Webster Financial Stock Up 1.3% Since Q3 Earnings Top, NII Rise Y/Y

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 reported figure compared favorably with the EPS of $1.34 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 acted as a spoilsport.

Net income applicable to common shareholders (GAAP basis) was $254.1 million, up 36% from the prior-year quarter.

Webster Financial’s Q3 Revenues & Expenses Increase Y/Y

WBS’ total revenues in the quarter increased 13.1% year over year to $732.6 million. The top line surpassed the Zacks Consensus Estimate by 1.2%.

NII increased 7.1% year over year to $631.7 million. The net interest margin was 3.40%, down one basis point.

Non-interest income was $100.9 million, significantly up from the year-ago quarter’s reported figure of $57.7 million. In the third quarter of 2024, total non-interest income included losses of $19.6 million on the sale of investment securities and $16 million related to the exit of noncore operations. Excluding this item, total non-interest income increased $7.6 million.

Non-interest expenses were $356.7 million, up 2.2% from the year-ago quarter. In the third quarter of 2025, the figure excluded the prior-year quarter’s restructuring-related charges and FDIC assessment benefit. Excluding these items, total non-interest expense increased $28.3 million. The rise was mainly driven by investments in human capital, business development, risk management infrastructure and higher performance-based incentives.

The efficiency ratio was 45.79% compared with 45.49% in the prior-year quarter. An increase in the efficiency ratio indicates a decline in profitability.

WBS’ Loans & Deposit Balance Rise Sequentially

As of Sept. 30, 2025, total loans and leases increased 2.6% on a sequential basis to $55.1 billion. Further, total deposits increased 2.8% from the prior quarter to $68.2 billion.

Webster Financial’s Credit Quality Mixed Bag

Total non-performing assets were $545.3 million as of Sept. 30, 2025, up 27.6% from the year-ago quarter. Allowance for loan losses was 1.32% of the total loans, remaining stable from the third quarter of 2024.

The ratio of net charge-offs to annualized average loans was 0.28%, up from 0.27% in the year-ago period.

The provision for credit losses was $44 million, down 18.5% year over year.

WBS’ Capital Ratios Improve

As of Sept. 30, 2025, the Tier 1 risk-based capital ratio was 11.90%, which increased from 11.77% as of Sept. 30, 2024. The total risk-based capital ratio was 14.69%, up from the prior-year quarter’s 14.06%.

Webster Financial’s Profitability Ratios Improve

Return on average assets was 1.27%, up from 1.01% in the prior-year quarter. At the end of the third quarter, the return on average common stockholders' equity was 11.23%, which rose from 8.67% in the prior-year quarter.

Our Viewpoint on WBS Stock

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.

Performance of Other Bank Stocks

Hancock Whitney Corp.’s HWC third-quarter 2025 earnings per share of $1.49 beat the Zacks Consensus Estimate of $1.41. Further, the bottom line rose 12% from the prior-year quarter.

HWC’s results benefited from an increase in non-interest income and NII alongside lower provisions. Also, higher loans were another positive. However, higher adjusted expenses alongside lower deposit balances were headwinds.

Citizens Financial Group CFG reported third-quarter 2025 adjusted EPS of $1.05, which surpassed the Zacks Consensus Estimate of $1.02. The metric rose 32.9% from the year-ago quarter.

The results of CFG benefited from a rise in non-interest income and NII. The increase in loan and deposit balances was also encouraging. However, a rise in expenses was a major headwind.

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This article originally published on Zacks Investment Research (zacks.com).

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