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WBS posted Q2 EPS of $1.52, beating estimates and rising from $1.26 a year earlier.
Revenues rose 16.5% to $715.8M, with NII up 8.5% and non-interest income more than doubling.
Loans rose 1.2% and deposits grew 1% sequentially, while the efficiency ratio and capital levels improved.
Webster Financial (WBS - Free Report) reported second-quarter 2025 earnings per share (EPS) of $1.52, which beat the Zacks Consensus Estimate of $1.41. Also, the reported figure compared favorably with the EPS of $1.26 reported a year ago.
Following the better-than-expected results, the company’s shares rose 2.8% during yesterday’s trading session.
Results benefited from a rise in net interest income (NII) and non-interest income. Higher loan and deposit balances and a decline in provision were encouraging too. However, an increase in non-interest expenses acted as a spoilsport.
Net income applicable to common shareholders (GAAP basis) was $251.7 million, up 43.4% from the prior-year quarter.
WBS’ total revenues in the quarter increased 16.5% year over year to $715.8 million. The top line surpassed the Zacks Consensus Estimate by 0.6%.
NII increased 8.5% year over year to $621.2 million. The net interest margin was 3.44%, up five basis points (bps).
Non-interest income was $94.7 million, significantly up from the year-ago quarter reported figure of $42.3 million. In the second quarter of 2024, total non-interest income included losses on the sale of investment securities of $49.9 million. Excluding this item, total non-interest income increased $2.5 million.
Non-interest expenses were $345.7 million, up 6% from the year-ago quarter. The increase was primarily driven by investments in risk management infrastructure and a rise in compensation and benefits expenses.
The efficiency ratio was 45.40% compared with 46.22% in the prior-year quarter. A decline in the efficiency ratio indicates a rise in profitability.
WBS’ Loans & Deposit Balance Rise Sequentially
As of June 30, 2025, total loans and leases increased 1.2% on a sequential basis to $53.7 billion. Further, total deposits increased 1% from the prior quarter to $66.3 billion.
Webster Financial’s Credit Quality Mixed Bag
Total non-performing assets were $537.1 million as of June 30, 2025, up 43.3% from the year-ago quarter. Allowance for loan losses was 1.35% of the total loans, which increased from 1.30% in the second quarter of 2024.
The ratio of net charge-offs to annualized average loans was 0.27%, up from 0.26% in the year-ago period.
The provision for credit losses was $46.5 million, down 21.2% year over year.
WBS’ Capital Ratios Improve
As of June 30, 2025, the Tier 1 risk-based capital ratio was 11.84%, which increased from 11.00% as of June 30, 2024. The total risk-based capital ratio was 14.03%, up from the prior-year quarter’s 13.28%.
Webster Financial’s Profitability Ratios Improve
Return on average assets was 1.29%, up from 0.96% in the prior-year quarter. At the end of the second quarter, the return on average common stockholders' equity was 11.31%, which rose from 8.40% in the prior-year quarter.
Our Viewpoint on WBS
Rising NII and non-interest income will boost Webster Financial's top line. Strategic buyouts in the past have fortified its balance sheet, while deposit and loan growth will continue aiding its financials. However, elevated expenses remain a near-term concern.
Webster Financial Corporation Price, Consensus and EPS Surprise
Bank of Hawaii (BOH - Free Report) is scheduled to announce second-quarter 2025 numbers on July 28.
Over the past seven days, the Zacks Consensus Estimate for BOH’s quarterly earnings has been unchanged at $1.04 per share. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Performance of Other Bank Stock
Hancock Whitney Corp.’s (HWC - Free Report) second-quarter 2025 adjusted earnings per share of $1.37 exceeded the Zacks Consensus Estimate of $1.34. Further, the bottom line rose 4.6% from the prior year quarter.
HWC’s results benefited from an increase in non-interest income and NII. Also, higher loans were another positive. However, increased adjusted expenses and provisions, alongside lower deposit balances, were headwinds.
