Is Webster Financial a Buy After Investment Firm Compass Wealth Made the Stock Its Top Holding?

What happened

Compass Wealth Management LLC reported in a filing with the Securities and Exchange Commission dated October 31, 2025, that it initiated a new position in Webster Financial (NYSE:WBS). The fund purchased 96,518 shares, with an estimated transaction value of $31.84 million based on the average price for the third quarter of 2025. This addition brings the fund’s total reportable holdings to 148 positions.

What else to know

Top holdings after the filing:

• WBS: $31.8 million (7.1% of AUM)
• WELL: $23.5 million (5.2% of AUM) as of Sept. 30, 2025
• BSV: $12.9 million (2.9% of AUM) as of Sept. 30, 2025
• VTI: $11.2 million (2.5% of AUM) as of Sept. 30, 2025
• VEA: $10.2 million (2.3% of AUM) as of Sept. 30, 2025

As of Oct. 30, 2025, Webster Financial shares were priced at $56.59, up 9% over the past year but underperforming the S&P 500 by 8 percentage points.

Company Overview

Company Snapshot

• Webster Financial offers commercial banking, health savings accounts (HSAs), and retail banking services, including lending, deposit products, cash management, and investment solutions.
• The company serves individuals, families, small to mid-sized businesses, and employers across the United States, with a focus on commercial clients and HSA account holders.
• It operates through three segments: Commercial Banking, HSA Bank, and Retail Banking, providing a diversified revenue base.

Webster Financial is a regional banking institution with a diversified business model spanning commercial banking, health savings account administration, and retail financial services. The company leverages a broad product suite and a multi-segment approach to drive stable revenue streams, and maintain competitive positioning within the U.S. regional banking sector. Its emphasis on both traditional banking and specialized HSA offerings enables access to a wide range of customer segments and recurring fee income opportunities.

Foolish Take

Investment management firm Compass Wealth Management's decision to buy Webster Financial stock is noteworthy because it not only initiated a stake in the bank, but it was a big one. Webster went from not being part of the fund to rocketing to the top holding.

This move suggests Compass Wealth has a bullish outlook on the financial institution. It's understandable to see why. In Webster's third quarter, revenue reached $732.6 million, up from $647.6 million in 2024.

Moreover, Webster's Q3 diluted earnings per share (EPS) of $1.54 was an improvement over the prior year's $1.10. The bank has delivered this kind of growth in revenue and EPS throughout 2025, and it could have attracted Compass Wealth's investment.

With Webster's EPS growth, its stock sports a reasonable price-to-earnings ratio of about 11, which may have also contributed to Compass Wealth Management's big stake in the bank.

Considering Webster Financial's strong sales growth, rising EPS, and reasonable valuation, these factors suggest the bank is a good investment to buy and hold for the long term.

Glossary

13F reportable assets: Assets disclosed by institutional investment managers in quarterly Securities and Exchange Commission (SEC) filings, showing holdings in U.S.-listed securities.

Assets under management (AUM): The total market value of investments managed on behalf of clients by a fund or firm.

Position: The amount of a particular security or investment held by an individual or institutional investor.

Stake: The ownership interest or share an investor holds in a company or fund.

Dividend yield: Annual dividend payments divided by the share price, expressed as a percentage.

Forward price-to-earnings ratio: A valuation metric comparing a company's current share price to its expected future earnings per share.

Trailing twelve-month (TTM): The 12-month period ending with the most recent quarterly report.

Commercial banking: Banking services provided to businesses, including loans, deposit accounts, and cash management solutions.

Health savings account (HSA): Tax-advantaged savings accounts for medical expenses, typically paired with high-deductible health insurance plans.

Fee income: Revenue generated from non-interest sources, such as account fees, service charges, or advisory fees.

Multi-segment approach: A business strategy targeting multiple customer groups or markets to diversify revenue sources.

Robert Izquierdo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard Bond Index Funds - Vanguard Short-Term Bond ETF, Vanguard FTSE Developed Markets ETF, and Vanguard Total Stock Market ETF. The Motley Fool has a disclosure policy.