WBS - Earnings call transcript Q3 2024 | Webster Financial Corporation

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Operator

Good morning. Welcome to the Webster Financial Third Quarter 2024 Earnings Call. Please note, this event 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 over Chairman, presentation now [Operator remarks The and on can it the Relations Instructions]. I be company's to turn investors.websterbank.com. CEO Ciulla. found Webster Financial's site at John will

John Ciulla

you to Financial first I'm and Emlen. morning. Quarter Neal joining very morning, pleased Thanks, to appreciate as as call Corporation's his us Webster joining Good he is welcome this XXXX welcome CFO. Third Webster's Holland earnings We Earnings Call.

hit stepped already in running team anticipated, ground since balance optimize Neal we has the taken impact officially interest see and has mid-August, the of grow of this some income to he steps As sheet our positioning of quarter. role his the you the the into and can

and I'll in more quarter. greater in provide pleased to the strategic the the Webster's our Neal call results tactical cover detail. Chief is Massiani, We're us really and Neal Officer, operations for results high-level accomplishments President Luis financial our to with I'll provide joining our over highlights it Q&A also details. the of and on portion Operating today. remarks will before hit turning and

We consistent expectations. our overall in in quarter, full year commercial the in X.X% grew We with grew deposits growth including the DDA, deposits X.X% HSA. loans growth and quarter,

through with loans. securitization certain Excluding concentration growth CRE to reduced accelerating and in we in quarter, the concentration, reclassification our a our health our categories. CRE C&I care-related growth payoffs further of was X.X% We $XXX reduce million performed

X Tier end declined XXX% percentage our as from at result, outstandings CRE capital As to and approximately a of a the QX. XXX% reserves of

last line year and and quarter-over-quarter from Our net repositioning. in asset over income our grew full increased sheet balance comparable year's period, a interest expectations. We growth benefited with

rates We sensitivity, down. continue come well as to our to positioning continue us asset mitigate

our current remained target with of in excess and of us capital in earnings Our CETX XQ optimization resulting and from levels now activities, strong, operating beyond. capital our XX%, capital flexibility providing

well-managed, position. Our in industry-leading a ratio quarter XX% expenses resulting third efficiency of still in remained an

a beginning for the financial Slide I'll for now quarter, return X. average XX.X%. of assets on the of and X.XX% to quarter, we turn return our generated on basis common performance on an adjusted On equity tangible a

Our was adjusted $X.XX. EPS

versatile return this you Our of favorable base. and quarter. which are to this illustrates point, deposit X, our metrics remain profitability diverse familiar At most peers Slide with and again

this the robust We As lower I Including our from came slide. Ametros. period on this the and a Commercial growth our cost in HSA mentioned Bank breadth on Bank, of upfront, executed Commercial segments channels which to a within added lower growth there. the we Bank $XXX opportunity as for well. last Bank million provided Strong HSA funding nice discussed to cost boost deposits quarter, execution deposit

profitably. to advantage ability tremendous balance in a growing a low-cost to continues number efficiently be sheet Our of business funding segments generate and our across

shrink XX% nonaccrual migration of a last decreasing credits. larger result investors. this outstandings quarter Moving we loans at been down with as The roughly on continued has to commercial office. been million be from half first the to continued of The portfolio most to I to continues as Slide a X, portfolio that continues CRE XX% our in did portfolio review traditional quarter see some end, which from of quarter, We X with X% $XXX balance estate have the real will focused segment of XXXX. focus largely negative

We prudently and managing to in reserves in identifying the be sector. credits continue problem managing and proactive

there in keep close significant this has $XX by an a risk the held to in generally, the loans well. no On eye continue at has see up migration. While consistently been rating focus, cycle. later on the migration primarily credit quarter performance rent-regulated stage it changes portfolio credit multifamily portfolio increase have we as driven office investor by our the nonaccrual more did aforementioned been We credit million in a our see quarter, we where of negative quality

health or was Outside of across some portfolios credit-specific migration not one class, continue the although care-related to CRE office, show and asset sector generally negative weakness. by industry portfolio driven

to continued the recent range rates. we consistent through-the-cycle in in loan seen risk we While of remains pre-pandemic our in our quarters have be commercial migration observed is continue with importantly, charge-off losses and and reviews, have and proactive annualized realization we'll

our Neal With cover turn to that, I'll in over financials it to more detail.

