ish NIM versus 3.35% to 3.40% going forward… we reduced total deposit costs by 16 basis points.” (CFO)

Q&A Highlights

Credit and provisioning: Provision up on CECL scenario weighting changes, not underlying trends; criticized loans declined; NCO target 25–35 bps for 2025 .
Capital and buybacks: Will buy back more shares in a stable economy; comfortable near 11% CET1, with willingness to dip quarter-to-quarter .
NIM and deposits: 2025 NIM guided ~3.40%; deposit beta now ~33%; multiple levers to reduce high-cost products (e.g., BREO) as rates evolve .
Loan growth pipeline: Expect balanced growth across C&I, consumer, resi; CRE growth selective with concentration constraints; macro uncertainty delaying activity .
Securities portfolio: Repricing adds ~100 bps on replaced securities; no planned mix change; higher average cash a small NIM drag .

Estimates Context

Metric	Consensus*	Actual	Result
EPS ($)	1.38*	1.30	Bold miss: EPS below consensus
SPGI Revenue (post‑provision) ($MM)	701.5*	627.3*	Bold miss: revenue below consensus
EPS # of Estimates	14*	—	—
Revenue # of Estimates	6*	—	—
FY 2025 EPS ($)	5.89*	—	—
Target Price Consensus ($)	70.76*	—	—

Notes: Items marked with * are Values retrieved from S&P Global.

Context: Company-reported revenue ($704.8M) includes net interest income + noninterest income; SPGI “Revenue” reflects post‑provision net revenue (NII after provision + noninterest income), which was impacted by the higher provision in Q1 .

Key Takeaways for Investors

Q1 misses were driven by a discretionary increase in recession weighting (CECL), not deterioration; management sees mid‑2025 credit inflection and declining criticized loans—watch for provision normalization in coming quarters .
Deposit growth and cost control are intact; NIM guided ~3.40% for 2025 with levers to lower high-cost deposit products—positive for margin durability if rates stabilize .
Excess capital supports continued buybacks alongside organic growth; CET1 near 11% with willingness to be flexible intra‑quarter—near‑term share repurchases could support the stock .
Segment strength is balanced: Healthcare Financial Services (HSA/Ametros) provides low‑cost, sticky funding and growth optionality; Consumer and C&I pipelines are healthy but sensitive to macro .
Credit optics (NPAs 1.06%) remain a headline risk but are concentrated in office and health care; proactive risk rating and resolution strategies are in place—monitor office portfolio updates and NCO cadence .
Guidance largely unchanged; modestly higher deposit beta (~33%) offsets tougher loan yield dynamics—execution on deposit repricing and DDA growth is key to hitting the upper end of NII/NIM .
Potential upside: successful Marathon JV launch (late Q2/early Q3), accelerating sponsor/M&A activity, and faster deposit cost reductions could lift NII and sentiment .

Appendix: Additional Data and Footnotes

Company Revenue (NII + Noninterest income) Q1 2025: $612.2M + $92.6M = $704.8M .
SPGI “Revenue” aligns to NII after provision + noninterest income: $534.7M + $92.6M = $627.3M *.

All document-based figures include citations. SPGI consensus and actual figures are marked with * and are Values retrieved from S&P Global.

WEBSTER FINANCIAL CORP (WBS)·Q1 2025 Earnings Summary