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Webster Financial's Q1 Earnings Beat Estimates on Higher NII
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Key Takeaways
Webster Financial reported Q1 EPS of $1.57, beating estimates and rising from $1.30 a year ago.
WBS saw NII grow 3.6% and non-interest income rise 9.6%, while total revenues missed estimates.
Webster Financial's Santander deal shifts focus, with closing expected in H2'26 and no outlook given.
Webster Financial Corporation (WBS - Free Report) posted adjusted earnings per share (EPS) of $1.57 for the first quarter of 2026, beating the Zacks Consensus Estimate of $1.53. Also, the reported figure compared favorably with the EPS of $1.30 reported a year ago.
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 was a headwind.
Results excluded transaction expenses, restructuring costs and a benefit related to the FDIC special assessment. After considering these, net income applicable to common shareholders (GAAP basis) was $239.3 million, up 8.6% from the prior-year quarter.
WBS’ Revenues & Expenses Increase Y/Y
Total revenues came in at $735.9 million, missing the consensus mark by 0.5%. The metric rose 4.4% year over year.
NII increased 3.6% year over year to $634.4 million. The net interest margin was 3.36%, down 12 basis points.
Non-interest income was $101.5 million, up 9.6% from the year-ago quarter’s reported figure of $92.6 million. The increase was primarily driven by increased client hedging activities, the change in the credit valuation adjustment, increased revenues from Ametros, higher deposit service fees, and the acquisition of SecureSave, partially offset by lower loan prepayment and syndication fees.
Non-interest expenses were $379.1 million, up 10.3% from the year-ago quarter. In the first quarter of 2026, the figure included $9.1 million in transaction expenses, $3.6 million in strategic restructuring costs and a $0.7-million benefit related to the FDIC special assessment. Excluding these items, total non-interest expenses increased $23.5 million. The rise was primarily driven by higher compensation and benefits costs.
The efficiency ratio was 46.83% compared with 45.79% in the prior-year quarter. An increase in the efficiency ratio indicates a decline in profitability.
WBS's Balance Sheet Expands, Funding Mix Shifts
Period-end loans and leases grew to $57.2 billion, up 1.2% from the prior quarter, with increases across commercial, commercial real estate and consumer categories. Total deposits inch up to $69 billion from $68.8 billion in the prior quarter, supported by growth in core deposits as a share of total funding.
The loan-to-deposit ratio was 82.9%, slightly higher than the prior quarter’s 82.3%, as loan growth outpaced deposit inflows. Total borrowings increased to $5.6 billion from $4.3 billion at the end of 2025, reflecting a somewhat greater reliance on wholesale funding.
Webster Financial’s Credit Quality Mixed Bag
Total non-performing assets were $524.4 million as of March 31, 2026, down 7.1% from the year-ago quarter. Allowance for loan losses was 1.28% of the total loans, which decreased from 1.34% reported in the first quarter of 2025.
The ratio of net charge-offs to annualized average loans was 0.29%, down from 0.42% in the year-ago period.
The provision for credit losses was $54 million, down 30.3% year over year.
WBS’ Capital Ratios: Mixed Bag
As of March 31, 2026, the Tier 1 risk-based capital ratio was 11.91%, which increased from 11.76% as of March 31, 2025. The total risk-based capital ratio was 13.89%, down from the prior-year quarter’s 13.96%.
Webster Financial’s Profitability Ratios Improve
Return on average assets was 1.16%, up from 1.15% in the prior-year quarter. At the end of the first quarter, the return on average common stockholders' equity was 10.35%, which rose from 9.94% in the prior-year quarter.
WBS's Santander Deal Becomes Key Strategic Focus
Webster Financial entered into a transaction agreement under which Banco Santander is set to acquire the company in a cash-and-stock deal. The deal is expected to close in the second half of 2026.
In light of the proposed transaction, management said Webster will no longer provide a forward-looking financial outlook. The company is focused on integration planning, noting that the combination is expected to enhance its ability to support clients and communities while opening additional growth opportunities.
Our Take on Webster
Webster’s proposed sale to Banco Santander shifts the near-term narrative from standalone execution to deal progression. Still, the first-quarter results showed the core franchise is holding up well, with NII rising year over year and non-interest income benefiting from items like stronger client hedging activity. Expense growth, led by compensation and benefits, remains an area to watch as it can limit operating leverage, while credit costs and non-performing loans warrant close monitoring given the quarter’s provision level and asset quality mix.
Webster Financial Corporation Price, Consensus and EPS Surprise
Hancock Whitney Corp.’s (HWC - Free Report) first-quarter 2026 adjusted EPS of $1.52 beat the Zacks Consensus Estimate of $1.48. Further, the bottom line rose 10.1% from the prior-year quarter.
HWC’s results were supported by higher NII and modest loan growth. However, the quarter was significantly impacted by a securities portfolio restructuring loss. Deposits also declined modestly. Higher expenses and increased provisions acted as other headwinds.
WaFd, Inc.’s (WAFD - Free Report) second-quarter fiscal 2026 (ended March 31) adjusted earnings of 83 cents per share beat the Zacks Consensus Estimate of 74 cents. The bottom line also jumped 27.7% year over year.
WAFD’s results reflected higher NII and non-interest income. However, elevated expenses and provisions were the undermining factors. A decline in loans and deposits was another headwind.
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Webster Financial's Q1 Earnings Beat Estimates on Higher NII
Key Takeaways
Webster Financial Corporation (WBS - Free Report) posted adjusted earnings per share (EPS) of $1.57 for the first quarter of 2026, beating the Zacks Consensus Estimate of $1.53. Also, the reported figure compared favorably with the EPS of $1.30 reported a year ago.
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 was a headwind.
Results excluded transaction expenses, restructuring costs and a benefit related to the FDIC special assessment. After considering these, net income applicable to common shareholders (GAAP basis) was $239.3 million, up 8.6% from the prior-year quarter.
WBS’ Revenues & Expenses Increase Y/Y
Total revenues came in at $735.9 million, missing the consensus mark by 0.5%. The metric rose 4.4% year over year.
NII increased 3.6% year over year to $634.4 million. The net interest margin was 3.36%, down 12 basis points.
Non-interest income was $101.5 million, up 9.6% from the year-ago quarter’s reported figure of $92.6 million. The increase was primarily driven by increased client hedging activities, the change in the credit valuation adjustment, increased revenues from Ametros, higher deposit service fees, and the acquisition of SecureSave, partially offset by lower loan prepayment and syndication fees.
Non-interest expenses were $379.1 million, up 10.3% from the year-ago quarter. In the first quarter of 2026, the figure included $9.1 million in transaction expenses, $3.6 million in strategic restructuring costs and a $0.7-million benefit related to the FDIC special assessment. Excluding these items, total non-interest expenses increased $23.5 million. The rise was primarily driven by higher compensation and benefits costs.
The efficiency ratio was 46.83% compared with 45.79% in the prior-year quarter. An increase in the efficiency ratio indicates a decline in profitability.
WBS's Balance Sheet Expands, Funding Mix Shifts
Period-end loans and leases grew to $57.2 billion, up 1.2% from the prior quarter, with increases across commercial, commercial real estate and consumer categories. Total deposits inch up to $69 billion from $68.8 billion in the prior quarter, supported by growth in core deposits as a share of total funding.
The loan-to-deposit ratio was 82.9%, slightly higher than the prior quarter’s 82.3%, as loan growth outpaced deposit inflows. Total borrowings increased to $5.6 billion from $4.3 billion at the end of 2025, reflecting a somewhat greater reliance on wholesale funding.
Webster Financial’s Credit Quality Mixed Bag
Total non-performing assets were $524.4 million as of March 31, 2026, down 7.1% from the year-ago quarter. Allowance for loan losses was 1.28% of the total loans, which decreased from 1.34% reported in the first quarter of 2025.
The ratio of net charge-offs to annualized average loans was 0.29%, down from 0.42% in the year-ago period.
The provision for credit losses was $54 million, down 30.3% year over year.
WBS’ Capital Ratios: Mixed Bag
As of March 31, 2026, the Tier 1 risk-based capital ratio was 11.91%, which increased from 11.76% as of March 31, 2025. The total risk-based capital ratio was 13.89%, down from the prior-year quarter’s 13.96%.
Webster Financial’s Profitability Ratios Improve
Return on average assets was 1.16%, up from 1.15% in the prior-year quarter. At the end of the first quarter, the return on average common stockholders' equity was 10.35%, which rose from 9.94% in the prior-year quarter.
WBS's Santander Deal Becomes Key Strategic Focus
Webster Financial entered into a transaction agreement under which Banco Santander is set to acquire the company in a cash-and-stock deal. The deal is expected to close in the second half of 2026.
In light of the proposed transaction, management said Webster will no longer provide a forward-looking financial outlook. The company is focused on integration planning, noting that the combination is expected to enhance its ability to support clients and communities while opening additional growth opportunities.
Our Take on Webster
Webster’s proposed sale to Banco Santander shifts the near-term narrative from standalone execution to deal progression. Still, the first-quarter results showed the core franchise is holding up well, with NII rising year over year and non-interest income benefiting from items like stronger client hedging activity. Expense growth, led by compensation and benefits, remains an area to watch as it can limit operating leverage, while credit costs and non-performing loans warrant close monitoring given the quarter’s provision level and asset quality mix.
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.
Performance of Other Bank Stocks
Hancock Whitney Corp.’s (HWC - Free Report) first-quarter 2026 adjusted EPS of $1.52 beat the Zacks Consensus Estimate of $1.48. Further, the bottom line rose 10.1% from the prior-year quarter.
HWC’s results were supported by higher NII and modest loan growth. However, the quarter was significantly impacted by a securities portfolio restructuring loss. Deposits also declined modestly. Higher expenses and increased provisions acted as other headwinds.
WaFd, Inc.’s (WAFD - Free Report) second-quarter fiscal 2026 (ended March 31) adjusted earnings of 83 cents per share beat the Zacks Consensus Estimate of 74 cents. The bottom line also jumped 27.7% year over year.
WAFD’s results reflected higher NII and non-interest income. However, elevated expenses and provisions were the undermining factors. A decline in loans and deposits was another headwind.