Executive Summary

Q4 2024 GAAP EPS was $1.01 and adjusted EPS was $1.43, with net interest margin expanding to 3.39% on balance sheet growth and securities repositioning; adjusted ROATCE was 17.73% and adjusted ROAA 1.27% .
Deposit and loan growth continued: deposits reached $64.8B (+0.4% q/q) and loans $52.5B (+1.1% q/q); loan-to-deposit ratio rose to 81.1% .
Credit costs elevated: provision was $63.5M and net charge-offs were $60.9M (0.47% of average loans), driven largely by traditional office and healthcare services exposures; allowance coverage remained 1.31% of loans .
2025 outlook: loans and deposits to grow 4–5% EOP, NII $2.45–$2.50B (non-FTE; add ~$55M for FTE), expenses $1.39–$1.41B, efficiency 45–47%, effective tax rate ~21%, CET1 target ~11%; NIM guided to 3.35–3.40% (raised from ~3.30% prior commentary) .
Potential stock catalysts: raised NIM guidance, strong Q1 margin expected, capital return optionality in 2025 (buybacks) if loan growth and regulatory backdrop align .

What Went Well and What Went Wrong

What Went Well

Net interest income rose $19M q/q on higher earning assets and modest NIM expansion; deposit costs declined 16 bps in the quarter .
Noninterest income benefited from a large direct investment gain and positive CVA swing; adjusted noninterest income was $109M (~$95M excluding one-offs), indicating resilient underlying activity .
Funding profile remained differentiated: diversified deposit growth in HSA, Ametros (to >$1B from ~$800M at acquisition), digital consumer, and commercial (e.g., 1031 exchanges) .
Management raised 2025 NIM guide to 3.35–3.40% and expects a very strong Q1 margin, citing deposit repricing playbook and securities repositioning .
Quote: “We are proactively investing…to improve our data and analytics capabilities…prepare Webster for a large bank regulatory regime…allow the bank to operate more nimbly” .

What Went Wrong

Credit costs elevated: provision of $63.5M matched $60.9M in net charge-offs; NPLs rose to 0.88% of loans, with office and healthcare services driving losses .
Tangible book value per share fell to $32.95 from $33.26 on AOCI impact; available-for-sale unrealized losses increased to $712.9M q/q; HTM unrealized losses $991.2M (not reflected on balance sheet) .
Efficiency ratio, while strong, ticked up q/q to 44.80% on higher incentive accruals, seasonal benefit costs, and a charitable contribution; adjusted expenses rose to $340M .
Prior commentary on NIM near ~3.30% into 2025 was revised; while the new guide is higher, the change highlights sensitivity to deposit mix and added long-term debt in 2H25 .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Revenue ($USD Millions)	—	$647.6	$661.0
Diluted EPS ($)	$1.05	$1.10	$1.01
Adjusted EPS ($)	—	$1.34	$1.43
Net Interest Income ($USD Millions)	$571.0	$589.9	$608.5
Noninterest Income ($USD Millions)	$63.8	$57.7	$52.5
Provision for Credit Losses ($USD Millions)	$36.0	$54.0	$63.5
Net Charge-offs ($USD Millions)	$34.0	$35.4	$60.9
NIM (%)	3.42	3.36	3.39
Efficiency Ratio (%)	43.04	45.49	44.80
Loans & Leases ($USD Billions)	$50.7	$51.9	$52.5
Deposits ($USD Billions)	$60.8	$64.5	$64.8
Loan-to-Deposit Ratio (%)	83.5	80.5	81.1
CET1 Ratio (%)	11.11	11.23	11.50

Segment breakdown (Operating revenue and key components, Q4 2024 vs Q4 2023):

Segment	Net Interest Income ($K)	Noninterest Income ($K)	Operating Revenue ($K)	Noninterest Expense ($K)	Pre-tax, Pre-provision N/R ($K)
Commercial Banking (Q4 2023 → Q4 2024)	351,942 → 330,392	32,711 → 41,026	384,653 → 371,418	97,299 → 106,762	287,354 → 264,656
Healthcare Financial Services (Q4 2023 → Q4 2024)	78,036 → 95,185	20,224 → 25,140	98,260 → 120,325	41,947 → 56,672	56,313 → 63,653
Consumer Banking (Q4 2023 → Q4 2024)	213,913 → 202,165	27,426 → 26,969	241,339 → 229,134	116,413 → 119,123	124,926 → 110,011

