The banking crisis has put Webster Financial to the test, which Deutsche Bank says shows it has a “resilient business model.” Analyst Bernard von-Gizycki initiated coverage of the regional bank with a buy rating. He set his price target at $47, which represents a 27% upside from the stock’s close on Wednesday. Shares of Webster Financial have fallen 20% since the banking crisis began on March 9. “WBS has emerged from the peak of the recent crisis and demonstrated the resilience of its business model (both deposits and loans grew vs. deposits declined at many peers) and remains in our view better positioned to navigate the current operating environment,” von-Gizycki wrote on Thursday notes. The bank is not completely out of the woods, he warned. Von-Gizycki expects difficulties to persist over the next 12 months due to a combination of deposit outflows and higher funding pressures, in addition to a potential recession. However, he said, “we believe WBS has a number of levers to control it while increasing loans and funding them with deposit growth.” “WBS has a diversified loan portfolio, funding flexibility should support a lower beta deposit relative to others despite pressure on rates, solid execution of the transaction in Sterling, which is expected to deliver better performance metrics compared to the time of the transaction announcement and cost. savings that will help fund growth opportunities across the business,” said von-Gizycki. He added that the recent sell-off in the stock appears to be “exaggerated” given strong deposit trends, well-placed asset sensitivities, as well as strong credit and equity trends relative to peers. “WBS appears to have weathered the height of the recent banking crisis relatively better than most, underscoring their model of resilient banks.” —CNBC’s Michael Bloom contributed to this report.
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