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 period ended September 30, 2025 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ____ to ...

Core Insights - Compass Wealth Management LLC initiated a new position in Webster Financial, purchasing 96,518 shares valued at approximately $31.84 million, increasing its total reportable holdings to 148 positions [1][6]. Company Overview - Webster Financial reported a trailing twelve-month (TTM) revenue of $2.72 billion and a net income of $830.61 million, with a dividend yield of 2.8% [3]. - As of October 30, 2025, Webster Financial's share price was $56.59, reflecting a 9% increase over the past year, although it underperformed the S&P 500 by 8 percentage points [2][3]. Financial Performance - In the third quarter of 2025, Webster Financial achieved revenue of $732.6 million, up from $647.6 million in 2024, indicating strong growth [6]. - The diluted earnings per share (EPS) for Q3 was $1.54, an increase from $1.10 in the previous year, showcasing consistent growth in both revenue and EPS throughout 2025 [7][9]. Business Model - Webster Financial operates as a regional banking institution with a diversified business model that includes commercial banking, health savings account administration, and retail financial services [5][8]. - The company serves a wide range of customer segments, including individuals, families, small to mid-sized businesses, and employers, focusing on commercial clients and HSA account holders [8]. Investment Appeal - The reasonable price-to-earnings ratio of about 11, combined with strong sales growth and rising EPS, suggests that Webster Financial is a compelling investment opportunity for long-term holding [9].

Key Takeaways Webster Financial's Q3 EPS of $1.54 topped estimates and rose from $1.34 a year earlier.Higher NII and non-interest income fueled a 13.1% revenue rise to $732.6 million.Loans and deposits climbed sequentially, while capital and profitability ratios improved.Shares of Webster Financial Corporation (WBS) have gained 1.3% since the announcement of its quarterly results on Oct. 17. Its third-quarter 2025 earnings per share (EPS) of $1.54 beat the Zacks Consensus Estimate of $1.52. Also, the report ...

Core Viewpoint - Webster Financial's stock has shown mixed performance over the past year, remaining flat in a strong equity market, but has recently declined over 12% from recent highs [1] Group 1: Stock Performance - Over the past year, Webster Financial's shares have traded essentially flat despite a strong equity market [1] - Recently, the stock has pulled back more than 12% from its recent highs [1] Group 2: Analyst Insights - The analysis is based on over fifteen years of experience in making contrarian bets and stock-specific turnaround stories to achieve outsized returns with a favorable risk/reward profile [1]

Core Viewpoint - Webster Financial (NYSE: WBS) has shown mixed performance over the past year, remaining flat in a strong equity market, but has recently experienced a pullback of over 12% from recent highs [1] Group 1: Stock Performance - The stock has traded essentially flat over the past year despite a strong equity market [1] - Recently, the stock has pulled back more than 12% from its recent highs [1] Group 2: Analyst Insights - The analyst has over fifteen years of experience making contrarian bets based on macro views and stock-specific turnaround stories [1] - The focus is on garnering outsized returns with a favorable risk/reward profile [1]

Group 1 - The article does not provide any specific information or insights regarding a company or industry [1]

Core Insights - Investor fears regarding worsening credit conditions eased as regional bank earnings provided relief after a significant market downturn [1][2] - The KBW regional bank index rose after a sharp decline of 6% on Thursday, marking its worst single-day pullback since April [1] Group 1: Regional Bank Earnings - Investors reacted positively to earnings reports from regional banks such as Truist Financial, Fifth Third Bancorp, Huntington Bancshares, and Ally Financial, with most stocks rising in early trading [2] - Loan loss provisions were lower than analysts' expectations for most banks, except for Huntington [2] Group 2: Credit Quality and Risks - Trust CEO Bill Rogers stated that overall credit quality remains strong, despite some idiosyncratic events in the market [3] - The scrutiny of regional banks increased after Western Alliance and Zions disclosed bad loans linked to fraud, causing significant stock declines [4] - Concerns were heightened by recent bankruptcies in the auto lending sector, with Fifth Third reporting a $200 million increase in net charge-offs compared to the previous quarter [6] Group 3: Market Reactions - Stocks of Western Alliance and Zions recovered on Friday after their initial declines, along with Jefferies Financial, which was affected by an auto parts supplier's bankruptcy [4] - Investors in the sector tend to react quickly to credit concerns, often selling first and asking questions later [5]