Key KPIs:

KPI	Q4 2023	Q3 2024	Q4 2024
Adjusted ROATCE (%)	19.83	17.28	17.73
Adjusted ROAA (%)	—	1.22	1.27
AFS Unrealized Losses ($USD Millions)	$708.7	$486.1	$712.9
HTM Unrealized Losses ($USD Millions, not recorded on BS)	$810.2	$677.0	$991.2
Tangible Book Value/Share ($)	$32.39	$33.26	$32.95
NPLs/Loans (%)	0.41	0.82	0.88
Allowance/Loans (%)	1.25	1.32	1.31
Allowance/NPLs (%)	303.39	161.60	149.47

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Interest Margin (%)	FY 2025	~3.30 (prior commentary)	3.35–3.40	Raised
NII ($USD Billions, non-FTE)	FY 2025	N/A	$2.45–$2.50 (add ~$0.055 FTE)	New
Loans Growth (%) (EOP)	FY 2025	N/A	4–5	New
Deposits Growth (%) (EOP)	FY 2025	N/A	4–5	New
Noninterest Income ($USD Millions)	FY 2025	N/A	$370–$390	New
Expenses ($USD Millions)	FY 2025	N/A	$1,390–$1,410; +$15–$20 run-rate for Cat-4 prep	New
Efficiency Ratio (%)	FY 2025	N/A	45–47	New
Effective Tax Rate (%)	FY 2025	~21	~21	Maintained
CET1 Target (%)	Near-term	11 (near-term)	11 (near-term)	Maintained
Deposit Beta (cycle down, %)	2025	~45% cycle-to-date (up-cycle)	~30% terminal (down-cycle assumption)	Lowered vs up-cycle

Q4 2024 quarterly guidance (from Q3 call) vs actual:

Metric	Q4 2024 Guidance (from Q3 call)	Q4 2024 Actual	Outcome
NII ($USD Millions, non-FTE)	$590–$600	$608.5	Above
Adjusted Noninterest Income ($USD Millions)	$85–$90	~$95 ex one-offs; $109 adjusted reported	Above (ex one-offs)
Adjusted Expenses ($USD Millions)	~$335	$340.4 total (adjusted $330.6)	In-line (adjusted)
Efficiency Ratio (%)	Mid-40s	44.80	In-line

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024, Q3 2024)	Current Period (Q4 2024)	Trend
NIM trajectory & asset sensitivity	Expect exit NIM mid-3.30s; neutralized rate sensitivity via hedges & securities; Q3 spot ~3.31% and Q4 NIM ~3.32% into 2025	Raised FY25 NIM guide to 3.35–3.40; very strong Q1 margin expected; deposit costs moving down	Improving
Deposits & betas	Cycle-to-date deposit beta ~44–45%; interLINK reprices with Fed; CD repricing tailwinds in 2H	Terminal beta ~30% for down-cycle; 16 bps q/q cost decline; playbook after cuts on consumer/commercial portfolios	Positive
CRE office exposure	Office balances ~$950M; NPL uptick from 4 loans; reserves raised ~$10M; securitization to reduce CRE concentration	Office exposure down to < $825M; 60% of Q4 charge-offs from office/healthcare; metrics improving; more natural resolution, paydowns/payoffs	Stabilizing
Credit outlook	Provision tied to migration in office/healthcare; normalized annualized CO 25–30 bps expected	Underlying migration moderating; mid-2025 credit inflection expected; normalized CO 25–30 bps with quarterly volatility	Moderating
HSA/Ametros growth	HSA deposit wins; Ametros ramp; new investment platform; Cigna renewal	HSA grew deposits +$800M FY; Ametros deposits >$1B; digital channels accelerating	Strong
Sponsor finance/private credit	JV with Marathon announced; private credit competition muted growth	JV expected live in 2Q; not in guidance; sponsor pipeline stronger; activity improving	Improving pipeline
Category 4 readiness & opex	Preparing for $100B category; restructuring to free ~$17M run-rate; expenses mid-40% efficiency	2025 incremental $15–$20M; total $40–$60M multi-year; investing in data/controls/treasury management	Investing
Capital return	CET1 to 11% by YE; buybacks considered post visibility	Likely capital return in 2025 absent outsized loan growth/M&A; target CET1 11% near-term, 10.5% LT	Optionality

