Table of Contents


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 

FORM 10-Q

_________________________________________________________________________________________________________________________________________-___________________________________________________________________________________________________
☑☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ending September 30, 2017ended March 31, 2024
or
☐Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ____ to ____
Commission File Number: 001-31486


WEBSTER FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
 _____________________________________________________________________________________________________________________________________________________________________
Delaware06-1187536
Delaware06-1187536
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)

145 Bank200 Elm Street, Waterbury,Stamford, Connecticut 0670206902
(Address and zip code of principal executive offices)

(203) 578-2202
(Registrant'sRegistrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolsName of each exchange on which registered
Common Stock, par value $0.01 per shareWBSNew York Stock Exchange
Depositary Shares, each representing 1/1000th interest in a shareWBS-PrFNew York Stock Exchange
of 5.25% Series F Non-Cumulative Perpetual Preferred Stock
Depositary Shares, each representing 1/40th interest in a shareWBS-PrGNew York Stock Exchange
of 6.50% Series G Non-Cumulative Perpetual Preferred Stock
Indicate by check mark whether the registrant:registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ☑☒  Yes☐No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☑☒  Yes    ☐No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”,filer,” “smaller reporting company”company,” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer☒
Large accelerated filer☑Accelerated filer☐Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transactiontransition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act Rule 12b-2)Act). ☐Yes☑   ☒ No
The number of shares of common stock, par value $.01$0.01 per share, outstanding as of October 31, 2017May 3, 2024 was 92,074,790.171,486,534.



INDEX
Page No.


INDEX
Page No.
Key to Acronyms and Terms
ii
Forward-Looking Statements
iii
Item 1.
130
Item 2.
401
Item 3.
6874
Item 4.
6874
Item 1.
6975
Item 1A.
6975
Item 2.
6975
Item 3.
7075
Item 4.
7075
Item 5.
7075
Item 6.
7076
7176
7277




i


KEY TO ACRONYMS AND TERMS
ACLAllowance for credit losses
Agency CMBSAgency commercial mortgage-backed securities
Agency CMOAgency collateralized mortgage obligations
Agency MBSAgency mortgage-backed securities
ALCOAsset/Liability Committee
AmetrosAmetros Financial Corporation
AOCI (AOCL)Accumulated other comprehensive income (loss), net of tax
ASCAccounting Standards Codification
ASU or the UpdateAccounting Standards Update
Basel III Capital RulesCapital rules under a global regulatory framework developed by the Basel Committee on Banking Supervision
BHC ActBank Holding Company Act of 1956, as amended
CECLCurrent expected credit losses
CET1Common Equity Tier 1 Capital, defined by Basel III capital rules
CET1 Risk-Based CapitalRatio of CET1 capital to total risk-weighted assets, defined by the Basel III Capital Rules
CFPBConsumer Financial Protection Bureau
CLOCollateralized loan obligations
CMBSNon-agency commercial mortgage-backed securities
COVID-19Coronavirus
CRACommunity Reinvestment Act of 1977
DTADeferred tax asset
EADExposure at default
FASBFinancial Accounting Standards Board
FDICFederal Deposit Insurance Corporation
FHLBFederal Home Loan Bank
FICOFair Isaac Corporation
FRBFederal Reserve Bank
FTEFully tax-equivalent
FTPFunds Transfer Pricing, a matched maturity funding concept
GAAPU.S. Generally Accepted Accounting Principles
Holding CompanyWebster Financial Corporation
HSAHealth savings account
HSA BankHSA Bank, a division of Webster Bank, National Association
interLINKInterlink Insured Sweep LLC
LGDLoss given default
LIHTCLow-income housing tax credit
MBSNon-agency mortgage-backed securities
NAVNet asset value
OCCOffice of the Comptroller of the Currency
OREOOther real estate owned
PDProbability of default
PPNRPre-tax, pre-provision net revenue
PTNRPre-tax, net revenue
ROURight-of-use
S&PStandard and Poor’s Rating Services
SECUnited States Securities and Exchange Commission
SOFRSecured overnight financing rate
SterlingSterling Bancorp, collectively with its consolidated subsidiaries
Tier 1 Leverage CapitalRatio of Tier 1 capital to average tangible assets, defined by the Basel III Capital Rules
Tier 1 Risk-Based CapitalRatio of Tier 1 capital to total risk-weighted assets, defined by the Basel III Capital Rules
Total Risk-Based CapitalRatio of total capital to total risk-weighted assets, defined by the Basel III Capital Rules
UPBUnpaid principal balance
Webster Bank or the BankWebster Bank, National Association, a wholly-owned subsidiary of Webster Financial Corporation
Webster or the CompanyWebster Financial Corporation, collectively with its consolidated subsidiaries
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
ii
FOWARD-LOOKING

FORWARD-LOOKING STATEMENTS and FACTORS THAT COULD AFFECT FUTURE RESULTS
This Quarterly Report on Form 10-Q contains "forward-looking statements"“forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "believes," "anticipates," "expects," "intends," "targeted," "continue," "remain," "will," "should," "may," "plans," "estimates"“believes,” “anticipates,” “expects,” “intends,” “targeted,” “continue,” “remain,” “will,” “should,” “may,” “plans,” “estimates,” and similar references to future periods; however, suchperiods. However, these words are not the exclusive means of identifying such statements. References to the "Company," " Webster," "we," "our," or "us" mean Webster Financial Corporation and its consolidated subsidiaries.
Examples of forward-looking statements include, but are not limited to:
▪projections of revenues, expenses, income or loss, earnings or loss per share, and other financial items;
▪statements of plans, objectives and expectations of Webster or its management or Board of Directors;
▪statements of future economic performance; and
▪statements of assumptions underlying such statements.
▪projections of revenues, expenses, income or loss, earnings or loss per share, and other financial items;
▪statements of plans, objectives, and expectations of the Company or its management or Board of Directors;
▪statements of future economic performance; and
▪statements of assumptions underlying such statements.
Forward-looking statements are based on Webster’sthe Company’s current expectations and assumptions regarding its business, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Webster’sThe Company’s actual results may differ materially from those contemplated by the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance.
Factors that could cause our actual results to differ from those discussed in theany forward-looking statements include, but are not limited to:
▪local, regional, national and international economic conditions and the impact they may have on us and our customers and our assessment of that impact;
▪volatility and disruption in national and international financial markets;
▪government intervention in the U.S. financial system;
▪changes in the level of non-performing assets and charge-offs;
▪changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements;
▪adverse conditions in the securities markets that lead to impairment in the value of our investment securities;
▪inflation, interest rate, securities market and monetary fluctuations;
▪the timely development and acceptance of new products and services and perceived overall value of these products and services by customers;
▪changes in consumer spending, borrowings and savings habits;
▪technological changes and cyber-security matters;
▪the ability to increase market share and control expenses;
▪changes in the competitive environment among banks, financial holding companies and other financial services providers;
▪the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) with which we and our subsidiaries must comply, including the Dodd-Frank Act;
▪the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters;
▪the costs and effects of legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews; and
▪our success at managing the risks involved in the foregoing items.
▪our ability to successfully execute our business plan and strategic initiatives, and manage any risks or uncertainties;
▪continued regulatory changes or other mitigation efforts taken by government agencies in response to volatility in the banking industry, including due to the bank failures in 2023;
▪volatility in Webster’s stock price due to investor sentiment, including in light of the bank failures of 2023 and related turmoil in the banking industry;
▪local, regional, national, and international economic conditions, and the impact they may have on us or our customers;
▪volatility and disruption in national and international financial markets, including as a result of geopolitical conflict;
▪the impact of unrealized losses in our available-for-sale securities portfolio;
▪changes in laws and regulations, or existing laws and regulations that we become subject to, including those concerning banking, taxes, dividends, securities, insurance, and healthcare administration, with which we must comply;
▪adverse conditions in the securities markets that could lead to impairment in the value of our securities portfolio;
▪inflation, monetary fluctuations, the possibility of a recession, and changes in interest rates, including the impact of such changes on economic conditions, customer behavior, funding costs, and our loans and leases and securities portfolios;
▪possible changes in governmental monetary and fiscal policies, including, but not limited to, Federal Reserve policies in connection with continued inflationary pressures and the ability of the U.S. Congress to increase the U.S. statutory debt limit, as needed, as well as the impact of the 2024 U.S presidential election;
▪the impact of a potential U.S. federal government shutdown;
▪the timely development and acceptance of new products and services, and the perceived value of those products and services by customers;
▪changes in deposit flows, consumer spending, borrowings, and savings habits;
▪our ability to implement new technologies and maintain secure and reliable information and technology systems;
▪the effects of any cybersecurity threats or fraudulent activity, including those that involve our third-party vendors and service providers;
▪performance by our counterparties and third-party vendors;
▪our ability to increase market share and control expenses;
▪changes in the competitive environment among banks, financial holding companies, and other traditional and non-traditional financial service providers;
▪our ability to maintain adequate sources of funding and liquidity;
▪changes in the mix of loan geographies, sectors, or types and the level of non-performing assets and charge-offs;
▪changes in estimates of future reserve requirements based upon periodic review under relevant regulatory and accounting requirements;
▪the effect of changes in accounting policies and practices applicable to us, including impacts of recently adopted accounting guidance;
▪legal and regulatory developments, including the resolution of legal proceedings or regulatory or other governmental inquiries, and the results of regulatory examinations or reviews;
▪our ability to navigate any environmental, social, governmental, and sustainability concerns of different stakeholders and activists that may arise from our business activities; and
▪our ability to assess and monitor the effect of artificial intelligence on our business and operations.
▪unforeseen events, such as pandemics or natural disasters, and any governmental or societal responses thereto;
Any forward-looking statements made by the Companystatement in this Quarterly Report on Form 10-Q speaks only as of the date they areon which it is made. Factors or events that could cause the Company’s actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as may be required by law.

ii

WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
KEY TO ACRONYMS AND TERMS
Agency CMBSAgency commercial mortgage-backed securities
Agency CMOAgency collateralized mortgage obligations
Agency MBSAgency mortgage-backed securities
ALCOAsset/Liability Committee
ALLLAllowance for loan and lease losses
AOCLAccumulated other comprehensive loss, net of tax
ASCAccounting Standards Codification
ASUAccounting Standards Update
Basel IIICapital rules under a global regulatory framework developed by the Basel Committee on Banking Supervision
CDICore deposit intangible assets
CET1 capitalCommon Equity Tier 1 Capital, defined by Basel III capital rules
CLOCollateralized loan obligation securities
CMBSNon-agency commercial mortgage-backed securities
Dodd-Frank ActDodd-Frank Wall Street Reform and Consumer Protection Act of 2010
FASBFinancial Accounting Standards Board
FDICFederal Deposit Insurance Corporation
FHLBFederal Home Loan Bank
FICOFair Isaac Corporation
FINRAFinancial Industry Regulatory Authority
FRBFederal Reserve Bank
FTPFunds Transfer Pricing, a matched maturity funding concept
GAAPU.S. Generally Accepted Accounting Principles
Holding CompanyWebster Financial Corporation
HSA BankA division of Webster Bank, National Association
ISDAInternational Swaps Derivative Association
LBPLook back period
LEPLoss emergence period
LGDLoss given default
LIBORLondon Interbank Offered Rate
LPLLPL Financial Holdings Inc.
NIINet interest income
OCCOffice of the Comptroller of the Currency
OCI/OCLOther comprehensive income (loss)
OREOOther real estate owned
OTTIOther-than-temporary impairment
PDProbability of default
PPNRPre-tax, pre-provision net revenue
RPARisk participation agreement
SECUnited States Securities and Exchange Commission
SERPSupplemental defined benefit retirement plan
SIPCSecurities Investor Protection Corporation
TDRTroubled debt restructuring, defined in ASC 310-40 "Receivables-Troubled Debt Restructurings by Creditors"
VIEVariable interest entity, defined in ASC 810-10 "Consolidation-Overall"
Webster BankWebster Bank, National Association, a wholly-owned subsidiary of Webster Financial Corporation
Webster or the CompanyWebster Financial Corporation, collectively with its consolidated subsidiaries


iii

Table of Contents

PART I.I – FINANCIAL INFORMATION
ITEM 1.2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL STATEMENTS
WEBSTER FINANCIAL CORPORATIONCONDITION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 September 30,
2017		 December 31,
2016
(In thousands, except share data)(Unaudited)  
Assets:   
Cash and due from banks$215,244
 $190,663
Interest-bearing deposits26,992
 29,461
Investment securities available-for-sale, at fair value2,591,162
 2,991,091
Investment securities held-to-maturity (fair value of $4,481,675 and $4,125,125)4,497,311
 4,160,658
Federal Home Loan Bank and Federal Reserve Bank stock136,340
 194,646
Loans held for sale (valued under fair value option $32,855 and $60,260)32,855
 67,577
Loans and leases17,446,421
 17,026,588
Allowance for loan and lease losses(201,803) (194,320)
Loans and leases, net17,244,618
 16,832,268
Deferred tax assets, net82,895
 84,391
Premises and equipment, net130,358
 137,413
Goodwill538,373
 538,373
Other intangible assets, net30,589
 33,674
Cash surrender value of life insurance policies528,136
 517,852
Accrued interest receivable and other assets295,309
 294,462
Total assets$26,350,182
 $26,072,529
Liabilities and shareholders' equity:   
Deposits:   
Non-interest-bearing$4,138,206
 $4,021,061
Interest-bearing16,717,029
 15,282,796
Total deposits20,855,235
 19,303,857
Securities sold under agreements to repurchase and other borrowings902,902
 949,526
Federal Home Loan Bank advances1,507,681
 2,842,908
Long-term debt225,704
 225,514
Accrued expenses and other liabilities219,873
 223,712
Total liabilities23,711,395
 23,545,517
Shareholders’ equity:   
Preferred stock, $.01 par value; Authorized - 3,000,000 shares:   
Series E issued and outstanding (5,060 shares)122,710
 122,710
Common stock, $.01 par value; Authorized - 200,000,000 shares:   
Issued (93,679,599 and 93,651,601 shares)937
 937
Paid-in capital1,123,685
 1,125,937
Retained earnings1,535,585
 1,425,320
Treasury stock, at cost (1,764,131 and 1,899,502 shares)(75,032) (70,899)
Accumulated other comprehensive loss, net of tax(69,098) (76,993)
Total shareholders' equity2,638,787
 2,527,012
Total liabilities and shareholders' equity$26,350,182
 $26,072,529
See accompanying Notes to Condensed Consolidated Financial Statements.

WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTSRESULTS OF INCOME (Unaudited)
 Three months ended September 30, Nine months ended September 30,
(In thousands, except per share data)2017 2016 2017 2016
Interest Income:       
Interest and fees on loans and leases$181,130
 $157,071
 $523,394
 $459,050
Taxable interest and dividends on investments43,819
 43,384
 136,167
 136,734
Non-taxable interest on investment securities5,765
 4,820
 17,103
 13,691
Loans held for sale307
 440
 826
 1,006
Total interest income231,021
 205,715
 677,490
 610,481
Interest Expense:       
Deposits16,760
 12,594
 44,874
 37,267
Securities sold under agreements to repurchase and other borrowings3,847
 3,447
 10,970
 10,999
Federal Home Loan Bank advances6,894
 6,979
 22,543
 21,517
Long-term debt2,616
 2,498
 7,748
 7,444
Total interest expense30,117
 25,518
 86,135
 77,227
Net interest income200,904
 180,197
 591,355
 533,254
Provision for loan and lease losses10,150
 14,250
 27,900
 43,850
Net interest income after provision for loan and lease losses190,754
 165,947
 563,455
 489,404
Non-interest Income:       
Deposit service fees38,321
 35,734
 113,519
 105,553
Loan and lease related fees6,346
 9,253
 19,898
 20,563
Wealth and investment services7,750
 7,593
 22,900
 21,992
Mortgage banking activities2,421
 4,322
 8,038
 11,335
Increase in cash surrender value of life insurance policies3,720
 3,743
 10,943
 11,060
Gain on sale of investment securities, net—
 —
 —
 414
Impairment loss on investment securities recognized in earnings—
 —
 (126) (149)
Other income7,288
 5,767
 18,267
 23,093
Total non-interest income65,846
 66,412
 193,439
 193,861
Non-interest Expense:       
Compensation and benefits89,192
 83,148
 264,822
 244,089
Occupancy14,744
 15,004
 46,957
 44,915
Technology and equipment22,580
 19,753
 66,646
 59,067
Intangible assets amortization1,002
 1,493
 3,085
 4,570
Marketing4,045
 4,622
 14,101
 14,215
Professional and outside services4,030
 4,795
 11,813
 11,360
Deposit insurance6,344
 6,177
 19,701
 19,596
Other expense19,886
 21,105
 62,901
 63,508
Total non-interest expense161,823
 156,097
 490,026
 461,320
Income before income tax expense94,777
 76,262
 266,868
 221,945
Income tax expense30,281
 24,445
 81,322
 72,478
Net income64,496
 51,817
 185,546
 149,467
Preferred stock dividends and other(2,070) (2,183) (6,284) (6,540)
Earnings applicable to common shareholders$62,426
 $49,634
 $179,262
 $142,927
        
Earnings per common share:       
Basic$0.68
 $0.54
 $1.95
 $1.57
Diluted0.67
 0.54
 1.94
 1.56
See accompanying Notes to Condensed Consolidated Financial Statements.


WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
 Three months ended September 30, Nine months ended September 30,
(In thousands)2017 2016 2017 2016
Net income$64,496
 $51,817
 $185,546
 $149,467
Other comprehensive income, net of tax:       
Total securities available-for-sale and transferred872
 1,218
 1,847
 19,988
Total derivative instruments1,111
 2,015
 2,921
 1,589
Total defined benefit pension and other postretirement benefit plans1,001
 1,125
 3,127
 3,376
Other comprehensive income, net of tax2,984
 4,358
 7,895
 24,953
Comprehensive income$67,480
 $56,175
 $193,441
 $174,420
See accompanying Notes to Condensed Consolidated Financial Statements.


WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)
(In thousands, except per share data)
Preferred
Stock
Common
Stock
Paid-In
Capital
Retained
Earnings
Treasury
Stock, at cost
Accumulated
Other
Comprehensive
Loss, Net of Tax
Total
Shareholders'
Equity
Balance at December 31, 2016$122,710
$937
$1,125,937
$1,425,320
$(70,899)$(76,993)$2,527,012
Net income—
—
—
185,546
—
—
185,546
Other comprehensive income, net of tax—
—
—
—
—
7,895
7,895
Dividends and dividend equivalents declared on common stock $0.77 per share—
—
124
(71,096)—
—
(70,972)
Dividends paid on Series E preferred stock $1,200.00 per share—
—
—
(6,072)—
—
(6,072)
Stock-based compensation—
—
—
1,887
9,070
—
10,957
Exercise of stock options—
—
(2,376)—
7,677
—
5,301
Common shares acquired related to stock compensation plan activity—
—
—
—
(9,295)—
(9,295)
Common stock repurchase program—
—
—
—
(11,585)—
(11,585)
Balance at September 30, 2017$122,710
$937
$1,123,685
$1,535,585
$(75,032)$(69,098)$2,638,787
        
(In thousands, except per share data)
Preferred
Stock
Common
Stock
Paid-In
Capital
Retained
Earnings
Treasury
Stock, at cost
Accumulated
Other
Comprehensive
Loss, Net of Tax
Total
Shareholders'
Equity
Balance at December 31, 2015$122,710
$937
$1,124,325
$1,315,948
$(71,854)$(78,106)$2,413,960
Net income—
—
—
149,467
—
—
149,467
Other comprehensive income, net of tax—
—
—
—
—
24,953
24,953
Dividends and dividend equivalents declared on common stock $0.73 per share—
—
109
(67,088)—
—
(66,979)
Dividends paid on Series E preferred stock $1,200.00 per share—
—
—
(6,072)—
—
(6,072)
Stock-based compensation, net of tax impact—
—
2,413
245
8,031
—
10,689
Exercise of stock options—
—
(1,307)—
3,679
—
2,372
Common shares acquired related to stock compensation plan activity—
—
—
—
(5,392)—
(5,392)
Common stock repurchase program—
—
—
—
(11,206)—
(11,206)
Common stock warrants repurchased—
—
(163)—
—
—
(163)
Balance at September 30, 2016$122,710
$937
$1,125,377
$1,392,500
$(76,742)$(53,153)$2,511,629
See accompanying Notes to Condensed Consolidated Financial Statements.

WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 Nine months ended September 30,
(In thousands)2017 2016
Operating Activities:   
Net income$185,546
 $149,467
Adjustments to reconcile net income to net cash provided by operating activities:   
Provision for loan and lease losses27,900
 43,850
Deferred tax (benefit) expense(3,241) 14,425
Depreciation and amortization28,060
 27,342
Amortization of earning assets and funding, premiums/discounts, net33,338
 42,855
Stock-based compensation9,050
 8,558
Gain on sale, net of write-down, on foreclosed and repossessed assets(551) (744)
Write-down (gain on sale), net on premises and equipment218
 (713)
Impairment loss on investment securities recognized in earnings126
 149
Gain on the sale of investment securities, net—
 (414)
Increase in cash surrender value of life insurance policies(10,943) (11,060)
Mortgage banking activities(8,038) (11,335)
Proceeds from sale of loans held for sale262,029
 298,840
Origination of loans held for sale(227,435) (320,739)
Net decrease (increase) in derivative contract assets net of liabilities11,235
 (73,765)
Net (increase) decrease in accrued interest receivable and other assets(19,405) 51,270
Net increase (decrease) in accrued expenses and other liabilities12,386
 (30,419)
Net cash provided by operating activities300,275
 187,567
Investing Activities:   
Net decrease in interest-bearing deposits2,469
 133,969
Purchases of available for sale investment securities(305,309) (615,174)
Proceeds from maturities and principal payments of available for sale investment securities695,595
 430,099
Proceeds from sales of available for sale investment securities—
 259,283
Purchases of held-to-maturity investment securities(887,240) (640,218)
Proceeds from maturities and principal payments of held-to-maturity investment securities525,499
 517,513
Net proceeds of Federal Home Loan Bank stock58,306
 3,243
Alternative investments return of capital (capital call), net107
 (649)
Net increase in loans(446,454) (1,010,423)
Proceeds from loans not originated for sale7,445
 20,764
Proceeds from life insurance policies746
 —
Proceeds from the sale of foreclosed and repossessed assets5,651
 6,900
Proceeds from the sale of premises and equipment2,182
 1,550
Additions to premises and equipment(20,034) (31,250)
Proceeds from redemption of other assets7,581
 —
Net cash used for investing activities(353,456) (924,393)
    
See accompanying Notes to Condensed Consolidated Financial Statements.
    

WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited), continued
 
 Nine months ended September 30,
(In thousands)2017 2016
Financing Activities:   
Net increase in deposits1,551,987
 1,248,710
Proceeds from Federal Home Loan Bank advances9,245,000
 14,150,000
Repayments of Federal Home Loan Bank advances(10,580,218) (14,226,147)
Net decrease in securities sold under agreements to repurchase and other borrowings(46,624) (350,695)
Dividends paid to common shareholders(70,732) (66,648)
Dividends paid to preferred shareholders(6,072) (6,072)
Exercise of stock options5,301
 2,372
Excess tax benefits from stock-based compensation—
 2,363
Common stock repurchase program(11,585) (11,206)
Common shares purchased related to stock compensation plan activity(9,295) (5,392)
Common stock warrants repurchased—
 (163)
Net cash provided by financing activities77,762
 737,122
Net increase in cash and due from banks24,581
 296
Cash and due from banks at beginning of period190,663
 199,693
Cash and due from banks at end of period$215,244
 $199,989
    
Supplemental disclosure of cash flow information:   
Interest paid$85,242
 $79,054
Income taxes paid78,832
 61,639
Noncash investing and financing activities:   
Transfer of loans and leases to foreclosed properties and repossessed assets$6,503
 $4,917
Transfer of loans from loans and leases to loans-held-for-sale—
 20,547
See accompanying Notes to Condensed Consolidated Financial Statements.

Note 1: Summary of Significant Accounting Policies
Nature of OperationsOPERATIONS
Webster Financial Corporation is a bank holding company and financial holding company under the Bank Holding CompanyBHC Act, incorporated under the laws of Delaware in 1986, and headquartered in Waterbury, Connecticut. At September 30, 2017,Stamford, CT. Webster Bank is a leading commercial bank in the Northeast that provides a wide range of digital and traditional financial solutions across three differentiated lines of business: Commercial Banking, Healthcare Financial Corporation's principal asset is all ofServices, and Consumer Banking. While its core footprint spans the outstanding capital stock of Webster Bank.
Webster delivers financial services to individuals, families, and businesses primarily within its regional footprintnortheastern U.S. from New York to Massachusetts. WebsterMassachusetts, certain businesses operate in extended geographies.
The following discussion and analysis provides information that management believes is necessary to understand the Company’s financial condition, results of operations, and cash flows for the three months ended March 31, 2024, as compared to 2023. This information should be read in conjunction with the Condensed Consolidated Financial Statements, and accompanying Notes thereto, contained in Part I - Item 1. Financial Statements of this report, and the Consolidated Financial Statements, and accompanying Notes thereto, contained in Part II - Item 8. Financial Statements and Supplementary Data of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The Company’s financial condition, results of operations, and cash flows for the three months ended March 31, 2024, are not necessarily indicative of future results that may be attained for the entire year or other interim periods.
Results of Operations
The following table summarizes selected financial highlights and key performance indicators:
 At or for the three months ended March 31,
(In thousands, except per share and ratio data)20242023
Income and performance ratios:
Net income$216,323 $221,004 
Net income available to common stockholders212,160 216,841 
Earnings per diluted common share1.23 1.24 
Return on average assets (annualized)1.15 %1.22 %
Return on average tangible common stockholders’ equity (annualized) (non-GAAP)16.30 17.66 
Return on average common stockholders’ equity (annualized)10.01 10.94 
Non-interest income as a percentage of total revenue14.89 10.62 
Asset quality:
ACL on loans and leases$641,442 $613,914 
Non-performing assets (1)
289,254 186,551 
ACL on loans and leases / total loans and leases1.26 %1.21 %
Net charge-offs / average loans and leases (annualized)0.29 0.20 
Non-performing loans and leases / total loans and leases (1)
0.56 0.36 
Non-performing assets / total loans and leases plus OREO and repossessed assets (1)
0.57 0.37 
ACL on loans and leases / non-performing loans and leases (1)
226.17 331.81 
Other ratios:
Tangible common equity (non-GAAP)7.15 %7.15 %
Tier 1 Risk-Based Capital11.08 10.93 
Total Risk-Based Capital13.21 12.99 
CET1 Risk-Based Capital10.57 10.42 
Stockholders’ equity / total assets11.49 11.08 
Net interest margin3.35 3.66 
Efficiency ratio (non-GAAP)45.25 41.64 
Equity and share related:
Common stockholders’ equity$8,463,519 $8,010,315 
Book value per common share49.07 45.85 
Tangible book value per common share (non-GAAP)30.22 29.47 
Common stock closing price50.77 39.42 
Dividends and equivalents declared per common share0.40 0.40 
Common shares issued and outstanding172,464 174,712 
Weighted-average common shares outstanding - basic170,445 172,766 
Weighted-average common shares outstanding - diluted170,704 172,883 
(1)Non-performing assets and the related asset quality ratios exclude the impact of net unamortized (discounts)/premiums and net unamortized deferred (fees)/costs on loans and leases.
1

Non-GAAP Financial Measures
The non-GAAP financial measures identified in the preceding table provide both management and investors with information useful in understanding the Company’s financial position, results of operations, the strength of its capital position, and overall business performance. These non-GAAP financial measures are used by management for performance measurement purposes, as well as for internal planning and forecasting, and by securities analysts, investors, and other interested parties to assess peer company operating performance. Management believes that this presentation, together with the accompanying reconciliations, provides investors with a more complete understanding of the factors and trends affecting the Company’s business and allows investors to view its performance in a similar manner.
Tangible book value per common share represents stockholders’ equity less preferred stock and goodwill and other intangible assets (tangible common equity) divided by common shares outstanding at the end of the reporting period. The tangible common equity ratio represents tangible common equity divided by total assets less goodwill and other intangible assets (tangible assets). Both of these measures are used by management to evaluate the Company’s capital position. The annualized return on average tangible common stockholders’ equity is calculated using net income available to common stockholders, adjusted for the annualized tax-effected amortization of intangible assets, as a percentage of average tangible common equity. This measure is used by management to assess the Company’s performance against its peer financial institutions. The efficiency ratio, which represents the costs expended to generate a dollar of revenue, is calculated excluding certain non-operational items in order to measure how well the Company is managing its recurring operating expenses.
These non-GAAP financial measures should not be considered a substitute for GAAP basis financial measures. Because
non-GAAP financial measures are not standardized, it may not be possible to compare these with other companies that present financial measures having the same or similar names.
The following tables reconcile non-GAAP financial measures to the most comparable financial measures defined by GAAP:
At March 31,
(Dollars and shares in thousands, except per share data)20242023
Tangible book value per common share:
Stockholders’ equity$8,747,498 $8,294,294 
Less: Preferred stock283,979 283,979 
Common stockholders’ equity$8,463,519 $8,010,315 
Less: Goodwill and other intangible assets3,250,909 2,861,310 
Tangible common stockholders’ equity$5,212,610 $5,149,005 
Common shares outstanding172,464 174,712 
Tangible book value per common share$30.22 $29.47 
Book value per common share (GAAP)$49.07 $45.85 
Tangible common equity ratio:
Tangible common stockholders’ equity$5,212,610 $5,149,005 
Total assets$76,161,693 $74,844,395 
Less: Goodwill and other intangible assets3,250,909 2,861,310 
Tangible assets$72,910,784 $71,983,085 
Tangible common equity ratio7.15 %7.15 %
Common stockholders’ equity to total assets (GAAP)11.11 %10.70 %
2

Three months ended March 31,
(Dollars in thousands)20242023
Return on average tangible common stockholders’ equity:
Net income$216,323 $221,004 
Less: Preferred stock dividends4,163 4,163 
Add: Intangible assets amortization, tax-effected7,263 7,503 
Net income adjusted for preferred stock dividends and intangible assets amortization$219,423 $224,344 
Net income adjusted for preferred stock dividends and
intangible assets amortization (annualized)		$877,692 $897,376 
Average stockholders’ equity$8,759,992 $8,215,676 
Less: Average preferred stock283,979 283,979 
 Average goodwill and other intangible assets3,090,751 2,849,673 
Average tangible common stockholders’ equity$5,385,262 $5,082,024 
Return on average tangible common stockholders’ equity16.30 %17.66 %
Return on average common stockholders’ equity (annualized) (GAAP)10.01 %10.94 %
Efficiency ratio:
Non-interest expense$335,923 $332,467 
Less: Foreclosed property activities(330)(262)
Intangible assets amortization9,194 9,497 
Operating lease depreciation663 1,884 
FDIC special assessment estimate11,862 — 
Merger-related expenses (1)
3,139 29,373 
Non-interest expense$311,395 $291,975 
Net interest income$567,739 $595,283 
Add: FTE adjustment15,879 15,911 
 Non-interest income99,353 70,766 
 Other income (2)
7,626 4,311 
Less: Operating lease depreciation663 1,884 
(Loss) on sale of investment securities, net(9,826)(16,747)
Net gain on sale of mortgage servicing rights11,655 — 
Income$688,105 $701,134 
Efficiency ratio45.25 %41.64 %
Non-interest expense as a percentage of total revenue (GAAP)50.36 %49.92 %
(1)Merger-related expenses include Ametros acquisition expenses and primarily Sterling merger expenses for the three months ended March 31, 2024, and 2023, respectively. Additional information regarding the Company’s business developments, including the acquisition of Ametros in January 2024, can be found within Note 2: Business Developments in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements.
(2)Other income (non-GAAP) includes the taxable equivalent of net income generated from LIHTC investments.
3

Net Interest Income
Net interest income is the Company’s primary source of revenue, representing 85.1% and 89.4% of total revenue for the three months ended March 31, 2024, and 2023, respectively. Net interest income is the difference between interest income on interest-earning assets (i.e., loans and leases and investment securities) and interest expense on interest-bearing liabilities
(i.e., deposits and borrowings), which are used to fund interest-earning assets and other activities. Net interest margin is calculated as the ratio of FTE net interest income to average interest-earning assets.
Net interest income, net interest margin, yields, and ratios on an FTE basis are considered non-GAAP financial measures, and are used by management to evaluate the comparability of the Company’s revenue arising from both taxable and non-taxable sources. FTE adjustments are determined assuming a statutory federal income tax rate of 21%.
Net interest income and net interest margin are influenced by the volume and mix of interest-earning assets and interest-bearing liabilities, changes in interest rate levels, re-pricing frequencies, contractual maturities, prepayment behavior, and the use of interest rate derivative financial instruments. These factors are affected by changes in economic conditions, which impacts monetary policies, competition for loans and deposits, as well as the extent of interest lost on non-performing assets.
Net interest income decreased $27.6 million, or 4.6%, from $595.3 million for the three months ended March 31, 2023, to $567.7 million for the three months ended March 31, 2024. On an FTE basis, net interest income also decreased $27.6 million. Net interest margin decreased 31 basis points from 3.66% for the three months ended March 31, 2023, to 3.35% for the three months ended March 31, 2024.
Average total interest-earning assets increased $2.0 billion, or 3.1%, from $66.1 billion for the three months ended March 31, 2023, to $68.1 billion for the three months ended March 31, 2024, primarily due to increases of $1.6 billion and $0.8 billion in average total investment securities and average loans and leases, respectively, partially offset by decreases of $0.3 billion and $0.1 billion in average interest-bearing deposits held at the FRB and average FHLB and FRB stock, respectively. The average yield on interest-earning assets increased 51 basis points from 5.08% for the three months ended March 31, 2023, to 5.59% for the three months ended March 31, 2024, primarily due to the higher interest rate environment, partially offset by lower purchase accounting accretion on loans and leases that were acquired in the Sterling merger.
Average total investment securities increased $1.6 billion, or 11.0%, from $14.6 billion for the three months ended March 31, 2023, to $16.2 billion for the three months ended March 31, 2024, primarily due to a higher volume of purchases net of paydown activities and sales of available-for-sale securities. At March 31, 2024, and 2023, the average total investment securities portfolio comprised 23.8% and 22.1% of average total interest-earning assets, respectively. The average yield on total investment securities increased 85 basis points from 2.79% for the three months ended March 31, 2023, to 3.64% for the three months ended March 31, 2024, primarily due to the reinvestment of funds received from the sale of lower yielding securities for securities at higher interest rates.
Average loans and leases increased $0.8 billion, or 1.7%, from $50.1 billion for the three months ended March 31, 2023, to $50.9 billion for the three months ended March 31, 2024, primarily due to commercial real estate and residential mortgage growth in 2023, partially offset by a decrease in mortgage warehouse loans. At March 31, 2024, and 2023, average loans and leases comprised 74.8% and 75.8% of average total interest-earning assets, respectively. The average yield on loans and leases increased 44 basis points from 5.80% for the three months ended March 31, 2023, to 6.24% for the three months ended March 31, 2024, primarily due to the higher interest rate environment, partially offset by lower purchase accounting accretion on loans and leases that were acquired in the Sterling merger.
Average interest-bearing deposits held at the FRB decreased $0.3 billion, or 36.3%, from $0.9 billion for the three months ended March 31, 2023, to $0.6 billion for the three months ended March 31, 2024, primarily due to the Company's risk management approach to hold higher levels of on-balance sheet liquidity in 2023. At March 31, 2024, and 2023, average interest-bearing deposits held at the FRB comprised 0.8% and 1.4% of total average interest-earning assets, respectively. The average yield on interest-bearing deposits held at the FRB increased 75 basis points from 4.63% for the three months ended March 31, 2023, to 5.38% for the three months ended March 31, 2024, primarily due to the higher interest rate environment.
Average FHLB and FRB stock decreased $0.1 billion, or 25.1%, from $0.5 billion for the three months ended March 31, 2023, to $0.4 billion for the three months ended March 31, 2024, primarily due to the lower FHLB stock investment required as a result of the decrease in FHLB advances in the second half of 2023. At March 31, 2024, and 2023, average FHLB and FRB stock comprised 0.5% and 0.7% of total average interest-earning assets, respectively. The average yield on average FHLB and FRB stock increased 75 basis points from 4.34% for the three months ended March 31, 2023, to 5.09% for the three months ended March 31, 2024, primarily due to the higher interest rate environment.
4

Average total interest-bearing liabilities increased $2.0 billion, or 3.3%, from $62.5 billion for the three months ended March 31, 2023, to $64.5 billion for the three months ended March 31, 2024, primarily due to an increase of $5.8 billion in average total deposits, partially offset by decreases of $3.0 billion, $0.6 billion, $0.1 billion, and $0.1 billion in average FHLB advances, average federal funds purchased, average securities sold under agreements to repurchase, and average long-term debt, respectively. The average rate on interest-bearing liabilities increased 87 basis points from 1.52% for the three months ended March 31, 2023, to 2.39% for the three months ended March 31, 2024, primarily due to the higher interest rate environment.
Average total deposits increased $5.8 billion, or 10.5%, from $54.8 billion for the three months ended March 31, 2023, to $60.6 billion for the three months ended March 31, 2024, reflecting an increase of $7.8 billion in interest-bearing deposits, partially offset by a decrease of $2.0 billion in non-interest-bearing deposits. The overall increase in average total deposits was primarily due to growth in interLINK, money market deposits, and retail certificates of deposit, partially offset by decreases in average non-interest-bearing and savings deposits. At March 31, 2024, and 2023, average total deposits comprised 93.9% and 87.7% of total average interest-bearing liabilities, respectively. The average rate on deposits increased 112 basis points from 1.11% for the three months ended March 31, 2023, to 2.23% for the three months ended March 31, 2024, primarily due to the higher interest rate environment and growth in higher costing deposit products, such as money market accounts and certificates of deposit. Time deposits as a percentage of average total interest-bearing deposits increased from 9.5% for the three months ended March 31, 2023, to 14.6% for the three months ended March 31, 2024, primarily due to a shift in customer preferences from lower rate savings accounts into higher rate certificates of deposits.
Average FHLB advances decreased $3.0 billion, or 52.6%, from $5.7 billion for the three months ended March 31, 2023, to $2.7 billion for the three months ended March 31, 2024, primarily due to the Company’s risk management approach to hold higher levels of on-balance sheet liquidity in 2023. At March 31, 2024, and 2023, average FHLB advances comprised 4.2% and 9.1% of average total interest-bearing liabilities, respectively. The average rate on FHLB advances to repurchase increased 70 basis points from 4.80% for the three months ended March 31, 2023, to 5.50% for the three months ended March 31, 2024, primarily due to the higher interest rate environment.
Average federal funds purchased decreased $0.6 billion, or 79.1%, from $0.7 billion for the three months ended March 31, 2023, to $0.1 billion for the three months ended March 31, 2024, primarily due to the additional liquidity generated from the interLINK deposit sweep program, which allowed for the Company to decrease its federal funds borrowing volume in 2023.
At March 31, 2024, and 2023, average federal funds purchased comprised 0.2% and 1.1% of average total interest-bearing liabilities, respectively. The average rate on federal funds purchased increased 85 basis points from 4.62% for the three months ended March 31, 2023, to 5.47% for the three months ended March 31, 2024, primarily due to the higher interest rate environment.
Average securities sold under agreements to repurchase decreased $0.1 billion, or 46.4% from $0.2 billion for the three months ended March 31, 2023, to $0.1 billion for the three months ended March 31, 2024, primarily due to short-term liquidity management needs. At March 31, 2024, and 2023, average securities sold under agreements to repurchase comprised 0.2% and 0.4% of total average interest-bearing liabilities, respectively. The average rate on securities sold under agreements to repurchase increased 41 basis points from 0.11% for the three months ended March 31, 2023, to 0.52% for the three months ended March 31, 2024, primarily due to the higher interest rate environment.
Average long-term debt decreased $0.1 billion, or 8.5%, from $1.1 billion for the three months ended March 31, 2023, to $1.0 billion for the three months ended March 31, 2024, primarily due to the maturity of its 4.375% senior fixed rate notes in February 2024. At March 31, 2024, and 2023, average long-term debt comprised 1.5% and 1.7% of average total interest-bearing liabilities, respectively. The average rate on long-term debt remained relatively flat at approximately 3.65% for both the three months ended March 31, 2024, and 2023.
5

The following table summarizes daily average balances, interest, and average yield/rate by major category, and net interest margin on an FTE basis:
 Three months ended March 31,
 20242023
(Dollars in thousands)Average
Balance		Interest Income/ExpenseAverage Yield/RateAverage
Balance		Interest Income/ExpenseAverage Yield/Rate
Assets
Interest-earning assets:
Loans and leases (1)
$50,938,418 $801,864 6.24 %$50,095,192 $725,543 5.80 %
Investment securities: (2)
Taxable13,955,397 141,131 3.87 12,093,477 92,290 2.91 
Non-taxable2,287,952 12,514 2.18 2,539,768 13,684 2.16 
Total investment securities16,243,349 153,645 3.64 14,633,245 105,974 2.79 
FHLB and FRB stock343,992 4,352 5.09 459,375 4,910 4.34 
Interest-bearing deposits (3)
572,401 7,786 5.38 898,884 10,396 4.63 
Loans held for sale13,418 82 2.45 4,630 16 1.39 
Total interest-earning assets68,111,578 $967,729 5.59 %66,091,326 $846,839 5.08 %
Non-interest-earning assets7,221,187 6,225,199 
Total assets$75,332,765 $72,316,525 
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Demand deposits$10,582,416 $— — %$12,629,928 $— — %
Health savings accounts8,605,640 3,191 0.15 8,292,450 3,027 0.15 
Interest-bearing checking, money market,
and savings		34,055,685 249,650 2.95 29,853,370 123,048 1.67 
Time deposits7,321,625 83,130 4.57 4,024,472 24,129 2.43 
Total deposits60,565,366 335,971 2.23 54,800,220 150,204 1.11 
Securities sold under agreements to repurchase130,653 171 0.52 243,848 67 0.11 
Federal funds purchased140,165 1,937 5.47 671,175 7,760 4.62 
FHLB advances2,689,632 37,367 5.50 5,673,826 68,126 4.80 
Long-term debt (2)
980,926 8,665 3.64 1,072,252 9,488 3.65 
Total borrowings3,941,376 48,140 4.88 7,661,101 85,441 4.48 
Total interest-bearing liabilities64,506,742 $384,111 2.39 %62,461,321 $235,645 1.52 %
Non-interest-bearing liabilities2,066,031 1,639,528 
Total liabilities66,572,773 64,100,849 
Preferred stock283,979 283,979 
Common stockholders’ equity8,476,013 7,931,697 
Total stockholders’ equity8,759,992 8,215,676 
Total liabilities and stockholders’ equity$75,332,765 $72,316,525 
Net interest income (FTE)$583,618 $611,194 
Less: FTE adjustment(15,879)(15,911)
Net interest income$567,739 $595,283 
Net interest margin (FTE)3.35 %3.66 %
(1)Non-accrual loans have been included in the computation of average balances.
(2)For the purpose of our average yield/rate and margin computations, unsettled trades on investment securities, unrealized gains (losses) on available-for-sale investment securities, and basis adjustments on long-term debt from de-designated fair value hedges are excluded.
(3)Interest-bearing deposits are a component of Cash and cash equivalents on the Condensed Consolidated Statements of Cash Flows included in Part I - Item 1. Financial Statements.
6

The following table summarizes the change in net interest income attributable to changes in rate and volume, and reflects net interest income on an FTE basis:
Three months ended March 31,
2024 vs. 2023
Increase (decrease) due to
(In thousands)
Rate (1)
VolumeTotal
Change in interest on interest-earning assets:
Loans and leases$69,137 $7,184 $76,321 
Investment securities36,483 11,188 47,671 
FHLB and FRB stock675 (1,233)(558)
Interest-bearing deposits1,166 (3,776)(2,610)
Loans held for sale76 (10)66 
Total interest income$107,537 $13,353 $120,890 
Change in interest on interest-bearing liabilities:
Health savings accounts$50 $114 $164 
Interest-bearing checking, money market, and savings70,546 56,056 126,602 
Time deposits42,447 16,554 59,001 
Securities sold under agreements to repurchase135 (31)104 
Federal funds purchased317 (6,140)(5,823)
FHLB advances5,073 (35,832)(30,759)
Long-term debt11 (834)(823)
Total interest expense$118,579 $29,887 $148,466 
Net change in net interest income$(11,042)$(16,534)$(27,576)
(1)The change attributable to mix, a combined impact of rate and volume, is included with the change due to rate.
Provision for Credit Losses
The provision for credit losses decreased $1.2 million, or 2.7%, from $46.7 million for the three months ended March 31, 2023, to $45.5 million for the three months ended March 31, 2024. The balance for the three months ended March 31, 2023, included a one-time merger related charge of $6.8 million, which increased the provision for unfunded loan commitments. Excluding this charge, the provision for credit losses increased $5.6 million, primarily due to the impact of the current macroeconomic environment on credit performance, risk rating migration, and loan growth.
Additional information regarding the Company’s provision for credit losses and ACL can be found under the sections captioned “Loans and Leases” through “Allowance for Credit Losses on Loans and Leases” contained elsewhere in this
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
7

Non-Interest Income
 Three months ended March 31,
(In thousands)20242023
Deposit service fees$42,589 $45,436 
Loan and lease related fees19,767 23,005 
Wealth and investment services7,924 6,587 
Cash surrender value of life insurance policies5,946 6,728 
(Loss) on sale of investment securities, net(9,826)(16,747)
Other income32,953 5,757 
Total non-interest income$99,353 $70,766 
Total non-interest income increased $28.6 million, or 40.4%, from $70.8 million for the three months ended March 31, 2023, to $99.4 million for the three months ended March 31, 2024, primarily due to an increase in Other income and lower net losses on sale of investment securities, partially offset by decreases in Loan and lease related fees and Deposit service fees.
Other income increased $27.2 million, or 472.4%, from $5.8 million for the three months ended March 31, 2023, to $33.0 million for the three months ended March 31, 2024, primarily due to a $11.7 million net gain on sale of mortgage servicing rights, excess proceeds from bank-owned life insurance policies, higher income generated from interest rate derivative activities, and incremental fee income related to the acquired Ametros business.
Net losses on sale of investment securities decreased $6.9 million, or 41.3%, from $16.7 million for the three months ended March 31, 2023, to $9.8 million or the three months ended March 31, 2024. The Company sold $344.1 million of Agency MBS, Corporate debt securities, and Municipal bonds and notes classified as available-for-sale for proceeds of $331.7 million during the three months ended March 31, 2024, and $415.9 million of U.S. Treasury notes and Corporate debt securities classified as available-for-sale for proceeds of $395.4 million during the three months ended March 31, 2023. The amount included in non-interest income reflects the portion of the total loss that was not attributed to a decline in credit quality.
Loan and lease related fees decreased $3.2 million, or 14.1%, from $23.0 million for the three months ended March 31, 2023, to $19.8 million for the three months ended March 31, 2024, primarily due to lower loan servicing fees.
Deposit service fees decreased $2.8 million, or 6.3%, from $45.4 million for the three months ended March 31, 2023, to $42.6 million for the three months ended March 31, 2024, primarily due to lower customer account service fees, partially offset by higher cash management fees.


8

Non-Interest Expense
 Three months ended March 31,
(In thousands)20242023
Compensation and benefits$188,540 $173,200 
Occupancy19,439 20,171 
Technology and equipment45,836 44,366 
Intangible assets amortization9,194 9,497 
Marketing4,281 3,476 
Professional and outside services12,981 32,434 
Deposit insurance24,223 12,323 
Other expense31,429 37,000 
Total non-interest expense$335,923 $332,467 
Total non-interest expense increased $3.4 million, or 1.0%, from $332.5 million for the three months ended March 31, 2023, to $335.9 million for the three months ended March 31, 2024, primarily due to increases in Compensation and benefits and Deposit insurance, partially offset by decreases in Professional and outside services and Other expense.
Compensation and benefits increased $15.3 million, or 8.9%, from $173.2 million for the three months ended March 31, 2023, to $188.5 million for the three months ended March 31, 2024, primarily due to the impact from the employees acquired in the Ametros acquisition, and higher compensation, performance-based incentives, and employee benefits.
Deposit insurance increased $11.9 million, or 96.6%, from $12.3 million for the three months ended March 31, 2023, to $24.2 million for the three months ended March 31, 2024, due to an increase in the FDIC special assessment estimate.
Professional and outside services decreased $19.4 million, or 60.0%, from $32.4 million for the three months ended March 31, 2023, to $13.0 million for the three months ended March 31, 2024, primarily due to a decrease in technology consulting fees, which were higher in 2023 as a result of the core conversion of the legacy Webster and legacy Sterling platforms.
Other expense decreased $5.6 million, or 15.1%, from $37.0 million for the three months ended March 31, 2023, to $31.4 million for the three months ended March 31, 2024, primarily due to a decrease in pension expense and other miscellaneous expenses.

