UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________________________________________________________________ ______________________________________________________________________________FORM __________________________________________________10-Q _________-___________________________________________________________________________________________________ ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly peri ...

Core Viewpoint - Webster Financial (WBS) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system emphasizes the importance of earnings estimate revisions, which are strongly correlated with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in stock price movements [4]. Company Performance and Outlook - The upgrade for Webster Financial suggests an improvement in the company's underlying business, which is expected to be reflected in higher stock prices [5]. - The Zacks Consensus Estimate for Webster Financial indicates an expected earnings per share of $5.86 for the fiscal year ending December 2025, with a 2.8% increase in estimates over the past three months [8]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with only the top 20% receiving a "Strong Buy" or "Buy" rating, indicating superior earnings estimate revisions [9][10]. - The upgrade of Webster Financial to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Core Insights - Zacks Premium offers various tools to help investors make informed decisions and enhance their confidence in the stock market [1] - The Zacks Style Scores provide a unique rating system for stocks based on value, growth, and momentum characteristics, aiding investors in selecting securities with high potential for market outperformance [2][3] Zacks Style Scores - Stocks are rated from A to F based on their value, growth, and momentum characteristics, with A indicating the highest potential for outperformance [3] - The Value Score identifies attractive stocks using ratios like P/E, PEG, and Price/Sales, focusing on undervalued stocks [3] - The Growth Score evaluates stocks based on projected and historical earnings, sales, and cash flow to find those with sustainable growth [4] - The Momentum Score helps investors capitalize on price trends, using factors like one-week price change and monthly earnings estimate changes [5] - The VGM Score combines all three Style Scores, providing a comprehensive indicator for investors seeking value, growth, and momentum [6] Zacks Rank - The Zacks Rank is a proprietary model that uses earnings estimate revisions to simplify portfolio building [7] - Stocks rated 1 (Strong Buy) have historically produced an average annual return of +23.62% since 1988, significantly outperforming the S&P 500 [8] - There are over 800 stocks rated 1 or 2, making it essential for investors to utilize Style Scores to narrow down choices [9] Investment Strategy - For optimal returns, investors should focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B [10] - Stocks with a 3 (Hold) rank should also have A or B Scores to maximize upside potential [10] - The direction of earnings estimate revisions is crucial; stocks with lower ranks and declining forecasts pose higher risks [11] Company Spotlight: Webster Financial (WBS) - Webster Financial Corporation, based in Stanford, CT, operates through three segments, providing various banking and financial services [12] - Currently rated 3 (Hold) with a VGM Score of B, WBS has a Momentum Style Score of A and has seen a 17% increase in shares over the past four weeks [12][13] - Recent earnings estimates for fiscal 2025 have been revised upward, with the Zacks Consensus Estimate increasing by $0.07 to $5.78 per share, alongside an average earnings surprise of +1.6% [13]

Core Insights - Webster Financial Corporation is leveraging legislative changes to expand the addressable market for its subsidiary, HSA Bank, which is expected to drive significant deposit growth [1][2]. HSA Bank Growth Potential - The recent reconciliation bill expands HSA eligibility for approximately 7 million participants in "bronze" ACA health plans, potentially leading to an additional $1 billion to $2.5 billion in HSA deposits over the next five years [2][3]. - Initial incremental growth for HSA deposits is projected to be between $50 million and $100 million in the next year, with the possibility of doubling the deposit opportunity if further legislation is enacted [3]. Private Credit Joint Venture - A joint venture with Marathon Asset Management will allow Webster Financial to engage in larger, more complex transactions, enhancing fee-based income and diversifying its private credit platform [4][5]. - The joint venture is expected to launch in the third quarter, with significant fee income anticipated to ramp up in 2026 and beyond [4]. Capital Management and Shareholder Returns - The company has improved its CET1 ratios and tangible book value per share, leading to a $700 million increase in share repurchase authorization, with 1.5 million shares repurchased at an average price of $51.69 [6][7]. - The management team is focused on a disciplined approach to capital deployment, balancing organic growth, M&A opportunities, and shareholder returns [8]. Future Outlook - The effective tax rate is projected to be between 20%-21%, with net interest margin expected to be between 3.35% and 3.40% in the second half of the year [9]. - The company plans to maintain its focus on organic growth and selective acquisitions while adapting to market conditions [9].

