Release Date: January 17, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: With the Treasury Secretary nominee potentially easing regulations, would Webster consider acquiring smaller banks if the Category 4 threshold is raised? A: John Ciulla, CEO, stated that while Webster is currently focused on organic growth, a change in the regulatory paradigm could make inorganic growth more feasible. However, this is not part of their 2025 plan, and they are taking a conservative view on how quickly regulatory changes might occur.
Q: Can you provide details on the $53 million increase in C&I non-performing loans (NPLs) this quarter? A: John Ciulla, CEO, explained that the increase was due to three or four credits, including some office-related loans. The overall credit perspective shows moderated risk rating migration, with most issues stemming from office and healthcare services portfolios.
Q: How should we think about the margin trajectory, especially with the securities repositioning? A: Neal Holland, CFO, indicated that the net interest margin (NIM) for 2025 is expected to be in the range of 3.35% to 3.40%, slightly higher than previously anticipated due to positive movements in Q4 and a steeper yield curve. The securities repositioning had a minimal impact in Q4 but is expected to add $18 million to net interest income in 2025.
Q: What are the expectations for deposit costs and betas in 2025? A: Neal Holland, CFO, noted that deposit costs were at 2.2% in Q4 and decreased to 2.13% in December. The expectation is for continued decline in Q1, with a terminal beta of approximately 30% for the cycle, assuming two Fed rate cuts.
Q: Regarding the office portfolio, what contributed to the sharp drop in office exposure this quarter? A: John Ciulla, CEO, clarified that the reduction in office exposure was due to natural payoffs and paydowns, not loan sales or charge-offs. Office-related charge-offs were around $15 million, with healthcare services contributing approximately $20 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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