9

Income Taxes
The Company recognized income tax expense of $69.3 million and $65.8 million for the three months ended March 31, 2024, and 2023, respectively, reflecting effective tax rates of 24.3% and 23.0%, respectively.
The increase in both income tax expense and the effective tax rate reflects the recognition of $9.4 million of net discrete tax expense during the three months ended March 31, 2024, which included a $10.9 million expense related to items recognized in prior years, as compared to the recognition of $6.0 million of net discrete tax benefits during the three months ended March 31, 2023, which included benefits related to Sterling merger related costs.
Additional information regarding the Company’s income taxes, including its DTAs, can be found within Note 9: Income Taxes in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Segment Reporting
The Company has three reportable segments, which reflect its primary differentiated lines of business: Commercial Banking, Healthcare Financial Services, and Consumer Banking. Segment performance is evaluated using PPNR, or PTNR, as appropriate. Certain Treasury activities and other functional divisions, such as information technology, human resources, risk management, bank operations, and the operations of interLINK, as well as amounts required to reconcile non-GAAP profitability metrics to those reported in accordance with GAAP, are included in the Corporate and Reconciling category.
Effective January 1, 2024, the Company realigned certain of its Business Banking operations to better serve its customers and deliver operational efficiencies. Under this realignment, $1.5 billion of loans and $2.2 billion of deposits were reassigned from Commercial Banking to Consumer Banking. Prior period amounts have been recast accordingly.
In addition, with the acquisition of Ametros on January 24, 2024, the Company formed a new reportable segment called Healthcare Financial Services, which includes the aggregated financial information of the HSA Bank and Ametros businesses.
The following is a description of the Company’s three reportable segments and their primary services at March 31, 2024:
Commercial Banking serves businesses with more than $10 million of revenue through its Commercial Real Estate, Equipment Finance, Middle Market, Regional Banking, Asset-Based Lending, Commercial Services, Public Sector Finance, Sponsor and Specialty Finance, Verticals and Support, Private Banking, and Treasury Management business units.
Healthcare Financial Services offers consumer-directed healthcare solutions that includes HSAs, health reimbursement arrangements, the administration of medical insurance claim settlements, flexible spending accounts, and commuter benefits. Accounts are distributed nationwide directly to employers and individual consumers, as well as through national and regional insurance carriers, benefit consultants, and financial advisors.
Consumer Banking offers consumer banking, mortgage lending, financial planning, trust,deposit and fee-based services, residential mortgages, home equity lines, secured and unsecured loans, debit and credit card products, and investment services to individual consumers and small businesses through its Consumer Lending and Business Banking business units. Consumer Banking operates a distribution network consisting of 196 banking offices,centers and 347 ATMs, mobilea customer care center, and a full range of web and mobile-based banking services, primarily throughout southern New England and the New York metro and suburban markets.
Additional information regarding the Company’s reportable segments and its internet website (segment reporting methodology can be found within Note 14: Segment Reporting in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements of this report, and within Note 21: Segment Reporting in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
10

Commercial Banking
www.websterbank.comOperating Results:
Three months ended March 31,
(In thousands)20242023
Net interest income$341,942 $360,293 
Non-interest income34,280 33,720 
Non-interest expense106,225 98,833 
Pre-tax, pre-provision net revenue$269,997 $295,180 
Commercial Banking’s PPNR decreased $25.2 million, or 8.5%, for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, due to a decrease in net interest income and an increase in non-interest expense, partially offset by an increase in non-interest income. The $18.4 million decrease in net interest income is primarily due to lower average deposit balances and higher rates paid on deposits. The $0.6 million increase in non-interest income is primarily due to higher cash management fees and interest rate derivative activities, partially offset by lower loan servicing fees. The $7.4 million increase in non-interest expense is primarily due to higher employee compensation, operational support, and technology expenses in order to support balance sheet growth.
Selected Balance Sheet and Off-Balance Sheet Information:www.wbst.com). Webster also offers equipment financing,
(In thousands)At March 31,
2024		At December 31,
2023
Loans and leases$39,883,343 $39,480,945 
Deposits16,075,390 16,053,850 
Assets under administration / management (off-balance sheet)3,016,817 2,911,293 
Loans and leases increased $0.4 billion, or 1.0%, at March 31, 2024, as compared to December 31, 2023, primarily due to organic growth in the commercial real estate, public sector finance and private banking business units, partially offset by net principal paydowns in the commercial non-mortgage, asset-based lending, and asset-based lendingequipment finance categories. Total portfolio originations for the three months ended March 31, 2024, and 2023, were $2.2 billion and $3.0 billion, respectively. The $0.8 billion decrease was primarily due to lower originations in all loan categories except for commercial real estate, which increased as compared to the prior year quarter.
Deposits increased $21.5 million, or 0.1%, at March 31, 2024, as compared to December 31, 2023, primarily due to higher money market and savings account balances, partially offset by lower non-interest-bearing demand deposit balances.
Commercial Banking held assets under administration of $0.9 billion at both March 31, 2024, and December 31, 2023, and assets under management of $2.1 billion and $2.0 billion at March 31, 2024, and December 31, 2023, respectively. The combined $0.1 billion increase, or 3.6%, was primarily due to an increase in investment account balances as a result of higher valuations in the equity markets and net funds invested.
11

Healthcare Financial Services
Operating Results:
Three months ended March 31,
(In thousands)20242023
Net interest income$86,138 $71,730 
Non-interest income31,061 24,067 
Non-interest expense52,127 43,700 
Pre-tax net revenue$65,072 $52,097 
Healthcare Financial Services’ PTNR increased $13.0 million, or 24.9%, for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, due to increases in net interest income and non-interest income, partially offset by an increase in non-interest expense. The $14.4 million increase in net interest income is primarily due to the acquisition of Ametros, an increase in net deposit spread, and organic HSA deposit growth. The $7.0 million increase in
non-interest income is primarily due to incremental fee income related to the acquired Ametros business, and higher customer account and interchange fees. The $8.4 million increase in non-interest expense is primarily due to incremental expenses related to the acquired Ametros business, and higher employee compensation and service contract expenses.
Selected Balance Sheet and Off-Balance Sheet Information:
(In thousands)At March 31,
2024		At December 31,
2023
Deposits$9,473,560 $8,287,705 
Assets under administration, through linked investment accounts (off-balance sheet)5,194,204 4,641,830 
Deposits increased $1.2 billion, or 14.3%, at March 31, 2024, as compared to December 31, 2023, primarily due to additional HSA account holders, organic HSA deposit growth, and the acquisition of Ametros.
Assets under administration, through linked investment accounts, increased $0.6 billion, or 11.9%, at March 31, 2024, as compared to December 31, 2023, primarily due to additional HSA account holders and an increase in investment account balances as a result of higher valuations in the equity markets.
12

Consumer Banking
Operating Results:
Three months ended March 31,
(In thousands)20242023
Net interest income$205,777 $234,604 
Non-interest income33,978 27,636 
Non-interest expense120,121 116,555 
Pre-tax, pre-provision net revenue$119,634 $145,685 
Consumer Banking’s PPNR decreased $26.1 million, or 17.9%, for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, due to a decrease in net interest income and an increase in non-interest expense, partially offset by an increase in non-interest income. The $28.8 million decrease in net interest income is primarily due to higher rates paid on deposits, partially offset by higher average loan balances and deposit growth. The $6.3 million increase in non-interest income is primarily due to a net gain on sale of mortgage servicing rights, partially offset by lower customer account service fees and loan servicing fees. The $3.6 million increase in non-interest expense is primarily due to higher employee compensation and operational support expenses, partially offset by lower technology and professional service costs.
Selected Balance Sheet and Off-Balance Sheet Information:
(In thousands)At March 31,
2024		At December 31,
2023
Loans$11,208,804 $11,234,743 
Deposits26,914,464 26,251,722 
Assets under administration (off-balance sheet)8,124,874 7,876,437 
Loans decreased $25.9 million, or 0.2%, at March 31, 2024, as compared to December 31, 2023, primarily due to net principal paydowns in home equity lines and loans, other consumer loans, and small business commercial and industrial loans, partially offset by organic growth in small business commercial real estate and residential mortgages. Total portfolio originations for both the three months ended March 31, 2024, and 2023, were $0.3 billion.
Deposits increased $0.7 billion, or 2.5%, at March 31, 2024, as compared to December 31, 2023, primarily due to higher money market, savings, and certificates of deposit balances, partially offset by lower non-interest-bearing demand deposits balances.
Assets under administration increased $0.2 billion, or 3.2% at March 31, 2024, as compared to December 31, 2023, primarily due to an increase in investment account balances as a result of higher valuations in the equity markets.
13

Financial Condition
Total assets increased $1.3 billion, or 1.6%, from $74.9 billion at December 31, 2023, to $76.2 billion at March 31, 2024. The change in total assets was primarily attributed to the following, which experienced changes greater than $100 million:
•Cash and cash equivalents decreased $170.6 million, primarily due to the Company’s risk management approach to hold higher levels of on-balance sheet liquidity in 2023;
•Total investment securities increased $246.7 million, reflecting a $605.3 million increase in the held-to-maturity portfolio, partially offset by a decrease of $358.6 million in the available-for-sale portfolio. The net increase in total investment securities was primarily due to purchases exceeding paydown activities, particularly across the Northeast. On a nationwide basis, through its HSA Bank division, Webster Bank offersAgency MBS, Agency CMBS, and administers health savings accounts, flexible spending accounts, health reimbursement accounts,CMBS categories, partially offset by $344.1 million in sales of available-for-sale Agency MBS, Corporate debt and commuter benefits.Municipal bonds and notes;
Basis•Loans held for sale increased $233.2 million, primarily due to the transfer of Presentationan aggregate $220.2 million of payroll finance and factored receivables loans from portfolio to held for sale at March 31, 2024;
•Loans and leases increased $372.6 million, primarily due to $2.5 billion of originations during the three months ended March 31, 2024, particularly across the commercial real estate and commercial non-mortgage categories, partially offset by net principal paydowns, and the aforementioned transfer of $220.2 million of payroll finance and factored receivables loans from portfolio to held for sale;
•Goodwill and other net intangible assets increased a combined $416.3 million, primarily due to the acquisition of Ametros on January 24, 2024, which resulted in the recognition of $228.2 million in goodwill, a $182.8 million core deposit intangible asset, and a $6.1 million trade name; and
•Accrued interest receivable and other assets increased $113.8 million. Notable drivers of the change included increases in LIHTC investments, accrued interest receivable, and accrued income from bank-owned life insurance policies, partially offset by decreases in treasury derivative assets and other asset balances.
Total liabilities increased $1.1 billion, or 1.7%, from $66.3 billion at December 31, 2023, to $67.4 billion at March 31, 2024. The change in total liabilities was primarily attributed to the following:
•Total deposits decreased $36.5 million, reflecting a $520.0 million decrease in non-interest-bearing deposits, partially offset by a $483.5 million increase in interest-bearing deposits. The net decrease in total deposits was primarily due to a $1.9 billion decrease in brokered certificates of deposit and lower balances in non-interest-bearing demand, partially offset by higher balances across all other deposit products, the receipt of the remaining Ametros deposits that were held at other banks, and organic HSA deposit growth;
•Securities sold under agreements to repurchase and other borrowings decreased $96.5 million, reflecting a $231.5 million decrease in short-term repurchase agreements, which was primarily due to the timing of maturities in the first quarter of 2024, partially offset by a $135.0 million increase in overnight federal funds, which was primarily due to a change in short-term funding mix;
•FHLB advances increased $1.3 billion, also primarily due to a change in short-term funding mix;
•Long-term debt decreased $134.3 million, primarily due to the maturity of its 4.375% senior fixed-rate notes on
February 15, 2024; and
•Accrued expenses and other liabilities increased $126.4 million. Notable drivers of the change included increases in unfunded commitments for LIHTC investments, treasury derivative liabilities, income taxes payable, and deferred revenue, partially offset by decreases in accrued compensation and accrued interest payable.
Total stockholders’ equity remained relatively flat at approximately $8.7 billion at both March 31, 2024, and December 31, 2023. Although the financial statement caption as a whole did not significantly change, activity within total stockholders’ equity included the following during the three months ended March 31, 2024:
•Net income recognized of $216.3 million;
•Other comprehensive loss, net of tax, of $65.5 million;
•Dividends paid to common and preferred stockholders of $69.0 million and $4.2 million, respectively;
•Stock-based compensation expense of $13.8 million; and
•Repurchases of common stock of $20.4 million under the Company’s common stock repurchase program and $13.5 million related to employee stock-based compensation plans.
14

Investment Securities
Through its Corporate Treasury function, the Company maintains and invests in debt securities that are primarily used to provide a source of liquidity for operating needs, to generate interest income, and as a means to manage the Company’s
interest-rate risk. The Company’s investment securities are classified into two major categories: available-for-sale and
held-to-maturity.
The ALCO manages the Company’s investment securities in accordance with regulatory guidelines and corporate policies, which include limitations on aspects such as concentrations in and types of investments, as well as minimum risk ratings per type of security. In addition, the OCC may further establish individual limits on certain types of investments if the concentration in any such security presents a safety and soundness concern. At March 31, 2024, and December 31, 2023, the Company had total investment securities of $16.3 billion and $16.0 billion, respectively, with an average risk weighting for regulatory purposes of 16.3% and 17.2%, respectively. The Bank held the entirety of the Company's investment securities portfolio at both March 31, 2024, and December 31, 2023. However, the Holding Company may also directly hold investment securities.
The following table summarizes the balances and percentage composition of the Company’s investment securities:
 At March 31, 2024At December 31, 2023
(In thousands)Amount%Amount%
Available-for-sale:
Government agency debentures$262,4883.1 %$264,6333.0 %
Municipal bonds and notes1,207,35014.0 1,573,23317.6 
Agency CMO46,2360.5 48,9410.5 
Agency MBS3,364,41439.1 3,347,09837.4 
Agency CMBS2,321,23027.0 2,288,07125.5 
CMBS731,8518.5 763,7498.5 
Corporate debt617,2097.2 622,1556.9 
Private label MBS41,3080.5 42,8080.5 
Other9,0550.1 9,0410.1 
Total available-for-sale$8,601,141100.0 %$8,959,729100.0 %
Held-to-maturity:
Agency CMO$22,4890.3 %$23,4700.3 %
Agency MBS2,618,78334.1 2,409,52134.1 
Agency CMBS4,028,79952.5 3,625,62751.2 
Municipal bonds and notes (1)
910,42211.8 916,10413.0 
CMBS99,5821.3 100,0751.4 
Total held-to-maturity$7,680,075100.0 %$7,074,797100.0 %
Total investment securities$16,281,216$16,034,526
(1)The balances at both March 31, 2024, and December 31, 2023, exclude the $0.2 million ACL recorded on held-to-maturity securities.
Available-for-sale securities decreased $0.4 billion, or 4.0%, from $9.0 billion at December 31, 2023, to $8.6 billion at
March 31, 2024, primarily due to the sale of $0.3 billion in Agency MBS, Corporate debt securities, and Municipal bonds and notes, which resulted in $12.4 million of gross realized losses, $2.6 million of which were attributed to a decline in credit quality, and therefore, have been included in the Provision for credit losses. This decrease was partially offset by purchases exceeding paydown activities, particularly across the Agency MBS, Agency CMBS, and CMBS categories. The average FTE yield on the available-for-sale portfolio was 3.85% for the three months ended March 31, 2024, as compared to 2.76% for the three months ended March 31, 2023. The 109 basis point increase is primarily due to the reinvestment of funds received from the sale of lower yielding securities for securities at higher interest rates.
At both March 31, 2024, and December 31, 2023, gross unrealized losses on available-for-sale securities were $0.8 billion. Available-for-sale securities are evaluated for credit losses on a quarterly basis. At both March 31, 2024, and December 31, 2023, no ACL was recorded on available-for-sale securities as each of the securities in the Company’s portfolio are investment grade and current as to principal and interest, and their price changes are consistent with interest and credit spreads when adjusting for convexity, rating, and industry differences. As of March 31, 2024, based on current market conditions and the Company’s targeted balance sheet composition strategy, the Company intends to hold its available-for-sale securities in unrealized loss positions through the anticipated recovery period.


15

Held-to-maturity securities increased $0.6 billion, or 8.6%, from $7.1 billion at December 31, 2023, to $7.7 billion at
March 31, 2024, primarily due to purchases exceeding paydown activities, particularly across the Agency MBS and Agency CMBS categories. The average FTE yield on the held-to-maturity portfolio was 3.37% for the three months ended March 31, 2024, as compared to 2.82% for the three months ended March 31, 2023, respectively. The 55 basis point increase is primarily due to higher interest rates on recent securities purchases, as compared to interest rates on securities with paydown activities.
At March 31, 2024, and December 31, 2023, gross unrealized losses on held-to-maturity securities were $0.9 billion and $0.8 billion, respectively. The $0.1 billion increase is primarily due to higher interest rates. Held-to-maturity securities are evaluated for credit losses on a quarterly basis under the CECL methodology. At both March 31, 2024, and December 31, 2023, the ACL on held-to-maturity securities was $0.2 million.
The following table summarizes the book value of investment securities by the earlier of either contractual maturity or call date, as applicable, along with the respective weighted-average yields:
At March 31, 2024
1 Year or Less1 - 5 Years5 - 10 YearsAfter 10 YearsTotal
(Dollars in thousands)Amount
Weighted-
Average
Yield (1)
Amount
Weighted-
Average
Yield (1)
Amount
Weighted-
Average
Yield (1)
Amount
Weighted-
Average
Yield (1)
Amount
Weighted-
Average
Yield (1)
Available-for-sale:
Government agency debentures$— — %$75,163 2.41 %$16,350 2.26 %$170,975 3.31 %$262,488 2.99 %
Municipal bonds and notes13,973 1.94 112,977 1.74 613,219 1.64 467,181 1.64 1,207,350 1.66 
Agency CMO— — 234 2.98 4,260 3.09 41,742 2.85 46,236 2.87 
Agency MBS— — 16,461 1.33 129,198 1.79 3,218,755 3.94 3,364,414 3.84 
Agency CMBS8,382 0.85 100,352 1.08 31,436 2.12 2,181,060 4.49 2,321,230 4.29 
CMBS— — 69,319 6.92 — — 662,532 6.90 731,851 6.90 
Corporate debt9,266 3.44 186,102 2.66 375,065 3.26 46,776 3.67 617,209 3.12 
Private label MBS— — — — — — 41,308 4.01 41,308 4.01 
Other— — 4,855 3.80 4,200 2.70 — — 9,055 3.29 
Total available-for-sale$31,621 2.09 %$565,463 2.66 %$1,173,728 2.21 %$6,830,329 4.22 %$8,601,141 3.83 %
Held-to-maturity:
Agency CMO$— — %$— — %$— — %$22,489 2.88 %$22,489 2.88 %
Agency MBS90 3.09 462 1.99 27,025 2.66 2,591,206 2.82 2,618,783 2.82 
Agency CMBS— — 57,690 2.96 60,029 2.38 3,911,080 3.88 4,028,799 3.84 
Municipal bonds and notes29,756 3.15 36,446 2.84 212,658 2.73 631,562 3.24 910,422 3.10 
CMBS— — — — — — 99,582 2.69 99,582 2.69 
Total held-to-maturity$29,846 3.15 %$94,598 2.91 %$299,712 2.65 %$7,255,919 3.43 %$7,680,075 3.39 %
Total investment securities$61,467 2.61 %$660,061 2.69 %$1,473,440 2.30 %$14,086,248 3.81 %$16,281,216 3.63 %
(1)Weighted-average yields exclude FTE adjustments, and are calculated using the sum of the total book value multiplied by the yield divided by the sum of the total book value for each security, major type, and maturity bucket.
Additional information regarding the Company’s investment securities’ portfolios can be found within Note 3: Investment Securities in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements.
16

Loans and Leases
The following table summarizes the amortized cost and percentage composition of the Company’s loans and leases:
 At March 31, 2024At December 31, 2023
(Dollars in thousands)Amount%Amount%
Commercial non-mortgage$16,696,07032.7 %$16,885,47533.3 %
Asset-based1,492,8862.9 1,557,8413.1 
Commercial real estate13,972,91627.3 13,569,76226.7 
Multi-family7,896,58615.5 7,587,97015.0 
Equipment financing1,280,0582.5 1,328,7862.6 
Residential8,226,15416.1 8,227,92316.2 
Home equity1,479,4202.9 1,516,9553.0 
Other consumer54,5520.1 51,3400.1 
Total loans and leases (1)
$51,098,642100.0 %$50,726,052100.0 %
(1)The amortized cost balances at March 31, 2024, and December 31, 2023, exclude the ACL recorded on loans and leases of $641.4 million and $635.7 million, respectively.
The following table summarizes loans and leases by contractual maturity, along with the indication of whether interest rates are fixed or variable:
At March 31, 2024
(In thousands)1 Year or Less1 - 5 Years5 - 15 YearsAfter 15 YearsTotal
Fixed rate:
Commercial non-mortgage$129,444 $788,203 $2,328,841 $1,510,237 $4,756,725 
Asset-based— 95,369 — — 95,369 
Commercial real estate514,891 1,965,463 1,122,284 124,036 3,726,674 
Multi-family363,685 3,510,062 1,121,337 63,908 5,058,992 
Equipment financing119,567 924,002 236,489 — 1,280,058 
Residential844 50,788 364,416 5,015,988 5,432,036 
Home equity2,986 23,777 167,846 210,170 404,779 
Other consumer21,117 6,166 1,043 112 28,438 
Total fixed rate loans and leases$1,152,534 $7,363,830 $5,342,256 $6,924,451 $20,783,071 
Variable rate:
Commercial non-mortgage$4,123,296 $7,176,187 $569,885 $69,977 $11,939,345 
Asset-based415,701 981,816 — — 1,397,517 
Commercial real estate2,497,244 4,811,981 2,255,905 681,112 10,246,242 
Multi-family346,702 1,254,661 1,207,623 28,608 2,837,594 
Residential185 10,448 287,848 2,495,637 2,794,118 
Home equity1,638 6,526 124,349 942,128 1,074,641 
Other consumer3,588 20,534 1,992 — 26,114 
Total variable rate loans and leases$7,388,354 $14,262,153 $4,447,602 $4,217,462 $30,315,571 
Total loans and leases (1)
$8,540,888 $21,625,983 $9,789,858 $11,141,913 $51,098,642 
(1)Amounts due exclude total accrued interest receivable of $284.1 million.
(2)The Company has a back-to-back swap program, whereby it enters into an interest rate swap with a qualified customer and simultaneously enters into an equal and opposite interest-rate swap with a swap counterparty, to hedge interest rate risk. At March 31, 2024, there were 898 customer interest rate swaps arrangements with a total notional amount of $7.2 billion to convert floating-rate loan payments to fixed-rate loan payments.

17

Portfolio Concentrations
The Company actively monitors and manages concentrations of credit risk pertaining to specific industries and geographies that may exist in its loan and lease portfolio.
At March 31, 2024, and December 31, 2023, commercial non-mortgage, commercial real estate, and multi-family loans comprised 75.5% and 75.0%, respectively, of the Company’s loan and lease portfolio, with a large portion of the borrowers or properties associated with these loans geographically concentrated in New York City and the proximate areas.
The following table summarizes commercial non-mortgage loans by industry, as determined using standardized industry classification codes, which are used by the Company to categorize loans based on the borrower’s type of business:
At March 31, 2024At December 31, 2023
(In thousands)Amount%Amount%
Finance$3,928,510 23.5 %$4,109,280 24.4 %
Services2,720,172 16.3 2,928,621 17.3 
Communications1,391,025 8.3 1,166,668 6.9 
Healthcare1,027,056 6.2 848,867 5.0 
Manufacturing996,336 6.0 1,163,798 6.9 
Retail & Wholesale780,762 4.7 874,547 5.2 
Real Estate773,660 4.6 815,769 4.8 
Transportation & Public Utilities550,132 3.3 547,967 3.3 
Construction447,574 2.7 477,303 2.8 
Other4,080,843 24.4 3,952,655 23.4 
Total Commercial non-mortgage$16,696,070 100.0 %$16,885,475 100.0 %
As illustrated above, the Company’s commercial non-mortgage portfolio is well diversified across industries, and concentrations are generally consistent from period to period. Any change in composition is consistent with the Company's portfolio growth strategy.
The following tables summarize commercial real estate and multi-family loans by both geography and property type:
(In thousands)At March 31, 2024At December 31, 2023
Geography:Amount%Amount%
New York City$7,634,045 34.9 %$7,482,324 35.4 %
Other New York County3,297,133 15.1 3,321,313 15.7 
Connecticut1,789,142 8.2 1,749,839 8.3 
New Jersey1,782,090 8.1 1,729,139 8.2 
Massachusetts1,336,681 6.1 1,338,936 6.3 
Southeast2,523,181 11.6 2,311,574 10.9 
Other3,507,230 16.0 3,224,607 15.2 
Total Commercial real estate & Multi-family$21,869,502 100.0 %$21,157,732 100.0 %
Property Type:
Multi-family (1)
$7,896,586 36.1 %$7,587,970 35.9 %
Industrial & Warehouse3,721,986 17.0 3,467,859 16.4 
Retail1,620,643 7.4 1,765,512 8.3 
Healthcare & Senior Living1,581,836 7.3 1,576,511 7.5 
Construction1,512,655 6.9 1,442,621 6.8 
Office986,182 4.5 1,041,451 4.9 
Hotel462,961 2.1 489,379 2.3 
Other4,086,653 18.7 3,786,429 17.9 
Total Commercial real estate & Multi-family$21,869,502 100.0 %$21,157,732 100.0 %
(1)Includes $1.5 billion and $1.3 billion of rent-regulated multi-family loans at March 31, 2024, and December 31, 2023, respectively.
Given the foundational change in office demand driven by the acceptance of remote work options, the commercial real estate market has experienced an increase in office property vacancies following the COVID-19 pandemic. As such, commercial real estate performance across the United States related to the office sector continues to be an area of uncertainty.
At March 31, 2024, the Company’s outstanding balance for commercial real estate office loans was $1.0 billion, or 1.9% of total loans and leases. In addition, at March 31, 2024, the Company has established reserves of $50.0 million against commercial real estate office loans. While the Company does anticipate ongoing change in the office sector, management believes that its reserve levels reflect the expected credit losses in the portfolio.
18

Credit Policies and Procedures
The Bank has credit policies and procedures in place designed to support its lending activities within an acceptable level of risk, which are reviewed and approved by management and the Board of Directors on a regular basis. To assist with this process, management inspects reports generated by the Company’s loan reporting systems related to loan production, loan quality, concentrations of credit, loan delinquencies, non-performing loans, and potential problem loans.
Commercial non-mortgage, asset-based, and equipment finance loans are underwritten after evaluating and understanding the borrower’s ability to operate and service its debt. Assessment of the borrower’s management is a critical element of the underwriting process and credit decision. Once it has been determined that the borrower’s management possesses sound ethics and a solid business acumen, current and projected cash flows are examined to determine the ability of the borrower to repay obligations, as contracted. Commercial non-mortgage, asset-based, and equipment finance loans are primarily made based on the identified cash flows of the borrower, and secondarily on the underlying collateral provided by the borrower. However, the cash flows of borrowers may not be as expected, and the collateral securing these loans, as applicable, may fluctuate in value. Most commercial non-mortgage, asset-based, and equipment finance loans are secured by the assets being financed and may incorporate personal guarantees of the principal balance.
Commercial real estate loans, including multi-family, are subject to underwriting standards and processes similar to those for commercial non-mortgage, asset-based, equipment finance, and warehouse lending loans. These loans are primarily viewed as cash flow loans, and secondarily as loans secured by real estate. Repayment of commercial real estate loans is largely dependent on the successful operation of the property securing the loan, the market in which the property is located, and the tenants of the property securing the loan. The properties securing the Company’s commercial real estate portfolio are diverse in terms of type and geographic location, which reduces the Company’s exposure to adverse economic events that may affect a particular market. Management monitors and evaluates commercial real estate loans based on collateral, geography, and risk grade criteria. All transactions are appraised to determine market value. Commercial real estate loans may be adversely affected by conditions in the real estate markets or in the general economy. Management periodically utilizes third-party experts to provide insight and guidance about economic conditions and trends affecting its commercial real estate loan portfolio.
Consumer loans are subject to policies and procedures developed to manage the specific risk characteristics of the portfolio. These policies and procedures, coupled with relatively small individual loan amounts and predominately collateralized loan structures, are spread across many different borrowers, minimizing the level of credit risk. Trend and outlook reports are reviewed by management on a regular basis, and policies and procedures are modified or developed, as needed. Underwriting factors for residential mortgage and home equity loans include the borrower’s FICO score, the loan amount relative to property value, and the borrower’s debt-to-income level. The Bank originates both qualified mortgage and non-qualified mortgage loans, as defined by applicable CFPB rules.
Allowance for Credit Losses on Loans and Leases
The ACL on loans and leases increased $5.7 million, or 0.9%, from $635.7 million at December 31, 2023, to $641.4 million at March 31, 2024, primarily due to the impact of the current macroeconomic environment on credit performance and nominal organic loan growth, partially offset by net charge-offs.
The following table summarizes the percentage allocation of the ACL across the loans and leases categories:
At March 31, 2024At December 31, 2023
(Dollars in thousands)Amount
% (1)
Amount
% (1)
Commercial non-mortgage$186,44829.1 %$211,69933.3 %
Asset-based31,8325.0 15,8282.5 
Commercial real estate268,69241.9 248,92139.2 
Multi-family81,83912.7 80,58212.7 
Equipment financing20,2983.2 20,6333.2 
Residential25,9484.0 29,7394.7 
Home equity24,1863.8 26,1544.1 
Other consumer2,1990.3 2,1810.3 
Total ACL on loans and leases$641,442100.0 %$635,737100.0 %
(1)The ACL allocated to a single loan and lease category does not preclude its availability to absorb losses in other categories.
19

Methodology
The Company’s ACL on loans and leases is considered to be a critical accounting policy. The ACL on loans and leases is a contra-asset account that offsets the amortized cost basis of loans and leases for the credit losses that are expected to occur over the life of the asset. Executive management reviews and advises on the adequacy of the allowance, which is maintained at a level that management deems to be sufficient to cover expected losses within the loan and lease portfolios.
The ACL on loans and leases is determined using the CECL model, whereby an expected lifetime credit loss is recognized at the origination or purchase of an asset, including those acquired through a business combination, which is then reassessed at each reporting date over the contractual life of the asset. The calculation of expected credit losses includes consideration of past events, current conditions, and reasonable and supportable economic forecasts that affect the collectability of the reported amounts. Generally, expected credit losses are determined through a pooled, collective assessment of loans and leases with similar risk characteristics. However, if the risk characteristics of a loan or lease change such that it no longer matches that of the collectively assessed pool, it is removed from the population and individually assessed for credit losses. The total ACL on loans and leases recorded by management represents the aggregated estimated credit loss determined through both the collective and individual assessments.
Collectively Assessed Loans and Leases. Collectively assessed loans and leases are segmented based on product type and credit quality, and expected losses are determined using models that follow a PD, LGD, EAD, or loss rate framework. For portfolios using the PD, LGD, and EAD framework, expected credit losses are calculated as the product of the probability of a loan defaulting, expected loss given the occurrence of a default, and the expected exposure of a loan at default. Summing the product across loans over their lives yields the lifetime expected credit losses for a given portfolio. The Company’s PD and LGD calculations are predictive models that measure the current risk profile of the loan pools using forecasts of future macroeconomic conditions, historical loss information, loan-level risk attributes, and credit quality indicators. The calculation of EAD follows an iterative process to determine the expected remaining principal balance of a loan based on historical paydown rates for loans of a similar segment within the same portfolio. The calculation of portfolio exposure in future quarters incorporates expected losses, the loan’s amortization schedule, and prepayment rates. Under the loss rate framework, expected credit losses are estimated using a loss rate that is multiplied by the amortized cost of the asset at the balance sheet date. For each loan segment identified, management applies an expected historical loss trend based on third-party loss estimates, and correlates them to observed economic metrics, and reasonable and supportable forecasts of economic conditions.
The accountingCompany’s models incorporate a single economic forecast scenario and reporting policiesmacroeconomic assumptions over a reasonable and supportable forecast period. The development of the reasonable and supportable forecast assumes each macroeconomic variable will revert to long-term expectations, with reversion characteristics unique to specific economic indicators and forecasts. Reversion towards long-term expectations generally begins two to three years from the forecast start date and is complete within three to five years. Certain models use output reversion and revert to mean historical portfolio loss rates on a
straight-line basis in the third year of the forecast. Other models incorporate a reasonable and supportable forecast of various macroeconomic variables over the remaining life of the Company’s assets.
The Company incorporates forecasts of macroeconomic variables in the determination of expected credit losses. Macroeconomic variables are selected for each class of financing receivable based on relevant factors, such as asset type and the correlation of the variables to credit losses, among others. Data from the forecast scenario of these macroeconomic variables are used as an inputs to the modeled loss calculation.
A portion of the collective ACL is comprised of qualitative adjustments for risk characteristics that are not reflected or captured in the quantitative models, but are likely to impact the measurement of estimated credit losses. Qualitative factors are based on management’s judgement of the Company, market, industry, or business specific data including loan trends, portfolio segment composition, and loan rating or credit scores. Qualitative adjustments may be applied in relation to economic forecasts when relevant facts and circumstances are expected to impact credit losses, particularly in times of significant volatility in economic activity.
Individually Assessed Loans and Leases. If the risk characteristics of a loan or lease change such that it no longer matches the risk characteristics of the collectively assessed pool, it is removed from the population and individually assessed for credit losses. Generally, all non-accrual loans and loans with a charge-off are individually assessed. The measurement method used to calculate the expected credit loss on an individually assessed loan or lease is dependent on the type and whether the loan or lease is considered to be collateral dependent. Methods for collateral dependent loans are either based on the fair value of the collateral less estimated cost to sell (when the basis of repayment is the sale of collateral), or the present value of the expected cash flows from the operation of the collateral. For non-collateral dependent loans, either a discounted cash flow method or other loss factor method is used. Any individually assessed loan or lease for which no specific valuation allowance is deemed necessary is either the result of sufficient cash flows or sufficient collateral coverage relative to the amortized cost of the asset.
Additional information regarding the Company’s ACL methodology can be found within Note 1: Summary of Significant Accounting Policies in the Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data of the Company's Annual Report on Form 10-K for the year ended December 31, 2023.
20

Asset Quality Ratios
The Company manages asset quality using risk tolerance levels established through the Company's underwriting standards, servicing, and management of its loan and lease portfolio. Loans and leases for which a heightened risk of loss has been identified are regularly monitored to mitigate further deterioration and preserve asset quality in future periods. Non-performing assets, credit losses, and net charge-offs are considered by management to be key measures of asset quality.
The following table summarizes key asset quality ratios and their underlying components:
(Dollars in thousands)At March 31,
2024		At December 31, 2023
Non-performing loans and leases (1)
$283,612 $209,544 
Total loans and leases51,098,642 50,726,052 
Non-performing loans and leases as a percentage of loans and leases0.56 %0.41 %
Non-performing assets (1)
$289,254 $218,600 
Total loans and leases$51,098,642 $50,726,052 
Add: OREO and repossessed assets5,642 9,056 
Total loans and leases plus OREO and repossessed assets$51,104,284 $50,735,108 
Non-performing assets as a percentage of loans and leases plus OREO
   and repossessed assets		0.57 %0.43 %
Non-performing assets (1)
$289,254 $218,600 
Total assets76,161,693 74,945,249 
Non-performing assets as a percentage of total assets0.38 %0.29 %
ACL on loans and leases$641,442 $635,737 
Non-performing loans and leases (1)
283,612 209,544 
ACL on loans and leases as a percentage of non-performing loans and leases226.17 %303.39 %
ACL on loans and leases$641,442 $635,737 
Total loans and leases51,098,642 50,726,052 
ACL on loans and leases as a percentage of loans and leases1.26 %1.25 %
ACL on loans and leases$641,442$635,737
Net charge-offs (annualized)149,956108,086
Ratio of ACL on loans and leases to net charge-offs (annualized)4.28x5.88x
(1)Non-performing asset balances and related asset quality ratios exclude the impact of net unamortized (discounts)/premiums and net unamortized deferred (fees)/costs on loans and leases.
The following table summarizes net charge-offs as an annualized percentage of average loans and leases for each category:
At or for the three months ended March 31,
20242023
(Dollars in thousands)Net
Charge-offs (Recoveries)		Average Balance%Net
Charge-offs (Recoveries)		Average Balance%
Commercial non-mortgage$31,333$16,941,5460.74 %$2,723$16,635,8740.07 %
Asset-based—1,523,616— 13,1891,790,9922.95 
Commercial real estate2,11213,719,1960.06 8,55113,260,2230.26 
Multi-family1,1287,684,5690.06 1,0336,710,1030.06 
Equipment financing3,3351,293,8561.03 (660)1,625,463(0.16)
Warehouse lending——— —409,580— 
Residential(72)8,225,151— (461)7,995,327(0.02)
Home equity(1,206)1,499,529(0.32)(421)1,608,428(0.10)
Other consumer85950,9556.74 56759,2023.83 
Total$37,489$50,938,4180.29 %$24,521$50,095,1920.20 %
Net charge-offs increased $13.0 million, or 52.9%, from $24.5 million for the three months ended March 31, 2024, as compared to $37.5 million for the three months ended March 31, 2023, primarily due to an increase in net charge-offs in the commercial non-mortgage category, partially offset by a decrease in net charge-offs in the asset-based lending category.
21

Liquidity and Capital Resources
The Company manages its cash flow requirements through proactive liquidity measures at both the Holding Company and the Bank. In order to maintain stable, cost-effective funding, and to promote overall balance sheet strength, the liquidity position of the Company is continuously monitored, and adjustments are made to balance sources and uses of funds, as appropriate.
At March 31, 2024, management is not aware of any events that are reasonably likely to have a material adverse effect on the Company’s liquidity position, capital resources, or operating activities. Although regulatory agencies have not issued formal guidance mandating more stringent liquidity and capital requirements, the Company is anticipating a greater focus on the liquidity and capital adequacy of financial institutions in response to the high-profile bank failures that occurred in 2023 and related turmoil in the banking industry. The Company has taken appropriate measures to mitigate the risk that such requirements, if implemented, may have on its business, financial positions, and results of operations.
Cash inflows are provided through a variety of sources, including principal and interest payments on loans and investments, unpledged securities that can be sold or utilized to secure funding, and new deposits. The Company is committed to maintaining a strong base of core deposits, which consists of demand, interest-bearing checking, savings, health savings, and money market accounts, to support growth in its loan portfolios. Management actively monitors the interest rate environment and makes adjustments to its deposit strategy in response to evolving market conditions, funding needs, and client relationship dynamics.
Holding Company Liquidity. The primary source of liquidity at the Holding Company is dividends from the Bank. To a lesser extent, investment income, net proceeds from investment sales, borrowings, and public offerings may provide additional liquidity. The Holding Company generally uses its funds for principal and interest payments on senior notes, subordinated notes, and junior subordinated debt, dividend payments to preferred and common stockholders, repurchases of its common stock, and purchases of investment securities, as applicable.
During the three months ended March 31, 2024, the Bank paid $175.0 million in dividends to the Holding Company. At March 31, 2024, there was $598.6 million of retained earnings available for the payment of dividends by the Bank to the Holding Company. On April 24, 2024, the Bank was approved to pay the Holding Company $125.0 million in dividends for the second quarter of 2024.
There are certain restrictions on the Bank’s payment of dividends to the Holding Company, which can be found within
Note 9: Regulatory Capital and Restrictions in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements of this report, and in the section captioned “Supervision and Regulation” in Part I - Item 1. Business of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
The quarterly cash dividend to common stockholders remained at $0.40 per common share for the three months ended
March 31, 2024. On April 24, 2024, it was announced that the Holding Company’s Board of Directors had declared a quarterly cash dividend of $0.40 per share on Webster common stock. For the Series F Preferred Stock and Series G Preferred Stock, quarterly cash dividends of $328.125 per share and $16.25 per share were declared, respectively. The Company continues to monitor economic forecasts, anticipated earnings, and its capital position in the determination of its dividend payments.
The Holding Company maintains a common stock repurchase program, which was approved by the Board of Directors, that authorizes management to purchase shares of its common stock in open market or privately negotiated transactions, through block trades, and pursuant to any adopted predetermined trading plan, subject to certain conditions. During the three months ended March 31, 2024, the Holding Company repurchased 434,061 shares under the repurchase program at a weighted-average price of $47.01 per share, totaling $20.4 million. At March 31, 2024, the Holding Company’s remaining purchase authority was $273.0 million. In addition, the Company will periodically acquire common shares outside of the repurchase program related to employee stock compensation plan activity. During the three months ended March 31, 2024, the Company repurchased 280,517 shares at a weighted-average price of $48.11 per share, totaling $13.5 million, for this purpose.
Webster Bank Liquidity. The Bank’s primary source of funding is its core deposits. Including time deposits, the Bank had a loan to deposit ratio of 84.1% and 83.5% at March 31, 2024, and December 31, 2023, respectively.
The Bank is required by OCC regulations to maintain a sufficient level of liquidity to ensure safe and sound operations. The adequacy of liquidity, as assessed by the OCC, depends on factors such as overall asset and liability structure, market conditions, competition, and the nature of the institution’s deposit and loan customers. At March 31, 2024, the Bank exceeded all regulatory liquidity requirements. The Company has designed a detailed contingency plan in order to respond to any liquidity concerns in a prompt and comprehensive manner, including early detection of potential problems and corrective action to address liquidity stress scenarios.
22

Capital Requirements. The Holding Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory actions by regulators that could have a direct material effect on the Company’s Condensed Consolidated Financial Statements. Under capital adequacy guidelines and/or the the regulatory framework for prompt corrective action (applies to the Bank only), both the Holding Company and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated pursuant to regulatory directives. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
Quantitative measures established by Basel III to ensure capital adequacy require the Holding Company and the Bank to maintain minimum ratios of CET1 Risk-Based Capital, Tier 1 Risk-Based Capital, Total Risk-Based Capital, and Tier 1 Leverage Capital, as defined in the regulations. At March 31, 2024, both the Holding Company and the Bank were classified as well-capitalized. Management believes that no events or changes have occurred subsequent to quarter-end that would change this designation.
In accordance with regulatory capital rules, the Company elected an option to delay the estimated impact of the adoption of CECL on its regulatory capital over a two-year deferral period, which ended on January 1, 2022, and subsequent three-year transition period ending on December 31, 2024. During the three-year transition period, capital ratios will phase out the aggregate amount of the regulatory capital benefit provided from the delayed CECL adoption in the initial two years. For 2022, 2023, and 2024, the Company is allowed 75%, 50%, and 25%, respectively, of the regulatory capital benefit as of December 31, 2021, with full absorption occurring in 2025. At March 31, 2024, the regulatory capital benefit allowed from the delayed CECL adoption resulted in a 3, 3, and 2 basis point increase to the Holding Company’s and the Bank’s CET1 Risk-Based Capital, Tier 1 Risk-Based Capital, and Tier 1 Leverage Capital, respectively, and a 1 basis point decrease to Total Risk-Based Capital. Both the Holding Company’s and the Bank’s regulatory ratios remain in excess of being well-capitalized, even without the regulatory capital benefit of the delayed CECL adoption impact.
Additional information regarding the required regulatory capital levels and ratios applicable to the Holding Company and the Bank can be found within Note 9: Regulatory Capital and Restrictions in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements.
23

Sources and Uses of Funds
Sources of Funds. Deposits are the primary source of cash flows for the Bank’s lending activities and general operational needs. Loan and securities repayments, proceeds from sales of loans and securities held for sale, and maturities also provide cash flows. While scheduled loan and securities repayments are a relatively stable source of funds, prepayments and other deposit inflows are influenced by economic conditions and prevailing interest rates, the timing of which are inherently uncertain. Additional sources of funds are provided by both short-term and long-term borrowings, and to a lesser extent, dividends received as part of the Bank's membership with the FHLB and FRB.
Deposits. The Bank offers a wide variety of checking and savings deposit products designed to meet the transactional and investment needs of its consumer and business customers. The Bank’s deposit services include, but are not limited to, ATM and debit card use, direct deposit, ACH payments, mobile banking, internet-based banking, banking by mail, account transfers, and overdraft protection, among others. The Bank manages the flow of funds in its deposit accounts and interest rates consistent with FDIC regulations. The Bank’s Consumer and Digital Pricing Committee and its Commercial and Institutional Liability and Loan Pricing Committee both meet regularly to determine pricing and marketing initiatives.
Total deposits were $60.7 billion and $60.8 billion at March 31, 2024, and December 31, 2023, respectively. The nominal
$36.5 million decrease is primarily due to a $1.9 billion decrease in brokered certificates of deposit and lower balances in non-interest-bearing demand, partially offset by higher balances across all other deposit products, the receipt of the remaining Ametros deposits that were held at other banks, and organic HSA deposit growth.
The following table summarizes daily average balances of deposits by type and the weighted-average rates paid thereon:
Three months ended March 31,
20242023
(Dollars in thousands)Average
Balance		Average RateAverage
Balance		Average Rate
Non-interest-bearing:
Demand$10,582,416 — %$12,629,928 — %
Interest-bearing:
Checking9,255,252 1.80 8,822,549 1.44 
Health savings accounts8,605,640 0.15 8,292,450 0.15 
Money market18,102,661 4.15 12,884,558 2.57 
Savings6,697,772 1.29 8,146,263 0.49 
Time deposits7,321,625 4.57 4,024,472 2.43 
Total interest-bearing49,982,950 2.70 42,170,292 1.42 
Total average deposits$60,565,366 2.23 %$54,800,220 1.11 %
Uninsured deposits represent the portion of deposit accounts in U.S. offices that exceed the FDIC insurance limit or similar state deposit insurance regime, and amounts in any other uninsured investment or deposit accounts that are classified as deposits and not subject to any federal or state deposit insurance regimes. The Company calculates its uninsured deposit balances based on the methodologies and assumptions used for regulatory reporting requirements, which includes an estimated portion and affiliate deposits. At March 31, 2024, and December 31, 2023, total uninsured deposits as per regulatory reporting requirements and reported on Schedule RC-O of the Bank’s Call Report were $20.7 billion and $21.0 billion, respectively.
The following table summarizes uninsured deposits information at March 31, 2024, after certain exclusions:
(In thousands)At March 31, 2024
Uninsured deposits, per regulatory reporting requirements$20,726,997
Less: Affiliate deposits(2,741,198)
         Collateralized deposits(5,067,374)
Uninsured deposits, after exclusions$12,918,425
Immediately available liquidity (1)
$18,756,799
Uninsured deposits coverage145.2%
(1)Reflects $10.8 billion and $6.8 billion of additional borrowing capacity from the FHLB and the FRB, respectively, and $1.2 billion of interest-bearing deposits held at FRB.
24

Uninsured deposits, after adjusting for affiliate deposits and collateralized deposits, represented 21.3% of total deposits at March 31, 2024. Management believes that this presentation provides a more accurate view of deposits at risk given that affiliate deposits are not customer facing, and therefore are eliminated upon consolidation, and collateralized deposits are secured by other means. As of the date of this Quarterly Report on Form 10-Q, the Company’s uninsured deposits as a percentage of total deposits, adjusted for affiliate deposits and collateralized deposits, is consistent with the percentage reported at March 31, 2024.
The following table summarizes the portion of U.S. time deposits in excess of the FDIC insurance limit and time deposits otherwise uninsured by contractual maturity:
(In thousands)March 31, 2024
Portion of U.S. time deposits in excess of insurance limit$508,998
Time deposits otherwise uninsured with a maturity of:
3 months or less$190,521
Over 3 months through 6 months186,435
Over 6 months through 12 months124,826
Over 12 months7,216
Additional information regarding period-end deposit balances and rates can be found within Note 6: Deposits in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements.
Borrowings. The Bank’s primary borrowing sources include securities sold under agreements to repurchase, federal funds purchased, FHLB advances, and long-term debt. Total borrowings were $4.9 billion and $3.9 billion at March 31, 2024, and December 31, 2023, respectively, and represented 6.5% and 5.2% of total assets, respectively. The $1.0 billion increase is primarily due to increases of $1.3 billion and $135.0 million in FHLB advances and federal funds purchased, respectively, partially offset by decreases of $231.5 million and $134.3 million in securities sold under agreements to repurchase and long-term debt, respectively.
Securities sold under agreements to repurchase are generally a form of short-term funding for the Bank in which it sells securities to counterparties with an agreement to buy them back in the future at a fixed price. Securities sold under agreements to repurchase totaled $126.9 million and $358.4 million at March 31, 2024, and December 31, 2023, respectively. The $231.5 million decrease is primarily due to the timing of maturities in the first quarter of 2024.
The Bank may also purchase term and overnight federal funds to meet its short-term liquidity needs. Federal funds purchased totaled $235.0 million and $100.0 million at March 31, 2024, and December 31, 2023, respectively. The $135.0 million increase is primarily due to the change in short-term funding mix.
FHLB advances are not only utilized as a source of funding, but also for interest rate risk management purposes. FHLB advances totaled $3.7 billion and $2.4 billion at March 31, 2024, and December 31, 2023, respectively. The $1.3 billion increase is also due to the change in short-term funding mix.
Long-term debt consists of senior fixed-rate notes maturing in 2029, subordinated fixed-to-floating-rate notes maturing in 2029 and 2030, and floating-rate junior subordinated notes maturing in 2033. Long-term debt totaled $914.5 million and $1.0 billion at March 31, 2024, and December 31, 2023, respectively. The $134.3 million decrease is primarily due to the maturity of its 4.375% senior fixed-rate notes on February 15, 2024.
The Bank had additional borrowing capacity from the FHLB of $10.8 billion and $12.5 billion at March 31, 2024, and December 31, 2023, respectively. The Bank also had additional borrowing capacity from the FRB of $6.8 billion and $6.6 billion at March 31, 2024, and December 31, 2023, respectively. Unencumbered investment securities of $1.1 billion at March 31, 2024, could have been used for collateral on borrowings or to increase borrowing capacity by either $848.5 million with the FHLB or $1.0 billion with the FRB.
25

The following table summarizes daily average balances of borrowings by type and the weighted-average rates paid thereon:
Three months ended March 31,
20242023
(Dollars in thousands)Average
Balance		Average RateAverage
Balance		Average Rate
Securities sold under agreements to repurchase$130,653 0.52 %$243,848 0.11 %
Federal funds purchased140,165 5.47 671,175 4.62 
FHLB advances2,689,632 5.50 5,673,826 4.80 
Long-term debt980,926 3.64 1,072,252 3.65 
Total average borrowings$3,941,376 4.88 %$7,661,101 4.48 %
Additional information regarding period-end borrowings balances and rates can be found within Note 7: Borrowings in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements.
Federal Home Loan Bank and Federal Reserve Bank Stock. The Bank is a member of the FHLB System, which consists of eleven district FHLBs, each of which is subject to the supervision and regulation of the Federal Housing Finance Agency. An activity-based capital stock investment in the FHLB is required in order for the Bank to maintain its membership and access advances and other extensions of credit for sources of funds and liquidity purposes. The FHLB capital stock investment is restricted as there is no market for it, and it can only be redeemed by the FHLB. The Bank held FHLB capital stock of $153.1 million and $99.0 million at March 31, 2024, and December 31, 2023, respectively. The most recent FHLB quarterly cash dividend was paid on May 2, 2024, in an amount equal to an annual yield of 8.40%.
The Bank is also required to hold FRB stock equal to 6% of its capital and surplus, of which 50% is paid. The remaining 50% is subject to call when deemed necessary by the Federal Reserve System. Similar to FHLB stock, the FRB capital stock investment is restricted as there is no market for it, and it can only be redeemed by the FRB. The Bank held FRB capital stock of $228.3 million and $227.9 million at March 31, 2024, and December 31, 2023, respectively. The most recent FRB semi-annual cash dividend was paid on December 29, 2023, in an amount equal to an annual yield of 4.30%.
Uses of Funds. The Company enters into various contractual obligations in the normal course of business that require future cash payments and that could impact its short-term and long-term liquidity and capital resource needs. The following table summarizes significant fixed and determinable contractual obligations at March 31, 2024. The actual timing and amounts of future cash payments may differ from the amounts presented. Based on the Company’s current liquidity position, it is expected that our sources of funds will be sufficient to fulfill these obligations when they come due.
  
Payments Due by Period (1)
(In thousands)20242025202620272028ThereafterTotal
Senior notes$— $— $— $— $— $300,000 $300,000 
Subordinated notes— — — — — 499,000 499,000 
Junior subordinated debt— — — — — 77,320 77,320 
FHLB advances3,650,000 — — 231 225 9,474 3,659,930 
Securities sold under agreements to repurchase126,886 — — — — — 126,886 
Federal funds purchased235,000 — — — — — 235,000 
Time deposits6,406,380 414,440 56,451 33,809 20,873 5,367 6,937,320 
Operating lease liabilities28,969 40,748 36,777 32,089 27,872 83,303 249,758 
Contingent consideration12,500 207 — — — — 12,707 
Royalty liabilities8,940 1,560 — — — — 10,500 
Purchase obligations (2)
103,403 37,947 18,638 12,583 4,333 14,287 191,191 
Total contractual obligations$10,572,078 $494,902 $111,866 $78,712 $53,303 $988,751 $12,299,612 
(1)Interest payments on borrowings have been excluded.
(2)Purchase obligations represent agreements to purchase goods or services of $1.0 million or more that are enforceable and legally binding and specify all significant terms.
In addition, in the normal course of business, the Company offers financial instruments with off-balance sheet risk to meet the financing needs of its customers. These transactions include commitments to extend credit and commercial and standby letters of credit, which involve, to a varying degree, elements of credit risk. Since many of these commitments are expected to expire unused or be only partially funded, the total commitment amount of $11.7 billion at March 31, 2024, does not necessarily reflect future cash payments.
26

The Company also enters into commitments to invest in venture capital and private equity funds and tax credit structures to assist the Bank in meeting its responsibilities under the CRA. The total unfunded commitment for these alternative investments was $796.2 million at March 31, 2024. However, the timing of capital calls cannot be reasonably estimated, and depending on the nature of the contract, the entirety of the capital committed by the Company may not be called.
Pension obligations are funded by the Company, as needed, to provide for participant benefit payments as it relates to the Company’s frozen, non-contributory, qualified defined benefit pension plan. Decisions to contribute to the defined benefit pension plan are made based upon pension funding requirements under the Pension Protection Act, the maximum amount deductible under the Internal Revenue Code, the actual performance of plan assets, and trends in the regulatory environment. The Company does not currently anticipate that it will be required to contribute to the defined benefit pension plan in 2024. The Company’s non-qualified supplemental executive retirement plans and other post-employment benefit plans are unfunded.
At March 31, 2024, the Company’s Condensed Consolidated Balance Sheet reflects a liability for uncertain tax positions of $14.5 million and $4.3 million of accrued interest and penalties, respectively. The ultimate timing and amount of any related future cash settlements cannot be predicted with reasonable certainty.
On November 29, 2023, the FDIC published a final rule implementing a special assessment for certain banks to recover losses incurred by protecting uninsured depositors of Silicon Valley Bank and Signature Bank upon their failure in March 2023. The final rule levies a special assessment to certain banks at a quarterly rate of 3.36 basis points based on their uninsured deposits balance reported as of December 31, 2022. The special assessment is to be collected for an anticipated total of eight quarterly assessment periods beginning with the first quarter of 2024, which has a payment date of June 28, 2024. Based on the final rule, the Company had estimated that its special assessment charge was approximately $47.2 million at December 31, 2023.
On February 23, 2024, the Company received notification from the FDIC that the estimated loss attributable to the protection of uninsured depositors at Silicon Valley Bank and Signature Bank was $20.4 billion, an increase of approximately $4.1 billion from the estimated $16.3 billion described in the final rule. Based on the Company’s evaluation of all information available at March 31, 2024, the Company recorded an additional $11.9 million towards its estimated special assessment charge. The FDIC plans to provide institutions subject to the special assessment with an updated estimate of each institution’s quarterly and total special assessment expense with its first quarter 2024 special assessment invoice, to be released in June 2024.
Additional information regarding credit-related financial instruments and the FDIC special assessment, and alternative investments can be found within Note 16: Commitments and Contingencies and Note 10: Variable Interest Entities, respectively, in the Notes to the Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements of this report. Additional information regarding defined benefit pension and other postretirement benefit plans and income taxes can be found within Note 19: Retirement Benefit Plans and Note 9: Income Taxes, respectively, in the Notes to the Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
27

Asset/Liability Management and Market Risk
An effective asset/liability management process must balance the risks and rewards from both short-term and long-term interest rate risk when determining the Company’s strategy and action. To facilitate this process, interest rate sensitivity is monitored on an ongoing basis by the Company’s ALCO, whose primary goal is to manage interest rate risk and maximize net income and net economic value over time in changing interest rate environments. The ALCO meets frequently to make decisions on the Company’s investment and funding portfolios based on the economic outlook, its interest rate expectations, the risk position, and other factors.
Four main tools are used for managing interest rate risk:
•the size, duration, and credit risk of the investment portfolio;
•the size and duration of the wholesale funding portfolio;
•interest rate contracts; and
•the pricing and structure of loans and deposits.
The Company measures interest rate risk using simulation analysis and asset/liability modeling software to calculate the earnings at risk and equity at risk. Essentially, interest rates are assumed to change up or down in a parallel fashion, and the net interest income results in each scenario are compared to a flat rate base scenario. The flat rate base scenario holds the end of period yield curve constant over a twelve-month forecast horizon. At both March 31, 2024, and December 31, 2023, the flat rate base scenario assumed a federal funds rate of 5.50%. The federal funds rate target range was 5.25-5.50% at both March 31, 2024, and December 31, 2023.
The following table summarizes the estimated impact that gradual parallel changes in interest rates of up and down 100, 200, and 300 basis points might have on the Company’s net interest income over a twelve-month period starting at March 31, 2024, and December 31, 2023, as compared to actual net interest income and assuming no changes in interest rates:
-300bp-200bp-100bp+100bp+200bp+300bp
March 31, 2024(7.0)%(4.2)%(2.0)%1.7%3.4%5.4%
December 31, 2023(7.2)%(4.5)%(2.0)%1.7%3.3%5.4%
Despite changes in the Company’s balance sheet composition during the three months ended March, 31, 2024, asset sensitivity in terms of net interest income generally remained unchanged from December 31, 2023, to March 31, 2024. This was primarily due to an increase in fixed-rate investment securities, which was offset by an increase in floating-rate loans.
The following table summarizes the estimated impact that yield curve twists or immediate non-parallel changes in interest rates of up and down 50 and 100 basis points might have on the Company’s net interest income over a twelve-month period starting at March 31, 2024, and December 31, 2023:
Short End of the Yield CurveLong End of the Yield Curve
-100bp-50bp+50bp+100bp-100bp-50bp+50bp+100bp
March 31, 2024(1.7)%(0.7)%0.4%0.8%(2.2)%(1.1)%1.1%2.1%
December 31, 2023(1.8)%(0.8)%0.4%0.7%(2.3)%(1.1)%1.1%2.2%
These non-parallel scenarios are modeled with the short end of the yield curve moving up or down 50 and 100 basis points, while the long end of the yield curve remains unchanged, and vice versa. The short end of the yield curve is defined as terms less than eighteen months, and the long end of the yield curve is defined as terms greater than eighteen months. The results reflect the annualized impact of immediate interest rate changes.
Despite changes in the Company’s balance sheet composition during the three months ended March, 31, 2024, sensitivity to both the short end and the long end of the yield curve for net interest income generally remained from December 31, 2023, to March 31, 2024. This was also primarily due to an increase in fixed-rate investment securities, which was offset by an increase in floating-rate loans.
The following table summarizes the estimated economic value of financial assets, financial liabilities, and off-balance sheet financial instruments and the corresponding estimated change in economic value if interest rates were to instantaneously increase or decrease by 100 basis points at March 31, 2024, and December 31, 2023:
(Dollars in thousands)Book
Value		Estimated
Economic
Value		Estimated Economic Value Change
-100bp+100bp
March 31, 2024
Assets$76,161,693 $71,150,404 $1,351,686 $(1,399,835)
Liabilities67,414,195 62,140,735 1,923,952 (1,754,226)
Net$8,747,498 $9,009,669 $(572,266)$354,391 
Net change as % base net economic value(6.4)%3.9 %
December 31, 2023
Assets$74,945,249 $70,356,779 $1,297,870 $(1,350,496)
Liabilities66,255,253 61,722,480 1,960,088 (1,786,228)
Net$8,689,996 $8,634,299 $(662,218)$435,732 
Net change as % base net economic value(7.7)%5.0 %
Changes in economic value can best be described through duration, which is a measure of the price sensitivity of financial instruments due to changes in interest rates. For fixed-rate financial instruments, it can be thought of as the weighted-average expected time to receive future cash flows, whereas for floating-rate financial instruments, it can be thought of as the weighted-average expected time until the next rate reset. Overall, the longer the duration, the greater the price sensitivity due to changes in interest rates. Generally, increases in interest rates reduce the economic value of fixed-rate financial assets as future discounted cash flows are worth less at higher interest rates. In a rising interest rate environment, the economic value of financial liabilities decreases for the same reason. A reduction in the economic value of financial liabilities is a benefit to the Company. Floating-rate financial instruments may have durations as short as one day, and therefore, may have very little price sensitivity due to changes in interest rates.
Duration gap represents the difference between the duration of financial assets and financial liabilities. A duration gap at or near zero would imply that the balance sheet is matched, and therefore, would exhibit no change in estimated economic value for changes in interest rates. At March 31, 2024, and December 31, 2023, the Company’s duration gap was negative 1.0 years and negative 1.1 years, respectively. A negative duration gap implies that the duration of financial liabilities is longer than the duration of financial assets, and therefore, liabilities have more price sensitivity than assets and will reset their interest rates at a slower pace. Consequently, the Company’s net estimated economic value would generally be expected to increase when interest rates rise, as the benefit of the decreased value of financial liabilities would more than offset the decreased value of financial assets. The opposite would generally be expected to occur when interest rates fall. Earnings would also generally be expected to increase when interest rates rise, and decrease when interest rates fall over the long term, absent the effects of any new business booked in the future.
These earnings and net economic value estimates are subject to factors that could cause actual results to differ, and also assume that management does not take any additional action to mitigate any positive or negative effects from changing interest rates. Management believes that the Company’s interest rate risk position at March 31, 2024, represents a reasonable level of risk given the current interest rate outlook. The Company continues to monitor interest rates and other relevant factors given recent market volatility and is prepared to take additional action, as necessary.
Additional information regarding the Company’s asset/liability management process can be found under the section captioned “Asset/Liability Management and Market Risk ” contained in Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
28

Critical Accounting Estimates
The preparation of the Company’s Condensed Consolidated Financial Statements, and accompanying notes thereto, in accordance with GAAP and practices generally applicable to the financial services industry, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the disclosure of contingent assets and liabilities. While management’s estimates are made based on historical experience, current available information, and other factors that are deemed to be relevant, actual results could significantly differ from those estimates.
Accounting estimates are necessary in the application of certain accounting policies and can be susceptible to significant change in the near term. Critical accounting estimates are those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had, or are reasonably likely to have, a material impact on the Company’s financial condition or results of operations. Management has identified that the Company’s most critical accounting estimates are those related to its ACL on loans and leases and business combinations accounting policies. These accounting policies and their underlying estimates are discussed directly with the Audit Committee of the Board of Directors.
Allowance for Credit Losses on Loans and Leases
The ACL on loans and leases is a reserve established through a provision for credit losses charged to expense, which represents management’s best estimate of expected lifetime credit losses within the Company’s loan and lease portfolios at the balance sheet date. The calculation of expected credit losses is determined using predictive methods and models that follow a
PD, LGD, EAD, or loss rate framework and include consideration of past events, current conditions, macroeconomic variables (i.e., unemployment, gross domestic product, property values, and interest rate spreads), and reasonable and supportable economic forecasts that affect the collectability of the reported amounts. Changes to the ACL on loans and leases, and therefore, to the related provision for credit losses, can materially affect its financial statements conformresults.
The determination of the appropriate level of ACL on loans and leases inherently involves a high degree of subjectivity and requires the Company to make significant estimates of current credit risks and trends using existing qualitative and quantitative information, and reasonable and supportable forecasts of future economic conditions, all of which may undergo frequent and material changes. Changes in economic conditions affecting borrowers and macroeconomic variables that the Company is more susceptible to, unforeseen events such as natural disasters and pandemics, along with GAAP. new information regarding existing loans, identification of additional problem loans, the fair value of underlying collateral, and other factors, both within and outside the Company’s control, may indicate the need for an increase or decrease in the ACL on loans and leases.
It is difficult to estimate the sensitivity of how potential changes in any one economic factor or input might affect the overall reserve because a wide variety of factors and inputs are considered in estimating the ACL and changes in those factors and inputs considered may not occur at the same rate and may not be consistent across all product types. Further, changes in factors and inputs may also be directionally inconsistent, such that improvement in one factor may offset deterioration in others.
Executive management reviews and advises on the adequacy of the ACL on loans and leases on a quarterly basis. Although the overall balance is determined based on specific portfolio segments and individually assessed assets, the entire balance is available to absorb credit losses for any of the loan and lease portfolios.
Additional information regarding the determination of the ACL on loans and leases, including the Company’s valuation methodology, can be found under the section captioned “Allowance for Credit Losses on Loans and Leases” contained elsewhere in this Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and within Note 1: Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements contained in
Part II - Item 8. Financial Statements and Supplementary Data included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Business Combinations
The acquisition method of accounting generally requires that the identifiable assets acquired and liabilities assumed in business combinations are recorded at fair value as of the acquisition date. The determination of fair value often involves the use of internal or third-party valuation techniques, such as discounted cash flow analyses or appraisals. Particularly, the valuation techniques used to estimate the fair value of the core deposit intangible asset acquired in the Ametros acquisition includes estimates related to discount rates, client attrition rates, an alternative cost of funds, and other relevant factors, which are inherently subjective. A description of the valuation methodologies used to estimate the fair values of the significant assets acquired and liabilities assumed from the Ametros acquisition can be found within Note 2: Business Developments in the Notes to Consolidated Financial Statements contained in Part I - Item 1. Financial Statements.
29

ITEM 1. FINANCIAL STATEMENTS
WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 2024December 31, 2023
(In thousands, except share data)(Unaudited)
Assets:
Cash and due from banks$322,041 $429,323 
Interest-bearing deposits1,223,187 1,286,472 
Investment securities available-for-sale, at fair value8,601,141 8,959,729 
Investment securities held-to-maturity, net of allowance for credit losses of $184 and $2097,679,891 7,074,588 
Federal Home Loan Bank and Federal Reserve Bank stock381,451 326,882 
Loans held for sale ($323 and $2,610 valued under fair value option)239,763 6,541 
Loans and leases51,098,642 50,726,052 
Allowance for credit losses on loans and leases(641,442)(635,737)
Loans and leases, net50,457,200 50,090,315 
Deferred tax assets, net341,292 369,212 
Premises and equipment, net423,128 429,561 
Goodwill2,868,068 2,631,465 
Other intangible assets, net382,841 203,135 
Cash surrender value of life insurance policies1,237,828 1,247,938 
Accrued interest receivable and other assets2,003,862 1,890,088 
Total assets$76,161,693 $74,945,249 
Liabilities and stockholders’ equity:
Deposits:
Non-interest-bearing$10,212,509 $10,732,516 
Interest-bearing50,535,234 50,051,768 
Total deposits60,747,743 60,784,284 
Securities sold under agreements to repurchase and other borrowings361,886 458,387 
Federal Home Loan Bank advances3,659,930 2,360,018 
Long-term debt914,520 1,048,820 
Accrued expenses and other liabilities1,730,116 1,603,744 
Total liabilities67,414,195 66,255,253 
Stockholders’ equity:
Preferred stock, $0.01 par value: Authorized—3,000,000 shares;
Series F issued and outstanding—6,000 shares
145,037 145,037 
Series G issued and outstanding—135,000 shares
138,942 138,942 
Common stock, $0.01 par value: Authorized—400,000,000 shares;
Issued—182,778,045 shares
1,828 1,828 
Paid-in capital6,138,935 6,179,753 
Retained earnings3,425,701 3,282,530 
Treasury stock, at cost—10,314,159 and 10,756,089 shares
(486,844)(507,523)
Accumulated other comprehensive (loss), net of tax(616,101)(550,571)
Total stockholders’ equity8,747,498 8,689,996 
Total liabilities and stockholders’ equity$76,161,693 $74,945,249 
See accompanying Notes to Condensed Consolidated Financial Statements.
30

WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three months ended
March 31,
(In thousands, except per share data)20242023
Interest Income:
Interest and fees on loans and leases$792,045 $716,356 
Taxable interest on investment securities135,071 85,566 
Non-taxable interest on investment securities12,514 13,684 
Loans held for sale82 16 
Other interest and dividends12,138 15,306 
Total interest income951,850 830,928 
Interest Expense:
Deposits335,971 150,204 
Securities sold under agreements to repurchase and other borrowings2,108 7,827 
Federal Home Loan Bank advances37,367 68,126 
Long-term debt8,665 9,488 
Total interest expense384,111 235,645 
Net interest income567,739 595,283 
Provision for credit losses45,500 46,749 
Net interest income after provision for credit losses522,239 548,534 
Non-interest Income:
Deposit service fees42,589 45,436 
Loan and lease related fees19,767 23,005 
Wealth and investment services7,924 6,587 
Cash surrender value of life insurance policies5,946 6,728 
(Loss) on sale of investment securities, net(9,826)(16,747)
Other income32,953 5,757 
Total non-interest income99,353 70,766 
Non-interest Expense:
Compensation and benefits188,540 173,200 
Occupancy19,439 20,171 
Technology and equipment45,836 44,366 
Intangible assets amortization9,194 9,497 
Marketing4,281 3,476 
Professional and outside services12,981 32,434 
Deposit insurance24,223 12,323 
Other expense31,429 37,000 
Total non-interest expense335,923 332,467 
Income before income taxes285,669 286,833 
Income tax expense69,346 65,829 
Net income216,323 221,004 
Preferred stock dividends4,163 4,163 
Net income available to common stockholders$212,160 $216,841 
Earnings per common share:
Basic$1.23 $1.24 
Diluted1.23 1.24 
See accompanying Notes to Condensed Consolidated Financial Statements.

31

WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
Three months ended
 March 31,
(In thousands)20242023
Net income$216,323 $221,004 
Other comprehensive (loss) income, net of tax:
Investment securities available-for-sale(36,271)71,618 
Derivative instruments(29,989)21,374 
Defined benefit pension and other postretirement benefit plans730 3,948 
Other comprehensive (loss) income, net of tax(65,530)96,940 
Comprehensive income$150,793 $317,944 
See accompanying Notes to Condensed Consolidated Financial Statements.

32

WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)
At or for the three months ended March 31, 2024
(In thousands, except per share data)Preferred StockCommon
Stock		Paid-In
Capital		Retained
Earnings		Treasury
Stock,
at cost		Accumulated Other
Comprehensive (Loss), Net of Tax		Total
Stockholders’
Equity
Balance at December 31, 2023$283,979 $1,828 $6,179,753 $3,282,530 $(507,523)$(550,571)$8,689,996 
Net income— — — 216,323 — — 216,323 
Other comprehensive (loss), net of tax— — — — — (65,530)(65,530)
Common stock dividends and equivalents—$0.40 per share
— — — (68,989)— — (68,989)
Series F preferred stock dividends—$328.125 per share
— — — (1,969)— — (1,969)
Series G preferred stock dividends—$16.25 per share
— — — (2,194)— — (2,194)
Stock-based compensation— — (40,818)— 54,578 — 13,760 
Common shares acquired from stock compensation plan activity— — — — (13,496)— (13,496)
Common stock repurchase program— — — — (20,403)— (20,403)
Balance at March 31, 2024$283,979 $1,828 $6,138,935 $3,425,701 $(486,844)$(616,101)$8,747,498 
At or for the three months ended March 31, 2023
(In thousands, except per share data)Preferred StockCommon
Stock		Paid-In
Capital		Retained
Earnings		Treasury
Stock,
at cost		Accumulated Other Comprehensive
(Loss), Net of Tax		Total
Stockholders’
Equity
Balance at December 31, 2022$283,979 $1,828 $6,173,240 $2,713,861 $(431,762)$(684,960)$8,056,186 
Adoption of ASU No. 2022-02— — — (4,245)— — (4,245)
Net income— — — 221,004 — — 221,004 
Other comprehensive income, net of tax— — — — — 96,940 96,940 
Common stock dividends and equivalents—$0.40 per share
— — — (69,712)— — (69,712)
Series F preferred stock dividends—$328.125 per share
— — — (1,969)— — (1,969)
Series G preferred stock dividends—$16.25 per share
— — — (2,194)— — (2,194)
Stock-based compensation— — (33,471)— 45,117 — 11,646 
Exercise of stock options— — (2,026)— 3,749 — 1,723 
Common shares acquired from stock compensation plan activity— — — — (15,085)— (15,085)
Balance at March 31, 2023$283,979 $1,828 $6,137,743 $2,856,745 $(397,981)$(588,020)$8,294,294 
See accompanying Notes to Condensed Consolidated Financial Statements.
33

WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 Three months ended March 31,
(In thousands)20242023
Operating Activities:
Net income$216,323 $221,004 
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses45,500 46,749 
Deferred income tax expense16,470 13,911 
Stock-based compensation13,760 11,646 
Depreciation and amortization of property and equipment and intangible assets19,027 20,745 
Net (accretion) and amortization of interest-earning assets and borrowings(11,893)(4,388)
Amortization of low-income housing tax credit investments20,413 21,478 
Reduction of right-of-use lease assets7,475 7,525 
Loss on sale of investment securities, net9,826 16,747 
Originations of loans held for sale(3,317)(2,590)
Proceeds from sale of loans held for sale4,713 3,832 
Net (gain) on sale of mortgage servicing rights(11,655)— 
(Increase) in cash surrender value of life insurance policies(5,946)(6,728)
Other operating activities, net(11,145)(677)
Net decrease (increase) in derivative contract assets and liabilities56,534 (48,570)
Net decrease (increase) in accrued interest receivable and other assets296,416 (8,150)
Net (decrease) in accrued expenses and other liabilities(418,820)(78,240)
Net cash provided by operating activities243,681 214,294 
Investing Activities:
Purchases of available-for-sale securities(244,434)(357,784)
Proceeds from principal payments, maturities, and calls of available-for-sale securities205,507 119,033 
Proceeds from sale of available-for-sale securities331,690 395,358 
Purchases of held-to-maturity securities(677,961)(599,387)
Proceeds from principal payments, maturities, and calls of held-to-maturity securities80,360 99,992 
Net (increase) in Federal Home Loan Bank and Federal Reserve Bank stock(54,569)(138,824)
Alternative investments (capital calls), net of distributions(4,192)(3,184)
Net (increase) in loans(692,991)(1,478,986)
Proceeds from sale of loans not originated for sale49,440 106,779 
Proceeds from sale of mortgage servicing rights18,310 — 
Proceeds from sale of foreclosed properties and repossessed assets790 1,745 
Proceeds from sale of property and equipment1,042 — 
Additions to property and equipment(5,057)(10,293)
Proceeds from life insurance policies3,977 — 
Net cash paid for acquisition of Ametros(359,460)— 
Net cash paid for acquisition of interLINK— (157,646)
Net cash (used for) investing activities(1,347,548)(2,023,197)
See accompanying Notes to Condensed Consolidated Financial Statements.
34

WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited), continued
 Three months ended March 31,
(In thousands)20242023
Financing Activities:
Net (decrease) increase in deposits(26,850)1,236,463 
Net increase in Federal Home Loan Bank advances1,299,912 3,099,909 
Net (decrease) in securities sold under agreements to repurchase and other borrowings(96,501)(845,676)
Repayment of long-term debt(132,550)— 
Payment of contingent consideration(4,050)— 
Dividends paid to common stockholders(68,599)(70,140)
Dividends paid to preferred stockholders(4,163)(4,163)
Exercise of stock options— 1,723 
Common stock repurchase program(20,403)— 
Common shares acquired related to stock compensation plan activity(13,496)(15,085)
Net cash provided by financing activities933,300 3,403,031 
Net (decrease) increase in cash and cash equivalents(170,567)1,594,128 
Cash and cash equivalents, beginning of period1,715,795 839,943 
Cash and cash equivalents, end of period$1,545,228 $2,434,071 
Supplemental disclosure of cash flow information:
Interest paid$416,290 $221,182 
Income taxes paid11,240 6,334 
Non-cash investing and financing activities:
Transfer of loans and leases to foreclosed properties and repossessed assets$742 $607 
Transfer of returned lease equipment to assets held for sale1,524 — 
Transfer of loans and leases to loans held for sale284,806 316,596 
Acquisition of Ametros:
Tangible assets acquired256,957 — 
Goodwill and other intangible assets417,085 — 
Liabilities assumed299,507 — 
Forgiveness of long-term debt12,875 — 
Pre-existing equity interest2,200 — 
Acquisition of interLINK:
Tangible assets acquired— 6,417 
Goodwill and other intangible assets— 183,216 
Liabilities assumed— 15,948 
Contingent consideration— 16,039 
Acquisition of Bend:
Tangible assets acquired— 294 
Goodwill and other intangible assets— (294)
Merger with Sterling:
Tangible assets acquired— 17,607 
Goodwill and other intangible assets— (25,561)
Liabilities assumed— (7,954)
See accompanying Notes to Condensed Consolidated Financial Statements.
35

Note 1: Basis of Presentation and Accounting Standards Updates
Basis of Presentation
The unaudited Condensed Consolidated Financial Statements of the Company have been prepared in conformityaccordance with the instructionsGAAP for Form 10-Qinterim financial information and Rule 10-01Article 10 of Regulation S-X. Accordingly, they do not include all theCertain information and notesfootnote disclosures required by GAAP for complete financial statements andhave been omitted or condensed. Therefore, the Condensed Consolidated Financial Statements should be read in conjunction with the Company's Consolidated Financial Statements, and Notes thereto,Company’s Annual Report on Form 10-K for the year ended December 31, 2016,2023. The results of operations for the three months ended March 31, 2024, are not necessarily indicative of the future results that may be attained for the entire year or other interim periods.
In the opinion of management, all necessary adjustments have been reflected to present fairly the financial position, results of operations, and cash flows for the reporting periods presented. Intercompany transactions and balances have been eliminated in consolidation. Assets under administration or assets under management that the Company holds or manages in a fiduciary or agency capacity for customers are not included in the Company's Annual ReportCondensed Consolidated Financial Statements.
Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications did not have a material impact on Form 10-K filed with the SEC on March 1, 2017.Company’s Condensed Consolidated Financial Statements.
Use of Estimates
The preparation of financial statementsthe Condensed Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities asand the disclosure of contingent assets and liabilities at the date of the financial statements as well as incomeCondensed Consolidated Financial Statements, and expensethe reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for the full year or any future period.
Certain prior period amounts have been reclassified to conform to the current year's presentation. These reclassifications had an immaterial effect on non-interest income, non-interest expense, net cash provided by operating activities, and net cash used for investing activities.
Significant Accounting Policy Updates
Centrally Cleared Derivatives
Effective during the first quarter of 2016, the Company offset the variation margin pertaining to derivatives reported on a net basis, subject to a legally enforceable master netting arrangement, with the same counterparty against the net derivative position on the Company's balance sheets. The Chicago Mercantile Exchange has amended their rulebooks to legally characterize variation margin payments for over-the-counter derivatives that clear, as settlements rather than collateral, effective January 3, 2017.
The Company has updated its significant accounting policies to classify variation margin deemed to be legal settlements as a single unit of account with the derivative, for accounting and presentation purposes. The policy update does not result in a change in the presentation of the Company's balance sheets as the Company previously offset the variation margin pertaining to derivatives reporting on a net basis, subject to a legally enforceable master netting arrangement, with the same counterparty against the net derivative position.
Accounting Standards Adopted during 2017
Effective January 1, 2017,in the following new accounting guidance was adopted by the Company:Current Period
ASU No. 2016-09, Compensation - Stock Compensation2023-02—Investments—Equity Method and Joint Ventures (Topic 718) - Improvements323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (a consensus of the Emerging Issue Task Force)
In March 2023, the FASB issued ASU No. 2023-02—Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (a consensus of the Emerging Issues Task Force), which permits reporting entities to Employee Share Based Payment Accounting
The Update impactedelect to account for their tax equity investments, regardless of the accounting for employee share-based payment transactions, includingprogram from which the income tax consequences, and classification oncredits are received, using the statement of cash flows. The Update requiresproportional amortization method if certain conditions are met. A reporting entity may make an accounting policy election to apply the Company to recognize the income tax effects of awards in the income statement on a prospective basis when the awards vest or are settled, compared to within additional paid-in capital. As a result, applicable excess tax benefits and tax deficiencies are recorded as an income tax benefit or expense, respectively. The Company elected to present the classification on the statement of cash flows on a prospective basis to better align this presentation with the income tax effects.
The impact of the Update will vary from period to period based on the Company's stock price and the quantity of shares that vest or are settled within a given period.

The Update also requires the Company to elect the accounting for forfeitures of share-based payments by either (i) recognizing forfeitures of awards as they occur or (ii) estimating the number of awards expected to be forfeited and adjusting the estimate when it is likely to change, as is currently required. The Company elected to account for forfeitures of share-based payments by estimating the number of awards expected to be forfeited and adjusting the estimate when it is likely to change, which isproportional amortization method in accordance with paragraph 323-740-25-4 on a tax-credit-program by tax-credit-program basis rather than electing to apply the Company's previous accounting practices.proportional amortization method at the reporting entity level or to individual investments.
A reporting entity that applies the proportional amortization method to qualifying tax equity investments must account for the receipt of the investment tax credits using the flow-through method under Topic 740, Income Taxes, even if the entity applies the deferral method for other investment tax credits received. The amendments also remove certain guidance for Qualified Affordable Housing Project Investments, require the application of the delayed equity contribution guidance to all tax equity investments, and require specific disclosures that must be applied to all investments that generate income tax credits and other income tax benefits from a tax credit program for which the entity has elected to apply the proportional amortization method in accordance with Subtopic 323-740.
The Company adopted the Update on January 1, 2024. The adoption of this accounting standardguidance did not have a material impact on the Company's financial statements.Company’s Condensed Consolidated Financial Statements and disclosures as its investments in tax credit structures are currently limited to LIHTC investments, which are already being accounted for using the proportional amortization method.
ASU No. 2016-06, Derivatives2023-01—Leases (Topic 842): Common Control Arrangements
In March 2023, the FASB issued ASU No. 2023-01—Leases (Topic 842): Common Control Arrangements, which requires that leasehold improvements associated with leases between entities under common control be: (i) amortized by the lessee over the useful lives of the leasehold improvements to the common control group (regardless of the lease term) as long as the lessee controls the use of the underlying asset (the leased asset) through a lease; however, if the lessor obtained the right to control the use of the underlying asset through a lease with another entity not within the same common control group, the amortization period may not exceed the amortization period of the common control group; and Hedging (Topic 815) - Contingent Put(ii) accounted for as a transfer between entities under common control through an adjustment to equity, if, and Call Optionswhen, the lessee no longer controls the use of the underlying asset. Additionally, those leasehold improvements are subject to the impairment guidance in Debt Instruments.Topic 360, Property, Plant, and Equipment.
The Company adopted the Update clarifies the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. The Update requires the assessment of embedded call (put) options solely in accordance with the four-step decision sequence. The Update clarified that companies are not required to assess whether the event triggering the ability to exercise the call/put option was also clearly and closely related.
January 1, 2024. The adoption of this accounting standardguidance did not have a material impact on the Company's financial statements,Company’s Condensed Consolidated Financial Statements and disclosures as its operating lease arrangements in which it is lessee are currently not between entities under common control.
36

ASU No. 2022-03—Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restriction
In June 2022, the FASB issued ASU No. 2022-03—Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security, and therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction, and requires the following disclosures for equity securities subject to contractual sale restrictions: (i) the fair value of equity securities subject to contractual sale restrictions reflected on the balance sheet; (ii) the nature and remaining duration of the restriction(s); and (iii) the circumstances that could cause a lapse in the restriction(s).
The Company hasadopted the Update on January 1, 2024. The adoption of this guidance did not performedhave a material impact on the additional stepCompany’s Condensed Consolidated Financial Statements and disclosures. The Company does not currently consider contractual restrictions on the sale of assessing whether the event triggering the ability to exercise the call (put) option was clearly and closely related, which was deemed not required by the Update.an equity security in measuring fair value.
Relevant Accounting Standards Issued but not yetBut Not Yet Adopted
The following list identifies ASUs applicable to the Company that have been issued by the FASB but are not yet effective:
ASU No. 2017-12, Derivatives and Hedging2023-09—Income Taxes (Topic 815) - Targeted 740)—Improvements to Accounting for Hedging Activities.Income Tax Disclosures
The purposeIn December 2023, the FASB issued ASU No. 2023-09—Income Taxes (Topic 740)—Improvements to Income Tax Disclosures, to provide more transparency about income tax information through improvements to income tax disclosures, primarily related to the rate reconciliation and income taxes paid information. Specifically, the amendments in this Update require disclosure of: (i) a tabular reconciliation, using both percentages and reporting currency amounts, with prescribed categories that are required to be disclosed, and the separate disclosure and disaggregation of prescribed reconciling items with an effect equal to 5% or more of the Update is to better alignamount determined by multiplying pretax income from continuing operations by the application statutory rate; (ii) a company’s financial reporting for hedging activities withqualitative description of the economic objectivesstates and local jurisdictions that make up the majority (greater than 50%) of those activities. The update requires a modified retrospective transition method in which the Company will recognize a cumulative effect of the change onstate and local income taxes; and (iii) amount of income taxes paid, net of refunds received, disaggregated by federal, state, and foreign taxes and by individual jurisdictions that comprise 5% or more of total income taxes paid, net of refunds received. The amendments in this Update also include certain other amendments to improve the opening balance for each affected componenteffectiveness of equity in the financial statements as of the date of adoption.
The Company is in the process of assessing all potential impacts of the standard.income tax disclosures.
The Update is effective for the first quarter of 2019,annual periods beginning after December 15, 2024, with early adoption permitted. The amendments should be applied on a prospective basis; however, retrospective application is permitted. The Company is currently evaluating this guidance to determine the potential to early adopt the Update.impact on its income tax disclosures.
ASU No. 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20) - Premium Amortization on Purchased Callable Debt Securities.2023-07—Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures
The Update is intendedIn November 2023, the FASB issued ASU No. 2023-07—Segment Reporting (Topic 280)—Improvements to enhance the accounting for the amortization of premiums for purchased callable debt securities.Reportable Segment Disclosures, to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. Specifically, the amendments in this Update shortens the amortization period for certain investments in callable debt securities purchased at a premium by requiringrequire disclosure of: (i) significant segment expenses that the premium be amortizedare regularly provided to the earliest call date. The Update is being issuedchief operating decision maker and included within each reported measure of segment profit or loss; (ii) an amount for other segment items by reportable segment and a description of its composition; and (iii) the title and position of the chief operating decision maker and an explanation of how the chief operating decision maker uses each reported measure of segment profit or loss in responseassessing segment performance and deciding how to concerns from stakeholders that, current GAAP excludes certain callable debt securities from consideration of early repayment of principal even if the holder is certain that the callallocate resources.
In addition, all annual disclosures about a reportable segment’s profit or loss and assets currently required by Topic 280, will be exercised.
The Update, upon adoption, is expected to accelerate the Company’s recognition of premium amortization on debt securities held within the portfolio. The amendmentsrequired in interim periods. Overall, the Update will be applied ondoes not change how a modified retrospective basis through a cumulative-effect adjustment directly through retained earnings upon adoption.
Management is inpublic entity identifies its operating segments, aggregates those operating segments, or determines its reportable segments, or applies the process of evaluating the full impact of adopting the Update including, but not limited to the following:
Modifying system amortization requirements;
Evaluation of premiums associated with debt securitiesquantitative thresholds to determine the appropriate cumulative-effect adjustment; and
Establishing new accounting policies pertaining to premium amortization on purchased callable debt securities.its reportable segments.
The Update is effective for the first quarter of 2019, earlyannual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements, in which, upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company is currently evaluating the potential to early adopt the Update.
ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715) - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.
The Update requires the Company to disaggregate the current-service-cost component from the other components of net benefit cost (the “other components”) and present it with other current compensation costs for related employees in the income statement and present the other components elsewhere in the income statement and outside of income from operations if that subtotal is presented. In addition, the Update requires entities to disclose the income statement lines that contain the other components if they are not presented on appropriately described separate lines.
The new guidance will be applied on a retrospective basis. The Company intends to adopt the Update for the first quarter of 2018. The Company does not expect this guidance to have a materialdetermine the impact on its consolidated financial statements.segment reporting disclosures.


ASU No. 2017-04, Intangibles - Goodwill

37

Note 2: Business Developments
Ametros Acquisition
On January 24, 2024, the Bank acquired all of the equity interest in Ametros from Long Ridge Capital Management
(the “Seller”). Ametros is a custodian and Other (Topic 350) - Simplifying the Test for Goodwill Impairment.
administrator of medical funds from insurance claim settlements that helps individuals manage their ongoing medical care through its CareGuard service and proprietary technology platform. The Update eliminates Step 2 from the goodwill impairment analysis. Step 2, requiresacquisition provided the Company with a fast-growing source of low-cost and long-duration deposits, new sources of non-interest income, and will enhance its employee benefit and healthcare financial services expertise.
The acquisition was accounted for as a business combination. Accordingly, the total purchase price, which included cash paid of $359.7 million, the forgiveness of $12.9 million in long-term debt, and the assumption of a $5.8 million liability for the Seller’s transaction expenses, has been preliminarily allocated to perform procedures to determine the identifiable assets acquired and liabilities assumed based on their acquisition-date fair valuevalues, as summarized in the following table:
(In thousands)Fair Value
Purchase price consideration$378,424 
Assets:
Cash and due from banks310 
Premises and equipment
1,078 
Other intangible assets188,900 
Deferred tax assets, net(35,889)
Other assets:
Funds held in escrow288,167 
Accounts receivable2,435 
Prepaid expenses1,166 
Total other assets291,768 
Total assets acquired$446,167 
Liabilities:
Interest-bearing deposits (1)
(20,622)
Other liabilities:
Accounts payable684 
Accrued expenses4,270 
Deferred revenue20,391 
Member’s funds288,167 
Operating lease liabilities838 
Total other liabilities314,350 
Total liabilities assumed$293,728 
Net assets acquired152,439 
Pre-existing equity interest (2)
$2,200 
Goodwill$228,185 
(1)The $20.6 million reflects the amount held in Ametros’ operating cash account at the impairment testingBank on January 24, 2024. Upon acquisition, such cash and the Bank’s corresponding deposit liability owed to Ametros were eliminated in consolidation, which resulted in a decrease to interest-bearing deposits for the Bank and the Bank’s legal title to the funds being held in such operating cash account.
(2)Prior to the acquisition date, the Company had a 0.6% equity interest in Ametros. The consideration transferred reflects the purchase price for the remaining 99.4% of its assetsthe business. Upon acquisition, the Company recognized a $1.5 million gain in Other income on the accompanying Condensed Consolidated Statement of Income, which represents the difference between the cost basis and liabilities (including unrecognized assets and liabilities). Under current guidance, Step 2 testing would be performed only if Step 1 testing indicated theestimated acquisition-date fair value of the reporting unit is below the reporting unit’s carrying amount.Company’s pre-existing equity interest in Ametros.
Once effective the Update will require the Company to record an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, eliminating the Step 2 requirements. The Company intends to adopt the Update for the first quarter$228.2 million of 2020. Adoptionpreliminary goodwill is not anticipated to have a material impact ondeductible for tax purposes. Information regarding the Company's financial statements.
ASU No. 2016-15, Statementallocation of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments.
The Update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The Update addresses the following eight issues: debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relationgoodwill to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle.Company’s reportable segments can be found within Note 15: Segment Reporting.
The Company intendsconsiders its valuations of other intangible assets, deferred taxes, and certain other assets and other liabilities to adoptbe provisional, as management continues to identify and assess information regarding the Updatenature of these assets acquired and liabilities assumed, including extended information gathering and management review procedures. Although the Company believes that the information available as of March 31, 2024, provides a reasonable basis for estimating fair value, it is possible that additional information becomes available during the one-year measurement period following the close of the acquisition, which could result in changes to the fair values presented.
The results of operations related to the acquired Ametros business are included in the Company’s Condensed Consolidated Statements of Income subsequent to the acquisition date, and were not material for the first quarter of 2018. The Company does not expect this guidance to have a material impact on its consolidated financial statements.three months ended March 31, 2024.
ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments.
38
Current GAAP requires an "incurred loss" methodology for recognizing credit losses that delays recognition until it is probable a loss has been incurred. Both financial institutions and users of their financial statements expressed concern that current GAAP restricts the ability to record credit losses that are expected, but do not yet meet the "probable" threshold.

The main objective of this Updatefollowing is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective, the amendments in this Update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates.
The Change from an "incurred loss" method to an "expected loss" method represents a fundamental shift from existing GAAP, and is likely to result in a material increase to the Company's accounting for credit losses on financial instruments. The Company has established a project lead and identified a working group comprised of members from different disciplines including Credit, Finance and Information Technology. The Company is in the early stages of evaluationdescription of the effect that this ASU will have on its financial statements and related disclosures, but has begun to develop a roadmap which includes a consideration of external resources that may be required, use of existing and new models, data availability and system solutions to facilitate implementation. The ASU will be effective for the Company as of the first quarter 2020. While we are currently unable to reasonably estimate the impact of adopting the Update, we expect the impact of adoption will be significantly influenced by the composition, characteristics and quality of our loan and securities portfolios as well as the economic conditions as of the adoption date.
ASU No. 2016-02, Leases (Topic 842).
The Update introduces a lessee model that brings most leases on the balance sheet. The Update also aligns certain of the underlying principles of the new lessor model with those in ASC 606 "Revenue from Contracts with Customers", the FASB’s new revenue recognition standard (e.g., evaluating how collectability should be considered and determining when profit can be recognized).
Furthermore, the Update addresses other concerns including the elimination of the required use of bright-line tests for determining lease classification. Lessors are required to provide additional transparency into the exposure to the changes in value of their residual assets and how they manage that exposure.
The Company intends to adopt the Update for the first quarter of 2019 using the modified retrospective method. The Company is in the early assessment stage and will continue to review the existing lease portfolio to evaluate the impact of the new accounting guidance on the financial statements.

ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities.
Equity investments not accounted for under the equity method or those that do not result in consolidation of the investee are to be measured at fair value with changes in the fair value recognized through net income. Entities are to present separately in other comprehensive income, the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when an election to measure the liability at fair value in accordance with the fair value option for financial instruments has been made. Also, the requirement to disclose the method(s) and significant assumptionsvaluation methodologies used to estimate the fair values of the significant assets acquired and liabilities assumed:
Other intangible assets. The Company identified and recognized a $182.8 million core deposit intangible asset and a
$6.1 million trade name intangible asset. A core deposit intangible asset represents the value of relationships with deposit customers. The fair value of the core deposit intangible asset was estimated using a net cost savings method, a form of discounted cash flow methodology, which gave appropriate consideration to expected client attrition rates and other applicable adjustments to the projected deposit balance, the interest cost and net maintenance cost associated with the client deposit base, an alternative cost of funds, and a discount rate that was used to discount the future economic benefits of the core deposit intangible asset to present value. The core deposit intangible asset is being amortized on an accelerated basis over an estimated useful life of 25 years, which is the period over which the estimated economic benefits are estimated to be received. The fair value of the trade name intangible asset for the Ametros brand was estimated using a relief-from-royalty methodology, which models the cost savings from owning the brand rather than licensing it from a third party. The trade name intangible asset is being amortized on a straight-line basis over an estimated useful life of 5 years.
Funds held in escrow and Members’ funds.
Funds held in escrow represent amounts held in interest-bearing checking accounts at insured depository institutions other than the Bank for the purpose of providing post-settlement medical administration services on a respective member’s behalf. Members’ funds is the corresponding liability to the Funds held in escrow. Given that these amounts can be withdrawn and/or directed for use on demand, as long as in accordance with the terms of the settlement agreement, their carrying amount is a reasonable estimate of fair value.
Held-for-Sale Payroll Finance and Factored Receivables Loan Portfolio
In March 2024, the Company initiated a plan to actively sell its payroll finance and factored receivables loan portfolio, along with the related customer relationship intangible assets. The decision to sell was a direct result of the Company’s continuous reassessment of its strategic model in an effort to identify opportunities to improve its core financial instruments measured at amortized costproducts and services. The Company expects to complete the sale in either the second or third quarter of 2024.
At March 31, 2024, the portfolio held-for-sale comprised $220.2 million in aggregate of payroll finance and factored receivables loans, which are included in Loans held for sale on the balance sheet has been eliminated.Condensed Consolidated Balance Sheets. The aggregate net carrying amount of the related customer relationship intangible assets was $49.7 million. These assets are included in Commercial Banking for segment reporting purposes.
TheSale of Mortgage Servicing Rights
On February 12, 2024, the Company intends to adoptsold the Update formajority of its mortgage servicing portfolio, which comprised 9,184 individual mortgage loans with an aggregate UPB of $1.4 billion. In connection with the first quartersale, the Company received net cash proceeds of 2018. Adoption is not anticipated to have a material impact$18.4 million and derecognized $6.7 million of mortgage servicing rights from Accrued interest receivable and other assets on the Company's financial statements.
ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). Also, subsequent ASUs issued to clarify this Topic.
Condensed Consolidated Balance Sheet. The Update requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The Update excludes the Company's revenue associated withresulting $11.7 million net interest income, and certain non-interest income lines items (loan and lease related fees, mortgage banking activities, increase in cash surrender value of life insurance policies, gain on sale of investment securities, net, impairment lossmortgage servicing rights is included in Other income on securities recognized in earnings,the Condensed Consolidated Statements of Operations.
interLINK Acquisition
On January 11, 2023, the Company acquired 100% ownership of interLINK from StoneCastle Partners LLC. interLINK is a technology-enabled deposit management platform that administers over $9 billion of deposits from FDIC-insured cash sweep programs between banks and broker/dealers and clearing firms. The acquisition provided the Company with access to a majorityunique source of other income). As a result a substantial amountcore deposit funding and scalable liquidity and added another technology-enabled channel to its already differentiated, omnichannel deposit gathering capabilities.
The total purchase price of the Company's revenue will notacquisition was $174.6 million, which included cash paid of $158.6 million and $16.0 million of contingent consideration measured at fair value. The contingent consideration is payable in cash upon the achievement of discrete customer and deposit growth events within three years of the acquisition date. Additional information regarding contingent consideration, including the determination of fair value, can be affected.found within Note 13: Fair Value Measurements.
The Company's deposit service fees, wealthacquisition has been accounted for as a business combination, and investment services,resulted in the addition of $31.4 million in net assets measured at fair value, which primarily comprised $36.0 million of broker dealer relationship intangible assets, $6.0 million of developed technology, a $4.0 million non-competition agreement intangible asset, and certain other non-interest income items are within the scope$15.9 million of the Update.royalty liabilities. The Company's evaluation$143.2 million of the impacted revenue streams and associated customer contractsgoodwill recognized is near completion. While the assessment is not complete, the timing of the Company's revenue recognition is not expected to materially change.deductible for tax purposes.
The disclosure objective of the Update is to provide users of the financial statement with sufficient information to understand the nature, amount, timing and uncertainty of revenue, certain costs, and cash flows arising from contracts with customers. The Company expects to provide expanded qualitative disclosure pertaining to significant judgments, accounting policy elections and the nature, timing, and uncertainty of revenue arising from contracts with customers. Further the Company expects to provide expanded quantitative disclosure pertaining to the disaggregation of revenue arising from contracts with customers. The Company continues to assess the impact of the changes in disclosure required by guidance.
The Company intends to adopt the Update for the first quarter of 2018 utilizing the modified retrospective application with a cumulative effect adjustment to opening retained earnings, if necessary. The Company's evaluations are not final and are subject to change.

39

Note 2:3: Investment Securities
A summary ofAvailable-for-Sale
The following tables summarize the amortized cost and fair value of investmentavailable-for-sale securities by major type:
 At March 31, 2024
(In thousands)
Amortized
Cost (1)
Unrealized
Gains		Unrealized
Losses		Fair Value
Government agency debentures$302,261 $— $(39,773)$262,488 
Municipal bonds and notes1,257,643 23 (50,316)1,207,350 
Agency CMO50,422 — (4,186)46,236 
Agency MBS3,629,162 19,414 (284,162)3,364,414 
Agency CMBS2,619,079 12,555 (310,404)2,321,230 
CMBS752,086 32 (20,267)731,851 
Corporate debt693,093 142 (76,026)617,209 
Private label MBS46,044 — (4,736)41,308 
Other9,836 — (781)9,055 
Total available-for-sale$9,359,626 $32,166 $(790,651)$8,601,141 
At December 31, 2023
(In thousands)
Amortized
Cost (1)
Unrealized
Gains		Unrealized
Losses		Fair Value
Government agency debentures$302,212 $— $(37,579)$264,633
Municipal bonds and notes1,626,126 8 (52,901)1,573,233
Agency CMO52,994 — (4,053)48,941
Agency MBS3,568,140 32,461 (253,503)3,347,098
Agency CMBS2,569,438 18,204 (299,571)2,288,071
CMBS788,478 — (24,729)763,749
Corporate debt704,569 — (82,414)622,155
Private label MBS46,635 — (3,827)42,808
Other9,830 — (789)9,041
Total available-for-sale$9,668,422 $50,673 $(759,366)$8,959,729 
(1)Accrued interest receivable on available-for-sale securities of $43.6 million and $42.5 million at March 31, 2024, and December 31, 2023, respectively, is presented below:
 At September 30, 2017 At December 31, 2016
(In thousands)
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value 
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value
Available-for-sale:



  


U.S. Treasury Bills$3,596
$—
$—
$3,596
 $734
$—
$—
$734
Agency CMO332,341
2,573
(3,116)331,798
 419,865
3,344
(3,503)419,706
Agency MBS923,819
3,214
(14,056)912,977
 969,460
4,398
(19,509)954,349
Agency CMBS599,165
—
(14,205)584,960
 587,776
63
(14,567)573,272
CMBS402,015
1,539
(121)403,433
 473,974
4,093
(702)477,365
CLO273,172
1,572
(161)274,583
 425,083
2,826
(519)427,390
Trust preferred30,463
676
(202)30,937
 30,381
—
(1,748)28,633
Corporate debt48,334
674
(130)48,878
 108,490
1,502
(350)109,642
Available-for-sale$2,612,905
$10,248
$(31,991)$2,591,162
 $3,015,763
$16,226
$(40,898)$2,991,091
Held-to-maturity:



     
Agency CMO$276,367
$1,138
$(3,030)$274,475
 $339,455
$1,977
$(3,824)$337,608
Agency MBS2,549,500
24,275
(30,012)2,543,763
 2,317,449
26,388
(41,768)2,302,069
Agency CMBS708,229
280
(3,549)704,960
 547,726
694
(1,348)547,072
Municipal bonds and notes705,411
5,213
(13,150)697,474
 655,813
4,389
(25,749)634,453
CMBS257,361
3,394
(197)260,558
 298,538
4,107
(411)302,234
Private Label MBS443
2
—
445
 1,677
12
—
1,689
Held-to-maturity$4,497,311
$34,302
$(49,938)$4,481,675
 $4,160,658
$37,567
$(73,100)$4,125,125

Other-Than-Temporary Impairment
The balance of OTTI,excluded from amortized cost and is included in the amortized cost columns above, is related to certain CLO positions that were previously considered Covered Funds as defined by Section 619 of the Dodd-Frank Act, commonly known as the Volcker Rule. The Company has taken measures to bring its CLO positions into conformance with the Volcker Rule.
During the nine months ended September 30, 2017, OTTI of $126 thousand, related toprincipal held back in conjunction with the exercise of a clean-up call option for a Private Label MBS security, was recognized. To the extent that changes occur inAccrued interest rates, credit movements,receivable and other factors that impact fair value and expected recovery of amortized cost of its investment securities,assets on the Company may, in future periods, be required to recognize OTTI in earnings.accompanying Condensed Consolidated Balance Sheets.
The following table presents the changes in OTTI:
 Three months ended September 30, Nine months ended September 30,
(In thousands)2017 2016 2017 2016
Beginning balance$3,231
 $3,437
 $3,243
 $3,288
Reduction for investment securities sold or called(1,028) (30) (1,166) (30)
Additions for OTTI not previously recognized in earnings—
 —
 126
 149
Ending balance$2,203
 $3,407
 $2,203
 $3,407


Fair Value and Unrealized Losses
The following tables provide information onsummarize the gross unrealized losses and fair value and unrealized losses for the individual investmentof available-for-sale securities with an unrealized loss, aggregated by classification and length of time that the individual investment securities haveeach major security type has been in a continuous unrealized loss position:
At September 30, 2017 At March 31, 2024
Less Than Twelve Months Twelve Months or Longer Total Less Than 12 Months12 Months or MoreTotal
(Dollars in thousands)
Fair
Value
Unrealized
Losses
 
Fair
Value
Unrealized
Losses
 
# of
Holdings
Fair
Value
Unrealized
Losses
(Dollars in thousands)Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses		Number of
Holdings		Fair
Value		Unrealized
Losses
Available-for-sale:     
Government agency debentures
Government agency debentures
Government agency debentures
Municipal bonds and notes
Agency CMO$75,042
$(1,002) $70,167
$(2,114) 16$145,209
$(3,116)
Agency MBS464,031
(5,169) 303,770
(8,887) 104767,801
(14,056)
Agency CMBS306,025
(6,240) 278,935
(7,965) 34584,960
(14,205)
CMBS39,775
(121) —
—
 539,775
(121)
CLO82,989
(161) —
—
 582,989
(161)
Trust preferred12,570
(97) 4,574
(105) 317,144
(202)
Corporate debt5,797
(87) 1,825
(43) 27,622
(130)
Available-for-sale in an unrealized loss position$986,229
$(12,877) $659,271
$(19,114) 169$1,645,500
$(31,991)
Held-to-maturity:     
Agency CMO$82,839
$(880) $83,103
$(2,150) 19$165,942
$(3,030)
Agency MBS870,376
(7,948) 775,331
(22,064) 1571,645,707
(30,012)
Agency CMBS570,781
(3,504) 4,730
(45) 45575,511
(3,549)
Municipal bonds and notes123,965
(1,745) 226,545
(11,405) 140350,510
(13,150)
CMBS40,150
(197) 250
—
 540,400
(197)
Held-to-maturity in an unrealized loss position$1,688,111
$(14,274) $1,089,959
$(35,664) 366$2,778,070
$(49,938)
Corporate debt
Corporate debt
Private label MBS
Other
Total
 At December 31, 2016
 Less Than Twelve Months Twelve Months or Longer Total
(Dollars in thousands)
Fair
Value
Unrealized
Losses
 
Fair
Value
Unrealized
Losses
 
# of
Holdings
Fair
Value
Unrealized
Losses
Available-for-sale:         
Agency CMO$107,853
$(2,168) $67,351
$(1,335) 15$175,204
$(3,503)
Agency MBS512,075
(10,503) 252,779
(9,006) 97764,854
(19,509)
Agency CMBS554,246
(14,567) —
—
 32554,246
(14,567)
CMBS12,427
(24) 63,930
(678) 1276,357
(702)
CLO49,946
(54) 50,237
(465) 5100,183
(519)
Trust preferred—
—
 28,633
(1,748) 528,633
(1,748)
Corporate debt—
—
 7,384
(350) 27,384
(350)
Available-for-sale in an unrealized loss position$1,236,547
$(27,316) $470,314
$(13,582) 168$1,706,861
$(40,898)
Held-to-maturity:         
Agency CMO$163,439
$(3,339) $17,254
$(485) 16$180,693
$(3,824)
Agency MBS1,394,623
(32,942) 273,779
(8,826) 1501,668,402
(41,768)
Agency CMBS347,725
(1,348) —
—
 25347,725
(1,348)
Municipal bonds and notes384,795
(25,745) 1,192
(4) 196385,987
(25,749)
CMBS60,768
(411) —
—
 860,768
(411)
Held-to-maturity in an unrealized loss position$2,351,350
$(63,785) $292,225
$(9,315) 395$2,643,575
$(73,100)
40


Impairment Analysis
 At December 31, 2023
 Less Than Twelve MonthsTwelve Months or LongerTotal
(Dollars in thousands)Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses		Number of
Holdings		Fair
Value		Unrealized
Losses
Government agency debentures$— $— $264,633 $(37,579)19$264,633 $(37,579)
Municipal bonds and notes18,066 (124)1,536,656 (52,777)3861,554,722 (52,901)
Agency CMO— — 48,941 (4,053)3648,941 (4,053)
Agency MBS71,187 (272)1,945,221 (253,231)4572,016,408 (253,503)
Agency CMBS430,070 (16,137)1,314,681 (283,434)1451,744,751 (299,571)
CMBS43,844 (856)719,905 (23,873)42763,749 (24,729)
Corporate debt4,278 (27)617,877 (82,387)91622,155 (82,414)
Private label MBS— — 42,808 (3,827)342,808 (3,827)
Other— — 9,041 (789)29,041 (789)
Total$567,445 $(17,416)$6,499,763 $(741,950)1,181$7,067,208 $(759,366)
The following impairment analysis by investment$31.3 million increase in gross unrealized losses from December 31, 2023, to March 31, 2024, is primarily due to higher interest rates. The Company assesses each available-for-sale security type, summarizesthat is in an unrealized loss position to determine whether the decline in fair value below the amortized cost basis for evaluating if investmentis a result of a credit loss or other factors. At both March 31, 2024, and December 31, 2023, no ACL was recorded on available-for-sale securities withinas each of the securities in the Company’s available-for-saleportfolio are investment grade, current as to principal and held-to-maturity portfolios have been impacted by OTTI. Unless otherwise notedinterest, and their price changes are consistent with interest and credit spreads when adjusting for an investment security type, management does not intend to sell these investment securitiesconvexity, rating, and has determined,industry differences.
As of March 31, 2024, based upon available evidence, that it is more likely than not thaton current market conditions and the Company’s targeted balance sheet composition strategy, the Company will not be requiredintends to sell these investmenthold its available-for-sale securities before the recovery of their amortized cost. As such, based on the following impairment analysis, the Company does not consider these investment securities, inwith unrealized loss positions to be other-than-temporarily impaired at September 30, 2017.
Available-for-Sale
Agency CMO. There were unrealized lossesthrough the anticipated recovery period. The issuers of $3.1 million onthese available-for-sale securities have not, to the Company’s investment in Agency CMO at September 30, 2017, compared to $3.5 million at December 31, 2016. Unrealized losses decreased due to lower principal balancesknowledge, established any cause for this asset class at September 30, 2017 compared to December 31, 2016.default. Market prices remained essentially unchanged. These investments are issued by a government agency or a government-sponsored agency and, therefore, are backed by certain government guarantees, either direct or indirect. The contractual cash flows for these investments are performingexpected to approach par as expected, and there has been no change in the underlying credit quality.
Agency MBS. There were unrealized losses of $14.1 million on the Company’s investment in Agency MBS at September 30, 2017, compared to $19.5 million at December 31, 2016. Unrealized losses decreased due to lower principal balances for this asset class at September 30, 2017 compared to December 31, 2016. Market prices remained essentially unchanged. These investments are issued by a government agency or a government-sponsored agency and, therefore, are backed by certain government guarantees, either direct or indirect. The contractual cash flows for these investments are performing as expected, and there has been no change in the underlying credit quality.
Agency CMBS. There were unrealized losses of $14.2 million on the Company's investment in Agency CMBS at September 30, 2017, compared to $14.6 million at December 31, 2016. Unrealized losses decreased while principal balances remained essentially unchanged. Market prices were slightly higher at September 30, 2017 compared to December 31, 2016. These investments are issued by a government agency or a government-sponsored agency and, therefore, are backed by certain government guarantees, either direct or indirect. The contractual cash flows for these investments are performing as expected, and there has been no change in the underlying credit quality.
CMBS. There were unrealized losses of $0.1 million on the Company’s investment in CMBS at September 30, 2017, compared to $0.7 million at December 31, 2016. The portfolio of mainly floating rate CMBS experienced lower principal balances and lower market spreads which resulted in higher security prices and smaller unrealized losses at September 30, 2017 compared to December 31, 2016. Internal and external metrics are considered when evaluating potential OTTI. Internal stress tests are performed on individual bonds to monitor potential losses under stress scenarios. Contractual cash flows for these investments are performing as expected.
CLO. There were unrealized losses of $0.2 million on the Company's investment in CLO at September 30, 2017, compared to $0.5 million at December 31, 2016. Unrealized losses decreased due to lower principal balances and lower market spreads for the CLO portfolio at September 30, 2017 compared to December 31, 2016. Internal and external metrics are considered when evaluating potential OTTI. Contractual cash flows for these investments are performing as expected.
Trust preferred. There were unrealized losses of $0.2 million on the Company's investment in trust preferred at September 30, 2017, compared to $1.7 million at December 31, 2016. Unrealized losses decreased due to lower market spreads for this asset class, which resulted in higher security prices compared to December 31, 2016. The trust preferred portfolio consists of three floating rate investments issued by two different large capitalization money center financial institutions, which continue to service the debt. The Company performs periodic credit reviews of the issuer to assess the likelihood for ultimate recovery of amortized cost.
Corporate debt. There were $0.1 million unrealized losses on the Company's corporate debt at September 30, 2017, compared to $0.4 million at December 31, 2016. Unrealized losses decreased due to lower principal balances for this asset class at September 30, 2017 compared to December 31, 2016. Market prices remained essentially unchanged. The Company performs periodic credit reviews of the issuer to assess the likelihood for ultimate recovery of amortized cost.
Held-to-Maturity
Agency CMO. There were unrealized losses of $3.0 million on the Company’s investment in Agency CMO at September 30, 2017 compared to $3.8 million at December 31, 2016. Unrealized losses decreased due to lower principal balances for this asset class at September 30, 2017 compared to December 31, 2016. Market prices remained essentially unchanged. These investments are issued by a government agency or a government-sponsored agency and, therefore, are backed by certain government guarantees, either direct or indirect. The contractual cash flows for these investments are performing as expected, and there has been no change in the underlying credit quality.

Agency MBS. There were unrealized losses of $30.0 million on the Company’s investment in Agency MBS at September 30, 2017, compared to $41.8 million at December 31, 2016. Unrealized losses decreased due to lower principal balances for this asset class at September 30, 2017 compared to December 31, 2016. Market prices remained essentially unchanged. These investments are issued by a government agency or a government-sponsored agency and, therefore, are backed by certain government guarantees, either direct or indirect. There has been no change in the underlying credit quality, and the contractual cash flows are performing as expected.
Agency CMBS. There were unrealized losses of $3.5 million on the Company's investment in Agency CMBS at September 30, 2017, compared to $1.3 million at December 31, 2016. Unrealized losses increased due to lower prices on recently purchased ACMBS as principal balances increased at September 30, 2017 compared to December 31, 2016. These investments are issued by a government agency or a government-sponsored agency and, therefore, are backed by certain government guarantees, either direct or indirect. There has been no change in the underlying credit quality, and the contractual cash flows are performing as expected.
Municipal bonds and notes. There were unrealized losses of $13.2 million on the Company’s investment in municipal bonds and notes at September 30, 2017, compared to $25.7 million at December 31, 2016. Unrealized losses decreased due to lower market rates which resulted in higher prices at September 30, 2017. The Company performs periodic credit reviews of the issuers and these investments are currently performing as expected.
CMBS. There were unrealized losses of $0.2 million on the Company’s investment in CMBS at September 30, 2017, compared to $0.4 million at December 31, 2016. Unrealized losses were approximately the same, for the portfolio comprised mainly of seasoned fixed rate conduit transactions, at September 30, 2017 compared to December 31, 2016. Internal and external metrics are considered when evaluating potential OTTI. Internal stress tests are performed on individual bonds to monitor potential losses under stress scenarios. The contractual cash flows for these investments are performing as expected.
Sales of Available-for Sale Investment Securities

There were no sales during the three and nine months ended September 30, 2017, or the three months ended September 30, 2016. For the nine months ended September 30, 2016, there were sales resulting in proceeds of $259.3 million, with the related gross realized gains and gross realized losses of $2.9 million and $2.5 million, respectively.securities approach maturity.
Contractual Maturities
The following table summarizes the amortized cost and fair value of debtavailable-for-sale securities by contractual maturity are set forth below:maturity:
At March 31, 2024
(In thousands)Amortized CostFair Value
Maturing within 1 year$32,356 $31,621 
After 1 year through 5 years597,123 565,463 
After 5 through 10 years1,271,850 1,173,728 
After 10 years7,458,297 6,830,329 
Total available-for-sale$9,359,626 $8,601,141 
 At September 30, 2017
 Available-for-Sale Held-to-Maturity
(In thousands)
Amortized
Cost
Fair
Value
 
Amortized
Cost
Fair
Value
Due in one year or less$18,668
$18,714
 $40,146
$40,753
Due after one year through five years40,246
40,748
 13,410
13,684
Due after five through ten years381,547
383,721
 38,323
39,102
Due after ten years2,172,444
2,147,979
 4,405,432
4,388,136
Total debt securities$2,612,905
$2,591,162
 $4,497,311
$4,481,675

For the maturity schedule above, mortgage-backedAvailable-for-sale securities and CLO, whichthat are not due at a single maturity date have been categorized based on the maturity date of the underlying collateral. Actual principal cash flows may differ from this categorization as borrowers have the right to repay their obligations with or without prepayment penalties.
Sales of Available-for Sale Securities
The following table summarizes information related to sales of available-for-sales securities:
Three months ended March 31,
(In thousands)20242023
Proceeds from sales$331,690 $395,358 
Gross realized gains$2,240 $— 
Gross realized losses(14,636)(20,483)
For the three months ended March 31, 2024, and 2023, net realized losses on sale of available-for-sale securities were $12.4 million and $20.5 million, respectively. Because $2.6 million and $3.8 million of the gross realized losses for the three months ended March 31, 2024 and 2023, respectively, were attributed to a decline in credit quality, those portions have been included in the Provision for credit losses on the accompanying Condensed Consolidated Statements of Income. The amounts of $9.8 million and $16.7 million for the three months ended March 31, 2024, and 2023, respectively, that are included in
non-interest income reflect the portion of the net realized loss that was not attributed to a decline in credit quality.

41

Other Information
The following table summarizes the carrying value of available-for-sale securities pledged for deposits, borrowings, and other purposes:
(In thousands)At March 31, 2024At December 31, 2023
Pledged for deposits$2,418,726$2,102,115
Pledged for borrowings and other5,687,1366,111,430
Total available-for-sale securities pledged$8,105,862$8,213,545
At March 31, 2024, the Company had callable available-for-sale securities with an aggregate carrying value of $2.6 billion.
Held-to-Maturity
The following tables summarize the amortized cost, fair value, and ACL on held-to-maturity securities by major type:
At March 31, 2024
(In thousands)
Amortized
Cost (1)
Unrealized
Gains		Unrealized
Losses		Fair ValueAllowanceNet Carrying Value
Agency CMO$22,489 $— $(1,938)$20,551 $— $22,489 
Agency MBS2,618,783 1,429 (327,351)2,292,861 — 2,618,783 
Agency CMBS4,028,799 11,580 (540,641)3,499,738 — 4,028,799 
Municipal bonds and notes910,422 683 (34,953)876,152 184 910,238 
CMBS99,582 — (6,017)93,565 — 99,582 
Total held-to-maturity$7,680,075 $13,692 $(910,900)$6,782,867 $184 $7,679,891 
At December 31, 2023
(In thousands)
Amortized
Cost (1)
Unrealized
Gains		Unrealized
Losses		Fair ValueAllowanceNet Carrying Value
Agency CMO$23,470 $— $(1,728)$21,742 $— $23,470 
Agency MBS2,409,521 1,141 (284,776)2,125,886 — 2,409,521 
Agency CMBS3,625,627 18,586 (514,534)3,129,679 — 3,625,627 
Municipal bonds and notes916,104 2,440 (24,877)893,667 209 915,895 
CMBS100,075 — (6,426)93,649 — 100,075 
Total held-to-maturity$7,074,797 $22,167 $(832,341)$6,264,623 $209 $7,074,588 
(1)Accrued interest receivable on held-to-maturity securities of $22.6 million and $24.9 million at March 31, 2024, and December 31, 2023, respectively, is excluded from amortized cost and is included in Accrued interest receivable and other assets on the accompanying Condensed Consolidated Balance Sheets.
An ACL on held-to-maturity securities is recorded for certain Municipal bonds and notes to account for expected lifetime credit losses. Agency securities represent obligations issued by a U.S. government-sponsored enterprise or other federally-related entity and are either explicitly or implicitly guaranteed, and therefore, assumed to be zero loss. Held-to-maturity securities with gross unrealized losses and no ACL are considered to be high credit quality, and therefore, zero credit loss has been recorded.
The following table summarizes the activity in the ACL on held-to-maturity securities:
Three months ended March 31,
(In thousands)20242023
Balance, beginning of period$209 $182 
(Benefit) provision for credit losses(25)100 
Balance, end of period$184 $282 
42

Contractual Maturities
The following table summarizes the amortized cost and fair value of held-to-maturity securities by contractual maturity:
At March 31, 2024
(In thousands)Amortized CostFair Value
Maturing within 1 year$29,846 $29,771 
After 1 year through 5 years94,598 89,326 
After 5 through 10 years299,712 288,067 
After 10 years7,255,919 6,375,703 
Total held-to-maturity$7,680,075 $6,782,867 
Held-to-maturity securities that are not due at a single maturity date presentationhave been categorized based on the maturity date of the underlying collateral. Actual principal cash flows may differ from this categorization as borrowers have the right to prepay their obligations with or without prepayment penalties.
Credit Quality Information
The Company monitors the credit quality of held-to-maturity securities through credit ratings provided by Standard & Poor’s Rating Services, Moody’s Investor Services, Fitch Ratings, Inc., Kroll Bond Rating Agency, or DBRS Inc. Credit ratings express opinions about the credit quality of a security and are updated at each quarter end. Investment grade securities are rated BBB- or higher by S&P, or Baa3 or higher by Moody’s, and are generally considered by the rating agencies and market participants to be of low credit risk. Conversely, securities rated below investment grade, which are labeled as speculative grade by the rating agencies, are considered to have distinctively higher credit risk than investment grade securities. There were no speculative grade held-to-maturity securities at either March 31, 2024, or December 31, 2023. Held-to-maturity securities that are not rated are collateralized with U.S. Treasury obligations.
The following tables summarize the amortized cost of held-to-maturity securities based on their lowest publicly available credit rating:
March 31, 2024
Investment Grade
(In thousands)AaaAa1Aa2Aa3A1A3Not Rated
Agency CMO$— $22,489 $— $— $— $— $— 
Agency MBS— 2,618,783 — — — — — 
Agency CMBS— 4,028,799 — — — — — 
Municipal bonds and notes332,969 162,439 252,852 111,277 32,690 4,165 14,030 
CMBS99,582 — — — — — — 
Total held-to-maturity$432,551 $6,832,510 $252,852 $111,277 $32,690 $4,165 $14,030 
December 31, 2023
Investment Grade
(In thousands)AaaAa1Aa2Aa3A1A3Not Rated
Agency CMO$— $23,470 $— $— $— $— $— 
Agency MBS— 2,409,521 — — — — — 
Agency CMBS— 3,625,627 — — — — — 
Municipal bonds and notes333,479 162,615 253,671 115,404 32,732 4,165 14,038 
CMBS100,075 — — — — — — 
Total held-to-maturity$433,554 $6,221,233 $253,671 $115,404 $32,732 $4,165 $14,038 
At September 30, 2017,both March 31, 2024, and December 31, 2023, there were no held-to-maturity securities past due under the terms of their agreements nor in non-accrual status.
Other Information
The following table summarizes the carrying value of held-to-maturity securities pledged for deposits, borrowings, and other purposes:
(In thousands)At March 31, 2024At December 31, 2023
Pledged for deposits$1,557,987$1,212,824
Pledged for borrowings and other5,732,5695,582,379
Total held-to-maturity securities pledged$7,290,556$6,795,203
At March 31, 2024, the Company had acallable held-to-maturity securities with an aggregate carrying value of $1.2 billion in callable investment securities in its CMBS, CLO,$0.9 billion.
43

Note 4: Loans and municipal bond portfolios. Leases
The Company considers prepayment risk in the evaluationfollowing table summarizes loans and leases by portfolio segment and class:
(In thousands)At March 31,
2024		At December 31, 2023
Commercial non-mortgage$16,696,070 $16,885,475 
Asset-based1,492,886 1,557,841 
Commercial real estate13,972,916 13,569,762 
Multi-family7,896,586 7,587,970 
Equipment financing1,280,058 1,328,786 
Commercial portfolio41,338,516 40,929,834 
Residential8,226,154 8,227,923 
Home equity1,479,420 1,516,955 
Other consumer54,552 51,340 
Consumer portfolio9,760,126 9,796,218 
Loans and leases$51,098,642 $50,726,052 
The carrying amount of its interest rate risk profile. These maturities may not reflect actual durations, which may be impacted by prepayments.
Investment securities with a carrying value totaling $2.8 billionloans and leases at September 30, 2017March 31, 2024, and $2.5 billion at December 31, 2016 were pledged to secure public funds, trust deposits, repurchase agreements,2023, includes net unamortized
(discounts)/premiums and for other purposes, as required or permitted by law.

Note 3: Variable Interest Entities
The Company has an investmentnet unamortized deferred (fees)/costs totaling $(29.5) million and $(33.8) million, respectively. Accrued interest receivable of $284.1 million and $270.4 million at March 31, 2024, and December 31, 2023, respectively, is excluded from the carrying amount of loans and leases and is included in several entities that meet the definition of a VIE. The following discussion provides information about the Company's VIEs.
Consolidated
Rabbi Trust. The Company established a Rabbi Trust to meet the obligations due under its Deferred Compensation Plan for Directors and Officers and to mitigate the expense volatility of the aforementioned plan. The funding of the Rabbi Trust and the discontinuation of the Deferred Compensation Plan for Directors and Officers occurred during 2012.
Investments held in the Rabbi Trust primarily consist of mutual funds that invest in equity and fixed income securities. The Company is considered the primary beneficiary of the Rabbi Trust as it has the power to direct the activities of the Rabbi Trust that significantly affect the VIE's economic performance and it has the obligation to absorb losses of the VIE that could potentially be significant to the VIE.
The Company consolidates the invested assets of the trust along with the total deferred compensation obligations and includes them in accruedAccrued interest receivable and other assets and accrued expenses and other liabilities, respectively, in the accompanying Condensed Consolidated Balance Sheets. Earnings in the Rabbi Trust, including appreciation or depreciation, are reflected as other non-interest income, and changes in the corresponding liability are reflected as compensation and benefits, in the accompanying Condensed Consolidated Statements of Income.
Non-Consolidated
Securitized Investments. The Company, through normal investment activities, makes passive investments in securities issued by VIEs for which Webster is not the manager. The investment securities consist of Agency CMO, Agency MBS, Agency CMBS, CLO and trust preferred. The Company has not provided financial or other support with respect to these investment securities other than its original investment. For these investment securities, the Company determined it is not the primary beneficiary due to the relative size of its investment in comparison to the principal amount of the structured securities issued by the VIEs, the level of credit subordination which reduces the Company’s obligation to absorb losses or right to receive benefits and its inability to direct the activities that most significantly impact the economic performance of the VIEs. The Company’s maximum exposure to loss is limited to the amount of its investment in the VIEs. Refer to Note 2: Investment Securities for additional information.
Tax Credit - Finance Investments. The Company makes equity investments in entities that finance affordable housing and other community development projects and provide a return primarily through the realization of tax benefits. In most instances the investments require the funding of capital commitments in the future. While the Company's investment in an entity may exceed 50% of its outstanding equity interests, the entity is not consolidated as Webster is not involved in its management. For these investments, the Company determined it is not the primary beneficiary due to its inability to direct the activities that most significantly impact the economic performance of the VIEs.
At September 30, 2017 and December 31, 2016, the aggregate carrying value of the Company's tax credit-finance investments were $35.7 million and $22.8 million, respectively. At September 30, 2017 and December 31, 2016, unfunded commitments have been recognized, totaling $24.3 million and $14.0 million, respectively, and are included in accrued expenses and other liabilities inon the accompanying Condensed Consolidated Balance Sheets.
Webster Statutory Trust. The Company owns all of the outstanding common stock of Webster Statutory Trust, which is a financial vehicle that has issued, and may issue in the future, trust preferred securities. The trust is a VIE in whichAt March 31, 2024, the Company is nothad pledged $17.8 billion and $1.2 billion of eligible loans as collateral to support borrowing capacity at the primary beneficiaryFHLB and therefore, is not consolidated. The trust's only assets are junior subordinated debentures issued by the Company, which were acquired by the trust using the proceeds from the issuance of the trust preferred securitiesFRB, respectively.
Non-Accrual and common stock. The junior subordinated debentures are included in long-term debt in the accompanying Condensed Consolidated Balance Sheets, and the related interest expense is reported as interest expense on long-term debt in the accompanying Condensed Consolidated Statements of Income.
Other Investments. The Company invests in various alternative investments in which it holds a variable interest. Alternative investments are non-public entities which cannot be redeemed since the Company’s investment is distributed as the underlying equity is liquidated. For these investments, the Company has determined it is not the primary beneficiary due to its inability to direct the activities that most significantly impact the economic performance of the VIEs.
At September 30, 2017 and December 31, 2016, the aggregate carrying value of the Company's other investments in VIEs were $13.0 million and $12.3 million, respectively, and the total exposure of the Company's other investments in VIEs, including unfunded commitments, were $22.4 million and $19.9 million, respectively.
The Company's equity interests in Tax Credit-Finance Investments, Webster Statutory Trust, and Other Investments are included in accrued interest receivable and other assets in the accompanying Condensed Consolidated Balance Sheets. For a further description of the Company's accounting policies regarding the consolidation of a VIE, refer to Note 1 to the Consolidated Financial Statements for the year ended December 31, 2016 included in its 2016 Form 10-K.

Note 4:Past Due Loans and Leases
The following table summarizes loans and leases:
(In thousands)At September 30,
2017		 At December 31, 2016
Residential$4,499,441
 $4,254,682
Consumer2,566,983
 2,684,500
Commercial5,348,303
 4,940,931
Commercial Real Estate4,464,917
 4,510,846
Equipment Financing566,777
 635,629
Loans and leases (1) (2)
$17,446,421
 $17,026,588

(1)Loans and leases include net deferred fees and net premiums/discounts of $20.8 million and $17.3 million at September 30, 2017 and December 31, 2016, respectively.
(2)At September 30, 2017, the Company had pledged $6.7 billion of eligible residential, consumer and commercial loans as collateral to support borrowing capacity at the FHLB Boston and the FRB of Boston.
Loans and Leases Aging
The following tables summarize the aging of accrual and non-accrual loans and leases by class:
 At March 31, 2024
(In thousands)30-59 Days
Past Due and
Accruing		60-89 Days
Past Due and
Accruing		90 or More Days Past Due
and Accruing		Non-accrualTotal Past Due and
Non-accrual		CurrentTotal Loans
and Leases
Commercial non-mortgage$3,077 $3,138 $35 $193,294 $199,544 $16,496,526 $16,696,070 
Asset-based— — — 34,893 34,893 1,457,993 1,492,886 
Commercial real estate28,137 717 12,452 3,815 45,121 13,927,795 13,972,916 
Multi-family21,750 22,406 — 10,439 54,595 7,841,991 7,896,586 
Equipment financing6,189 2,984 — 8,677 17,850 1,262,208 1,280,058 
Commercial portfolio59,153 29,245 12,487 251,118 352,003 40,986,513 41,338,516 
Residential9,645 8,019 — 8,589 26,253 8,199,901 8,226,154 
Home equity4,971 1,652 — 22,934 29,557 1,449,863 1,479,420 
Other consumer100 141 — 200 441 54,111 54,552 
Consumer portfolio14,716 9,812 — 31,723 56,251 9,703,875 9,760,126 
Total$73,869 $39,057 $12,487 $282,841 $408,254 $50,690,388 $51,098,642 
 At December 31, 2023
(In thousands)30-59 Days
Past Due and
Accruing		60-89 Days
Past Due and
Accruing		90 or More Days Past Due
and Accruing		Non-accrualTotal Past Due and
Non-accrual		CurrentTotal Loans
and Leases
Commercial non-mortgage$2,270 $890 $94 $122,855 $126,109 $16,759,366 $16,885,475 
Asset-based— — — 35,068 35,068 1,522,773 1,557,841 
Commercial real estate1,459 — 184 11,383 13,026 13,556,736 13,569,762 
Multi-family5,198 2,340 — — 7,538 7,580,432 7,587,970 
Equipment financing3,966 8 — 9,828 13,802 1,314,984 1,328,786 
Commercial portfolio12,893 3,238 278 179,134 195,543 40,734,291 40,929,834 
Residential14,894 6,218 — 5,704 26,816 8,201,107 8,227,923 
Home equity5,676 3,285 — 23,545 32,506 1,484,449 1,516,955 
Other consumer410 94 — 142 646 50,694 51,340 
Consumer portfolio20,980 9,597 — 29,391 59,968 9,736,250 9,796,218 
Total$33,873 $12,835 $278 $208,525 $255,511 $50,470,541 $50,726,052 
44

The following table provides additional information on non-accrual loans and leases:
At March 31, 2024At December 31, 2023
(In thousands)Non-accrualNon-accrual with No AllowanceNon-accrualNon-accrual with No Allowance
Commercial non-mortgage$193,294 $12,367 $122,855 $20,066 
Asset-based34,893 1,155 35,068 1,330 
Commercial real estate3,815 — 11,383 2,681 
Multi-family10,439 957 — — 
Equipment financing8,677 376 9,828 1,584 
Commercial portfolio251,118 14,855 179,134 25,661 
Residential8,589 1,690 5,704 856 
Home equity22,934 11,546 23,545 12,471 
Other consumer200 38 142 49 
Consumer portfolio31,723 13,274 29,391 13,376 
Total$282,841 $28,129 $208,525 $39,037 
 At September 30, 2017
(In thousands)
30-59 Days
Past Due and
Accruing
60-89 Days
Past Due and
Accruing
90 or More Days Past Due
and Accruing
Non-accrualTotal Past Due and Non-accrualCurrentTotal Loans
and Leases
Residential$8,069
$3,654
$—
$45,676
$57,399
$4,442,042
$4,499,441
Consumer:       
Home equity7,613
4,685
—
37,105
49,403
2,269,468
2,318,871
Other consumer2,224
1,454
—
1,859
5,537
242,575
248,112
Commercial:       
Commercial non-mortgage1,948
364
934
58,915
62,161
4,402,543
4,464,704
Asset-based—
—
—
8,558
8,558
875,041
883,599
Commercial real estate:       
Commercial real estate1,347
444
—
10,603
12,394
4,161,572
4,173,966
Commercial construction—
—
—
477
477
290,474
290,951
Equipment financing818
49
—
570
1,437
565,340
566,777
Total$22,019
$10,650
$934
$163,763
$197,366
$17,249,055
$17,446,421
 At December 31, 2016
(In thousands)30-59 Days
Past Due and
Accruing
60-89 Days
Past Due and
Accruing
90 or More Days Past Due
and Accruing		Non-accrualTotal Past Due and Non-accrualCurrentTotal Loans
and Leases
Residential$8,631
$2,609
$—
$47,279
$58,519
$4,196,163
$4,254,682
Consumer:       
Home equity8,831
5,782
—
35,926
50,539
2,359,354
2,409,893
Other consumer2,233
1,485
—
1,663
5,381
269,226
274,607
Commercial:       
Commercial non-mortgage1,382
577
749
38,190
40,898
4,094,727
4,135,625
Asset-based—
—
—
—
—
805,306
805,306
Commercial real estate:       
Commercial real estate6,357
1,816
—
9,871
18,044
4,117,742
4,135,786
Commercial construction—
—
—
662
662
374,398
375,060
Equipment financing903
693
—
225
1,821
633,808
635,629
Total$28,337
$12,962
$749
$133,816
$175,864
$16,850,724
$17,026,588
InterestAdditional interest income on non-accrual loans and leases that would have been recorded as additional interest incomerecognized in the Condensed Consolidated Statements of Income had thesuch loans and leases been current in accordance with the originaltheir contractual terms totaled $2.8was $10.8 million and $3.7$6.1 million for the three months ended September 30, 2017March 31, 2024, and 2016, respectively, and $6.4 million and $8.4 million for the nine months ended September 30, 2017 and 2016,2023, respectively.

Allowance for Loan and LeaseCredit Losses
The following tables summarize the activity in, as well as the loan and lease balances that were evaluated for, the ALLL:
 At or for the three months ended September 30, 2017
 ResidentialConsumerCommercial
Commercial
Real Estate
Equipment
Financing
Total
ALLL:      
Balance, beginning of period$18,427
$42,488
$79,964
$52,402
$6,297
$199,578
(Benefit) provision charged to expense(348)(41)12,166
(2,129)502
10,150
Charge-offs(585)(6,197)(3,002)(749)(121)(10,654)
Recoveries280
1,894
466
10
79
2,729
Balance, end of period$17,774
$38,144
$89,594
$49,534
$6,757
$201,803
       
 At or for the three months ended September 30, 2016
(In thousands)ResidentialConsumerCommercial
Commercial
Real Estate
Equipment
Financing
Total
ALLL:      
Balance, beginning of period$24,413
$42,956
$73,822
$33,622
$5,615
$180,428
Provision charged to expense1,076
4,985
4,351
2,953
885
14,250
Charge-offs(1,304)(5,259)(2,561)—
(300)(9,424)
Recoveries554
1,313
370
194
240
2,671
Balance, end of period$24,739
$43,995
$75,982
$36,769
$6,440
$187,925
       
 At or for the nine months ended September 30, 2017
(In thousands)ResidentialConsumerCommercial
Commercial
Real Estate
Equipment
Financing
Total
ALLL:      
Balance, beginning of period$23,226
$45,233
$71,905
$47,477
$6,479
$194,320
(Benefit) provision charged to expense(4,436)6,847
21,905
2,987
597
27,900
Charge-offs(1,940)(18,273)(5,321)(951)(425)(26,910)
Recoveries924
4,337
1,105
21
106
6,493
Balance, end of period$17,774
$38,144
$89,594
$49,534
$6,757
$201,803
Individually evaluated for impairment$4,925
$1,689
$10,844
$290
$38
$17,786
Collectively evaluated for impairment$12,849
$36,455
$78,750
$49,244
$6,719
$184,017
       
Loan and lease balances:      
Individually evaluated for impairment$116,706
$46,224
$85,385
$18,199
$3,642
$270,156
Collectively evaluated for impairment4,382,735
2,520,759
5,262,918
4,446,718
563,135
17,176,265
Loans and leases$4,499,441
$2,566,983
$5,348,303
$4,464,917
$566,777
$17,446,421
 At or for the nine months ended September 30, 2016
(In thousands)ResidentialConsumerCommercial
Commercial
Real Estate
Equipment
Financing
Total
ALLL:      
Balance, beginning of period$25,876
$42,052
$66,686
$34,889
$5,487
$174,990
Provision charged to expense991
12,458
25,447
3,921
1,033
43,850
Charge-offs(3,536)(14,236)(17,294)(2,521)(521)(38,108)
Recoveries1,408
3,721
1,143
480
441
7,193
Balance, end of period$24,739
$43,995
$75,982
$36,769
$6,440
$187,925
Individually evaluated for impairment$9,443
$3,005
$6,579
$467
$9
$19,503
Collectively evaluated for impairment$15,296
$40,990
$69,403
$36,302
$6,431
$168,422
       
Loan and lease balances:      
Individually evaluated for impairment$122,020
$46,208
$58,197
$24,423
$6,863
$257,711
Collectively evaluated for impairment4,112,027
2,661,135
4,721,605
4,256,090
614,833
16,365,690
Loans and leases$4,234,047
$2,707,343
$4,779,802
$4,280,513
$621,696
$16,623,401


Impaired on Loans and Leases
The following tables summarize impaired loans and leases:
 At September 30, 2017
(In thousands)
Unpaid
Principal
Balance
Total
Recorded
Investment
Recorded
Investment
No Allowance
Recorded
Investment
With Allowance
Related
Valuation
Allowance
Residential$127,986
$116,706
$27,961
$88,745
$4,925
Consumer - home equity51,496
46,225
21,833
24,392
1,689
Commercial :     
Commercial non-mortgage88,221
76,827
28,124
48,703
10,844
Asset-based8,558
8,558
8,558
—
—
Commercial real estate:     
Commercial real estate19,026
17,725
12,894
4,831
271
Commercial construction580
474
—
474
19
Equipment financing3,721
3,642
3,004
638
38
Total$299,588
$270,157
$102,374
$167,783
$17,786
 At December 31, 2016
(In thousands)
Unpaid
Principal
Balance
Total
Recorded
Investment
Recorded
Investment
No Allowance
Recorded
Investment
With Allowance
Related
Valuation
Allowance
Residential$131,468
$119,424
$21,068
$98,356
$8,090
Consumer - home equity52,432
45,719
22,746
22,973
2,903
Commercial :     
Commercial non-mortgage57,732
53,037
26,006
27,031
7,422
Asset-based—
—
—
—
—
Commercial real estate:     
Commercial real estate24,146
23,568
19,591
3,977
169
Commercial construction1,188
1,187
1,187
—
—
Equipment financing6,398
6,420
6,197
223
9
Total$273,364
$249,355
$96,795
$152,560
$18,593

The following table summarizes the average recorded investment and interest income recognized for impairedchange in the ACL on loans and leases:
 Three months ended September 30, Nine months ended September 30,
 2017 2016 2017 2016
(In thousands)
Average
Recorded
Investment
Accrued
Interest
Income
Cash Basis Interest Income Average
Recorded
Investment		Accrued
Interest
Income		Cash Basis Interest Income 
Average
Recorded
Investment
Accrued
Interest
Income		Cash Basis Interest Income 
Average
Recorded
Investment
Accrued
Interest
Income		Cash Basis Interest Income
Residential$118,841
$1,027
$285
 $124,993
$1,070
$304
 $118,065
$3,133
$986
 $128,234
$3,309
$918
Consumer - home equity46,753
341
246
 46,892
336
238
 45,972
998
808
 47,317
1,029
754
Commercial               
Commercial Non-Mortgage81,816
249
—
 58,874
352
—
 64,932
704
—
 57,389
1,299
—
Asset based4,279
—
—
 —
—
—
 4,279


—
 —
—
—
Commercial real estate:               
Commercial real estate20,249
96
—
 23,930
77
—
 20,647
329
—
 26,689
374
—
Commercial construction828
—
—
 4,386
12
—
 831
12
—
 5,171
81
—
Equipment financing4,895
30
—
 3,642
107
—
 5,031
168
—
 3,642
109
—
Total$277,661
$1,743
$531
 $262,717
$1,954
$542
 $259,757
$5,344
$1,794
 $268,442
$6,201
$1,672

leases by portfolio segment:

 At or for the three months ended March 31,
20242023
(In thousands)Commercial PortfolioConsumer PortfolioTotalCommercial PortfolioConsumer PortfolioTotal
ACL on loans and leases:
Balance, beginning of period$577,663 $58,074 $635,737 $533,125 $61,616 $594,741 
Adoption of ASU No. 2022-02— — — 7,704 (1,831)5,873 
Provision (benefit)49,354 (6,160)43,194 38,757 (936)37,821 
Charge-offs(38,461)(1,330)(39,791)(26,410)(1,098)(27,508)
Recoveries553 1,749 2,302 1,574 1,413 2,987 
Balance, end of period$589,109 $52,333 $641,442 $554,750 $59,164 $613,914 
Individually evaluated for credit losses60,786 4,209 64,995 27,459 8,590 36,049 
Collectively evaluated for credit losses$528,323 $48,124 $576,447 $527,291 $50,574 $577,865 
Credit Quality Indicators.Indicators
To measure credit risk for the commercial commercial real estate, and equipment financing portfolios,portfolio, the Company employs a dual grade credit risk grading system for estimating the probability of borrower defaultPD and the loss given default.LGD. The credit risk grade system assigns a rating to each borrower and to the facility, which together form a Composite Credit Risk Profile. The credit risk grade system categorizes borrowers by common financial characteristics that measure the credit strength of borrowers and facilities by common structural characteristics. The Composite Credit Risk Profile has ten grades, with each grade corresponding to a progressively greater risk of default.loss. Grades (1) -to (6) are considered pass ratings, and grades (7) -to (10) are considered criticized, as defined by the regulatory agencies. A (7) “Special Mention” rating has a potential weakness that, if left uncorrected, may result in deterioration of the repayment prospects for the asset. An (8) “Substandard” rating has a well-defined weakness that jeopardizes the full repayment of the debt. A (9) “Doubtful” rating has all of the same weaknesses as a substandard asset with the added characteristic that the weakness makes collection or liquidation in full given current facts, conditions, and values improbable. Assets classified as a (10) “Loss” rating are considered uncollectible and charged-off. Risk ratings, which are assigned to differentiate risk within the portfolio, are reviewed on an ongoing basis and revised to reflect changes in a borrower'sborrower’s current financial position and outlook, risk profile, and the related collateral and structural position. Loan officers review updated financial information or other loan factors on at least an annual basis for all pass rated loans to assess the accuracy of the risk grade. Criticized loans undergo more frequent reviews and enhanced monitoring.
45

A (7) "Special Mention"To measure credit has the potential weakness that, if left uncorrected, may result in deterioration of the repayment prospectsrisk for the asset. An (8) "Substandard" asset hasconsumer portfolio, the most relevant credit characteristic is the FICO score, which is a well defined weaknesswidely used credit scoring system that jeopardizes the full repaymentranges from 300 to 850. A lower FICO score is indicative of the debt. An asset rated (9) "Doubtful" has allhigher credit risk and a higher FICO score is indicative of the same weaknesses aslower credit risk. FICO scores are updated at least on a substandard credit with the added characteristic that the weakness makes collection or liquidation in full, given current facts, conditions, and values, improbable. Assets classified as (10) "Loss" in accordance with regulatory guidelines are considered uncollectible and charged off.
quarterly basis. The following table summarizes commercial, commercial real estate and equipment financing loans and leases segregated by risk rating exposure:
 Commercial Commercial Real Estate Equipment Financing
(In thousands)At September 30,
2017		 At December 31,
2016		 At September 30,
2017		 At December 31,
2016		 At September 30,
2017		 At December 31,
2016
(1) - (6) Pass$5,037,439
 $4,655,007
 $4,266,658
 $4,357,458
 $548,298
 $618,084
(7) Special Mention108,828
 56,240
 85,926
 69,023
 3,557
 1,324
(8) Substandard192,161
 226,603
 112,333
 84,365
 14,922
 16,221
(9) Doubtful9,875
 3,081
 —
 —
 —
 —
Total$5,348,303
 $4,940,931
 $4,464,917
 $4,510,846
 $566,777
 $635,629

For residential and consumer loans, the Company considers factors such as past due status, updated FICO scores, employment status, collateral, geography, loans discharged in bankruptcy, and the status of first lien position loans on second lien position loans, asare also considered to be consumer portfolio credit quality indicators. On an ongoing basis forFor portfolio monitoring purposes, the Company estimates the current value of property secured as collateral for both home equity and residential first mortgage lending products.products on an ongoing basis. The estimate is based on home price indices compiled by the S&P/Case-Shiller Home Price Indices. The trendReal estate price data is applied to the loan portfolios taking into account the age of the most recent valuation and geographic area.
Troubled Debt RestructuringsThe following tables summarize the amortized cost basis of commercial loans and leases by Composite Credit Risk Profile grade and origination year:
At March 31, 2024
(In thousands)20242023202220212020PriorRevolving Loans Amortized Cost BasisTotal
Commercial non-mortgage:
Risk rating:
Pass$663,424 $2,467,862 $3,900,425 $1,315,230 $686,594 $1,480,383 $5,511,758 $16,025,676 
Special mention— 54,770 56,426 47,247 32,684 11,246 34,044 236,417 
Substandard— 77,736 127,796 41,141 26,857 48,295 112,126 433,951 
Doubtful— — — — — 26 — 26 
Total commercial non-mortgage663,424 2,600,368 4,084,647 1,403,618 746,135 1,539,950 5,657,928 16,696,070 
Current period gross write-offs— 240 21,228 9,118 353 766 — 31,705 
Asset-based:
Risk rating:
Pass7,552 20,276 — — — 28,179 1,264,087 1,320,094 
Special mention— 927 732 — — 3,497 16,527 21,683 
Substandard— — — — — 1,152 149,957 151,109 
Total asset-based7,552 21,203 732 — — 32,828 1,430,571 1,492,886 
Current period gross write-offs— — — — — — — — 
Commercial real estate:
Risk rating:
Pass575,902 2,319,662 3,557,239 1,748,708 1,138,226 4,032,725 151,615 13,524,077 
Special mention— 19,635 4,675 20,978 29,561 116,552 — 191,401 
Substandard— 29,149 22,571 6,546 59,648 138,314 1,210 257,438 
Total commercial real estate575,902 2,368,446 3,584,485 1,776,232 1,227,435 4,287,591 152,825 13,972,916 
Current period gross write-offs— — — 1,399 — 860 — 2,259 
Multi-family:
Risk rating:
Pass393,731 1,638,357 1,921,264 1,057,961 384,683 2,447,598 — 7,843,594 
Special mention— — — — — 1,685 — 1,685 
Substandard— — — — 359 50,948 — 51,307 
Total multi-family393,731 1,638,357 1,921,264 1,057,961 385,042 2,500,231 — 7,896,586 
Current period gross write-offs— — — — — 1,128 — 1,128 
Equipment financing:
Risk rating:
Pass71,632 301,206 272,532 198,821 162,267 209,068 — 1,215,526 
Special mention52 16,448 3,207 5,938 229 8,368 — 34,242 
Substandard84 171 8,676 7,292 6,008 8,059 — 30,290 
Total equipment financing71,768 317,825 284,415 212,051 168,504 225,495 — 1,280,058 
Current period gross write-offs— — — — — 3,369 — 3,369 
Total commercial portfolio1,712,377 6,946,199 9,875,543 4,449,862 2,527,116 8,586,095 7,241,324 41,338,516 
Current period gross write-offs$— $240 $21,228 $10,517 $353 $6,123 $— $38,461 
46

At December 31, 2023
(In thousands)20232022202120202019PriorRevolving Loans Amortized Cost BasisTotal
Commercial non-mortgage:
Pass$2,602,444 $4,089,327 $1,371,139 $711,362 $610,199 $952,097 $5,970,588 $16,307,156 
Special mention15,184 60,240 61,235 33,111 — 720 48,561 219,051 
Substandard48,849 104,087 23,258 28,222 44,612 30,426 79,778 359,232 
Doubtful— 8 — — 3 25 — 36 
Total commercial non-mortgage2,666,477 4,253,662 1,455,632 772,695 654,814 983,268 6,098,927 16,885,475 
Current period gross write-offs325 7,637 1,775 512 969 4,391 — 15,609 
Asset-based:
Pass23,007 — — — 3,280 34,999 1,333,271 1,394,557 
Special mention651 763 — — 3,676 — 29,610 34,700 
Substandard— — — — 1,330 — 127,254 128,584 
Total asset-based23,658 763 — — 8,286 34,999 1,490,135 1,557,841 
Current period gross write-offs— — — — 13,189 3,900 — 17,089 
Commercial real estate:
Pass2,265,428 3,502,425 1,831,005 1,195,732 1,193,642 3,112,770 176,668 13,277,670 
Special mention850 4,675 14,463 31,405 23,443 37,688 1,210 113,734 
Substandard25,802 16,179 9,545 15,418 58,602 52,812 — 178,358 
Total commercial real estate2,292,080 3,523,279 1,855,013 1,242,555 1,275,687 3,203,270 177,878 13,569,762 
Current period gross write-offs4,632 — 12,617 3,813 2,754 38,569 — 62,385 
Multi-family:
Pass1,597,599 1,934,100 1,041,416 442,888 595,676 1,920,618 — 7,532,297 
Special mention— — — — 260 35,942 — 36,202 
Substandard— — — 364 11,563 7,544 — 19,471 
Total multi-family1,597,599 1,934,100 1,041,416 443,252 607,499 1,964,104 — 7,587,970 
Current period gross write-offs— — — — — 3,447 — 3,447 
Equipment financing:
Pass335,874 297,186 232,304 176,061 183,679 69,927 — 1,295,031 
Special mention— — 116 — 90 — — 206 
Substandard— 9,144 8,064 6,600 4,285 5,456 — 33,549 
Total equipment financing335,874 306,330 240,484 182,661 188,054 75,383 — 1,328,786 
Current period gross write-offs— — — 2,633 3,304 42 — 5,979 
Total commercial portfolio6,915,688 10,018,134 4,592,545 2,641,163 2,734,340 6,261,024 7,766,940 40,929,834 
Current period gross write-offs$4,957 $7,637 $14,392 $6,958 $20,216 $50,349 $— $104,509 
47

The following table summarizes information for TDRs:tables summarize the amortized cost basis of consumer loans by FICO score and origination year:
At March 31, 2024
(In thousands)20242023202220212020PriorRevolving Loans Amortized Cost BasisTotal
Residential:
Risk rating:
800+$31,773 $258,518 $876,330 $1,085,654 $425,046 $1,029,578 $— $3,706,899 
740-79963,609 336,781 660,935 748,992 300,885 713,330 — 2,824,532 
670-73916,063 139,978 334,526 284,846 88,711 518,781 — 1,382,905 
580-669887 18,590 49,910 43,025 17,029 106,517 — 235,958 
579 and below— 1,391 10,072 12,128 782 51,487 — 75,860 
Total residential112,332 755,258 1,931,773 2,174,645 832,453 2,419,693 — 8,226,154 
Current period gross write-offs— — — — — 64 — 64 
Home equity:
Risk rating:
800+1,319 28,064 26,971 34,581 25,209 61,331 381,942 559,417 
740-7991,373 23,922 19,804 26,051 12,507 37,911 333,256 454,824 
670-7393,970 14,475 14,413 15,265 7,083 30,424 241,202 326,832 
580-669354 3,097 3,783 2,555 1,237 13,881 73,203 98,110 
579 and below— 198 1,514 733 232 4,172 33,388 40,237 
Total home equity7,016 69,756 66,485 79,185 46,268 147,719 1,062,991 1,479,420 
Current period gross write-offs— — — — — 177 — 177 
Other consumer:
Risk rating:
800+56 482 373 1,875 142 462 30,934 34,324 
740-7999 975 536 465 596 833 6,149 9,563 
670-739392 618 435 324 720 781 4,520 7,790 
580-669146 122 176 92 118 250 1,134 2,038 
579 and below— 77 97 49 14 31 569 837 
Total other consumer603 2,274 1,617 2,805 1,590 2,357 43,306 54,552 
Current period gross write-offs890 — 11 18 26 144 — 1,089 
Total consumer portfolio119,951 827,288 1,999,875 2,256,635 880,311 2,569,769 1,106,297 9,760,126 
Current period gross write-offs$890 $— $11 $18 $26 $385 $— $1,330 
(Dollars in thousands)At September 30,
2017		 At December 31, 2016
Accrual status$135,774
 $147,809
Non-accrual status82,576
 75,719
Total recorded investment of TDRs$218,350
 $223,528
Specific reserves for TDRs included in the balance of ALLL$11,837
 $14,583
Additional funds committed to borrowers in TDR status3,944
 459
48

For
At December 31, 2023
(In thousands)20232022202120202019PriorRevolving Loans Amortized Cost BasisTotal
Residential:
Risk rating:
800+$214,446 $847,009 $1,096,109 $451,307 $141,919 $910,117 $— $3,660,907 
740-799363,696 703,568 755,750 279,946 112,303 633,578 — 2,848,841 
670-739137,460 293,699 292,255 95,838 48,412 346,663 — 1,214,327 
580-66920,208 52,962 45,770 14,840 10,492 106,497 — 250,769 
579 and below6,909 52,690 11,749 1,345 128,714 51,672 — 253,079 
Total residential742,719 1,949,928 2,201,633 843,276 441,840 2,048,527 — 8,227,923 
Current period gross write-offs— — 387 — 153 4,630 — 5,170 
Home equity:
Risk rating:
800+27,047 27,439 35,927 25,586 8,110 56,062 391,616 571,787 
740-79924,772 20,069 27,147 13,888 5,158 34,190 355,926 481,150 
670-73915,857 15,655 15,389 5,992 3,189 29,454 242,189 327,725 
580-6693,080 3,786 1,991 1,658 1,115 9,988 70,102 91,720 
579 and below696 1,109 1,079 576 552 6,319 34,242 44,573 
Total home equity71,452 68,058 81,533 47,700 18,124 136,013 1,094,075 1,516,955 
Current period gross write-offs— 4 81 — 104 3,114 — 3,303 
Other consumer:
Risk rating:
800+432 356 1,913 189 255 77 25,699 28,921 
740-7991,318 586 486 730 690 381 7,180 11,371 
670-739526 570 358 981 1,210 79 3,549 7,273 
580-66969 169 129 153 303 56 1,983 2,862 
579 and below125 97 61 11 28 1 590 913 
Total other consumer2,470 1,778 2,947 2,064 2,486 594 39,001 51,340 
Current period gross write-offs3,263 7 2 218 377 363 — 4,230 
Total consumer portfolio816,641 2,019,764 2,286,113 893,040 462,450 2,185,134 1,133,076 9,796,218 
Current period gross write-offs$3,263 $11 $470 $218 $634 $8,107 $— $12,703 
Collateral Dependent Loans and Leases
A non-accrual loan or lease is considered collateral dependent when the portion of TDRs deemedborrower is experiencing financial difficulty and when repayment is substantially expected to be uncollectible, Webster charged off $0.4 millionprovided through the operation or sale of collateral. Commercial non-mortgage loans,
asset-based loans, and $3.0 million for the three months ended September 30, 2017 and 2016, respectively, and $3.0 million, and $17.9 million for the nine months ended September 30, 2017 and 2016, respectively.

The following table provides information on the type of concession forequipment financing loans and leases modified as TDRs:are generally secured by machinery and equipment, inventory, receivables, or other non-real estate assets, whereas commercial real estate, multi-family, residential, home equity, and other consumer loans are secured by real estate.
 Three months ended September 30, Nine months ended September 30,
 2017 2016 2017 2016
 Number of
Loans and
Leases
Post-
Modification
Recorded
Investment(1)
 Number of
Loans and
Leases
Post-
Modification
Recorded
Investment(1)
 Number of
Loans and
Leases
Post-
Modification
Recorded
Investment(1)
 Number of
Loans and
Leases
Post-
Modification
Recorded
Investment(1)
(Dollars in thousands) 
Residential:           
Extended Maturity—
$—
 4
$967
 9$1,390
 11$1,969
Adjusted Interest Rate—
—
 1
292
 2335
 2528
Maturity/Rate Combined4
570
 3
290
 91,416
 101,185
Other (2)
6
1,357
 3
299
 325,471
 183,190
Consumer - home equity           
Extended Maturity2
158
 2
89
 8822
 9381
Adjusted Interest Rate1
247
 —
—
 1247
 ——
Maturity/Rate Combined2
399
 3
264
 133,212
 11923
Other (2)
12
839
 8
270
 553,733
 371,447
Commercial non - mortgage   

       
Extended Maturity—
—
 2
213
 8813
 1114,862
Maturity/Rate Combined8
299
 —
—
 139,153
 2648
Other (2)
—
—
 4
1,265
 14
 111,639
Commercial real estate:           
Extended Maturity—
—
 1
109
 ——
 1109
Maturity/Rate Combined—
—
 1
291
 ——
 2335
Other (2)
—
—
 —
—
 ——
 1509
Equipment Financing           
Extended Maturity—
—
 6
6,638
 ——
 76,642
Total TDRs35
$3,869
 38
$10,987
 151$26,596
 133$34,367

(1)Post-modification balances approximate pre-modification balances. The aggregate amount of charge-offs as a result of the restructurings was not significant.
(2)Other includes covenant modifications, forbearance, loans discharged under Chapter 7 bankruptcy, or other concessions.
LoansAt March 31, 2024, and leases modified as TDRs withinDecember 31, 2023, the previous 12 monthscarrying amount of collateral dependent loans was $50.0 million and $66.1 million, respectively, for which there was a payment default, consisted of one residential loan with a recorded investment of $248 thousand for both the three and nine months ended September 30, 2017. There were no suchcommercial loans and leases, for both the three and nine months ended September 30, 2016.

The recorded investment of TDRs in commercial, commercial real estate, and equipment financing segregated by risk rating exposure is as follows:
(In thousands)At September 30, 2017 At December 31, 2016
(1) - (6) Pass$8,902
 $10,210
(7) Special Mention360
 7
(8) Substandard46,157
 45,509
(9) Doubtful—
 2,738
Total$55,419
 $58,464


Note 5: Transfers of Financial Assets
The Company sells financial assets in the normal course of business, primarily residential mortgage loans sold to government-sponsored enterprises through established programs and securitizations. The gain or loss on residential mortgage loans sold and the related origination fee income, and the fair value adjustment to loans held-for-sale are included as mortgage banking activities in the accompanying Condensed Consolidated Statements of Income.
The Company may be required to repurchase a loan in the event of certain breaches of the representations and warranties, or in the event of default of the borrower within 90 days of sale, as provided for in the sale agreements. A reserve for loan repurchases provides for estimated losses pertaining to the potential repurchase of loans associated with the Company’s mortgage banking activities. The reserve reflects management’s evaluation of the identity of the counterparty, the vintage of the loans sold, the amount of open repurchase requests, specific loss estimates for each open request, the current level of loan losses in similar vintages held in the residential loan portfolio, and estimated recoveries on the underlying collateral. The reserve also reflects management’s expectation of losses from repurchase requests for which the Company has not yet been notified, as the performance of loans sold and the quality of the servicing provided by the acquirer also may impact the reserve. The provision recorded at the time of the loan sale is netted from the gain or loss recorded in mortgage banking activities, while any incremental provision, post loan sale, is recorded in other non-interest expense in the accompanying Condensed Consolidated Statements of Income.
The following table provides a summary of activity in the reserve for loan repurchases:
 Three months ended September 30, Nine months ended September 30,
(In thousands)2017 2016 2017 2016
Beginning balance$843
 $992
 $790
 $1,192
Provision (benefit) charged to expense25
 37
 78
 (64)
Repurchased loans and settlements charged off(18) —
 (18) (99)
Ending balance$850
 $1,029
 $850
 $1,029

The following table provides information for mortgage banking activities:
 Three months ended September 30, Nine months ended September 30,
(In thousands)2017 2016 2017 2016
Residential mortgage loans held for sale:       
Proceeds from sale$88,691
 $128,268
 $262,029
 $298,840
Loans sold with servicing rights retained79,690
 115,822
 239,357
 273,827
        
Net gain on sale1,979
 3,324
 4,356
 6,749
Ancillary fees682
 1,046
 2,091
 2,485
Fair value option adjustment(240) (48) 1,591
 2,101

The Company has retained servicing rights on residential mortgage loans totaling $2.6 billion at both September 30, 2017 and December 31, 2016.
The following table presents the changes in carrying value for mortgage servicing assets:
 Three months ended September 30, Nine months ended September 30,
(In thousands)2017 2016 2017 2016
Beginning balance$24,708
 $21,946
 $24,466
 $20,698
Additions2,576
 3,338
 7,063
 8,198
Amortization(2,144) (1,900) (6,389) (5,512)
Ending balance$25,140
 $23,384
 $25,140
 $23,384

Loan servicing fees, net of mortgage servicing rights amortization, were $0.2$23.8 million and $0.3$22.7 million, respectively, for the three months ended September 30, 2017consumer loans. The ACL for collateral dependent loans and 2016, respectively, and $0.6 million and $0.9 million for the nine months ended September 30, 2017 and 2016, respectively, and are included as a component of loan related fees in the accompanying Condensed Consolidated Statements of Income.
See Note 13: Fair Value Measurements for a further discussionleases is individually assessed based on the fair value of loans held for salethe collateral less costs to sell at the reporting date. At March 31, 2024, and mortgage servicing assets. Additionally, loans not originated for sale were sold approximately at carryingDecember 31, 2023, the collateral value for cash proceeds of $7.4 million for certain residentialassociated with collateral dependent loans and $20.8leases was $78.1 million forand $93.7 million, respectively.
49

Modifications to Borrowers Experiencing Financial Difficulty
In certain circumstances, the Company enters into agreements to modify the terms of loans to borrowers experiencing financial difficulty. A variety of solutions are offered to borrowers experiencing financial difficulty, including loan modifications that may result in principal forgiveness, interest rate reductions, payment delays, term extensions, or a combination thereof. The following is a description of each of these types of modifications:
•Principal forgiveness – The outstanding principal balance of a loan may be reduced by a specified amount. Principal forgiveness may occur voluntarily as part of a negotiated agreement with a borrower, or involuntarily through a bankruptcy proceeding.
•Interest rate reductions – Includes modifications where the contractual interest rate of the loan has been reduced.
•Payment delays – Deferral arrangements that allow borrowers to delay a scheduled loan payment to a later date. Deferred loan payments do not affect the original contractual maturity terms of the loan. Modifications that result in only an insignificant payment delay are not disclosed. The Company generally considers a payment delay of three months or less to be insignificant.
•Term extensions – Extensions of the original contractual maturity date of the loan.
•Combination – Combination includes loans that have undergone more than one of the above loan modification types.
Significant judgment is required to determine if a borrower is experiencing financial difficulty. These considerations vary by portfolio class. The Company has identified modifications to borrowers experiencing financial difficulty that are included in its disclosures as follows:
•Commercial: The Company evaluates modifications of loans to commercial borrowers that are rated substandard or worse, and includes the modifications in its disclosures to the extent that the modification is considered
other-than-insignificant.
•Consumer: The Company generally evaluates all modifications of loans forto consumer borrowers subject to its loss mitigation program and includes them in its disclosures to the nineextent that the modification is considered other-than-insignificant.
The following tables summarize the amortized cost basis at March 31, 2024, and 2023, of loans modified to borrowers experiencing financial difficulty, disaggregated by class and type of concession granted:
For the three months ended March 31, 2024
(In thousands)Interest Rate ReductionTerm ExtensionPayment DelayCombination - Term Extension and Interest Rate ReductionTotal
% of Total Class (2)
Commercial non-mortgage$1,934$18,124$50,038$1,099$71,1950.4  %
Asset-based—1,667——1,6670.1 
Commercial real estate—7,753——7,7530.1 
Multi-family—49,990——49,9900.6 
Equipment financing—556——556— 
Residential629——135764— 
Home equity———6565— 
Total (1)
$2,563$78,090$50,038$1,299$131,9900.3  %
For the three months ended March 31, 2023
(In thousands)Interest Rate ReductionTerm ExtensionCombination -
Term Extension and Interest Rate Reduction		Total
% of Total Class (2)
Commercial non-mortgage$7$29,884$—$29,8910.2  %
Commercial real estate—17,116—17,1160.1 
Home equity—5764121— 
Total (1)
$7$47,057$64$47,1280.1  %
(1)The total amortized cost excludes accrued interest receivable of $0.8 million and $0.2 million at March 31, 2024, and 2023, respectively.
(2)Represents the total amortized cost of the loans modified as a percentage of the total period end loan balance by class.
50

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty:
For the three months ended March 31, 2024
Financial Effect (1)
Interest Rate Reduction:
Commercial non-mortgageReduced weighted average interest rate by 2.5%
Term Extension:
Commercial non-mortgageExtended term by a weighted average of 0.5 years
Asset-basedExtended term by a weighted average of 0.3 years
Commercial real estateExtended term by a weighted average of 0.3 years
Multi-familyExtended term by a weighted average of 0.7 years
Payment Delay:
Commercial non-mortgageProvided payment deferrals for a weighted average of 0.5 years
For the three months ended March 31, 2023
Financial Effect
Interest Rate Reduction:
Commercial non-mortgageReduced weighted average interest rate by 4.5%
Term Extension:
Commercial non-mortgageExtended term by a weighted average of 0.6 years
Commercial real estateExtended term by a weighted average of 1.0 year
Home equityExtended term by a weighted average of 8.8 years
Combination - Term Extension and Interest Rate Reduction:
Home equityExtended term by a weighted average of 5.1 years and reduced weighted average interest rate by 1.5%
(1)Certain disclosures related to financial effects of modifications do not include those deemed to be immaterial.
The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following tables summarize the aging of loans that had been modified in the twelve months preceding March 31, 2024, and in the three months ended September 30, 2017March 31, 2023:
At March 31, 2024
(In thousands)Current30-59 Days
Past Due		60-89 Days
Past Due		90+ Days
Past Due		Non-AccrualTotal
Commercial non-mortgage$77,451$—$19$—$97,587$175,057
Asset-based42,331————42,331
Commercial real estate24,859———16925,028
Multi-family—18,10322,406—9,48149,990
Equipment financing1,762———3172,079
Residential1,258———7642,022
Home equity510———86596
Total$148,171$18,103$22,425$—$108,404$297,103
At March 31, 2023
(In thousands)Current30-59 Days
Past Due		60-89 Days
Past Due		90+ Days
Past Due		Non-AccrualTotal
Commercial non-mortgage$3,562$—$—$—$26,329$29,891
Commercial real estate17,116————17,116
Home equity23———98121
Total$20,701$—$—$—$26,427$47,128
There were $17.8 million of commercial non-mortgage loans made to borrowers experiencing financial difficulty that were modified in the preceding twelve months and 2016, respectively.that subsequently defaulted during the three months ended March 31, 2024. Loans made to borrowers experiencing financial difficulty that were both modified during the three months ended March 31, 2023, and that subsequently defaulted were not significant. For the purposes of this disclosure, a payment default is defined as 90 or more days past due and accruing. Non-accrual loans that are modified to borrowers experiencing financial difficulty remain on non-accrual status until the borrower has demonstrated performance under the modified terms. Commitments to lend additional funds to borrowers experiencing financial difficulty whose loans had been modified were not significant.

