WBS - Earnings call transcript Q4 2024 | Webster Financial Corporation

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Operator

Good morning. Welcome to the Webster Financial Corp. Fourth Quarter 2024 Earnings Conference 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

Reform found begin release may on the information about that our forward-looking remarks to we uncertainties, harbor Securities I which within subject affect and harbor site presentation to the [Operator more can disclaimer company's remarks, at language to comments made Ciulla. risks and you safe Litigation Instructions] I'll Private the the the include the for Please meaning remind of by XXXX the are Financial's review be Before rules. in Investor Relations now and presentation CEO, of John today's want Act call management's us. The forward-looking management press statements Webster accompanying investors.websterbank.com. may and over safe turn

John Ciulla

Financial performance, morning, Quarter cover Holland, our us this will Thanks, and Fourth Call. appreciate high-level Webster some after in the our provide financials to welcome remarks you Corporation's We Good on which morning. joining more Earnings detail. XXXX Neal Emlen. CFO, I'll

and to and President achievements for yield concentration Massiani, call We is our the for of realized Officer, Chief our on for we of optimizing our our company Luis us balance again commercial portion Q&A as asset continue XXXX of number today. The of the in estate a bank position sheet, also profile future. took strategic reducing steps the real deliver clients joining the Operating Our and including capital securities regulatory risk number a to the improving ratios, improve portfolio. weightings assets for

client for perspective, Through our of a Ametros' we services. business. exploring banking grew alternate Webster's adoption administration we We're strategic year and challenging established heightened source greater for and loans integration opportunity. markets in deposits introducing for a for enhancing regulatory for accomplishments environment. From particularly capacity, amidst add financial solid to in driven developed banking the growth residential fronts. Webster products of as appreciation was low-cost, have to off-balance products rate operate to interest increasing year of our XXXX, growth added settlement base, deposits the a on we foundation funding new higher and of addition even In for growth, in and future. a potential to the the Ametros' industry our fantastic both liquidity balanced into acquisition a profile. The prepared early deposit growth These further an longer long-duration with both growth we C&I work Ametros grow towards Loan continue paradigm a loan a mortgage, industry the by setting the and future, sheet

return life-sized year full on be Our efficiency assets and adjusted including results an an of equity return on best of peers, common XX.X%, to among X.XX%, the of of ratio financial XX.X%. continue our tangible adjusted

grow, our differentiated to Turning deposits in opportunities a X. Webster, with just efficiency solid on income On our a quarter year-over-year be in return return the XXXX. differentiated us we on margin adjusted we net of have each profile an to the in Slide noninterest We and Slide tangible we below trajectory on deposits X, unique lines. of ratio it business continue proud equity built Loans an very some we of continue and to funding continue ended basis, for XX.X%, common a grew quarter. On at focus be fourth to and XX%. of and assets of X.XX% the had expanded, interest adjusted

Our over and loan-to-deposit with XX% us provides XXXX ratio just move of another element flexibility we into of as beyond.

over its of deposit acquisition. the $X which balances to $XXX added we from Ametros, time million noted, As billion, grown just previously has at

million as our $XXX segment. between digital market In account year, branch relationships platform the holder deposit our business. exchange HSA commercial seamless about opening HSA their enhanced the through to access continue expanding Private in helps we've of middle benefited bank, the emphasis Client excited HSA which and attributed potential part of clients. in estate expansion our the and Invest capabilities We [ deposits channels, network digital accelerating grew the seen growth our and deposit by real this the of growth business, an an rapidly account with ensure XXXX in consumer launch be and its to ] Bank in from of commercial investments. We've bilateral

to a partner at client our enhancing ensuring base of continue deposit which a of forward. institutions. focus insured FDIC developments our the ours and funding as availability grow be good will we We front, Overall, lot depository core to continue funding move interLINK, access on to to

X. Moving to Slide

moderating, points continue the two it to million not [ additional and some We turn despite still about ] of related XX% high traditional this we health point or basis On We office charge-offs on rate volatility a over credits, pockets a services, given metrics care metrics. In the provide office overall charge-off I'll of inflection that office Neal in performance care CRE we other the year. Outside focus have to XX again is million, underlying the trends we any higher the we of XXXX some quarter. credit, charges basis believe quarter-to-quarter the metrics value over totaled the that, a normalized those range. With than services to on with past solid believe approximated still credit on financial to XX overall credit annualized are looking our on $XXX and been the provide coming portfolios with Exposure to co-related are materially over XX in net mid-XXXX just of commercial from charge-offs less and health $XX charge-offs detail our end portfolio. improved. is with remaining a overall points, net of talking migration level portfolio seeing see weakness. the quarter, office. to quarter, at have of portfolio quarter, down on

