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Webster Financial WBS 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.
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.
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.
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%.
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.
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.
Bank of Hawaii BOH 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.)
Hancock Whitney Corp.’s HWC 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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This article originally published on Zacks Investment Research (zacks.com).
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