51

Note 6:5: Goodwill and Other Intangible Assets
Goodwill
The following table summarizes changes in the carrying amount of goodwill:
(In thousands)At March 31,
2024		At December 31,
2023
Balance, beginning of period$2,631,465 $2,514,104 
Ametros acquisition (1)
236,603 — 
interLINK acquisition— 143,216 
Bend acquisition— (294)
Sterling merger— (25,561)
Balance, end of period$2,868,068 $2,631,465 
(1)Reflects the $228.2 million of preliminary goodwill recorded in connection with the Ametros acquisition in January 2024, and $8.4 million of other intangible assetsadjustments.
Information regarding goodwill by reportable segment consisted of the following:can be found within Note 14: Segment Reporting.
 At September 30, 2017 At December 31, 2016
(In thousands)
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
 
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Other intangible assets:       
HSA Bank CDI$22,000
$(8,036)$13,964
 $22,000
$(6,162)$15,838
HSA Bank Customer relationships21,000
(4,375)16,625
 21,000
(3,164)17,836
Total other intangible assets$43,000
$(12,411)$30,589
 $43,000
$(9,326)$33,674
        
Goodwill:       
Community Banking  $516,560
   $516,560
HSA Bank  21,813
   21,813
Total goodwill  $538,373
   $538,373

Other Intangible Assets
There was no changeThe following table summarizes other intangible assets:
 At March 31, 2024At December 31, 2023
(In thousands)Gross Carrying
Amount		Accumulated
Amortization		Net Carrying
Amount		Gross Carrying
Amount		Accumulated
Amortization		Net Carrying
Amount
Core deposits (1)
$328,837 $59,239 $269,598 $146,037 $53,986 $92,051 
Customer relationships151,000 46,654 104,346 151,000 43,116 107,884 
Non-competition agreement4,000 1,000 3,000 4,000 800 3,200 
Trade name (1)
6,100 203 5,897 — — — 
Total other intangible assets$489,937 $107,096 $382,841 $301,037 $97,902 $203,135 
(1)The increase in the gross carrying amounts for goodwill since December 31, 2016.amount is due to the Ametros acquisition in January 2024, which resulted in the identification and recognition of a $182.8 million core deposit intangible asset and a $6.1 million trade name.
As of September 30, 2017, theThe remaining estimated aggregate future amortization expense for other intangible assets is as follows:
(In thousands)
At March 31, 2024 (1)
Remainder of 2024$25,480 
202531,094 
202630,113 
202729,558 
202826,687 
Thereafter190,258 
(1)As previously discussed in Note 2: Business Developments, the Company initiated a plan to actively sell its payroll finance and factored receivables loan portfolio, along with the related customer relationship intangible assets, in March 2024. The aggregate net carrying amount of the related customer relationship intangible assets was $49.7 million at March 31, 2024, and has been excluded from the Company’s estimate of remaining future amortization expense.
(In thousands) 
Remainder of 2017$978
20183,847
20193,847
20203,847
20213,847
Thereafter14,223

52

Note 7:6: Deposits
A summary ofThe following table summarizes deposits by type follows:type:
(In thousands)At March 31,
2024		At December 31,
2023
Non-interest-bearing:
Demand$10,212,509 $10,732,516 
Interest-bearing:
Health savings accounts8,603,184 8,287,889 
Checking9,498,036 8,994,095 
Money market18,615,031 17,662,826 
Savings6,881,663 6,642,499 
Time deposits6,937,320 8,464,459 
Total interest-bearing$50,535,234 $50,051,768 
Total deposits$60,747,743 $60,784,284 
Time deposits, money market, and interest-bearing checking obtained through brokers (1)
$1,778,381 $3,673,733 
Aggregate amount of time deposit accounts that exceeded the FDIC limit1,348,498 1,221,887 
Demand deposit overdrafts reclassified as loan balances12,251 10,432 
(In thousands)At September 30,
2017
At December 31,
2016
Non-interest-bearing:   
Demand$4,138,206
 $4,021,061
Interest-bearing:   
Checking2,581,266
 2,528,274
Health savings accounts4,891,024
 4,362,503
Money market2,598,187
 2,047,121
Savings4,428,061
 4,320,090
Time deposits2,218,491
 2,024,808
Total interest-bearing16,717,029
 15,282,796
Total deposits$20,855,235
 $19,303,857
    
Time deposits and interest-bearing checking, included in above balances, obtained through brokers$913,042
 $848,618
Time deposits, included in above balance, that meet or exceed the FDIC limit613,012
 490,721
Deposit overdrafts reclassified as loan balances2,494
 1,885

(1)Excludes $5.8 billion and $5.7 billion of money market sweep deposits received through interLINK at March 31, 2024, and December 31, 2023, respectively.
The following table summarizes the scheduled maturities of time deposits are as follows:deposits:
(In thousands)At March 31,
2024
Remainder of 2024$6,406,380 
2025414,440 
202656,451 
202733,809 
202820,873 
Thereafter5,367 
Total time deposits$6,937,320 
(In thousands)At September 30,
2017
Remainder of 2017$285,203
2018952,745
2019607,952
2020225,159
2021107,921
Thereafter39,511
Total time deposits$2,218,491
53


Note 8:7: Borrowings
Total borrowings of $2.6 billion at September 30, 2017 and $4.0 billion at December 31, 2016 are described in detail below.
The following table summarizes securities sold under agreements to repurchase and other borrowings:
At March 31, 2024At December 31, 2023
(Dollars in thousands)Total OutstandingRateTotal OutstandingRate
Securities sold under agreements to repurchase (1)
$126,886 0.12 %$358,387 3.43 %
Federal funds purchased235,000 5.44 100,000 5.48 
Securities sold under agreements to repurchase and other borrowings$361,886 3.58 %$458,387 3.88 %
 At September 30,
2017		 At December 31,
2016
(In thousands)AmountRate AmountRate
Securities sold under agreements to repurchase:     
Original maturity of one year or less$335,902
0.18% $340,526
0.16%
Original maturity of greater than one year, non-callable400,000
3.04
 400,000
3.09
Total securities sold under agreements to repurchase735,902
1.73
 740,526
1.82
Fed funds purchased167,000
1.12
 209,000
0.46
Securities sold under agreements to repurchase and other borrowings$902,902
1.62% $949,526
1.53%

(1)
Repurchase agreements are used as a source of borrowed funds and are collateralized by U.S. Government agency mortgage-backed securities. Repurchase agreement counterparties are limited to primary dealers in government securities and commercial/municipal customers through Webster’s Treasury Unit. Dealer counterparties have the right to pledge, transfer, or hypothecate purchased securities during the term of the transaction. The Company has the right of offset with respect to all repurchase agreement assets and liabilities. Total securities sold under agreements to repurchase represents theare presented as gross amount for these transactions, as only liabilities are outstanding for the periods presented.
Securities sold under agreements to repurchase, all of which have an original maturity of one year or less for the periods presented, are used as a source of borrowed funds and are collateralized by Agency MBS and Corporate debt. The Company’s repurchase agreement counterparties are limited to primary dealers in government securities, and commercial and municipal customers through the Corporate Treasury function. The Company may also purchase unsecured term and overnight federal funds to satisfy its short-term liquidity needs.
The following table providessummarizes information for FHLB advances:
At March 31, 2024At December 31, 2023
(Dollars in thousands)Total OutstandingWeighted-
Average Contractual Coupon Rate		Total OutstandingWeighted-
Average Contractual Coupon Rate
Maturing within 1 year$3,650,000 5.50 %$2,350,000 5.53 %
After 1 but within 2 years— — — — 
After 2 but within 3 years— — — — 
After 3 but within 4 years456 1.36 235 — 
After 4 but within 5 years— — 228 2.75 
After 5 years9,474 2.08 9,555 2.07 
Total FHLB advances$3,659,930 5.49 %$2,360,018 5.52 %
Aggregate market value of assets pledged as collateral$20,238,325 $20,734,035 
Remaining borrowing capacity at FHLB10,779,412 12,535,423 
 At September 30,
2017		 At December 31,
2016
(Dollars in thousands)Amount
Weighted-
Average Contractual Coupon Rate
 Amount
Weighted-
Average Contractual Coupon Rate
Maturing within 1 year$880,500
1.28% $2,130,500
0.71%
After 1 but within 2 years133,731
1.34
 200,000
1.36
After 2 but within 3 years259,295
1.79
 128,026
1.73
After 3 but within 4 years75,000
1.51
 175,000
1.77
After 4 but within 5 years150,061
2.23
 200,000
1.81
After 5 years9,091
2.61
 9,370
2.59
 1,507,678
1.49% 2,842,896
0.95%
Premiums on advances3
  12
 
Federal Home Loan Bank advances$1,507,681
  $2,842,908
 
      
Aggregate carrying value of assets pledged as collateral$6,388,102
  $5,967,318
 
Remaining borrowing capacity2,668,964
  1,192,758
 

WebsterThe Bank is in compliance withmay borrow up to the amount of eligible mortgages and securities that have been pledged as collateral to secure FHLB collateral requirements for the periods presented. Eligible collateral, primarilyadvances, which includes certain residential and commercial real estate loans, has been pledged to securehome equity lines of credit, CMBS, Agency MBS, Agency CMO, U.S. Treasury notes, and MBS. The Bank was in compliance with its FHLB advances.collateral requirements at both March 31, 2024, and December 31, 2023.
The following table summarizes long-term debt:
(Dollars in thousands)At March 31,
2024		At December 31,
2023
4.375%Senior fixed-rate notes due February 15, 2024$— $132,550 
4.100%
Senior fixed-rate notes due March 25, 2029 (2)
326,766 328,104 
4.000%Subordinated fixed-to-floating rate notes due December 30, 2029274,000 274,000 
3.875%Subordinated fixed-to-floating rate notes due November 1, 2030225,000 225,000 
Junior subordinated debt Webster Statutory Trust I floating-rate notes due September 17, 2033 (3)
77,320 77,320 
Total senior and subordinated debt903,086 1,036,974 
Discount on senior fixed-rate notes(498)(537)
Debt issuance cost on senior fixed-rate notes(1,337)(1,419)
Premium on subordinated fixed-to-floating rate notes13,269 13,802 
Long-term debt (1)
$914,520 $1,048,820 
(1)The classification of debt as long-term is based on the initial terms of greater than one year as of the date of issuance.
(2)The Company de-designated its fair value hedging relationship on these senior fixed-rate notes in 2020. A basis adjustment of $26.8 million and $28.1 million at March 31, 2024, and December 31, 2023, respectively, is included in the carrying value and is being amortized over the remaining life of the senior fixed-rate notes.
(3)The interest rate on the Webster Statutory Trust I floating-rate notes varies quarterly based on 3-month SOFR plus a credit spread adjustment plus a market spread of 2.95%, which yielded 8.54% at March 31, 2024, and 8.59% at December 31, 2023.
54
(Dollars in thousands)At September 30,
2017		 At December 31,
2016
4.375%Senior fixed-rate notes due February 15, 2024$150,000
 $150,000
Junior subordinated debt Webster Statutory Trust I floating-rate notes due September 17, 2033 (1)
77,320
 77,320
Total notes and subordinated debt227,320
 227,320
Discount on senior fixed-rate notes(756) (845)
Debt issuance cost on senior fixed-rate notes(860) (961)
Long-term debt$225,704
 $225,514
(1)The interest rate on Webster Statutory Trust I floating-rate notes, which varies quarterly based on 3-month LIBOR plus 2.95%, was 4.27% at September 30, 2017 and 3.94% at December 31, 2016.


Note 9:8: Accumulated Other Comprehensive Loss,(Loss), Net of Tax
The following tables summarize the changes in AOCL by component:
 Three months ended September 30, 2017 Nine months ended September 30, 2017
(In thousands)Securities Available For Sale and TransferredDerivative InstrumentsDefined Benefit Pension and Other Postretirement Benefit PlansTotal Securities Available For Sale and TransferredDerivative InstrumentsDefined Benefit Pension and Other Postretirement Benefit PlansTotal
Beginning balance$(14,501)$(15,258)$(42,323)$(72,082) $(15,476)$(17,068)$(44,449)$(76,993)
  OCI/OCL before reclassifications872
(34)—
838
 1,847
(445)—
1,402
  Amounts reclassified from AOCL—
1,145
1,001
2,146
 —
3,366
3,127
6,493
Net current-period OCI/OCL872
1,111
1,001
2,984
 1,847
2,921
3,127
7,895
Ending balance$(13,629)$(14,147)$(41,322)$(69,098) $(13,629)$(14,147)$(41,322)$(69,098)
 Three months ended September 30, 2016 Nine months ended September 30, 2016
(In thousands)Securities Available For Sale and TransferredDerivative InstrumentsDefined Benefit Pension and Other Postretirement Benefit PlansTotal Securities Available For Sale and TransferredDerivative InstrumentsDefined Benefit Pension and Other Postretirement Benefit PlansTotal
Beginning balance$12,363
$(23,406)$(46,468)$(57,511) $(6,407)$(22,980)$(48,719)$(78,106)
  OCI/OCL before reclassifications1,218
794
—
2,012
 20,156
(2,416)—
17,740
  Amounts reclassified from AOCL—
1,221
1,125
2,346
 (168)4,005
3,376
7,213
Net current-period OCI/OCL1,218
2,015
1,125
4,358
 19,988
1,589
3,376
24,953
Ending balance$13,581
$(21,391)$(45,343)$(53,153) $13,581
$(21,391)$(45,343)$(53,153)

The following tables provide information for the items reclassified from AOCL:
(In thousands)Three months ended September 30, Nine months ended September 30,Associated Line Item in the Condensed Consolidated Statements of Income
AOCL Components2017 2016 2017 2016
         
Securities available-for-sale and transferred:        
Unrealized gains (losses) on investment securities$—
 $—
 $—
 $414
Gain on sale of investment securities, net
Unrealized gains (losses) on investment securities—
 —
 —
 (149)Impairment loss recognized in earnings
Total before tax—
 —
 —
 265
 
Tax benefit (expense)—
 —
 —
 (97)Income tax expense
Net of tax$—
 $—
 $—
 $168
 
Derivative instruments:        
Cash flow hedges$(1,810) $(1,925) $(5,316) $(6,314)Total interest expense
Tax benefit665
 704
 1,950
 2,309
Income tax expense
Net of tax$(1,145) $(1,221) $(3,366) $(4,005) 
Defined benefit pension and other postretirement benefit plans:        
Amortization of net loss$(1,587) $(1,780) $(4,959) $(5,343)(1)
Prior service costs—
 (4) —
 (11)(1)
Total before tax(1,587) (1,784) (4,959) (5,354) 
Tax benefit586
 659
 1,832
 1,978
Income tax expense
Net of tax$(1,001) $(1,125) $(3,127) $(3,376) 

(1) Theseeach component of accumulated other comprehensive (loss), net of tax:
Three months ended March 31, 2024
(In thousands)Investment Securities Available-for-SaleDerivative InstrumentsDefined Benefit Pension and Other Postretirement Benefit PlansTotal
Balance, beginning of period$(517,450)$(2,869)$(30,252)$(550,571)
Other comprehensive (loss) income before reclassifications(45,392)(30,291)251 (75,432)
Amounts reclassified from accumulated other comprehensive (loss)9,121 302 479 9,902 
Other comprehensive (loss) income, net of tax(36,271)(29,989)730 (65,530)
Balance, end of period$(553,721)$(32,858)$(29,522)$(616,101)
Three months ended March 31, 2023
(In thousands)Investment Securities Available-for-SaleDerivative InstrumentsDefined Benefit Pension and Other Postretirement Benefit PlansTotal
Balance, beginning of period$(631,160)$(8,874)$(44,926)$(684,960)
Other comprehensive income before reclassifications56,635 20,782 3,553 80,970 
Amounts reclassified from accumulated other comprehensive (loss)14,983 592 395 15,970 
Other comprehensive income, net of tax71,618 21,374 3,948 96,940 
Balance, end of period$(559,542)$12,500 $(40,978)$(588,020)
The following table further summarizes the amounts reclassified from accumulated other comprehensive (loss):
Accumulated Other Comprehensive
(Loss) Components		Three months endedAssociated Line Item on the
Condensed Consolidated
Statements of Income
March 31,
20242023
(In thousands)
Investment securities available-for-sale:
Net unrealized holding (losses)$(12,396)$(20,483)
(Loss) on sale of investment securities, net (1)
Tax benefit3,275 5,500 Income tax expense
Net of tax$(9,121)$(14,983)
Derivative instruments:
Hedge terminations$(34)$(76)Interest expense
Premium amortization(272)(736)Interest income
Tax benefit4 220 Income tax expense
Net of tax$(302)$(592)
Defined benefit pension and other postretirement benefit plans:
Actuarial net loss amortization$(657)$(542)Other expense
Tax benefit178 147 Income tax expense
Net of tax$(479)$(395)
(1)Net realized losses on sale of investment securities available-for-sale are generally included as a component of non-interest income, unless any portion or all of the loss components areis attributed to a decline in credit quality, in which the amount realized is then included in the computationProvision for credit losses. During the three months ended March 31, 2024, and 2023, $2.6 million and $3.8 million of the net periodic benefit cost (see Note 14 - Retirement Benefit Planslosses realized on sale of investment securities available-for-sale were included in the Provision for further details).

credit losses, respectively.

55

Note 10:9: Regulatory MattersCapital and Restrictions
Capital Requirements
Webster Financial Corporation isThe Holding Company and the Bank are subject to various regulatory capital requirements administered by the Federal Reserve System, while Webster Bank is subjectfederal banking agencies. Failure to regulatorymeet minimum capital requirements administered by the OCC. Regulatory authorities can initiate certain mandatory actions if Webster Financial Corporation or Webster Bank fail to meet minimum capital requirements, whichby regulators that could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines andand/or the regulatory framework for prompt corrective action (applies to the Bank only), both Webster Financial Corporationthe Holding Company and Websterthe Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated underpursuant to regulatory accounting practices. These quantitative measures require minimumdirectives. Capital amounts and ratiosclassification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
Quantitative measures established by Basel III to ensure capital adequacy.
adequacy require the Holding Company and the Bank to maintain minimum ratios of CET1 Risk-Based Capital, Tier 1 Risk-Based Capital, Total Risk-Based Capital, and Tier 1 Leverage Capital, as defined in the regulations. CET1 capital consists of common stockholders’ equity less deductions for goodwill and other intangible assets, and certain deferred tax adjustments. At the time of initial adoption of the Basel III total risk-basedCapital Rules, the Company had elected to opt-out of the requirement to include certain components of AOCI in CET1 capital. Tier 1 capital is comprisedconsists of three categories: CET1 capital additionalplus preferred stock. Total capital consists of Tier 1 capital and Tier 2 capital. CET1 capital, includes common shareholders' equity, less deductions for goodwill, other intangibles, and certain deferred tax liabilities. Common shareholders' equity, for purposes of CET1 capital, excludes AOCL components as permitted bydefined in the opt-out election taken by Webster upon adoption of Basel III. Tier 1 capital is comprised of CET1 capital plus perpetual preferred stock, whileregulations. Tier 2 capital includes qualifying subordinated debt and qualifying allowance for credit losses,the permissible portion of the ACL.
At March 31, 2024, and December 31, 2023, both the Holding Company and the Bank were classified as well-capitalized. Management believes that together equal total capital.no events or changes have occurred subsequent to period end that would change this designation.
The following tabletables provides information on the capital ratios for Webster Financial Corporationthe Holding Company and Websterthe Bank:
At March 31, 2024
 
Actual (1)
Minimum RequirementWell Capitalized
(Dollars in thousands)AmountRatioAmountRatioAmountRatio
Webster Financial Corporation
CET1 Risk-Based Capital$5,923,041 10.57 %$2,521,412 4.5 %$3,642,040 6.5 %
Tier 1 Risk-Based Capital6,207,020 11.08 3,361,883 6.0 4,482,510 8.0 
Total Risk-Based Capital7,400,017 13.21 4,482,510 8.0 5,603,138 10.0 
Tier 1 Leverage Capital6,207,020 8.51 2,916,558 4.0 3,645,697 5.0 
Webster Bank
CET1 Risk-Based Capital$6,588,389 11.78 %$2,516,948 4.5 %$3,635,591 6.5 %
Tier 1 Risk-Based Capital6,588,389 11.78 3,355,930 6.0 4,474,574 8.0 
Total Risk-Based Capital7,191,796 12.86 4,474,574 8.0 5,593,217 10.0 
Tier 1 Leverage Capital6,588,389 9.04 2,913,783 4.0 3,642,229 5.0 
At December 31, 2023
 
Actual (1)
Minimum RequirementWell Capitalized
(Dollars in thousands)AmountRatioAmountRatioAmountRatio
Webster Financial Corporation
CET1 Risk-Based Capital$6,188,433 11.11 %$2,507,190 4.5 %$3,621,497 6.5 %
Tier 1 Risk-Based Capital6,472,412 11.62 3,342,920 6.0 4,457,227 8.0 
Total Risk-Based Capital7,643,423 13.72 4,457,227 8.0 5,571,534 10.0 
Tier 1 Leverage Capital6,472,412 9.06 2,857,890 4.0 3,572,362 5.0 
Webster Bank
CET1 Risk-Based Capital$6,913,443 12.43 %$2,502,835 4.5 %$3,615,206 6.5 %
Tier 1 Risk-Based Capital6,913,443 12.43 3,337,113 6.0 4,449,484 8.0 
Total Risk-Based Capital7,494,332 13.47 4,449,484 8.0 5,561,855 10.0 
Tier 1 Leverage Capital6,913,443 9.69 2,855,212 4.0 3,569,015 5.0 
(1)In accordance with regulatory capital rules, the Company elected an option to delay the estimated impact of the adoption of CECL on its regulatory capital over a two-year deferral period, which ended on January 1, 2022, and a subsequent three-year transition period ending on December 31, 2024. During the three-year transition period, regulatory capital ratios will phase out the aggregate amount of the regulatory capital benefit provided from the delayed CECL adoption in the initial two years. For 2022, 2023, and 2024, the Company is allowed 75%, 50%, and 25%, respectively, of the regulatory capital benefit as of December 31, 2021, with full absorption occurring in 2025.
 At September 30, 2017
 Actual Minimum Requirement Well Capitalized
(Dollars in thousands)AmountRatio AmountRatio AmountRatio
Webster Financial Corporation        
CET1 risk-based capital$2,031,955
10.99% $832,149
4.5% $1,201,993
6.5%
Total risk-based capital2,436,332
13.17
 1,479,376
8.0
 1,849,220
10.0
Tier 1 risk-based capital2,154,665
11.65
 1,109,532
6.0
 1,479,376
8.0
Tier 1 leverage capital2,154,665
8.36
 1,030,973
4.0
 1,288,717
5.0
Webster Bank        
CET1 risk-based capital$2,061,764
11.16% $831,319
4.5% $1,200,794
6.5%
Total risk-based capital2,266,110
12.27
 1,477,900
8.0
 1,847,376
10.0
Tier 1 risk-based capital2,061,764
11.16
 1,108,425
6.0
 1,477,900
8.0
Tier 1 leverage capital2,061,764
8.00
 1,030,260
4.0
 1,287,825
5.0
56

 At December 31, 2016
 Actual Minimum Requirement Well Capitalized
(Dollars in thousands)AmountRatio AmountRatio AmountRatio
Webster Financial Corporation        
CET1 risk-based capital$1,932,171
10.52% $826,504
4.5% $1,193,840
6.5%
Total risk-based capital2,328,808
12.68
 1,469,341
8.0
 1,836,677
10.0
Tier 1 risk-based capital2,054,881
11.19
 1,102,006
6.0
 1,469,341
8.0
Tier 1 leverage capital2,054,881
8.13
 1,010,857
4.0
 1,263,571
5.0
Webster Bank        
CET1 risk-based capital$1,945,332
10.61% $825,228
4.5% $1,191,995
6.5%
Total risk-based capital2,141,939
11.68
 1,467,071
8.0
 1,833,839
10.0
Tier 1 risk-based capital1,945,332
10.61
 1,100,304
6.0
 1,467,071
8.0
Tier 1 leverage capital1,945,332
7.70
 1,010,005
4.0
 1,262,507
5.0

Dividend Restrictions
Webster Financial CorporationThe Holding Company is dependent upon dividends from Websterthe Bank to provide funds for its cash requirements, including paymentsthe payment of dividends to shareholders. Banking regulations may limitstockholders and for other cash requirements. Dividends paid by the amount of dividends that may be paid. ApprovalBank are subject to various federal and state regulatory limitations. Express approval by regulatory authoritiesthe OCC is required if the effect of dividends declared would cause the regulatory capital of Websterthe Bank to fall below specified minimum levels or if dividends declaredthe amount would exceed the net income for that year combined with the undistributed net income for the preceding two years. In addition,
The Bank paid the Holding Company $175.0 million and $150.0 million in dividends for the three months ended March 31, 2024, and 2023, respectively, for which no express approval from the OCC has discretion to prohibit any otherwise permitted capital distribution on general safety and soundness grounds. Dividends paid by Webster Bank to Webster Financial Corporation totaled $80 million during the nine months ended September 30, 2017 compared to $115 million during the nine months ended September 30, 2016.was required.
Cash Restrictions
WebsterThe Bank is required byunder Federal Reserve System regulations to maintain cash reserve balances in the form of vault cash or deposits held at a FRB to ensure that it is able to meet customer demands. The reserve requirement ratio is subject to adjustment as economic conditions warrant. Effective March 26, 2020, the Federal Reserve reset the requirement to zero in order to address liquidity concerns resulting from the COVID-19 pandemic. Pursuant to this action, the Bank has not been required to hold cash reserve balances since that date.
57

Note 10: Variable Interest Entities
The Company has an investment interest in the following entities that each meet the definition of a variable interest entity. Information regarding the Company’s consolidation of variable interest entities can be found within Note 1: Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data of the Company’s Annual Report on hand orForm 10-K for the year ended December 31, 2023.
Consolidated
Rabbi Trusts. The Company established a Rabbi Trust to meet its obligations due under the Webster Bank Deferred Compensation Plan for Directors and Officers and to mitigate expense volatility. The funding of the Rabbi Trust and the discontinuation of the Webster Bank Deferred Compensation Plan for Directors and Officers occurred during 2012. In connection with the Federal Reserve Bank. PursuantSterling merger in 2022, the Company acquired assets held in a separate Rabbi Trust that had been previously established to this requirement, Websterfund obligations due under the Greater New York Savings Bank Directors’ Retirement Plan.
Investments held $76.7in the Rabbi Trusts consist primarily of mutual funds that invest in equity and fixed income securities. The Company is considered the primary beneficiary of these Rabbi Trusts as it has the power to direct the activities of the Rabbi Trusts that most significantly impact its economic performance and it has the obligation to absorb losses and/or the right to receive benefits of the Rabbi Trusts that could potentially be significant.
The Rabbi Trusts’ assets are included in Accrued interest receivable and other assets on the accompanying Condensed Consolidated Balance Sheets. Investment earnings and any changes in fair value are included in Other income on the accompanying Condensed Consolidated Statements of Income. Additional information regarding the Rabbi Trusts' investments can be found within Note 13: Fair Value Measurements.
Non-Consolidated
Low Income Housing Tax Credit Investments. The Company makes non-marketable equity investments in entities that sponsor affordable housing and other community development projects that qualify for the LIHTC Program pursuant to Section 42 of the Internal Revenue Code. The purpose of these investments is not only to assist the Bank in meeting its responsibilities under the CRA, but also to provide a return, primarily through the realization of tax benefits. While the Company's investment in an entity may exceed 50% of its outstanding equity interests, the entity is not consolidated as the Company is not the primary beneficiary. The Company has determined that it is not the primary beneficiary due to its inability to direct the activities that most significantly impact economic performance. The Company applies the proportional amortization method to subsequently measure its investments in qualified affordable housing projects.
The following table summarizes the Company’s LIHTC investments and related unfunded commitments:
(In thousands)March 31, 2024December 31, 2023
Gross investment in LIHTC investments$1,293,847 $1,135,192 
Accumulated amortization(161,612)(141,199)
Net investment in LIHTC investments$1,132,235 $993,993 
Unfunded commitments for LIHTC investments$683,133 $549,258 
The aggregate carrying value of the Company’s LIHTC investments and the related unfunded commitments are included in Accrued interest receivable and other assets and Accrued expenses and other liabilities on the accompanying Condensed Consolidated Balance Sheets, respectively. The Company’s maximum exposure to loss related to its LIHTC investments is generally the aggregate carrying value as of each reporting date. However, income tax credits recognized related to these investments are subject to recapture by taxing authorities for up to a period of 15 years based on compliance provisions that are required to be met at the project level. During the three months ended March 31, 2024, and 2023, there were $158.7 million and $58.6zero of net commitments approved to fund LIHTC investments, respectively.
The following table summarizes the amount of income tax credits and other income tax benefits, and investment amortization generated from the Company’s LIHTC investments, which are recognized as a component of income tax expense (benefit):
Three months ended March 31,
(In thousands)20242023
Income tax credits and other income tax benefits from LIHTC investments$(28,024)$(21,898)
Investment amortization from LIHTC investments20,413 21,478 
Both the income tax credits and other income tax benefits, and investment amortization generated from the Company’s LIHTC investments, are included as a component of operating activities on the Condensed Consolidated Statements of Cash Flows.
58

Webster Statutory Trust. The Company owns all the outstanding common stock of Webster Statutory Trust, a financial vehicle that has issued, and in the future may issue, trust preferred securities. The Company is not the primary beneficiary of Webster Statutory Trust. Webster Statutory Trust’s only assets are junior subordinated debentures that are issued by the Company, which were acquired using the proceeds from the issuance of trust preferred securities and common stock. The junior subordinated debentures are included in Long-term debt on the accompanying Condensed Consolidated Balance Sheets, and the related interest expense is included in Long-term debt on the accompanying Condensed Consolidated Statements of Income. Additional information regarding these junior subordinated debentures can be found within Note 7: Borrowings.
Other Non-Marketable Investments. The Company invests in alternative investments comprising interests in non-public entities that cannot be redeemed since the underlying equity is distributed as the investment is liquidated. The ultimate timing and amount of these distributions cannot be predicted with reasonable certainty. For each of these alternative investments that is classified as a variable interest entity, the Company has determined that it is not the primary beneficiary due to its inability to direct the activities that most significantly impact economic performance. The aggregate carrying value of the Company’s other non-marketable investments was $193.2 million and $190.1 million at September 30, 2017March 31, 2024, and December 31, 2016,2023, respectively, which is included in Accrued interest receivable and other assets on the accompanying Condensed Consolidated Balance Sheets, and its maximum exposure to loss, including unfunded commitments, was $306.3 million and $307.2 million, respectively. Additional information regarding the fair value of other non-marketable investments can be found within
Note 13: Fair Value Measurements.

59

Note 11: Earnings Per Common Share
Reconciliation ofThe following table summarizes the calculation of basic and diluted earnings per common share:
 Three months ended March 31,
(In thousands, except per share data)20242023
Net income$216,323 $221,004 
Less: Preferred stock dividends4,163 4,163 
Net income available to common stockholders212,160 216,841 
Less: Earnings allocated to participating securities2,101 1,845 
Earnings applicable to common stockholders$210,059 $214,996 
Weighted-average common shares outstanding - basic170,445 172,766 
Add: Effect of dilutive stock options and restricted stock259 117 
Weighted-average common shares outstanding - diluted170,704 172,883 
Basic earnings per common share$1.23 $1.24 
Diluted earnings per common share1.23 1.24 
Earnings per common share follows:
 Three months ended September 30, Nine months ended September 30,
(In thousands, except per share data)2017 2016 2017 2016
Earnings for basic and diluted earnings per common share:       
Net income$64,496
 $51,817
 $185,546
 $149,467
Less: Preferred stock dividends2,024
 2,024
 6,072
 6,072
Net income available to common shareholders62,472
 49,793
 179,474
 143,395
Less: Earnings applicable to participating securities46
 159
 212
 468
Earnings applicable to common shareholders$62,426
 $49,634
 $179,262
 $142,927
        
Shares:       
Weighted-average common shares outstanding - basic92,125
 91,365
 92,003
 91,298
Effect of dilutive securities:       
Stock options and restricted stock372
 465
 403
 452
Warrants6
 27
 6
 26
Weighted-average common shares outstanding - diluted92,503
 91,857
 92,412
 91,776
        
Earnings per common share:       
Basic$0.68
 $0.54
 $1.95
 $1.57
Diluted0.67
 0.54
 1.94
 1.56

is calculated under the two-class method in which all earnings (distributed and undistributed) are allocated to common stock and participating securities based on their respective rights to receive dividends. The Company may grant restricted stock, restricted stock units, non-qualified stock options, incentive stock options, or stock appreciation rights to certain employees and directors under its stock-based compensation programs, which entitle recipients to receive non-forfeitable dividends during the vesting period on a basis equivalent to the dividends paid to holders of common stock. These unvested awards meet the definition of participating securities.
Potential common shares excluded from performance-based restricted stock that were not included in the effectcomputation of dilutive securitiesearnings per common share because they would have beenwere anti-dilutive are as follows:under the treasury stock method were 54,586 and 85,033 for the three months ended March 31, 2024, and 2023, respectively,
 Three months ended September 30, Nine months ended September 30,
(In thousands)2017 2016 2017 2016
Stock options (shares with exercise price greater than market price)—
 172
 —
 172
Restricted stock (due to performance conditions on non-participating shares)80
 —
 61
 161
60


Note 12: Derivative Financial Instruments
Risk Management Objective of Using DerivativesDerivative Positions and Offsetting
Webster manages economic risks, suchDerivatives Designated as interest rate, liquidity, and credit risks by managing the amount, sources, and duration of its debt funding in conjunction with the use of interest rate derivative financial instruments. Webster enters into interest rate derivatives to mitigate the exposure related to business activities that result in the future receipt or payment of, both known and uncertain, cash amounts that are impacted by interest rates. The primary objective for using interest rate derivatives is to add stability to interest expense by managing exposure to interest rate movements. To accomplish this objective, Webster uses interest rate swaps and interest rate caps as part of its interest rate risk management strategy.
Hedging Instruments. Interest rate swaps andallow the Company to change the fixed or variable nature of an interest rate caps designated as cash flow hedges are designed to managewithout the risk associated with a forecasted event or an uncertain variable-rate cash flow. Forward-settle interest rate swaps protect the Company against adverse fluctuations in interest rates by reducing its exposure to variability in cash flows relating to interest payments on forecasted debt issuances. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. InterestCertain pay fixed/receive variable interest rate capsswaps are designated as cash flow hedges involveto effectively convert variable-rate debt into fixed-rate debt, whereas certain receive fixed/pay variable interest rate swaps are designated as fair value hedges to effectively convert fixed-rate long-term debt into variable-rate debt. Certain purchased options are also designated as cash flow hedges. Purchased options allow the receiptCompany to limit the potential adverse impact of variable amountsinterest rates by establishing a cap rate or floor rate in exchange for an upfront premium. The purchased options designated as cash flow hedges represent interest rate caps where payment is received from athe counterparty if interest rates rise above the strikecap rate, on the contract in exchange for payment of an up-front premium.
Cash flow hedges are used to regulate the variable cash flows associated with existing variable-rate debt and forecasted issuances of debt. Derivative instruments designated as cash flow hedges are recorded on the balance sheet at fair value. The effective portion of the change in fair value of the derivatives which are designated as cash flow hedges, and that qualify for hedge accounting, is recorded to AOCL and is reclassified into earnings in the subsequent periods that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of these derivatives, attributable to the difference in the effective date of the hedge and the effective date of the debt issuance, is recognized directly in earnings. During the periods presented, there was no ineffectiveness to be recognized in earnings.
Certain fixed-rate obligations can be exposed to a change in fair value attributable to changes in benchmark interest rates. On occasion, interest rate swaps will be usedfloors where payment is received from the counterparty when interest rates fall below the floor rate.
Derivatives Not Designated as Hedging Instruments. The Company also enters into other derivative transactions to manage this exposure. An interest rate swap which involveseconomic risks, but does not designate the receipt of fixed-rate amounts from a counterpartyinstruments in exchange for Webster making variable-rate payments over the life of the agreement, without the exchange of the underlying notional amount, is designated as a fair value hedge. For a qualifying derivative designated as a fair value hedge the gain or loss on the derivative, as well as the gain or loss on the hedged item, is recognized in interest expense. During the periods presented, Webster did not have any interest rate derivative financial instruments designated as fair value hedges and as a result, there was no impact to interest expense.
Additionally, in order to address certain other risk management matters,relationships. In addition, the Company also utilizesenters into derivative instruments that do not qualify for hedge accounting. These derivative instruments, which are recorded on the balance sheet at fair value,contracts to accommodate customer needs. Derivative contracts with changes in fair value recognized each period as other non-interest income in the accompanying Condensed Consolidated Statements of Income, are described in the following paragraphs.
Interest rate swap and cap contracts are sold to commercial and other customers who wish to modify loan interest rate sensitivity. These contracts are offset with dealer counterparty transactions structured with matching terms. As a result, there isterms to ensure minimal impact on earnings, except for fee income earned in such transactions.earnings.
RPAsThe following tables present the notional amounts and fair values, including accrued interest, of derivative positions:
At March 31, 2024
Asset DerivativesLiability Derivatives
(In thousands)Notional AmountsFair ValueNotional AmountsFair Value
Designated as hedging instruments:
Interest rate derivatives (1)
$500,000 $263 $4,750,000 $44,366 
Not designated as hedging instruments:
Interest rate derivatives (1)
8,542,883 362,602 8,542,895 362,802 
Mortgage banking derivatives (2)
1,463 15 — — 
Other (3)
364,396 662 744,777 225 
Total not designated as hedging instruments8,908,742 363,279 9,287,672 363,027 
Gross derivative instruments, before netting$9,408,742 363,542 $14,037,672 407,393 
Less: Master netting agreements61,395 61,395 
Cash collateral received/paid285,297 — 
Total derivative instruments, after netting$16,850 $345,998 
At December 31, 2023
Asset DerivativesLiability Derivatives
(In thousands)Notional AmountsFair ValueNotional AmountsFair Value
Designated as hedging instruments:
Interest rate derivatives (1)
$2,750,000 $11,140 $2,700,000 $13,679 
Not designated as hedging instruments:
Interest rate derivatives (1)
8,284,356 319,122 8,272,197 321,064 
Mortgage banking derivatives (2)
2,798 37 — — 
Other (3)
340,553 337 731,055 1,067 
Total not designated as hedging instruments8,627,707 319,496 9,003,252 322,131 
Gross derivative instruments, before netting$11,377,707 330,636 $11,703,252 335,810 
Less: Master netting agreements55,949 55,949 
Cash collateral received/paid232,190 — 
Total derivative instruments, after netting$42,497 $279,861 
(1)Balances related to clearing houses are entered intopresented as financial guaranteesa single unit of performance onaccount. In accordance with their rule books, clearing houses legally characterize variation margin payments as settlement of derivatives rather than collateral against derivative positions. Notional amounts of interest rate swap derivatives.swaps cleared through clearing houses included $91.0 million and $113.8 million for asset derivatives at March 31, 2024, and December 31, 2023, respectively. The purchased (asset) or sold (liability) guarantee allows the Companyrelated fair values approximated zero. There were no interest rate swaps cleared through clearing houses for liability derivatives at both March 31, 2024, and December 31, 2023.
(2)Notional amounts related to participate-in (fee received) or participate-out (fee paid) the risk associated with certain derivative positions executed with the borrower by the lead bank in a loan syndication.residential loans excluded approved floating rate commitments of $1.7 million and $1.0 million at March 31, 2024, and December 31, 2023, respectively.
(3)Other derivatives include foreign currency forward contracts related to lending arrangements, a VISAVisa equity swap transaction, and mortgage bankingrisk participation agreements. Notional amounts of risk participation agreements included $300.5 million and $299.2 million for asset derivatives such as mortgage-backed securitiesand $707.6 million and $682.9 million for liability derivatives at March 31, 2024, and December 31, 2023, respectively, which had insignificant related to residential loan commitments and loans held for sale. Mortgage banking derivativesfair values.
61

The following tables represent the off-setting derivative financial instruments that are utilized by Webster in its efforts to manage risk of loss associated with its mortgage loan commitments and mortgage loans held for sale. Prior to closing and funding certain single-family residential mortgage loans interest rate lock commitments are generally extended to the borrowers. During the period from commitment date to closing date, Webster is subject to the risk that market rates of interest may change. If market rates rise, investors generally will pay less to purchase such loans causing a reduction in the anticipated gain on sale of the loans, or possibly resulting in a loss. In an effort to mitigate such risk, forward delivery sales commitments are established under which Webster agrees to deliver whole mortgage loans to various investors or issue mortgage-backed securities. Mandatory forward commitments establish the price to be received upon the sale of the related mortgage loan, thereby mitigating certain interest rate risk. There is, however, still certain execution risk specifically related to Webster’s ability to close and deliver to its investors the mortgage loans it has committed to sell.matter netting agreements:
At March 31, 2024
(In thousands)Gross Amount RecognizedDerivative Offset AmountCash Collateral Received/PaidNet Amount Presented
Asset derivatives$346,853 $61,395 $285,297 $161 
Liability derivatives61,395 61,395 — — 
At December 31, 2023
(In thousands)Gross Amount RecognizedDerivative Offset AmountCash Collateral Received/PaidNet Amount Presented
Asset derivatives$289,778 $55,949 $232,190 $1,639 
Liability derivatives55,949 55,949 — — 

Derivative Activity
Fair Value of Derivative Instruments
The following table presentssummarizes the notional amounts andincome statement effect of derivatives designated as hedging instruments:
Recognized InThree months ended March 31,
(In thousands)Net Interest Income20242023
Fair value hedges:
Interest rate derivativesDeposits interest expense$(1,320)$(10,235)
Hedged itemDeposits interest expense— 10,427 
Net recognized on fair value hedges (1)
$1,320 $(192)
Cash flow hedges:
Interest rate derivativesLong-term debt interest expense$34 $76 
Interest rate derivativesInterest and fees on loans and leases(10,764)(736)
Net recognized on cash flow hedges$(10,798)$(812)
(1)The Company de-designated its fair valuesvalue hedging relationship on $400.0 million of derivative positions:
 At September 30, 2017 At December 31, 2016

Asset Derivatives Liability Derivatives Asset Derivatives Liability Derivatives
(In thousands)Notional
Amounts		Fair
Value		 Notional
Amounts		Fair
Value		 Notional
Amounts		Fair
Value		 Notional
Amounts		Fair
Value
Designated as hedging instruments:           
Positions subject to a master netting agreement (1)
           
Interest rate derivatives$225,000
$1,972
 $100,000
$195
 $225,000
$3,270
 $100,000
$792
Not designated as hedging instruments:           
Positions subject to a master netting agreement (1)
           
Interest rate derivatives2,270,444
4,225
 1,125,953
3,224
 1,943,485
32,226
 1,242,937
24,388
Other8,595
260
 22,161
419
 10,634
231
 14,265
120
Positions not subject to a master netting agreement           
Interest rate derivatives1,738,527
35,065
 1,652,004
15,764
 1,734,679
38,668
 1,451,762
19,001
RPAs94,103
112
 99,538
136
 86,037
139
 87,273
166
Mortgage banking derivatives (2)
42,290
614
 60,698
128
 103,440
3,084
 59,895
711
Other262
2
 1,777
157
 1,438
19
 181
11
Total not designated as hedging instruments4,154,221
40,278
 2,962,131
19,828
 3,879,713
74,367
 2,856,313
44,397
Gross derivative instruments, before netting$4,379,221
42,250
 $3,062,131
20,023
 $4,104,713
77,637
 $2,956,313
45,189
Less: Legally enforceable master netting agreements
 2,915
  2,916
  24,252
  24,254
Less: Cash collateral posted 2,540
  766
  11,475
  600
Total derivative instruments, after netting $36,795
  $16,341
  $41,910
  $20,335
(1)One of Webster's counterparty relationships was impacted by a Chicago Mercantile Exchange rulebook amendment, resulting in the presentation of that relationship on a settlement basis, as a single unit of account at September 30, 2017, versus a netting basis at December 31, 2016.
(2)Notional amounts include mandatory forward commitments of $60.5 million, while notional amounts do not include approved floating rate commitments of $21.9 million, at September 30, 2017.
Changesdeposits, which pertained to a portion of Ametros’ member deposits, in Fair Value
Changes2023. The $1.3 million basis adjustment included in the fair valuecarrying amount of derivatives not qualifying for hedge accounting treatment were recognized as follows:
 Three months ended September 30, Nine months ended September 30,
(In thousands)2017 2016 2017 2016
Interest rate derivatives$1,501
 $608
 $1,780
 $6,515
RPAs51
 110
 157
 (143)
Mortgage banking derivatives(219) 720
 (1,886) 357
Other(7) (285) (634) (582)
Total impact on other non-interest income$1,326
 $1,153
 $(583) $6,147

Amounts for the effective portion of changes in the fair value of derivatives qualifying for hedge accounting treatment are reclassified to interest expense as interest payments are made on Webster's variable-rate debt. Over the next twelve months, the Company estimates that $1.2 million will be reclassified from AOCL as an increase to interest expense.
Webster records gains and losses related to hedge terminations to AOCL. These balances are subsequentlydeposits at December 31, 2023, was amortized into interest expense overin January 2024 upon the respective termsacquisition of Ametros.
Time-value premiums, which are amortized on a straight-line basis, are excluded from the hedged debt instruments. At September 30, 2017, theassessment of hedge effectiveness for purchased options designated as cash flow hedges. The remaining unamortized loss on the terminationbalance of cash flow hedges is $16.5time-value premiums at March 31, 2024, was $0.3 million. Over the next twelve months, the Company estimates that $6.4an estimated $30.4 million decrease to interest income will be reclassified from AOCL as an increase(AOCL) relating to interest expense.
cash flow hedge gain/loss. The maximum length of time over which forecasted transactions are hedged is 3.0 years. Additional information aboutregarding cash flow hedge activity impacting AOCL,(AOCL) and the related amounts reclassified to interest expense is provided innet income can be found within Note 9:8: Accumulated Other Comprehensive Loss,(Loss), Net of Tax. Information about
The following table summarizes the valuation methods used to measure the fair valueincome statement effect of derivatives is providednot designated as hedging instruments:
Recognized InThree months ended March 31,
(In thousands)Non-interest Income20242023
Interest rate derivativesOther income$1,290 $(3,687)
Mortgage banking derivativesMortgage banking activities(22)(16)
OtherOther income1,277 (735)
Total not designated as hedging instruments$2,545 $(4,438)
Derivative Exposure. At March 31, 2024, the Company had $2.3 million in Note 13: Fair Value Measurements.

Offsetting Derivatives
Webster has entered into transactions with counterparties that are subject to a legally enforceable master netting agreement. Derivatives subject to a legally enforceable master netting agreement are reported on a net basis, netinitial margin posted at clearing houses, and $290.3 million of cash collateral. Net gain positions are recorded as assets and arecollateral received included in accrued interest receivableCash and other assets, while, net loss positions are recorded as liabilities and are included in accrued expenses and other liabilities, indue from banks on the accompanying Condensed Consolidated Balance Sheets.
The following table is presented on a gross basis, prior to the application of counterparty netting agreements:
 At September 30, 2017 At December 31, 2016
(In thousands)
Gross
Amount
Relationship OffsetCash Collateral Offset
Net
Amount
 
Gross
Amount
Relationship OffsetCash Collateral Offset
Net
Amount
Derivative instrument gains:         
Hedge accounting$1,972
$292
$1,051
$629
 $3,270
$2,335
$935
$—
Non-hedge accounting4,452
2,623
1,489
340
 32,457
21,917
10,540
—
Total assets$6,424
$2,915
$2,540
$969
 $35,727
$24,252
$11,475
$—
          
Derivative instrument losses:         
Hedge accounting$195
$195
$—
$—
 $792
$792
$—
$—
Non-hedge accounting3,643
2,721
766
156
 24,508
23,462
600
446
Total liabilities$3,838
$2,916
$766
$156
 $25,300
$24,254
$600
$446

Counterparty Credit Risk
Use of derivative contracts may expose the bank to counterparty credit risk. The Company has ISDA master agreements, including a Credit Support Annex, with all derivative counterparties. The ISDA master agreements provide that on each payment date, all amounts otherwise owing the same currency under the same transaction are netted so that only a single amount is owed in that currency. The ISDA provides, if the parties so elect, for such netting of amounts in the same currency among all transactions identified as being subject to such election that have common payment dates and booking offices. Under the Credit Support Annex, daily net exposure in excess of a negotiated threshold is secured by posted cash collateral. The Company has negotiated a zero threshold with the majority of its approved financial institution counterparties. In accordance with Webster policies, institutional counterparties must be analyzed and approved through the Company’s credit approval process.
The Company’s credit exposure on interest rate derivatives with non-dealer counterparties is limited to the net favorable value, including accrued interest, of all such instruments, reduced by the amount of collateral pledged by the counterparties. The Company's credit exposure related to derivatives with dealer counterparties is significantly mitigated with cash collateral equal to, or in excess of, the market value of the instrument updated daily.
In accordance with counterparty credit agreements and derivative clearing rules, the Company had approximately $20.7 million in net margin collateral posted with financial counterparties at September 30, 2017, comprised of $30.5 million in initial margin and $9.8 million in variation margin collateral received from financial counterparties or the derivative clearing organization. Collateral levels for approved financial institution counterparties are monitored daily and adjusted as necessary. In the event of default, should the collateral not be returned, the exposure would be offset by terminating the transaction.
The Company regularly evaluates the credit risk of its counterparties,derivative customers, taking into account the likelihood of default, net exposures, and remaining contractual life, among other related factors. Credit risk exposure is mitigated as transactions with customers are generally secured by the same collateral of the underlying transactions. The Company'scurrent net current credit exposure relating to interest rate derivativesderivative contracts with Webster Bank customers was $35.1$16.7 million at September 30, 2017.March 31, 2024. In addition, the Company also monitors potential future exposure, representing its best estimate of exposure to remaining contractual maturity. The potential future exposure relating to interest rate derivativesderivative contracts with Webster Bank customers totaled $27.7was $112.0 million at September 30, 2017. CreditMarch 31, 2024. The Company has incorporated a credit valuation adjustment (contra-liability) to reflect non-performance risk exposure is mitigatedin the fair value measurement of its derivatives, which totaled $7.5 million and $6.2 million at March 31, 2024, and December 31, 2023, respectively. Various factors impact changes in the valuation adjustment over time, such as transactions with customers are generally secured bychanges in the same collateralcredit spreads of the underlying transactions being hedged.contracted parties, and changes in market rates and volatilities, which affect the total expected exposure of the derivative instruments.

