Webster Financial Corporation WBS is currently facing continued rise in operating expenses. Also, significant exposure to commercial loans poses a threat to its financials. While these are expected to keep the company’s bottom line under pressure, its top-line growth and ample liquidity should lend some support.
As a major part of Webster Financial’s loan portfolio consists of commercial and commercial real estate loans (nearly 60% as of Jun 30, 2017), any deterioration in housing sector prices will weigh on its financials.
Additionally, mounting operating expenses have been hurting the company’s bottom-line growth. Non-interest expenses have been rising persistently, with a four-year (2013-2016) CAGR of 7.8%. The uptrend continued in the first six months of 2017.
The company’s expenses might keep on increasing owing to the initiative to grow the HSA Bank segment and transform Community Banking.
While rising revenues on the back of growth in loan and deposit balances and an expected relief from tough regulations are expected to support bottom line, analysts seem to be bearish on the company’s earnings potential. The trend in earnings estimate revisions has been stable for Webster Financial.
Some stocks worth considering in the finance space are Community Bank System, Inc. CBU, First Commonwealth Financial Corporation FCF and People's Utah Bancorp PUB. All three stocks have been witnessing upward revisions in earnings estimates.
Community Bank System delivered an average positive earnings surprise of 10.1%, with a beat in all the trailing four quarters.
First Commonwealth Financial delivered positive earnings surprise in all the trailing four quarters with an average beat of 12.9%
With a beat in each of the trailing four quarters People's Utah Bancorp delivered an average positive earnings surprise of 7.7%.
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