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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% for Q3 2025, with overall revenue growth of 2.3% compared to the prior quarter [5][6] - Loan growth was 2.6%, amounting to an increase of $1.4 billion, while deposits also grew over 2% [14][15] - Net income rose to $261 million from $259 million in the previous quarter, with earnings per share (EPS) increasing to $1.54 from $1.52 [16][20] Business Line Data and Key Metrics Changes - All major lending categories contributed to the growth in commercial and consumer lending, with a notable increase in loan-related fees due to more active capital markets [10] - The private credit joint venture with Marathon Asset Management is fully operational, showing positive early returns and expanding lending solutions [11][12] - HSA Bank is expected to see significant growth due to new legislation increasing the addressable market for HSA accounts, potentially adding $1 billion to $2.5 billion in incremental deposits over five years [12][13] Market Data and Key Metrics Changes - The company experienced a seasonal increase in public funds, with deposits up by $1.2 billion [15] - The net interest margin (NIM) decreased by four basis points to 3.4%, influenced by tighter credit spreads on new loans [17][60] - Charge-offs remained stable at 28 basis points, consistent with the previous quarter, indicating stable credit quality [20][78] Company Strategy and Development Direction - The company aims to leverage its diverse balance sheet growth while maintaining substantial liquidity and conservative credit positioning [5][6] - There is a focus on expanding product offerings through the Marathon joint venture, which is expected to enhance both transactions and on-balance sheet business opportunities [30][31] - The company is not currently pursuing whole bank M&A but is open to smaller healthcare-related acquisitions that would enhance fee and deposit generation capabilities [42][64] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about macroeconomic tailwinds for the banking industry, despite recent market volatility [7][8] - The outlook for Q4 anticipates flat net interest income, with expectations of seasonal outflows of deposits and higher debt costs [21][22] - Management remains confident in the credit profile, noting a 7% decline in criticized loans and stable nonaccrual loans [20][78] Other Important Information - The company celebrated its 90th anniversary, highlighting its long-standing commitment to serving clients and communities [23] - The tangible book value per share increased to $36.42 from $35.13, reflecting net income and improvements in accumulated other comprehensive income (AOCI) [20] Q&A Session Summary Question: Details on the Marathon partnership and growth outlook - Management reported a strong pipeline of business from the Marathon partnership, with optimism for growth in 2025 and beyond [29] Question: Trajectory of deposit growth and priorities - The company is focused on growing attractive categories like HSA and EnterSync, preferring these over broker deposits [31][32] Question: Exposure to private credit and risk management - The company has a solid track record in private credit, with no losses reported, and maintains a conservative approach to underwriting [36][39] Question: Loan growth outlook and pipelines - Management indicated a robust pipeline for loans but expects a potential increase in prepayments in Q4, leading to more moderate growth expectations [46][48] Question: Capital allocation and buyback pace - The company will prioritize loan growth and strategic acquisitions before considering returning capital to shareholders through buybacks [50][51] Question: Credit quality outlook - Management noted stable credit quality metrics and expressed confidence in the gradual improvement of nonaccrual and classified loans [74][78] Question: Investment opportunities and regulatory changes - The company plans to redeploy investment dollars into new business initiatives, particularly in digitization and treasury management capabilities [102][104]

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% for Q3 2025, with overall revenue growth of 2.3% compared to the prior quarter [3][4] - Total assets reached $83 billion, with loans and deposits both increasing over 2% linked quarter [11] - Net income rose to $261 million from $259 million in the previous quarter, and earnings per share (EPS) increased to $1.54 from $1.52 [12] Business Line Data and Key Metrics Changes - Loan growth was driven by diverse categories, with total loans up $1.4 billion, or 2.6%, including a notable increase in commercial real estate [11][12] - Deposit growth was also diverse, with public funds up $1.2 billion seasonally, alongside growth in commercial and Healthcare Financial Services [11] - The private credit joint venture with Marathon Asset Management is fully operational, with positive early returns and a significant pipeline of lending opportunities [9][19] Market Data and Key Metrics Changes - The company noted that tariffs and labor market uncertainty are not significantly impacting the credit performance of its loan portfolio [6] - The addressable market for Health Savings Accounts (HSAs) is expected to increase by 7 million customers, potentially driving $1 billion to $2.5 billion in incremental deposit growth over the next five years [10] Company Strategy and Development Direction - The company aims to maintain a diverse balance sheet while focusing on organic earnings growth opportunities and capital generation [4] - There is a strategic focus on enhancing the HSA business through technology investments and expanding product offerings to capture a direct-to-consumer market [67] - The management remains cautious about M&A activities, emphasizing organic growth and smaller healthcare-related acquisitions instead [30][70] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about macroeconomic tailwinds for the banking industry, despite recent market volatility [5] - The outlook for Q4 includes expectations of flat net interest income, with potential seasonal outflows of deposits and higher debt costs [15] - The company is confident in its credit profile, with a focus on maintaining high-quality loan origination while managing risk [52] Other Important Information - The company celebrated its 90th anniversary, highlighting its long-standing commitment to serving clients and communities [16] - The tangible book value per share increased to $36.42 from $35.13, reflecting net income growth and improvements in accumulated other comprehensive income (AOCI) [14] Q&A Session Summary Question: Details on the Marathon Asset Management partnership - Management reported positive early success with a growing pipeline of business and the ability to offer expanded products to clients [19][20] Question: Trajectory of growth for Amitros and InterSync - The company is focused on growing attractive categories in HSA and Amitros, with a preference for InterSync balances over broker deposits [21][22] Question: Lending exposure to the private credit industry - The company has a significant NBFI exposure, primarily in fund banking and lender finance, with a strong track record of zero losses [26][27] Question: Outlook on loan growth for 2026 - Management anticipates steady loan growth in the mid-single digits for 2026, with a focus on high-quality assets [80] Question: Impact of recent rate cuts on loan and deposit pricing - The company is positioned neutrally regarding interest rates, with some downward repricing on variable rate portfolios [74] Question: Credit quality outlook - Management noted stable credit quality metrics, with a focus on resolving non-accrual and classified loans [49][52]