WBS - Earnings call 4 2023 | Webster Financial Corporation

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Operator

Good morning. Welcome to the Webster Financial Corporation's Fourth Quarter 2023 Earnings Conference Call. Please note this conference is being recorded. I would now like to introduce Webster's Director of Investor Relations, Emlen Harmon to introduce the call. Mr. ahead. go please Harmon,

Emlen Harmon

morning. Good

harbor Reform begin that our forward-looking the us. to today's we disclaimer and Securities in Please review release I within uncertainties, and about risks and remarks, comments made you Litigation Private the the presentation include meaning which are and safe remind the of harbor by XXXX the Before of affect safe want subject rules. to Act information may management language statements press forward-looking for may more

accompanying management's Investor presentation remarks The on can the Relations be company's investors.websterbank.com. found site at

Q&A we queue. Financial's Ciulla. ask follow-up participant of call will the For and returning CEO, John before portion the the Webster I ask that X to question X call, now each the to turn just over

John Ciulla

welcome our Emlen. Financial over turning and appreciate greater you it lot, Good Webster financial results Quarter Earnings I'll and detail. morning. high-level to to on this in Glenn everyone, morning, provide Call. to XXXX a remarks results joining We cover Fourth our Corporation's before Thanks operations us

large, and positioned are deliver the to outperformance for distraction The we business level, from and across With we lines. about integration we into the a to momentum our continue activities high delivering continues execute are at less well at industry carrying company we as excited are XXXX. hopefully, financial our clients

today review results year full start for our to with going to I'm XXXX.

throughout for model funding non-commoditized throughout a sound a As banking focus period efficient diverse including we of This admirably highly operating difficult the uniquely I've stated base, strength performance franchise, businesses. on our the performed year, industry. the and illustrates and

book the record to generating $X.XX grew Webster. EPS per fourth well. in year, We prior the tangible share We as record reached quarter adjusted from $X.XX for EPS in a value our

year was X.XX%, tangible efficiency a we XX.X%, was and assets common ended Our on return equity with our the XX% on return ratio.

we our core strategic several the We completed have closed deposits relationship-oriented technology work competitive acquisition funding in illustrating to substantially acquisition executed model. the We performance, the conversion our of Ametros. the we integration. of highly industry, the a all our accomplishments. grew strong capably banking financial In core interLINK strength merger environment realized of and business our meaningful and advantage addition our announced on We and through

refined also those the and We and a we most advantage mix of promising characteristics. risk/reward our businesses, building emphasizing strategic where have

we of the our On next quarter XX.X% produced return On financial slide, tangible equity and on nearly remain basis, X.X%. an assets results on return fourth solid. of common adjusted a a

$X.XX. roughly and grew was adjusted growth each categories. deposits EPS our loans loan by focused We strategic Our X%, in with commercial

to control efficiency continue exhibit solid ratio of an with We expense XX%.

at common strong X tangible capital and Our Tier XX.XX% common equity remained and X.XX%, respectively. equity

a provide with significant strong capability internal of starting term. the generation flexibility capital and will us over Our amount long operating point

than The were timing were of a billion solid $X fourth in higher some than that including balance more balances. our period-end growth, loan backloaded, and of securities quarter loan the our accomplishments, average resulting

as we growth, pipeline into loan us head robust overall with a tailwind Our provide coupled XXXX. should a with

illustrates diversity, strategic of highlights slide Following key one our which our funding advantages.

business to We Ametros, last which of are We close vertical are the another unique year we at the announced confident some on the following end funding with provide our and we that on detail adding acquisition of expect shortly. slide.

growing over income. for the technology teams. annuities, platform and proprietary majority Ametros fee for recipient. administers adds opportunity of the funds the Ametros Webster medical exciting deposits, service via low-cost, significant To it in A claim and claims large unique whereby of as particularly administered replenished are a a settlements fast structured are life recipients describe brief, the business which as funds provides is Ametros

deposit contracted As $X.X billion [ inflows this over today, there of ] are construct. of under

duration discounted deposit the services XX services access Promoter are average administrators. funds to replenishment and exceeds evidenced provides by management, and ardent the is Ametros by The market by this professional value-added payment of and feature, of collection Net medical have Score a further including leader XX years. base as the these government enhanced retention Given They among customer an reporting. far

the expect We a XX% CAGR at grow will deposits X over years. ensuing

Our inflation projected constitution, addition verticals, to the and or growth existing no existing assumes synergies business growth new changes trajectory with business new medical Ametros of the members relationships, Webster's of including businesses.

the forward of X% new degrees to varying and will our XXXX see we earnings. colleagues accretive near We these, to welcoming of in anticipate the future. officially look modestly be transaction opportunity. all earnings For We accretive to XXXX

profile unchanged across more the fairly provide exposures manage Our as bank. and proactively credit quarter prior continue detail remain overall credit will comments. from his our in key we Glenn credit to metrics

next portfolio. standard slide, the I'll touch on CRE of On overview Office quickly the our

loans the being properties of reduction payoffs We size either The and continues of came support consistent the from up credits. million continue from be nonexistent. down solid to a non-accruals $XXX underlying We to or make are portfolio, in performance the repositioned. portfolio X.X% tick X% the on to classified see this quarter, last this quarter. with reducing did progress which relatively of solid another majority but Overall delinquencies is

absolute Glenn appendix over smaller are that, financials I'll in the to our to more cover we slide future to Given we getting With this in a detail. will balance, to move quarters. it turn much likely

Glenn MacInnes

John, repositioning $XX common to common special adjusted largest earnings the assessment, of GAAP on good Thanks, in quarter. with The million basis, a morning, Slide securities component reported we $XX On earnings reported fourth our of and per We everyone. of million million for $X.XX. $XXX $XXX merger-related to expense loss $XX were of GAAP and adjusted income the X million start share net shareholders adjustments income FDIC and of shareholders of an and with I'll $X.XX. million. EPS net

quarter. sheet billion third Slide the Total at X. on Next, period were billion review balance $X.X I'll up trends from assets end, beginning $XX

fourth billion AFS portfolio $X.X up our of remaining late value reduce third the first with of interest we took the attributed quarter $X.X Much associated benefit were quarter. balances our from million the the to growth increase $XXX of be billion reflects the securities appreciation to quarter, asset was while incremental in net action the to securities sensitivity. realized Our in income occurred the

also X margin $XXX earn-back. ago, noted As our less result million moment I first to in year points repositioned securities in should of quarter. we X of This roughly a net portfolio our a with benefit than the interest basis

was driven $XXX net $XXX The by Loans million. of were and the Deposits quarter, result quarter, than by average growth late up the in interest-bearing interLINK that funds, in declines million, in the public resulting seasonal in sector categories. majority of balance occurred commercial checking. a higher by period-end by million in growth grew offset the $XXX CDs,

to XX%, last was quarter. ratio loan-to-deposit Our flat

capital Our was ratio remain Common our Tier strong. XX.XX%, and common tangible equity X.X%. levels equity was X ratio

XX% the of increased share Tangible earnings annually. or just In under in to into back unrealized environment, would quarter-over-quarter, and reflecting accrete security rate $XX.XX per a AOCI. $XX improvement interest anticipate losses million capital steady book value we

business estate loan grew highlighted trends Commercial quarter the Slide C&I up On principally Growth stronger Loan basis. net, was C&I risk, commercial In lower-yielding X.X% real banking. sector real fund where roughly risk-rated much in we a portfolios, to banking on in portfolios. continues in or are X. in growth of the Commercial was The portfolios. was low $XXX drive multifamily. trends well including finance public on total, Bank were and estate growth million and linked loans as as

were off loans increased points. X of XX% ran And periodic at end. mortgage we on loans basis Notably, the remaining balances floating The quarter and warehouse. yield in loan portfolio total

exception total of funds We demand Slide where money We provide additional market the $XXX in in saw deposits deposit declines. or detail categories With and accounts, prior product seasonality deposits on quarter all with from million XX. on major public drove growth of X.X%.

of cumulative Our total XXX deposit were costs XX%. basis total or points points basis up to cycle-to-date deposit beta XX

beta On the we to incorporate our we anticipate reach Slide to rolled XX, XX%. deposit during which forward our quarter beta first assumptions

anticipated Moving relative adjusted period. quarter. to income the income statement income our $XX to earnings down interest prior net was to adjusted our Net down as reported compared adjusted We to Slide million $XX million for XX. prior Overall, was highlight was adjustment Adjusted run nonstrategic quarter, a modeled balance largely by our driven later was off and we derivatives. sheet income in on million, loans. the customer valuation credit $XX achieved in swing growth noninterest down noncash continue to

the Partially down and $X.X offsetting provision $X.X these down million. million, was expenses trends, were

We tax state the also result a in rate, true-ups. from benefited lower from XX.X% quarter, XX.X% a this third and local as down of quarter

was Our efficiency XX%. ratio

from linked interest our portfolios. of net which X addition basis income, million later Net $XX to by This the assets declined growth On quarter in than was nonstrategic we decreased X.XX%. runoff points to anticipated in driven quarter. prior Slide margin earning interest highlight XX,

fourth our net asset of NIM forecasted to both in income interest we QX, result As and the timing a of expect the into earning growth and quarter. first quarter grow originations

funding. -- offsetting increased change points funds of higher-yielding interest-bearing basis assets primarily over the earning pace a quarter. wholesale with basis in The on liabilities periodic decline driven deposit in X by cost mix yield and the to is prior deposit to seasonal deposit up moderated while was of increase due basis pricing categories total points seasonality XX points. in XX Our growth public The coming

on swing decline customer Slide million a which adjusted down was million in an On quarter $X last on $X the basis. benefit XX, million $XX $X of noninterest derivatives. This credit quarter to resulted income, valuation a charge a prior model to to relative highlight noncash adjustment this we was million quarter. in attributable

quarter. commercial experienced fees clients interchange to activity also seasonal tied HSA decline and fourth in We remained slow in the transaction

XX. and by $XXX partially reported Reductions the benefit costs. in FDIC million Noninterest insurance quarter. increased We Slide offset expense down technology adjusted of were from costs and is prior $X on marketing reoccurring employee expenses million,

charge-offs, loan and a relative million was Slide our was quarter. was million $XX attributable and macro factors million $XX of incurred to which attributable allowance credit which provision. flat $X effectively to losses, of After million in prior to we for net credit XX growth. details recording which components of $XX

coverage quarter, decreased basis shift with lower allowance to content. points from XXX mix our XXX loans in reflecting part last modestly loans to to loss the basis result, a As points

Slide highlights our key quality XX asset metrics.

just flat points total On the $XX by loans loans. classifieds million prior as assets are of quarter a an nonperforming from increased points with to commercial basis. basis to as and points basis nonperforming to XXX on basis increased of classified loans Commercial left, XX upper slightly percent XXX absolute prior representing loans year up

totaled of $XX on charge-offs. divested the residential upper in quarter $XX $XX loans the right and $XX on of million loans. basis million of million of divestitures points resulted in XX We These net loans charge-offs million in or an commercial the basis. $XX annualized average million Net another

strong we levels. maintained regulatory and All targets. levels of capital XX, excess Slide in On capital remain internal

tangible our share. our equity and Our XX.XX%, value was ratio was book common $XX.XX X.X%, X common a equity Tier ratio was tangible

wrap impacts my Ametros, on net up impact our The Slide with and pro which outlook fees I'll comments deposits, XXXX. interest directly expenses. income, of includes XX the forma for outlook

expect we commercial businesses. -- of range will We expect to to by continue grow X%. driven to our grow deposits loans grow to be X% Growth X%. in to we the X% Likewise, to expect

interest non-FTE net on basis. expect to of a billion income We $X.X billion $X.XX

I net those For on to the basis, roughly would add $XX modeling income outlook. interest million an FTE

range Our to $XXX includes expected Noninterest approximately both X the fees million approximately in income amortization. $X.X in This are decreases costs Expenses million intangible $XX to rate the to the includes May. addition This net to the of million. the is outlook in generated of income be Ametros, due interest forecasted beginning representing funds and operating billion. assumes estimated by to Fed billion $XX million Ametros. in $X.XXX be in $XXX

to is mid-XX% Our range. to efficiency the ratio low be expected in

With acquisitions, which the roughly XX% committed of back utilizing rate we repurchases we turn have we capital XX%. revealing in Ametros managers expect to after We ratio share close past tax We'll near in and a years. shortly, Tier I'll to to common that, John are prudent and remarks. our to for capital closing couple approximately of announced of expected to term, XX.X%. earnings it for the similar effective of of tuck-in equity an those that be target X continue With anticipate

John Ciulla

as offerings. Thanks, the industry our we about our add were Despite industry challenging remain product us XXXX. good the year Streamlining We've bank. we Glenn. prospects to Webster In headwinds, is year year, efficiently a earnings for for continued with service to in last advantageous position volatility. capabilities to banking we enter our momentum. optimistic to improve allow taken the steps more grow reduce our and our technology will and also able an

compelling areas. opportunity technology, great opportunity. and the company in Our our a continue to with capital and enabling provides in We'll us funding people to position generation strategically grow that further invest

investments and efficiency dynamics maintaining ratio, starting point the profitability make these our for peer-leading while we will these and Given returns.

conclude of my to going remarks a acknowledgments few I'm thanks. with

of partnership [ the the Executive Chair. and role with we will As today his building and company the X-year been become without near contributions. his significant our of over the counsel in ] Sterling, and merger out anniversary it is the where past X would company, Jack be company and years, Chairman move I Jack's valuable as Kopnisky has of will not vision

in our work our this terms the completing want collective the clients. to Jack. X and went call core efforts of publicly their last shareholders was to offer XXXX into our As to of February colleagues earnings opportunity conversion. our for is thanks a I take and turmoil to and the that this Thank prior year behalf industry to transition, on challenging you

colleagues achieving joining today. our franchise financial Thank ton building open for in us call will Our a results. and I and put questions. all on the Operator, our the Glenn work line XXXX for you of

Operator

Instructions] line of Fitzgibbon first comes Piper the from Sandler. [Operator from Mark Your question

Mark Fitzgibbon

First today, you further are to do to yields Glenn, in the based first the grow security on book quarter continue extend where to of sensitivity? and question I sort asset reduce had, plan

Glenn MacInnes

thanks. we the securities billion at $X.X saw, did, Mark, did about We you add in the probably of fourth end quarter. Yes, as

well of it actually, So rate next I And think quarters. going did at the bodes a that high into environment. opportunistically we couple

sensitivity. But further our that. was to real minimize about intent asset good feel we So the

Mark Fitzgibbon

continue do to that you to Glenn, plan quarter? in first do the But

Glenn MacInnes

Yes. that at will but be will extent $X the it and to I it's level be not it reinvest. mean smaller -- billion, a

investment will be $XXX We portfolio, have our in a approximately million which coming reinvested. securities off quarter

Mark Fitzgibbon

[ Okay. so, loan just if office or notes then ]? And And you in sell secondly, you quick, to any did them the real par quarter? loans did where sell relative

John Ciulla

market say, We of progressive Mark. decline did, would the I the been kind talking about in we've and this -- values.

sales I and weren't think loan the office. quarter mid-XXs, they smaller this were but all

robustly bulk sheet we few did the and not not like balance some do as in last So repositioning, but we had quarters. in

refinances this the the in payoffs noted, $XXX quarter in decline million and at primarily interestingly, from and I was quarter, As market office, par.

a do lot sales office So this we didn't of quarter.

Operator

question line next of Matt Your Breese from Stephens. comes from the

Matthew Breese

the this what 'XX loan that hikes? bit in they the on yields X ] up provide are And today, less you hoping than X changed was quarter-to-quarter? color touch expansion Expansion to that? one, have on you is yield curious, was I Or to I then loan was could expecting fact incremental slowdown Fed of just was we bps loan saw could I yields. tied [ a lack [ ]. more quarter, a in

Glenn MacInnes

Yes.

I'll hit me beginning. just -- the let at numbers So the

-- the quarter somewhere ahead. loan go ] commercial So originated XXX pretty in And were was I the fourth loans was [ there. our quarter, XXX much the [indiscernible] in fourth yields what ] [ around same total think, and range,

John Ciulla

we Matt, the which million loan we in you where because it beginning. quarter, and business. so the back-ended it's $XXX NII we warehouse that if originations we've on interesting, right, have year-over-year, in exited -- in hit less growth right? We had hurt look And mortgage also, obviously,

the point other other dynamic almost non-office lower full side, rating, fund the that is has banking, a estate average but yield was of The real weighted there risk in. lower on mix high-quality of business commercial also which

origination, credit we I sponsor see say, didn't would conditions specialty. and much market So in and appetite as given given

to loan of quarter little fourth yield do as a as anything. in the mix with much if will, expansion in you so of mutation, the the And bit had the

Matthew Breese

it. Got

the what methodology what one, intangibles And Ametros. you time intangibles? I second of types regarding my to curious amortization tied it's or the the is had if that? was And is then And CDI, breakdown mentioned Okay. frame and

Glenn MacInnes

through Yes, the great question. on And a it's when working still we're that. intangibles

excess life on the closed transaction years. yet, banking have little than that haven't different XX a somewhere of We a it's it in but typical these type in of

be expect in think bank in of than would I out that. the using XX further the the this But -- would to space, it's maximum probably you amortization case, it be So years. intangible

Matthew Breese

to But assume it's a safe CDI [ ]? versus goodwill it's

Glenn MacInnes

primarily, Yes, yes.

Operator

Chris comes line next of from KBW. Your from McGratty question the

Christopher McGratty

Maybe a capital. question on

basically your for you Ametros. little buybacks X-part anything on estimate more pause buybacks the said for pro from the guess bit you think a I question. to best build bit CETX then for going QX, a post that I And QX? until you're What's precluding you maybe forma deal? resuming

Glenn MacInnes

Yes.

said term. what I So near thanks, in the And Chris. that was

think target that XX.X% build that. think we in can to and then capital common about coming our the right to I equity And of begin down so first about Tier level you from quarter X

John Ciulla

exactly half think plan repurchases uses We second, to are our latter in the to have We'll well. clearly offset there fourth expectations dividend that's and at employees if third do we of quarter generally continue no Yes, and maybe organic the in that shares of capital that. look And we the right. and I productive time. year, will other over grants as repurchase to

plan. our we So and part the think, it's look at prudent still game a of cautious bit closing. our capital Ametros just little levels being, as We're I through

of half go shareholders sheet repositioning the over capital in We that have as anticipate decisions opportunities bucket potentially securities of But also second well. year. that the to balance could we returning and into

Christopher McGratty

NII guide. Okay. Great. And then maybe one on the

to think your by an cuts a provided? has to fewer change XXXX, get you If looks X, what cuts you've the NII I market. bit got futures the were that would how more little outlook than X which from similar outlook ours, we

Glenn MacInnes

that really ballpark the but I to of We would if have downside. in just have to to $XX think significant X it probably it's that think hedges million in range you a now, kick million $XX there give X not cuts it's and probably some we we I do -- in, cuts So would got us.

So it's not significant. that

Christopher McGratty

Okay. XXXX, $XX is $XX the And that million given million for to case...

Glenn MacInnes

Yes, in XXXX.

end our said So had high of guidance if be low you would take end, the on probably million you we out it to took cuts, that. you million $XX $XX in the and at X range

Operator

the comes line from question of next Your from Haire Casey Jefferies.

Casey Haire

Great.

one just Glenn, So another following NII the on up on guide.

quarter us the the Where peak at was beginning the ] in after in cume ] cuts giving May. year. cume does cycle? the these progress could to beta how And looking [ us you I throughout it XX, give get that first XX%. you X wondering Slide the in does tightening progression if So beta [ then

Glenn MacInnes

Yes.

So be around that will think I think plus it will I stay minus. Casey, -- or it XX%,

dynamic think I be there deposit is to our the going repricing.

And so million $XX of if I as look beta billion, you what type XX% is of $XX no of about say our lag that at or characterize would book book high deposits.

$X So but billion, perfect right? almost as And funds. be it Fed Ametros and think would interLINK. a I'm of $X with that one-on-one reprice the -- would of ahead billion. -- So getting is example, interLINK, sorry, say it. I'm immediate. those

deposits. example beta an that's type of a no of So high lag

So or our billion. $XX XX%, book, about of billion deposit $XX $XX it's or at sort say, I look billion

for that be a us. will So benefit

think it -- we'll will XX% around minus around we're plus I there. So probably up somewhere -- end or

full help you mid-XXs, deposit is offset it of factor in the beta well. going as will run on a is have probably down year other The to that So right? some our basis that

to we're a XX% in at a lower and basis grow did $XXX that's year. by our data that obviously, up And just Ametros, because million few bringing Ametros will and bring expected -- points,

Casey Haire

Got you.

Ametros run know, on And come just the is then implies current decent the ramp the I here. from guide, of on and following Okay. obviously, a expense sort up rate. fee

what legacy is you add break for is feel we what what better then can is or a Ametros Webster? wondering, And get just ramps? so can what Just out does organic

Glenn MacInnes

Yes.

John run me Let it can color. add then a some take and at

saw, $X.X you So core in were -- expenses 'XX. billion, XXXX. the $X.X to for guidance, say, billion And billion as in $X.XXX

that approximately million represents I you is to that $XX numbers, Ametros. round would say, back, like million. if And $XXX tied So million $XXX to peel growth of

associated XXX includes with along And platform so intangible costs, operating the the employees, amortization. with that technology

type to $XX million and of based performance-based remaining in about [indiscernible] so $XX investments remaining half comp, So And comp and the business million of the to another -- right? $XX lines. revenue-generating that's about is then of fee performance half million tied tied

$XX or Ametros got business comp, $XX then million broad you comp, very So in the and investment from another from million performance-based in million on $XX numbers. -- $XX from performance-based million

John Ciulla

asked. And he then fees the

Glenn MacInnes

Okay.

noninterest our on So -- NII, so sorry. income, yes,

So million XXXX. core for million $XXX net $XXX income, We're to interest $XXX million. projecting

type year-over-year is got $XX $X million, you type transactional account HSA fees, that pharmacy across and swaps, of a $XX growth fees, right, smaller other about is like of number of which mix to fees. So $X syndication million million some management sort million which $X and remaining administration of in to interchange up million, sort in of $X and fees and categories lending trust fees, million investment cash The is commercial to $XX tied includes million a of transactional to of Ametros, rebate and growth fees.

So sort that it. gives geography you the of of

John Ciulla

part It And expectation, looks on expenses, year-over-year, Glenn's increase right? of which seeing. those the an finer most then Casey, expenses, of expenses have point compensation is performance-based are is industry related increase and headline number, it the high really is but the half to OpEx amortization you in Ametros in to of of of intangibles acquisition part guided to a a it said, and as like point, of the put Glenn

And giving the to If us, technology. rate some has kind we revenue to execute efficiency the the I look projects people in still tailwinds X% going is the expectations, to remaining and unique all continue under. from us opportunity to be invest you and and slightly on Even we're range into down, about of is things our that offense of which then teams to be and core or the in in low decline. mid-XX% think an perspective of expenses for those investment with increase and if

timing than on to if time some should curtail So expenses lower and of get we higher expect -- obviously, and respect fees on we investments tailwinds the we and to. the -- with or need opportunities those to NII have

the and feel we promised we've at up those it So of over peel number time I half needs good of financial where about is given and of the the expenses guidance in I And headline kind are, rest ending think the back pretty it really given. metrics we revenue and it is that opportunities. to realize performance-based organic. the kind not investment It's new of on acquisition

Operator

Your the comes Manan next from of Morgan question line Stanley. from Gosalia

Manan Gosalia

you the that about Can to you much from? get view right? to do see X% you loan X% environment catalyst, high as the for from that in growth help Like guess, end talk growth that guidance of what the I XXXX. Where to do coming you how a And range? need do

John Ciulla

our I Yes, is guide on the the what you're seeing question. X% the great good And X% the clients realize news on kind pipeline that finger sectors from and our that the end advantage we the top in and point of of obviously, that's the we is we've And market. think a to of and pulse we markets a hope our serve. good got

pray our improve. I would growth that market in what we're were than assumptions higher and is that. would attitude not hope the have So that that a we with loan conditions projecting original going We're say understanding

lot really think And so opportunity. a got of I do we've

the specialty, growth originations commercial the non-office sponsor We've be equipment sector But public those banking. capabilities market will of say too. in have ABL pipelines growth in majority loan and the areas and end will the would categories, I finance come we is. are gone C&I core and finance, those which commercial through The cree, obviously fund Those in our categories general good commercial. commercial where

our of the starting unique in buying real in had quarter. forward pipeline and us, our our loan to end not a assets you're And in is some private who more at selling booking for for areas, as see we've while transactional quarter our Banking we flourish, overall -- and investors, of of the muted. the in of see other to of buying more obviously, companies finer still more that momentum terms In why the we and activity. see and it's Commercial we're may the Webster, And the bit to significantly starting that's activity means seen point head and demand or going selling transactional into Head of businesses, looking you are trading at terms and seeing that first starting equity assets grow pipeline talking to estate sponsors

updated within now, execute good kind got go bogey the segments too and ] keep the low geography. quarter-to-quarter. as is strategies that we without much obviously underwriting level We'll that's a confidence to risk But end and existing people continuing right of of we've around on taking boxes with something attainable our [ that, X% range of and our