William Holland

to everyone. with million, securities good adjusted repositioning the morning, Slide on for X of of $XXX and asset $X.XX. valuation income net deferred million we common a an $XX charge. shareholders of John, GAAP charge and start pretax million I'll diluted consisted a $XX adjusted our reported tax and earnings Adjustments Thanks, EPS basis, and quarter. On

million to portfolio the of $XXX modestly on loan were we total, Loan growth points basis as We to by the quarter. by deposit Turning to cash rate modest lending modest remained trends came end. X.X% up X. particularly funds declines we without was ratio increased other DDA CRE short activity were effect loans highlighted greater $XX by floating period the down in on public period risk linked levels the Total of XXX build assets growth in positioned increasing basis quarter the of X. We due were as levels, on have attractive of growth. million, year-end. marking to Slide points, and of by From provide levels down billion in flat loss. Loan of seasonal characteristics. The categories. portfolio a to XX.X%. second unrealized in additional loans well growth as are growth million at security offset securities strong the quarter lower loan-to-deposit impact detail retained the largely balances offset Capital in or X. at on portfolio. as deposits last The increased to Slide duration concentration, time decline earnings Slide concentration at on Exclusive fund and effectively grew loan growth payoff September increased public reward primarily and driven position residential our end, in yield was C&I In declined are return $XXX by to current cuts XX CRE portfolio and office since relationships deposits, Fed to in a total were categories. XXX%. the consecutive opportunity offset deposits with $XX

XX. NIM were was we modest XX, from NIM Moving a X.XX%. basis up the positive in approximately XX yields million increase quarter. interest the the $XX of the in increased quarter, total was of XX.X%. X efficiency the Overall, a book derivative basis X.X% a quarter, on were quarter. Slide sheet In over saw revenues benefited up [ points with securities was XXX over anticipate up costs transaction to came illustrates growth net million the noninterest as quarter, we prior X the sensitivity basis impact point at up income. growth $XX with gain in a to rates. we million, $XXX $XX improvement by and in income income points our assets. fourth and income, ] a driven rate income value the interest-earning and in quarter balance by quarter, deposit highlight reduced interest the prior prior ratio prior incrementally in with XX%. On income in earn-back Total The investment in a years. adjustment. in $XX modest $X or expansion the increase was XX which up and adjusted our ratios. million to and margin. over provision an expenses in million Net interest We our realized capital million The the was $XX tax interest nominal Noninterest million large increase We reinvested income, Adjusted $XX Slide and Slide sold to and interest to up net valuation our direct relative million swing net million, adjustments, Excluding $XX

income sensitivity rate proactively income. intent up interest over to interest income stable was million, million by have $XXX variety noninterest over $XX trajectory with prior Slide provide XX, XXXX, reduced since quarter. the a a with through our noninterest the of We Adjusted environments. On asset XX%

noninterest the positive business been Excluding consistent activity quarter. have the remained million. CVA prior Underlying and income in gain direct investment to quarter, the would roughly $XX the

Turning to Slide XX.

of increase $XXX details credit performance-based expense. In XX net quarter, $XXX contribution booking in we recorded accruals charge-offs. and million seasonal made of from have our we was $XX and Foundation. Slide higher expense, allowance million, realized XQ. provision, $X quarter. losses, adjusted expenses to charge-offs, which the million for in a We up effectively million We up Webster components relative a prior in the noninterest incentive benefit the charitable matching a After on $XX million reported to details

of a last as effectively flat at quarter percentage allowance basis remained XXX points. Our to loans

care key traditional service charge-offs to indicated, highlights credits. Slide quality principally related health and our John asset As related office metrics. XX were

in quarter side As you and commercial with risk of can migration the up XX%. assets loans page, X% left-hand classified nonperforming the grain on of see slowed the

to Turning XX. Slide

excess were flat capital of Our we retain a effectively good amount capital. modestly levels as or up

value the per share reflecting Our book per share impact to from $XX.XX, of AOCI. tangible declined $XX.XX

Page growth an end-of-period mix XXXX a on X% X% anticipate asset year full classes. with We outlook, XX. diverse on basis, to by For appears grow will loans driven of

X% on anticipate net $X.X end-of-period billion to billion X% also to We grow an basis. a expect of $X.XX will non-FTE deposits on interest income We basis.

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

basis funds XXX beginning assumes reductions point outlook Our in Fed March.

be XX%. will a category X the in income of expense ratio noninterest billion, $XX expenses $XXX and outlook million between with prepare $XX expect to range needed to million. to expenses run in efficiency We eventual billion operating of to $X.XX million bank. XX% Incorporated be incremental We $XXX an approximately $X.XX in will to for are our rate million our anticipate transition

and that enhance investments treasury including foundation, controls data frontline prioritizing are management. our reporting, We operating

let in believe between -- in realized the to expenses, inclusive Over run XXXX, bank proposals. will million that operating $XX several we we ready rate the years, we of $XX existing will add category amount X under the will the million next

to effective our will XX%. be approximately tax rate anticipate We continue

equity to it back for will With Our I closing John X ratio that, XX%. remains common Tier near-term turn target remarks.