62

Note 13: Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FairThe determination of fair value is best determined using quoted market prices. However, in many instances,may require the use of estimates when quoted market prices are not available. In such instances, fair values are determined using appropriate valuation techniques. Various assumptions and observable inputs must be relied upon in applying these techniques. Accordingly, categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. As such, the fair value estimates may not be realized in an immediate transfer of the respective asset or liability.
Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the entire holdings or any part of a particular financial instrument. Fair value estimates are based on management’s judgments regarding future expected loss experience,losses, current economic conditions, the risk characteristics of variouseach financial instruments,instrument, and other factors. Thesesubjective factors are subjective in nature and involve uncertainties and matters of significant judgment and, therefore,that cannot be determined with precision. Changes
The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure value. The hierarchy gives the highest priority to unadjusted quoted prices in assumptions could significantly affectactive markets for identical assets or liabilities and the estimates.
Fair Value Hierarchy
lowest priority to unobservable inputs. The three levels within the fair value hierarchy are as follows:
•
Level 1: Valuation is based upon
•Level 1: Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
•
Level 2: Fair value is calculated using significant inputs other than quoted market prices that are directly or indirectly observable for the asset or liability. The valuation may rely on quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date.
•Level 2: Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, rate volatility, prepayment speeds, and credit ratings), or inputs that are derived principally from or corroborated by market data, correlation, or other means.
•Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. This includes certain pricing models or other similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit ratings, etc.), or inputs that are derived principally or corroborated by market data, by correlation, or other means.
•
Level 3: Inputs for determining the fair value of the respective assets or liabilities are not observable. Level 3 valuations are reliant upon pricing models and techniques that require significant management judgment or estimation.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Available-for-Sale Investment Securities. When unadjusted quoted prices are available in an active market, the Company classifies its available-for-sale investment securities within Level 1 of the valuation hierarchy. U.S. Treasury Bills are classified within Level 1 of the fair value hierarchy.
When quoted market prices are not available, the Company employs an independent pricing service that utilizes matrix pricing to calculate fair value. SuchThese fair value measurements consider observable data, such as dealer quotes, market spreads, cash flows, yield curves, live trading levels, trade execution data, market consensus prepayments speeds, credit information, and the respective terms and conditions for debt instruments. Management maintains procedures to monitor the pricing service's assumptionsservice’s results and establishes processeshas a process in place to challenge the pricing service'stheir valuations that appear unusual or unexpected. Available-for-Sale investment securities which includeand methodologies. Government agency debentures, Municipal bonds and notes, Agency CMO, Agency MBS, Agency CMBS, CMBS, CLO, trust preferred,Corporate debt, Private label MBS, and corporate debt,Other available-for-sale securities are classified within Level 2 of the fair value hierarchy.
Derivative Instruments.The fair values presented for derivative instruments include any accrued interest. Foreign exchange contracts are valued based on unadjusted quoted prices in active markets, and accordingly, are classified within Level 1 of the fair value hierarchy. DerivativeExcept for mortgage banking derivatives, all other derivative instruments are valued using third-party valuation software, which considers the present value of cash flows discounted using observable forward rate assumptions. The Chicago Mercantile Exchange have amended their rulebooks to legally characterize variation margin payments for over-the-counter derivatives that clear as settlements rather than collateral, effective January 3, 2017. One of Webster's counterparty relationships was impacted by this change, resulting in the fair value of the instrument including cash collateral as a single unit of account.
The resulting fair values areis then validated against valuations performed by independent third parties anddealer counterparties. These derivative instruments are classified within Level 2 of the fair value hierarchy. In determining if any fair value adjustment related to credit risk is required, Webster evaluates the credit risk of its counterparties by considering factors such as the likelihood of default by the counterparties, its net exposures, the remaining contractual life, as well as the amount of collateral securing the position. Webster reviews its counterparty exposure on a regular basis, and, when necessary, appropriate business actions are taken to adjust the exposure. When determining fair value, Webster applies the portfolio exception with respect to measuring counterparty credit risk for all of its derivative transactions subject to a master netting arrangement. The change in value of derivative assets and liabilities attributable to credit risk was not significant during the reported periods.

Mortgage Banking Derivatives. ForwardThe Company uses forward sales of mortgage loans and mortgage-backed securities are utilized by the Company in its efforts to manage the risk of loss associated with its mortgage loan commitments and mortgage loans held for sale. Prior to closing and funding certain single-family residential mortgage loans, an interest rate lock commitment is generally extended to the borrower. During thethis in-between time period, from commitment date to closing date, the Company is subject to the risk that market interest rates of interest may change. If market rates rise, investors generally will pay less to purchase suchmortgage loans, resultingwhich would result in a reduction in the gain on sale of the loans, or possibly a loss. In an effort to mitigate suchthis risk, forward delivery sales commitments are established underin which the Company agrees to either deliver whole mortgage loans to various investors or issue mortgage-backed securities. The fair value of mortgage banking derivatives is determined based on current market prices for similar assets in the secondary market and, therefore,market. Accordingly, mortgage banking derivatives are classified within Level 2 of the fair value hierarchy.
Investments Held in Rabbi Trust. Investments held in the Rabbi Trust primarily include mutual funds that invest in equity and fixed income securities. Shares of mutual funds are valued based on net asset value, which represents quoted market prices for the underlying shares held in the mutual funds. Therefore, investments held in the Rabbi Trust are classified within Level 1 of the fair value hierarchy. Webster has elected to measure the investments held in the Rabbi Trust at fair value. The cost basis of the investments held in the Rabbi Trust is $2.9 million at September 30, 2017.
Alternative Investments. Alternative investments are non-public entities that cannot be redeemed since the Company’s investment is distributed as the underlying equity is liquidated. Alternative investments in which the ownership percentage is greater than 3% are fair valued on a recurring basis based upon the net asset value of the respective fund. Alternative investments in which the ownership percentage is less than 3% are fair valued on a non-recurring basis. These alternative investments are recorded at cost, subject to impairment testing. Both recurring and non-recurring alternative investments are classified within Level 3 of the fair value hierarchy, as they are non-public entities that cannot be redeemed since the Company's investment is distributed as the underlying investments are liquidated. At September 30, 2017, the alternative investments book value was $17.3 million and there was $9.4 million in remaining unfunded commitments.
Originated Loans Held For Sale. Residential mortgageThe Company has elected to measure originated loans typically are classified as held for sale upon origination based on management's intent to sell such loans. The Company generally records residential mortgage loans held for saleat fair value under the fair value option per ASC Topic 825, Financial Instruments. Electing to measure originated loans held for sale at fair value reduces certain timing differences and better reflects the price the Company would expect to receive from the sale of ASC 825 "Financial Instruments".these loans. The fair value of residential mortgageoriginated loans held for sale is based on quoted market prices of similar loans sold in conjunction with securitization transactions. Accordingly, suchoriginated loans held for sale are classified within Level 2 of the fair value hierarchy.

The following table compares the fair value to the UPB of originated loans held for sale:
At March 31, 2024At December 31, 2023
(In thousands)Fair ValueUPBDifferenceFair ValueUPBDifference
Originated loans held for sale$323 $316 $7 $2,610 $2,658 $(48)
Summaries
63

Rabbi Trust Investments.Investments held in each of the Company’s Rabbi Trusts consist primarily of mutual funds that invest in equity and fixed income securities. Shares of these mutual funds are valued based on the NAV as reported by the trustee of the funds, which represents quoted prices in active markets. Accordingly, the Rabbi Trusts’ investments are classified within Level 1 of the fair value hierarchy. At both March 31, 2024, and December 31, 2023, the total cost basis of the investments held in the Rabbi Trusts was $9.2 million.
Alternative Investments. Equity investments have a readily determinable fair value when unadjusted quoted prices are available in an active market for identical assets. Accordingly, these alternative investments are classified within Level 1 of the fair value hierarchy. At March 31, 2024, and December 31, 2023, equity investments with a readily determinable fair value had a total carrying amount of $1.2 million and $0.9 million, respectively, with no remaining unfunded commitment. During the three months ended March 31, 2024, there were total write-ups in fair value of $0.3 million associated with these alternative investments.
Equity investments that do not have a readily determinable fair value may qualify for the NAV practical expedient if they meet certain requirements. The Company’s alternative investments measured at NAV consist of investments in non-public entities that cannot be redeemed since investments are distributed as the underlying equity is liquidated. Alternative investments measured at NAV are not classified within the fair value hierarchy. At March 31, 2024, and December 31, 2023, these alternative investments had a total carrying amount of $38.6 million and $35.9 million, respectively, and a remaining unfunded commitment of $27.9 million and $29.8 million, respectively.
Contingent Consideration. The Company recorded $16.0 million of contingent consideration at fair value related to two earn-out agreements associated with the acquisition of interLINK on January 11, 2023. The terms of the purchase agreement specified that the seller would receive earn-outs based on the ability of the Company to: (i) re-sign the existing broker dealers under contract, and (ii) generate $2.5 billion in new broker dealer deposit programs within three years of the acquisition date. The estimated fair values of the contingent consideration liabilities are measured on a recurring basis and determined using an income approach considering management’s evaluation of the probability of achievement, forecasted achievement date (payment term), and a discount rate equivalent to the counterparty cost of debt. These significant inputs, which are the responsibility of management and calculated with the assistance of a third-party valuation specialist, are not observable, and accordingly, are classified within Level 3 of the fair value hierarchy.
The following tables summarize the unobservable inputs used to derive the estimated fair value of the Company’s contingent consideration liabilities (dollars in thousands):
At March 31, 2024
AgreementMaximum AmountProbability of AchievementPayment Term
(in years)		Discount RateFair Value
(i) Re-sign broker dealers (1)
$20799.0 %1.636.40 %$182
(ii) Deposit program growth$12,500100.0 %0.756.40 %$11,568
At December 31, 2023
AgreementMaximum AmountProbability of AchievementPayment Term
(in years)		Discount RateFair Value
(i) Re-sign broker dealers (1)
$4,82699.0 %1.886.40 %$4,232
(ii) Deposit program growth$12,500100.0 %1.006.40 %$11,568
(1)The Company re-signed one of the existing broker dealers under contract in January 2024, which resulted in the cash payment of $4.6 million during the three months ended March 31, 2024, to settle a portion of its contingent consideration obligation with StoneCastle Partners LLC in accordance with the purchase agreement.
Contingent consideration liabilities are included within Accrued expenses and other liabilities on the accompanying Condensed Consolidated Balance Sheets. Any fair value adjustments to contingent consideration liabilities are included in Other expense on the accompanying Condensed Consolidated Statements of Income.
64

The following tables summarize the fair values of assets and liabilities measured at fair value on a recurring basis are as follows:basis:
 At March 31, 2024
(In thousands)Level 1Level 2Level 3Total
Financial Assets:
Available-for-sale securities:
Government agency debentures$— $262,488 $— $262,488 
Municipal bonds and notes— 1,207,350 — 1,207,350 
Agency CMO— 46,236 — 46,236 
Agency MBS— 3,364,414 — 3,364,414 
Agency CMBS— 2,321,230 — 2,321,230 
CMBS— 731,851 — 731,851 
Corporate debt— 617,209 — 617,209 
Private label MBS— 41,308 — 41,308 
Other— 9,055 — 9,055 
Total available-for-sale securities— 8,601,141 — 8,601,141 
Gross derivative instruments, before netting (1)
594 362,948 — 363,542 
Originated loans held for sale— 323 — 323 
Investments held in Rabbi Trusts12,545 — — 12,545 
Alternative investments1,221 — — 1,221 
Alternative investments measured at NAV (2)
— — — 38,620 
Total financial assets$14,360 $8,964,412 $— $9,017,392 
Financial Liabilities:
Gross derivative instruments, before netting (1)
$160 $407,233 $— $407,393 
Contingent consideration— — 11,750 11,750 
Total financial liabilities$160 $407,233 $11,750 $419,143 
 At December 31, 2023
(In thousands)Level 1Level 2Level 3Total
Financial Assets:
Available-for-sale securities:
Government agency debentures$— $264,633 $— $264,633 
Municipal bonds and notes— 1,573,233 — 1,573,233 
Agency CMO— 48,941 — 48,941 
Agency MBS— 3,347,098 — 3,347,098 
Agency CMBS— 2,288,071 — 2,288,071 
CMBS— 763,749 — 763,749 
Corporate debt— 622,155 — 622,155 
Private label MBS— 42,808 — 42,808 
Other— 9,041 — 9,041 
Total available-for-sale securities— 8,959,729 — 8,959,729 
Gross derivative instruments, before netting (1)
217 330,419 — 330,636 
Originated loans held for sale— 2,610 — 2,610 
Investments held in Rabbi Trusts11,900 — — 11,900 
Alternative investments959 — — 959 
Alternative investments measured at NAV (2)
— — — 35,888 
Total financial assets$13,076 $9,292,758 $— $9,341,722 
Financial Liabilities:
Gross derivative instruments, before netting (1)
$970 $334,840 $— $335,810 
Contingent consideration— — 15,800 15,800 
Total financial liabilities$970 $334,840 $15,800 $351,610 
 At September 30, 2017
(In thousands)Level 1Level 2Level 3Total
Financial assets held at fair value:    
U.S. Treasury Bills$3,596
$—
$—
$3,596
Agency CMO—
331,798
—
331,798
Agency MBS—
912,977
—
912,977
Agency CMBS—
584,960
—
584,960
CMBS—
403,433
—
403,433
CLO—
274,583
—
274,583
Trust preferred—
30,937
—
30,937
Corporate debt—
48,878
—
48,878
Total available-for-sale investment securities3,596
2,587,566
—
2,591,162
Gross derivative instruments, before netting (1)
262
41,988
—
42,250
Investments held in Rabbi Trust5,278
—
—
5,278
Alternative investments—
—
6,986
6,986
Originated loans held for sale—
32,855
—
32,855
Total financial assets held at fair value$9,136
$2,662,409
$6,986
$2,678,531
Financial liabilities held at fair value:    
Gross derivative instruments, before netting (1)
$562
$19,461
$—
$20,023
 At December 31, 2016
(In thousands)Level 1Level 2Level 3Total
Financial assets held at fair value:    
U.S. Treasury Bills$734
$—
$—
$734
Agency CMO—
419,706
—
419,706
Agency MBS—
954,349
—
954,349
Agency CMBS—
573,272
—
573,272
CMBS—
477,365
—
477,365
CLO—
427,390
—
427,390
Trust preferred—
28,633
—
28,633
Corporate debt—
109,642
—
109,642
Total available-for-sale investment securities734
2,990,357
—
2,991,091
Gross derivative instruments, before netting (1)
250
77,387
—
77,637
Investments held in Rabbi Trust5,119
—
—
5,119
Alternative investments—
—
5,502
5,502
Originated loans held for sale—
60,260
—
60,260
Total financial assets held at fair value$6,103
$3,128,004
$5,502
$3,139,609
Financial liabilities held at fair value:    
Gross derivative instruments, before netting (1)
$120
$45,069
$—
$45,189
(1)For information relating to(1)Additional information regarding the impact of netting derivative assets and derivative liabilities as well as the impact from offsetting cash collateral paid to the same derivative counterparties see Note 12: Derivative Financial Instruments.
The following table presents the changes in Level 3 assets and derivative liabilities, thatas well as the impact from offsetting cash collateral paid to the same derivative counterparties, can be found within Note 12: Derivative Financial Instruments.
(2)Certain alternative investments are recorded at NAV. Assets measured at NAV are not classified within the fair value on a recurring basis:hierarchy.
(In thousands)Alternative Investments
Balance at January 1, 2017$5,502
Unrealized gain included in net income639
Purchases/capital funding899
Payments(54)
Balance at September 30, 2017$6,986
65


Assets Measured at Fair Value on a Non-Recurring Basis
CertainThe Company measures certain assets areat fair value on a non-recurring basis. The following is a description of the valuation methodologies used for assets measured at fair value on a non-recurring basis;basis.
Alternative Investments. The measurement alternative has been elected for alternative investments without readily determinable fair values that is,do not qualify for the assetsNAV practical expedient. The measurement alternative requires investments to be measured at cost minus impairment, if any, plus or minus adjustments resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. Accordingly, these alternative investments are notclassified within Level 2 of the fair value hierarchy. At March 31, 2024, and December 31, 2023, the carrying amount of these alternative investments was $55.3 million and $53.1 million, respectively, of which $1.4 million and $7.9 million, respectively, were considered to be measured at fair value on an ongoing basis but are subjectvalue. During the three months ended March 31, 2024, there was $1.7 million in total
write-ups due to fair value adjustments in certain circumstances, for example, when there is evidenceobservable price changes and $0.5 million of total write-downs due to impairment. The following is a description of valuation methodologies used for assets measured on a non-recurring basis.
Loans Transferred Loansto Held Forfor Sale. Certain loans are transferred to loans held for sale onceOnce a decision has been made to sell such loans. Theseloans not previously classified as held for sale, these loans are accountedtransferred into the held for sale category and carried at the lower of cost or market and are considered to be recognized at fair value, when they are recorded at below cost.less estimated costs to sell. At the time of transfer into held for sale classification, any amount by which cost exceeds fair value is accounted for as a valuation allowance. This activity is primarily commercialgenerally pertains to loans with observable inputs, and istherefore, are classified within Level 2. On2 of the occasionfair value hierarchy. However, should these loans include adjustments for changes in loan characteristics usingbased on unobservable inputs, the loans would then be classified within Level 3.3 of the fair value hierarchy. At March 31, 2024, and December 31, 2023, there were $239.3 million and $3.9 million loans that were transferred to held for sale on the Condensed Consolidated Balance Sheet, respectively.
Collateral Dependent Impaired Loans and Leases. Impaired loansLoans and leases for which repayment is substantially expected to be provided solely bythrough the valueoperation or sale of the underlying collateral are considered collateral dependent, and are valued based on the estimated fair value of suchthe collateral, less estimated costs to sell at the reporting date, using customized discounting criteria. As such,Accordingly, collateral dependent impaired loans and leases are classified aswithin Level 3 of the fair value hierarchy.
Other Real Estate Owned and Repossessed Assets. The total book value of OREO and repossessed assets was $5.3 million at September 30, 2017. OREO and repossessed assets are accounted forheld at the lower of cost or marketfair value and are considered to be recognizedmeasured at fair value when they are recorded at below cost. The fair value of OREO is based oncalculated using independent appraisals or internal valuation methods, less estimated selling costs. The valuationcosts, and may consider available pricing guides, auction results, and price opinions. Certain repossessed assets may also require assumptions about factors that are not observable in an active market in the determination ofwhen determining fair value; as such,value. Accordingly, OREO and repossessed assets are classified within Level 3 of the fair value hierarchy. At March 31, 2024, and December 31, 2023, the total carrying value of OREO and repossessed assets was $5.6 million and $9.1 million, respectively. In addition, the amortized cost of consumer loans secured by residential real estate property that were in process of foreclosure at March 31, 2024, was $9.1 million.
The table below presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis as of September 30, 2017:
(Dollars in thousands) 
AssetFair ValueValuation MethodologyUnobservable InputsRange of Inputs
Collateral dependent impaired loans and leases$15,955
Real Estate AppraisalsDiscount for appraisal type0%-20%
   Discount for costs to sell0%-15%
OREO$2,587
Real Estate AppraisalsDiscount for appraisal type0%-20%
   Discount for costs to sell8%

Estimated Fair ValueValues of Financial Instruments and Mortgage Servicing Assets
The Company is required to disclose the estimated fair valuevalues of certain financial instruments both assets and liabilities, for which it is practicable to estimate fair value.mortgage servicing rights. The following is a description of the valuation methodologies used to estimate fair value for those assets and liabilities.
Cash Due from Banks, and Interest-bearing Deposits.Cash Equivalents. TheGiven the short time frame to maturity, the carrying amount of cash and cash equivalents, which comprises cash and due from banks and interest-bearing deposits, is used to approximateapproximates fair value, given the short time frame to maturityvalue. Cash and as such, these assets do not present unanticipated credit concerns. Cash, due from banks, and interest-bearing depositscash equivalents are classified within Level 1 of the fair value hierarchy.
Held-to-Maturity Investment Securities.Securities. When quoted market prices are not available, the Company employs an independent pricing service that utilizes matrix pricing to calculate fair value. SuchThese fair value measurements consider observable data, such as dealer quotes, market spreads, cash flows, yield curves, live trading levels, trade execution data, market consensus prepaymentsprepayment speeds, credit information, and the respective terms and conditions for debt instruments. Management maintains procedures to monitor the pricing service's assumptionsservice’s results and establishes processeshas a process in place to challenge the pricing service'stheir valuations that appear unusual or unexpected. Held-to-Maturity investmentand methodologies. Held-to-maturity securities, which include Agency CMO, Agency MBS, Agency CMBS, CMBS, municipalMunicipal bonds and notes, and private label MBS securities,CMBS, are classified within Level 2 of the fair value hierarchy.
Loans and Leases, net.net The estimated. Except for collateral dependent loans and leases, the fair value of loans and leases held for investment is calculatedestimated using a discounted cash flow method, usingmethodology, based on future prepayments and market interest rates inclusive of an illiquidity premiumdiscount for comparable loans and leases. The associated cash flows are then adjusted for associated credit risks and other potential losses. Fair value for impaired loans and leases is estimated using the net present value of the expected cash flows.losses, as appropriate. Loans and leases are classified within Level 3 of the fair value hierarchy.
66
Deposit Liabilities. The fair value of demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the reporting date. Deposit liabilities are classified within Level 2 of the fair value hierarchy.
Time Deposits. The fair value of a fixed-maturity certificate of deposit is estimated using the rates currently offered for deposits of similar remaining maturities. Time deposits are classified within Level 2 of the fair value hierarchy.

Securities Sold Under Agreements to Repurchase and Other Borrowings. The carrying value is an estimate of fair value for those securities sold under agreements to repurchase and other borrowings that mature within 90 days. The fair values of all other borrowings are estimated using discounted cash flow analysis based on current market rates adjusted, as appropriate, for associated credit risks. Securities sold under agreements to repurchase and other borrowings are classified within Level 2 of the fair value hierarchy.
Federal Home Loan Bank Advances and Long-Term Debt. The fair value of FHLB advances and long-term debt is estimated using a discounted cash flow technique. Discount rates are matched with the time period of the expected cash flow and are adjusted, as appropriate, to reflect credit risk. FHLB advances and long-term debt are classified within Level 2 of the fair value hierarchy.
Mortgage Servicing Assets.Rights. Mortgage servicing assetsrights are accounted for at cost, subject to impairment testing. Mortgage servicing assets are considered to be recognizedinitially measured at fair value when they are recorded at below cost. Changes inand subsequently measured using the amortization method. The Company assesses mortgage servicing rights for impairment each quarter and establishes or adjusts the valuation allowance to the extent that amortized cost exceeds the estimated fair value are included as a component of other non-interest income in the accompanying Condensed Consolidated Statements of Income.market value. Fair value is calculated as the present value of estimated future net servicing income and relies on market based assumptions for loan prepayment speeds, servicing costs, discount rates, and other economic factors; as such,factors. Accordingly, the primary risk inherent in valuing mortgage servicing assetsrights is the impact of fluctuating interest rates on the related servicing revenue stream. Mortgage servicing assetsrights are classified within Level 3 of the fair value hierarchy.
Deposit Liabilities. The fair value of deposit liabilities, which comprises demand deposits, interest-bearing checking, savings, health savings, and money market accounts, reflects the amount payable on demand at the reporting date. Deposit liabilities are classified within Level 2 of the fair value hierarchy.
Time Deposits. The fair value of fixed-maturity certificates of deposit is estimated using rates that are currently offered for deposits with similar remaining maturities. Time deposits are classified within Level 2 of the fair valuesvalue hierarchy.
Securities Sold Under Agreements to Repurchase and Other Borrowings. The fair value of selected financial instrumentssecurities sold under agreements to repurchase and servicing assetsother borrowings that mature within 90 days approximates their carrying value. The fair value of securities sold under agreements to repurchase and other borrowings that mature after 90 days is estimated using a discounted cash flow methodology based on current market rates and adjusted for associated credit risks, as appropriate. Securities sold under agreements to repurchase and other borrowings are as follows:classified within Level 2 of the fair value hierarchy.
 At September 30, 2017 At December 31, 2016
(In thousands)
Carrying
Amount
 
Fair
Value
 
Carrying
Amount
 
Fair
Value
Assets:       
Level 2       
Held-to-maturity investment securities$4,497,311
 $4,481,675
 $4,160,658
 $4,125,125
Transferred loans held for sale—
 —
 7,317
 7,444
Level 3       
Loans and leases, net17,244,618
 17,155,002
 16,832,268
 16,678,106
Mortgage servicing assets25,140
 44,992
 24,466
 52,075
Alternative investments10,296
 12,539
 11,034
 13,189
Liabilities:       
Level 2       
Deposit liabilities$18,636,744
 $18,636,744
 $17,279,049
 $17,279,049
Time deposits2,218,491
 2,213,155
 2,024,808
 2,024,395
Securities sold under agreements to repurchase and other borrowings902,902
 905,249
 949,526
 955,660
FHLB advances (1)
1,507,681
 1,512,203
 2,842,908
 2,825,101
Long-term debt (1)
225,704
 235,686
 225,514
 225,514
(1)The following adjustments to the carrying amount are not included for determinationFederal Home Loan Bank Advances and Long-Term Debt. The fair value of fair value, see Note 8: Borrowings:
•FHLB advances - unamortized premiums onand long-term debt is estimated using a discounted cash flow methodology in which discount rates are matched with the time period of the expected cash flows and adjusted for associated credit risks, as appropriate. FHLB advances
•Long-term and long-term debt - unamortized discount and debt issuance cost on senior fixed-rate notesare classified within Level 2 of the fair value hierarchy.

Note 14: Retirement Benefit Plans
Defined benefit pension and other postretirement benefits
The following table summarizes the componentscarrying amounts, estimated fair values, and classifications within the fair value hierarchy of net periodic benefit cost:selected financial instruments and mortgage servicing rights:
 At March 31, 2024At December 31, 2023
(In thousands)Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
Assets:
Level 1
Cash and cash equivalents$1,545,228 $1,545,228 $1,715,795 $1,715,795 
Level 2
Held-to-maturity investment securities, net7,679,891 6,782,867 7,074,588 6,264,623 
Level 3
Loans and leases, net50,457,200 48,348,067 50,090,315 48,048,106 
Mortgage servicing rights1,514 3,973 8,523 24,495 
Liabilities:
Level 2
Deposit liabilities$53,810,423 $53,810,423 $52,319,825 $52,319,825 
Time deposits6,937,320 6,902,736 8,464,459 8,426,708 
Securities sold under agreements to repurchase and other borrowings361,886 361,867 458,387 458,380 
FHLB advances3,659,930 3,657,612 2,360,018 2,358,381 
Long-term debt (1)
914,520 852,877 1,048,820 999,918 
(1)Any unamortized premiums/discounts, debt issuance costs, or basis adjustments to long-term debt, as applicable, are excluded from the determination of fair value.
 Three months ended September 30,
 2017 2016
(In thousands)Pension PlanSERPOther Benefits Pension PlanSERPOther Benefits
Service cost$12
$—
$—
 $11
$—
$—
Interest cost on benefit obligations1,829
96
19
 2,110
98
32
Expected return on plan assets(3,074)—
—
 (3,067)—
—
Amortization of prior service cost—
—
—
 —
—
4
Recognized net loss1,466
136
(15) 1,666
106
8
Net periodic benefit cost$233
$232
$4
 $720
$204
$44
67

 Nine months ended September 30,
 2017 2016
(In thousands)Pension PlanSERPOther Benefits Pension PlanSERPOther Benefits
Service cost$37
$—
$—
 $34
$—
$—
Interest cost on benefit obligations5,486
281
69
 6,331
292
94
Expected return on plan assets(9,222)—
—
 (8,596)—
—
Amortization of prior service cost—
—
—
 —
—
11
Recognized net loss4,398
561
—
 4,998
319
26
Net periodic benefit cost$699
$842
$69
 $2,767
$611
$131


Note 15: Share-Based Plans
Stock compensation plans
Webster maintains stock compensation plans under which non-qualified stock options, incentive stock options, restricted stock, restricted stock units, or stock appreciation rights may be granted to employees and directors. The Company believes these share awards better align the interests of its employees with those of its shareholders. Stock compensation cost is recognized over the required service vesting period for the awards, based on the grant-date fair value, net of estimated forfeitures, and is included as a component of compensation and benefits reflected in non-interest expense.
The following table provides a summary of stock compensation expense recognized in the accompanying Condensed Consolidated Statements of Income:
 Three months ended September 30, Nine months ended September 30,
(In thousands)2017 2016 2017 2016
Stock options$—
 $—
 $—
 $43
Restricted stock3,007
 2,944
 9,050
 8,515
Total stock compensation expense$3,007
 $2,944
 $9,050
 $8,558

At September 30, 2017 there was $16.7 million of unrecognized stock compensation expense for restricted stock expected to be recognized over a weighted-average period of 2.0 years.
The following table provides a summary of the stock compensation plans activity for the nine months ended September 30, 2017:
 Restricted Stock Awards Outstanding Stock Options Outstanding
 Time-Based Performance-Based 
 
Number of
Shares
Weighted-Average
Grant Date
Fair Value
 
Number of
Units
Weighted-Average
Grant Date
Fair Value
 
Number of
Shares
Weighted-Average
Grant Date
Fair Value
 
Number  of
Shares
Weighted-Average
Exercise Price
Outstanding, at January 1, 2017253,361
$32.24
 2,158
$32.89
 116,184
$33.62
 1,072,974
$21.24
Granted164,953
54.79
 8,129
56.07
 89,581
56.18
 —
—
Exercised options—
—
 —
—
 —
—
 279,344
25.80
Vested restricted stock awards (1)
155,390
36.36
 6,900
48.82
 87,982
40.74
 —
—
Forfeited14,586
36.44
 —
—
 6,276
42.72
 —
—
Outstanding and exercisable, at September 30, 2017248,338
$43.96
 3,387
$56.07
 111,507
$45.61
 793,630
$19.63
(1)Vested for purposes of recording compensation expense.
Time-based restricted stock. Time-based restricted stock awards vest over the applicable service period ranging from 1 to 5 years. The number of time-based awards that may be granted to an eligible individual in a calendar year is limited to 100,000 shares. Compensation expense is recorded over the vesting period based on a fair value, which is measured using the Company's common stock closing price at the date of grant.
Performance-based restricted stock. Performance-based restricted stock awards vest after a 3 year performance period. The awards vest with a share quantity dependent on that performance, in a range from 0 to 150%. The performance criteria for 50% of the shares granted in 2017 is based upon Webster's ranking for total shareholder return versus Webster's compensation peer group companies and the remaining 50% is based upon Webster's average of return on equity during the three year vesting period. The compensation peer group companies are utilized because they represent the financial institutions that best compare with Webster. The Company records compensation expense over the vesting period, based on a fair value calculated using the Monte-Carlo simulation model, which allows for the incorporation of the performance condition for the 50% of the performance-based shares tied to total shareholder return versus the compensation peer group, and based on a fair value of the market price on the date of grant for the remaining 50% of the performance-based shares tied to Webster's return on equity. Compensation expense is subject to adjustment based on management's assessment of Webster's return on equity performance relative to the target number of shares condition.
Stock options. Stock option awards have an exercise price equal to the market price of Webster Financial Corporation's stock on the date of grant. Each option grants the holder the right to acquire a share of Webster Financial Corporation common stock over a contractual life of up to 10 years. All awarded options have vested. There were 735,785 non-qualified stock options and 57,845 incentive stock options outstanding at September 30, 2017.

Note 16:14: Segment Reporting
Webster’s operations are organized intoThe Company has three reportable segments, that representwhich reflect its primary businesses -differentiated lines of business: Commercial Banking, Community BankingHealthcare Financial Services, and HSA Bank. These three segments reflect how executiveConsumer Banking. Segment performance is evaluated using PPNR, or PTNR, as appropriate. Certain Treasury activities and other functional divisions, such as information technology, human resources, risk management, responsibilities are assigned,bank operations, and the primary businesses, the products and services provided, the typeoperations of customer served, and how discrete financial information is currently evaluated. The Corporate Treasury unit of the Company, along with theinterLINK, as well as amounts required to reconcile non-GAAP profitability metrics to amountsthose reported in accordance with GAAP, are included in the Corporate and Reconciling category.
DescriptionEffective January 1, 2024, the Company realigned certain of its Business Banking operations to better serve its customers and deliver operational efficiencies. Under this realignment, $1.5 billion of loans and $2.2 billion of deposits were reassigned, and $77.2 million of goodwill was reallocated on a relative fair value basis, from Commercial Banking to Consumer Banking. There was no goodwill impairment as a result of this realignment. Prior period amounts have been recast accordingly.
In addition, with the acquisition of Ametros on January 24, 2024, the Company formed a new reportable segment called Healthcare Financial Services, which includes the aggregated financial information of the HSA Bank and Ametros businesses. The allocation of the purchase price for the Ametros acquisition is considered preliminary at March 31, 2024. The $228.2 million of preliminary goodwill recorded related to Ametros has been allocated entirely to Healthcare Financial Services.
The allocation of the purchase price for the interLINK acquisition on January 11, 2023, was considered final as of June 30, 2023. The $143.2 million of goodwill recorded related to interLINK was allocated entirely to Commercial Banking.
The following is a description of the Company’s three reportable segments and their primary services at March 31, 2024:
Commercial Banking serves businesses with more than $10 million of revenue through its Commercial Real Estate, Equipment Finance, Middle Market, Regional Banking, Asset-Based Lending, Commercial Services, Public Sector Finance, Sponsor and Specialty Finance, Verticals and Support, Private Banking, and Treasury Management business units.
Healthcare Financial Services offers consumer-directed healthcare solutions that includes HSAs, health reimbursement arrangements, the administration of medical insurance claim settlements, flexible spending accounts, and commuter benefits. Accounts are distributed nationwide directly to employers and individual consumers, as well as through national and regional insurance carriers, benefit consultants, and financial advisors.
Consumer Banking offers consumer deposit and fee-based services, residential mortgages, home equity lines, secured and unsecured loans, debit and credit card products, and investment services to individual consumers and small businesses through its Consumer Lending and Business Banking business units. Consumer Banking operates a distribution network consisting of 196 banking centers and 347 ATMs, a customer care center, and a full range of web and mobile-based banking services, primarily throughout southern New England and the New York metro and suburban markets.
Segment Reporting Methodology
Webster’s reportable segment results are intended to reflect each segment as if it were a stand-alone business. WebsterThe Company uses an internal profitability reporting system to generate information by operatingreportable segment, which is based on a series of management estimates for FTP and allocations regarding funds transfer pricing,for non-interest expense, provision for loan and leasecredit losses, non-interest expense, income taxes, and equity capital. These estimates and allocations, certain of which are subjective in nature, are periodically reviewed and refined. Changes in estimates and allocations that affectFor additional information regarding the reported results of any operatingCompany’s segment do not affect the consolidated financial position or results of operations of Webster as a whole. The full profitability measurement reports, which are prepared for each operating segment, reflect non-GAAP reporting methodologies. The differences between full profitability and GAAP results are reconciledmethodology, please refer to Note 21: Segment Reporting in the CorporateNotes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Reconciling category.
Webster allocates interest income and interest expense to each business, while also transferring the primary interest rate risk exposures to the Corporate and Reconciling category, using a matched maturity funding concept called Funds Transfer Pricing. The allocation process considers the specific interest rate risk and liquidity risk of financial instruments and other assets and liabilities in each line of business. The matched maturity funding concept considers the origination date and the earlierSupplementary Data of the maturity date or the repricing date of a financial instrument to assign an FTP rate for loans and deposits originated each day. Loans are assigned an FTP rate for funds used and deposits are assigned an FTP rate for funds provided. This process is executed by the Company’s Financial Planning and Analysis division and is overseen by ALCO.
Webster allocates the provision for loan and lease losses to each segment basedAnnual Report on management’s estimate of the inherent loss content in each of the specific loan and lease portfolios. Provision expense for certain elements of risk that are not deemed specifically attributable to a reportable segment, such as the provisionForm 10-K for the consumer liquidating portfolio, is shown as part of the Corporate and Reconciling category.year ended December 31, 2023.
Webster allocates a majority of non-interest expense to each reportable segment using a full-absorption costing process. Costs,The following tables present balance sheet information, including corporate overhead, are analyzed, pooled by process, and assigned to the appropriate reportable segment. Income tax expense is allocated to each reportable segment based on the consolidated effective income tax rateallocations, for the period shown.
Segment Reporting Modifications
The 2016 segment results have been adjusted for comparability to the 2017 segment presentation for the following changes.
To further strengthen Webster's ability to deliver the totality of its products and services to the owners and executives of commercial clients and other high net worth individuals, an organizational change was made during the second quarter of 2017. Effective April 1, 2017, the head of Private Banking reports directly to the head of Commercial Banking. The current organizational structure reflects how executive management responsibilities are assigned and reviewed. As a result of this change, the Private Banking and Commercial Banking operating segments are aggregated into one reportable segment, Commercial Banking.
In late 2007 Webster discontinued its indirect residential construction lending and its indirect home equity lending outside of its primary New England market area referred to as National Wholesale Lending. Webster placed these two portfolios into a liquidating loan portfolio included within the Corporate and Reconciling category. The balance of the home equity liquidating loan portfolio was $65.0 million at December 31, 2016. As the remainder of this portfolio has been performing in the same manner as the continuing home equity portfolio, management has decided to combine the liquidating loan portfolio with the continuing home equity loan portfolio. The combined portfolio is included in the Community Banking reportable segment.
The following table presents total assets for Webster'sCompany’s reportable segments and the Corporate and Reconciling category:
At March 31, 2024
(In thousands)Commercial BankingHealthcare Financial ServicesConsumer BankingCorporate and ReconcilingConsolidated Total
Goodwill$1,960,363 $285,670 $622,035 $— $2,868,068 
Total assets42,286,247 509,012 12,268,347 21,098,087 76,161,693 
At December 31, 2023
(In thousands)Commercial BankingHealthcare Financial ServicesConsumer BankingCorporate and ReconcilingConsolidated Total
Goodwill$1,951,945 $57,485 $622,035 $— $2,631,465 
Total assets41,843,297 122,421 12,327,403 20,652,128 74,945,249 
68

 Total Assets
(In thousands)
Commercial
Banking
Community
Banking
HSA
Bank
Corporate and
Reconciling
Consolidated
Total
At September 30, 2017$9,428,676
$8,881,322
$76,090
$7,964,094
$26,350,182
At December 31, 20169,069,445
8,721,046
83,987
8,198,051
26,072,529

The following tables present the operating results, including allthe appropriate allocations, for Webster’sthe Company’s reportable segments and the Corporate and Reconciling category:
 Three months ended March 31, 2024
(In thousands)Commercial BankingHealthcare Financial ServicesConsumer BankingCorporate and ReconcilingConsolidated Total
Net interest income$341,942 $86,138 $205,777 $(66,118)$567,739 
Non-interest income34,280 31,061 33,978 34 99,353 
Non-interest expense106,225 52,127 120,121 57,450 335,923 
Pre-tax, pre-provision net revenue269,997 65,072 119,634 (123,534)331,169 
Provision (benefit) for credit losses47,283 — (4,089)2,306 45,500 
Income before income taxes222,714 65,072 123,723 (125,840)285,669 
Income tax expense49,220 17,114 30,436 (27,424)69,346 
Net income$173,494 $47,958 $93,287 $(98,416)$216,323 
 Three months ended March 31, 2023
(In thousands)Commercial BankingHealthcare Financial ServicesConsumer BankingCorporate and ReconcilingConsolidated Total
Net interest income$360,293 $71,730 $234,604 $(71,344)$595,283 
Non-interest income33,720 24,067 27,636 (14,657)70,766 
Non-interest expense98,833 43,700 116,555 73,379 332,467 
Pre-tax, pre-provision net revenue295,180 52,097 145,685 (159,380)333,582 
Provision for credit losses35,250 — 2,571 8,928 46,749 
Income before income taxes259,930 52,097 143,114 (168,308)286,833 
Income tax expense57,964 14,066 35,922 (42,123)65,829 
Net income$201,966 $38,031 $107,192 $(126,185)$221,004 
69
 Three months ended September 30, 2017
(In thousands)
Commercial
Banking
Community Banking
HSA
Bank
Corporate and
Reconciling
Consolidated
Total
Net interest income (expense)$81,925
$96,859
$26,713
$(4,593)$200,904
Provision (benefit) for loan and lease losses12,073
(1,923)—
—
10,150
Net interest income (expense) after provision for loan and lease losses69,852
98,782
26,713
(4,593)190,754
Non-interest income13,207
27,079
19,371
6,189
65,846
Non-interest expense38,339
92,478
27,222
3,784
161,823
Income (loss) before income tax expense44,720
33,383
18,862
(2,188)94,777
Income tax expense (benefit)14,363
10,605
6,006
(693)30,281
Net income (loss)$30,357
$22,778
$12,856
$(1,495)$64,496

 Three months ended September 30, 2016
(In thousands)
Commercial
Banking
Community Banking
HSA
Bank
Corporate and
Reconciling
Consolidated
Total
Net interest income (expense)$74,265
$91,995
$20,560
$(6,623)$180,197
Provision for loan and lease losses7,876
6,374
—
—
14,250
Net interest income (expense) after provision for loan and lease losses66,389
85,621
20,560
(6,623)165,947
Non-interest income15,916
29,130
16,900
4,466
66,412
Non-interest expense35,793
92,508
23,021
4,775
156,097
Income (loss) before income tax expense46,512
22,243
14,439
(6,932)76,262
Income tax expense (benefit)14,957
7,122
4,624
(2,258)24,445
Net income (loss)$31,555
$15,121
$9,815
$(4,674)$51,817
Note 15: Revenue from Contracts with Customers
The following tables summarize revenues recognized in accordance with ASC Topic 606, Revenue from Contracts with Customers. These disaggregated amounts, together with sources of other non-interest income that are subject to other GAAP topics, have been reconciled to non-interest income by reportable segment as presented within Note 14: Segment Reporting.
Three months ended March 31, 2024
(In thousands)Commercial BankingHealthcare Financial ServicesConsumer BankingCorporate and
Reconciling		Consolidated
Total
Non-interest Income:
Deposit service fees$5,842 $22,052 $14,796 $(101)$42,589 
Loan and lease related fees (1)
3,622 — — — 3,622 
Wealth and investment services3,178 — 4,751 (5)7,924 
Other income— 9,009 (183)1,044 9,870 
Revenue from contracts with customers12,642 31,061 19,364 938 64,005 
Other sources of non-interest income21,638 — 14,614 (904)35,348 
Total non-interest income$34,280 $31,061 $33,978 $34 $99,353 
Three months ended March 31, 2023
(In thousands)Commercial BankingHealthcare Financial ServicesConsumer BankingCorporate and
Reconciling		Consolidated
Total
Non-interest Income:
Deposit service fees$4,236 $22,092 $19,178 $(70)$45,436 
Loan and lease related fees (1)
4,427 — — — 4,427 
Wealth and investment services2,767 — 3,828 (8)6,587 
Other income— 1,975 358 932 3,265 
Revenue from contracts with customers11,430 24,067 23,364 854 59,715 
Other sources of non-interest income22,290 — 4,272 (15,511)11,051 
Total non-interest income$33,720 $24,067 $27,636 $(14,657)$70,766 
 Nine months ended September 30, 2017
(In thousands)
Commercial
Banking
Community
Banking
HSA
Bank
Corporate and
Reconciling
Consolidated
Total
Net interest income (expense)$239,118
$286,351
$76,339
$(10,453)$591,355
Provision for loan and lease losses29,562
(1,662)—
—
27,900
Net interest income (expense) after provision for loan and lease losses209,556
288,013
76,339
(10,453)563,455
Non-interest income39,163
80,516
58,392
15,368
193,439
Non-interest expense113,767
281,979
84,211
10,069
490,026
Income (loss) before income tax expense134,952
86,550
50,520
(5,154)266,868
Income tax expense (benefit)41,125
26,374
15,395
(1,572)81,322
Net income (loss)$93,827
$60,176
$35,125
$(3,582)$185,546
(1)A portion of Loan and lease related fees on the Condensed Consolidated Statements of Income comprises income generated from factored receivables and payroll financing activities that is within the scope of ASC Topic 606.
 Nine months ended September 30, 2016
(In thousands)
Commercial
Banking
Community
Banking
HSA
Bank
Corporate and
Reconciling
Consolidated
Total
Net interest income (expense)$211,422
$274,186
$60,484
$(12,838)$533,254
Provision for loan and lease losses29,765
14,085
—
—
43,850
Net interest income (expense) after provision for loan and lease losses181,657
260,101
60,484
(12,838)489,404
Non-interest income41,819
83,248
54,969
13,825
193,861
Non-interest expense103,336
276,045
71,966
9,973
461,320
Income (loss) before income tax expense120,140
67,304
43,487
(8,986)221,945
Income tax expense (benefit)39,233
21,979
14,201
(2,935)72,478
Net income (loss)$80,907
$45,325
$29,286
$(6,051)$149,467


Major Revenue Streams
Deposit service fees consist of fees earned from commercial and consumer customer deposit accounts, such as account maintenance and cash management/analysis fees, as well as other transactional service charges (i.e., insufficient funds, wire transfers, stop payment fees, etc.). Performance obligations for account maintenance services and cash management/analysis fees are satisfied on a monthly basis at a fixed transaction price, whereas performance obligations for other deposit service charges that result from various customer-initiated transactions are satisfied at a point-in-time when the service is rendered. Payment for deposit service fees is generally received immediately or in the following month through a direct charge to the customers’ accounts. Certain commercial customer contracts include credit clauses, whereby the Company will grant credit upon the customer meeting pre-determined conditions, which can be used to offset fees. On occasion, the Company may also waive certain fees. Fee waivers are recognized as a reduction to revenue in the period the waiver is granted to the customer.
The deposit service fees revenue stream also includes interchange fees earned from debit and credit card transactions. The transaction price for interchange services is based on the transaction value and the interchange rate set by the card network. Performance obligations for interchange fees are satisfied at a point-in-time when the cardholder’s transaction is authorized and settled. Payment for interchange fees is generally received immediately or in the following month.
Factored receivables non-interest income consists of fees earned from accounts receivable management services. The Company factors accounts receivable, with and without recourse, for customers whereby the Company purchases their accounts receivable at a discount and assumes the risk, as applicable, and ownership of the assets through direct cash receipt from the end consumer. Factoring services are performed in exchange for a non-refundable fee at a transaction price based on a percentage of the gross invoice amount of each receivable purchased, subject to a minimum required amount. The performance obligation for factoring services is generally satisfied at a point-in-time when the receivable is assigned to the Company. However, should the commission earned not meet or exceed the minimum required annual amount, the difference between that and the actual amount is recognized at the end of the contract term. Other fees associated with factoring receivables may include wire transfer and technology fees, field examination fees, and Uniform Commercial Code fees, where the performance obligations are satisfied at a point-in-time when the services are rendered. Payment from the customer for factoring services is generally received immediately or within the following month.
70

Payroll finance non-interest income consists of fees earned from performing payroll financing and business process outsourcing services, including full back-office technology and tax accounting services, along with payroll preparation, making payroll tax payments, invoice billings, and collections for independently-owned temporary staffing companies nationwide. Performance obligations for payroll finance and business processing activities are either satisfied upon completion of the support services or as payroll remittances are made on behalf of customers to fund their employee payroll, which generally occurs on a weekly basis. The agreed-upon transaction price is based on a fixed-percentage per the terms of the contract, which could be subject to a hold-back reserve to provide for any balances that are assessed to be at risk of collection. When the Company collects on amounts due from end consumers on behalf of its customers and at the time of financing payroll, the Company retains the agreed-upon transaction price payable for the performance of its services and remits an amount to the customer net of any advances and payroll tax withholdings, as applicable.
Wealth and investment services consist of fees earned from asset management, trust administration, and investment advisory services, and through facilitating securities transactions. Performance obligations for asset management and trust administration services are satisfied on a monthly or quarterly basis at a transaction price based on a percentage of the period-end market value of the assets under administration. Payment for asset management and trust administration services is generally received a few days after period-end through a direct charge to the customers’ accounts. Performance obligations for investment advisory services are satisfied over the period in which the services are provided through a time-based measurement of progress, and the agreed-upon transaction price with the customer varies depending on the nature of the services performed. Performance obligations for facilitating securities transactions are satisfied at a point-in-time when the securities are sold at a transaction price that is based on a percentage of the contract value. Payment for both investment advisory services and facilitating securities transactions may be received in advance of the service, but generally is received immediately or in the following period, in arrears.
Contracts with customers generated accounts receivable and deferred revenue of $2.3 million and $20.8 million, respectively,
at March 31, 2024. Both of these balances were recorded in connection with contracts with customers from the acquired Ametros business. Ametros’ contracts with customers include a fixed, non-refundable fee that represents an advance payment for access to future discounted medical products and services. This up-front fee is initially deferred and subsequently recognized into Other income ratably over the estimated life expectancy of the member. An insignificant amount of such fee revenue was recognized during the three months ended March 31, 2024. Contracts with customers did not generate significant contract assets or contract liabilities at December 31, 2023.
71

Note 17:16: Commitments and Contingencies
Credit-Related Financial Instruments
The Company offers credit-related financial instruments inIn the normal course of business, the Company offers financial instruments with off-balance sheet risk to meet certainthe financing needs of its customers, that involve off-balance sheet risk.customers. These transactions may include an unused commitmentcommitments to extend credit, standby letterletters of credit, orand commercial letterletters of credit. Such transactionscredit, which involve, to varying degrees, elements of credit risk.
The following table summarizes the outstanding amounts of credit-related financial instruments with off-balance sheet risk:
(In thousands)At September 30, 2017 At December 31, 2016
Commitments to extend credit$5,043,151
 $5,224,280
Standby letter of credit159,485
 128,985
Commercial letter of credit42,007
 46,497
Total credit-related financial instruments with off-balance sheet risk$5,244,643
 $5,399,762

(In thousands)At March 31,
2024		At December 31, 2023
Commitments to extend credit$11,171,394 $12,026,597 
Standby letters of credit497,573 482,462 
Commercial letters of credit36,300 54,382 
Total credit-related financial instruments with off-balance sheet risk$11,705,267 $12,563,441 
Commitments to Extend Credit.The Company makesenters into contractual commitments under various terms to lend fundsextend credit to its customers at a future point in time. These commitments include(i.e., revolving credit arrangements, term loan commitments, and short-term borrowing agreements. Most of these loans haveagreements), generally with fixed expiration dates or other termination clauses whereand that require payment of a fee may be required.fee. Substantially all of the Company’s commitments to extend credit are contingent upon its customers maintaining specific credit standards at the time of loan funding, and are often secured by real estate collateral. Since the majority of the Company’s commitments routinelytypically expire without being funded, or after required availability of collateral occurs, the total commitmentcontractual amount does not necessarily represent the Company’s future liquiditypayment requirements.
Standby Letter of Credit.A standby letterletters of credit commitsare written conditional commitments issued by the Company to make payments on behalf of customers if certain specified future events occur. The Company has recourse against the customer for any amount required to be paidguarantee its customers’ performance to a third party underparty. In the event the customer does not perform in accordance with the terms of its agreement with a standby letter of credit, which is often part of a larger credit agreement under which security is provided. Historically, a large percentage of standby letters of credit expire without being funded.third-party, the Company would be required to fund the commitment. The contractual amount of aeach standby letter of credit represents the maximum amount of potential future payments the Company could be required to make, and ismake. Historically, the Company's maximummajority of the Company’s standby letters of credit risk.
Commercial Letter of Credit.A commercialexpire without being funded. However, if the commitment were funded, the Company has recourse against the customer. The Company’s standby letter of credit isagreements are often secured by cash or other collateral.
Commercial letters of credit are issued to facilitatefinance either domestic or foreign customer trade arrangements for customers.arrangements. As a general rule, drafts are committed to be drawn when the goods underlying the transaction are in transit. Similar to a standby letterletters of credit, athe Company’s commercial letter of credit isagreements are often secured by anthe underlying security agreement includinggoods subject to trade.
Allowance for Credit Losses on Unfunded Loan Commitments
An ACL is recorded under the assets or inventory to which they relate.
These commitments subject the Company to potential exposureCECL methodology and included in excess of the amounts recorded in the financial statements, and therefore, management maintains a specific reserve for unfunded credit commitments. This reserve is reported as a component of accruedAccrued expenses and other liabilities inon the accompanying Condensed Consolidated Balance Sheets.Sheets to provide for the unused portion of commitments to lend that are not unconditionally cancellable by the Company. At March 31, 2024, and December 31, 2023, the ACL on unfunded loan commitments totaled $24.5 million and $24.7 million, respectively.
Litigation
The following table provides a summary of activity in the reserve for unfunded credit commitments:
 Three months ended September 30, Nine months ended September 30,
(In thousands)2017 2016 2017 2016
Beginning balance$2,544
 $2,319
 $2,287
 $2,119
Provision charged to expense—
 172
 257
 372
Ending balance$2,544
 $2,491
 $2,544
 $2,491

Litigation
WebsterCompany is involved in routinesubject to certain legal proceedings occurringand unasserted claims and assessments in the ordinary course of business and is subject to lossbusiness. Legal contingencies related to such litigation and claims arising therefrom. Webster evaluates these contingenciesare evaluated based on information currently available, including advice of counsel and assessment of available insurance coverage. WebsterThe Company establishes an accrual for litigation and claimsspecific legal matters when a loss contingencyit determines that the likelihood of an unfavorable outcome is considered probable and the related amountloss is reasonably estimable. ThisOnce established, each accrual is periodically reviewedadjusted to reflect any subsequent developments. Legal contingencies are subject to inherent uncertainties, and unfavorable rulings may be adjusted as circumstances change. Webster also estimates certain loss contingencies for possibleoccur that could cause the Company to either adjust its litigation accrual or incur actual losses that exceed the current estimate, which ultimately could have a material adverse effect, either individually or in the aggregate, on its business, financial condition, or operating results. The Company will consider settlement of cases when it is in the best interests of the Company and claims, whether or not there is an accrued probable loss. Webster believes it has defenses to all the claims asserted against it in existing litigation matters andits stakeholders. The Company intends to defend itself in all matters.
Based upon its current knowledge, after consultation with counselclaims asserted against it, and after taking into consideration its current litigation accrual, Webstermanagement currently believes that at September 30, 2017 any reasonably possible losses,the outcome of these contingencies will not be material, either individually or in additionthe aggregate, to amounts accrued, are not material to Webster’sthe Company or its consolidated financial condition. However,position.
Federal Deposit Insurance Corporation Special Assessment
On November 29, 2023, the FDIC published a final rule implementing a special assessment for certain banks to recover losses incurred by protecting uninsured depositors of Silicon Valley Bank and Signature Bank upon their failure in lightMarch 2023. The final rule levies a special assessment to certain banks at a quarterly rate of 3.36 basis points based on their uninsured deposits balance reported as of December 31, 2022. The special assessment is to be collected for an anticipated total of eight quarterly assessment periods beginning with the uncertainties involved in such actions and proceedings, there is no assurancefirst quarter of 2024, which has a payment date of June 28, 2024. Based on the final rule, the Company had estimated that its special assessment charge was approximately $47.2 million at December 31, 2023.
72

On February 23, 2024, the Company received notification from the FDIC that the ultimate resolutionestimated loss attributable to the protection of these matters will not significantly exceeduninsured depositors at Silicon Valley Bank and Signature Bank was $20.4 billion, an increase of approximately $4.1 billion from the amounts currently accrued by Webster or thatestimated $16.3 billion described in the final rule. Based on the Company’s litigation accrual will not needevaluation of all information available at March 31, 2024, the Company recorded an additional $11.9 million towards its estimated special assessment charge. The FDIC plans to provide institutions subject to the special assessment with an updated estimate of each institution’s quarterly and total special assessment expense with its first quarter 2024 special assessment invoice, to be adjustedreleased in future periods. Such an outcome could be material to the Company’s operating results in a particular period, depending on, among other factors, the size of the loss or liability imposed and the level of the Company’s income for that period.June 2024.

73
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Note 17: Subsequent Events
The following discussion should be read in conjunction withCompany has evaluated subsequent events from the Company’s Consolidated Financial Statements and Notes thereto, for the year ended December 31, 2016, included in its 2016 Form 10-K, and in conjunction withdate of the Condensed Consolidated Financial Statements, and accompanying Notes thereto, includedthrough the date of issuance, and determined that no significant events were identified requiring recognition or disclosure.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information regarding quantitative and qualitative disclosures about market risk can be found in Item 1 of this report. Operating results forPart I within Note 12: Derivative Financial Instruments in the three and nine months ended September 30, 2017 are not necessarily indicative of the results for the full year ending December 31, 2017, or any future period.
Application of Critical Accounting Policies and Accounting Estimates
The Company’s significant accounting policies are described in Note 1Notes to the Consolidated Financial Statements includedcontained in its 2016 Form 10-K. Modifications to significant accounting policies made during the year are described in Note 1 to the Condensed ConsolidatedItem 1. Financial Statements, includedand under the section captioned “Asset/Liability Management and Market Risk” contained in Item 1 of this report. The preparation of the Condensed Consolidated Financial Statements in accordance with GAAP and practices generally applicable to the financial services industry requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, and to disclose contingent assets and liabilities. Actual results could differ from those estimates.
Management has identified the Company's most critical accounting policies as:
allowance for loan and lease losses;
fair value measurements for valuation of investments and other financial instruments;
evaluation for impairment of goodwill and other intangible assets; and
assessing the realizability of deferred tax assets and the measurement of uncertain tax positions.
These particular significant accounting policies are considered most critical in that they are important to the Company’s financial condition and results, and they require management’s subjective and complex judgment as a result of the need to make estimates about the effects of matters that are inherently uncertain. The accounting policies and estimates, including the nature of the estimates and types of assumptions used, are described throughout Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Webster's 2016 Form 10-K and Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this report.
Results of Operations
Selected financial highlights are presented in the following table:
 At or for the three months ended September 30, At or for the nine months ended September 30,
(In thousands, except per share and ratio data)2017 2016 2017 2016
Earnings:       
Net interest income$200,904
 $180,197
 $591,355
 $533,254
Provision for loan and lease losses10,150
 14,250
 27,900
 43,850
Total non-interest income65,846
 66,412
 193,439
 193,861
Total non-interest expense161,823
 156,097
 490,026
 461,320
Net income64,496
 51,817
 185,546
 149,467
Earnings applicable to common shareholders62,426
 49,634
 179,262
 142,927
Share Data:       
Weighted-average common shares outstanding - diluted92,503
 91,857
 92,412
 91,776
Diluted earnings per common share$0.67
 $0.54
 $1.94
 $1.56
Dividends and dividend equivalents declared per common share0.26
 0.25
 0.77
 0.73
Dividends declared per Series E preferred share400.00
 400.00
 1,200.00
 1,200.00
Book value per common share27.34
 26.06
 27.34
 26.06
Tangible book value per common share (non-GAAP)
21.16
 19.80
 21.16
 19.80
Selected Ratios:       
Net interest margin3.30% 3.10% 3.27% 3.10%
Return on average assets (annualized basis)
0.98
 0.82
 0.95
 0.80
Return on average common shareholders' equity (annualized basis)
9.95
 8.36
 9.67
 8.16
CET1 risk-based capital10.99
 10.48
 10.99
 10.48
Tangible common equity ratio (non-GAAP)
7.55
 7.25
 7.55
 7.25
Return on average tangible common shareholders' equity (annualized basis) (non-GAAP)
12.99
 11.24
 12.71
 11.04
Efficiency ratio (non-GAAP)
59.18
 61.43
 60.62
 61.63

The non-GAAP financial measures identified in the preceding table provide investors with information useful in understanding the Company's financial performance, performance trends and financial position. These measures are used by management for internal planning and forecasting purposes, as well as by securities analysts, investors and other interested parties to compare peer company operating performance. Management believes that the presentation, together with the accompanying reconciliations provides a complete understanding of the factors and trends affecting the Company's business and allows investors to view its performance in a similar manner. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures and results. Because non-GAAP financial measures are not standardized, it may not be possible to compare these measures with other companies that present measures having the same or similar names.
The following tables reconcile the non-GAAP financial measures with financial measures defined by GAAP:
 At September 30,
(Dollars and shares in thousands, except per share data)2017 2016
Tangible book value per common share (non-GAAP):   
Shareholders' equity (GAAP)$2,638,787
 $2,511,629
Less: Preferred stock (GAAP)122,710
 122,710
         Goodwill and other intangible assets (GAAP)568,962
 573,129
Tangible common shareholders' equity (non-GAAP)$1,947,115
 $1,815,790
Common shares outstanding92,034
 91,687
Tangible book value per common share (non-GAAP)$21.16
 $19.80
    
Tangible common equity ratio (non-GAAP):   
Tangible common shareholders' equity (non-GAAP)$1,947,115
 $1,815,790
Total Assets (GAAP)$26,350,182
 $25,633,617
Less: Goodwill and other intangible assets (GAAP)568,962
 573,129
Tangible assets (non-GAAP)$25,781,220
 $25,060,488
Tangible common equity ratio (non-GAAP)7.55% 7.25%
 Three months ended September 30, Nine months ended September 30,
(Dollars in thousands)2017 2016 2017 2016
Return on average tangible common shareholders' equity (non-GAAP):       
Net income (GAAP)$64,496
 $51,817
 $185,546
 $149,467
Less: Preferred stock dividends (GAAP)2,024
 2,024
 6,072
 6,072
Add: Intangible assets amortization, tax-affected at 35% (GAAP)651
 970
 2,005
 2,971
Income adjusted for preferred stock dividends and intangible assets amortization (non-GAAP)$63,123
 $50,763
 $181,479
 $146,366
Income adjusted for preferred stock dividends and intangible assets amortization, annualized (non-GAAP)$252,492
 $203,052
 $241,972
 $195,155
Average shareholders' equity (non-GAAP)$2,635,312
 $2,503,960
 $2,597,574
 $2,466,414
Less: Average preferred stock (non-GAAP)122,710
 122,710
 122,710
 122,710
 Average goodwill and other intangible assets (non-GAAP)569,538
 573,978
 570,562
 575,491
Average tangible common shareholders' equity (non-GAAP)$1,943,064
 $1,807,272
 $1,904,302
 $1,768,213
Return on average tangible common shareholders' equity (non-GAAP)12.99% 11.24% 12.71% 11.04%
        
Efficiency ratio (non-GAAP):       
Non-interest expense (GAAP)$161,823
 $156,097
 $490,026
 $461,320
Less: Foreclosed property activity (GAAP)(72) 45
 (141) (236)
 Intangible assets amortization (GAAP)1,002
 1,493
 3,085
 4,570
 Other expense (non-GAAP)213
 793
 2,923
 2,270
Non-interest expense (non-GAAP)$160,680
 $153,766
 $484,159
 $454,716
Net interest income (GAAP)$200,904
 $180,197
 $591,355
 $533,254
Add: Tax-equivalent adjustment (non-GAAP)4,340
 3,478
 12,509
 9,735
 Non-interest income (GAAP)65,846
 66,412
 193,439
 193,861
Less: Gain on sale of investment securities, net (GAAP)—
 —
 —
 414
 Other (non-GAAP)(431) (236) (1,377) (1,372)
Income (non-GAAP)$271,521
 $250,323
 $798,680
 $737,808
Efficiency ratio (non-GAAP)59.18% 61.43% 60.62% 61.63%

Financial Performance
Comparison to Prior Year Quarter
For the three months ended September 30, 2017, income before income tax expense of $94.8 million increased $18.5 million, or 24.3%, compared to the three months ended September 30, 2016. Net interest income increased 11.5%, the provision for loan and lease losses decreased 28.8%, non-interest income decreased 0.9%, and non-interest expense increased 3.7%.
After income tax expense of $30.3 million and $24.4 million for the three months ended September 30, 2017 and 2016, respectively, net income was $64.5 million and diluted earnings per share was $0.67 for the three months ended September 30, 2017 compared to net income of $51.8 million and diluted earnings per share of $0.54 for the three months ended September 30, 2016.
Comparison to Prior Year to Date
For the nine months ended September 30, 2017, income before income tax expense of $266.9 million increased $44.9 million, or 20.2%, compared to the nine months ended September 30, 2016. Net interest income increased 10.9%, the provision for loan and lease losses decreased 36.4%, non-interest income was flat, and non-interest expense increased 6.2%.
After income tax expense of $81.3 million and $72.5 million for the nine months ended September 30, 2017 and 2016, respectively, net income was $185.5 million and diluted earnings per share was $1.94 for the nine months ended September 30, 2017 compared to net income of $149.5 million and diluted earnings per share of $1.56 for the nine months ended September 30, 2016.

The following tables summarize daily average balances, interest, yield/rate, and net interest margin on a fully tax-equivalent basis:
 Three months ended September 30,
 2017 2016
(Dollars in thousands)Average
Balance		InterestYield/Rate Average
Balance		InterestYield/Rate
        
Assets       
Interest-earning assets:       
Loans and leases$17,364,519
$182,269
4.14% $16,423,642
$157,926
3.80%
Investment securities (based upon historical amortized cost)
6,994,661
51,130
2.92
 6,784,652
49,282
2.91
FHLB and FRB stock135,943
1,482
4.33
 185,104
1,478
3.18
Interest-bearing deposits58,193
173
1.17
 53,852
67
0.49
Loans held for sale34,939
307
3.51
 58,299
440
3.02
Total interest-earning assets24,588,255
$235,361
3.78% 23,505,549
$209,193
3.53%
Non-interest-earning assets1,721,591
   1,752,981
  
Total Assets$26,309,846
   $25,258,530
  
        
Liabilities and Shareholders' Equity       
Interest-bearing liabilities:       
Demand deposits$4,201,723
$—
—% $4,011,712
$—
—%
Savings, checking, & money market deposits14,577,673
10,229
0.28
 13,257,559
7,005
0.21
Time deposits2,155,743
6,531
1.20
 2,009,433
5,589
1.11
Total deposits20,935,139
16,760
0.32
 19,278,704
12,594
0.26
        
Securities sold under agreements to repurchase and other borrowings904,854
3,847
1.66
 909,560
3,447
1.48
FHLB advances1,362,165
6,894
1.98
 2,158,911
6,979
1.26
Long-term debt225,673
2,616
4.64
 225,414
2,498
4.43
Total borrowings2,492,692
13,357
2.11
 3,293,885
12,924
1.54
Total interest-bearing liabilities23,427,831
$30,117
0.51% 22,572,589
$25,518
0.45%
Non-interest-bearing liabilities246,703
   181,981
  
Total liabilities23,674,534
   22,754,570
�� 
        
Preferred stock122,710
   122,710
  
Common shareholders' equity2,512,602
   2,381,250
  
Total shareholders' equity2,635,312
   2,503,960
  
Total Liabilities and Shareholders' Equity$26,309,846
   $25,258,530
  
Tax-equivalent net interest income $205,244
   $183,675
 
Less: Tax-equivalent adjustments (4,340)   (3,478) 
Net interest income $200,904
   $180,197
 
Net interest margin  3.30%   3.10%
 

 Nine months ended September 30,
 2017 2016
(Dollars in thousands)Average
Balance		InterestYield/Rate Average
Balance		InterestYield/Rate
        
Assets       
Interest-earning assets:       
Loans and leases$17,225,217
$526,419
4.05% $16,101,807
$461,399
3.79%
Investment securities (based upon historical amortized cost)
7,031,738
157,550
2.98
 6,861,128
153,280
2.98
FHLB and FRB stock160,911
4,732
3.93
 188,692
4,315
3.05
Interest-bearing deposits63,684
472
0.98
 57,692
216
0.49
Loans held for sale31,373
826
3.51
 40,739
1,006
3.29
Total interest-earning assets24,512,923
$689,999
3.73% 23,250,058
$620,216
3.54%
Non-interest-earning assets1,666,080
   1,768,426
  
Total Assets$26,179,003
   $25,018,484
  
        
Liabilities and Shareholders' Equity       
Interest-bearing liabilities:       
Demand deposits$4,039,738
$—
—% $3,802,873
$—
—%
Savings, checking & money market deposits14,315,225
26,732
0.25
 13,010,427
20,481
0.21
Time deposits2,079,021
18,142
1.17
 2,027,336
16,786
1.11
Total deposits20,433,984
44,874
0.29
 18,840,636
37,267
0.26
        
Securities sold under agreements to repurchase and other borrowings884,975
10,970
1.63
 943,458
10,999
1.53
FHLB advances1,829,175
22,543
1.63
 2,340,055
21,517
1.21
Long-term debt225,607
7,748
4.58
 225,651
7,444
4.40
Total borrowings2,939,757
41,261
1.85
 3,509,164
39,960
1.50
Total interest-bearing liabilities23,373,741
$86,135
0.49% 22,349,800
$77,227
0.46%
Non-interest-bearing liabilities207,688
   202,270
  
Total liabilities23,581,429
   22,552,070
  
        
Preferred stock122,710
   122,710
  
Common shareholders' equity2,474,864
   2,343,704
  
Total shareholders' equity2,597,574
   2,466,414
  
Total Liabilities and Shareholders' Equity$26,179,003
   $25,018,484
  
Tax-equivalent net interest income $603,864
   $542,989
 
Less: Tax-equivalent adjustments (12,509)   (9,735) 
Net interest income $591,355
   $533,254
 
Net interest margin  3.27%   3.10%
 

Net interest income is the difference between interest income on earning assets, such as loans and investments, and interest expense on liabilities, such as deposits and borrowings, which are used to fund those assets. Net interest income is the Company's largest source of revenue, representing 75.4% of total revenue for the nine months ended September 30, 2017. Net interest margin is the ratio of tax-equivalent net interest income to average earning assets for the period.
Net interest income and net interest margin are impacted by the level of interest rates, mix of assets earning and liabilities paying those interest rates, and the volume of interest-earning assets and interest-bearing liabilities. These conditions are influenced by changes in economic conditions that impact interest rate policy, competitive conditions that impact loan and deposit pricing strategies, as well as the extent of interest lost to non-performing assets.
Webster manages the risk of changes in interest rates on net interest income and net interest margin through ALCO and through related interest rate risk monitoring and management policies. Four main tools are used for managing interest rate risk:
the size, duration and credit risk of the investment portfolio,
the size and duration of the wholesale funding portfolio,
off-balance sheet interest rate contracts, and
the pricing and structure of loans and deposits.
ALCO meets at least monthly to make decisions on the investment and funding portfolios based on the economic outlook, its interest rate expectations, the portfolio risk position, and other factors.
The Federal Open Market Committee increased the federal funds rate target range from 0.50-0.75% at December 31, 2016, to 0.75-1.00% effective March 16, 2017 and, to 1.00-1.25% effective June 15, 2017. See the "Asset/Liability Management and Market Risk" section for further discussion of Webster’s interest rate risk position.
Net Interest Income
Comparison to Prior Year Quarter
Net interest income totaled $200.9 million for the three months ended September 30, 2017 compared to $180.2 million for the three months ended September 30, 2016, an increase of $20.7 million. On a fully tax-equivalent basis, net interest income increased $21.6 million when compared to the same period in 2016. The increase for the three months ended September 30, 2017 was primarily the result of a significant increase in loan balances and yield improvement of 34 basis points, while investment balances remained flat but the reinvestment spreads on those assets improved. Net interest margin increased 20 basis points to 3.30% for the three months ended September 30, 2017 from 3.10% for the three months ended September 30, 2016.
Comparison to Prior Year to Date
Net interest income totaled $591.4 million for the nine months ended September 30, 2017 compared to $533.3 million for the nine months ended September 30, 2016, an increase of $58.1 million. On a fully tax-equivalent basis, net interest income increased $60.9 million when compared to the same period in 2016. The increase for the nine months ended September 30, 2017 was primarily the result of a significant increase in loan balances and yield improvement of 26 basis points, bearing greater weight on net interest margin than flat investment balances and reinvestment spreads on those assets. Net interest margin increased 17 basis points to 3.27% for the nine months ended September 30, 2017 from 3.10% for the nine months ended September 30, 2016.
Changes in Net Interest Income
The following table presents the components of the change in net interest income attributable to changes in rate and volume, and reflects net interest income on a fully tax-equivalent basis:
 Three months ended September 30, Nine months ended September 30,
 2017 vs. 2016
Increase (decrease) due to		 2017 vs. 2016
Increase (decrease) due to
(In thousands)
Rate (1)
VolumeTotal 
Rate (1)
VolumeTotal
Interest on interest-earning assets:       
Loans and leases$15,634
$8,708
$24,342
 $34,294
$30,725
$65,019
Loans held for sale47
(181)(134) 95
(215)(120)
Investments (2)
366
1,594
1,960
 897
3,987
4,884
Total interest income$16,047
$10,121
$26,168
 $35,286
$34,497
$69,783
Interest on interest-bearing liabilities:       
Deposits$3,104
$1,062
$4,166
 $5,067
$2,541
$7,608
Borrowings3,034
(2,601)433
 6,567
(5,267)1,300
Total interest expense$6,138
$(1,539)$4,599
 $11,634
$(2,726)$8,908
Net change in net interest income$9,909
$11,660
$21,569
 $23,652
$37,223
$60,875

(1)The change attributable to mix, a combined impact of rate and volume, is included with the change due to rate.
(2)Investments include: Securities, FHLB and FRB stock, and Interest-bearing deposits.

Average loans and leases for the nine months ended September 30, 2017 increased $1.1 billion compared to the average for the nine months ended September 30, 2016. The loan and lease portfolio comprised 70.3% of the average interest-earning assets at September 30, 2017 compared to 69.3% of the average interest-earning assets at September 30, 2016. The loan and lease portfolio yield increased 26 basis points to 4.05% for the nine months ended September 30, 2017 compared to the loan and lease portfolio yield of 3.79% for the nine months ended September 30, 2016. The increase in the yield on the average loan and lease portfolio is due to increased yield on floating rate loans as well as increased spreads on loan originations.
Average investments for the nine months ended September 30, 2017 increased $148.8 million compared to the average for the nine months ended September 30, 2016. The investments portfolio comprised 29.6% of the average interest-earning assets at September 30, 2017 compared to 30.6% of the average interest-earning assets at September 30, 2016. The investments portfolio yield increased 3 basis points to 2.99% for the nine months ended September 30, 2017 compared to the investments portfolio yield of 2.96% for the nine months ended September 30, 2016. The increase in the yield on the investments portfolio is primarily due to a reduction in premium amortization from slower prepayment speeds and an increased yield on floating rate securities, more than offsetting lower current market rates on investment securities purchases compared to the yield on investment securities paydowns and maturities.
Average total deposits for the nine months ended September 30, 2017 increased $1.6 billion compared to the average for the nine months ended September 30, 2016. The increase is comprised of an increase of $236.9 million in non-interest-bearing deposits and an increase of $1.4 billion in interest-bearing deposits. The increase in average interest-bearing deposits, and an improved product mix to low-cost deposits, was primarily due to health savings account deposit growth. The average cost of deposits was 0.29% for the nine months ended September 30, 2017 compared to 0.26% for the nine months ended September 30, 2016. The slight increase in the average cost of deposits is mainly the result of an increase in the rate paid on public money market accounts. Higher cost time deposits, decreased to 12.7% for the nine months ended September 30, 2017 from 13.5% for the nine months ended September 30, 2016, as a percentage of total interest-bearing deposits.
Average total borrowings for the nine months ended September 30, 2017 decreased $569.4 million compared to the average for the nine months ended September 30, 2016. Average securities sold under agreements to repurchase and other borrowings decreased $58.5 million, and average FHLB advances decreased $510.9 million as utilization of advances maturing within one year declined significantly. The average cost of borrowings increased 35 basis point to 1.85% for the nine months ended September 30, 2017 from 1.50% for the nine months ended September 30, 2016. The increase in average cost of borrowings is the result of the federal funds rate being increased three times between December 2016 and June 2017.
Cash flow hedges impacted the average cost of borrowings as follows:
 Three months ended September 30, Nine months ended September 30,
(In thousands)20172016 20172016
Interest rate swaps on repurchase agreements$—
$—
 $—
$361
Interest rate swaps on FHLB advances1,657
2,099
 5,139
6,469
Interest rate swaps on senior fixed-rate notes76
76
 229
229
Interest rate swaps on brokered CDs and deposits195
195
 585
585
Net increase to interest expense on borrowings$1,928
$2,370
 $5,953
$7,644

Provision for Loan and Lease Losses
The provision for loan and lease losses is the expense necessary to maintain the allowance for loan and lease losses at levels appropriate to absorb estimated credit losses in the loan and lease portfolio.
Comparison to Prior Year Quarter
The provision for loan and lease losses was $10.2 million for the three months ended September 30, 2017, which decreased $4.1 million compared to the three months ended September 30, 2016. The decrease in provision for loan and lease losses was primarily due to lower loan growth on a quarter comparative basis. Total net charge-offs was $7.9 million and $6.8 million for the three months ended September 30, 2017 and 2016, respectively. Higher commercial real estate and commercial net charge-offs contributed $1.3 million to the increase in net charge-offs.
Comparison to Prior Year to Date
The provision for loan and lease losses was $27.9 million for the nine months ended September 30, 2017, which decreased $16.0 million compared to the nine months ended September 30, 2016. The decrease in provision for loan and lease losses was primarily due to lower loan growth as compared to the rate for the same period in 2016. Total net charge-offs was $20.4 million and $30.9 million for the nine months ended September 30, 2017 and 2016, respectively. The decrease was primarily due to lower commercial real estate and other commercial loan related net charge-offs.
Allowance for Loan and Lease Losses
The ALLL is a significant accounting estimate that is determined through periodic and systematic detailed reviews of the Company's loan and lease portfolio. The ALLL is determined based on an analysis which assesses the inherent risk for probable losses within the portfolio. Significant judgments and estimates are necessary in the determination of the ALLL. Significant judgments include, among others, loan risk ratings and classifications, the probability of loan defaults, the net loss exposure in the event of loan defaults, the loss emergence period, the determination and measurement of impaired loans, and other quantitative and qualitative considerations.
At September 30, 2017, the ALLL totaled $201.8 million, or 1.16% of total loans and leases, as compared to $194.3 million, or 1.14% of total loans and leases, at December 31, 2016.
See the "Loans and Leases" through "Allowance for Loan and Lease Losses Methodology" sections for further details.

Non-Interest Income
 Three months ended September 30,   Nine months ended September 30,  
  Increase (decrease)  Increase (decrease)
(Dollars in thousands)20172016 AmountPercent 20172016 AmountPercent
Deposit service fees$38,321
$35,734
 $2,587
7.2 % $113,519
$105,553
 $7,966
7.5 %
Loan related fees6,346
9,253
 (2,907)(31.4) 19,898
20,563
 (665)(3.2)
Wealth and investment services7,750
7,593
 157
2.1
 22,900
21,992
 908
4.1
Mortgage banking activities2,421
4,322
 (1,901)(44.0) 8,038
11,335
 (3,297)(29.1)
Increase in cash surrender value of life insurance policies3,720
3,743
 (23)(0.6) 10,943
11,060
 (117)(1.1)
Gain on sale of investment securities, net—
—
 —
n/m
 —
414
 (414)n/m
Impairment loss recognized in earnings—
—
 —
n/m
 (126)(149) 23
n/m
Other income7,288
5,767
 1,521
26.4
 18,267
23,093
 (4,826)(20.9)
Total non-interest income$65,846
$66,412
 $(566)(0.9)% $193,439
$193,861
 $(422)(0.2)%
n/m - not meaningful
Comparison to Prior Year Quarter
Total non-interest income for the three months ended September 30, 2017 was $65.8 million, a decrease of $0.6 million, or 0.9%, compared to $66.4 million for the three months ended September 30, 2016. The decrease is primarily attributable to reductions in loan related fees and mortgage banking activities, partially offset by deposit service fee growth and higher other income.
Deposit service fees totaled $38.3 million for the three months ended September 30, 2017, compared to $35.7 million for the three months ended September 30, 2016. The increase is primarily due to increased checking account service charges and check card interchange attributable to health savings account growth and usage activity.
Loan related fees totaled $6.3 million for the three months ended September 30, 2017, compared to $9.3 million for the three months ended September 30, 2016. The decrease is primarily due to a lower syndication activity, and to a lesser extent, increased mortgage servicing rights amortization.
Mortgage banking activities totaled $2.4 million for the three months ended September 30, 2017, compared to $4.3 million for the three months ended September 30, 2016. The decrease is due to lower sales volume of conforming residential mortgage originations, driven by a decrease in refinance activity.
Other income totaled $7.3 million for the three months ended September 30, 2017, compared to $5.8 million for the three months ended September 30, 2016. The increase is primarily due to increased client hedging revenue.
Comparison to Prior Year to Date
Total non-interest income for the nine months ended September 30, 2017 was $193.4 million, a decrease of $422 thousand, or 0.2%, compared to $193.9 million for the nine months ended September 30, 2016. The decrease is primarily attributable to decreases in mortgage banking activities and other income, partially offset by increases in deposit service fees.
Deposit service fees totaled $113.5 million for the nine months ended September 30, 2017, compared to $105.6 million for the nine months ended September 30, 2016. The increase is primarily due to increased checking account service charges and check card interchange attributable to health savings account growth and usage activity.
Mortgage banking activities totaled $8.0 million for the nine months ended September 30, 2017, compared to $11.3 million for the nine months ended September 30, 2016. The decrease is due to lower volume of conforming residential mortgage originations, driven by a decrease in refinance activity.
Other income totaled $18.3 million for the nine months ended September 30, 2017, compared to $23.1 million for the nine months ended September 30, 2016. The decrease is due to a $2.7 million favorable adjustment to the fair value of the contingent receivable recognized in 2016, a decrease in net client interest rate hedging activities/hedging revenue, and partially offset by an increase in alternative investment gains.


Non-Interest Expense
 Three months ended September 30,   Nine months ended September 30,  
  Increase (decrease)  Increase (decrease)
(Dollars in thousands)

20172016 AmountPercent 20172016 AmountPercent
Compensation and benefits$89,192
$83,148
 $6,044
7.3 % $264,822
$244,089
 $20,733
8.5 %
Occupancy14,744
15,004
 (260)(1.7) 46,957
44,915
 2,042
4.5
Technology and equipment22,580
19,753
 2,827
14.3
 66,646
59,067
 7,579
12.8
Intangible assets amortization1,002
1,493
 (491)(32.9) 3,085
4,570
 (1,485)(32.5)
Marketing4,045
4,622
 (577)(12.5) 14,101
14,215
 (114)(0.8)
Professional and outside services4,030
4,795
 (765)(16.0) 11,813
11,360
 453
4.0
Deposit insurance6,344
6,177
 167
2.7
 19,701
19,596
 105
0.5
Other expense19,886
21,105
 (1,219)(5.8) 62,901
63,508
 (607)(1.0)
Total non-interest expense$161,823
$156,097
 $5,726
3.7 % $490,026
$461,320
 $28,706
6.2 %
Comparison to Prior Year Quarter
Total non-interest expense for the three months ended September 30, 2017 was $161.8 million, an increase of $5.7 million, or 3.7%, compared to $156.1 million for the three months ended September 30, 2016. The increase is primarily attributable to compensation and benefits, technology and equipment, and somewhat offset by other expense.
Compensation and benefits totaled $89.2 million for the three months ended September 30, 2017, compared to $83.1 million for the three months ended September 30, 2016. The increase is primarily due to strategic hires and annual incentives increases.
Technology and equipment totaled $22.6 million for the three months ended September 30, 2017, compared to $19.8 million for the three months ended September 30, 2016. The increase is primarily due to increased service contracts to support bank growth.
Other expense totaled $19.9 million for the three months ended September 30, 2017, compared to $21.1 million for the three months ended September 30, 2016. The decrease is a result of numerous items, none of which were individually significant.
Comparison to Prior Year to Date
Total non-interest expense for the nine months ended September 30, 2017 was $490.0 million, an increase of $28.7 million, or 6.2%, compared to $461.3 million for the nine months ended September 30, 2016. The increase is primarily attributable to compensation and benefits, occupancy, and technology and equipment.
Compensation and benefits totaled $264.8 million for the nine months ended September 30, 2017, compared to $244.1 million for the nine months ended September 30, 2016. The increase is primarily due to strategic hires as well as an increase to annual merit increases and group insurance costs.
Occupancy totaled $47.0 million for the nine months ended September 30, 2017, compared to $44.9 million for the nine months ended September 30, 2016. The increase is essentially a result of charges related to banking center optimization.
Technology and equipment totaled $66.6 million for the nine months ended September 30, 2017, compared to $59.1 million for the nine months ended September 30, 2016. The increase is primarily due to increased service contracts and additional depreciation on infrastructure to support bank growth.
Income Taxes
Webster recognized income tax expense of $30.3 million and $81.3 million reflecting effective tax rates of 31.9% and 30.5% for the three and nine months ended September 30, 2017, respectively, compared to $24.4 million and $72.5 million and 32.1% and 32.7%, for the three and nine months ended September 30, 2016, respectively.
The increases in tax expense for the three and nine months ended September 30, 2017 as compared to 2016 principally reflect the higher levels of pre-tax income in 2017, while the decreases in the effective rates in those same periods principally reflect $5.9 million of excess tax benefits recognized under ASU No. 2016-09 in the nine months ended September 30, 2017, which includes $0.5 million during the three months ended September 30, 2017.
See “Accounting Standards Adopted During 2017” section of Note 1: Summary of Significant Accounting Policies in the Notes to Condensed Consolidated Financial Statements contained elsewhere in this report for information on adoption of ASU No. 2016-09. For additional information on Webster's income taxes, including its deferred tax assets and uncertain tax positions, see Note 8 - Income Taxes in the Notes to Consolidated Financial Statements contained in the Company's 2016 Form 10-K.

Segment Reporting
Webster’s operations are organized into three reportable segments that represent its primary businesses - Commercial Banking, Community Banking and HSA Bank. These three segments reflect how executive management responsibilities are assigned, the primary businesses, the products and services provided, the type of customer served, and how discrete financial information is currently evaluated. The Corporate Treasury unit of the Company, along with adjustments required to reconcile profitability metrics to amounts reported in accordance with GAAP, are included in the Corporate and Reconciling category.
Commercial Banking is comprised of Commercial Banking and Private Banking operating segments.
Commercial Banking provides commercial and industrial lending and leasing, commercial real estate lending, and treasury and payment solutions. Specifically, Webster Bank deploys lending through middle market, commercial real estate, equipment financing, asset-based lending and specialty lending units. These groups utilize a relationship approach model throughout its footprint when providing lending, deposit, and cash management services to middle market companies. In addition, Commercial Banking serves as a referral source within Commercial Banking and to the other lines of business.
Private Banking provides local, full relationship banking that serves high net worth clients, not-for-profit organizations, and business clients for asset management, financial planning services, trust services, loan products, and deposit products. These client relationships generate fee revenue on assets under management or administration, while a majority of the relationships also include lending and/or deposit accounts which provide net interest income and other ancillary fees.
Community Banking is comprised of Personal Banking and Business Banking operating segments.
Through a distribution network, consisting of 167 banking centers and 338 ATMs, a customer care center, and a full range of web and mobile-based banking services, it serves consumer and business customers primarily throughout southern New England and into Westchester County, New York.
Personal Banking offers consumer deposit and fee-based services, residential mortgages, home equity lines/loans, unsecured consumer loans, and credit card products. In addition, investment and securities-related services, including brokerage and investment advice is offered through a strategic partnership with LPL, a broker dealer registered with the SEC, a registered investment advisor under federal and applicable state laws, a member of the FINRA, and a member of the SIPC. Webster Bank has employees located throughout its banking center network, who, through LPL, are registered representatives.
Business Banking offers credit, deposit, and cash flow management products to businesses and professional service firms with annual revenues of up to $25 million. This group builds broad customer relationships through business bankers and business certified banking center managers, supported by a team of customer care center bankers and industry and product specialists.
HSA Bank offers health savings accounts, health reimbursement accounts, flexible spending accounts, and other financial solutions. Health savings accounts are used in conjunction with high deductible health plans in order to facilitate tax advantages for account holders with respect to health care spending and retirement savings, in accordance with applicable laws. Health savings accounts are offered through employers for the benefit of their employees or directly to individual consumers and are distributed nationwide directly or through national and regional insurance carriers.
HSA Bank deposits provide long duration low-cost funding that is used to minimize the Company’s use of wholesale funding in support of the Company’s loan growth. As such, net interest income represents the difference between a funding credit allocation, reflecting the value of the duration funding, and the interest paid on deposits. In addition, non-interest revenue is generated predominantly through service fees and interchange income.
Segment Results
The 2016 segment results have been adjusted for comparability to the 2017 segment presentation for the following changes:
To further strengthen Webster's ability to deliver the totality of its products and services to the owners and executives of commercial clients and other high net worth individuals, an organizational change was made during the second quarter of 2017. Effective April 1, 2017, the head of Private Banking reports directly to the head of Commercial Banking. The current organizational structure reflects how executive management responsibilities are assigned and reviewed. As a result of this change, the Private Banking and Commercial Banking operating segments are aggregated into one reportable segment, Commercial Banking.
In late 2007 Webster discontinued its indirect residential construction lending and its indirect home equity lending outside of its primary New England market area, referred to as National Wholesale Lending. Webster placed these two portfolios into a liquidating loan portfolio included within the Corporate and Reconciling category. The balance of the home equity liquidating loan portfolio was $65.0 million at December 31, 2016. As the remainder of this portfolio has been performing in the same manner as the continuing home equity portfolio, management has decided to combine the liquidating loan portfolio with the continuing home equity loan portfolio. The combined portfolio is included in the Community Banking reportable segment.

The following tables present net income (loss), selected balance sheet information, and assets under administration/management for Webster’s reportable segments and the Corporate and Reconciling category for the periods presented:
 Three months ended September 30, Nine months ended September 30,
(In thousands)2017 2016 2017 2016
Net income (loss):       
Commercial Banking$30,357
 $31,555
 $93,827
 $80,907
Community Banking22,778
 15,121
 60,176
 45,325
HSA Bank12,856
 9,815
 35,125
 29,286
Corporate and Reconciling(1,495) (4,674) (3,582) (6,051)
Total$64,496
 $51,817
 $185,546
 $149,467
 At September 30, 2017
(In thousands)Commercial
Banking		Community BankingHSA BankCorporate and
Reconciling		Total
Total assets$9,428,676
$8,881,322
$76,090
$7,964,094
$26,350,182
Loans and leases9,291,257
8,155,063
101
—
17,446,421
Goodwill—
516,560
21,813
—
538,373
Deposits4,251,470
11,331,767
4,891,024
380,974
20,855,235
Not included in above amounts:     
Assets under administration/management1,990,988
3,231,345
1,158,601
—
6,380,934
      
 At December 31, 2016
(In thousands)Commercial
Banking		Community BankingHSA BankCorporate and
Reconciling		Total
Total assets$9,069,445
$8,721,046
$83,987
$8,198,051
$26,072,529
Loans and leases9,066,905
7,959,558
125
—
17,026,588
Goodwill—
516,560
21,813
—
538,373
Deposits3,592,531
10,970,977
4,362,503
377,846
19,303,857
Not included in above amounts:     
Assets under administration/management1,781,840
2,980,113
878,190
—
5,640,143

Commercial Banking
Operating Results:
 Three months ended September 30, Nine months ended September 30,
(In thousands)2017 2016 2017 2016
Net interest income$81,925
 $74,265
 $239,118
 $211,422
Provision for loan and lease losses12,073
 7,876
 29,562
 29,765
Net interest income after provision69,852
 66,389
 209,556
 181,657
Non-interest income13,207
 15,916
 39,163
 41,819
Non-interest expense38,339
 35,793
 113,767
 103,336
Income before income taxes44,720
 46,512
 134,952
 120,140
Income tax expense14,363
 14,957
 41,125
 39,233
Net income$30,357
 $31,555
 $93,827
 $80,907
Comparison to Prior Year Quarter
Net income decreased $1.2 million for the three months ended September 30, 2017 as compared to the same period in 2016. Net interest income increased $7.7 million, primarily due to loan growth and higher loan portfolio yield. The provision for loan and lease losses increased $4.2 million due, in part, to slight increases in allowance levels for certain portfolios. Non-interest income decreased $2.7 million primarily due to greater syndication fees in the year ago period. Non-interest expense increased $2.5 million, related to strategic hires and investments in product enhancements and infrastructure.
Comparison to Prior Year to Date
Net income increased $12.9 million for the nine months ended September 30, 2017 as compared to the same period in 2016. Net interest income increased $27.7 million, primarily due to loan growth and higher loan portfolio yield. The provision for loan and lease losses decreased $0.2 million. Non-interest income decreased $2.7 million, primarily due to greater syndication fees in the year ago period. Non-interest expense increased $10.4 million, related to strategic hires and investments in product enhancements and infrastructure.
Selected Balance Sheet Information and Assets Under Administration/Management:
(In thousands)At September 30,
2017		 At December 31,
2016
Total assets$9,428,676
 $9,069,445
Loans and leases9,291,257
 9,066,905
Deposits4,251,470
 3,592,531
Not included in above amounts:   
Assets under administration/management1,990,988
 1,781,840
Loans and leases increased $224.4 million at September 30, 2017 compared to December 31, 2016. Loan originations were $2.3 billion for the nine months ended September 30, 2017 compared to $2.1 billion for the nine months ended September 30, 2016. Management believes the reserve level is adequate to cover losses in the Commercial Banking portfolio. For additional discussion related to asset quality metrics, see the "Asset Quality" section elsewhere within this report. Deposits increased $658.9 million at September 30, 2017 compared to December 31, 2016 primarily due to the acquisition of new clients and seasonality of government deposits.
Commercial Banking held approximately $356.1 million and $271.7 million in assets under administration, and $1.6 billion and $1.5 billion in assets under management, at September 30, 2017 and December 31, 2016, respectively, related to Private Bank clients.

Community Banking
Operating Results:
 Three months ended September 30, Nine months ended September 30,
(In thousands)2017 2016 2017 2016
Net interest income$96,859
 $91,995
 $286,351
 $274,186
(Benefit) provision for loan and lease losses(1,923) 6,374
 (1,662) 14,085
Net interest income after provision98,782
 85,621
 288,013
 260,101
Non-interest income27,079
 29,130
 80,516
 83,248
Non-interest expense92,478
 92,508
 281,979
 276,045
Income before income taxes33,383
 22,243
 86,550
 67,304
Income tax expense10,605
 7,122
 26,374
 21,979
Net income$22,778
 $15,121
 $60,176
 $45,325
Comparison to Prior Year Quarter
Net income increased $7.7 million for the three months ended September 30, 2017 as compared to the same period in 2016. Net interest income increased $4.9 million, primarily due to growth in both loans and deposits, coupled with improved spreads on deposits as a result of higher interest rates. The increase was partially offset by the effects of tightening spreads on the loan portfolio. A benefit in 2017 compared to a provision for loan and lease losses in 2016 resulted in a favorable impact of $8.3 million, primarily due to loan portfolio quality improvement. Non-interest income decreased $2.1 million resulting from decreases in fees from mortgage banking activities and loan servicing income. Non-interest expense was flat compared to the three months ended September 30, 2016.
Comparison to Prior Year to Date
Net income increased $14.9 million for the nine months ended September 30, 2017 as compared to the same period in 2016. Net interest income increased $12.2 million, primarily due to growth in both loans and deposits, coupled with improved spreads on deposits as a result of higher interest rates. The overall increase was partially offset by the effects of tightening spreads on the loan portfolio. A benefit in 2017 compared to a provision for loan and lease losses in 2016 resulted in a favorable impact of $15.7 million, primarily due to loan portfolio quality improvement. Non-interest income decreased $2.7 million, primarily due to lower fees from mortgage banking activities and client interest rate hedging activities; partially offset by increased fee income from investment management activity and deposit related service charges. Non-interest expense increased $5.9 million, primarily due to increased compensation and benefits, increased investment in technology infrastructure, charges related to banking center optimization, and net deposit fraud losses; partially offset by lower marketing, and the absence in 2017 of core deposit intangible amortization, which ended in 2016.
Selected Balance Sheet Information and Assets Under Administration:
(In thousands)At September 30,
2017		 At December 31,
2016
Total assets$8,881,322
 $8,721,046
Loans8,155,063
 7,959,558
Deposits11,331,767
 10,970,977
Not included in above amounts:   
Assets under administration3,231,345
 2,980,113
Loans increased $195.5 million to $8.2 billion at September 30, 2017 compared to December 31, 2016. The net increase is related to growth inresidential mortgages and business banking loans; partially offset by net decreases in the equity and unsecured personal loans portfolios. Loan originations were $1.5 billion in the nine months ended September 30, 2017 compared to $1.7 billion for the same period in 2016. Originations decreased by $127.3 million driven by less residential mortgage originations.
Deposits increased $360.8 million at September 30, 2017 compared to December 31, 2016 due to the Boston expansion and continued growth in all major deposit product types.
Additionally, investment and securities-related services had assets under administration, in its strategic partnership with LPL, which increased $251.2 million to $3.2 billion at September 30, 2017, compared to December 31, 2016.

HSA Bank
Operating Results:
 Three months ended September 30, Nine months ended September 30,
(In thousands)2017 2016 2017 2016
Net interest income$26,713
 $20,560
 $76,339
 $60,484
Non-interest income19,371
 16,900
 58,392
 54,969
Non-interest expense27,222
 23,021
 84,211
 71,966
Income before income taxes18,862
 14,439
 50,520
 43,487
Income tax expense6,006
 4,624
 15,395
 14,201
Net income$12,856
 $9,815
 $35,125
 $29,286
Comparison to Prior Year Quarter
Net income increased $3.0 million for the three months ended September 30, 2017 as compared to the same period in 2016. Net interest income increased $6.2 million, reflecting the growth in deposits and improved deposit spread. Non-interest income increased $2.5 million due primarily to the growth in accounts. Non-interest expense increased $4.2 million primarily as a result of account growth and continued investment in key initiatives related to continuous improvement, customer service, and expanded distribution.
Comparison to Prior Year to Date
Net income increased $5.8 million for the nine months ended September 30, 2017 as compared to the same period in 2016. Net interest income increased $15.9 million, reflecting the growth in deposits and improved deposit spread. Non-interest income increased $3.4 million due to growth in accounts. Non-interest expense increased $12.2 million primarily due to increased compensation and benefit costs, increased processing costs in support of business growth as well as continued investment in key initiatives related to continuous improvement, customer service, and expanded distribution.
Selected Balance Sheet Information and Assets Under Administration:
(In thousands)At September 30,
2017		 At December 31,
2016
Total assets$76,090
 $83,987
Deposits4,891,024
 4,362,503
Not included in above amounts:   
Assets under administration1,158,601
 878,190
Deposits increased $528.5 million at September 30, 2017 compared to December 31, 2016, driven by organic growth. HSA Bank deposits accounted for 23.5% and 22.6% of the Company’s total deposits at September 30, 2017 and December 31, 2016, respectively.
Additionally, HSA Bank had $1.2 billion in assets under administration, through linked brokerage accounts, at September 30, 2017 compared to $0.9 billion at December 31, 2016, as the number of account holders with investments continues to increase.
At September 30, 2017, there were $6.1 billion in total footings, comprised of $4.9 billion in deposit balances and $1.2 billion in assets under administration balances.
Financial Condition
Webster had total assets of $26.4 billion at September 30, 2017 and $26.1 billion at December 31, 2016. Loans and leases of $17.2 billion, net of ALLL of $201.8 million, at September 30, 2017 increased $0.4 billion compared to loans and leases of $16.8 billion, net of ALLL of $194.3 million, at December 31, 2016. Total deposits of $20.9 billion at September 30, 2017 increased $1.6 billion compared to total deposits of $19.3 billion at December 31, 2016. Interest bearing deposits increased 9.4%, during the period, due to growth in health savings and money market accounts.
At September 30, 2017, total shareholders' equity of $2.6 billion increased $111.8 million compared to total shareholders' equity of $2.5 billion at December 31, 2016. Changes in shareholders' equity for the nine months ended September 30, 2017 included increases of $185.5 million in net income and $11.0 million for share-based award activity, partially offset by $71.0 million in common dividends, $6.1 million in preferred dividends, and $20.9 million purchases of treasury stock at cost.
The quarterly cash dividend to shareholders has been increased to $0.26 per common share since April 24, 2017. See the selected financial highlights under the "Results of Operations" section and Note 10: Regulatory Matters in the Notes to Condensed Consolidated Financial Statements contained elsewhere in this report for information on regulatory capital levels and ratios.

Investment Securities
Webster Bank's investment securities are managed within regulatory guidelines and corporate policy, which include limitations on aspects such as concentrations in and type of investments as well as minimum risk ratings per type of security. The OCC may establish additional individual limits on a certain type of investment if the concentration in such investment presents a safety and soundness concern. In addition to the Bank, the Holding Company also may directly hold investment securities from time-to-time.
Webster maintains, through its Corporate Treasury Unit, investment securities that are primarily structured to provide a source of liquidity for operating needs, to generate interest income, and as a means to manage interest-rate risk. Investment securities are classified into two major categories, available-for-sale and held-to-maturity. Available-for-sale consists primarily of Agency CMO, Agency MBS, Agency CMBS, CMBS, and CLO. Held-to-maturity consists primarily of Agency CMO, Agency MBS, Agency CMBS, municipal bonds and notes, and CMBS. At September 30, 2017, the Company had no holdings in obligations of individual states, counties, or municipalities which exceeded 10% of consolidated shareholders’ equity.
The combined carrying value of investment securities totaled $7.1 billion and $7.2 billion at September 30, 2017 and December 31, 2016, respectively. Available-for-sale investment securities decreased by $399.9 million, primarily due to principal paydowns exceeding principal purchase activity. Held-to-maturity investment securities increased by $336.7 million, primarily due to purchase activity exceeding principal paydowns. On a tax-equivalent basis, the yield in the investment securities portfolio for both the nine months ended September 30, 2017 and 2016 was 2.98%.
The Company held $4.4 billion in investment securities that are in an unrealized loss position at September 30, 2017. Approximately $2.7 billion of this total has been in an unrealized loss position for less than twelve months, while the remainder, $1.7 billion, has been in an unrealized loss position for twelve months or longer. The total unrealized loss was $81.9 million at September 30, 2017. These investment securities were evaluated by management and were determined not to be other than temporarily impaired. The Company does not have the intent to sell these investment securities, and it is more likely than not that it will not have to sell these investment securities before the recovery of their cost basis. To the extent that credit movements and other related factors influence the fair value of its investment securities, the Company may be required to record impairment charges for OTTI in future periods.
The following table summarizes the amortized cost and fair value of investment securities:
 At September 30, 2017 At December 31, 2016
(In thousands)
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Available-for-sale:         
U.S. Treasury Bills$3,596
$—
$—
$3,596
 $734
$—
$—
$734
Agency CMO332,341
2,573
(3,116)331,798
 419,865
3,344
(3,503)419,706
Agency MBS923,819
3,214
(14,056)912,977
 969,460
4,398
(19,509)954,349
Agency CMBS599,165
—
(14,205)584,960
 587,776
63
(14,567)573,272
CMBS402,015
1,539
(121)403,433
 473,974
4,093
(702)477,365
CLO273,172
1,572
(161)274,583
 425,083
2,826
(519)427,390
Trust preferred30,463
676
(202)30,937
 30,381
—
(1,748)28,633
Corporate debt48,334
674
(130)48,878
 108,490
1,502
(350)109,642
Available-for-sale$2,612,905
$10,248
$(31,991)$2,591,162
 $3,015,763
$16,226
$(40,898)$2,991,091
Held-to-maturity:         
Agency CMO$276,367
$1,138
$(3,030)$274,475
 $339,455
$1,977
$(3,824)$337,608
Agency MBS2,549,500
24,275
(30,012)2,543,763
 2,317,449
26,388
(41,768)2,302,069
Agency CMBS708,229
280
(3,549)704,960
 547,726
694
(1,348)547,072
Municipal bonds and notes705,411
5,213
(13,150)697,474
 655,813
4,389
(25,749)634,453
CMBS257,361
3,394
(197)260,558
 298,538
4,107
(411)302,234
Private Label MBS443
2
—
445
 1,677
12
—
1,689
Held-to-maturity$4,497,311
$34,302
$(49,938)$4,481,675
 $4,160,658
$37,567
$(73,100)$4,125,125
The benchmark 10-year U.S. Treasury rate decreased to 2.33% at September 30, 2017 from 2.45% at December 31, 2016. Webster Bank has the ability to use its investment securities, as well as interest-rate financial instruments within internal policy guidelines, to hedge and manage interest-rate risk as part of its asset/liability strategy. See Note 12: Derivative Financial Instruments in the Notes to Condensed Consolidated Financial Statements contained elsewhere in this report for additional information concerning derivative financial instruments.

Alternative Investments
Investments in Private Equity Funds. The Company has investments in private equity funds. These investments, which totaled $11.0 million at September 30, 2017 and $10.8 million at December 31, 2016, are included in other assets in the accompanying Condensed Consolidated Balance Sheets. The majority of these funds are held at cost based on ownership percentage in the fund, while some are accounted for at fair value using a net asset value. See a further discussion of fair value in Note 13: Fair Value Measurements in the Notes to Condensed Consolidated Financial Statements contained elsewhere in this report. The Company recognized a net gain of $563 thousand and a net loss of $183 thousand for the three months ended September 30, 2017 and 2016, respectively, and a net gain of $2.2 million and $186 thousand for the nine months ended September 30, 2017 and 2016, respectively. These amounts are included in other non-interest income in the accompanying Condensed Consolidated Statements of Income.
Other Non-Marketable Investments. The Company holds certain non-marketable investments, which include preferred share ownership in other equity ventures. These investments, which totaled $6.3 million at September 30, 2017 and $5.7 million at December 31, 2016, are included in other assets in the accompanying Condensed Consolidated Balance Sheets. These funds are held at cost and subject to impairment testing. The Company recorded a net gain of $17 thousand and $8 thousand for the three months ended September 30, 2017 and 2016, respectively, and a net gain of $44 thousand and $35 thousand for the nine months ended September 30, 2017 and 2016, respectively. These amounts are included in other non-interest income in the accompanying Condensed Consolidated Statements of Income.
The Volcker Rule prohibits investments in private equity funds and non-public funds that are considered Covered Funds, as defined in the regulation. On May 4, 2017, the Federal Reserve approved Webster's illiquid funds extension request. As such, compliance with the rule provisions is required by July 21, 2022. See the "Supervision and Regulation" section of Item 1. Business, contained in the Company's 2016 Form 10-K, for additional information on the Volcker Rule, including Covered Funds.
Loans and Leases
The following table provides the composition of loans and leases:
 At September 30, 2017 At December 31, 2016
(Dollars in thousands)Amount% Amount%
Residential$4,473,557
25.6 $4,232,771
24.9
Consumer:     
Home equity2,304,058
13.2 2,395,483
14.1
Other consumer247,855
1.4 274,336
1.6
Total consumer2,551,913
14.6 2,669,819
15.7
Commercial:     
Commercial non-mortgage4,482,191
25.7 4,151,740
24.4
Asset-based886,475
5.1 808,836
4.8
Total commercial5,368,666
30.8 4,960,576
29.1
Commercial real estate:     
Commercial real estate4,178,424
24.0 4,141,025
24.3
Commercial construction290,936
1.7 375,041
2.2
Total commercial real estate4,469,360
25.7 4,516,066
26.5
Equipment financing562,171
3.2 630,040
3.7
Net unamortized premiums14,780
0.1 9,402
0.1
Net deferred fees5,974
— 7,914
—
Total loans and leases$17,446,421
100.0 $17,026,588
100.0
Total residential loans were $4.5 billion at September 30, 2017, an increase of $240.8 million from December 31, 2016. The net increase is a result of direct and correspondent originations of $632.8 million, partially offset by payments and payoffs.
Total consumer loans were $2.6 billion at September 30, 2017, a decrease of $117.9 million from December 31, 2016. The net decrease is primarily due to lower utilization of home equity lines.
Total commercial loans were $5.4 billion at September 30, 2017, an increase of $408.1 million from December 31, 2016. The net increase primarily related to originations of $1.8 billion, partially offset by payments and payoffs.
Total commercial real estate loans were $4.5 billion at September 30, 2017, a decrease of $46.7 million from December 31, 2016. The net decrease is a result of originations of $570.2 million, more than offset by payments and payoffs.
Equipment financing loans and leases were $562.2 million at September 30, 2017, a decrease of $67.9 million from December 31, 2016. The net decrease was primarily related to scheduled amortization and higher prepayments, partially offset by originations of $96.3 million.