Manan Gosalia

classified expand commercial Very what But seeing could in seeing little helpful. you're I bit And And credit then on if there? especially on the you credit. you if about was what little if CRE? increase you bucket. know could you're the commercial a speak loan a can bit side, non-office there a smaller dig on in this on quarter

John Ciulla

your be and last owners in and seeing seem to to to we Sure. connected degradation and any maturities sponsors be question, loans. their with We're -- in really non-office not well managing I'll seem start

significant any at note wouldn't deterioration I there So all.

a from into I think from I characterize being quarter credit classified. accurate. in We perspective prior a way C&I loans the as relatively few the had quarter pretty unchanged is go

also nonperformers We modestly. our reduced

there. some And offsets overall we credit of kind profile the had stable. So remains

consumer. recession thereafter. Risk areas, And I again, not the have that Credit great Chief us haven't the in I during still right? many capitulation seeing but and been was any in we're lot, -- seeing like many know dealt that I the no resiliency certain with We're surprised a Officer of significant you and been there's

home able been on, focus The seeing investment. respect in those I to still level no have seen and are generally in of and delinquencies $XXX certain sponsor to X remediate We C&I, And would exposure proactively issues mortgage have that material and last loss. or areas all at then health good we resilient, pretty you've a which without sort with contracting, issues. and obviously, people services, million over secular either course our of is equity being loans by quarters office we've say, but the the or in avoiding sectors reduce our And certain X done job [indiscernible] almost us pressures, specialty quickly. we're some care or cyclical, of things opportunities

But charge-off overall things, be XX numbers, risk if Even any I you to areas not I for working at kind ended portfolio. and the modestly think basis migration same downside. risk up we're about the at stress seeing in points. net proactive to the the material continues pre-pandemic. Interestingly, through the as management of rating look of portfolio in the average So the X-year we year, that's think the with

really now you -- management and related is points to points, is gives sheet loan points that basis XX of of performance basis you where pre-pandemic balance that XX XX the sales. levels. perspective basis even And So within to credit a proactive

So people haven't aggressively. for kind to we think have we been pretty time, credit monitor really I the wave continue that seen of expecting but

Operator

comes Daniel Raymond James. from from Tamayo next Your line question of the

Daniel Tamayo

just have the just point Ametros Ametros that intent on expenses all almost around been one, could of have questions the your did a that into put pull But this is my asked I forecast guess baked the out to at we quick a XXXX, Just point. amortization finer in you discussion from? number operating a

Glenn MacInnes

be million, is would of half is intangible and what would say to about be said going we So amortization. I up say would expenses I that $XX

Operator

Morgan. line comes next Your Alexopoulos JP question Steven from of from the

Steven Alexopoulos

go I Glenn. for to to you, the back margin want

right? [ club. Many your So ] NIM at XXX peers fairly of the are the in strong, X% is

a NIM NIM part trend potential the negative, how about Does right, the NIM? sheet, long-term put early about you 'XX then once you in where we this steeper start cuts. up an potential we and And short-term which curve, like down balance cuts, normal As a in think curve, for us, versus of for once positive, those a given asset-sensitive do together are do think normal XQ? the get then you given do a we how think for the Fed getting the is

Glenn MacInnes

Steve. Thanks, Yes.

John, occurred. the securities end for anomaly given in over the I loan is So think of that of of at quarter. XXX I his billion [ highlighted the the originations think, remarks, $X of ] origination, more sort us an originations

we're And pay ], So we'll that borrowings coming FHLB like mathematically, first if benefit minimum, And quarter. a going ], of year, down million of just get our will So so we a into in. support out X like get benefit are right? will things Ametros that. of At the [ that $XXX to and you think add as get [ immediate that then is the whole NIM. the full for you that X.XX carry it the you

thing, have and are this other repricing. think know we past fixed this continue rate that is I talked to about all the dynamic, The in we've loans I as due,

some to repricing. like that extent the fixed it's picking $X into for in loans, billion to billion And are $X.X they us, basis points. reprice So quarters rate loans you're rate of up fixed XXX

to added that's as So well. NIM

you is year think through The of talked up I carry first benefit on like the here quarters, we to million, on basis you'll about year, all that. the we get restructuring When we did think And what's see quarter, are -- we it you that NIM see of NIM. securities These that. in the about dynamic you'll sensitive. about points are asset and $XXX that XXX will the out picked support the additive the couple purchases, the at probably of full end

half year, to a lag, begin the in as So the see the reprice -- you'll which costs will initially be Fed you'll to as to back cut, starts begin see deposit well. will NIM down of --

ins pieces on some upside, rolls all appreciate. you sure expect I of range with how potential [ the outs moving would can lot So that XXX balance would ] and out. the the NIM a as there's sheet be in depending that of and I'm

John Ciulla

of that Yes. And a they little the we right, Steve, than long as I most dynamic start keep this that the given term get think a more some you feel in said, can have pressure the moves We stable better year the near term, cutting. in rate confident the NIM we've made we relatively pretty industry. Glenn at But when opportunity right?

Steven Alexopoulos

Got it.

then year had which XXXX. a Bank, overall And on a question I HSA Okay. for had decent

in at be value you there? not look give it since the business. you to "Well, update appetite maybe an guys Slide Bank it's HSA I do you today, bit of So us call quite for important Can the being as to your you retain the how there John, Bank as at a of as say, last the I terms look know, earnings of And you could the was HSA frame and speculation by back right? that franchise". X to used held me feel is of being inside Webster.