John Ciulla

Neal. Thanks,

proactively allow to only bank regulatory management in are improve we Investments pockets will investments. of future discover opportunity operate concerns. nimbly, of capabilities also mitigation As but Neal prepare data we Webster a investing just regime, large to earlier more new our not are for Webster's and analytics making noted, and risk bank the

of Ametros' to investments our business user analytics position engagement. Webster across market. performance addition grow our we outset that company's remarks, will our improve In the in capabilities well for we addressable that businesses. At the continue sheet. our balance And Commercial and some enhancing treasury development client of opportunities XXXX. simply segments I we we in to to also are outlook, we the well beyond the improve to the are remains middle business see investing existing channels Also In client bank, market Bank, tools. our my proactively to teams. and become and enhancing capabilities diverse future a expand our positioned bigger contemplated of our In strong will interface our investments management are various the drive banking consumer, the digital and given capabilities banking needed capital HSA, acquisition mentioned hiring

maintaining operating to return profile. Our peer-leading enables structure us our make necessary investments while efficient grow a business to

can you to success Operator, we'll today. and we of there. to work for in they fantastic to all it North to delivered our Carolina fires you Before open we the the in Webster's communities. Thank have I and been them do mitigate wrap express end for and tragedies our as want clients their the we up, And XXXX, year, last up questions. I Thank clients of note floods did and in outcomes who've by want impacted help call colleagues colleagues again, those some damage and joining sympathies Angeles. that for contribution hard Los continue impacted the our all for to to the I now everyone at to

Operator

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

Mark Fitzgibbon

John, like it buyer regulations disposed of that move if if I'm I the on that Secretary guess your priority become banks? list? Webster like the likely again is to banks sounds curious would small up threshold -- on it is of sort nominee Treasury raised, Would Category is a Webster. X easing

John Ciulla

stands Yes. line And of now. be takes organic that equation think mean, Category optionality of right path of $XXX billion the we're at out perspective. of I right you kind bright the right our it X to really Mark, kind some are really from acquisitive forward obviously excited an the hurdle about I now,

regulatory or administration is will it Our the good time take will what some like get after easier, to M&A extent to the a sense really of But paradigm that look expectation change. the the is for inorganically. to work need the franchise more time, opportunity certainly an us X put would has lessened to additional do we more allowable restrictions that that build or in over Category

in regulatory to is, how over right the answer a course I plan it's change think short growth. And a now. the yes, conservative in our guess inorganic as could But pretty I our the not things year. So at accelerate next the view paradigm change quickly looking take of will we 'XX

Mark Fitzgibbon

guess credits Great. I particular increase you And had this And that quarter, then I NPLs in many concentrated curious any that? one industry? million C&I Okay. was was was in $XX it how

John Ciulla

office quarter we usual. credit that perspective, It of nonaccruals we're in in in was X kind as resulting portfolios. or materially well and we was portfolio, have this migration loss an as rating the charge-offs quarter. X seeing there There two credits. across is mentioned higher from the It some really the moderated slightly overall What and obviously, I had but had wasn't. negative fourth risk mitigated loan and

of I X same credits. of of the usual it's or So And X in characteristics the say would terms suspects credits. those kind

Operator

from comes Our next question Barclays. Jared Shaw line the of from

Jared David Shaw

quarter? guess, when in maybe the trajectory. How repositioning be was looking that, I securities backdrop of that Just and margin at the about with should that thinking we the

William Holland

Yes.

talked now X.XX% in in steeper in [ last movements QX be will our and XXXX believe quarter we for about NIM that curve, range. to ] With be X.XX% to we positive So range the expecting of that X.XX%. XXXX

And increases. XXXX. we on shy positive QX, the impact very So of in little NII million value increase our with in repositioning, in about to saw $XX $X million just

Jared David Shaw

a different back And then angle. from sort capital of Okay. All color. great I circling guess on right. just That's

expect for should You or target. I XX.X% And aggressively to down be maybe with little at have that -- longer-term that a you to here? comfortable, guess, we XX% to XX% to even What looking would so? you have near-term more happen would target, we maybe bring buybacks feel

John Ciulla

mean normal capital pretty our think program. management disciplined around I we're Yes. I

inflection credit best kind anticipating We're kind right. and on our you're credit. a looking to guess of always now. still at but right I moderating. ] I'm make We're on [ of predictions reticent think credit timing, point mid-XX

sitting And are robust hope at We ratio growth. a CETX loan now. right more pretty we for

so people economic capital mid-single-digit get have kind a bump far growth. activity demand, I that we of think the most If first. with deploy in reported still anticipating loan and and we're there loan we'll line in of

health franchise. enhance to We have care opportunity an our

do during position we are acquisition. absent anticipate For we there, where we would capital capital tuck-in to example, course of the that use for we a shareholders XXXX. in of another return But

Operator

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

Matthew Breese

year, within guide the was mid-January? kind could here deposit and the just around maybe Neal, costs I deposit hoping for of you sit where some as in discuss margin insight expectations and betas costs to

William Holland

Yes.