Core Viewpoint - Webster Financial (WBS) reported strong second-quarter 2025 earnings, with EPS of $1.52, surpassing the Zacks Consensus Estimate of $1.41 and up from $1.26 a year ago [1][8] Financial Performance - Net income applicable to common shareholders was $251.7 million, reflecting a 43.4% increase from the prior-year quarter [2] - Total revenues increased 16.5% year over year to $715.8 million, exceeding the Zacks Consensus Estimate by 0.6% [3] - Net interest income (NII) rose 8.5% year over year to $621.2 million, with a net interest margin of 3.44%, up five basis points [3] - Non-interest income significantly increased to $94.7 million from $42.3 million a year ago, excluding prior losses on investment securities [4] Expenses and Efficiency - Non-interest expenses were $345.7 million, up 6% from the previous year, driven by risk management investments and increased compensation [5] - The efficiency ratio improved to 45.40% from 46.22% in the prior-year quarter, indicating enhanced profitability [5] Loans and Deposits - Total loans and leases increased 1.2% sequentially to $53.7 billion, while total deposits rose 1% to $66.3 billion as of June 30, 2025 [6][8] Credit Quality - Total non-performing assets were $537.1 million, up 43.3% from the year-ago quarter, with an allowance for loan losses at 1.35% of total loans [7] - The provision for credit losses decreased by 21.2% year over year to $46.5 million [7] Capital Ratios - The Tier 1 risk-based capital ratio improved to 11.84% from 11.00% a year ago, and the total risk-based capital ratio rose to 14.03% from 13.28% [9] Profitability Ratios - Return on average assets was 1.29%, up from 0.96% in the prior-year quarter, and return on average common stockholders' equity increased to 11.31% from 8.40% [10] Strategic Outlook - Rising NII and non-interest income are expected to enhance Webster Financial's top line, supported by strategic buyouts and growth in deposits and loans, although elevated expenses pose a near-term concern [11]

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Core Insights - Webster Financial (WBS) reported a revenue of $715.84 million for the quarter ended June 2025, reflecting a year-over-year increase of 16.5% and a surprise of +0.58% over the Zacks Consensus Estimate of $711.74 million [1] - The earnings per share (EPS) for the quarter was $1.52, up from $1.26 in the same quarter last year, resulting in an EPS surprise of +7.8% compared to the consensus estimate of $1.41 [1] Financial Performance Metrics - Net Interest Margin stood at 3.4%, matching the average estimate from six analysts [4] - The Efficiency Ratio was reported at 45.4%, better than the average estimate of 47.6% from six analysts [4] - Net charge-offs as a percentage of average loans and leases (annualized) were 0.3%, lower than the average estimate of 0.4% from five analysts [4] - Average balance of Total interest-earning assets was $74 billion, exceeding the average estimate of $72.96 billion from five analysts [4] - Total nonperforming loans and leases amounted to $534.52 million, significantly lower than the estimated $587.42 million from two analysts [4] - Total Non-Interest Income reached $94.66 million, slightly above the average estimate of $93.59 million from six analysts [4] - Net Interest Income was reported at $621.18 million, surpassing the average estimate of $616.23 million from five analysts [4] - Wealth and investment services income was $7.78 million, slightly below the average estimate of $7.86 million from five analysts [4] - Loan and lease related fees totaled $17.66 million, below the average estimate of $17.97 million from five analysts [4] - Deposit service fees were reported at $40.93 million, exceeding the average estimate of $39.51 million from five analysts [4] - Increase in cash surrender value of life insurance policies was $9.17 million, above the average estimate of $8.02 million from four analysts [4] - Non-interest income from other sources was $19.12 million, below the average estimate of $20.35 million from four analysts [4] Stock Performance - Webster Financial's shares have returned +13.3% over the past month, outperforming the Zacks S&P 500 composite's +4.2% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - The company reported a return on tangible common equity of 18% and a return on assets (ROA) of nearly 1.3% with overall revenue growth of 1.6% quarter-over-quarter [6][18] - The common equity Tier one ratio increased, and the loan to deposit ratio remained flat at 81% [7][18] - The tangible book value per common share grew to $35.13, up over 3% from the previous quarter [18][26] Business Line Data and Key Metrics Changes - Total loans increased by $616 million or 1.2% linked quarter, with a notable one-time transfer of $242 million of loans to held for sale [19] - Total deposits grew by $739 million, with deposit costs up three basis points due to seasonal mix shifts [20] - Non-interest income was $95 million, reflecting a modest increase driven by growth in deposit service fees [23] Market Data and Key Metrics Changes - The company noted no new pockets of credit deterioration across industries, maintaining a strong operating position [9] - The Healthcare Financial Services segment is expected to see significant growth due to favorable provisions in recent legislation, potentially adding $1 billion to $2.5 billion in deposits over five years [13][14] Company Strategy and Development Direction - The company is focused on organic growth, tuck-in acquisitions, and enhancing its healthcare services vertical [30][50] - The asset management partnership with Marathon is expected to enhance loan growth and drive fee revenue starting in 2026 [11][15] - The company aims to maintain a disciplined approach to capital management, prioritizing growth and shareholder returns [38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a less certain macroeconomic environment and highlighted the potential for loan growth to accelerate [6][28] - The company anticipates that regulatory changes will strengthen the competitive position of U.S. banks [29] - Management remains vigilant regarding credit quality, with expectations for continued improvement in credit metrics [80] Other Important Information - The company announced the addition of Jason Schugel as Chief Risk Officer and Fred Crawford as a new Board member [30] - The company is preparing to cross $100 billion in assets, with significant investments in technology and operations [24] Q&A Session Summary Question: Capital and Buyback Strategy - Management indicated a willingness to reduce the CET1 ratio over time while maintaining a target of 11% for the near term, with potential buybacks in the second half of the year [35][37][39] Question: NIM Outlook and Debt Issuance - Management confirmed that cash balances are at desired levels, with a minor impact on NIM expected from cash build and upcoming debt issuance [42][43] Question: Deposit Costs and Growth - Management expects deposit costs to decrease with potential rate cuts, but competition may limit significant reductions [45][46] Question: HSA Market Expansion - Management noted that no major changes in expenses are anticipated for HSA, but marketing investments will be necessary to educate new consumers [56][59] Question: Credit Quality Metrics - Management expressed cautious optimism about credit quality improvements, emphasizing stability in risk ratings and no new problem areas [80][81] Question: Commercial and Industrial Originations - Management reported strong originations across all categories, with expectations for continued growth in the second half of the year [66][68] Question: Rent-Regulated Buildings Impact - Management indicated limited exposure to rent-regulated buildings, with a well-seasoned portfolio and good credit stats [72][75] Question: Non-Interest Bearing Deposits - Management noted a recent uptick in non-interest bearing deposits, with expectations for mild growth in the second half of the year [88][90] Question: HSA Provisions and Market Size - Management highlighted that the majority of the deposit growth opportunity stems from new eligibility for HSA accounts under recent legislation [91][93]

