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 ended March 31, ~~2023~~2024

☐ 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)

______________________________________________________________________________________


Delaware						06-1187536
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

200 Elm Street, Stamford, Connecticut 06902

(Address and zip code of principal executive offices)

(203) 578-2202

(~~Registrant's~~Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbols	Name of each exchange on which registered
Common Stock, par value $0.01 per share	WBS	New York Stock Exchange
Depositary Shares, each representing 1/1000th interest in a share	WBS-PrF	New York Stock Exchange
of 5.25% Series F Non-Cumulative Perpetual Preferred Stock
Depositary Shares, each representing 1/40th interest in a share	WBS-PrG	New York Stock Exchange
of 6.50% Series G Non-Cumulative Perpetual Preferred Stock

Indicate by check mark whether the 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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit 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,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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 transition 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). ☐ Yes ☒ No

The number of shares of common stock, par value ~~$.01~~$0.01 per share, outstanding as of ~~April 28, 2023~~May 3, 2024 was ~~174,744,977.~~171,486,534.

INDEX


		Page No.

Key to Acronyms and Terms		ii
Forward-Looking Statements		iii

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	30

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	7374

Item 4.	Controls and Procedures	7374

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	75

Item 1A.	Risk Factors	75

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	75

Item 3.	Defaults Upon Senior Securities	7675

Item 4.	Mine Safety Disclosures	7675

Item 5.	Other Information	7675

Item 6.	Exhibits	7776

EXHIBIT INDEX		7776

SIGNATURES		7877

~~WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES~~

KEY TO ACRONYMS AND TERMS


ACL			Allowance for credit losses
Agency CMBS			Agency commercial mortgage-backed securities
Agency CMO			Agency collateralized mortgage obligations
Agency MBS			Agency mortgage-backed securities
ALCO			Asset/Liability Committee
Ametros			Ametros Financial Corporation
AOCI (AOCL)			Accumulated other comprehensive income (loss), net of tax
ASC			Accounting Standards Codification
ASU or the Update			Accounting Standards Update
Basel III Capital Rules			Capital rules under a global regulatory framework developed by the Basel Committee on Banking Supervision
~~Bend~~			~~Bend Financial, Inc.~~
BHC Act			Bank Holding Company Act of 1956, as amended
CECL			Current expected credit losses
CET1 ~~capital~~			Common Equity Tier 1 Capital, defined by Basel III capital rules
CET1 Risk-Based Capital			Ratio of CET1 capital to total risk-weighted assets, defined by the Basel III Capital Rules
CFPB			Consumer Financial Protection Bureau
CLO			Collateralized loan obligations
CMBS			Non-agency commercial mortgage-backed securities
COVID-19			Coronavirus
CRA			Community Reinvestment Act of 1977
DTA			Deferred tax asset
EAD			Exposure at default
FASB			Financial Accounting Standards Board
FDIC			Federal Deposit Insurance Corporation
FHLB			Federal Home Loan Bank
FICO			Fair Isaac Corporation
FRB			Federal Reserve Bank
FTE			Fully tax-equivalent
FTP			Funds Transfer Pricing, a matched maturity funding concept
GAAP			U.S. Generally Accepted Accounting Principles
Holding Company			Webster Financial Corporation
HSA			Health savings account
HSA Bank			HSA Bank, a division of Webster Bank, National Association

interLINK			Interlink Insured Sweep LLC
~~IRA~~			~~Inflation Reduction Act~~
~~ITGC~~			~~Information technology general controls~~
LGD			Loss given default
~~LIBOR~~			~~London Interbank Offered Rate~~
LIHTC			Low-income housing tax credit
MBS			Non-agency mortgage-backed securities
NAV			Net asset value
OCC			Office of the Comptroller of the Currency
~~OPEB~~			~~Other post-employment medical and life insurance benefits~~
OREO			Other real estate owned
~~PCD~~			~~Purchased credit-deteriorated~~
PD			Probability of default
PPNR			Pre-tax, pre-provision net revenue
~~PPP~~PTNR			~~Small Business Administration Paycheck Protection Program~~Pre-tax, net revenue

ROU			Right-of-use
~~SALT~~S&P			~~State~~Standard and ~~local tax~~Poor’s Rating Services

SEC			United States Securities and Exchange Commission
~~SERP~~			~~Supplemental executive defined benefit retirement plan~~
SOFR			Secured overnight financing rate
Sterling			Sterling Bancorp, collectively with its consolidated subsidiaries
~~TDR~~Tier 1 Leverage Capital			~~Troubled debt restructuring,~~Ratio of Tier 1 capital to average tangible assets, defined ~~in ASC 310-40 "Receivables - Troubled Debt Restructurings~~ by ~~Creditors"~~the Basel III Capital Rules
Tier 1 Risk-Based Capital			Ratio of Tier 1 capital to total risk-weighted assets, defined by the Basel III Capital Rules
Total Risk-Based Capital			Ratio of total capital to total risk-weighted assets, defined by the Basel III Capital Rules

UPB			Unpaid principal balance
Webster Bank or the Bank			Webster Bank, National Association, a wholly-owned subsidiary of Webster Financial Corporation
Webster or the Company			Webster Financial Corporation, collectively with its consolidated subsidiaries

~~WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES~~

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking ~~statements"~~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,” and similar references to future periods. However, these words are not the exclusive means of identifying such statements.

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 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 the 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. The 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 any forward-looking statements include, but are not limited to:

▪our ability to successfully ~~integrate the operations of Webster and Sterling and realize the anticipated benefits of the merger, including our ability to successfully complete our core conversion in the anticipated timeframe;~~

▪~~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 ~~our~~the banking industry, including due to the bank failures in 2023;

▪volatility in Webster’s stock price due to investor sentiment, including ~~following~~in light of the bank failures ~~during the first fiscal quarter~~ of 2023 and related turmoil in the ~~acquisition of such failed banks (or their assets), by stronger banks within the U.S.~~ banking ~~system;~~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, such as the war between Russia and Ukraine;~~conflict;

▪the ~~continued effects from the COVID-19 pandemic, or the potential adverse effects from future pandemics, and any governmental or societal responses thereto;~~

▪~~unforeseen events, such as natural disasters;~~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 ~~and our subsidiaries~~ 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 ~~replacement~~ability of ~~and transition from, LIBOR~~the U.S. Congress to ~~SOFR~~increase the U.S. statutory debt limit, as needed, as well as the ~~primary interest rate benchmark;~~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 ~~cyber~~cybersecurity threats ~~attacks or events,~~ 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;

▪~~our inability to remediate the material weaknesses in our internal control related to ineffective ITGCs;~~

▪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 ~~appropriately address any environmental, social, governmental,~~assess and ~~sustainability concerns that may arise from~~monitor the effect of artificial intelligence on our business ~~activities.~~and operations.

▪unforeseen events, such as pandemics or natural disasters, and any governmental or societal responses thereto;

Any forward-looking statement in this Quarterly Report on Form 10-Q speaks only as of the date on which it is made. Factors or events that could cause the ~~Company's~~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.

iii

PART I – FINANCIAL INFORMATION

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

Webster Financial Corporation is a bank holding company and financial holding company under the BHC Act, incorporated under the laws of Delaware in 1986, and headquartered in 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 Services, and Consumer Banking. While its core footprint spans the northeastern U.S. from New York to Massachusetts, certain businesses operate in extended geographies.

The following discussion and analysis provides information that management believes is necessary to understand the ~~Company's~~Company’s financial condition, results of operations, and cash flows for the three months ended March 31, ~~2023,~~2024, as compared to ~~2022.~~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~~Company’s Annual Report on Form 10-K for the year ended December 31, ~~2022, which was filed with the SEC on March 10,~~ 2023. The ~~Company's~~Company’s financial condition, results of operations, and cash flows for the three months ended March 31, ~~2023,~~2024, are not necessarily indicative of future results that may be attained for the entire year or other interim periods.

~~Executive Overview~~

~~Nature of Operations~~

Webster Financial Corporation is a bank holding company and financial holding company under the BHC Act, incorporated under the laws of Delaware in 1986, and headquartered in Stamford, Connecticut. Webster Bank, along with its HSA Bank division, is a leading commercial bank in the Northeast that delivers a wide range of digital and traditional financial solutions to businesses, individuals, families, and partners across its three differentiated lines of business: Commercial Banking, HSA Bank, and Consumer Banking. While its core footprint spans from New York to Rhode Island and Massachusetts, certain businesses operate in extended geographies. HSA Bank is one of the largest providers of employee benefit solutions in the United States.

