WBS - Webster Financial Corporation (WBS) Q1 2024 Earnings Call Transcript

2024-04-23 14:56:03 ET

Webster Financial Corporation (WBS)

Q1 2024 Earnings Conference Call

April 23, 2024 09:00 AM ET

Company Participants

Emlen Harmon - Director of IR

John Ciulla - CEO

Glenn MacInnes - CFO

Conference Call Participants

Matt Breese - Stephens

Chris McGratty - KBW

Mark Fitzgibbon - Piper Sandler

Steven Alexopoulos - JP Morgan

Casey Haire - Jefferies

Jared Shaw - Barclays.

Manan Gosalia - Morgan Stanley

Daniel Tamayo - Raymond James

Bernard von-Gizycki - Deutsche Bank

Laurie Hunsicker - Seaport Research Partners

Presentation

Operator

Good morning, and welcome to the Webster Financial First Quarter 2024 Earnings Call. Please note, this event is being recorded. I’d now like to introduce Webster's Director of Investor Relations, Emlen Harmon to introduce the call. Mr. Harmon, please go ahead.

Emlen Harmon

Good morning. Before we begin our remarks, I want to remind you that the comments made by management may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to the Safe Harbor rules. Please review the forward-looking disclaimer and Safe Harbor language in today's press release and presentation for more information about risks and uncertainties, which may affect us. The presentation accompanying management's remarks can be found on the company's Investor Relations site at investors.websterbank.com. For the Q&A portion of the call, we ask that each participant ask just one question and one follow-up before returning to the queue.

I'll now turn it over to Webster Financial CEO and Chairman, John Ciulla.

John Ciulla

Thanks, Emlen. Good morning and welcome to Webster Financial Corporation's First Quarter 2024 Earnings Call. We appreciate you joining us this morning. I will provide remarks on our high level results and operations before turning it over to Glenn to cover our financial results in greater detail. We're off to a solid start this year, having achieved a number of significant accomplishments, both strategically and financially. I first want to provide some color around initiatives that solidify Webster's commitment to our clients, communities and colleagues, as these have been and continue to be core to our company values.

In the fourth quarter, Webster launched the You're Home program, a special purpose credit program offering down payment assistance and flexible credit requirements to help expand homeownership opportunities for low to moderate income first-time homebuyers. The You're Home program is the most recent component of our broad-community investment strategy, a multi-year commitment to expanding access to capital, providing loans, investments, technical assistance and financial services to individuals and small businesses in LMI neighborhoods.

We are also launching four new finance labs in the coming weeks, in partnership with local non-profits, the Webster Finance Labs Initiative, provides technology and programming to create financial empowerment opportunities for young people. By the end of this year, we will have deployed over $1.7 million into nine labs under this initiative. Our colleagues share this commitment to service last year, the Webster volunteers gave nearly 17,000 hours of their time to nearly 500 community organizations across our footprint. These are just a few examples of how Webster and our colleagues demonstrate our commitment to our values and our communities.

Turning to our financial performance on Slide 2. On an adjusted basis for the quarter, we generated a return on average assets of 1.26% and a return on tangible common equity of 17.9%. Our adjusted EPS was $1.35. We’re pleased to grow client deposits by $1.8 billion and use those funds to redeem brokered deposits. Amidst, a challenging growth environment for the industry, we grew loans at 0.7% or 1.2%, when adjusting for the transfer of $240 million of loans to held-for-sale. Our $1.6 billion in funded loan originations this quarter were driven by high-quality C&I, CRE categories including fund banking and public sector finance, and CRE in property types with solid operating dynamics.

Our efficiency ratio was 45% in-line with the low to mid 40s range, we expect to operate in for the year. Our interest income performance was softer than originally anticipated as a number of factors led to lower than expected loan yields, and we saw our deposits continue to reprice higher, albeit at a moderated rate. Despite these dynamics, we still anticipate that NII for the full-year, will be in the lower range of the guidance we provided in January, assuming loan demand and credit quality of that loan demand cooperate....

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