William Holland

adjusted EPS non-core John, start quarter. charge, earnings for and a $XX $XXX income reported securities operations, with the $XX impact our common pretax and and we factoring diluted everyone. basis, adjusted a of On Thanks, to shareholders X million a and from million of $XX of morning, good Adjustments of restructuring million the repositioning an costs. million GAAP net on I'll strategic consisted $X.XX. exit Slide of

billion $X.X at seasonal deposit growth from was of Deposit by of $XX X. Total end, funds by billion in second growth up billion. robust surge assets the billion. $X.X quarter, public mirrored Slide to $X.X aided Turning period were a

we of we than holding As are a balances substantial growth, the cash result higher have historically. deposit

exhibited also growth was the loan ratio X.X%, loan-to-deposit of solid We securitization. excluding The XX.X%.

Tier prior XX increase and movement the low common due earnings improved to was equity AOCI per increased equity in X.XX%. Tangible positive up rate levels share, book points our Capital environment. X tangible ratio The significantly. retained common the and value the to linked by with was XX.XX%, quarter, common quarter driven from ratio $XX.XX basis

several actions capital risk well AOCI. we from the ratio benefited from The undertook benefited asset TCE as to as common improvement to ratio additional internal X optimize In Tier securitization. generation, also the equity the weightings in

basis were or million added actions common our ratio. X.X% XX In on linked Tier these points quarter. trends $XXX to Loan highlighted X are up equity total, total, Slide X. In loans

CRE, other quarter. natural down this to originations some this flat Excluding balances and $XXX The commercial securitization new us path target Fed in real real repricing to frees characteristics. XXX% risk-reward relationships the experienced the of of Commercial add attractive capacity categories floating the September accelerates million allows The rate grew our were of addition estate on plus securitization, our by mix portfolio given on loans loan attrition as to X.X% with of we yield the and estate move. reserves. was capital loan

Slide coming public on pace total across grew $X.X was by We billion additional to X. quarter with discrete majority diverse quarter, a detail deposits HSA this deposits seasonal provide increase growth million of with Bank of the deposits million accelerated with and DDA seasonal balances added $XXX effects. that We low-cost due inflows opportunity $XXX on over the of categories. increased this The an from deposits. by

still see quarters declines. balances the is after DDA to it in of several normalization However, encouraging

$X $X noninterest to higher $XX sheet Net million up growth Moving million. quarter, by Adjusted were provision up Slide by yields. X. expenses asset prior $X interest income and driven was million. the and up decreased income Adjusted the million earning was balance from

quarter. was income the Overall, tax $XX adjusted our relative XX.X%. adjustments, rate up net was Excluding prior million to

ratio was XX%. efficiency Our

balance million X.X% or we growth which increased increased basis net linked income, by The and XX, $XX yield. was earning net highlight Slide sheet to X.XX%. driven interest up On quarter, interest margin X the asset points

securities and quarter Our the loan the earning over portfolio up increased points. prior assets yield yields with on X flat points XX basis basis

quarter. $XXX of of were anticipate point the to years. less incrementally book flat than earn-back and an improvement net, In with for to XXX sold ratios. We with quarter, X third with value On approximate we yields minimal million effectively costs impact a total maintain reinvested deposit in our an we able securities basis capital the

mitigating XX over versus illustrates noninterest our a asset negative made sensitivity $X.X the gain $X.X Slide adjusted included increasing securitization. our by has $X up and of progress Slide duration On assets million XX basis. the income, in reducing CVA income both on X liabilities. which quarter of on is was Adjusted years past the an Webster and million duration the its the prior million

experience pressure impact of up in Ametros by million, the acquisition, year-over-year the offset are Year-over-year, fees including fee changes to $X core continue We growth. CVA. on

million prior credit Noninterest $X prior expense increases of due in up our quarter. After million, occupancy $XX is relative on costs. driven Slide components modest which $XX factors. by we net million $XXX provision, primarily the from recorded XX. to We up $XX the reported Slide details expenses charge-offs, adjusted booking to in capital human of for and allowance XX credit million quarter, technology, million losses, was

points basis last our from increased result, to loans a points allowance As basis XXX XXX to coverage quarter.

