Webster Financial (NYSE:WBS) Appear Ready to Return to Normal

After a couple of years of building up their loan loss reserves, FBR said they believe Webster Financial (NYSE:WBS) is poised to return to normal earnings.

FBR says, "We raise our 2011 operating EPS estimate to $1.30 (from $1.05) and our 2012 operating EPS estimate to $1.50 (from $1.30), with lower provision expense the primary change in our estimates. Our estimate of $1.50–$1.75 of normalized EPS is unchanged. Over the past couple years, Webster was proactive in building a large loan loss reserve, which negatively impacted profitability, but today those reserves appear ample relative to Webster's loan book, and should enable its earnings to return to "normal" even as it works through residual credit problems. Shares trade at some premium to peers, which we consider merited by its strengthened capital and growing earnings outlook, but valuation keeps us at a Market Perform."

FBR Capital maintains a "Market Perform" rating on Webster Financial, which was trading at $22.59, gaining $1.19, or 5.56 percent, as of 12:02 PM EST.