~~Recent Industry Developments~~

During the first quarter and into the second quarter of 2023, the banking industry experienced significant volatility with multiple high-profile bank failures and industry-wide concerns related to liquidity, deposit outflows, unrealized losses on securities, and eroding consumer confidence in the banking system. Despite these negative industry developments, the Company's total deposits at March 31, 2023, were $55.3 billion, representing a net $1.2 billion increase compared to its total deposits at December 31, 2022. Additionally, the Holding Company's and the Bank's regulatory capital ratios at
March 31, 2023, remained in excess of the "well-capitalized" minimum. Additional information regarding regulatory capital ratios can be found within Note 10: Regulatory Capital and Restrictions in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements.

~~interLINK Acquisition~~

On January 11, 2023, Webster acquired interLINK, 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 expanded the Company's core deposit funding sources and scalable liquidity and added another technology-enabled channel to its already differentiated, omnichannel deposit gathering capabilities. At March 31, 2023, interLINK provided the Company with an additional $2.9 billion of money market deposits. Additional information regarding the acquisition of interLINK can be found within Note 2: Mergers and Acquisitions in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements.

~~Sterling Integration Update~~

On January 31, 2022, Webster completed its merger with Sterling. Significant progress on integration and conversion efforts were made throughout the year ended December 31, 2022, and the Company remains on track with key project milestones as of the first quarter of 2023, with a continued focus on business-as-usual operations. The significant accomplishments achieved as of the end of the first quarter of 2023 included: (i) additional systems integrations and data validation exercises; (ii) the completion of user acceptance testing; (iii) the finalization of financial center staffing and training plans; and (iv) the consolidation of bank routing numbers. The Company is prepared to complete several mock conversions in the second quarter of 2023 as it progresses towards core conversion targeted for mid-2023.

~~LIBOR Transition Update~~

The Company has a LIBOR transition plan in place that is commensurate with identified LIBOR transition risks and exposures, and is aligned with regulatory guidance and ARRC best practices. Management continued to execute according to its LIBOR transition plan during the first quarter of 2023, addressing emerging issues and risks as they arise, while closely monitoring legislative and regulatory guidance associated with the LIBOR transition.

As of the date of this Quarterly Report on Form 10-Q, the Company's main focus continues to be on the remediation of legacy LIBOR contracts, the integration of legacy Webster and legacy Sterling systems and processes, monitoring and responding to market developments, and addressing regulatory and accounting requirements. The Company will execute its actual transition of remaining LIBOR contracts to SOFR at the first rate reset date after June 30, 2023.

Results of Operations

The following table summarizes selected financial highlights and key performance indicators:


		At or for the three months ended March 31,							At or for the three months ended March 31,
(In thousands, except per share and ratio data)	(In thousands, except per share and ratio data)	2023			2022			(In thousands, except per share and ratio data)	2024		2023
Income and performance ratios:	Income and performance ratios:
Net income (loss)		$	221,004		$	(16,747)
Net income (loss) available to common stockholders		216,841			(20,178)
Earnings (loss) per diluted common share		1.24			(0.14)
Net income
Net income
Net income
Net income available to common stockholders
Earnings per diluted common share
Return on average assets (annualized)	Return on average assets (annualized)	1.22		%	(0.12)		%	Return on average assets (annualized)	1.15	%	1.22	%
Return on average tangible common stockholders' equity (annualized) (non-GAAP)		17.66			(1.36)
Return on average common stockholders' equity (annualized)		10.94			(1.25)
Return on average tangible common stockholders’ equity (annualized) (non-GAAP)
Return on average common stockholders’ equity (annualized)
Non-interest income as a percentage of total revenue	Non-interest income as a percentage of total revenue	10.62			20.88
Asset quality:	Asset quality:
ACL on loans and leases
ACL on loans and leases
ACL on loans and leases	ACL on loans and leases	$	613,914		$	569,371
Non-performing assets (1)	Non-performing assets (1)	186,551			251,206
ACL on loans and leases / total loans and leases	ACL on loans and leases / total loans and leases	1.21		%	1.31		%	ACL on loans and leases / total loans and leases	1.26	%	1.21	%
Net charge-offs / average loans and leases (annualized)	Net charge-offs / average loans and leases (annualized)	0.20			0.10
Non-performing loans and leases / total loans and leases (1)	Non-performing loans and leases / total loans and leases (1)	0.36			0.57
Non-performing assets / total loans and leases plus OREO (1)		0.37			0.58
Non-performing assets / total loans and leases plus OREO and repossessed assets (1)
ACL on loans and leases / non-performing loans and leases (1)	ACL on loans and leases / non-performing loans and leases (1)	331.81			229.48
Other ratios:	Other ratios:

Tangible common equity (non-GAAP)	Tangible common equity (non-GAAP)	7.15		%	8.26		%
Tier 1 risk-based capital		10.93			12.05
Total risk-based capital		12.99			14.41
CET1 risk-based capital		10.42			11.46
Stockholders' equity / total assets		11.08			12.55

Tangible common equity (non-GAAP)

Tangible common equity (non-GAAP)									7.15	%	7.15	%
Tier 1 Risk-Based Capital
Total Risk-Based Capital
CET1 Risk-Based Capital
Stockholders’ equity / total assets
Net interest margin	Net interest margin	3.66			3.21
Efficiency ratio (non-GAAP)	Efficiency ratio (non-GAAP)	41.64			48.73
Equity and share related:	Equity and share related:
Common equity		$	8,010,315		$	7,893,156
Common stockholders’ equity
Common stockholders’ equity
Common stockholders’ equity
Book value per common share	Book value per common share	45.85			44.32
Tangible book value per common share (non-GAAP)	Tangible book value per common share (non-GAAP)	29.47			28.94
Common stock closing price	Common stock closing price	39.42			56.12
Dividends and equivalents declared per common share	Dividends and equivalents declared per common share	0.40			0.40
Common shares issued and outstanding	Common shares issued and outstanding	174,712			178,102
Weighted-average common shares outstanding - basic	Weighted-average common shares outstanding - basic	172,766			147,394
Weighted-average common shares outstanding - diluted	Weighted-average common shares outstanding - diluted	172,883			147,394

(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.

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~~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, ~~purposes, as well as~~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~~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~~Company’s capital position. The annualized return on average tangible common ~~stockholders'~~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~~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,
	At March 31,											At March 31,
(Dollars and shares in thousands, except per share data)	(Dollars and shares in thousands, except per share data)	2023			2022			(Dollars and shares in thousands, except per share data)	2024		2023
Tangible book value per common share:	Tangible book value per common share:
Stockholders' equity		$	8,294,294		$	8,177,135
Stockholders’ equity
Stockholders’ equity
Stockholders’ equity
Less: Preferred stock	Less: Preferred stock	283,979			283,979
Common stockholders' equity		$	8,010,315		$	7,893,156
Common stockholders’ equity
Less: Goodwill and other intangible assets	Less: Goodwill and other intangible assets	2,861,310			2,738,353
Tangible common stockholders' equity		$	5,149,005		$	5,154,803
Tangible common stockholders’ equity
Common shares outstanding	Common shares outstanding	174,712			178,102
Tangible book value per common share	Tangible book value per common share	$	29.47		$	28.94
Book value per common share (GAAP)	Book value per common share (GAAP)	$	45.85		$	44.32

Tangible common equity ratio:	Tangible common equity ratio:
Tangible common stockholders' equity		$	5,149,005		$	5,154,803
Tangible common equity ratio:
Tangible common equity ratio:
Tangible common stockholders’ equity
Tangible common stockholders’ equity
Tangible common stockholders’ equity
Total assets	Total assets	$	74,844,395		$	65,131,484
Less: Goodwill and other intangible assets	Less: Goodwill and other intangible assets	2,861,310			2,738,353
Tangible assets	Tangible assets	$	71,983,085		$	62,393,131
Tangible common equity ratio	Tangible common equity ratio	7.15		%	8.26		%	Tangible common equity ratio	7.15	%	7.15	%
Total common stockholders' equity to total assets (GAAP)		10.70		%	12.12		%
Common stockholders’ equity to total assets (GAAP)								Common stockholders’ equity to total assets (GAAP)	11.11	%	10.70	%

