A Connecticut bank holding company that serves everyday consumers across the Northeast through its Webster Bank branches and digital accounts, while its HSA Bank division administers health savings accounts nationally and Ametros manages medical insurance claim settlements. It began in 1935, when 24-year-old Harold Webster Smith borrowed from friends and family to open a savings and loan in Waterbury during the Great Depression, and the bank was later renamed in his honor when he retired in 1995.
Webster's net interest margin compressed to 3.26% as loan growth and lower credit costs lifted net income 41% to $257M.
The compressed for a second straight quarter, falling 18 to 3.26% as asset yields declined faster than funding costs. rose 41.4% to $256.8 million, or $1.56 per share, driven by an 8% increase in average loans and a 32.3% drop in the . The pending $12.3 billion acquisition by Banco Santander remains on track for the second half of 2026, and the company paused share repurchases under the deal agreement.
Key takeaways
rose 1.9% to $632.7 million as 8% average loan growth offset an 18-basis-point decline in the to 3.26%, the second consecutive quarter of compression after the margin stabilized through the second half of 2025.
The fell 32.3% to $31.5 million, driven by favorable risk rating migration and lower individually assessed reserves, while remained at 0.23% of average loans.
Section summaries
Management's Discussion and Analysis
Q2 net income was $256.8M with NIM compression to 3.26% offset by loan growth and lower credit provisions amid a pending $12.3B acquisition.
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rose 1.9% to $632.7M as 8% average loan growth offset an 18bps decline to 3.26% from lower rates and balance sheet mix.
The fell 32.3% to $31.5M, driven by favorable risk rating migration and lower individually assessed reserves.
Non-interest income grew 13.3% to $107.2 million, primarily from higher bank-owned life insurance events and loan syndication fees, with no securities losses for a fourth straight quarter.
Non- increased 11.4% to $385.0 million, reflecting $8.7 million in transaction costs tied to the pending Banco Santander acquisition and higher compensation.
The improved to 11.71%, and the company declared a $0.40 quarterly while remaining subject to the pause under the Transaction Agreement with Banco Santander.
What changed
The , which stabilized at 3.42% for full-year 2025 and expanded in the first half of that year, has now compressed for two consecutive quarters — falling to 3.36% in Q1 2026 and 3.26% in Q2 2026 — as the lower rate environment continues to pressure asset yields faster than funding costs reprice.
The improvement in risk rating migration flagged in Q2 and Q3 2025 has translated into sustained lower credit costs: the provision fell to $31.5 million from $46.5 million a year ago, and held at 0.23% of average loans, down from 0.42% in Q1 2025.
Share repurchases, which totaled $593.7 million in FY2025, have been paused under the Transaction Agreement with Banco Santander; the company repurchased no shares in Q1 or Q2 2026.
The private credit joint venture with Marathon Asset Management, flagged in FY2025 as facing potential dissolution due to change-in-control provisions, remains unresolved as the Santander transaction progresses toward its expected second-half 2026 close.
What to watch
Whether the stabilizes or compresses further below 3.26% as the lower rate environment continues to pressure asset yields, particularly given the approaching $100 billion asset threshold.
The trajectory of and the allowance coverage ratio, particularly whether the 0.23% charge-off rate is sustained or reverses in commercial non-mortgage and multi-family credits.
Progress toward the expected second-half 2026 close of the Banco Santander acquisition, including any regulatory or shareholder obstacles that could delay or terminate the deal and potentially trigger the $489 million termination fee.
The resolution of the private credit joint venture with Marathon Asset Management, which faces potential dissolution due to change-in-control provisions triggered by both the Santander transaction and CVC Capital Partners' acquisition of Marathon.
Non-interest income grew 13.3% to $107.2M, primarily from higher bank-owned life insurance events and loan syndication fees.
Non- increased 11.4% to $385.0M, reflecting $8.7M in transaction costs for the pending Banco Santander deal and higher compensation.
Commercial Banking PPNR rose 1.0% on higher loan and deposit balances, while Consumer Banking PPNR fell 7.7% due to deposit spread compression.
The company remains well-capitalized with a CET1 ratio of 11.71%, and the pending acquisition by Banco Santander is expected to close in the second half of 2026.
Quantitative and Qualitative Disclosures About Market Risk
Information regarding quantitative and qualitative disclosures about market risk can be found in Part I under the section captioned “Asset/Liability Management and Market Risk” contained in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operat…
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Information regarding quantitative and qualitative disclosures about market risk can be found in Part I under the section captioned “Asset/Liability Management and Market Risk” contained in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and within Note 13: Derivative Financial Instruments in the Notes to Condensed Consolidated Financial Statements contained in Item 1. Financial Statements, which are incorporated herein by reference.
Information regarding legal proceedings can be found within Note 17: Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements, which is incorporated herein by reference.
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Information regarding legal proceedings can be found within Note 17: Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements, which is incorporated herein by reference.
There have been no material changes to the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
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There have been no material changes to the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.