Asset Quality
Management maintains asset quality within established risk tolerance levels through its underwriting standards, servicing, and management of loan and lease performance. Loans and leases, particularly where a heightened risk of loss has been identified, are regularly monitored to mitigate further deterioration which could potentially impact key measures of asset quality in future periods. Past due loans and leases, non-performing assets, and credit loss levels are considered to be key measures of asset quality.
The following table provides key asset quality ratios:
 At September 30, 2017 At December 31, 2016
Non-performing loans and leases as a percentage of loans and leases0.94% 0.79%
Non-performing assets as a percentage of loans and leases plus OREO0.97
 0.81
Non-performing assets as a percentage of total assets0.64
 0.53
Loans and leases over 30 days past due and accruing income as a percentage of loans and leases0.19
 0.25
ALLL as a percentage of non-performing loans and leases123.32
 144.98
ALLL as a percentage of loans and leases1.16
 1.14
Net charge-offs as a percentage of average loans and leases (1)
0.16
 0.23
Ratio of ALLL to net charge-offs (1)
7.41x
 5.25x
(1)Calculated for the September 30, 2017 period based on the year-to-date net charge-offs, annualized.
Potential Problem Loans and Leases
Potential problem loans and leases are defined by management as certain loans and leases that, for;
commercial, commercial real estate, and equipment financing are performing loans and leases with a well defined weakness that jeopardizes the full repayment of the debt where there is also information which causes management to have serious concern about the ability of a borrower to comply with the present repayment terms in the future, and
residential and consumer are performing loans with a delinquency migration that approaches a period which would historically result in non-accrual status.
Potential problem loans and leases exclude loans and leases past due 90 days or more and accruing, non-accrual loans and leases, and TDRs. Management monitors potential problem loans and leases due to a higher degree of risk associated them. The current expectation of probable losses is included in the ALLL, however management cannot predict whether these potential problem loans and leases ultimately will become non-performing or result in a loss. In addition to loans and leases past due 90 days or more and accruing and TDRs, which are contained elsewhere within this section, the Company had potential problem loans and leases of $239.6 million at September 30, 2017 compared to $263.3 million at December 31, 2016.
Past Due Loans and Leases
The following table provides information regarding loans and leases past due 30 days or more and accruing income:
 At September 30, 2017 At December 31, 2016
(Dollars in thousands)Amount
% (1)
 Amount
% (1)
Residential$11,700
0.26 $11,202
0.26
Consumer:     
Home equity12,268
0.53 14,578
0.61
Other consumer3,674
1.48 3,715
1.35
Commercial non-mortgage2,302
0.05 1,949
0.05
Commercial real estate1,783
0.04 8,173
0.20
Equipment financing867
0.15 1,596
0.25
Loans and leases past due 30-89 days32,594
0.19 41,213
0.24
Loans and leases past due 90 days and accruing (2)
934
0.02 749
0.02
Total$33,528
0.19 $41,962
0.25
Deferred costs and unamortized premiums75
  86
 
Total loans and leases over 30 days past due and accruing income$33,603
  $42,048
 
(1)Represents the principal balance of loans and leases over 30 days past due and accruing income as a percentage of the outstanding principal balance within the comparable loan and lease category, and which excludes the impact of deferred costs and unamortized premiums.
(2)Loans and leases past due 90 days and accruing was exclusively commercial non-mortgage for the periods presented.

The balance of loans and leases past due 30 days or more and accruing income decreased $8.4 million at September 30, 2017 compared to December 31, 2016 and was centered in commercial real estate and consumer home equity. The ratio of loans and leases past due 30 days or more and accruing income as a percentage of loans and leases declined to 0.19% at September 30, 2017 as compared to 0.25% at December 31, 2016.
Non-performing Assets
The following table provides information regarding non-performing assets:
 At September 30, 2017 At December 31, 2016
(Dollars in thousands)Amount
% (1)
 Amount
% (1)
Residential$45,597
1.02 $47,201
1.12
Consumer:     
Home equity37,057
1.61 35,875
1.50
Other consumer1,858
0.75 1,663
0.61
Total consumer38,915
1.52 37,538
1.41
Commercial:     
Commercial non-mortgage58,942
1.32 38,550
0.93
Asset-based loans8,558
0.97 —
—
Total commercial67,500
1.26 38,550
0.78
Commercial real estate:     
Commercial real estate10,590
0.25 9,859
0.24
Commercial construction476
0.16 662
0.18
Total commercial real estate11,066
0.25 10,521
0.23
Equipment financing570
0.10 225
0.04
Total non-accrual loans and leases163,648
0.94 134,035
0.79
Deferred costs and unamortized premiums115
  (219) 
Total recorded investment in non-accrual loans and leases (2)
$163,763
  $133,816
 
      
Total non-accrual loans and leases$163,648
  $134,035
 
Foreclosed and repossessed assets:     
Residential and consumer4,986
  3,911
 
Commercial and equipment financing328
  —
 
Total foreclosed and repossessed assets$5,314
  $3,911
 
Total non-performing assets$168,962
  $137,946
 
(1)Represents the principal balance of non-accrual loans and leases as a percentage of the outstanding principal balance within the comparable loan and lease category, and which excludes the impact of deferred costs and unamortized premiums.
(2)Includes non-accrual TDRs of $82.6 million at September 30, 2017 and $75.7 million at December 31, 2016.
Non-performing assets increased $31.0 million at September 30, 2017 compared to December 31, 2016. The increase in non-performing assets at September 30, 2017 is primarily due to three middle market loans that were moved to non-accrual during the year and are being actively monitored and managed, with appropriate reserves established at the time of move to non-accrual. As a result, overall non-performing assets as a percentage of total assets increased to 0.64% at September 30, 2017 as compared to 0.53% at December 31, 2016.
The following table provides detail of non-performing loan and lease activity:
 Nine months ended September 30,
(In thousands)2017 2016
Beginning balance$134,035
 $139,941
Additions104,693
 73,990
Paydowns/draws(48,187) (46,778)
Charge-offs(21,002) (32,999)
Other reductions(5,891) (5,936)
Ending balance$163,648
 $128,218

Impaired Loans and Leases
Loans are considered impaired when it becomes probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. Impairment is evaluated on a pooled basis for smaller-balance loans of a similar nature. Consumer and residential loans for which the borrower has been discharged in Chapter 7 bankruptcy are considered collateral dependent impaired loans at the date of discharge. Commercial, commercial real estate, and equipment financing loans and leases over a specific dollar amount, risk rated substandard or worse and non-accruing, all TDRs, and all loans that have had a partial charge-off are evaluated individually for impairment.
To the extent that an impaired loan or lease balance is collateral dependent, the Company evaluates the fair value of the collateral. Impairment is calculated as the excess of the present value of estimated future cash flows using the original interest rate of the loan, or at the fair value of collateral, less estimated selling costs and other customized discounting criteria.
For residential and consumer collateral dependent loans, a third-party appraisal is obtained upon loan default. Fair value of the collateral for residential and consumer collateral dependent loans is reevaluated every six months. Fair value is also reassessed, with any excess amount charged off, for consumer loans that reach 180 days past due in accordance with Federal Financial Institutions Examination Council guidelines. For commercial, commercial real estate, and equipment financing collateral dependent loans and leases, The Company's impairment process requires obtaining a third-party appraisal or asset valuation, an interim valuation analysis, blue book reference, or other internal methods, when determining the fair value of the collateral. Fair value of the collateral for commercial loans is reevaluated quarterly. Whenever the Company has a third-party real estate appraisal performed by independent licensed appraisers, a licensed in-house appraisal officer or qualified reviewer reviews these appraisals for compliance with the Financial Institutions Reform Recovery and Enforcement Act and the Uniform Standards of Professional Appraisal Practice.
A fair value shortfall is recorded as an impairment reserve, thereby increasing the ALLL. Subsequent to an appraisal or other fair value estimate, should reliable information come to management's attention that the value has declined further, additional impairment reserves may be recorded to reflect the particular situation. Any impaired loan for which no specific valuation allowance was necessary is the result of either sufficient cash flow or sufficient collateral coverage of the book balance.
At September 30, 2017, there were 1,612 impaired loans and leases with a recorded investment balance of $270.2 million, which included loans and leases of $167.8 million with an impairment allowance of $17.8 million. This compares to 1,635 impaired loans and leases with a recorded investment balance of $249.4 million, which included loans and leases of $152.6 million, with an impairment allowance of $18.6 million at December 31, 2016. For additional information, see Note 4: Loans and Leases in the Notes to Condensed Consolidated Financial Statements contained elsewhere in this report.
Troubled Debt Restructurings
A modified loan is considered a TDR when two conditions are met: (i) the borrower is experiencing financial difficulties; and (ii) the modification constitutes a concession. Modified terms are dependent upon the financial position and needs of the individual borrower. The Company considers all aspects of the restructuring in determining whether a concession has been granted, including the debtor's ability to access market rate funds. In general, a concession exists when the modified terms of the loan are more attractive to the borrower than standard market terms. Common modifications include material changes in covenants, pricing, and forbearance. Loans for which the borrower has been discharged under Chapter 7 bankruptcy are considered collateral dependent TDRs and thus, impaired at the date of discharge and charged down to the fair value of collateral less cost to sell.
The Company’s policy is to place consumer loan TDRs, except those that were performing prior to TDR status, on non-accrual status for a minimum period of six months. Commercial TDRs are evaluated on a case-by-case basis for determination of accrual status. Loans qualify for return to accrual status once they have demonstrated performance with the restructured terms of the loan agreement for a minimum of six months. Initially, all TDRs are reported as impaired. Generally, a TDR is classified as an impaired loan and reported as a TDR for the remaining life of the loan. Impaired and TDR classification may be removed if the borrower demonstrates compliance with the modified terms for a minimum of six months and through one fiscal year-end, and the restructuring agreement specifies a market rate of interest equal to that which would be provided to a borrower with similar credit at the time of restructuring. In the limited circumstance that a loan is removed from TDR classification, it is the Company’s policy to continue to base its measure of loan impairment on the contractual terms specified by the loan agreement.

The following tables provide information for TDRs:
 Nine months ended September 30,
(In thousands)2017 2016
Beginning balance$223,528
 $272,690
Additions25,604
 32,996
Paydowns/draws(25,277) (49,906)
Charge-offs(2,999) (17,927)
Transfers to OREO(2,506) (1,853)
Ending balance$218,350
 $236,000
(In thousands)At September 30,
2017		 At December 31,
2016
Accrual status$135,774
 $147,809
Non-accrual status82,576
 75,719
Total recorded investment of TDRs$218,350
 $223,528
Specific reserves for TDRs included in the balance of ALLL$11,837
 $14,583
Additional funds committed to borrowers in TDR status3,944
 459
Overall, TDR balances decreased $5.2 million at September 30, 2017 compared to December 31, 2016. The September 30, 2017 specific reserves for TDRs declined from year end, and reflects management’s current assessment of reserve requirements.
Allowance for Loan and Lease Losses Methodology
The ALLL policy is considered a critical accounting policy. Executive management reviews and advises on the adequacy of the ALLL reserve, which is maintained at a level deemed sufficient by management to cover probable losses inherent within the loan and lease portfolios.
The quarterly process for estimating probable losses is based on predictive models, to measure the current risk profile of loan portfolio and combines other quantitative and qualitative factors together with the impairment reserve to determine the overall reserve requirement. Management's judgment and assumptions influence loss estimates and ALLL balances. Quantitative and qualitative factors that management considers include factors such as the nature and volume of portfolio growth, national and regional economic conditions and trends, other internal performance metrics, and how each of these factors is expected to impact near term loss trends. While actual future conditions and realized losses may vary significantly from assumptions, management believes the ALLL is adequate at September 30, 2017.
The Company’s methodology for assessing an appropriate level of the ALLL includes three key elements:
Impaired loans and leases are either analyzed on an individual or pooled basis and assessed for specific reserves measured based on the present value of expected future cash flows discounted at the effective interest rate of the loan or lease, except that as a practical expedient, impairment may be measured based on a loan or lease's observable market price, or the fair value of the collateral, if the loan or lease is collateral dependent. A loan or lease is collateral dependent if the repayment of the loan or lease is expected to be provided solely by the underlying collateral. The Company considers the pertinent facts and circumstances for each impaired loan or lease when selecting the appropriate method to measure impairment and evaluates, on a quarterly basis, each selection to ensure its continued appropriateness.
Loans and leases that are not considered impaired and have similar risk characteristics, are segmented into homogeneous pools and modeled using quantitative methods. The Company's loss estimate for its commercial portfolios utilizes an expected loss methodology that is based on PG and LGD models. The PD and LGD models are based on borrower and facility risk ratings assigned to each loan and are updated throughout the year as a borrower's financial condition changes. PD and LGD models are derived using the Company's portfolio specific historic data and are refreshed annually. Residential and consumer portfolio loss estimates are based on roll rate models that utilize the Company's historic delinquency and default data. For each segmentation the loss estimates incorporate a LEP model which represents an amount of time between when a loss event first occurs to when it is charged-off. An LEP is determined for each loan type based on the Company's historical experience and is reassessed at least annually.
The Company also considers qualitative factors, consistent with interagency regulatory guidance, that are not explicitly factored in the quantitative models but that can have an incremental or regressive impact on losses incurred in the current loan and lease portfolio.

At September 30, 2017 the ALLL was $201.8 million compared to $194.3 million at December 31, 2016. The increase of $7.5 million in the reserve at September 30, 2017 compared to December 31, 2016 is primarily due to growth in both commercial banking and community banking portfolios and increased reserves for certain impaired loans. The ALLL reserve remains adequate to cover inherent losses in the loan and lease portfolios. ALLL as a percentage of loans and leases, also known as the reserve coverage, increased to 1.16% at September 30, 2017 from 1.14% at December 31, 2016, reflecting an updated assessment of inherent losses and impaired reserves. ALLL as a percentage of non-performing loans and leases decreased to 123.32% at September 30, 2017 from 144.98% at December 31, 2016.
The following table provides an allocation of the ALLL by portfolio segment:
 At September 30, 2017 At December 31, 2016
(Dollars in thousands)Amount
% (1)
 Amount
% (1)
Residential$17,774
0.40 $23,226
0.55
Consumer38,144
1.49 45,233
1.68
Commercial89,594
1.68 71,905
1.46
Commercial real estate49,534
1.11 47,477
1.05
Equipment financing6,757
1.19 6,479
1.02
Total ALLL$201,803
1.16 $194,320
1.14
(1)Percentage represents allocated ALLL to total loans and leases within the comparable category. The allocation of a portion of the ALLL to one category of loans and leases does not preclude its availability to absorb losses in other categories.
The following table provides detail of activity in the ALLL:
 At or for the three months ended September 30, At or for the nine months ended September 30,
(In thousands)2017 2016 2017 2016
Beginning balance$199,578
 $180,428
 $194,320
 $174,990
Provision10,150
 14,250
 27,900
 43,850
Charge-offs:       
Residential(585) (1,304) (1,940) (3,536)
Consumer(6,197) (5,259) (18,273) (14,236)
Commercial(3,002) (2,561) (5,321) (17,294)
Commercial real estate(749) —
 (951) (2,521)
Equipment financing(121) (300) (425) (521)
Total charge-offs(10,654) (9,424) (26,910) (38,108)
Recoveries:       
Residential280
 554
 924
 1,408
Consumer1,894
 1,313
 4,337
 3,721
Commercial466
 370
 1,105
 1,143
Commercial real estate10
 194
 21
 480
Equipment financing79
 240
 106
 441
Total recoveries2,729
 2,671
 6,493
 7,193
Net charge-offs(7,925) (6,753) (20,417) (30,915)
Ending balance$201,803
 $187,925
 $201,803
 $187,925

The following table provides a summary of net charge-offs (recoveries) to average loans and leases by category:
 Three months ended September 30, Nine months ended September 30,
 2017 2016 2017 2016
(Dollars in thousands)Amount
% (1)
 Amount
% (1)
 Amount
% (1)
 Amount
% (1)
Residential$305
0.03 $750
0.07 $1,016
0.03 $2,128
0.07
Consumer4,303
0.67 3,946
0.58 13,936
0.71 10,515
0.51
Commercial2,536
0.19 2,191
0.19 4,216
0.11 16,151
0.48
Commercial real estate739
0.07 (194)(0.02) 930
0.03 2,041
0.07
Equipment financing42
0.03 60
0.04 319
0.07 80
0.02
Net charge-offs$7,925
0.18 $6,753
0.16 $20,417
0.16 $30,915
0.26
(1)Net charge-offs (recoveries) to average loans and leases, percentage calculated based on period-to-date activity, annualized.
Net charge-offs increased $1.2 million and decreased $10.5 million for the three and nine months ended September 30, 2017, respectively, as compared to the same periods in 2016. The decrease for nine months period is primarily due to improved asset quality in commercial loans. Webster Bank has credit policies and procedures in place designed to support lending activity within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. To assist management with its review, reports related to loan production, loan quality, concentrations of credit, loan delinquencies, non-performing loans, and potential problem loans are generated by loan reporting systems.
Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate and service its debt. Underwriting standards are designed to focus on and support the promotion of relationships rather than transactional banking. Once it is determined that the borrower’s management possesses sound ethics and solid business acumen, the Company examines current and projected cash flows to determine the ability of the borrower to repay obligations as agreed. Commercial and industrial loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers; however, may not be as expected, and the collateral securing these loans may fluctuate in value. Most commercial and industrial loans are secured by the assets being financed and may incorporate personal guarantees of the principals.
Commercial real estate loans are subject to underwriting standards and processes similar to commercial and industrial loans, in addition to those specific to real estate loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Repayment of these loans is largely dependent on the successful operation of the property securing the loan, the market in which the property is located, and the tenants of the property securing the loan. The properties securing the Company’s commercial real estate portfolio are diverse in terms of type and geographic location, which reduces the Company's exposure to adverse economic events that may affect a particular market. Management monitors and evaluates commercial real estate loans based on collateral, geography, and risk grade criteria. Commercial real estate loans may be adversely affected by conditions in the real estate markets or in the general economy. The Company also utilizes third-party experts to provide insight and guidance about economic conditions and trends affecting its commercial real estate loan portfolio.
Commercial construction loans have unique risk characteristics and are provided to experienced developers/sponsors with strong track records of successful completion and sound financial condition and are underwritten utilizing feasibility studies, independent appraisals, sensitivity analysis of absorption and lease rates, and financial analysis of the developers and property owners. Commercial construction loans are generally based upon estimates of costs and value associated with the complete project. These estimates may be subject to change as the construction project proceeds. In addition, these loans often include partial or full completion guarantees. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property, or an interim loan commitment from the Company until permanent financing is obtained. These loans are closely monitored with on-site inspections by third-party professionals and the Company's internal staff.
Policies and procedures are in place to manage consumer loan risk and are developed and modified, as needed. Policies and procedures, coupled with relatively small loan amounts, and predominately collateralized structures spread across many individual borrowers, minimize risk. Trend and outlook reports are reviewed by management on a regular basis. Underwriting factors for mortgage and home equity loans include the borrower’s FICO score, the loan amount relative to property value, and the borrower’s debt to income level and are also influenced by regulatory requirements. Additionally, Webster Bank originates both qualified mortgage and non-qualified mortgage loans as defined by the Consumer Financial Protection Bureau rules that went into effect on January 10, 2014.

Sources of Funds and Liquidity
Sources of Funds. The primary source of Webster Bank’s cash flow for use in lending and meeting its general operational needs is deposits. Operating activities, such as loan and mortgage-backed securities repayments, and other investment securities sale proceeds and maturities, also provide cash flow. While scheduled loan and investment security repayments are a relatively stable source of funds, loan and investment security prepayments and deposit inflows are influenced by prevailing interest rates and local economic conditions and are inherently uncertain. Additional sources of funds are provided by FHLB advances or other borrowings.
Federal Home Loan Bank and Federal Reserve Bank Stock. Webster Bank is a member of the Federal Home Loan Bank System, which consists of eleven district Federal Home Loan Banks, each subject to the supervision and regulation of the Federal Housing Finance Agency. An activity-based FHLB capital stock investment is required in order for Webster Bank to access advances and other extensions of credit for sources of funds and liquidity purposes. The FHLB capital stock investment is restricted in that there is no market for it, and it can only be redeemed by the FHLB. The FHLB recently has initiated a process to redeem the holdings of its member banks in excess of their membership and activity requirements, based on current conditions. As a result, Webster Bank held $85.6 million of FHLB capital stock at September 30, 2017 compared to $143.9 million at December 31, 2016, for its membership and for outstanding advances and other extensions of credit. On August 2, 2017, the FHLB paid a cash dividend equal to an annual yield of 4.22%.
Additionally, Webster Bank is required to hold FRB stock equal to 6% of its capital and surplus of which 50% is paid. The remaining 50% is subject to call when deemed necessary by the FRB. The FRB capital stock investment is restricted in that there is no market for it, and it can only be redeemed by the FRB. At both September 30, 2017 and December 31, 2016, Webster Bank held $50.7 million of FRB capital stock. Beginning in 2016, the semi-annual dividend payment from the FRB will be calculated as the lesser of three percent or yield of the 10-year Treasury note auctioned at the last auction held prior to the payment of the dividend.
Deposits. Webster Bank offers a wide variety of deposit products for checking and savings (including: ATM and debit card use, direct deposit, ACH payments, combined statements, mobile banking services, internet-based banking, bank by mail, as well as overdraft protection via line of credit or transfer from another deposit account) designed to meet the transactional, savings, and investment needs for both consumer and business customers throughout 167 banking centers within its primary market area. Webster Bank manages the flow of funds in its deposit accounts and provides a variety of accounts and rates consistent with FDIC regulations. Webster Bank’s Retail Pricing Committee and its Commercial and Institutional Liability Pricing Committee meet regularly to determine pricing and marketing initiatives.
Total deposits were $20.9 billion at September 30, 2017 compared to $19.3 billion at December 31, 2016. The increase is predominately related to an increase in health savings accounts of $0.5 billion and an increase in money market accounts of $0.6 billion. See Note 7: Deposits in the Notes to Condensed Consolidated Financial Statements contained elsewhere in this report for additional information.
Borrowings. Utilized as a source of funding for liquidity and interest rate risk management purposes, borrowings primarily consist of FHLB advances and securities sold under agreements to repurchase, whereby securities are delivered to counterparties under an agreement to repurchase the securities at a fixed price in the future. At September 30, 2017 and December 31, 2016, FHLB advances totaled $1.5 billion and $2.8 billion, respectively. Webster Bank had additional borrowing capacity from the FHLB of approximately $2.7 billion at September 30, 2017 compared to approximately $1.2 billion at December 31, 2016. Webster Bank also had additional borrowing capacity at the FRB of approximately $0.5 billion at September 30, 2017 and $0.6 billion at December 31, 2016. In addition, unpledged investment securities of $4.3 billion at September 30, 2017 could have been used to increase borrowing capacity by approximately $3.8 billion at the FHLB or approximately $3.8 billion at the FRB, or alternatively used for collateral on other borrowings, such as repurchase agreements.
In addition, Webster Bank may utilize term and overnight Fed funds to meet short-term liquidity needs. The Company's long-term debt consists of senior fixed-rate notes maturing in 2024 and junior subordinated notes maturing in 2033. Total borrowed funds were $2.6 billion at September 30, 2017 compared to $4.0 billion at December 31, 2016. Borrowings represented 10.0% and 15.4% of total assets at September 30, 2017 and December 31, 2016, respectively. The reduction in borrowings was primarily related to FHLB advances maturing within one year. For additional information, see Note 8: Borrowings in the Notes to Condensed Consolidated Financial Statements contained elsewhere in this report.

Liquidity. Webster meets its cash flow requirements at an efficient cost under various operating environments through proactive liquidity management at both the Holding Company and Webster Bank. Liquidity comes from a variety of cash flow sources such as operating activities, including principal and interest payments on loans and investments, or financing activities, including unpledged investment securities, which can be sold or utilized to secure funding, and new deposits. Webster is committed to maintaining a strong, increasing base of core deposits, consisting of demand, checking, savings, health savings, and money market accounts, to support growth in its loan and lease portfolio. Liquidity is reviewed and managed in order to maintain stable, cost effective funding to promote overall balance sheet strength. Net cash provided by operating activities was $300.3 million for the nine months ended September 30, 2017 as compared to $187.6 million for the nine months ended September 30, 2016. The increase is significantly a result of derivative activity and, to a lesser extent, mortgage banking activities.
Holding Company Liquidity. The primary source of liquidity at the Holding Company is dividends from Webster Bank. Webster Bank paid $80 million in dividends to the Holding Company during the nine months ended September 30, 2017. To a lesser extent, investment income, net proceeds from investment sales, borrowings, and public offerings may provide additional liquidity. The main uses of liquidity are the payment of principal and interest to holders of senior notes and capital securities, the payment of dividends to preferred and common shareholders, repurchases of its common stock, and purchases of available-for-sale investment securities. There are certain restrictions on the payment of dividends by Webster Bank to the Holding Company, which is described in the section captioned "Supervision and Regulation" in Item 1 of Webster’s 2016 Form 10-K. At September 30, 2017, there was $328.8 million of retained earnings available for the payment of dividends by Webster Bank to the Holding Company.
The Company has a common stock repurchase program authorized by the Board of Directors, with $3.9 million of remaining repurchase authority at September 30, 2017. In addition, Webster periodically acquires common shares outside of the repurchase program related to stock compensation plan activity. The Company records the purchase of shares of common stock at cost based on the settlement date for these transactions. During the nine months ended September 30, 2017, a total of 389,952 shares of common stock were repurchased for approximately $20.9 million, of which 222,000 shares were purchased under the common stock repurchase program at a cost of approximately $11.6 million, and 167,952 shares were purchased, at market prices, related to stock compensation plan activity for a cost of approximately $9.3 million.
Webster Bank Liquidity. Webster Bank's primary source of funding is core deposits. The primary use of this funding is for loan portfolio growth. Including time deposits, Webster Bank had a loan to total deposit ratio of 83.7% and 88.2% at September 30, 2017 and December 31, 2016, respectively.
Webster Bank is required by OCC regulations to maintain liquidity sufficient to ensure safe and sound operations. Whether liquidity is adequate, as assessed by the OCC, depends on such factors as the overall asset/liability structure, market conditions, competition, and the nature of the institution’s deposit and loan customers. Webster Bank exceeded all regulatory liquidity requirements as of September 30, 2017. The Company has a detailed liquidity contingency plan designed to respond to liquidity concerns in a prompt and comprehensive manner. The plan is designed to provide early detection of potential problems and details specific actions required to address liquidity stress scenarios.
Applicable OCC regulations require Webster Bank, as a commercial bank, to satisfy certain minimum leverage and risk-based capital requirements. As an OCC regulated commercial institution, it is also subject to a minimum tangible capital requirement. As of September 30, 2017, Webster Bank was in compliance with all applicable capital requirements and exceeded the FDIC requirements for a well-capitalized institution. See Note 10: Regulatory Matters in the Notes to Condensed Consolidated Financial Statements contained elsewhere in this report for a further discussion of regulatory requirements applicable to Webster Financial Corporation and Webster Bank.
The liquidity position of the Company is continuously monitored, and adjustments are made to the balance between sources and uses of funds as deemed appropriate. Management is not aware of any events that are reasonably likely to have a material adverse effect on the Company’s liquidity, capital resources, or operations. In addition, management is not aware of any regulatory recommendations regarding liquidity, which, if implemented, would have a material adverse effect on the Company.
Off-Balance Sheet Arrangements
Webster engages in a variety of financial transactions that, in accordance with GAAP, are not recorded in the financial statements or are recorded in amounts that differ from the notional amounts. Such transactions are utilized in the normal course of business, for general corporate purposes or for customer financing needs. Corporate purpose transactions are structured to manage credit, interest rate, and liquidity risks, or to optimize capital. Customer transactions are structured to manage their funding requirements or facilitate certain trade arrangements. These transactions give rise to, in varying degrees, elements of credit, interest rate, and liquidity risk. For the nine months ended September 30, 2017, Webster did not engage in any off-balance sheet transactions that would have a material effect on its financial condition. For additional information, see Note 17: Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements contained elsewhere in this report.

Asset/Liability Management and Market Risk
An effective asset/liability management process must balance the risks and rewards from both short and long-term interest rate risks in determining management strategy and action. To facilitate and manage this process, interest rate sensitivity is monitored on an ongoing basis by ALCO. The primary goal of ALCO is to manage interest rate risk to maximize net income and net economic value over time in changing interest rate environments subject to Board of Director approved risk limits. The Board of Directors sets the policy limits for earnings at risk for parallel ramps in interest rates over twelve months of plus and minus 100 and 200 basis points as well as twist shocks of plus and minus 50 and 100 basis points. Economic value, or equity at risk, limits are set for parallel shocks in interest rates of plus and minus 100 and 200 basis points. Based on the near historic lows in short-term interest rates, the declining interest rate scenarios of minus 100 basis points or more for both earnings at risk and equity at risk were temporarily suspended per ALCO policy. Effective with September 30, 2017, these scenarios were re-instituted. The results of the re-instituted minus 100 basis point scenario is outside of the established interest rate risk limit due to the impact of deposit floors. Due to the low probability of occurrence and the current level of rates, the Board of Directors has approved a temporary exception to policy. ALCO also regularly reviews earnings at risk scenarios for customized changes in rates, as well as longer-term scenarios of up to four years in the future.
Management measures interest rate risk using simulation analysis to calculate earnings and equity at risk. These risk measures are quantified using simulation software from one of the leading firms in the field of asset/liability modeling. Key assumptions relate to the behavior of interest rates and spreads, prepayment speeds, and the run-off of deposits are included in the simulation analysis. From such simulations, interest rate risk is quantified, and appropriate strategies are formulated and implemented.
Earnings at risk is defined as the change in earnings (excluding provision for loan and lease losses and income tax expense) due to changes in interest rates. Interest rates are assumed to change up or down in a parallel fashion, and earnings results are compared to a flat rate scenario as a base. The flat rate scenario holds the end of the period yield curve constant over the twelve month forecast horizon. Earnings simulation analysis incorporates assumptions about balance sheet changes such as asset and liability growth, loan and deposit pricing, and changes to the mix of assets and liabilities. It is a measure of short-term interest rate risk. Equity at risk is defined as the change in the net economic value of assets and liabilities due to changes in interest rates compared to a base net economic value. Equity at risk analyzes sensitivity in the present value of cash flows over the expected life of existing assets, liabilities, and off-balance sheet contracts. It is a measure of the long-term interest rate risk to future earnings streams embedded in the current balance sheet.
Asset sensitivity is defined as earnings or net economic value increasing compared to a base scenario when interest rates rise and decreasing when interest rates fall. In other words, assets are more sensitive to changing interest rates than liabilities and, therefore, re-price faster. Likewise, liability sensitivity is defined as earnings or net economic value decreasing compared to a base scenario when interest rates rise and increasing when interest rates fall.
Key assumptions underlying the present value of cash flows include the behavior of interest rates and spreads, asset prepayment speeds, and attrition rates on deposits. Cash flow projections from the model are compared to market expectations for similar collateral types and adjusted based on experience with Webster Bank's own portfolio. The model's valuation results are compared to observable market prices for similar instruments whenever possible. The behavior of deposit and loan customers is studied using historical time series analysis to model future customer behavior under varying interest rate environments.
The equity at risk simulation process uses multiple interest rate paths generated by an arbitrage-free trinomial lattice term structure model. The Base Case rate scenario, against which all others are compared, uses the month-end LIBOR/Swap yield curve as a starting point to derive forward rates for future months. Using interest rate swap option volatilities as inputs, the model creates multiple rate paths for this scenario with forward rates as the mean. In shock scenarios, the starting yield curve is shocked up or down in a parallel fashion. Future rate paths are then constructed in a similar manner to the Base Case.
Cash flows for all instruments are generated using product specific prepayment models and account specific system data for properties such as maturity date, amortization type, coupon rate, repricing frequency, and repricing date. The asset/liability simulation software is enhanced with a mortgage prepayment model and a Collateralized Mortgage Obligation database. Instruments with explicit options such as caps, floors, puts and calls, and implicit options such as prepayment and early withdrawal ability require such a rate and cash flow modeling approach to more accurately quantify value and risk. On the asset side, risk is impacted the most by mortgage loans and mortgage-backed securities, which can typically prepay at any time without penalty and may have embedded caps and floors. In the loan portfolio, floors are a benefit to interest income in low rate environments. Floating-rate loans at floors pay a higher interest rate than a loan at a fully indexed rate without a floor, as with a floor there is a limit on how low the interest rate can fall. As market rates rise, however, the interest rate paid on these loans does not rise until the fully indexed rate rises through the contractual floor. On the liability side, there is a large concentration of customers with indeterminate maturity deposits who have options to add or withdraw funds from their accounts at any time. Implicit floors on deposits are modeled based upon historical data. Webster Bank also has the option to change the interest rate paid on these deposits at any time.

Webster's earnings at risk model incorporates net interest income, non-interest income and expense items, some of which vary with interest rates. These items include mortgage banking income, servicing rights, cash management fees, and derivative mark-to-market adjustments.
Four main tools are used for managing interest rate risk:
the size and duration of the investment portfolio,
the size and duration of the wholesale funding portfolio,
off-balance sheet interest rate contracts, and
the pricing and structure of loans and deposits.
ALCO meets at least monthly to make decisions on the investment and funding portfolios based on the economic outlook, the Committee's interest rate expectations, the risk position, and other factors. ALCO delegates pricing and product design responsibilities to individuals and sub-committees but monitors and influences their actions on a regular basis.
Various interest rate contracts, including futures and options, interest rate swaps, and interest rate caps and floors can be used to manage interest rate risk. These interest rate contracts involve, to varying degrees, credit risk and interest rate risk. Credit risk is the possibility that a loss may occur if a counterparty to a transaction fails to perform according to the terms of the contract. The notional amount of interest rate contracts is the amount upon which interest and other payments are based. The notional amount is not exchanged, and therefore, should not be taken as a measure of credit risk. See Note 12: Derivative Financial Instruments in the Notes to Condensed Consolidated Financial Statements contained elsewhere in this report for additional information.
Certain derivative instruments, primarily forward sales of mortgage-backed securities, are utilized by Webster Bank in its efforts to manage risk of loss associated with its mortgage banking activities. Prior to closing and funds disbursement, an interest-rate lock commitment is generally extended to the borrower. During such time, Webster Bank is subject to risk that market rates of interest may change impacting pricing on loan sales. In an effort to mitigate this risk, forward delivery sales commitments are established, thereby setting the sales price.
The following table summarizes the estimated impact that gradual parallel changes in income of 100 and 200 basis points, over a twelve month period starting September 30, 2017 and December 31, 2016, might have on Webster’s NII for the subsequent twelve month period compared to NII assuming no change in interest rates:
NII-200bp-100bp+100bp+200bp
September 30, 2017N/A(6.1)%3.5%6.5%
December 31, 2016N/AN/A2.4%4.7%
The following table summarizes the estimated impact that gradual parallel changes in interest rates of 100 and 200 basis points, over a twelve month period starting September 30, 2017 and December 31, 2016, might have on Webster’s PPNR for the subsequent twelve month period compared to PPNR assuming no change in interest rates:
PPNR-200bp-100bp+100bp+200bp
September 30, 2017N/A(11.9)%5.5%10.7%
December 31, 2016N/AN/A2.9%6.3%
Interest rates are assumed to change up or down in a parallel fashion, and NII and PPNR results in each scenario are compared to a flat rate scenario as a base. The flat rate scenario holds the end of period yield curve constant over a twelve month forecast horizon. The flat rate scenario as of September 30, 2017 and December 31, 2016 assumed a Fed Funds rate of 1.25% and 0.75% respectively. Asset sensitivity for both NII and PPNR on September 30, 2017 was higher as compared to December 31, 2016, primarily due to growth in deposits, mainly health savings accounts, a reduction in borrowings and loans moving further away from floors.
Webster can also hold futures, options, and forward foreign currency contracts to minimize the price volatility of certain assets and liabilities. Changes in the market value of these positions are recognized in earnings.
The following table summarizes the estimated impact that yield curve twists or immediate non-parallel changes in interest rates might have on Webster’s NII for the subsequent twelve month period starting September 30, 2017 and December 31, 2016:
 Short End of the Yield Curve Long End of the Yield Curve
NII-100bp-50bp+50bp+100bp -100bp-50bp+50bp+100bp
September 30, 2017(8.6)%(4.3)%2.0%3.9% (4.1)%(1.8)%1.4%2.6%
December 31, 2016N/AN/A1.2%2.3% (3.8)%(1.6)%1.3%2.3%

The following table summarizes the estimated impact that immediate non-parallel changes in interest rates might have on Webster’s PPNR for the subsequent twelve month period starting September 30, 2017 and December 31, 2016:
 Short End of the Yield Curve Long End of the Yield Curve
PPNR-100bp-50bp+50bp+100bp -100bp-50bp+50bp+100bp
September 30, 2017(16.3)%(8.0)%3.2%6.3% (6.3)%(2.7)%2.3%4.5%
December 31, 2016N/AN/A1.4%2.7% (5.6)%(2.1)%1.7%3.7%
The non-parallel scenarios are modeled with the short end of the yield curve moving up or down 50 and 100 basis points, while the long end of the yield curve remains unchanged and vice versa. The short end of the yield curve is defined as terms of less than eighteen months, and the long end as terms of greater than eighteen months. These results above reflect the annualized impact of immediate rate changes.
Sensitivity to increases in the short end of the yield curve for NII and PPNR increased from December 31, 2016 due to higher forecasted health savings accounts balances, a reduction in borrowings and greater distance from loan floors. Sensitivity to decreases in the short end of the yield curve for NII and PPNR are much greater than sensitivity for increases due to the assumption of deposit floors. Sensitivity to both increases and decreases in the long end of the yield curve was essentially unchanged from December 31, 2016 in both NII and PPNR.
The following table summarizes the estimated economic value of assets, liabilities, and off-balance sheet contracts at September 30, 2017 and December 31, 2016 and the projected change to economic values if interest rates instantaneously increase or decrease by 100 basis points:
  
Book
Value
Estimated
Economic
Value
Estimated Economic Value Change
 
(Dollars in thousands)-100 bp+100 bp
September 30, 2017    
Assets$26,350,182
$25,811,516
$518,087
$(631,956)
Liabilities23,711,395
22,630,383
741,133
(633,646)
Net$2,638,787
$3,181,133
$(223,046)$1,690
Net change as % base net economic value  (7.0)%0.1 %
     
December 31, 2016    
Assets$26,072,529
$25,527,648
N/A$(633,934)
Liabilities23,545,517
22,650,967
N/A(555,854)
Net$2,527,012
$2,876,681
N/A$(78,080)
Net change as % base net economic value  N/A(2.7)%
Changes in economic value can be best described using duration. Duration is a measure of the price sensitivity of financial instruments for small changes in interest rates. For fixed-rate instruments, it can also be thought of as the weighted-average expected time to receive future cash flows. For floating-rate instruments, it can be thought of as the weighted-average expected time until the next rate reset. The longer the duration, the greater the price sensitivity for given changes in interest rates. Floating-rate instruments may have durations as short as one day and, therefore, have very little price sensitivity due to changes in interest rates. Increases in interest rates typically reduce the value of fixed-rate assets as future discounted cash flows are worth less at higher discount rates. A liability's value decreases for the same reason in a rising rate environment. A reduction in value of a liability is a benefit to Webster.
Duration gap is the difference between the duration of assets and the duration of liabilities. A duration gap near zero implies that the balance sheet is matched and would exhibit no change in estimated economic value for a small change in interest rates. Webster's duration gap was negative 0.9 years at September 30, 2017. At December 31, 2016, the duration gap was negative 0.4 years. A negative duration gap implies that liabilities are longer than assets and, therefore, they have more price sensitivity than assets and will reset their interest rates slower than assets. Consequently, Webster's net estimated economic value would generally be expected to increase when interest rates rise as the benefit of the decreased value of liabilities would more than offset the decreased value of assets. The opposite would generally be expected to occur when interest rates fall. Earnings would also generally be expected to increase when interest rates rise and decrease when interest rates fall over the longer term absent the effects of new business booked in the future. The change in Webster's duration gap is due primarily to the increase in health savings accounts and demand deposit balances as of September 30, 2017.
These estimates assume that management does not take any action to mitigate any positive or negative effects from changing interest rates. The earnings and economic values estimates are subject to factors that could cause actual results to differ. Management believes that Webster's interest rate risk position at September 30, 2017 represents a reasonable level of risk given the current interest rate outlook. Management, as always, is prepared to act in the event that interest rates do change rapidly.

Impact of Inflation and Changing Prices
The Condensed Consolidated Financial Statements and related data presented herein have been prepared in accordance with GAAP, which requires the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation.
Unlike most industrial companies, substantially all of the assets and liabilities of a banking institution are monetary in nature. As a result, interest rates have a more significant impact on Webster's performance than the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or in the same magnitude as the price of goods and services.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The required information is set forth above, in Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, see the section captioned "Asset/Liability Management and Market Risk," which is incorporated herein by reference.
ITEM 4. CONTROLS AND PROCEDURES
AsEvaluation of September 30, 2017, the Company carried out an evaluation,Disclosure Controls and Procedures
Our management, under the supervision and with the participation of the Company's management, including its Chief Executive Officer (who is our principal executive officer) and its Chief Financial Officer of(who is our principal financial officer), evaluated the effectiveness of the Company'sour disclosure controls and procedures, (asas defined in Rulesin Rule 13a-15(e) orand 15d-15(e) of the Securities Exchange Act of 1934). 1934, as amended (the “Exchange Act”), as of March 31, 2024. The term “disclosure controls and procedures” means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Based on thisthat evaluation, managementour Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2024, our disclosure controls and procedures andwere effective.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting were not effective as of September 30, 2017 as a result of an identified material weakness, as described(as defined in Rules 13a-15(f) and 15d-15(f) under the Company's 2016 Form 10-K, resulting from the aggregation of control deficiencies in management’s review of the allowance for loan loss model including certain process level controls preventing unapproved changes in modeling assumptions as well as the precision of management’s review over the valuation of allowance for loan and lease losses balance. This material weakness did not result in any misstatement of the Company's consolidated financial statements for any period presented. The Company's remediation efforts related to this material weakness are ongoing.
DuringExchange Act) during the quarter ended September 30, 2017, the company implemented a new accounting system which streamlines trade input and valuation activities related to its investment securities and derivative portfolios. The change in how transactions are processed has further enhanced process controls and procedures. In addition, as further described below, the Company continued to enhance its control environment in connection with its allowance for loan and lease loss process. Excluding these changes, there were no changes in the Company’s internal control over financial reporting that occurred during the period covered by this reportMarch 31, 2024, that have materially affected, or are reasonably likely to materially affect, the Company’sour internal control over financial reporting.
Remediation Plan for Material Weakness in Internal Control Over Financial ReportingLimitations on Effectiveness of Controls and Procedures
In response to the material weakness identified above, the Company has implemented changes toBecause of its inherent limitations, management does not expect that our disclosure controls and procedures or our internal control over financial reporting includingwill prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Further, no evaluation of controls can provide absolute assurance that misstatements due to personnel responsible for the allowance for loan loss process, strengthening the designerror or fraud will not occur or that all control issues and instances of the ALLL internal controls and enhancing communication protocols. The Company has engaged the use of a third party expert to test the operating effectiveness of the ALLL internal control environment. As of the date of this filing,fraud, if any, within the Company has not concluded that the material weakness hashave been fully remediated.detected.


74

PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, Webster and its subsidiaries are subject to certainInformation regarding legal proceedings can be found within Note 16: Commitments and claimsContingencies in the ordinary course of business. Management presently believes that the ultimate outcome of these proceedings, individually andNotes to Consolidated Financial Statements contained in the aggregate, will not be material to Webster or its consolidated financial position. Webster establishes an accrual for specific legal matters when it determines that the likelihood of an unfavorable outcomePart I - Item 1. Financial Statements, which is probable and the loss is reasonably estimable. Legal proceedings are subject to inherent uncertainties, and unfavorable rulings could occur that could cause Webster to adjust its litigation accrual or could have, individually or in the aggregate, a material adverse effect on its business, financial condition, or operating results.incorporated herein by reference.
ITEM 1A. RISK FACTORS
During the nine months ended September 30, 2017, there wereThere have been no material changes to the risk factors previously disclosed in Webster'sthe Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2023.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
The following table provides information with respect to any purchase of equity securities of Webster Financial Corporation'sfor the Company’s common stock made by or on behalf of Websterthe Company or any "affiliated“affiliated purchaser,"” as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, during the three months ended September 30, 2017:March 31, 2024:
Period
Total
Number of
Shares
Purchased (1)
Average Price
Paid Per Share (2)
Total Number of
Shares Purchased
as Part of Publicly Announced Plans
or Programs
Maximum Dollar Amount Available for Purchase Under the Plans or Programs (3)
January 1, 2024 - January 31, 202442,931$51.28—$293,356,942
February 1, 2024 - February 29, 2024273,19246.96215,824283,232,096
March 1, 2024 - March 31, 2024398,45547.35218,237272,952,140
Total714,57847.44434,061272,952,140
Period
Total
Number of
Shares
Purchased (1)
Average Price
Paid
Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Maximum
Dollar Amount Available for Repurchase
Under the Plans
or Programs (1)
 
Total
Number of
Warrants
Purchased (2)
Average Price
Paid
Per Warrant
July 1-31, 2017128,464
$52.22
128,238
$8,792,599
 —
$—
August 1-31, 201793,762
52.14
93,762
3,903,923
 —
—
September 1-30, 2017—
—
—
3,903,923
 —
—
Total222,226
52.18
222,000
3,903,923
 —
—
(1)The maximum dollar amount available for repurchase under the plans or programs, at September 30, 2017, in the table above, reflects the amount remaining under the common stock repurchase program authorized by the Company's Board(1)During the three months ended March 31, 2024, 280,517 of Directors on December 6, 2012. In addition, on October 24, 2017, the Company's Board of Directors approved a new common stock repurchase program which authorizes management to repurchase, in open market or privately negotiated transactions, subject to market conditions and other factors, up to a maximum of $100 million of common stock. Both programs will remain in effect until fully utilized or until modified, superseded, or terminated.
Of the total number of shares purchased during the three months ended September 30, 2017, 226 shares were acquired at market prices outside of the Company’s common stock repurchase program and related to stockemployee share-based compensation plan activity, at market prices.activity.
(2)On June 3, 2011, the Company announced that, with approval from its Board of Directors, it had repurchased a significant number of the warrants issued as part of Webster's participation in the U.S. Treasury's Capital Purchase Program in a public auction conducted on behalf of the U.S. Treasury. The Board approved plan provides for additional repurchases from time-to-time, as permitted by securities laws and other legal requirements. There remain 9,777 outstanding warrants to purchase a share (1:1) of the Company's common stock, which carry an exercise price of $18.28 per share and expire on November 21, 2018.
Restrictions(2)The average price paid per share is calculated on Dividendsa trade date basis and excludes commissions and other transaction costs.
Holders of the Company's(3)The Company maintains a common stock are entitled to receive such dividends asrepurchase program, which was approved by the Board of Directors may declare outon October 24, 2017, that authorizes management to purchase shares of funds legally available for such payments. Also, as a bank holding company, the ability to declare and pay dividends is dependent on certain federal regulatory considerations. See Note 10: Regulatory Matters in the Notes to Condensed Consolidated Financial Statements contained elsewhere in this report for additional information.
The Company has 5,060,000 outstanding Depository Shares, each representing 1/1000th interest in a share of 6.40% Series E Non-Cumulative Perpetual Preferred Stock, par value $.01 per share, with a liquidation preference of $25,000 per share (or $25 per depository share). The Series E Preferred Stock is redeemable at Webster's option, in whole or in part, on December 15, 2017, or any dividend payment date thereafter, or in whole but not in part, upon a "regulatory capital treatment event" as defined in the Prospectus Supplement. The terms of the Series E Preferred Stock prohibit the Company from declaring or paying any cash dividends on itsWebster common stock unlessin open market or privately negotiated transactions, through block trades, and pursuant to any adopted predetermined trading plan, subject to the availability and trading price of stock, general market conditions, alternative uses for capital, regulatory considerations, and the Company’s financial performance. On April 27, 2022, the Board of Directors increased management’s authority to repurchase shares of Webster has declared and paid full dividends oncommon stock under the Series E Preferred Stock for the most recently completed dividend period.repurchase program by $600.0 million in shares. This existing repurchase program will remain in effect until fully utilized or until modified, superseded, or terminated.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
ITEM 5. OTHER INFORMATION
Not applicableJohn Ciulla, our Chairman and Chief Executive Officer, entered into a 10b5-1 trading arrangement with a brokerage firm, intended to satisfy the affirmative defense of Rule 10b5-1(c), on February 13, 2024 for trades over a period of time from May 20, 2024 until May 20, 2025, or such earlier time as when 32,000 shares of Webster common stock are sold.
No other director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408 of Regulation S-K, during the quarter ended March 31, 2024.

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ITEM 6. EXHIBITS
TheA list of exhibits to this Quarterly Report on Form 10-Q areis set forth on the below.
Exhibit NumberExhibit DescriptionExhibit IncludedIncorporated by Reference
FormExhibitFiling Date
28-K2.14/23/2021
3Certificate of Incorporation and Bylaws.
3.110-Q3.18/9/2016
3.2.18-K3.14/28/2023
3.2.28-K3.22/1/2022
3.3
Certificate of Designations establishing the rights of the Company's 8.50% Series A Non-Cumulative Perpetual Convertible Preferred Stock
8-K3.16/11/2008
3.48-K3.111/24/2008
3.58-K3.17/31/2009
3.68-K3.27/31/2009
3.78-A12B3.312/4/2012
3.88-A12B3.312/12/2017
3.98-A12B3.42/1/2022
3.108-K3.13/17/2020
3.118-K3.52/1/2022
10.1DEF 14AA3/15/2023
31.1X
31.2X
32.1
X (1)
32.2
X (1)
101The following financial information from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, formatted in Inline Extensible Business Reporting Language (iXBRL) includes: (i) Cover Page, (ii) Condensed Consolidated Balance Sheets, (iii) Condensed Consolidated Statements Of Income, (iv) Condensed Consolidated Statements Of Comprehensive Income, (v) Condensed Consolidated Statements Of Stockholders' Equity, (vi) Condensed Consolidated Statements Of Cash Flows, and (vii) Notes to Condensed Consolidated Financial Statements, tagged in summary and in detail.X
104Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101)X
(1)Exhibit Index immediately preceding such exhibitsis furnished herewith and are incorporated herein by reference.

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
WEBSTER FINANCIAL CORPORATION
Registrant
Date: November 6, 2017By:/s/ James C. Smith
James C. Smith
Chairman and Chief Executive Officer
(Principal Executive Officer)
Date: November 6, 2017By:/s/ Glenn I. MacInnes
Glenn I. MacInnes
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Date: November 6, 2017By:/s/ Albert J. Wang
Albert J. Wang
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)


WEBSTER FINANCIAL CORPORATION
EXHIBIT INDEX
Exhibit Number Exhibit Description Filed Herewith Incorporated by Reference
   Form Exhibit Filing Date
3 Certificate of Incorporation and Bylaws.        
3.1 
Fourth Amended and Restated Certificate of Incorporation
   10-Q 3.1 8/9/2016
3.2 
Certificate of Designations establishing the rights of the Company's 8.50% Series A Non-Cumulative Perpetual Convertible Preferred Stock
   8-K 3.1 6/11/2008
3.3 
Certificate of Designations establishing the rights of the Company's Fixed Rate Cumulative Perpetual Preferred Stock, Series B
   8-K 3.1 11/24/2008
3.4 
Certificate of Designations establishing the rights of the Company's Perpetual Participating Preferred Stock, Series C
   8-K 3.1 7/31/2009
3.5 
Certificate of Designations establishing the rights of the Company's Non-Voting Perpetual Participating Preferred Stock, Series D
   8-K 3.2 7/31/2009
3.6 
Certificate of Designations establishing the rights of the Company's 6.40% Series E Non-Cumulative Perpetual Preferred Stock
   8-A12B 3.3 12/4/2012
3.7 
Bylaws, as amended effective June 9, 2014
   8-K 3.1 6/12/2014
10.1 * 
Retirement and Advisory Services Agreement, dated as of September 17, 2017, by and between Webster Financial Corporation and James C. Smith
   8-K 10.1 9/19/2017
31.1 
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by the Chief Executive Officer.
 X      
31.2 
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by the Chief Financial Officer.
 X      
32.1 + 
Written statement pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by the Chief Executive Officer.
 X      
32.2 + 
Written statement pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by the Chief Financial Officer.
 X      
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embeded within the Inline XBRL document        
101.SCH XBRL Taxonomy Extension Schema Document X      
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document X      
101.DEF XBRL Taxonomy Extension Definitions Linkbase Document X      
101.LAB XBRL Taxonomy Extension Label Linkbase Document X      
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document X      
* This exhibit is a management contract, or compensatory plan, or arrangement in which directors or executive officers are eligible to participate.
+ This exhibit shall not be deemed "filed"filed for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

72
76

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
WEBSTER FINANCIAL CORPORATION
(Registrant)
Date: May 10, 2024By:/s/ John R. Ciulla
John R. Ciulla
Chief Executive Officer, Chairman, and Director
(Principal Executive Officer)
Date: May 10, 2024By:/s/ Glenn I. MacInnes
Glenn I. MacInnes
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Date: May 10, 2024By:/s/ Albert J. Wang
Albert J. Wang
Executive Vice President and Chief Accounting Officer
(Principal Accounting Officer)

77