John Ciulla

don't. I Sure.

it's But a every important revenue important So And deposit it's it's from long-duration contributor. I'll term. it's kind us answer perspective. of as and obviously, us to smaller the to of perspective, a the and organization contribution hugely nonetheless, as Obviously, been. low-cost, a question financial fee from size pure the short given now, slightly bit

call. asked it I that because way after speculation activity was last that can on quarters. of I every had single call lot I What clarify a question quarter Steve, this happened, one the no X knew the our answered question answered there phone and for asked. about I was when

people So perspective. answer gave No, there new I a that are because seller not a was an of HSA. we thought

clip, even are unique as -- some to businesses, diversified sources us true unique not Ametros cross a in particularly to we'll ability our as really well. interLINK a able there in be are our the included funding opportunities at in acquisition have these of grow and ability, bank with believer for forecast, I as I fees have a that good to and mentioned, of think We synergies throw in

of time But we're also that do very shareholders' steward our a say capital. every I carefully

our an our continually achieve seller venture capital a and have profit of business as obviously, of allocate doing joint activity as we're owned maximize lines shareholders activity best for business activity to not to and a so so value But we how make as those not economic we're whether our and always sure all lines, or HSA. we're to opportunity the as evaluate premise we a missing diligence or And decisions. in is sold that happens that we not wholly make those a can or

Steven Alexopoulos

violate Got your and John, could X-question helpful squeeze it. in rule. I color. more X That's if

regarding $XXX potential just billion threshold. this So

$XX diet, of we in to want similar look RWA them when right? at So are at the you asset to on XXXX of your an and year your you when guys at guys But look range, some the lot be buffet. billion peers ended a the seem at you guidance,

like more So those but when you prepared, you your get terms so of that, what change, time to peers? growth, some than feel look no line much of slow could confidence no very like gives that's to slow manage growth know your see rules reason trying you to you reason in to Just you're you do in the there?

John Ciulla

a think that loaded before we look, I go a ways question. threshold. That's hit think Yes. have I to I -- mean, we the

makeup on we're on plans and looking As you from they understand can liquidity, a prepared perspective, of the on balance that a compliance capital, enacted the X-year ultimately the time spending lot making and at of risk rules if of our sheet. impact imagine, full making management are sure we X- we're our sure

divest classes the to think to months. slow got we're respect or next at looking growth we've grow, to with XX to that not against I over asset up And in can this we Steve, make flexibility XX economic moves gun quickly. we enough the the

room I billion. plan to eventuality clients for $XXX the continue to some to think we still have customers, take care service and existing running of our of

time we're back everything slow obviously And to an we're toward we strategically, have making so growth every think don't and $XXX doing overlay that move and pull the what's mean now. eye when we requirement. you But billion that it's

are that M&A. be it? thinking want of want well discussions the jump answer, because you it's to satisfying any at of advantage that billion? to over means to crawl frankly, it. we're the to take over our to a know right having. know strategies thinking for on And may it $XXX the Do you what Do So you market ourselves, time. I in but $XXX we're be Those those about Do uncertainty the of we're one if avoid quite want positioning not billion? the We're about future strategy view able

continuing by trapped differentiated ourselves don't to our grow this So base a in continue I to putting don't I position use origination at we're to we are. and think funding think pace. channels

Operator

comes Your from Preston of Brody next from UBS. the line question

Broderick Preston

up this of X.XX% wanted questions. a and on I purchase purchases Glenn, quarter. just restructure with to the follow The couple securities yield was

restructurings, spot was are end of at given the what what securities then for the one, And -- of you spot quarter? end buying? just So two, rate the purchases, the the quarter yield

Glenn MacInnes

Sure.

million. So on we the said, I like $XXX first question, sold,

part? and XXX say, of yield [ what was yield And [ that during the ]. XXX like a think most of really bought duration I ] was that points. with we and Does on quarter answer MBS X.X-year basis XXX book it, ], say that a the [

Broderick Preston

Yes, it does. It does.

Glenn MacInnes

think then XXX [ And [indiscernible] securities Okay. yield, the end. is I ] quarter

Broderick Preston

Okay.

continue Mark quarter. the response And plan first if your to purchase so correctly, you to heard in I to securities

So to you yields going at I'm similar you're purchasing that continue assuming that did.

Glenn MacInnes

off spins if reinvest think reinvesting. roll and it. securities Like million we our about of Yes, [indiscernible] would that you $XXX quarter, a

Broderick Preston

the there wanted seems like of it discuss on on kind And of even just given analysts. CAGR setting that bank target? But just then to of of I where the aside, maybe within the for maybe we're wanted just where kind why XX% you was think appropriate touch synergies? you I without that's for are again. CDI could synergies outperform kind of But hoping you kind could I growth conservatism to surface, follow-up, you Okay. about Ametros organically it the just talking And Got areas it. guidance growth my aggressive Thank pretty target ask the a expense.

John Ciulla

great historic data, a pretty a got and demonstrated a the team off ability we've and it's base, great team they've do small and Remember, management Yes. there and it. there's to

strong there As a pipeline. I really is pretty noted,

it's kind insurance growth. little a like It's the account their work both natural for. great relationships predictable. see they also And and can with that You HSA, it's companies HSA the and they of bit, holders do very have

pretty got good small sight to base line And of so a forward. going growth we've relatively off

And you've future got -- a bunch contracted of that kind of is payments.

know of kind in. you coming So what's

see we in him range. the don't between that's And cross-sell the Where sets of holders know product of who's the line I expansion good markets feel any comments. be factor that, right with and reasonable think pretty different account mentioned factor in upside, characteristics. investment I any really a We businesses expand able to serve. behind of my synergies don't in capital our to they CEO I kind other comfortable in similar has So now other with there, talented, it some into sight we that We opportunities.

do the CAGR them So the feel growth, predictable, that to of new strong opportunity kind X ways over to to line of sight very out for figure our of next very confident But growth years. we it. our upside is that's XX% a that, terms really baseline, in

Broderick Preston

I If Got more sneak could it. X in.

lot the Just business there's [ line to the a the going to on given of that for guys, growth the just it outlook, in why given think just strength for of but like sell I basis, did given you pipeline, business it them Longridge stand-alone it's was going know ] strength right smaller the seems be a because forward. time

John Ciulla

transaction. knew specialty, an there's the and very with auction our It's Yes, divest. smooth and company sellers able it were the all. that was the relationships and We equity to to team them convince wasn't a and time for were sponsor just the it there it right a and process. through we I -- no buyer private was investment, natural story at We

that's So there's no story it. there, and

Operator

next line of Jon RBC Capital Markets. the from from Your Arfstrom comes question

Jon Arfstrom

questions. cleanup Just of a couple

talk On changed the just the loan little trajectory, what drivers dissecting bit And late what were. what about drove just growth? that, a the quarter and

John Ciulla

core believe C&I, Most still of profitable growth high-quality our particular, of by some but along some loan risk in with in finance, quite is obviously, sector kind public economically originations quarter multifamily and lower banking, the which Yes. low frankly, government very driven fund and we the were but banking. national yielding,

slightly earlier much side, on was which fund overall particularly risk-weighted year-end. of in portfolio of by all the in than closed again, a the lower yielding, higher Again, the basis, to lower-than-expected we that And answer assets, banking gave question those about why expansion the quarter. quality yield the

things of working closed in December in quarter. we and as why so were earlier through pipeline, the closing that's And kind to our opposed

Jon Arfstrom

Okay.

no story, given So real [indiscernible]. just

John Ciulla

Yes, just happens timing, it quarter-to-quarter. and

Jon Arfstrom

Okay.

well. like been as John. merger the has you for as Sterling seems you assuming ask picture, like mentioned Just It as thought new I'm same and But business page. gone as long it's It any on I you have Chairman, Jack usual, second seems it. would priorities question, bigger but the

John Ciulla

all. star making And north We we No, we're were still there's to a his obviously, team us the and will things build XX%-ish sure after ROTC, was flexibility to we leading no, time, team, are to to the at things deliver still and be. and think no efficiency would line got trying -- left and to on we're grow we're and We give ratio thought the seek continue the management we journey. But out knew to continue a ROA completely I'll a all aligned even organization. do. doing counsel X.X-ish are pivot of Board, lot we that sight the what have he kind entire that what spent we I of to continue and We opportunities. we've of think a good

volatile there'll other bit or pivot no but a little been has be culture strategy environment over in the time, Obviously, things.

us continue see You'll to at a execute try high and level.

Operator

comes Bank. next Von from Gizycki line from Deutsche Your Bernard question of the

Bernard Von Gizycki

areas some enhance integration discussions been consumer, just on in to Sterling. Maybe HSA. the commercial, with staying With now you, income across fee opportunities past there's the of

your cash provide possible? as management, for What you implied any 'XX? of could growth. in these about card, can But guide talked timing FX size areas treasury opportunities, be of You if

John Ciulla

of of of on going out on built base other clients. as FX our Yes. off we the good, truth our have ancillary So that's steady rolled matter already outcome not we're activities to We've increase relatively in growth fees compared know, into relatively the Glenn for NII. the are those and And to in, a our change right? management, working do new -- double-digit in mentioned, you the businesses, things. capabilities small materially growth, of card, some cash those the those our mean, I is as

of moved expected about in like contribution the in -- the to you in Glenn year. a bit terms AMetros the fees little needle Things talked

at And forecast around so further like definitely looking opportunities that's around built balance capabilities not opportunities are and around going generate We other but options interesting sheet. there markets, opportunities to good. our into to and fee be our origination securitization, to about, to syndicating the capital early manage and keep have given strong talk too income

the fee in that think long comfortable over term, giving our income you nothing are on. nothing now be about to would and But plans things but we guidance I right those drive

Bernard Von Gizycki

Understood.

expense maybe still quarter, that expenses. the I about remain. think just last talking opportunities The

of call this think back-office could you processes of other any I frame front? and opportunity help consolidation the about talked on Maybe center remaining you some consolidation.

John Ciulla

Yes.

into built I I view. think Glenn, comment, but think net our sort my overall expense of that's

stuff of a made that's stickier call than the others. We've centers. of the Some progress on little consolidation

have there. to future transition still in investments technology. that make going opportunity We we're old would non-core to an technology to We stays. the need the decommission it's some that we think in But offset I say

don't run ] you rate know think full [ don't if you I -- so opportunities. of of estimate And some those for the what

Glenn MacInnes

just mid- back XX% that's But expect efficiency and be. we come to to ratio, I would to low where Yes.

gives first of it that to us, there's what market is implies so all, the optionality And more extent headwinds.

CFO, more stuff still well. I business in ledgers my the know also that still like we that that the some to is gives point but reinvest -- implications optionality getting down as have opportunity to in that, important are as we an we and But I consolidating reconciliations us there's there. think and So the are world,

think as XXs XX low to the best-in-class like I we efficiency we're to mid-XXs to at on it So think ratio. low of --

thinking would that's guide. just modeling if it, of use I so you're would as a I And -- what

Operator

Citigroup. comes next from Ben the line Gerlinger of question from Your

Benjamin Gerlinger

Think in about the general. just deposit franchise

is environment that kind how just Casey -- even cut curve But look unprecedented. in flow bps in question, if if like, of get X beta was curious mix or forward deposit I the any asked niches. assumption. gave you change deposit you kind assumptions going basis you what think general? of just forward? XXX I in is it's different thoughts the some over flows non-recessionary just might your points see course deposit might the a mix might those there I what a on on down of just or your correct, Are that XXX differences

Glenn MacInnes

a Yes, good it's question.

So And HSA have do there's we in I things quarter, the benefit about where a are to the continue enrollment then get think funded a obviously, period well, we that lot us. and the the unique couple during get We as first Ametros. of those year. of we talked accounts to

to ability our which from the [indiscernible]. to extent optionality ratio we're lay have some deposits to increase We interLINK, with loan-to-deposit have core [ satisfied us we ] gives or -- the

us as that So optionality gives well.

think about the of quarter. we is deposits, on we're as the due that -- billion quarter, have $X thing in I flow just far CDs that watching as another do coming first the maturities second the in under

an keeping like we're on eye DDA, a close So also pure a that's keeping things little rolls that or And down eye come on bit. we're which that demand something how over. has

billion -- we're been we've $XX So that around hovering basically mark.

think million year. potential has probably the We that $XXX course grow of about to the over

I don't are those So see we're thinking. that sort the things anything of significant.

to flow and are a a think see low people to into money might that. still drop. from like their clients or you'll go type accounts bit more think going of on want the little They to and extent deposits longer our market rates interest-bearing little that things of investments I CDs savings

continue very think see But I to are We -- to dynamics. have those that's that. basic