So QX, X.X%. we had at deposit costs

down now. little margin to moved we we X in what we do and some the strong into on right with margin strong went December, In continue year do expect throughout add we as year, That basis a but QX. to we points expect As And QX that the we're we bit QX, a to expect we additional will side seeing decline. have few had about a very throughout tail things off a very happen X.XX%. debt

Specifically repricing, think had on commercial moves. organization, I moves on some as great have we've very And an positive some the side. seen deposit

run We move where take me, we action. consumer down multiple have a playbook after we quarter cut, every -- portfolios. We every excuse

guidance We points Kind what And we mentioned deposit have beta expect portfolio. CD that have about that a X And our beta at a good renewal as for is approximately to cycle cycle. we we a before, level of XX% as XX entire date, maintaining anticipating our is are I basis on in of terminal our strategy. this cuts.

those cycle. anticipate cuts, X XX% we So the throughout of through beta kind

bit that how deposit helps our pricing. we're address cost little hopefully, a So about thinking

Matthew Breese

years, I talk you footprint? bit is little And into embark strategic. medium second are understanding on the more was and so, near from geography you've the of businesses geography hoping happy of one the my then a national helpful. where? a could expansion kind see any might John, Very you some term? If current Yes. over we you of How more expanded sort with And about Webster standpoint. grown or

John Ciulla

interesting think our where I activity. sort of we take local we Philadelphia of do don't our businesses estate, local which any that to branch footprint, middle real business an that's kind question. of is bank have kind of Yes, of market outside plans to specific our commercial Boston, most

over people found credit have parachuting by a think I markets. very be entrant difficult to good we and time, quality grow and new new into it's

taken up of others of mix good opening I done think regional pleased differently and as and that and we have that. kind have you is, so And have mentioned, a national approach what who pretty than local, we're forth businesses. LPOs with

So you like finance, about sponsor We all national ABL, the businesses in equipment we do, things our of generally understand of businesses. finance national, public think understand are business. We kind sector the geographies.

you our branch us to our expand until unless for really continue expand the and And businesses footprint to see geographic expansion. think regional national or as in opportunities footprint, was businesses. I just M&A more kind continue you'd of probably potentially our environment I pipeline of and probably kind us So core those invest of local we and ripe national think our see had to good some

Operator

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

Timur Braziler

My wanted quarter out. already fourth I that first laid of near top just results, on circle The the back you're the end range kind of one, margin. to you

prove get going pretty year, strong within enough the of to to conservative You to kind quarter here? there's rest to going range Or mentioned pressure that could it be back the that we again. be are first range? that implying the be of is

William Holland

Yes.

great team we some done QX, we're deposits. neutral pretty but in of job a large XXX a the deposits HSA bit to seasonal and obviously in very And our variability, of inflows with There's have ] confident position. think [ us little a that range. has here positioning I of XXX

lot the beginning see a we benefit So in year. the of of

we going end I bottom into kind guide think guide the of year of question that our our our growth. DDA you that and end big have of gets the is the to top

in there. DDA side, to stable remarks, kind returned the help. And do we As growth expect I on of prepared which growth mentioned we've some to of level will my

also second increasing bit interest have basis margin. factor long-term also is a of of coming quarter the pressure in, year, half net puts in We which cash the little a last on We're a our points. And we few little do another bit are debt then more I talking mentioned levels.

net impact, the little very NIM to interest cash take have as it's actually, point it the second income, year kind positive slightly X to we So positive, impact will in basis up also. on a X of half drag our a of but a

[ X.XX NIM wrapping of that ] for to the kind our So up, year. confident X.XX in

Unknown Analyst

credit Do as about And XX Great. points how I wanted of you to step the in your Does move on Okay. level? John, what function this being that to that higher kind basis where base? And imply curve. dig of your if just towards are, current -- that a quantifying just that? should might to called is normalized I'm bit we that thoughts and inflection some around a a rates think to then And little wondering level out off what kind XX it that CRE yield they risk are of stay attribute properties? tail we continue of

John Ciulla

base great it's respect answer in time. go first can X terms across look relatively a charge-offs. and difficult with 'XX, of outperform credit of That's to hoping basis a that we question. point But over of case if our XX cost range kind to were that as quarters the XX 'XX, one at we that assumption we to provisioning. Yes, you Obviously, in obviously

any because basis portfolio, quarters always we full have caveat XX lumpiness say some 'XX, we get banking forward kind peg the of underperform I commercial with type also outlook growth for in and outperform Moody's to forth. But economics. quality the in originations, it of think huge loan in given provision XX can each is we're the think of on new X if so our to you And of year charge-off is and expectation reliant while the credit points and next obviously, these in onboarding quarter. a level, pace the the I that of around somewhere itself you be so What and we'll the that

X what course -- way happen quarters to I is would at of I it number the expect look of more a 'XX. for So is of we 'XX proxy the during the

were I the X in fourth first see you in that, our some case quarters. Underneath shoots to the back quarter the we of just risk our way think, So did pegging of if in envisioned risk in performance models, you green in that, terms right, base ratings. we're terms migration,

on have side, We our moved improved. arms we the around and we neutral gotten for nonaccruals of if of seeing a the office earlier. didn't in we've mentioned bump in downgrades. the every So C&I credit look the in closer And big have actual We example, obviously, I direction classified in terms upgrades in underneath more metrics there. terms portfolio criticized And C&I. you think portfolios loans in actually that know that of credit and

have we did So terms of we than year what about ago left, a what we in better feel remaining. was

as we're still all impact had get talked we have we better quarter, think time an see should of a quarter we of sort in kind should good about Jason in if a time. quarters acceleration us really the downgrades good this balanced news range positive were high which upgrades pipeline, at terrific mid-XX kind I I profitable there on of ] charge-offs, improvement So are we hit the and in we even charge-off in that where the back the portfolio, to is our very profitability. provisioning. fourth data if and and Obviously, look in to lower go the on levels for and reasons a hopefully return profile you getting think and over first provision economic of And [ of they when X portfolio. The more

Operator

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

Christopher McGratty

at kind a you has worked that to think the year, look the the interesting sponsored to the John, quarter. you you. X% grow and What book was -- variable in the -- last me I guide last against was X% is been of the guide X% saw And for that growth to think macro if year. it loan I X%

just So you that two a can give or in portfolio? on comment trends

John Ciulla

Yes.

snakebitten on a these am I things, on and -- out So go to Chris. limb

will more their it active what more more the origination, the in that for payoffs it because portfolio interesting there's activity. some an platform More with sponsors pipeline tell means is stronger, that is means not companies M&A activity are because I So when seeing selling you but environment. us we more only there's activity is

play right it, think you because after look and to you we if whatever pipeline. But make M&A prediction, that more loan there's bump environment I But with bias have I there's a when the our growth going through momentum feel if before bigger activity, Trump to better will ask really of the again in tariffs, out, customers, that think rates aggressively. a positive people me you with So you a But better not in economic what take 'XX it's see cautious. that about feel and overall business all I how came look forward. into going balanced it's I think optimism conservative talk everybody election. X% dynamics investing had been we benefit it's people and view. of think, whether but happens these few range before with interestingly, relatively a I think obviously still only what the time in decidedly see reporting happens interesting this, to see numbers, And exuberance like And pipeline, us, a X% to start the a it's And kind of I X%, banks is. it obviously to at you X%, to

year think 'XX was guess am head in a that kind ago. digits into perspective. But growth of think why the the sponsor that's book so best I seeing we than we a I as more still with mid-single is what And I encouraged we're by

Christopher McGratty

missed buyback you forgive capital again, What could ranks of XX.X in does I [indiscernible] Okay. to Great. to? would need remind I jumped I of minute stack get you where just ] kind on going [ The me, just ]? in to And a XX.X priorities? the then terms [ what of to me take guess, it commentary, appreciate then late. it. that. Neal, I terms -- And

John Ciulla

we Yes, yes. this. just And talked about

you're So I think right.

position, in are a our of well right. excess of capital target We in We're short-term strong XX%. very

be are, that priority. to loan The than in return to we that more are obviously, if I think a capital to not position that's growth upside, elements shareholders likely us during in the to surprise 'XX. a does

Ametros opportunity enhance priority acquisitions That funding We have to HSA. our tuck-in would us. a or of capital continue around use profile be through for to

current see we to purchases more outside view conditions, of we be see we the on depending materially share of would growth our on not we'll be moderate, confident. XXXX. As credit what to do engage growth, likely in if And then during continue loan loan course market is

Christopher McGratty

capital could you right? your Given do both, iteration,

John Ciulla

a we XX.X% to what Yes, can. your will question, like that and I on operating down And do or actually moderate then move we credit get target. think regulatory sense And an be to we where lot point would we peg internally I landscape better time XX.X%. our respect capital we see we've trying the normalized progresses, with comfortable to time a this move more to 'XX long-term inflection spent last target to can. if say, of and environment of see ratio a we us Yes, looks a to as we for