Three months ended March 31,
(Dollars in thousands) 2023 2022
Return on average tangible common stockholders' equity:
Net income $ 221,004 $ (16,747)
Less: Preferred stock dividends 4,163 3,431
Add: Intangible assets amortization, tax-effected 7,503 5,046
Income (loss) adjusted for preferred stock dividends and intangible assets amortization $ 224,344 $ (15,132)
Income (loss) adjusted for preferred stock dividends and intangible assets amortization (annualized) $ 897,376 $ (60,528)
Average stockholders' equity $ 8,215,676 $ 6,691,490
Less: Average preferred stock 283,979 236,121
Average goodwill and other intangible assets 2,849,673 2,007,266
Average tangible common stockholders' equity $ 5,082,024 $ 4,448,103
Return on average tangible common stockholders' equity 17.66 % (1.36) %
Return on average common stockholders' equity (annualized) (GAAP) 10.94 % (1.25) %
Efficiency ratio:
Non-interest expense $ 332,467 $ 359,785
Less: Foreclosed property activities (262) (75)
Intangible assets amortization 9,497 6,387
Operating lease depreciation 1,884 1,632
Merger-related expenses 29,373 108,495
Strategic initiatives charges — (4,140)
Non-interest expense $ 291,975 $ 247,486
Net interest income $ 595,283 $ 394,248
Add: FTE adjustment 15,911 8,158
Non-interest income 70,766 104,035
Other income (1)
4,311 3,082
Less: Operating lease depreciation 1,884 1,632
(Loss) on sale of investment securities (16,747) —
Income $ 701,134 $ 507,891
Efficiency ratio 41.64 % 48.73 %
Non-interest expense as a percentage of total revenue (GAAP) 49.92 % 72.20 %


	Three months ended March 31,
(Dollars in thousands)	2024			2023
Return on average tangible common stockholders’ equity:
Net income	$	216,323		$	221,004
Less: Preferred stock dividends	4,163			4,163
Add: Intangible assets amortization, tax-effected	7,263			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 stock	283,979			283,979
Average goodwill and other intangible assets	3,090,751			2,849,673
Average tangible common stockholders’ equity	$	5,385,262		$	5,082,024
Return on average tangible common stockholders’ equity	16.30		%	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 amortization	9,194			9,497
Operating lease depreciation	663			1,884
FDIC special assessment estimate	11,862			—
Merger-related expenses (1)	3,139			29,373

Non-interest expense	$	311,395		$	291,975
Net interest income	$	567,739		$	595,283
Add: FTE adjustment	15,879			15,911
Non-interest income	99,353			70,766
Other income (2)	7,626			4,311
Less: Operating lease depreciation	663			1,884
(Loss) on sale of investment securities, net	(9,826)			(16,747)
Net gain on sale of mortgage servicing rights	11,655			—
Income	$	688,105		$	701,134
Efficiency ratio	45.25		%	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.

Net Interest Income

Net interest income is the ~~Company's~~Company’s primary source of revenue, representing ~~89.4%~~85.1% and ~~79.1%~~89.4% of total ~~revenues~~revenue for the three months ended March 31, ~~2023,~~2024, and ~~2022,~~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 aan FTE basis are considered non-GAAP financial measures, and are used by management to evaluate the comparability of the ~~Company's~~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 ~~increased $201.1~~decreased $27.6 million, or ~~51.0%~~4.6%, from ~~$394.2 million for the three months ended March 31, 2022, to~~ $595.3 million for the three months ended March 31, ~~2023. On a FTE basis, net interest income increased $208.8 million. Net interest margin increased 45 basis points from 3.21%~~2023, to $567.7 million for the three months ended March 31, ~~2022, to~~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. These increases are both primarily driven by the full quarter impact of the Sterling merger on
balances in 2023, ~~as compared~~ to ~~the two-thirds impact for the quarter in 2022, and the higher interest rate environment.~~

~~Average total interest-earning assets increased $15.8 billion, or 31.3%, from $50.3 billion~~3.35% for the three months ended March 31, ~~2022, to~~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 ~~$14.2~~$1.6 billion ~~$1.2~~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 ~~loans and leases, average investment securities, average FHLB and FRB stock, and average~~ interest-bearing deposits held at the FRB and average FHLB and FRB stock, respectively. The average yield on interest-earning assets increased ~~175~~51 basis points from ~~3.33% for the three months ended March 31, 2022, to~~ 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 ~~a decrease in~~lower purchase accounting accretion on ~~interest-earning assets~~loans and leases that were acquired ~~from Sterling.~~in the Sterling merger.

Average ~~loans and leases~~total investment securities increased ~~$14.2~~$1.6 billion, or ~~39.5%~~11.0%, from ~~$35.9~~$14.6 billion for the three months ended March 31, ~~2022,~~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 ~~the full quarter impact of the Sterling merger on balances~~commercial real estate and residential mortgage growth in 2023, ~~as compared to the two-thirds impact for the quarter~~partially offset by a decrease in ~~2022, and organic loan growth.~~mortgage warehouse loans. At March 31, ~~2023,~~2024, and ~~2022,~~2023, average loans and leases comprised ~~75.8%~~74.8% and ~~71.4%~~75.8% of average total interest-earning assets, respectively. The average yield on loans and leases increased ~~190~~44 basis points from ~~3.90% for the three months ended March 31, 2022, to~~ 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 ~~a decrease in~~lower purchase accounting accretion on loans and leases that were acquired ~~from Sterling.~~

Average total investment securities increased $1.2 billion, or 9.0%, from $13.4 billion for the three months ended March 31, 2022, to $14.6 billion for the three months ended March 31, 2023, primarily due to the full quarter impact ofin the Sterling merger on balances in 2023 as compared to the two-thirds impact for the quarter in 2022. At March 31, 2023, and 2022, the average total investment securities portfolio comprised 22.1% and 26.7% of average total interest-earning assets, respectively. The average yield on total investment securities increased 77 basis points from 2.02% for the three months ended March 31, 2022, to 2.79% for the three months ended March 31, 2023, primarily due to the reinvestment of securities that had matured or were sold in the current period at higher yields.

Average FHLB and FRB stock increased $0.3 billion, or 176.1%, from $0.2 billion for the three months ended March 31, 2022, to $0.5 billion for the three months ended March 31, 2023, primarily due to the additional FHLB stock investment required as a result of the increase in FHLB advances. At March 31, 2023, and 2022, average FHLB and FRB stock comprised 0.7% and 0.3% of total average interest-earning assets, respectively. The average yield on average FHLB and FRB stock increased 234 basis points from 2.00% for the three months ended March 31, 2022, to 4.34% for the three months ended March 31, 2023, primarily due to the higher interest rate environment.merger.

Average interest-bearing deposits held at the FRB ~~increased $0.1~~decreased $0.3 billion, or ~~12.5%~~36.3%, from ~~$0.8 billion for three months ended March 31, 2022, to~~ $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 ~~strategic decision~~Company's risk management approach to ~~maintain additional liquidity.~~hold higher levels of on-balance sheet liquidity in 2023. At March 31, ~~2023,~~2024, and ~~2022,~~2023, average interest-bearing deposits held at the FRB comprised ~~1.4%~~0.8% and ~~1.6%~~1.4% of total average interest-earning assets, respectively. The average yield on interest-bearing deposits held at the FRB increased ~~440~~75 basis points from ~~0.23% for the three months ended March 31, 2022, to~~ 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.