Financial Data and Key Metrics Changes - The company reported a return on tangible common equity of 18% and a return on assets (ROA) of nearly 1.3% with overall revenue growth of 1.6% compared to the prior quarter [5][6] - The common equity Tier one ratio increased, and the loan to deposit ratio remained flat at 81% [6][15] - The tangible book value per common share grew to $35.13, up over 3% from the previous quarter [15][23] Business Line Data and Key Metrics Changes - Total loans increased by $616 million or 1.2% linked quarter, with a notable one-time transfer of $242 million of loans to held for sale [16][17] - Total deposits grew by $739 million, with deposit costs up three basis points due to seasonal mix shifts [17][20] - Non-interest income was $95 million, reflecting a modest increase driven by growth in deposit service fees [20] Market Data and Key Metrics Changes - The company has not observed new pockets of credit deterioration across any industry or sector, maintaining a strong operating position [7][22] - The healthcare financial services segment is expected to benefit from favorable provisions in the reconciliation bill, potentially increasing HSA deposits significantly over the next five years [11][12] Company Strategy and Development Direction - The company is focused on organic growth, tuck-in acquisitions, and enhancing its healthcare services vertical [25][46] - The asset management partnership with Marathon is anticipated to enhance loan growth and drive fee revenue starting in 2026 [9][13] - The company aims to leverage its differentiated deposit profile and strong capital position to capitalize on growth opportunities [7][28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan growth accelerating as clients adapt to the current economic environment [25][26] - The company is well-positioned to thrive in various operating environments, including an accelerating investment cycle [27][28] - Management remains vigilant regarding potential impacts from proposed tariffs but does not foresee significant exposure to affected industries [7][26] Other Important Information - The company authorized an additional $700 million in share repurchases and bought back 1.5 million shares during the quarter [6][15] - The company welcomed a new Chief Risk Officer and a new Board member, enhancing its executive management team [28][29] Q&A Session Summary Question: What is the company's willingness to reduce CET1 and thoughts on near-term buyback pace? - Management indicated a medium-term goal of 11% for CET1 and a potential reduction over time, with disciplined capital management strategies in place [34][35] Question: What is the outlook for NIM and cash balances? - Management confirmed that cash balances are at desired levels, with a slight impact on NIM expected from cash build and new debt issuance [40] Question: How does the company view deposit costs in light of expected rate cuts? - Management expects to lower deposit costs if rate cuts occur but noted significant competition in the deposit market [42][43] Question: What is the company's stance on M&A if the category four threshold is lifted? - Management stated that while they are not actively pursuing whole bank M&A, they remain open to opportunities if the regulatory environment changes [46][47] Question: How will the expansion of the HSA market impact expenses? - Management indicated no major changes in expense trajectory for HSA, with some marketing investments anticipated for consumer education [53][55] Question: What is the outlook for credit quality metrics? - Management expressed cautious optimism about continued improvement in credit quality metrics, with no new pockets of problems identified [76][78] Question: How will the joint venture with Marathon impact loan growth? - Management expects the joint venture to enhance competitive positioning and facilitate participation in larger transactions, positively impacting loan growth [95][101]

Webster Financial (WBS) came out with quarterly earnings of $1.52 per share, beating the Zacks Consensus Estimate of $1.41 per share. This compares to earnings of $1.26 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +7.80%. A quarter ago, it was expected that this holding company for Webster Bank would post earnings of $1.38 per share when it actually produced earnings of $1.3, delivering a surprise of -5.8%.Over the last fou ...