7. Webster Financial
of Waterbury, Conn. closed at 17.74 Wednesday, for a year-to-date return of 50%.
Shares of the Waterbury, Conn.-based lender have remained fairly stable since taking an initial leg up from roughly $12.50 at the start of the year to a high above $20 in the spring. Since September, the stock has stayed mostly in a range of $15 to $18.
The company reported third-quarter net income to common shareholders of $17.8 million, or 22 cents a share, compared to a net loss of $26.1 million, or 39 cents a share, during the third quarter of 2009. Following the pattern for so many banks, earnings improved year-over-year mainly because of a declined in the provision for loan losses to $25 million during the third quarter from $85 million a year earlier.
Third-quarter 2010 earnings suffered from a $2.8 million legal settlement of a class action lawsuit related to overdraft fees.
Following the third-quarter earnings announcement, David Darst of Guggenheim Securities reiterated his buy rating for Webster Financial, citing "generally positive" credit trends and the company's $644 million in loans originated during the third quarter, increasing from $577 million the previous quarter and $383 million a year earlier. Darst's price target for Webster is $20.50.
Webster Financial had total assets of $17.8 billion as of September 30, with an NPA ratio of 1.97%, improving from 2.27% a year earlier. The third-quarter net charge-off ratio was 1.06% and loan loss reserves covered 3.12% of total loans as of September 30.
The company owes $400 million in TARP money and according to SNL Financial, CEO Gerald Plush said at an investor conference on November 11 that the company "previously estimated a capital raise of $100 million to $150 million, and continue to think that's accurate."
The shares trade for 1.4 times tangible book value according to SNL Financial. The forward price-to-earnings ratio is 18.3, based on the consensus earnings estimate of 97 cents a share for 2011. The forward P/E drops to 13, based on the 2012 consensus earnings estimate of $1.36 a share.
Out of 12 analysts covering Webster Financial, three rate the shares a buy, eight recommend holding the shares and one analyst recommends investors sell the share.