Webster Financial delivered a solid Q3 2024 performance, marked by tangible improvement in net interest income (NII) and a resilient balance sheet, supported by diversified low-cost funding and proactive balance sheet optimization. GAAP net income totaled $193.0 million, or $1.10 per share, with adjusted earnings of $1.34 per share. Revenue reached $1.0618 billion, up 3.98% year over year and 4.24% quarter over quarter, while gross margin declined year over year due to mix but rebounded QoQ, signaling ongoing earnings quality amid a rate environment that remains uncertain for banks.
Key drivers in the quarter included: (1) disciplined deposit growth of $2.2 billion (driven by DDA, Commercial deposits, and a $400 million HAS Bank deposit opportunity), (2) loan growth of 0.7% quarter over quarter (1.3% excluding CRE securitization) with accelerating C&I activity and ongoing CRE optimization, and (3) a net interest margin (NIM) of 3.36%—up 4 bp sequentially despite asset sensitivity management—supported by a favorable mix shift and securities reinvestment actions. Management underscored capital strength (CET1 at 11.23%), a high-quality liquidity position, and a continued focus on cost discipline (efficiency ratio of 45%). Looking forward, Webster guided for 4Q24 NII in a range of $590–$600 million (non-FTE), with ~50 bp of rate cuts baked in, and outlined an outlook for modest loan growth in 1Q25 and into 2025, while signaling a potential return of capital through share repurchases as earnings power and capital flexibility allow.
Overall, Webster appears well-positioned to navigate a lower-for-longer rate backdrop with a diversified funding base, a controlled CRE exposure trajectory, and a capital blueprint that supports share holder value through potential buybacks and selective growth investments.