our highlights metrics. asset quality XX Slide key

the in the the quarter. million you continued quarter. charts, As in we capital already $XX saw levels. on Net in came charge-offs $XX at strong can we X see XX, million migration versus enhanced Slide our On prior

with actions a previously, portfolios, as several sector generation significant capital in As These securitization our combination reviewing and lower quarter. as losses we organic we the this noted finance quarter, and risk weighting to multifamily, in increase loans. of improve our ratios to ratios of the the our took including public capital actions, led in AOCI lender capital multifamily well

fourth wrap my up comments the with quarter. on outlook XX will for Slide I our

for with growth across growth X% diverse We in real including modest expect loans potential estate. by to some X.X%, the grow the to categories, commercial

anticipating We leads will are decline public in deposits funds the business to as around outflows. X% seasonality by

this the range call. second interest net $XXX a expect of basis, provided the non-FTE quarter within We we $XXX income range in to guidance million earnings on million, the on is

Our outlook the ratio be be an XX fourth anticipate expenses each range the income December. of with million. We in million noninterest first $XX points to of assumes with will $XXX mid-XXs. Adjusted cuts efficiency million and adjusted will points November net XX in in interest the in $XX quarter basis income basis

equity XX%. common near-term Tier remains X ratio Our

turn With John for back it closing that, to remarks. I'll

John Ciulla

receive questions quarter. our Thanks, Neal. priorities for on in anticipating given we'll ratios the I'm allocation, increase the in capital capital sharp our

prioritize quarter, to return shareholders growth we be and complementary of balance and we the capacity While funding capital. has to our sheet organic acquisitions, prudent managers and will proactive second continue since to increased tuck-in capital

to We are well profile. positioned our profitability maintain

managing our balance year ensure to in in terms assets. stable we As the funding earning tweaking costs our both proactively our past the environment, of over rate interest net profile managed interest a and declining Neal of sheet have income detailed,

a loan capacity and allocation the efficiency our the capital at have ratio peers. of balance of capability and and flexibility on maintaining time our mix among while to same categories, best sheet grow We remains via deposit diversified our

we We have retained superior invest profitability and processes even in technology. people, as

cloud and have XX BSA/AML On investments made our the our modernization including foundation, the capabilities. technology core competencies significant the our building last latter, and months, heightening strengthen over cybersecurity advanced of platform, we to banking

our is I'd thank hard reflected Finally, our categories. effort. our Thank strong performance in growth favorable again this work Their joining their like in to continued colleagues for you us in today. deposit particularly for quarter,

open line will to Operator, questions. we the

Operator

[Operator Instructions] KBW. with question from Your line first the of Chris comes McGratty

Christopher McGratty

Maybe sheet thinking about it balance John obviously neutrally-positioned think more guess, it given or Neal, better, you the freed space leave a the for I up bit do 'XX. balance the into with is I'll little a trough? about, maybe How the in set How we there. you sheet QX trough took Yes, actions sheet? you up NII, of balance going are

William Holland

Yes.

cash quarter. you more be on how QX, which for we're came in X.XX% balance at to NIM. will drag we Kind sheet, in holding slight to at have going the look we the of little a as exited bit a QX So

that we're then kind and year range we're the 'XX and in kind velocity NIM. of that into going of is So in how the level into X.XX% staying in to we exit about think be right next QX, having

be going minus at think we're move we're So we 'XX. forward range may points We stable plus as forward, that's NIM. but into at basis X the a we or looking

Christopher McGratty

Okay. Could to think you more able my follow-up, return the then return order just also you be Perfect. rank you to you timing capital? And of might and which flexibility. maybe alluded John, capital the

John Ciulla

likely think sheet this balance I Yes. interLINK kind an should think to organic use we other fact the and Ametros things and in do 'XX, are prioritizing about absent then I where and deploy inflection that that doing always talk the and thinking with again, down, more think no that that do of rates interest into point coming get first of like we as about if productive see opportunities growth, there's we done we organic and we've half repurchases I obviously, mean credit to other quarter with capital, Chris. begin we're we for of given Bend, capital.

we're flexibility. I So there. now, our more think and feel have about capital We levels we really good some

other the more share before organic So repurchases were begin we deployment. X, or of to in than absent likely next quarter we're uses

Operator

line Your the Jared next comes question from Barclays. with of Shaw

Jared David Shaw

as exit to much, much growth loan we we starts anticipate year but from into loan maybe we should not that going the 'XX, CRE? at rate accelerate going we or expect exit of or attrition that sort Looking It maybe 'XX? -- maybe as growth the expect how into headwind should and 'XX, sounds overall additional like