Average total interest-bearing liabilities increased ~~$15.1~~$2.0 billion, or ~~31.9%~~3.3%, from ~~$47.4 billion for the three months ended March 31, 2022, to~~ $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 ~~increases~~an increase of ~~$8.9 billion, $5.7 billion, $0.7 billion, and $0.2~~$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, ~~and average long-term debt, partially offset by a $0.4 billion decrease in~~ average securities sold under agreements to ~~repurchase.~~repurchase, and average long-term debt, respectively. The average rate on interest-bearing liabilities increased ~~139~~87 basis points from ~~0.13% for the three months ended March 31, 2022, to~~ 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 ~~$8.9~~$5.8 billion, or ~~19.4%~~10.5%, from ~~$45.9 billion for the three months ended March 31, 2022, to~~ $54.8 billion for the three months ended March 31, 2023, to $60.6 billion for the three months ended March 31, 2024, reflecting ~~increases~~an increase of ~~$1.4 billion and $7.5~~$7.8 billion in
~~non-interest-bearing deposits and~~ interest-bearing deposits, ~~respectively.~~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 ~~the full quarter impact~~growth in interLINK, money market deposits, and retail certificates of ~~the Sterling merger on balances in 2023 as compared to the two-thirds impact for the quarter in 2022, and the acquisition of interLINK,~~deposit, partially offset by ~~the effect of customers rebalancing their deposit concentrations due to the current banking environment.~~decreases in average non-interest-bearing and savings deposits. At March 31, ~~2023,~~2024, and ~~2022,~~2023, average total deposits comprised ~~87.7%~~93.9% and ~~96.9%~~87.7% of total average interest-bearing liabilities, respectively. The average rate on deposits increased ~~104~~112 basis points from ~~0.07% for the three months ended March 31, 2022, to~~ 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. Higher cost time~~products, such as money market accounts and certificates of deposit. Time deposits as a percentage of average total
interest-bearing deposits increased from ~~7.3% for the three months ended March 31, 2022, to~~ 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 ~~checking and~~ savings ~~products~~accounts into higher rate certificates of ~~deposit products.~~deposits.

Average FHLB advances ~~increased $5.7~~decreased $3.0 billion, or 52.6%, from ~~$10.9 million for the three months ended March 31, 2022, to~~ $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 ~~short-term funding needs and~~ the ~~strategic decision~~Company’s risk management approach to ~~maintain additional liquidity.~~hold higher levels of on-balance sheet liquidity in 2023. At March 31, ~~2023,~~2024, and ~~2022,~~2023, average FHLB advances comprised ~~9.1%~~4.2% and ~~less than one percent~~9.1% of average total interest-bearing liabilities, respectively. The average rate on FHLB advances to repurchase increased ~~277~~70 basis points from ~~2.03% for the three months ended March 31, 2022, to~~ 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 ~~were~~decreased $0.6 billion, or 79.1%, from $0.7 billion for the three months ended March 31, 2023, and had an average rate of 4.62%. There were no average federal funds purchased for the three months ended March 31, 2022. At March 31, 2023, average federal funds purchased comprised 1.1% of average total interest-bearing liabilities.

~~Average long-term debt increased $0.2 billion, or 19.6%, from $0.9~~to $0.1 billion for the three months ended March 31, ~~2022, to $1.1 billion for the three months ended March 31, 2023,~~2024, primarily due to the ~~full quarter impact of~~additional liquidity generated from the ~~Sterling merger on balances in 2023 as compared to the two-thirds impact~~interLINK deposit sweep program, which allowed for the ~~quarter~~Company to decrease its federal funds borrowing volume in ~~2022.~~ 2023.
At March 31, 2024, and 2023, average federal funds purchased comprised 0.2% and ~~2022, average long-term debt comprised 1.7% and 1.9%~~1.1% of average total interest-bearing liabilities, respectively. The average rate on ~~long-term debt~~federal funds purchased increased 3185 basis points from ~~3.34% for the three months ended March 31, 2022, to 3.65%~~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 ~~full quarter~~higher interest rate ~~impact in 2023 of the subordinated debt assumed from Sterling as compared to the two-thirds impact for the quarter in 2022.~~environment.

Average securities sold under agreements to repurchase decreased ~~$0.4~~$0.1 billion, or ~~57.7%~~46.4% from ~~$0.6 billion for the three months ended March 31, 2022, to~~ $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 ~~the Company's extinguishment of its two long-term structured repurchase agreements during the third quarter of 2022, and the timing of maturities.~~short-term liquidity management needs. At March 31, ~~2023,~~2024, and ~~2022,~~2023, average securities sold under agreements to repurchase comprised ~~0.4%~~0.2% and ~~1.2%~~0.4% of total average interest-bearing liabilities, respectively. The average rate on securities sold under agreements to repurchase ~~decreased 55~~increased 41 basis points from ~~0.66% for the three months ended March 31, 2022, to~~ 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 ~~Company's extinguishment~~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 ~~two~~4.375% senior fixed rate notes in February 2024. At March 31, 2024, and 2023, average long-term ~~structured repurchase agreements during~~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 ~~third quarter of 2022, which were contracted at a higher cost.~~three months ended March 31, 2024, and 2023.

The following table summarizes daily average balances, interest, and average yield/rate by major category, and net interest margin on aan FTE basis:


		Three months ended March 31,														Three months ended March 31,
		2023						2022								2024												2023
(Dollars in thousands)	(Dollars in thousands)	Average Balance		Interest Income/Expense		Average Yield/Rate		Average Balance		Interest Income/Expense		Average Yield/Rate		(Dollars in thousands)		Average Balance			Interest Income/Expense			Average Yield/Rate						Average Balance			Interest Income/Expense			Average Yield/Rate

Assets	Assets
Assets
Assets
Interest-earning assets:
Interest-earning assets:
Interest-earning assets:	Interest-earning assets:
Loans and leases (1)	Loans and leases (1)	$	50,095,192	$	725,543	5.80	%	$	35,912,829	$	349,417	3.90	%
Loans and leases (1)
Loans and leases (1)																$	50,938,418		$	801,864		6.24		%				$	50,095,192		$	725,543		5.80		%
Investment securities: (2)	Investment securities: (2)
Taxable
Taxable
Taxable	Taxable	12,093,477		92,290		2.91		11,461,292		57,467		2.02
Non-taxable	Non-taxable	2,539,768		13,684		2.16		1,960,251		9,802		2.00
Total investment securities	Total investment securities	14,633,245		105,974		2.79		13,421,543		67,269		2.02
FHLB and FRB stock	FHLB and FRB stock	459,375		4,910		4.34		166,357		821		2.00
Interest-bearing deposits (3)	Interest-bearing deposits (3)	898,884		10,396		4.63		799,265		453		0.23
Loans held for sale	Loans held for sale	4,630		16		1.39		17,918		26		0.58
Total interest-earning assets	Total interest-earning assets	66,091,326		$	846,839	5.08	%	50,317,912		$	417,986	3.33	%	Total interest-earning assets		68,111,578			$	967,729		5.59	5.59	%				66,091,326			$	846,839		5.08	5.08	%

Non-interest-earning assets	Non-interest-earning assets	6,225,199						4,490,665
Non-interest-earning assets
Non-interest-earning assets
Total assets
Total assets
Total assets	Total assets	$	72,316,525					$	54,808,577

Liabilities and Stockholders' Equity
Liabilities and Stockholders’ Equity

Liabilities and Stockholders’ Equity

Liabilities and Stockholders’ Equity
Interest-bearing liabilities:	Interest-bearing liabilities:
Interest-bearing liabilities:
Interest-bearing liabilities:
Demand deposits
Demand deposits
Demand deposits	Demand deposits	$	12,629,928	$	—	—	%	$	11,263,282	$	—	—	%	$	10,582,416		$	—		—	—	%				$	12,629,928		$	—		—	—	%
Health savings accounts	Health savings accounts	8,292,450		3,027		0.15		7,759,465		1,087		0.06
Interest-bearing checking, money market, and savings	Interest-bearing checking, money market, and savings	29,853,370		123,048		1.67		24,316,436		5,019		0.08
Time deposits	Time deposits	4,024,472		24,129		2.43		2,544,286		1,293		0.21
Total deposits	Total deposits	54,800,220		150,204		1.11		45,883,469		7,399		0.07

Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	243,848		67		0.11		577,039		956		0.66
Securities sold under agreements to repurchase
Securities sold under agreements to repurchase
Federal funds purchased	Federal funds purchased	671,175		7,760		4.62		—		—		—
Other borrowings		—		—		—		—		1		—

FHLB advances
FHLB advances
FHLB advances	FHLB advances	5,673,826		68,126		4.80		10,936		56		2.03
Long-term debt (2)	Long-term debt (2)	1,072,252		9,488		3.65		896,310		7,168		3.34

Total borrowings
Total interest-bearing liabilities	Total interest-bearing liabilities	62,461,321		$	235,645	1.52	%	47,367,754		$	15,580	0.13	%	Total interest-bearing liabilities		64,506,742			$	384,111		2.39	2.39	%				62,461,321			$	235,645		1.52	1.52	%
Non-interest-bearing liabilities	Non-interest-bearing liabilities	1,639,528						749,333
Total liabilities	Total liabilities	64,100,849						48,117,087
Total liabilities
Total liabilities

Preferred stock	Preferred stock	283,979						236,121
Common stockholders' equity		7,931,697						6,455,369
Total stockholders' equity		8,215,676						6,691,490
Total liabilities and stockholders' equity		$	72,316,525					$	54,808,577

Preferred stock

Preferred stock
Common stockholders’ equity
Common stockholders’ equity
Common stockholders’ equity
Total stockholders’ equity
Total stockholders’ equity
Total stockholders’ equity
Total liabilities and stockholders’ equity
Total liabilities and stockholders’ equity
Total liabilities and stockholders’ equity
Net interest income (FTE)
Net interest income (FTE)
Net interest income (FTE)	Net interest income (FTE)			$	611,194					$	402,406
Less: FTE adjustment	Less: FTE adjustment			(15,911)						(8,158)
Less: FTE adjustment
Less: FTE adjustment
Net interest income
Net interest income
Net interest income	Net interest income			$	595,283					$	394,248
Net interest margin (FTE)	Net interest margin (FTE)					3.66	%					3.21	%
Net interest margin (FTE)
Net interest margin (FTE)																									3.35		%										3.66	%

(1)Non-accrual loans have been included in the computation of average balances.

