We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Shares of Webster Financial (WBS - Free Report) gained 3.4% after it delivered a positive earnings surprise of 2% in second-quarter 2019. Earnings per share of $1.05 surpassed the Zacks Consensus Estimate of $1.03. Also, the bottom line increased 22.1% from the prior-year quarter.
Results reflect growth in revenues, with support from higher loans and improving interest margin. Further, fee income showed considerable improvement. Also, the company’s strong capital position was a tailwind. However, higher expenses and provisions were headwinds.
The company reported earnings applicable to common shareholders of $96.2 million, up from $79.5 million in the prior-year quarter.
Webster Financial’s total revenues increased 8.3% year over year to $317.6 million. Also, the top line surpassed the Zacks Consensus Estimate of $314.2 million.
Net interest income grew 7.5% year over year to $241.8 million. Moreover, net interest margin expanded 6 basis points (bps) to 3.63%.
Non-interest income was around $75.9 million, up 10.9% year over year. The upswing mainly resulted from rise in all components except mortgage banking income.
Non-interest expenses of $180.6 million increased slightly from the year-ago quarter. This upswing mainly resulted from higher compensation and benefits expenses, technology and equipment, along with other expenses, partially offset by a fall in marketing and occupancy costs.
Efficiency ratio (on a non-GAAP basis) came in at 56.09% compared with 57.78% as of Jun 30, 2018. A lower ratio indicates improved profitability.
The company’s total loans and leases as of Jun 30, 2019 were $19.27 billion, up 2.4% sequentially. However, total deposits decreased slightly from the previous quarter to $22.6 billion.
Credit Quality: A Mixed Bag
Total non-performing assets were $153.2 million, up 4.9% from the year-ago quarter. In addition, the ratio of net charge-offs to annualized average loans came in at 0.24%, up 5 bps year over year. Also, the provision for loan and lease losses increased13.3% to $11.9 million.
However, allowance for loan losses represented 1.10% of total loans as of Jun 30, 2019, down 5 bps from Jun 30, 2018.
Improved Capital & Profitability Ratios
As of Jun 30, 2019, Tier 1 risk-based capital ratio was 12.15% compared with 11.74% as of Jun 30, 2018. Additionally, total risk-based capital ratio came in at 13.54% compared with 13.21% in the prior-year quarter. Tangible common equity ratio was 8.31%, up from 7.75% as of Jun 30, 2018.
Return on average assets was 1.38% in the reported quarter compared with the year-ago quarter’s 1.22%. As of Jun 30, 2019, return on average common stockholders' equity came in at 13.47%, up from 12.22% as of Jun 30, 2018.
Our Viewpoint
Webster Financial is well positioned on revenue growth and strong loan balance. Further, the company’s capital position is strong. Nonetheless, escalating expenses might partially impede its bottom-line growth in the near term.
Webster Financial Corporation Price, Consensus and EPS Surprise
SunTrust Banks' (STI - Free Report) second-quarter 2019 adjusted earnings of $1.44 per share reflect a decline of 3.4% from the year-ago quarter. The Zacks Consensus Estimate for earnings for the quarter was pegged at $1.46.
BancorpSouth reported second-quarter 2019 net operating earnings of 61 cents per share, which came in line with the Zacks Consensus Estimate. Also, the bottom line increased 8.9% from the prior-year quarter.
Driven by top-line strength, U.S. Bancorp’s (USB - Free Report) second-quarter 2019 earnings per share of $1.09 surpassed the Zacks Consensus Estimate of $1.07. Also, the reported figure is up 6.9% from the prior-year quarter.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Webster Financial (WBS) Q2 Earnings Top, Stock Gains 3.4%
Shares of Webster Financial (WBS - Free Report) gained 3.4% after it delivered a positive earnings surprise of 2% in second-quarter 2019. Earnings per share of $1.05 surpassed the Zacks Consensus Estimate of $1.03. Also, the bottom line increased 22.1% from the prior-year quarter.
Results reflect growth in revenues, with support from higher loans and improving interest margin. Further, fee income showed considerable improvement. Also, the company’s strong capital position was a tailwind. However, higher expenses and provisions were headwinds.
The company reported earnings applicable to common shareholders of $96.2 million, up from $79.5 million in the prior-year quarter.
Revenue Growth Mitigates Higher Expenses, Loans Increase
Webster Financial’s total revenues increased 8.3% year over year to $317.6 million. Also, the top line surpassed the Zacks Consensus Estimate of $314.2 million.
Net interest income grew 7.5% year over year to $241.8 million. Moreover, net interest margin expanded 6 basis points (bps) to 3.63%.
Non-interest income was around $75.9 million, up 10.9% year over year. The upswing mainly resulted from rise in all components except mortgage banking income.
Non-interest expenses of $180.6 million increased slightly from the year-ago quarter. This upswing mainly resulted from higher compensation and benefits expenses, technology and equipment, along with other expenses, partially offset by a fall in marketing and occupancy costs.
Efficiency ratio (on a non-GAAP basis) came in at 56.09% compared with 57.78% as of Jun 30, 2018. A lower ratio indicates improved profitability.
The company’s total loans and leases as of Jun 30, 2019 were $19.27 billion, up 2.4% sequentially. However, total deposits decreased slightly from the previous quarter to $22.6 billion.
Credit Quality: A Mixed Bag
Total non-performing assets were $153.2 million, up 4.9% from the year-ago quarter. In addition, the ratio of net charge-offs to annualized average loans came in at 0.24%, up 5 bps year over year. Also, the provision for loan and lease losses increased13.3% to $11.9 million.
However, allowance for loan losses represented 1.10% of total loans as of Jun 30, 2019, down 5 bps from Jun 30, 2018.
Improved Capital & Profitability Ratios
As of Jun 30, 2019, Tier 1 risk-based capital ratio was 12.15% compared with 11.74% as of Jun 30, 2018. Additionally, total risk-based capital ratio came in at 13.54% compared with 13.21% in the prior-year quarter. Tangible common equity ratio was 8.31%, up from 7.75% as of Jun 30, 2018.
Return on average assets was 1.38% in the reported quarter compared with the year-ago quarter’s 1.22%. As of Jun 30, 2019, return on average common stockholders' equity came in at 13.47%, up from 12.22% as of Jun 30, 2018.
Our Viewpoint
Webster Financial is well positioned on revenue growth and strong loan balance. Further, the company’s capital position is strong. Nonetheless, escalating expenses might partially impede its bottom-line growth in the near term.
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 #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
SunTrust Banks' (STI - Free Report) second-quarter 2019 adjusted earnings of $1.44 per share reflect a decline of 3.4% from the year-ago quarter. The Zacks Consensus Estimate for earnings for the quarter was pegged at $1.46.
BancorpSouth reported second-quarter 2019 net operating earnings of 61 cents per share, which came in line with the Zacks Consensus Estimate. Also, the bottom line increased 8.9% from the prior-year quarter.
Driven by top-line strength, U.S. Bancorp’s (USB - Free Report) second-quarter 2019 earnings per share of $1.09 surpassed the Zacks Consensus Estimate of $1.07. Also, the reported figure is up 6.9% from the prior-year quarter.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>