John Ciulla

did particularly deals. prepayments, mean significant activity, I specialty great although transactional there's couple Loan that Yes. know And core has been say that, I also clearly sort on many pull-through it's quarter this right? really muted sponsor a quarters. that lot a for good quarter, will of a categories. have has we fourth early is of last industry We quarter to in on the question, the and subject growth the and of in in C&I continued

we So guidance really didn't the fourth that's for why our change quarter.

you've and so, I XX XX%. single to the years say, high me or around digits we've think for in able commercial kind grow heard of categories to been

kind of our there's think Jared, that see loan continued demand. view is modest 'XX, of I now, right we

think of January when guidance, give Could So as to think right 'XX get the year call. now, growth. outperform into going kind we We're X%-ish about next that? I a we Sure. formal we loan

look you I and perform the growth. of better loan saying I modest to think kind be at are think may not or I've at think read think whatever but blowout allows, more with and activity, 'XX what we can said kind I this but always year I a be year, others we if market than of respect to similar

which there mix think your commercial over which in significant balances support there. it we and pleased many estate, and template in a but you us and drive will as just gives to clients level had We to can, that really really the gain organic full for of others of we couple I as about down at We're relationships. beneficial the at some a good bit there's of was transaction. securitization, then know look us. CRE trying as and respect the industry last origination I really obviously, prepayments, this With real the question terms to us reported quarters in economically in much actually we're have did see so to And of we on our the good not CRE it capacity quarter

market grow other we think see And then our at capital the can loans CRE end of grow in the to day, nonstrategic we modest base this at classes, you'll relying CRE ability quarter, But with our we exit either to maybe as our growth. overall relationships. not I still CRE C&I we flat grow outsized while on and growth showed

Jared David Shaw

good maybe side, That's there. great really for trends deposit on color. then And the follow-up my

you be some think As or or do enrollment opportunity? we're [ maybe thoughts there your that pressures what ] entering HSA are the on season, could

Luis Massiani

it's Jared, Luis.

indicators good in as going is couple the seen enrollment as good the to years. we've do be we of pretty see seen -- that recent early So we've season

a fair investments So of we've technology. investment may year. that a out this made have the of bunch seen. platform amount We We launched new earlier rolled client-facing you management in

to And business. about going the And we more growth year. continue in so we and slightly this see relative and we what very how to the deposit we positioned HSA -- the to you're that saw good XXXX position investments to feel faster think similar

is we today. where HSA feel So about good

John Ciulla

end and agree season coming able of new a do was first final can Luis, at of the usually you selling of be January, business then it give Jared, I anticipate. in obviously, we what But we And look first the And tally kind think in. quarter, a to HSA. what's for as we at we'll I kind with good

Operator

Your Piper question line comes next Mark from of with Fitzgibbon the Sandler.

Mark Fitzgibbon

third office have have wondering, that $XXX loans Real you of I'm you The to I X John, on tune against them? quarter? guys about are reserves Jersey And guess are an these large the in in million. nonaccrual that specific week suggesting article any do late Deal the published default in New last

John Ciulla

Thanks for Yes. Mark. the question,

with me couple of on book, single loan point a a forth. billion those of $XX loans and and specific litigation public. and we relationships, a obviously, So so both comment Obviously, don't But let make so generally comments. exposures, this become has on bit

will under a overstate has So originated what Webster million. the tell exposure, there I premerger. you loans numbers highlight is those were exposure significantly $XX X One are Webster's

The Webster other obviously and the loans under reserves those there those have charge-offs Both against and of been been one specific at nonaccrual put loans. the end is appropriate third on $XX are have loans the million. exposure of quarter. of reviewed Both those

X loans, in charge-offs -- increase drove nonperformers overall that was were mentioned to took I comments, $XX not in in contributed the and in or significant charge early quarter. the office the As my Those quarter. million what loans the the X we the

charge-offs I'll kind that's of to making are that so we're of and The about we nonperformer But charges good in we're our that go So pretty that can they're when there. you. go, were tell supposed office the things from charge-offs sure managing quarter, to proactively take. what you supposed taking XX% things triangulate

thing our very company peer got we've size to earnings median. high is reserve being And compared a a about right now power. significant the loan so We've good our loss got

financial forward. feel impact didn't overall those work in CRE to our And our have a that reserves but performance, we move not material down pretty an be only good in that so financial as enough portfolio this to overall got impact really it quarter, on not there continue have we've we and we loans, X