Management Commentary

Strategy: “Investments…to improve our data and analytics capabilities…prepare Webster for a large bank regulatory regime, but will also allow the bank to operate more nimbly, discover new pockets of opportunity and earlier mitigation of risk” .
Funding differentiation: “We grew deposits in each of our differentiated business lines…loan-to-deposit ratio just over 80%…enhancing deposit availability to partner depository institutions” .
Credit view: “Despite a higher level of charge-offs…underlying credit migration trends moderating…mid-2025 inflection point on overall credit metrics” .
NIM guide: “We now believe that our NIM for 2025 will be in the range of 3.35% to 3.40%…repositioning adds about $18M to NII in 2025” .
Capital return: “More likely than not to be in a position to return capital to shareholders during 2025” .

Q&A Highlights

Margin trajectory: NIM for FY25 guided to 3.35–3.40%; Q1 margin “very strong”; deposit repricing playbook after each cut; terminal deposit beta ~30% through two cuts .
Rate sensitivity: Two cuts vs no cuts are “plus or minus $10M” on NII; positioned fairly neutral; more sensitive to long-term rates .
Capital allocation: CET1 near-term target 11%; likelihood of buybacks in 2025 if loan growth doesn’t absorb capital; ability to both grow and return capital .
Credit details: Q4 net charge-offs >$60M, ~60% office/healthcare; office charge-offs ~$15M and healthcare ~$20M; office book down to ~$824M via payoffs/paydowns (no sale charges) .
JV & growth: Marathon JV to be live in 2Q; not embedded in guidance; potential upside to loan balances/investment income .
Geography & business mix: No branch expansion; continued focus on national businesses (ABL, equipment finance, public sector, sponsor) .

Estimates Context

Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was requested but unavailable due to SPGI daily request limit. As a result, we cannot provide a beat/miss assessment versus consensus for this quarter [SPGI request error].
Given elevated adjusted EPS ($1.43) alongside stronger-than-guided NII and adjusted noninterest income, sell-side models may need to reflect improved NIM trajectory (3.35–3.40% FY25) and deposit cost trajectory, while embedding ongoing credit normalization and Category 4 ramp opex .

Values would normally be retrieved from S&P Global.

Key Takeaways for Investors

Raised NIM guide and strong Q1 margin set a favorable earnings trajectory despite a neutral rate stance; securities repositioning provides ~$18M NII uplift in 2025 .
Diversified deposit engines (HSA, Ametros, digital consumer, commercial) underpin funding cost declines and support loan growth with an ~81% loan-to-deposit ratio .
Credit normalization remains the base case (25–30 bps annualized CO), with office and healthcare services still the primary risk pockets; management expects a mid-2025 credit inflection .
2025 outlook is balanced: loans/deposits +4–5% EOP, NII $2.45–$2.50B (non-FTE), expenses $1.39–$1.41B, efficiency 45–47%, tax ~21%; incremental Category 4 opex $15–$20M (total $40–$60M over several years) .
Capital return optionality is rising; buybacks likely in 2025 absent outsized organic growth or tuck-ins in healthcare verticals (Ametros/HSA) .
Near-term trading: watch for Q1 margin strength and deposit cost progression; medium-term thesis: deposit franchises and neutralized rate sensitivity drive sustained ROATCE in mid/high teens, with credit stabilization and capital returns as catalysts .

Additional Q4 2024 Press Releases

Earnings release announcement (Jan 7, 2025) .
Prime lending rate lowered to 7.50% (Dec 18, 2024) .
Dividends declared (Jan 29, 2025): common dividend $0.40 per share, preferred series details .

All financials and commentary cross-referenced to 8-K Exhibit 99.1 and the Q4 2024 earnings call transcript – – –.

WEBSTER FINANCIAL CORP (WBS)·Q4 2024 Earnings Summary