Stock to Keep Your Eyes on: Webster Financial Corp. (NYSE:WBS)

Webster Financial Corp. (NYSE:WBS) reported earnings for the three months ended Mar2016 on April 19, 2016. The company earned $0.51 per share on revenue of $176.15M. Analysts had been modeling earning per share of $0.53 with $177.81M in revenue.

Webster Financial Corp. (WBS) on April 19, 2016 announced earnings applicable to common shareholders of $46.5 million, or $0.51 per diluted share, for the quarter ended March 31, 2016 compared to $46.9 million, or $0.52 per diluted share, for the quarter ended March 31, 2015.

“Solid quarterly results underscore Webster’s sustained progress in executing growth strategies that maximize value to customers and shareholders.  Both loans and revenue grew more than 10 percent, and total assets neared $25 billion,” said James C. Smith, chairman and chief executive officer. “Our recent Boston expansion is gaining momentum, as new deposits recently surpassed $100 million.  Webster bankers continued to excel in service to customers and communities.”

Highlights for the first quarter of 2016 compared to the first quarter of 2015:

• Record core revenue of $240.1 million, an increase of 10.3 percent, including a record level of net interest income of $176.2 million.


• Loan growth of $1.6 billion, or 11.1 percent, with double-digit growth in commercial, commercial real estate and residential mortgage loans.


• Deposit growth of $1.2 billion, or 6.7 percent, primarily reflecting HSA Bank’s strong organic growth.


• Efficiency ratio of 61.29 percent would have been 58.92 percent excluding the Boston expansion related expenses.


• Annualized return on average tangible common shareholders’ equity of 10.97 percent.

“We continue to demonstrate expense discipline as evidenced by our ability to deliver on our efficiency commitments,” said Glenn MacInnes, executive vice president and chief financial officer. “Excluding Boston expansion related expenses, the efficiency ratio has been at or below 60% for twelve consecutive quarters.”

Quarterly net interest income compared to the first quarter of 2015:

• Net interest income was $176.2 million compared to $159.8 million.


• Net interest margin was 3.11 percent compared to 3.10 percent. The yield on interest-earning assets increased by 3 basis points, while the cost of funds increased by 1 basis point.


• Net interest margin increased 3 basis points on a linked-quarter basis.


• Average interest-earning assets totaled $23.0 billion and grew by $1.9 billion, or 9.2 percent.


• Average loans totaled $15.8 billion and grew by $1.8 billion, or 12.9 percent.

Webster Financial Corp. earnings per share showed an increasing trend of 3.5% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 253%.Analysts project EPS growth over the next 5 years at 8.35%. It has EPS annual growth over the past 5 fiscal years of 30.3% when sales grew 1.4. It reported 10.6% sales growth, and -1.6% EPS decline in the last quarter.

The stock is trading at $39.16, up 31.98% from 52-week low of $30.09. The stock trades down -2.79% from its peak of $41.34 and -4.37% below the consensus price target of $37.45. Its volume clocked up at 0.86 million shares which is higher than the average volume of 0.73 million shares. Its market capitalization currently stands at $3.58B.