Mark Fitzgibbon

have wondered book. guess shrinking if what the follow-up, on reserve as with share then office a done us right Okay. the And you I great That's John, now? I is a could job great. you portfolio guys just the office

John Ciulla

that, X%, think said talked had I'll which X/X $X obviously We of billion that of about, repeat about that asked working I me Yes, being through. I of about there through. up X/X give to that when I'll and you we're Jason that combat working it's kind in X a again, -- ago. referenced or kind what hand-to-hand so portfolio we're of talked is was quarter Mark. These difficult you just credits I the

about has kind we just to continue that well through. We've the got manage, secondary portfolio leased in-place stuff leases maturities, that's and X/X middle, tertiary as of worry in the and we've as of the we support we highly about don't enough that actively got of then think work kind long-dated to and

$XXX about So when overall we as most the that the against comfortable think that's And the because think feel it's it on some really left, you when for are about about remember, us. you specific there reserves portfolio X/X million X% well. problematic that's of reserving,

Operator

line the from comes of question Matthew with Breese next Your Stephens.

Matthew Breese

hoping cycle, of of whether cycle coin next other and where? is success loan lowering the I And hiking quarters, full you you've a what was had any then so, tweaking range? betas or seen match could costs, so, XX% will over side the loan sensitivity, deposit just early expectations about during given low year not the you the reduced little asset around which and think was bit if the we've deposit talk kind you've in or the not whether or beta over

William Holland

there. in I'll jump Yes.

quick we deposit cut our of I repriced about pretty first beta. took deposit $XX portfolio XX% of on cycle our portfolio. points, basis billion, at obviously, a portfolio action the billion had that think, And at XX in we've and the -- down about $XX we of

$XX look beta XXX% of you XX% book, if so total at or at kind our far. it's So billion beta about

the those of online some over XXX% interLINK moves with in bunch and on XX% are commercial almost saw basically Brio, We our a portfolio Our beta, our nice $X and first down pricing cut. far deposit consumer our portfolio, so beta immediate billion. portfolio deposits, on through then different

good pretty we're So there. feeling

cash the step securities. and reprice. to portfolio, loans take securities you That's within billion we of $X billion in a our year, next at as and billion $XX approximately in and loans And $XX back in look expect overall our

is securities $XX our billion than So $X out long book fixed with billion variable. less our of are portfolio and that

as So loans. kind repricing of on the the side look that we at

XX the the in beta, And about beta if the down. cycle, beta anticipating up quick basis XX% of you think portfolio, billion you then And do $XX a first quarters flip $XX if deposit and in that's -- billion XX% X to we to X a of on beta. you quarters the XX% billion about the a and there, XXX% first math a saw side, we're approximately $XX

our of for We and X% borrowings, billion got $X will We've billion billion over, in on another back us have mature up. hedge so are helps XXX $X basis those points roll securities or to a And next. short that then billion the And this ] there's approximately mature [ roll anticipated that support and roll portfolio $X about or that large annually. or fixed-rate range, quarter off originations churn $X positioning. is have and X% factor at new current with so we

when put that we a going of pretty well-balanced kind So you next year. position together, into have all

loans. very having And modeled see in of as you variable us rate a neutral large a fairly positioning despite results, can portion our

the has us an topic, down-rate answer important job know think So it's good but environment. team positioning a done and I there, for I long this really a

Matthew Breese

address expect for preparation any growth expect coming to thank specifically expense Should you $XXX growth to And appreciate you. on the it I around billion. all follow-up over for expectations as as what this? year next we of or beef infrastructure? expenses, relates you the the kind in is that, so, ready And just do acceleration as year areas in or expense quarters out get you

John Ciulla

category. we're be terms before, the expense additional from as right organic remind we're of our in perspective and get that will an right finishing there you running plan we to years said, and the And leave growth as cadence PwC, And for may building X you going this Matt, to with and march X in through our out the And billion to obviously, a TLAC. now and for hitting analysis for of people capabilities for technology, us wanting always kind little GAAP But away there through. of now reporting you our that I up $XXX we're of mentioned X. more. thank hiring expense Yes, question. we the Category

those And our our means X businesses quarter, I mentioned mentioned you took those terms And severance heard expenses we charges that plan reorganization our Neal And kind I earlier, about exiting free-up organization also for looking for on give lot is, that the that include invest. guidance, fully-loaded as in moves spread we of that last and will dollars our some January, expenses. out. remind that non-core you a in at will 'XX quarter. when and to assumptions what to X in to of the we example, of have years

expenses, that 'XX we question So outsized January returns won't think additional it put deliver in as process. be our confident answer We as to feel guidance. the on to the still our that, we very in get ability our through We you're to move forward, go in but will this pressure going material.

more I put little a around flavor if bit And know to want but... so that, you Neal, don't of

William Holland

Yes.

drop mentioned, at one expect this X. expense And we team the prepare We'll really restructuring a hey, concerns I run all organization you our the program. next we of bottom reinvest to job that as took opportunities And small for coming those some year John putting million, with which charges efficiency Category to $XX my the quarter, there use running ratio. dollars we're a said line. has Are of find and John. nice rate XX% more won't efficiency? flow done the to think to together was, well, into And a initial

base specific an to requirements. if $X.X about So kind as we billion. the of it's expense take over continue mentioned, our way I that think find pave just numbers have an in to example John back, you But can we'll step we And efficiencies a QX. of that's how to talk

X% $XX that So is of million.

highlighting that If probably our onetime good you what to to a just that X not over edges kind view. the versus we that chunk around to of growth is a side expense percent a expenses saying the the of going what's should expense rate kind happen, on big it pop-up I'm need but some of add of next be years, the build. current hits incremental that's

John mentioned, on and give more not we're in making and through preparation, progress we're as we'll good fully analysis the details But QX. there,

Operator

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

Daniel Tamayo

forward. how guess, how and on environment a uncertainty a follow-up out. charge-offs that increased first, office with and in I thinking loan we an you you repurchases possibility well? John, the early-stage peak your think into I here? just nonaccrual to for plays levels, net that are kind about Do lead those nonaccruals credit mentioned credit whole at how curious side. should credit nearing But Obviously, inflection could on the there's some the plays of going just think how as we be But about should think or thinking that?

John Ciulla

last you worse. less that predict. and quarter because We've one Yes, marginally difficult that less quarter it mentioned be I the through it's entire a terrific would portfolio. if were, were worse, question answering and We this to is this -- love been we just

pre-pandemic We are with look in at I of the And identified, real where again getting if you in our line statistics. think obviously, to a the statistics, through. all kind point I go they're proactively everybody remind that we still all absolute portfolio that we've issues

normalcy that trying saying, of return know CEOs of I to are a a been of credit. lot on a everybody remind So this cratering credit. hasn't we're It's to sort been

now what coming right down. looking rates hope got at interest and we're Our we've is

refinancing an seen already X-year We of have the increase behavior commercial the and in the curve. activity forward estate based real on

down, should And the bank quarter. certainly and to we navigates interest if this particular bank a half in It's point landing, rates of call see that so as tough I running do inflection 'XX. an sheets P&Ls balance Fed think first come through soft the credit, in

continued not pleased to annualized migration. some seen We been in We've negative have result levels rating higher that, has migration charge-offs. of risk that

would of forward be half for of understanding But that obviously, based we have "hey, all bottom." the 'XX, the so where reserves. say, factors the sheet. got really of to trading, we and allocation lots balance we asking capital, if absolute capital to good the our And is portfolio do XQ we've of We've question first respect the kind we're you're me in I to it and on our think think difficult improvement of should start with earnings. got return a see macro look And

that decide all into a first or not whether buybacks whether in fourth box activity. 'XX that's or the quarter, or half of we'll not So start put and we the

Daniel Tamayo

then just the Terrific. looking growth, gears loan side. Okay. changing And at here, growth loan

You about some by headwinds be perhaps slower, mentioned the you fourth the C&I Sponsor specifically with prepayments. quarter talked could and impacted how

just quarter, how the that pace up to picked side, third end in also going And of you steady? was side there, residential it relatively be of you're to the the But on house? expectations to curious, what then the other portfolio adding the near the growth the quarter, the for saw if much just if relative curious of

John Ciulla

Yes.

