[Management View]
Management reported broad-based growth in earnings, assets, and deposits compared to the prior quarter, while maintaining efficiency and capital strength. They highlighted a material inflection point in asset quality, with criticized commercial loans and non-accruals both declining. Executives anticipate significant long-term deposit growth from HSA Bank due to legislative changes, with the majority of the expanded opportunity tied to newly eligible bronze ACA plan participants. The company confirmed its Marathon joint venture is set to bolster balance sheet flexibility and future fee income, with fee income expected to begin ramping in 2026, positioning Webster to pursue larger loan deals and grow capital markets revenue streams.

[Outlook]
The outlook remains for full-year 2025 NII of $2.47 billion to $2.5 billion, and NIM (Net Interest Margin) is expected to moderate toward a 3.35%-3.40% range as year-end approaches. Management described continued investments in technology, business development, and risk management as part of preparations for growth toward the $100 billion asset threshold. Executives do not anticipate material expense changes in HSA Bank operations from expanded direct-to-consumer outreach, with incremental marketing spend expected but no substantial change in expense trajectory.

[Financial Performance]
Webster reported a return on tangible common equity of 18% for Q2 2025, with revenue growth of 1.6% compared to the prior quarter. EPS increased to $1.52 from $1.30 in Q1 2025. The efficiency ratio was maintained at 45.4%, and tangible book value per share rose to $35.13, up over 3% from the prior quarter. The CET1 ratio increased, with a target of 11% for the remainder of 2025. Net charge-off ratio was 27 basis points, within the long-term normalized range.

[Q&A Highlights]
Question 1: Just given the current environment and outlook for potential deregulation, what is your willingness to reduce CET1? And then just overall thoughts on near-term pace of the buyback? (Line breaks here)
Answer: Management stated their medium-term and short-term goal is 11% CET1, with potential to reduce to 10.5% as markets stabilize. They emphasized a disciplined approach to capital management, prioritizing balance sheet growth and potential tuck-in acquisitions, with share buybacks as a secondary option.

Question 2: Question on the NIM outlook. The cash build, are you guys good with where the cash balances are today? And then also, I think you guys talked about a long-term debt issue coming in the second half of the year. Just wondering how that's going to impact? (Line breaks here)
Answer: Management is comfortable with current cash levels, expecting a minor impact on NIM. A new debt issuance in the second half will have a one basis point impact on NIM.

Question 3: Just to follow-up, John, unrelated. If the category four threshold gets lifted, how important does bank M&A become for Webster? And if so, you know, what would you be sort of looking for in potential targets? (Line breaks here)
Answer: Management is focused on organic growth and tuck-in acquisitions, not prioritizing whole bank M&A. They are attuned to regulatory changes but emphasize strategic growth in healthcare services and deposit profiles.

Question 4: On the HSA news, does that require you to make any investments in new delivery channels or new outreach channels to capture that additional pool? (Line breaks here)
Answer: No material change in expense trajectory is expected. Webster already operates a significant direct-to-consumer channel, with some marketing spend anticipated for consumer education.

Question 5: On the allowance and provision, how should we think about the allowance build from here and the provision? (Line breaks here)
Answer: The CECL program is tied to risk rating migration and loan growth. Management is comfortable with current coverage ratios, with growth driven by balance sheet expansion and credit performance.

Question 6: C&I originations picked up quite a bit this quarter. How much of that feels sustainable, and how are spreads holding up there? (Line breaks here)
Answer: Management sees sustainable loan growth across categories, with building pipelines in C&I and CRE. They anticipate strong loan growth in the second half of 2025.

Question 7: How much of a valuation impact do you think there could be to the heavier rent-regulated buildings? (Line breaks here)
Answer: Management does not anticipate material impact from potential regulatory changes, citing seasoned portfolios with strong credit profiles.

Question 8: Should we expect the metrics you highlight on Slide 13 to improve further in the coming quarters? (Line breaks here)
Answer: Management is cautious in predicting credit performance but sees stabilization in risk rating migration and no new pockets of problems.

Question 9: Is there any further benefit to recovery of interest income in the NII forecast as other nonaccruals work down over time? (Line breaks here)
Answer: Management anticipates nonperformers to trend down, with potential positive impact on NII, but no material impact is expected in forecasts.

Question 10: Noninterest-bearing deposits saw a nice uptick. Any thoughts on potential growth in the second half? (Line breaks here)
Answer: Management believes they have reached the bottom of the decline in DDA accounts, expecting mild growth in the second half of the year.

Question 11: On HSA, most of the benefit is coming from the bronze HSA plan participants. How big were the other provisions? (Line breaks here)
Answer: The bronze plan participants are the primary driver of deposit growth, with other provisions contributing minimally.

Question 12: Curious on the sponsor side, if you're seeing any changes in demand there? (Line breaks here)
Answer: Management sees improved pipeline activity in sponsor finance, expecting better growth trajectory in the second half of the year.

Question 13: Thoughts on the movement of brokered deposits in the third quarter? (Line breaks here)
Answer: Brokered deposits are managed within a 3-5% range, with seasonal fluctuations expected but stable long-term contribution.

Question 14: To what extent does loan growth come from looking at larger deals? (Line breaks here)
Answer: The joint venture with Marathon allows participation in larger transactions without increasing on-balance-sheet hold sizes, enhancing competitive offerings.

Question 15: Can you talk to some of the competitive landscapes around the deposit side? (Line breaks here)
Answer: Management expects NIM to moderate to 3.35-3.40% by year-end, with competitive deposit environment and high-quality loan originations impacting spread compression.

Question 16: With the larger loan size, do you think it's maybe a little bit bigger company? (Line breaks here)
Answer: The joint venture will provide recurring fee income and greater origination activity, with larger transactions offering capital markets and treasury management opportunities.

Question 17: Do you have the kind of back office or banking opportunities for legacy marathon relationships now? (Line breaks here)
Answer: Management sees potential for future collaboration with Marathon but no current plans for banking services for their borrowers.

Question 18: What was your share buyback price on the 1 million shares in the quarter? (Line breaks here)
Answer: Share repurchases were at $51.69.

Question 19: Anything on the $185 million of maturities that we should be thinking about? (Line breaks here)
Answer: No significant concerns, considered normal course.

[Sentiment Analysis]
Analysts and management maintained a positive tone throughout the call, emphasizing strategic growth opportunities and asset quality improvements. Management expressed confidence in their ability to navigate regulatory changes and competitive pressures, while analysts focused on the sustainability of growth and potential impacts of legislative changes.

[Quarterly Comparison]
| Metric | Q2 2025 | Q1 2025 |
|--------|---------|---------|
| EPS | $1.52 | $1.30 |
| Revenue Growth | 1.6% | - |
| Efficiency Ratio | 45.4% | - |
| Tangible Book Value per Share | $35.13 | $33.97 |
| CET1 Ratio | Increased | - |
| Net Charge-Off Ratio | 27 basis points | - |

[Risks and Concerns]
Management does not anticipate new pockets of credit deterioration across industries or sectors. They remain vigilant to potential effects from proposed tariffs but do not have disproportionate exposure to impacted industries. The rent-regulated multifamily portfolio is well-seasoned, with strong credit profiles, mitigating potential valuation impacts from regulatory changes.

[Final Takeaway]
Webster's Q2 2025 earnings call highlighted strategic growth and asset quality improvements, with management confident in their ability to navigate regulatory changes and competitive pressures. The company is well-positioned for long-term growth, leveraging legislative changes to expand HSA Bank deposits and the Marathon joint venture to enhance loan origination capabilities. Analysts and management maintained a positive tone, focusing on sustainability of growth and potential impacts of legislative changes. Webster's proactive approach to credit risk management and strategic investments in technology and business development position the company to capitalize on emerging opportunities and strengthen its competitive position in the banking industry.