(2)For the ~~purposes~~purpose of our average yield/rate and margin computations, unsettled trades on investment securities, ~~and~~ unrealized ~~gain (loss) balances~~gains (losses) on available-for-sale investment securities, and ~~senior fixed-rate note~~basis adjustments on long-term debt from de-designated fair value hedges are excluded.

(3)Interest-bearing deposits are ~~included as~~ a component of Cash and cash equivalents on the Condensed Consolidated Statements of Cash Flows included in Part I - Item 1. Financial Statements.

The following table summarizes the change in net interest income attributable to changes in rate and volume, and reflects net interest income on aan FTE basis:


		Three months ended March 31,
		2023 vs. 2022 Increase (decrease) due to
		Three months ended March 31,
		Three months ended March 31,
		Three months ended March 31,
	2024 vs. 2023 Increase (decrease) due to
(In thousands)
(In thousands)
(In thousands)	(In thousands)	Rate (1)		Volume		Total
Change in interest on interest-earning assets:	Change in interest on interest-earning assets:
Change in interest on interest-earning assets:
Change in interest on interest-earning assets:
Loans and leases	Loans and leases	$	232,942	$	143,184	$	376,126
Loans and leases
Loans and leases
Investment securities
Investment securities
Investment securities	Investment securities	32,571		6,134		38,705

FHLB and FRB stock	FHLB and FRB stock	2,642		1,447		4,089

FHLB and FRB stock

FHLB and FRB stock
Interest-bearing deposits
Interest-bearing deposits
Interest-bearing deposits	Interest-bearing deposits	9,887		56		9,943
Loans held for sale	Loans held for sale	1		(11)		(10)
Loans held for sale
Loans held for sale
Total interest income	Total interest income	$	278,043	$	150,810	$	428,853
Total interest income
Total interest income
Change in interest on interest-bearing liabilities:
Change in interest on interest-bearing liabilities:
Change in interest on interest-bearing liabilities:	Change in interest on interest-bearing liabilities:

Health savings accounts	Health savings accounts	$	1,865	$	75	$	1,940

Health savings accounts

Health savings accounts
Interest-bearing checking, money market, and savings
Interest-bearing checking, money market, and savings
Interest-bearing checking, money market, and savings	Interest-bearing checking, money market, and savings	116,121		1,908		118,029
Time deposits	Time deposits	22,374		462		22,836
Time deposits
Time deposits
Securities sold under agreements to repurchase
Securities sold under agreements to repurchase
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	(337)		(552)		(889)
Federal funds purchased	Federal funds purchased	7,760		—		7,760
Other borrowings		(1)		—		(1)
Federal funds purchased
Federal funds purchased

FHLB advances

FHLB advances

FHLB advances	FHLB advances	39,304		28,766		68,070
Long-term debt	Long-term debt	850		1,470		2,320
Long-term debt
Long-term debt
Total interest expense
Total interest expense
Total interest expense	Total interest expense	$	187,936	$	32,129	$	220,065
Net change in net interest income	Net change in net interest income	$	90,107	$	118,681	$	208,788
Net change in net interest income
Net change in net interest income

(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 ~~totaled~~decreased $1.2 million, or 2.7%, from $46.7 ~~million and $188.8~~ million for the three months ended March 31, 2023, ~~and 2022, respectively.~~to $45.5 million for the three months ended March 31, 2024. The balance for the three months ended March 31, ~~2022,~~2023, included a one-time merger related charge of $6.8 million, which increased the ~~establishment of the initial ACL of $175.1 million~~provision for ~~non-PCD loans and leases that were acquired from Sterling in the merger.~~unfunded loan commitments. Excluding this charge, the provision for credit losses increased ~~$33.0~~$5.6 million, primarily due to the impact of the current macroeconomic environment on credit performance, risk rating migration, and ~~organic~~ loan growth.

During the three months ended March 31, 2023, and 2022, total net charge-offs were $24.5 million and $8.9 million, respectively. The net increase of $15.6 million is primarily due to an increase in net charge-offs in the asset-based lending and commercial real estate categories, partially offset by a decrease in net charge-offs in the commercial non-mortgage category.

Additional information regarding the ~~Company's~~Company’s provision for credit losses and ACL can be found under the sections captioned ~~"Loans~~“Loans and ~~Leases"~~Leases” through ~~"Allowance~~“Allowance for Credit Losses on Loans and ~~Leases"~~Leases” contained elsewhere in this
Item 2. ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Non-Interest Income

Three months ended March 31,

(In thousands)

2023

2022

(In thousands)

Deposit service fees

45,436

47,827

Loan and lease related fees

23,005

22,679

Loan and lease related fees

Wealth and investment services

6,587

10,597

Mortgage banking activities

428

Increase in cash surrender value of life insurance policies

6,728

6,732

(Loss) on sale of investment securities

(16,747)

—

Wealth and investment services

Cash surrender value of life insurance policies

(Loss) on sale of investment securities, net

Other income

5,698

15,772

Total non-interest income

70,766

104,035

Total non-interest income

Total non-interest income ~~decreased $33.2~~increased $28.6 million, or ~~32.0%~~40.4%, from ~~$104.0 million for the three months ended March 31, 2022, to~~ $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 ~~a loss~~an increase in Other income and lower net losses on sale of investment securities, ~~and~~partially offset by decreases in ~~other income, wealth~~Loan and ~~investment services,~~lease related fees and ~~deposit~~Deposit service fees.

~~During~~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 ~~which resulted in $20.5 million of gross realized losses.~~during the three months ended March 31, 2023. The ~~$16.7 million loss on sale of investment securities~~amount included in non-interest income ~~represents~~reflects the portion of the total ~~charge~~loss that was not attributed to a decline in credit quality. ~~There were no sales of available-for-sale securities during the three months ended March 31, 2022.~~

~~Other income~~Loan and lease related fees decreased ~~$10.1~~$3.2 million, or ~~63.9%~~14.1%, from ~~$15.8 million for the three months ended March 31, 2022, to $5.7~~$23.0 million for the three months ended March 31, 2023, ~~primarily due~~ to ~~lower income generated from customer interest rate derivative activities and direct investments.~~

~~Wealth and investment services decreased $4.0 million, or 37.8%, from $10.6~~$19.8 million for the three months ended March 31, ~~2022, to $6.6 million for the three months ended March 31, 2023,~~2024, primarily due to lower ~~net investment services income, which is a direct result of the outsourcing of the consumer investment services platform effective as of the fourth quarter of 2022.~~loan servicing fees.

Deposit service fees decreased ~~$2.4~~$2.8 million, or ~~5.0%~~6.3%, from ~~$47.8 million for the three months ended March 31, 2022, to~~ $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 ~~and cash management/analysis~~ fees, partially offset by higher ~~interchange income.~~cash management fees.

Non-Interest Expense

Three months ended March 31,

(In thousands)

2023

2022

(In thousands)

Compensation and benefits

173,200

184,002

Occupancy

20,171

18,615

Occupancy

Technology and equipment

44,366

55,401

Intangible assets amortization

9,497

6,387

Intangible assets amortization

Marketing

3,476

3,509

Professional and outside services

32,434

54,091

Professional and outside services

Deposit insurance

12,323

5,222

Other expense

37,000

32,558

Other expense

Total non-interest expense

332,467

359,785

Total non-interest expense

Total non-interest expense ~~decreased $27.3~~increased $3.4 million, or ~~7.6%~~1.0%, from ~~$359.8 million for the three months ended March 31, 2022, to~~ $332.5 million for the three months ended March 31, 2023, ~~primarily due~~ to decreases in professional and outside services, technology and equipment, and compensation and benefits, partially offset by increases in other expense, deposit insurance, and intangible assets amortization.