Operator

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

Laura Havener Hunsicker

-- How health comment linked charge-off Or If $XXX sharp go had versus was was pretty then much obviously million what terms quarter, bit share back is on much office which happening? in that to great just how drop care you that of of services? And charge-offs, that sale? in was the $XXX we of a million. charge-offs, of down with to you of of exactly the much also $XX so how million little a charge-offs the in us net actually office can can just was or amount, commercial

John Ciulla

Sure.

million, charge-offs it's So care $XX a office-related of to -- relative say around were $XX the you million that a in that the $XX charges I would million health office charge-offs. in around $XX give were and sense million,

contributions, if kind idiosyncratic, one-offs, were The you others will. fraud, things were management different smaller of and that

not any sales did Your question charges on office, to the loan we in have quarter. related

reduction. gave you charge-off a So that numbers. of natural sort was I the

saw activity. moderating definitely time. I discussions activity, portends more and So credit and over to pay around the some our good. of rest it payoffs of migration which we downs is It's think And support

So good and C&I quarter. we in we seeing estate a -- the are amount commercial of real payoffs saw

that natural portfolio quarter, so which were reduction good. was the more a And you if is will, there this remediation, in -- natural

Laura Havener Hunsicker

back to was you a you securities then margin just the the margin in going for when us And spot quarter for Do have the moment. exactly December? And just then restructure? can remind

William Holland

the quarter Yes. at we we as were $X.X of for quarter reposition and positive spot due strong, for to earlier, million saw the very of December. securities was middle actually benefit in I the where The securities And kind reposition. happened December of X.XX% mentioned margin the

Operator

Your next Anthony line question comes of Elian from JPMorgan. from the

Anthony Elian

in assumes year, don't of cuts about talk the if you March. to cuts guide we beginning you But could this NII Your the impact get guidance two NII range half second until provided? the

William Holland

Yes.

let's -- all sensitivity. So if million And just we've $XX our done And the a on I range. you're year, in earlier around cuts kind the as get rate mentioned call, of don't at two minus a lot neutral interest we or we positioned during that. of plus we're fairly say for work

in fits where a yields our more neutral outside material but bit mean those all It long-term a numbers, little -- could more range. We're pick up, position to but bit rates driver guidance. drive it isn't of little a or So our fairly material within benefit sensitive we a still not longer-term are there. material see I

Anthony Elian

do loan expect expect talk this to year? Or of you you you But sources that drive And growth X%, I Then loan growth just diversified mentioned guide my half? you growth can loan in areas and of growth. know portfolios back follow-up X% the is weighted? about specific continued on to your half first

John Ciulla

end one, Sure. seasonal it's the I of is generally into say, than kind us. back more for would number quarter slower fourth

And of for so year. remainder growth see I think would of off the that, you'd that the

we're you lot think time. we've when growth categories. across assuming our look at Obviously, I spent of a portfolio,

[ commercial target. concentration XXX We estate are X ] at quarters that ahead real now reduction. in our We're

seeing are more there. payoffs We

mortgage And So it's that it's in consumer businesses, in even business, replace well estate rolling our as grow the we regional and across slowly we banking C&I off. than our middle are have some national what's growth real have commercial across quarter-to-quarter, capacity market, commercial estate, across sponsor, it's potentially the more should and real business to categories. Otherwise, but on side.

Operator

of question from next comes from UBS. line Nick Holowko Your the

Nicholas Holowko

to in the $XX clear rate backdrop, $XX start the the spend there regulatory how how regulatory did change coming back to million million thinking run to become to front, meaningful you're expenses? and investment the expense that outlook about would more incremental about just in Maybe to it that be related if thinking were the going changes

John Ciulla

I'll great what the to question. the hard think answer I'd And over and Yes. say, of It's to a question. part then actually it turn Neal I

build of here, One we're doing fact there changes the road of some taking the as the consideration we elimination that if may requirements. into things our we out are be map

what you the as to analyst for risk technology on our to are we're as need on in And the or to would resiliency investor are is in all those side, side. the could and ending making so want may and an respect build investments us both of the to important us make, data what the on make the of 'XX doing out change and we're strength bank, to And an investments dynamics or back the or required continue clearly to be infrastructure [indiscernible] extent the we're which a side, chart invest. not we prioritization our with that the to

we're making franchise. kind deprioritize check these or regardless there, because our what the we're X-year of journey, pull and think for of they to perfunctory trying our the I they're add we back Category those So or don't more many then are. either investments be of strength requirements to that end we that think And are significant to of X the investments in value box us, able back may

to stuff you prepared Neal tell will like difficult, TLAC be like that's know regulatory to whether there. you a don't whether we'd nuanced, know are of things If changes what don't I on kind have very So of there. right? are obvious, savings. and TLAC dollars based But issue be I sort the give don't to able is other what savings It's would have we you

William Holland

else tied have said any I potential I Yes. I said, to or to think than could don't have different don't dollars better changes, have add. and so much rules we specific what don't think I John

Nicholas Holowko

in strategy-related to JV lending arena. Last be Is potential Perfect. And partnership how thinking had that with announced and back And incremental there to the that then it you're Marathon coming about to year, the question. another up maybe you get could running? in any is XXXX? growth now direct involved

John Ciulla

We a opening. loan income will economics get to mean loan as in any running, once advantage question. will able value us, or partnership up to but be active delayed to into Great We're and the our about be added to tell obviously be guess. and will to no our anticipate still that That's and Right. alive which for the excited still -- what that drive are good we We guidance. in XQ. from I best insight we're doesn't current growth, it, guidance. want investment you our bullish. But there it is meaningful economic balances

it's upside. potential So

Operator

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

Bernard Von Gizycki

color you incorporated any bank guide. color the you Just $XX noted contributions. large the costs is 'XX provide just contributions can color focus or million expense $XX investments to on related on the million on provide the the incremental on Could growing what how you're the on making? of much Appreciate in additional expenses. of the growth growth? other there John, Maybe Ametros. you initiatives Just any

William Holland

there. Yes. comments -- I'll take some provide

growth in and say, asked And and biggest expenses. But experience. in infrastructure our with some benefit lines to and then $XX to some talked areas taxes as prepare Category the our annual things of you say invest continuing types we the on we good invest year-over-year, of client We our investments our healthy have, expectations. I focus -- around areas continuing X. to continuing for investment million that support of our some growth. our those in for lines be would also really that preparation would payroll to And three future and Ametros really technology also strong I like infrastructure. X, business and Category merit So that We're have investing supporting about would such technology business

Bernard Von Gizycki

And the digital from 'XX? And for then Great. just the It Okay. maybe [ were some [indiscernible] you you're seems are deposits. some commentary in in What seasonal there. channels. XXXX I Was relationships on more like that just more noted. contributions the that leaning exchange growing then there ] expectations know on

deposits platform of that of cost Just any thoughts out? those on growth from kind play and how the

John Ciulla

Yes.

driven back estate -- going XXXX happens by that real activity was commercial was there activity. On and broadly the side, be ] ended to XXXX it whatever [ in is in

to good transaction some going place seeing more properties see going forth. to get buys and if naturally there, have start to activity, sells So relationships exchanging more and we and -- a back you're where you're and there's we so

business XXXX -- grow relative in to XXXX where So today. be should should it was

did anticipate channel on broadly and the 'XX say in and when we on set you really and deposit to or is at health XXXX, in did is the the across one that I'd what product lines The On of those and we care board, the growth investments commercial, in And offering made good. side, them. about good competitive. The well. we stay the each aside care to those be every that business across board look digital of we've better really working excited of we you can We're amount line pricing diversified we that a health is year. across ensure in we proposition side, what fair and consumer verticals just this pretty had solid the all and digital, on do what service going than

Operator

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

Benjamin Gerlinger

forward. it i.e., It $XX think XX.X% incremental don't here incremental sense. that's assuming just for the frontloaded? like outlook? I trying fair steady is guys. sounds in know 'XX state, 'XX [indiscernible] I rules on all kind rules to a this Or of and I'm like on to don't do change just kind of as X-year is is well a like said it [indiscernible] million guidance the you guidance are is $XX expenses million better upside the to gave to seems so change, reasonable, revenue. of pretty preparation Those the

William Holland

breaking got a think bit, up question. I your little You're I but

stand assumption our is today. the so based of as million to $XX rules And on they $XX million

-- in $XX to looking million when million are talked We $XX about we XXXX.

next As than through. [Audio a analyze that we'll But stair and in at end go see direction. as step year of we the more play build big -- we obviously, it as you either out, Gap] again fluctuations I

heard. of think I hopefully, count I versus your having question on being you step on fluctuations. correctly answered stair there of what based And could I more line kind So unusual current in any a plan

Benjamin Gerlinger

the synergies? that million bit else. $XX number? that, of think less do little there's it $XX year And of I other, Like a of a sense. is was Or one That on then kind to save but $XX with kind million if million million you $X could lot somewhere net point a than the you makes that know if that investments, any spend you could be

above? counting XX this or that XX-XX net be it would be -- the that net You're should the number of all we is

William Holland

I in in John asked, say you some, think, put synergies Yes. also And a net would it's mentioned, I there's buckets. number. you expenses different about these could

do for as of mentioned, us effective make check compliance box a regulatory believe, many John expenditures will may and of But needed organization. efficient these a item. them be more we the Some a

As we on our areas, have opportunities we'll capital to some go stack. deeper optimize capital

able be we to to increase and liquidity today. we'll continue side, As our level from liquidity invest the in even optimize

more data, technology infrastructure As should efficiencies we going forward. the we operating in invest get

better expenses And do a Category in and meet become needed at that a also make these as look the the X are run. will I requirements better us that So to bank bank. perform long

Operator

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

Daniel Tamayo

asked couple Most a of specific just maybe But been my ones. questions answered. and have of

beta of was just terms that. the on was the about way not First, projection And underlying XX% assumption in the XX%? that what's think could the for talked thinking getting cycle. back given But cycle. kind you're noninterest-bearing Correct on I improve maybe curious from it up? what the kind me of I'm on cut assumption that XX% talked if wrong higher, about maybe And of beta about what where you you've rate pre to deposit the

William Holland

the way Yes. Very, were on very above fair up. XX% question. We

our that out land? As at at environment place last the have guidance for seem we of mentioned, we a in way reasonable of to down. guide you that big margin envision DDA think sheet like our we that things as does very there mentioned, look normal where of out balances do the I for a mark the differently on than year, And point the there's that believe is the a has assumption the can lot deposit X% But margin As for XX% [indiscernible]. a in you question given neutral curve of. we a you year. had you a balances where the that this that think change. But we exactly by assumption Obviously, growth kind think you can guys I I end modest stabilize. has a kind to what and X% yield that the environment and accelerates, beat balance I We reasonable have ending to came future? compared the of DDA If decline kind hit I normalized XXXX reasonable of look

Daniel Tamayo

of forecast think we to about Okay. margin, around new I the the as kind appreciate year. longer then you term And that. talked XXX this XXX

margin you you making debt. You're ending can at of reasonable change. you things where to given a for margin normalized by year, larger, balance talked to kind I assumption you to the as point guys envision like for as look about adding sheet there's is lot But changes kind the sheet you the mean you balance the does seem of for end the get of future? Obviously, reasonable this of kind a a that yield that place that curve normal a the stabilize? and of think

William Holland

position around. statement things as margin midterm level a lot that do we've possible. is that, as that Yes. But organization your think our there Clearly, is variables of out can done a neutrally about And mentioned, of good believe can we having. move kind to we to all correct we we as

Operator

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

Jon Arfstrom

shoots talked green you there. you're what us there? stabilization of is little mentioned examples and confidence some about you touch mentioned you a give Can that I in your seeing you -- you over happening think and -- maybe worst Can bit office, some the

John Ciulla

Yes. restructuring more got still to natural loan. where I willing mentioned seeing we're so I in feel rightsize resolution seeing We're deals I we're credits. they're the borrowers the -- to what amendments to guess mean, and they've seeing definitely earlier, equity like building,

And behavior of us seeing nonaccruals give us say criticized pretty and down. they've borrower in payoffs the just come the of portfolio, look and And from what office refinancings so away I basically, terms a at indication. then if in some would and level classified you the of good just paydowns we're

of result, down charge-offs through these they've and unfortunately, come come as because They've time, some refinancings, right, down refinancing. a of restructures but over also

So absolute portfolio think of have it. that existing than we say that classified heightened working have of levels still portfolio change some at to we've not last to in and an beginning portfolio we've the behaviors. that's we kind the -- kind year. we're corner the we say seen say, But do kind the through that And the and of still of don't had, that office there and we in nonaccruals is stronger turned of now

Jon Arfstrom

or list administration X regulatory of leadership? on point Okay. wish from than That's Mark's that's the Follow-up new view first Good. question, helpful. the other one. there Category a Is on anything else regulatory your for

John Ciulla

think guess left, I love I see to tailored lot to say so on CEOs Yes. can't probably what tell We is a you a diatribe what only go with more have of nice there. would But actually few minutes would other I a the return consistent things that off on I a asset banks organizations, in. activities I probably you they that the commensurate everything, like cutoffs risk of with or And and at captures that size not based engage with philosophy come supervision. supervise is and a profile look which artificial

to now. keep the that I same and don't we're that line systemic we sudden, or $XX we're create risk think we and if system our So businesses all riskier. at same a we're more that same at I that our billion in any infrastructure activity of think billion $XXX our of base

a get of size So may but But some be artificial terrific. maybe overall, too I paradigm. think bridge take some That thresholds be just we'll more of time. some will think tailored would I that, far. asset it lifting supervisory And

Operator

to will I remarks. session. CEO, question-and-answer John our closing back the call turn now concludes that And Ciulla over for

John Ciulla

Thank you hope today. great us very a everyone, day. I for much, joining Thanks. have you

Operator

call. This you your participation. conference Thank concludes today's for

disconnect. You may now

Webster Financial (WBS) 17 Jan 252024 Q4 Earnings call transcript