and in there's we've is to continued we in our activity reason have it momentum that of if in categories. as lot the is guidance a out the visibility QX. the because quarter, early see would I NII focus and the a sort which fourth know some And in to take pull-through quarter. full origination growth in I third that The say us we interestingly, as the continuing securitization, yet. really X.X% didn't loan up if go both the of back-ended, we quarter, said, primary on C&I on the of gives you the quarter, Our don't behaviors prepayments into will, myriad grow more you was we

our I private think give of from we us which the still to in up business Specialty our quarter, momentum program, manager the there. have hopefully additional some and pressure on & running first asset We're Sponsor have should proliferation credit. going

performed Our well. middle market

pull well. got performed finance equipment We've in and asset-based sector public Our in finance. levers lending to other

able think with be we'll to to grow C&I our I So continue portfolio, categories.

you're the if are in because because level, and get see probably fewer in estate at of there mentioned, commercial real you good it, You'll growth can market. some players risk/reward nice Neal now, really as right modest

some sort And our market originations, correspondent of obviously, in mortgage customers I of mortgage then fill with in then our we'll our think and level origination. serving

X%-ish balance, that still And the would kind right number. we growth I say it's of loan annualized balanced. is So think on

Operator

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

Bernard Von Gizycki

So documented And certain on loans you know you've the this a on and the call, to talking this Page capital X improvement that these identified the actions? to you more about optimize bit eligible treatment. how I if was been but noted elaborate the you've could RWA big quarter? to just on And size of deck, during

William Holland

Yes.

be general weighting. and at So I multifamily, and quarter. I'll for an finance lender our total sector, public points actions and in pledge had really think of at in a in all We weighting, of the risk XX% deep went sitting basis obligation could And at we lot in a were give bonds public you risk portfolios XX%. the and of revenue XX sector XXX% and loans about the our did in example, dives looked kind

work did That's across pull So weighting of and category. data to example additional really there. our lot the we risk a optimize one

the Included as that in that also we drive capital levels, mentioned. was mentioned, So and that just about hopefully I increased the X basis helped -- that in and securitization points. XX

Bernard Von Gizycki

expenses, then the capabilities. technology, in helpful. the with you've Okay. basically highlighted BSA/AML investments Yes. cybersecurity, obviously, platform, That's making tech the cloud stack, significant banking you been modernizing core on And

services tech the professional the occupancy? highlighted some on also spend you and those sequentially, the increase quarter and for professional you on provide just Could tech quarter, the costs. color During occupancy

John Ciulla

the Bernard, -- to expenses initiatives meaning related quarter? specific for question, Specific like those your

Bernard Von Gizycki

Yes.

John Ciulla

about way. that don't think really We it

at and is this year, the rolling talking that part items been every we look deploying. knew about initiatives, we a that that we've specific everything map in road highlighted technology X-year were long-term of we've that strategy investment there you think and are I and highlighted you that

recurring be So there we isolate going would nature. as is term nothing something long in really new that to there that's

all to it's invest the are to various to be required XXXX. And tech we in of estimated out we stack, so inclusive we in tech in business alluded is think kind invest stack, everything provide the the build Neal to that all platforms progression for modernize all -- to of that and be projection XXXX. what lines, going going guidance be going expenses what those are and management the includes risk expect continue when to that

any envision don't XXXX We in that this seen to year. tech be spend going what you've outsized there's relative to

support So the specific out technology in at areas long-term making risk And investments have a to client time to we map feel operating experience, the what is. path -- again, while we platforms. we feel building our same pretty good clear about and road

Operator

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

Laura Havener Hunsicker

welcome. And Neal,

now, to Just and that but then of provision quarter, that loans was that of you've million on here, back $XX book, been million this certainly, office and of And I nonperforming much took X% new loan only million. $XX $XX how your go and and X is very office transparent, appreciate you of loss proactive are the your office? and to

is little And X bit those occupancy, loans? debt on are specific the those reserves service you or million, what that X% reserves office million, reserves Can are your specific on $XX Mark, backdrop loans, X the certainly new you basically, about a help what us think gave, there? $XX what's under then of the the

this million. refresh million. now question $XX filed, at here about there then sort were And the -- April it. looks lead. a again, appraisal that on the $XX a that done is that lead, think us help just exposure $XXX office, property months then final was million of is property you just guys, just Bankwell i.e., Sterling in per you filing, Can they're of the that was Bankwell we're part later, just it And like And X specifically

just any us could you really that of be if that, think So through would parts helpful? help