John Ciulla

you're with agree think I -- I is deposit by kind depositors the nonbank which question would customers flows. down. asking, and or necessarily changes overall of I bank, And points the XXX think Glenn. I behaviors Yes, it don't answering hope we're first

Benjamin Gerlinger

little forward a And kind there's correct, to Got that the the is X-ish cuts. from you of I just said then devil's know bit of you. That's follow-up, helpful. here. just play a really advocate that curve

you bit probably year? you your a you combined [ I today? floor terms below $X.X downside reality, to a had revenue range, the the higher also expenses you that on the And in we slightly ] bit ratio Could NII that said put little Or at of of overall is You the expenses. [ probably investment. have of flexibility the range kind little floor, billion just the efficiency know which maybe quit ]? below expect for relative a is And

John Ciulla

more of we market down the Well, investment-based interesting have think and it the I question. always than projected line cut and because optionality, some are incentive comp, mean in is I naturally. comes if and project-based performance-based the change right, dramatic conditions

to So the do $X.X we the clearly -- if I banks. environment And the that the billion invest. -- opportunity the most even to we say, us believe there's expense we'll kind still go below in can But again, would of top dramatically overall at that. have efficient we model demanded those operating that levels, have

that in to. and And There delay either some we are flexibility. some on we or there have so cancel could had do pull back variable if investments yes, or we costs project-based

Operator

comes Your Partners. the from next Research from of line Seaport question Hunsicker Laurie

Laura Havener Hunsicker

forma And us the Ametros to is pro a quarter? fine-tune intangibles will Just the in little can help maybe this expected look just what here, think first like? back date bit going also closing when you

Glenn MacInnes

the I and about are $XX of being half eventually immediately can you income pay think into that funding and would FHLP heard ] bringing which pro I of you in action And talked be call that to being of like the [ X.XX% quickly those. me the range about fee immediate million, $XX in X% forma, So $XXX it rate earlier million, think as the to so loans, then on CDI. million it and I an expenses would talked on in with say deposits the the range of move X.X%. down more

So I the pretty quickly. P&L build think you can

this thing to is The every XX% we a business going out, grow that that's and CAGR would earlier, point John talked I at year. as is

of closer So chance million, year. to the by bringing range $X in this the billion we'll good $XXX we're end be

based and the will that we in and continue everything -- relationships So contractual see that on market.

allow that build should sort P&L. your of to you So

Closing date...

John Ciulla

intangibles. forma Pro And

Glenn MacInnes

of -- about expense, million intangibles the the of date, of yes, $XX So half it's side and relatively I that think soon.

John Ciulla

the estimate, of plus is or End January minus.

Laura Havener Hunsicker

pro the right? $XX billion $X.XXX your so I about that just hear by it. intangibles, growth million. forma on Did That's So

Glenn MacInnes

I'm not that say again. sure,

Laura Havener Hunsicker

your goodwill this your total and intangibles you So in that balance million $X.XXX grows assets. That intangible your by $XX have sheet, other billion acquisition? on with

Glenn MacInnes

$XX amortization million the No, is year. intangible about the in

Laura Havener Hunsicker

it. Got

Okay.

is the... amount So of the dollar what

Glenn MacInnes

probably So the intangibles were close like to million. $XXX

Laura Havener Hunsicker

$XXX number million, great. for. looking was That was the I

Glenn MacInnes

right complete that. estimating I'm We on are now. not that

Laura Havener Hunsicker

were And have for office quarter? going fourth charge-offs office office. to What you just the sense. And back in it, your Got the full you. then what if XXXX the Makes ]? year were [ charge-offs

John Ciulla

can in was... if It me they that see for I Let this meaningful you, Laurie. get weren't quarter.

mature to sales around all as of, And roughly down sales, what's for proactive entire the losses we're left underlying I looking that apologize. the contribution aggressively for $XX charge-offs. good we point I we book, to not million feel mean support feel I to includes this think think nonetheless. particularly their sort I in said, range charges, I including proactive the it about said, so were year. that And we the confident note the And really I'm note of wasn't where meaningful of number, how the credit $XX million fully all the as exposure. pretty that kind still have quarter's we brought it. But charge-offs. getting and I a

Operator

line Your Timur Wells Braziler next the of from question comes from Fargo.

Timur Braziler

Maybe XX% coming circling grows, risk new of in business of guess the I there. some What's market Ametros, for And total that away that that on maybe and eating as back addressable expected space? just the more one what's of CAGR? competition

John Ciulla

but market -- leader, there's obviously untapped. a are they It's Yes. the huge

I now. in right total think claims $XX space billion their in that's

be It's realized proposition, account is days, insurers I holders and and value the more lot room. in starting think, a running early there's to So more their by the industry. of of

professional penetrated which perspective, that very from we of so think one the it's administrator is exciting low things So is business. about a the

Timur Braziler

And risk your eats of into that a competition is growth maybe there that some rate?

John Ciulla

a addressable I lot customer I don't these and the of contractual. to base, good market is guys total given penetration with it -- respect think again, the that have

least any our it's to be see from I mover cannibalization think, terms to now, a competitors. risk in continue And projections expand. and industry so opportunity, of think don't I And from the at we our across to first

Timur Braziler

versus breakdown Great. you rule pre-XXXX HS And then change? give of multifamily. the you us rate York the New City rent my any to follow-up, extent just looking to have TPA market at regulated Can exposure properties? And

John Ciulla

is pre-XXXX, to than there. billion. exposure have the the little was level down of $X.XX but $X.X interesting say very in an booked portfolio XQ for over see, are diversified, would that X after This regulation. the million with Q exposures $X.X you half Xrd Yes, about, more $XX of after loans from is obviously million. I the multifamily, is We let's the -- average stat only of Multifamily regulated loans commitment our billion

think us very of no comfortable classified kind [ the portfolio loans of rest the telltrees below the makes stats So I pretty of with are commercial nonchunky and ] criticized granular and overall feel a credit which book.

that And loan so there's in only right $X.XX now billion. X delinquent

right credit any So don't story there we now. see

Operator

queue turn the have remarks. will now I John closing for call time. Ciulla our further to back We over questions this in at no

John Ciulla

and on the your company. Really Thank you. with everybody staying day. the call great Have engagement a appreciate

Operator

disconnect. now conference This concludes participation, and you call. you Thank for may today's your

Webster Financial (WBS) 23 Jan 242023 Q4 Earnings call transcript