Webster Financial Corporation

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 emlyn harman to introduce the call mr harman please go ahead 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 reformat 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. 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 the call over to Webster Financial CEO, John Ciulo.

Thanks, Emlyn. Good morning and welcome to Webster Financial Corporation's fourth quarter 2024 earnings call. We appreciate you joining us this morning. I'll provide some high level remarks on our performance, after which our CFO, Neil Holland, will cover the financials in more detail. Our president and chief operating officer, Luis Massiani, is also joining us for the Q&A portion of the call today. The company again realized the number of strategic achievements in 2024 as we continue to deliver for our clients and position the bank for the future. We took a number of steps to improve our balance sheet, including optimizing asset risk weightings for regulatory capital ratios, reducing our concentration of commercial real estate assets, and improving the yield profile on our securities portfolio. In addition to deposit growth, we continue to add off-balance sheet funding capacity, further enhancing our liquidity profile. The acquisition of Amitros early in the year added a new source of low-cost, long-duration deposits with a fantastic growth opportunity. Through our integration work in 2024, we have developed an even greater appreciation for the growth potential of the business. We're introducing banking products to Amitros' client base, increasing industry adoption of settlement administration, and exploring alternate markets for Amitros' products and services. These strategic accomplishments establish a solid foundation for Webster's future, particularly as we grow toward a heightened regulatory paradigm and prepare to operate in a higher-for-longer interest rate environment. From a financial perspective, we grew both loans and deposits amidst a challenging year for the banking industry on both fronts. Loan growth was driven by our C&I and residential mortgage, setting Webster up for balanced loan growth into the future. Our full-year financial results continue to be among the best of our like-sized peers, including an adjusted return on tangible common equity of 17.5%, adjusted return on assets of 1.23%, and an efficiency ratio of 45%. Turning to slide three, we ended the fourth quarter on a solid trajectory, with an adjusted return on tangible common equity of 17.7%, adjusted return on assets of 1.27%, and an efficiency ratio just below 45%. Loans and deposits continued to grow, our net interest margin expanded, and we had some unique non-interest income opportunities in the quarter. On slide four, we continue to be very proud of the differentiated funding profile we have built at Webster, and it continued to be a focus for us in 2024. On a year-over-year basis, we grew deposits in each of our differentiated business lines. Our loan-to-deposit ratio of just over 80% provides us with another element of flexibility as we move into 2025 and beyond. As previously noted, we added Amitros, which has grown its deposit balances to just over $1 billion, from $800 million at the time of acquisition. We continue to be excited about the potential of this rapidly expanding business. HSA Bank grew its deposits by $800 million in the year, in part attributed to the launch of the HSA Invest platform, which helps ensure seamless access between an HSA account holder and their investments. We've seen an accelerating deposit growth in consumer through our digital channels as we've enhanced digital account opening capabilities in our branch network and private client segment. In the commercial bank, deposit growth benefited from the expansion of our 1031 exchange business and emphasis of bilateral relationships with our commercial real estate and middle market clients. We continue to grow our client base at Interlink, ensuring access to core FDIC-insured funding and enhancing deposit availability to our partner depository institutions. Overall, a lot of good developments on the funding front, which will continue to be a focus of ours. as we move forward. Moving to slide five, we continue to provide metrics on the CREE portfolio with a focus on office. Exposure to office is down materially again this quarter to less than $825 million, and metrics on the remaining portfolio have improved. Outside of office and healthcare services, we are not seeing any other pockets of correlated weakness. On overall credit, despite a higher level of charge-offs in the quarter, we see underlying credit migration trends moderating and still believe we are looking at a mid-2025 inflection point on overall credit metrics. In the quarter, net charge-off totaled just over $60 million, with 60% of those charges coming from traditional office-related or healthcare services credits, the two portfolios we have been talking about over the past year. We still believe a normalized annualized charge-off rate is 25 to 30 basis points, with some volatility quarter-to-quarter given the commercial bias of our portfolio. 2024 overall net charge-offs approximated 30 basis points, the high end of that range. With that, I'll turn it over to Neil to provide some additional detail on our solid financial performance in the quarter.