John Ciulla

-- Laurie, to can't amount refreshed life with a right, even and all I along of with ins are your answers for quarter, I'll specific billion think specific to the all, and provision is you're a factors and and don't your because many so related mean, good I first portfolio don't credit CECL the can don't outs, $XX you, the of identify qualitative refreshing have there's very I you're And a loan with there. risk tell provisioning of I think there respect you the give that information. I that, -- that portfolio. ratings you updating up or what losses doing a for of coming to

what but So necessarily where from. with amount provide, the of certainly, the it impacts you correlate immediately charge-offs doesn't came charge-offs

I had charge-offs to the related can X that in a the about the draw gave quarter, actually our bit. So charge-offs offset overall to a I mentioned which you the of were loans office the loans fact think recoveries we debt don't XX% in loans. being drivers provision. to connection those our we I consumer, charge-offs largest Those little

tough the I repay specific as service a What the have can and from those question there draw coverage loans loan not nonaccrual, the the or it's those conclusions. flows they're I LTVs again, in-place So don't if underlying that tell to debt that whether is now. to agreed. seat can certainly means X on as CEO you it is on cash

you and you on get to can't some able be with but might we specifics Jason, off-line, give the X I those transactions. So Emlen that of

lead the We lender. were

a significantly think, I XXXX or was, It XXXX pre-merger. origination correct. You're

and information on the here, tell can you that's that the So were I that available me those X credits we I Laurie. think to I agent have

Laura Havener Hunsicker

Okay.

occur? finally, margin? do my a When you spot have switching quarter then the follow-up in did the just then And Okay. gears. question, And securities restructuring September

William Holland

margin. I'll in jump the with September spot

I'll was basis We by than X about NIM a that September dynamics. deposits bit really say saying our more were monthly represents X points little September came a bit X.XX%. NIM that basis I'll caveat is NIM. Loans points. variable little quarterly and also lower. repricing down So

lag deposits with of with middle we of some the the in coming cuts, and higher the September. later our well month. moving So cash far Fed repricing cut started in started before the down holding there there also levels is obviously

on So as XX% confident September since before, QX I action taken costs, mid-September, come that above in already. spot that we've significant will are our number. NIM beta our mentioned And our deposit we

Yes.

transaction middle probably average of and of think I it quarter, quarter. more kind was the throughout that's weighted -- to happened it the but there the the then

Operator

with Your Varga next Samuel question from of UBS. line comes the

Samuel Varga

commented on the securities the billion to million. of back go to yield sort roll-on on wanted book you on $X and flows just this that. around Obviously, the X% annual cash was quarter the I $XXX expected of being

So the XX you over expect why can on to this was next comment you lower, months? why quarter it just move higher

William Holland

Yes.

securities, full quarter, this $XXX added kind that point, a in on so your of to comment million. on at rate So loans pricing my and X%, that fixed more was mix billion $X of -- we

was $XXX our that purchase kind modeling million. for in between QX, recent we're $XXX think $XXX I million and average most and of million

securities there. But points plus So that, clarify numbers just that feeling our and good was that loans. about our the or X% XXX repricing basis to of fixed

So why the there. is number that's little a bit higher

Samuel Varga

on then And it. the you base, XX% beta. said Brio Got the deposit

Just the book duration realized to short production clarify that's new Or is of for as well, it, is given that overall the the XX%? already this that on quarter?

William Holland

Yes. The portfolio. the on XX% is overall

Samuel Varga

and over potentially or production, Okay. then of so been XXX%? in have terms get -- new And XXX% you near able to to

William Holland

Yes.

and priced done a We've think of I down before potential monitoring -- and in been nice for team basis that think cut XX liquidity moves us basis we're from job moves the now, has prudent we've moves. the you'll we're I points as made. earnings, more of reaction additional very first done to future, where versus through our client cut, in XX we've the seen far good we're the balancing So the and and points, really we've so see actively downward cut pretty

John Ciulla

is the portfolio. on There's there rate no the -- as is no portfolio real there, on real difference

diverse versus dollars the all. in not new there's pricing there. It's existing So product that portfolio

it for are about all think to new existing one same actually way getting beta the the exact -- deposits plus overall yield. originated. is is which deposits the portfolio, So It's

be new both roughly would the on beta existing and the So same.

Operator

call the John concludes for question-and-answer Ciulla closing I'll to turn remarks. This the session.

John Ciulla

much. company. the Thank you day. continued interest today great We very appreciate in your Have and a everyone joining

Operator

concludes you conference. This joining. today's for thank We

your You disconnect may lines. now

Webster Financial (WBS) 17 Oct 242024 Q3 Earnings call transcript