Webster Financial Corporation lowered its prime lending rate to 6.75% from 7.00%, a move that took effect on December 11, 2025. The change was announced on December 12, 2025, and is designed to make borrowing cheaper for the bank’s commercial and consumer customers while preserving the firm’s competitive edge in the Northeast market.
The rate cut is expected to stimulate loan demand, supporting Webster’s goal of 4‑5% loan growth for 2025 and potentially approaching 7% as the bank’s loan portfolio expands to $55.1 billion at the end of the third quarter. The lower prime rate should make Webster’s mortgage, auto‑loan, and small‑business financing products more attractive relative to competitors, helping the bank capture additional market share.
Net interest margin (NIM) has been a key focus for Webster. In Q3 2025 the bank reported a NIM of 3.40%, a slight decline from 3.41% in Q2 2025, reflecting the impact of the rate cut. The firm’s low‑cost deposit base—particularly the $9 billion in HSA Bank deposits—provides a cushion that can absorb margin compression while the bank continues to grow its loan book.
Management emphasized the strategic importance of the rate adjustment. CEO John R. Ciulla noted that the move “strengthens Webster’s competitive positioning in a rate‑sensitive market” and that the bank’s “strong deposit base and disciplined cost structure” will help maintain profitability. CFO Neal Holland highlighted that the firm’s “favorable funding mix” allows it to keep margins stable even as it offers more attractive loan rates.
Competitive analysis shows that Webster’s new prime rate is in line with or slightly below rates offered by regional peers such as East West Bancorp and Citizens Financial Group. By aligning its prime rate with market leaders, Webster aims to retain existing customers and attract new borrowers without eroding its margin profile.
The rate cut also signals confidence in the bank’s liquidity and capital position. With a robust deposit base and a focus on low‑cost funding, Webster is positioned to weather potential margin pressure while pursuing its loan growth targets. The move is part of a broader strategy that includes the recent acquisition of SecureSave and a private‑credit joint venture with Marathon Asset Management, both of which are expected to enhance fee income and diversify revenue streams.
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