Webster Financial Corporation (WBS) | Investment Case

1. Company Snapshot

1.a. Company Description

Webster Financial Corporation operates as the bank holding company for Webster Bank, National Association that provides a range of banking, investment, and financial services to individuals, families, and businesses in the United States.It operates through three segments: Commercial Banking, HSA Bank, and Retail Banking.The Commercial Banking segment provides lending, deposit, and cash management services; commercial and industrial lending and leasing, commercial real estate lending, equipment financing, and asset-based lending, as well as treasury and payment services; wealth management solutions to business owners, operators, and consumers; and trust, asset management, financial planning, insurance, retirement, and investment products.

The HSA Bank segment offers health savings accounts, health reimbursement arrangements, flexible spending accounts, and commuter services that are distributed directly to employers and individual consumers, as well as through national and regional insurance carriers, consultants, and financial advisors.The Retail Banking segment provides deposit and fee-based services, residential mortgages, home equity lines, secured and unsecured loans, and credit cards to consumers.The company also offers online and mobile banking services.

As of December 31, 2021, it operated 130 banking centers and 251 ATMs. The company was founded in 1935 and is headquartered in Stamford, Connecticut.

Show Full description

1.b. Last Insights on WBS

Webster Financial Corporation's recent performance was driven by strong Q4 earnings, beating estimates with $1.59 per share, a 10.5% increase from $1.43 per share a year ago. The company's net interest income (NII) and fee income growth contributed to the positive results. Additionally, several institutional investors, including Bailard Inc. and Assenagon Asset Management S.A., have increased their stakes in the company. Webster Financial's cash flow coverage of 4.70x also provides comfort for income investors.

1.c. Company Highlights

Last Price	73.09
Change Percentage	1.23%
Open	72.41
Previous Close	72.2
Market Cap ( Millions)	11785
Volume	2774792
Year High	73.87
Year Low	39.43
M A 50	66.47
M A 200	59.5

FCF Yield	13.46%
Dividend Yield	2.19%
ROE	10.70%
Debt / Equity	45.48%
Net Debt / EBIDTA	300.12%
Price To Book	1.23
Price Earnings Ratio	11.68
Price To FCF	7.43
Price To sales	2.66
EV / EBITDA	11.96

2. Webster Financial's Strong 2025 Performance Sets Stage for Continued Growth

Webster Financial Corporation reported a robust fourth-quarter 2025, with a return on tangible common equity (ROTCE) of 17% and return on assets (ROA) of 1.2% for the full year. Earnings per share (EPS) rose 10% year-over-year to $1.59, beating analyst estimates of $1.52. The company's net interest income and fees drove revenue growth, with loans increasing 8% and deposits growing 6%. The tangible book value per share increased 13% to $37.20, reflecting the company's strong capital position.

Publication Date: Jan -25

                                    📋 Highlights
                                    Strong Financial Performance::
                                                Full-year 2025 delivered 17% ROTCE, 1.2% ROA, 10% EPS growth, 8% loan growth, and 6% deposit growth, with tangible book value per share rising 13% to $37.20.
Capital Management & Share Repurchases::
                                                Repurchased 10.9 million shares, maintained capital ratios above well-capitalized levels, and targets CET1 ratios of 11% (near-term) and 10.5% (long-term).
2026 Financial Guidance::
                                                Anticipates $2.57B–$2.63B net interest income, 5–7% loan growth, 4–6% deposit growth, and $390M–$410M in fees, with NIM stable at ~3.35% and deposit costs at 1.91%.
HSA Business Momentum::
                                                HSA Bank saw 250,000 account openings (15,000 more than prior year), with $1B–$2.5B in incremental deposit growth expected over five years from HSA eligibility expansion.
Strategic Initiatives & Credit Quality::
                                                Remediated commercial classified loans by 5%, invested in non-traditional verticals (HSA Bank, Mitros), and acquired SecureSafe to enhance emergency savings offerings, aligning with growth in lower-risk sectors.

                                

Capital Management and Share Repurchase

The company repurchased 10.9 million shares in 2025, demonstrating its commitment to returning capital to shareholders. Webster's capital ratios remain above well-capitalized levels, with a CET1 ratio that is expected to be maintained at around 11% in the near term. The company's capital management strategy is focused on optimizing its capital position while driving growth.