~~Professional and outside services decreased $21.7 million, or 40.0%, from $54.1~~$335.9 million for the three months ended March 31, ~~2022,~~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, ~~primarily due~~ to ~~a $24.4 million decrease in merger-related expenses, particularly as it relates to advisory and legal fees, partially offset by an increase in other professional fees.~~

~~Technology and equipment decreased $11.0 million, or 19.9%, from $55.4~~$13.0 million for the three months ended March 31, ~~2022, to $44.4 million for the three months ended March 31, 2023,~~2024, primarily due to a ~~$20.8 million~~ decrease in ~~merger-related expenses, particularly~~technology consulting fees, which were higher in 2023 as it relates to contract termination costs. Included in the balance for the three months ended
March 31, 2023, is a ~~reduction of $4.8 million to a previously recorded technology-related contract termination charge resulting from a change in the expected use of certain services post core conversion.~~

Compensation and benefits decreased $10.8 million, or 5.9%, from $184.0 million for the three months ended March 31, 2022, to $173.2 million for the three months ended March 31, 2023, primarily due to a $30.5 million decrease in merger-related expenses, particularly as it relates to severance and retention, and the outsourcingresult of the ~~consumer investment services platform effective as~~core conversion of the ~~fourth quarter of 2022, partially offset by the full quarter impact in 2023 of salaries~~legacy Webster and ~~incentives from the~~legacy Sterling ~~merger compared to a two-thirds impact for the quarter in 2022.~~platforms.

Other expense ~~increased $4.4~~decreased $5.6 million, or ~~13.6%~~15.1%, from ~~$32.6 million for the three months ended March 31, 2022, to~~ $37.0 million for the three months ended March 31, 2023, ~~primarily due~~ to the full quarter impact in 2023 of other expenses from the Sterling merger compared to the two-thirds impact for the quarter in 2022, partially offset by a $3.9 million decrease in merger-related expenses, particularly as it relates to disposals on property and equipment. Included in the balance reported for the three months ended March 31, 2023, is a reduction of $1.7 million to a previously recorded contract termination charge resulting from a decrease in volume usage.

~~Deposit insurance increased $7.1 million, or 136.0%, from $5.2~~$31.4 million for the three months ended March 31, ~~2022, to $12.3 million for the three months ended March 31, 2023,~~2024, primarily due to ~~the increased initial base deposit insurance assessment rate schedules adopted by the FDIC, which took effect as of the first quarter of 2023 for all insured depository institutions,~~a decrease in pension expense and ~~asset growth.~~other miscellaneous expenses.

Intangible assets amortization increased $3.1 million, or 48.7%, from $6.4 million for the three months ended March 31, 2022, to $9.5 million for the three months ended March 31, 2023, due to the amortization expense related to the broker dealer relationship and non-competition agreement intangible assets recorded in connection with the interLINK acquisition, and the full quarter impact in 2023 of accelerated amortization on core deposits and customer relationship intangible assets recorded in connection with the Sterling merger and Bend acquisition.

Income Taxes

The Company recognized income tax expense of ~~$65.8~~$69.3 million and ~~an income tax benefit of $33.6~~$65.8 million for the three months ended March 31, ~~2023,~~2024, and ~~2022,~~2023, respectively, reflecting aneffective 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 ~~23.0% for~~$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, ~~and an effective tax benefit rate of 66.7% for the three months ended March 31, 2022.~~

~~The income tax benefit of $33.6 million for the first quarter of 2022 reflected the recognition of the pre-tax net loss and the tax~~which included benefits ~~associated with the~~related to Sterling merger with Sterling, making comparisons to the current period not meaningful. The $65.8 million of income tax expense and the 23.0% effective tax rate for the first quarter of 2023 reflects the application of an estimated annual effective tax rate of 22.3% for 2023 and the recognition of discrete items during the period.related costs.

Additional information regarding the ~~Company's~~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~~Company’s Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

Segment Reporting

The ~~Company's operations are organized into~~Company has three reportable segments, ~~that represent~~which reflect its primary ~~businesses:~~differentiated lines of business: Commercial Banking, ~~HSA Bank,~~Healthcare Financial Services, and Consumer Banking. ~~These segments reflect how executive management responsibilities are assigned, how discrete financial information~~Segment performance is evaluated ~~the type of customer served, and how products and services are provided. Segments are evaluated~~ using ~~PPNR.~~PPNR, or PTNR, as appropriate. Certain Treasury activities ~~including~~and other functional divisions, such as information technology, human resources, risk management, bank operations, and the operations of interLINK, ~~along with the~~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. ~~Additional~~

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 ~~regarding~~of the ~~Company's reportable segments~~HSA Bank and ~~its segment reporting methodology can be found within Note 16: Segment Reporting in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements.~~Ametros businesses.

The following is a description of the Company’s three reportable segments and their primary ~~services:~~services at March 31, 2024:

Commercial Banking serves businesses with more than $2$10 million of revenue through its Commercial Real Estate, ~~and~~ Equipment Finance, Middle Market, ~~Business~~Regional Banking, Asset-Based Lending, ~~and~~ Commercial Services, Public Sector Finance, ~~Mortgage Warehouse,~~ Sponsor and Specialty Finance, Verticals and Support, Private Banking, and Treasury Management business units.

~~HSA Bank~~Healthcare Financial Services offers ~~a comprehensive~~ consumer-directed healthcare ~~solution~~solutions that includes HSAs, health reimbursement arrangements, the administration of medical insurance claim settlements, flexible spending accounts, and commuter benefits. HSAs 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 savings, in accordance with applicable laws. HSAsAccounts are distributed nationwide directly to employers and individual consumers, as well as through national and regional insurance carriers, benefit consultants, and financial advisors. HSA Bank deposits provide long duration, low-cost funding that is used to minimize the Company’s use of wholesale funding in support of its loan growth. In addition, non-interest revenue is generated predominantly through service fees and interchange income.

Consumer Banking ~~serves individual customers~~offers consumer deposit and ~~small businesses with less than $2 million of revenues by offering consumer deposits,~~fee-based services, residential mortgages, home equity lines, secured and unsecured loans, debit and credit card products, and investment ~~services.~~services to individual consumers and small businesses through its Consumer Lending and Business Banking business units. Consumer Banking operates a distribution network consisting of ~~201~~196 banking centers and ~~351~~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~~metro and ~~Suburban~~suburban markets.

Additional information regarding the Company’s reportable segments and its 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.

Commercial Banking

Operating Results:


		Three months ended March 31,
	Three months ended March 31,								Three months ended March 31,
(In thousands)	(In thousands)	2023		2022		(In thousands)	2024	2023
Net interest income	Net interest income	$	384,314	$	287,069
Non-interest income	Non-interest income	35,397		38,743
Non-interest expense	Non-interest expense	108,509		89,240
Pre-tax, pre-provision net revenue	Pre-tax, pre-provision net revenue	$	311,202	$	236,572

Commercial ~~Banking's~~Banking’s PPNR ~~increased $74.6~~decreased $25.2 million, or ~~31.5%~~8.5%, for the three months ended March 31, ~~2023,~~2024, as compared to the three months ended March 31, ~~2022,~~2023, due to ~~an increase in net interest income, partially offset by~~ a decrease in ~~non-interest~~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:


(In thousands)	At March 31, 2024		At December 31, 2023
Loans and leases	$	39,883,343	$	39,480,945
Deposits	16,075,390		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 equipment 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.

Healthcare Financial Services

Operating Results:


	Three months ended March 31,
(In thousands)	2024		2023
Net interest income	$	86,138	$	71,730
Non-interest income	31,061		24,067
Non-interest expense	52,127		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 ~~$97.2~~$14.4 million increase in net interest income is primarily due to the ~~full quarter impact~~acquisition of ~~the Sterling merger on balances~~Ametros, an increase in ~~2023 as compared to the two-thirds impact for the quarter~~net deposit spread, and organic HSA deposit growth. The $7.0 million increase in ~~2022, organic loan growth, and the higher interest rate environment. The $3.3 million decrease in~~
non-interest income is primarily due to ~~lower prepayment penalties, cash management fees,~~incremental fee income related to the acquired Ametros business, and higher customer ~~interest rate derivative activities, partially offset by higher syndication~~account and interchange fees. The ~~$19.3~~$8.4 million increase in non-interest expense is primarily due to ~~the full quarter impact of~~incremental expenses ~~from the Sterling merger in 2023 as compared~~related to the ~~two-thirds impact for the quarter in 2022.~~acquired Ametros business, and higher employee compensation and service contract expenses.