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Webster Financial Tops Q2 Earnings on Higher Fee Income, Stock Gains
Key Takeaways
Webster Financial (WBS - Free Report) reported second-quarter 2025 earnings per share (EPS) of $1.52, which beat the Zacks Consensus Estimate of $1.41. Also, the reported figure compared favorably with the EPS of $1.26 reported a year ago.
Following the better-than-expected results, the company’s shares rose 2.8% during yesterday’s trading session.
Results benefited from a rise in net interest income (NII) and non-interest income. Higher loan and deposit balances and a decline in provision were encouraging too. However, an increase in non-interest expenses acted as a spoilsport.
Net income applicable to common shareholders (GAAP basis) was $251.7 million, up 43.4% from the prior-year quarter.
Webster Financial’s Revenues & Expenses Increase Y/Y
WBS’ total revenues in the quarter increased 16.5% year over year to $715.8 million. The top line surpassed the Zacks Consensus Estimate by 0.6%.
NII increased 8.5% year over year to $621.2 million. The net interest margin was 3.44%, up five basis points (bps).
Non-interest income was $94.7 million, significantly up from the year-ago quarter reported figure of $42.3 million. In the second quarter of 2024, total non-interest income included losses on the sale of investment securities of $49.9 million. Excluding this item, total non-interest income increased $2.5 million.
Non-interest expenses were $345.7 million, up 6% from the year-ago quarter. The increase was primarily driven by investments in risk management infrastructure and a rise in compensation and benefits expenses.
The efficiency ratio was 45.40% compared with 46.22% in the prior-year quarter. A decline in the efficiency ratio indicates a rise in profitability.
WBS’ Loans & Deposit Balance Rise Sequentially
As of June 30, 2025, total loans and leases increased 1.2% on a sequential basis to $53.7 billion. Further, total deposits increased 1% from the prior quarter to $66.3 billion.
Webster Financial’s Credit Quality Mixed Bag
Total non-performing assets were $537.1 million as of June 30, 2025, up 43.3% from the year-ago quarter. Allowance for loan losses was 1.35% of the total loans, which increased from 1.30% in the second quarter of 2024.
The ratio of net charge-offs to annualized average loans was 0.27%, up from 0.26% in the year-ago period.
The provision for credit losses was $46.5 million, down 21.2% year over year.
WBS’ Capital Ratios Improve
As of June 30, 2025, the Tier 1 risk-based capital ratio was 11.84%, which increased from 11.00% as of June 30, 2024. The total risk-based capital ratio was 14.03%, up from the prior-year quarter’s 13.28%.
Webster Financial’s Profitability Ratios Improve
Return on average assets was 1.29%, up from 0.96% in the prior-year quarter. At the end of the second quarter, the return on average common stockholders' equity was 11.31%, which rose from 8.40% in the prior-year quarter.
Our Viewpoint on WBS
Rising NII and non-interest income will boost Webster Financial's top line. Strategic buyouts in the past have fortified its balance sheet, while deposit and loan growth will continue aiding its financials. However, elevated expenses remain a near-term concern.
Webster Financial Corporation Price, Consensus and EPS Surprise
Webster Financial Corporation price-consensus-eps-surprise-chart | Webster Financial Corporation Quote
Webster Financial currently carries a Zacks Rank 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
An Upcoming Bank Release
Bank of Hawaii (BOH - Free Report) is scheduled to announce second-quarter 2025 numbers on July 28.
Over the past seven days, the Zacks Consensus Estimate for BOH’s quarterly earnings has been unchanged at $1.04 per share. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Performance of Other Bank Stock
Hancock Whitney Corp.’s (HWC - Free Report) second-quarter 2025 adjusted earnings per share of $1.37 exceeded the Zacks Consensus Estimate of $1.34. Further, the bottom line rose 4.6% from the prior year quarter.
HWC’s results benefited from an increase in non-interest income and NII. Also, higher loans were another positive. However, increased adjusted expenses and provisions, alongside lower deposit balances, were headwinds.