Growth Prospects and Guidance

Webster expects loan growth of 5-7% and deposit growth of 4-6% in 2026, driven by its focus on non-traditional banking verticals such as HSA Bank, Mitros, and InterSync. The company's net interest margin is expected to remain around 3.35%, with some seasonal fluctuations. The guidance assumes two 25 basis point Fed funds cuts, and fees are expected to be $390 million to $410 million.

Valuation and Dividend Yield

With a Price-to-Tangible Book Value (P/TBV) ratio of approximately 1.08, Webster's valuation appears reasonable compared to its peers. The company's Dividend Yield is 2.5%, providing a relatively attractive return for income-focused investors. Considering the company's growth prospects and capital management strategy, the current valuation appears to be fairly priced.

HSA Bank Growth and Innovation

The HSA Bank business has seen significant growth, with 15,000 more accounts opened than last year and total account openings of nearly 250,000. The company's investment in client experience and technology is expected to drive continued growth in the HSA business. The acquisition of SecureSafe, a market leader in employer-sponsored emergency savings accounts, adds a new product to the HSA Bank channel and demonstrates the company's commitment to innovation.

Loan Growth and Credit Quality

Webster expects loan growth to be driven by higher-yielding categories, with credit spreads having tightened. The company's office book continues to be a focus, but it is considered ring-fenced, with adequate reserves in place. The expected annualized charge-off rate for the office book is between 25-35 basis points.

3. NewsRoom

Webster Financial (NYSE:WBS) & Merchants Bancorp (NASDAQ:MBIN) Financial Review

Feb -10

Source: defenseworld.net

$HAREHOLDER ALERT: The M&A Class Action Firm Announces An Investigation of Webster Financial Corporation (NYSE: WBS)

Feb -09

Source: globenewswire.com

Income Investors Sleep Well With Webster Financial's 4.70x Cash Flow Coverage

Feb -09

Source: 247wallst.com

Weekend Morning Brew: Big Tech's $650B AI Bet, Bitcoin Slides

Feb -07

Source: gurufocus.com

Halper Sadeh LLC Encourages SLAB and WBS Shareholders to Contact the Firm to Discuss Their Rights

Feb -04

Source: prnewswire.com

WBS Agrees to $12.3B Buyout by SAN: What This Means for Investors

Feb -04

Source: zacks.com

Johnson Fistel Investigates Webster Financial Corporation (WBS) Shareholders' Rights Following Proposed Sale to Banco Santander

Feb -04

Source: globenewswire.com

Here Are Wednesday’s Top Wall Street Analyst Research Calls: AES Corp, Airbnb, Cloudflare, Devon Energy, Levi Strauss, Lumentum, PayPal, and More

Feb -04

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.64%)

6. Segments

Commercial Banking

Expected Growth: 7.5%

Webster Financial Corporation's 7.5% growth in Commercial Banking is driven by strong loan growth, fueled by a robust economy and increased demand for commercial and industrial loans. Additionally, the bank's strategic expansion into new markets, improved operating efficiency, and enhanced digital capabilities have contributed to the segment's growth.

Consumer Banking

Expected Growth: 7.8%

Webster Financial Corporation's 7.8% growth in Consumer Banking is driven by increasing demand for digital banking services, strategic branch expansion, and competitive loan and deposit offerings. Additionally, the corporation's focus on customer experience, cross-selling initiatives, and effective cost management have contributed to the segment's growth.

Health Savings Account Bank

Expected Growth: 8.2%

Webster Financial Corporation's Health Savings Account (HSA) growth of 8.2% is driven by increasing adoption of consumer-directed health plans, rising healthcare costs, and growing awareness of HSAs as a tax-advantaged savings vehicle. Additionally, Webster's strong online platform, competitive interest rates, and user-friendly interface contribute to its market share gain.

Corporate and Reconciling

Expected Growth: 7.2%

Webster Financial Corporation's 7.2% growth is driven by strong corporate loan growth, fueled by a robust commercial and industrial loan pipeline, as well as continued expansion in the commercial real estate sector. Additionally, reconciling items such as lower provision for loan losses and increased fee income from treasury services and mortgage banking also contributed to the growth.

7. Detailed Products

Commercial Banking

Webster Financial Corporation provides commercial banking services to businesses, including cash management, lending, and treasury management solutions.

Consumer Banking

Webster Financial Corporation offers consumer banking services, including checking and savings accounts, credit cards, and personal loans.

Home Lending

Webster Financial Corporation provides home lending services, including mortgages, refinancing, and home equity loans.

Private Banking

Webster Financial Corporation offers private banking services, including wealth management, investment, and trust services.

Insurance Services

Webster Financial Corporation provides insurance services, including life insurance, disability insurance, and long-term care insurance.

Wealth Management

Webster Financial Corporation offers wealth management services, including investment management, financial planning, and retirement planning.

8. Webster Financial Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Webster Financial Corporation operates in a highly competitive industry, and customers have various alternatives to choose from. However, the company's strong brand reputation and customer loyalty mitigate the threat of substitutes.

Bargaining Power Of Customers

Webster Financial Corporation's customers have limited bargaining power due to the company's diversified customer base and lack of concentration. This reduces the threat of customers negotiating better prices or terms.

Bargaining Power Of Suppliers

Webster Financial Corporation relies on a few large suppliers for its operations, giving them some bargaining power. However, the company's strong relationships with suppliers and its ability to negotiate contracts mitigate this threat.

Threat Of New Entrants

The financial services industry has high barriers to entry, including regulatory hurdles and capital requirements. This makes it difficult for new entrants to compete with established players like Webster Financial Corporation.

Intensity Of Rivalry

The financial services industry is highly competitive, with many established players competing for market share. Webster Financial Corporation faces intense rivalry from other banks and financial institutions, which can lead to pricing pressures and reduced market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	31.01%
Debt Cost	7.90%
Equity Weight	68.99%
Equity Cost	10.63%
WACC	9.78%
Leverage	44.95%

11. Quality Control: Webster Financial Corporation passed 3 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Hancock Whitney

A-Score: 6.3/10

Value: 6.0

Growth: 5.9

Quality: 7.2

Yield: 6.0

Momentum: 5.5

Volatility: 7.0

1-Year Total Return ->

Webster

A-Score: 6.2/10

Value: 6.2

Growth: 6.3

Quality: 7.5

Yield: 6.0

Momentum: 5.0

Volatility: 6.3

1-Year Total Return ->

Atlantic Union Bankshares

A-Score: 5.9/10

Value: 6.2

Growth: 5.2

Quality: 7.0

Yield: 8.0

Momentum: 2.5

Volatility: 6.7

1-Year Total Return ->

Zions Bank

A-Score: 5.9/10

Value: 7.0

Growth: 6.9

Quality: 6.2

Yield: 6.0

Momentum: 4.0

Volatility: 5.3

1-Year Total Return ->

Ameris

A-Score: 5.5/10

Value: 3.2

Growth: 7.8

Quality: 5.7

Yield: 2.0

Momentum: 7.0

Volatility: 7.3

1-Year Total Return ->

UMB

A-Score: 5.4/10

Value: 5.9

Growth: 5.8

Quality: 6.3

Yield: 4.0

Momentum: 3.5

Volatility: 7.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-2.87%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

9.78%

Webster Financial Corporation - US9478901096

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on WBS

1.c. Company Highlights

Average Growth

Average Yield

Average Quality

Earnings Miss

Revenues Beats

Stable Momentum

Medium Volatility

Revenues Miss

Fairly Valued

Earnings Beats

Better Quality

Strong Momentum

2. Webster Financial's Strong 2025 Performance Sets Stage for Continued Growth

Capital Management and Share Repurchase

Growth Prospects and Guidance

Valuation and Dividend Yield

HSA Bank Growth and Innovation

Loan Growth and Credit Quality

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.64%)

6. Segments

Commercial Banking

Expected Growth: 7.5%

Consumer Banking

Expected Growth: 7.8%

Health Savings Account Bank

Expected Growth: 8.2%

Corporate and Reconciling

Expected Growth: 7.2%

7. Detailed Products

Commercial Banking

Consumer Banking

Home Lending

Private Banking

Insurance Services

Wealth Management

8. Webster Financial Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Webster Financial Corporation passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

73.09$

Current Price

73.09$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA