Webster Financial Q4 Earnings Top Estimates on Higher NII, Stock Down

Webster Financial Corporation WBS reported fourth-quarter 2025 adjusted earnings per share (EPS) of $1.59, which beat the Zacks Consensus Estimate of $1.52. Also, the reported figure compared favorably with the EPS of $1.43 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 was a headwind. Given the concern, WBS shares lost 3.2% during Friday’s trading session.Results excluded gains on debt redemption, a charitable contribution to the Webster Foundation, asset disposal and contract termination costs, acquisition expenses and a benefit related to the FDIC special assessment. After considering these, net income applicable to common shareholders (GAAP basis) was $254.7 million, up 48.3% from the prior-year quarter.For 2025, adjusted EPS was $5.94, comparing favorably with $5.38 reported in the prior year. The company reported net income applicable to its common shareholders (GAAP basis) of $974.9 million, which increased 31% year over year.Webster Financial’s Q4 Revenues & Expenses Increase Y/YWBS’ total revenues in the quarter increased 12.9% year over year to $746.2 million. The top line surpassed the Zacks Consensus Estimate by 2.3%.Full-year revenues aggregated to $2.9 billion, which increased 11.9% year over year.NII increased 4% year over year to $632.8 million. The net interest margin was 3.35%, down 9 basis points.Non-interest income was $113.3 million, significantly up from the year-ago quarter’s reported figure of $52.5 million. In the fourth quarter of 2025, total non-interest income included gains of $9.8 million from debt redemption. Excluding this item, total non-interest income decreased $5.8 million.Non-interest expenses were $383.2 million, up 12.6% from the year-ago quarter. In the fourth quarter of 2025, the figure included certain notable items, partially offset by a benefit related to the FDIC special assessment. Excluding these items, total non-interest expense increased $25 million. The rise was mainly driven by investments in human capital and technology, increased performance-based incentives and marketing expenses.The efficiency ratio was 46.95% compared with 44.80% in the prior-year quarter. An increase in the efficiency ratio indicates a decline in profitability.WBS’s Loans & Deposit Balances Rise SequentiallyAs of Dec. 31, 2025, total loans and leases increased 2.8% on a sequential basis to $56.6 billion. Further, total deposits increased nearly 1% from the prior quarter to $68.7 billion.Webster Financial’s Credit Quality Mixed BagTotal non-performing assets were $502.1 million as of Dec. 31, 2025, up 8.7% from the year-ago quarter. Allowance for loan losses was 1.27% of the total loans, which decreased from 1.31% reported in the fourth quarter of 2024.The ratio of net charge-offs to annualized average loans was 0.35%, down from 0.47% in the year-ago period.The provision for credit losses was $42 million, down 33.8% year over year.WBS’ Capital Ratios WeakenAs of Dec. 31, 2025, the Tier 1 risk-based capital ratio was 11.71%, which decreased from 12.06% as of Dec. 31, 2024. The total risk-based capital ratio was 13.69%, down from the prior-year quarter’s 14.24%.Webster Financial’s Profitability Ratios ImproveReturn on average assets was 1.23%, up from 0.91% in the prior-year quarter. At the end of the fourth quarter, the return on average common stockholders' equity was 10.91%, which rose from 7.80% in the prior-year quarter.Our Viewpoint on WBS StockRising 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 QuoteWebster 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 StocksHancock Whitney Corp.’s HWC fourth-quarter 2025 earnings per share of $1.49 beat the Zacks Consensus Estimate by a penny. Further, the bottom line rose 6.4% from the prior year quarter.HWC’s results benefited from an increase in non-interest income and NII. Higher loans and deposits were another positive. However, higher expenses alongside increased provisions were headwinds.Citizens Financial Group CFG reported fourth-quarter 2025 EPS of $1.13, which surpassed the Zacks Consensus Estimate of $1.11 per share. The metric rose 32.9% from the year-ago quarter.CFG’s results 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.Zacks Names #1 Semiconductor StockThis under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Webster Financial Corporation (WBS): Free Stock Analysis Report Citizens Financial Group, Inc. (CFG): Free Stock Analysis Report Hancock Whitney Corporation (HWC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks