This post was originally published on this site.
Webster Financial NYSE: WBS used its fourth-quarter 2025 earnings call to highlight what management described as a year of consistent execution and balance sheet growth, while also outlining expectations for 2026 loan and deposit expansion and continued investment in its healthcare- and payments-adjacent businesses.
Management recaps 2025 performance and strategic priorities
CEO John Ciulla said Webster “continued to excel from a fundamental perspective” in the fourth quarter and entered 2026 “on our front foot,” despite what he called an uncertain macro backdrop. For the full year, Ciulla reported a 17% return on tangible common equity (ROTCE) and a 1.2% return on assets (ROA). He said earnings per share increased 10% year over year, alongside 8% loan growth and 6% deposit growth.
Ciulla also pointed to tangible book value per share growth of 13% and emphasized capital returns, noting the company repurchased 10.9 million shares during 2025. Management said it continued investing in “non-traditional banking verticals,” including HSA Bank, Ametros, and InterSync.
At the same time, Ciulla described “aggressive” remediation of two “isolated pockets” of the loan portfolio with less favorable credit characteristics, highlighting a 5% decline in commercial classified loans compared with the prior year-end. He said broader asset quality trends remained solid and that Webster entered 2026 with robust capital, a strong funding and liquidity profile, and consistent credit performance.
Operating update: loan growth, deposits, and healthcare-related initiatives
President and COO Luis Massiani said fourth-quarter results echoed Webster’s performance throughout the year, with “robust” client activity supporting both loan growth and lending-related fee income. He noted that limited payoff activity contributed to better-than-expected loan growth in the quarter and that growth was generated across a broad range of asset classes.
Massiani also cited “significant progress” on credit remediation, stating that classified commercial loans fell 7% and nonperformers declined 8% in the quarter. Net charge-offs were 35 basis points, and he said the trajectory of problem assets should continue to decline, though the pace may vary by quarter.
On funding, Massiani said 2025 deposit growth was driven by contributions across commercial, consumer, healthcare, financial services, and InterSync. He highlighted early-stage account openings tied to changes affecting Affordable Care Act plan participants. Bronze plan participants have begun opening HSA accounts, and Webster enhanced mobile and web enrollment to better serve this group. Massiani said the company was seeing increased direct-to-consumer account openings and expected that to accelerate over the rest of the year.
Webster’s expectation for deposit growth from expanded HSA eligibility was unchanged. Management said newly eligible plan participants could drive $1 billion to $2.5 billion of incremental deposit growth at HSA Bank over the next five years, including $50 million to $100 million in 2026, while cautioning that adoption is likely to be gradual. Massiani added that the company is monitoring healthcare policy developments, including potential legislative proposals related to HSAs and ACA subsidies.
He also called Ametros’ deposit growth outlook “very strong,” citing increased recognition among settlement recipients of the benefits of professional administration. Webster said it is adding sales capacity and leveraging its scale and technology to enhance the member experience.
Financial review: balance sheet, NIM, fees, expenses, and credit
CFO Neal Holland said balance sheet growth remained solid in the fourth quarter. Assets increased $880 million, or 1%, during the quarter and were up just over $5 billion, or 6.4%, for the full year. In the fourth quarter, the company repurchased 3.6 million shares.
Holland said loans rose $1.5 billion, or 2.8%, in the fourth quarter and were up 7.8% for the full year, with growth “diverse and predominantly driven by commercial loan categories including commercial real estate.” Total deposits increased 0.9% from the prior quarter. Holland noted a seasonal $1.2 billion decline in public funds but said Webster backfilled those outflows with corporate deposits. Deposit costs declined 11 basis points from the prior quarter, and Holland said repricing could accelerate in the first quarter due to seasonal factors and repricing efforts.
On the income statement, Holland said the quarter included “a number of adjustments,” resulting in a net $8 million reduction to pre-tax income and $6 million to after-tax income. Excluding adjustments, adjusted pre-provision net revenue (PPNR) decreased $4.9 million sequentially as slightly better revenue was offset by expenses related to current and future growth. Adjusted net income was slightly higher sequentially, helped by a lower provision and tax rate, while adjusted EPS benefited from a lower share count.
Holland said net interest income rose modestly, supported by loan growth and more limited payoff activity than anticipated into quarter-end. He said loan yields helped support net interest margin, which came in a couple of basis points better than the company’s most recent guidance. Webster’s quarterly and December NIM were both 3.35%.
Adjusted fees increased $2.7 million from the prior quarter, which Holland attributed to higher client activity, direct investment gains, and the credit valuation adjustment. Non-interest expense increased sequentially, driven largely by incentive accruals, investments tied to the “expanded opportunity” at HSA Bank, and technology investments.
The allowance for credit losses declined $9 million from the prior quarter, which Holland said reflected charge-offs of previously reserved loans and improving underlying credit trends. Webster reported nonperforming assets down 8%, commercial classified loans down 7%, and criticized loans down 6%, with charge-offs of 35 basis points for the quarter. Holland said capital ratios remained above “well-capitalized” levels and above the company’s public targets, and tangible book value per share increased to $37.20 from $36.42 in the prior quarter.
2026 outlook: growth targets and rate assumptions
Holland outlined Webster’s 2026 guidance, including 5% to 7% loan growth and 4% to 6% deposit growth. He said the midpoint implies expected revenue of $3 billion on a GAAP basis. Net interest income is expected to be $2.57 billion to $2.63 billion, assuming 225 basis points of Fed funds cuts in June and September. Fees are expected to be $390 million to $410 million and expenses are expected to be $1.46 billion to $1.48 billion.
Holland said first-quarter 2026 expenses are expected to be a few percentage points higher than adjusted fourth-quarter expenses, primarily due to seasonal payroll taxes and annual merit and benefit costs.
In Q&A, Holland said Webster expects its NIM exit rate of 3.35% to be maintained throughout 2026 and suggested modeling NIM in the “mid-330s” range, with typical seasonal patterns.
Q&A highlights: Marathon JV, deposits, capital, and credit pockets
- Marathon partnership: Management said the joint venture is live and operational but has not yet had a material impact on sponsor loan growth. Ciulla said Webster expects about $2 million in positive income from the JV itself and characterized the company’s outlook as conservative, with potential upside if it wins more sponsor business.
- HSA marketing and Bronze opportunity: Ciulla said incremental spending is “mostly marketing,” focused on identifying and educating newly eligible direct-to-consumer prospects rather than major system buildouts. Management later said the infrastructure and scalability are already in place to support growth without incremental technology cost.
- Deposit pricing: Holland said Webster made more aggressive pricing moves after a mid-December rate cut, ending December with an average deposit cost of 1.91% versus 1.99% for the quarter. He said competition remains strong and the company is assuming a 30% overall beta through the end of next year in its guidance.
- Capital return and CET1: Ciulla said the capital strategy is unchanged—prioritizing organic growth and potential tuck-in acquisitions for healthcare verticals, then returning capital through dividends and buybacks. He said another year similar to 2025 buybacks is possible and indicated the company may become more comfortable moving below its 11% near-term CET1 target after annual stress testing and capital planning in the coming quarters.
- Credit and office exposure: Ciulla said Webster had “ring fenced” its office and healthcare services portfolios, which he noted remain a large portion of nonperformers and classified loans. He said the office portfolio was about $720 million and healthcare services about $400 million, with reserves and risk ratings viewed as appropriate. Management said it believes it can operate within a 25 to 35 basis point annualized charge-off rate, though quarterly outcomes may vary due to the nature of large commercial credits.
- SecureSave acquisition: Ciulla described SecureSave, acquired in December, as a relatively small business in a “pseudo startup” phase and a market leader in employer-sponsored emergency savings accounts, which are often viewed as a retention tool by employers. He said the deal was already reflected in quarter-end metrics and that Webster expects to begin calling out related deposit balances as they build.
Ciulla closed by describing 2025, Webster’s 90th year, as a record year for milestones and financial achievements, and said the company believes its differentiated model can “organically and sustainably outgrow and out earns the banking industry at large” while focusing on risk-appropriate returns and community investment.
About Webster Financial NYSE: WBS
Webster Financial Corporation is a bank holding company headquartered in Waterbury, Connecticut. Through its principal subsidiary, Webster Bank, N.A., the company offers a broad range of banking products and financial services to individuals, small businesses, and middle-market commercial clients. Key offerings include deposit accounts, residential and commercial real estate lending, equipment finance, treasury management, and payment processing solutions.
In addition to traditional banking services, Webster Financial provides wealth management and insurance products designed to help clients plan for retirement, preserve assets, and manage risk.
Recommended Stories
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Before you consider Webster Financial, you’ll want to hear this.
MarketBeat keeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and Webster Financial wasn’t on the list.
While Webster Financial currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
Learn the basics of options trading and how to use them to boost returns and manage risk with this free report from MarketBeat. Click the link below to get your free copy.