Selected Balance Sheet and Off-Balance Sheet Information:


(In thousands)	(In thousands)	At March 31, 2023		At December 31, 2022		(In thousands)	At March 31, 2024	At December 31, 2023
Loans and leases		$	41,286,860	$	40,115,067
Deposits	Deposits	18,297,574		19,563,227
Assets under administration / management (off-balance sheet)		2,670,273		2,258,635
Assets under administration, through linked investment accounts (off-balance sheet)

~~Loans and leases~~Deposits increased $1.2 billion, or ~~2.9%~~14.3%, at March 31, ~~2023,~~2024, as compared to December 31, ~~2022,~~2023, primarily due to organic growth in the commercial non-mortgage and commercial real estate categories, partially offset by net principal paydowns in the warehouse lending, equipment finance, and asset-based lending categories. Total portfolio originations for the three months ended March 31, 2023, and 2022, were $3.0 billion and $2.0 billion, respectively. The $1.0 billion increase was primarily due to the timing of the Sterling merger in 2022, and an increase in commercial non-mortgage originations.

Deposits decreased $1.3 billion, or 6.5%, at March 31, 2023, as compared to December 31, 2022, primarily resulting from customers rebalancing their deposit concentrations due to the current banking environment.

Commercial Banking held $0.8 billion and $0.6 billion in assets under administration and $1.9 billion and $1.7 billion in assets under management at March 31, 2023, and December 31, 2022, respectively. The combined increase of $0.4 billion, or 18.2%, was primarily due to customers shifting their deposits into investment accounts to purchase U.S. Treasury securities with government-backing, and higher valuations in the equity markets during the three months ended March 31, 2023.

additional HSA ~~Bank~~

~~Operating Results:~~
Three months ended March 31,
(In thousands) 2023 2022
Net interest income $ 71,730 $ 44,577
Non-interest income 24,067 26,958
Non-interest expense 43,700 36,409
Pre-tax net revenue $ 52,097 $ 35,126

HSA Bank's pre-tax net revenue increased $17.0 million, or 48.3%, for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022, primarily due to an increase in net interest income, partially offset by a decrease in non-interest income and an increase in non-interest expense. The $27.2 million increase in net interest income is primarily due to an increase in net deposit interest rate spread and organic deposit growth. The $2.9 million decrease in non-interest income is primarily due to lower customer account service fees. The $7.3 million increase in non-interest expense is primarily due to an increase in compensation costs, higher service contract expenses related to additional account holders, organic HSA deposit growth, and the ~~full quarter~~acquisition of ~~expenses expenses from the Bend acquisition in 2023 compared to the one-half impact for the quarter in 2022.~~

~~Selected Balance Sheet and Off-Balance Sheet Information:~~
(In thousands) At March 31,
2023 At December 31,
2022
Deposits $ 8,272,534 $ 7,944,919
Assets under administration, through linked investment accounts (off-balance sheet) 3,775,869 3,393,832

Deposits increased $0.3 billion, or 4.1%, at March 31, 2023, as compared to December 31, 2022, primarily due to an increase in the number of account holders and organic deposit growth. HSA deposits accounted for approximately 15.0% and 14.7% of the Company's total consolidated deposits at March 31, 2023, and December 31, 2022, respectively.Ametros.

Assets under administration, through linked investment accounts, increased ~~$0.4~~$0.6 billion, or ~~11.3%~~11.9%, at March 31, ~~2023,~~2024, as compared to December 31, ~~2022,~~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 during the three months ended March 31, 2023.~~markets.

Consumer Banking

Operating Results:


		Three months ended March 31,
	Three months ended March 31,								Three months ended March 31,
(In thousands)	(In thousands)	2023		2022		(In thousands)	2024	2023
Net interest income	Net interest income	$	210,583	$	136,677
Non-interest income	Non-interest income	25,959		27,901
Non-interest expense	Non-interest expense	106,879		95,510
Pre-tax, pre-provision net revenue	Pre-tax, pre-provision net revenue	$	129,663	$	69,068

Consumer ~~Banking's~~Banking’s PPNR ~~increased $60.6~~decreased $26.1 million, or ~~87.7%~~17.9%, for the three months ended March 31, ~~2023,~~2024, as compared to the three months ended March 31, ~~2022,~~2023, due to ~~an increase in net interest income, partially offset by~~ a decrease in ~~non-interest~~net interest income and an increase in non-interest ~~expense.~~expense, partially offset by an increase in non-interest income. The ~~$73.9~~$28.8 million ~~increase~~decrease in net interest income is primarily due to ~~the full quarter impact of the Sterling merger~~higher rates paid on deposits, partially offset by higher average loan balances ~~in 2023 as compared to the two-thirds impact for the quarter in 2022,~~ and ~~the higher interest rate environment.~~deposit growth. The ~~$1.9~~$6.3 million ~~decrease~~increase in non-interest income is primarily due to ~~lower~~a net ~~investment services income driven by the outsourcing~~gain on sale of ~~the consumer investment services platform in the fourth quarter of 2022,~~mortgage servicing rights, partially offset by ~~higher deposit~~lower customer account service ~~fee income.~~fees and loan servicing fees. The ~~$11.4~~$3.6 million increase in non-interest expense is primarily due to ~~the full quarter impact of~~higher employee compensation and operational support expenses, ~~from the Sterling merger in 2023 as compared to the two-thirds impact for the quarter in 2022,~~ partially offset by lower ~~compensation~~technology and ~~benefits expenses.~~professional service costs.

Selected Balance Sheet and Off-Balance Sheet Information:

(In thousands)

At March 31,
2023

At December 31,
2022

(In thousands)

At March 31,
2024

At December 31,
2023

Loans

9,617,093

9,624,465

Deposits

23,698,094

23,609,941

Assets under administration (off-balance sheet)

7,750,020

7,872,397

Loans decreased ~~$7.4~~$25.9 million, or ~~0.1%~~0.2%, at March 31, ~~2023,~~2024, as compared to December 31, ~~2022,~~2023, primarily due to net principal paydowns in home equity ~~balances~~lines and ~~the continued run-off of Lending Club~~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 ~~during~~for both the three months ended March 31, ~~2023,~~2024, and ~~2022,~~2023, were $0.3 ~~billion and $0.6 billion, respectively. The $0.3 billion decrease was primarily due to the increase in market rates, which resulted in lower residential mortgage originations.~~billion.

Deposits increased ~~$0.1~~$0.7 billion, or ~~0.4%~~2.5%, at March 31, ~~2023,~~2024, as compared to December 31, ~~2022, as customer preferences shifted from lower rate checking~~2023, primarily due to higher money market, savings, and ~~savings products into higher rate~~ certificates of deposit ~~products.~~balances, partially offset by lower non-interest-bearing demand deposits balances.

Assets under administration ~~decreased $0.1~~increased $0.2 billion, or ~~1.6%~~3.2% at March 31, ~~2023,~~2024, as compared to at December 31, ~~2022,~~2023, primarily due to ~~customer~~an increase in investment ~~outflows, partially offset by~~account balances as a result of higher valuations in the equity ~~markets during the three months ended March 31, 2023.~~markets.

Financial Condition

Total assets increased ~~$3.5~~$1.3 billion, or ~~5.0%~~1.6%, from ~~$71.3~~$74.9 billion at December 31, ~~2022,~~2023, to ~~$74.8~~$76.2 billion at March 31, ~~2023.~~2024. The change in total assets was primarily attributed to the following, which experienced changes greater than $100 ~~million dollars:~~million:

•~~Interest-bearing deposits increased $1.7 billion,~~Cash and cash equivalents decreased $170.6 million, primarily due to the ~~strategic decision~~Company’s risk management approach to ~~maintain additional liquidity;~~hold higher levels of on-balance sheet liquidity in 2023;

•Total investment securities ~~net~~ increased ~~$0.4 billion,~~$246.7 million, reflecting a ~~$0.5 billion~~$605.3 million increase in the held-to-maturity portfolio, partially offset by a ~~$0.1 billion~~ decrease of $358.6 million in the available-for-sale portfolio. The ~~overall~~net increase in total investment securities was primarily due to purchases exceeding paydown activities, particularly across the Agency MBS, Agency CMBS, and a favorable market value adjustment on
available-for-sale securities,CMBS categories, partially offset by ~~the sale~~$344.1 million in sales of ~~$415.9 million in~~available-for-sale Agency MBS, Corporate debt and ~~U.S. Treasury~~Municipal bonds and notes;

•~~FHLB and FRB stock increased $138.8 million, primarily due to the additional FHLB stock investment required as a result of the increase in FHLB advances during the first quarter of 2023;~~

•Loans held for sale increased ~~$0.2 billion,~~$233.2 million, primarily due to the ~~Company's current balance sheet composition strategy, which resulted in the increased~~ transfer of ~~commercial~~an aggregate $220.2 million of payroll finance and factored receivables loans from ~~held for investment~~portfolio to held for sale ~~in the current period;~~at March 31, 2024;

•Loans and leases increased ~~$1.2 billion,~~$372.6 million, primarily due to ~~$3.3~~$2.5 billion of originations during the three months ended March 31, ~~2023,~~2024, particularly across the commercial ~~non-mortgage~~real estate and commercial ~~real estate~~non-mortgage categories, partially offset by net principal paydowns, and ~~commercial~~the aforementioned transfer of $220.2 million of payroll finance and factored receivables loans from portfolio ~~loan sales.~~to held for sale;

•Goodwill and other net intangible assets increased a combined ~~$147.9 million. Goodwill increased $117.4~~$416.3 million, which reflects the $143.2 million recognized in connection with the interLINK acquisition, partially offset by the impact of the Sterling merger measurement period adjustments recorded during the first quarter of 2023. The $30.5 million increase in other net intangible assets is primarily due to the ~~$36.0~~acquisition of Ametros on January 24, 2024, which resulted in the recognition of $228.2 million ~~broker dealer relationship~~in goodwill, a $182.8 million core deposit intangible asset, and ~~$4.0~~a $6.1 million ~~non-competition agreement recognized~~trade name; and

•Accrued interest receivable and other assets increased $113.8 million. Notable drivers of the change included increases in ~~connection with the interLINK acquisition,~~LIHTC investments, accrued interest receivable, and accrued income from bank-owned life insurance policies, partially offset by ~~year-to-date amortization charges.~~decreases in treasury derivative assets and other asset balances.

Total liabilities increased ~~$3.3~~$1.1 billion, or ~~5.3%~~1.7%, from ~~$63.2~~$66.3 billion at December 31, ~~2022,~~2023, to ~~$66.5~~$67.4 billion at March 31, ~~2023.~~2024. The change in total liabilities was primarily attributed to the following:

•Total deposits ~~increased $1.2 billion,~~decreased $36.5 million, reflecting a ~~$2.2 billion increase~~$520.0 million decrease in ~~interest-bearing~~non-interest-bearing deposits, partially offset by a ~~$1.0~~$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 ~~deposits. The overall increase in deposits is primarily due to the $2.9 billion of sweep money market deposits added as a result of the interLINK acquisition,~~demand, partially offset by higher balances across all other deposit products, the ~~impact~~receipt of ~~customers rebalancing their~~the remaining Ametros deposits that were held at other banks, and organic HSA deposit ~~concentrations in the current banking environment.~~growth;

•Securities sold under agreements to repurchase and other borrowings decreased ~~$0.8 billion,~~$96.5 million, reflecting a $231.5 million decrease in short-term repurchase agreements, which was primarily due to ~~$0.9 billion~~the timing of federal funds purchased at December 31, 2022, as compared to none at March 31, 2023. The additional liquidity generated from the interLINK deposit sweep program allowed for the paydown of higher rate federal funds purchased duringmaturities in the first quarter of ~~2023;~~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 ~~$3.1~~$1.3 billion, also primarily due to a change in short-term funding ~~needs and~~mix;

•Long-term debt decreased $134.3 million, primarily due to the ~~strategic decision to maintain additional liquidity;~~maturity of its 4.375% senior fixed-rate notes on
February 15, 2024; and

•Accrued expenses and other liabilities ~~decreased $0.2 billion, primarily due to decreases~~increased $126.4 million. Notable drivers of $111.6 million and
$83.1 millionthe 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 ~~annual employee bonuses, respectively.~~interest payable.

Total ~~stockholders'~~stockholders’ equity ~~increased $0.2 billion, or 3.0%, from $8.1~~remained relatively flat at approximately $8.7 billion at both March 31, 2024, and December 31, ~~2022, to $8.3 billion at~~
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, ~~2023. The change in total stockholders' equity was attributed to the following:~~

•~~The adoption of ASU No. 2022-02, which resulted in a $4.2 million cumulative-effect adjustment to retained earnings;~~2024:

•Net income recognized of ~~$221.0~~$216.3 million;

•Other comprehensive loss, net of tax, of $65.5 million;

•Dividends paid to common and preferred stockholders of ~~$69.7~~$69.0 million and $4.2 million, respectively;

•~~Other comprehensive income, net~~Stock-based compensation expense of tax, of $96.9 million, primarily due to favorable market value adjustments on
available-for-sale securities and cash flow hedges driven by decreases in long-term interest rates;

•~~Employee stock-based compensation plan activity of $11.6 million, inclusive of restricted stock amortization and forfeitures, and stock options exercised of $1.7~~$13.8 million; and

•Repurchases of common stock of ~~$15.1~~$20.4 million under the Company’s common stock repurchase program and $13.5 million related to employee stock-based compensation plans.

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~~Company’s
interest-rate risk. The ~~Company's~~Company’s investment securities are classified into two major categories: available-for-sale and
held-to-maturity.

The ALCO manages the ~~Company's~~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 ~~investment~~security presents a safety and soundness concern. At March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, the Company had total investment securities ~~with a total net carrying value~~ of ~~$14.9~~$16.3 billion and ~~$14.5~~$16.0 billion, respectively, with an average risk weighting for regulatory purposes of ~~17.4%~~16.3% and ~~19.0%~~17.2%, respectively. ~~Although the~~The Bank held the entirety of the Company's investment securities portfolio at both March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023. However, the Holding Company may also directly hold ~~investments.~~investment securities.

The following table summarizes the balances and percentage composition of the ~~Company's~~Company’s investment securities:


		At March 31, 2023				At December 31, 2022						At March 31, 2024						At December 31, 2023
(In thousands)	(In thousands)	Amount		%		Amount		%		(In thousands)		Amount		%				Amount		%
Available-for-sale:	Available-for-sale:
U.S. Treasury notes		$	386,772	4.9	%	$	717,040	9.1	%

Government agency debentures

Government agency debentures

Government agency debentures	Government agency debentures	262,342		3.4		258,374		3.3		$	262,488		3.1	%		$	264,633		3.0	%
Municipal bonds and notes	Municipal bonds and notes	1,645,228		21.1		1,633,202		20.7
Agency CMO	Agency CMO	57,462		0.7		59,965		0.8
Agency MBS	Agency MBS	2,230,850		28.6		2,158,024		27.3
Agency CMBS	Agency CMBS	1,635,252		21.0		1,406,486		17.8
CMBS	CMBS	902,058		11.6		896,640		11.4
CLO		—		—		2,107		—

Corporate debt
Corporate debt
Corporate debt	Corporate debt	625,523		8.0		704,412		8.9
Private label MBS	Private label MBS	44,262		0.6		44,249		0.6
Other	Other	9,228		0.1		12,198		0.1
Total available-for-sale securities		$	7,798,977	100.0	%	$	7,892,697	100.0	%
Total available-for-sale										Total available-for-sale		$	8,601,141	100.0	%			$	8,959,729	100.0	%

Held-to-maturity:	Held-to-maturity:
Held-to-maturity:
Held-to-maturity:
Agency CMO
Agency CMO
Agency CMO	Agency CMO	$	27,101	0.4	%	$	28,358	0.4	%	$	22,489		0.3	%		$	23,470		0.3	%
Agency MBS	Agency MBS	2,613,113		37.0		2,626,114		40.0
Agency CMBS	Agency CMBS	3,364,186		47.6		2,831,949		43.1
Municipal bonds and notes (1)	Municipal bonds and notes (1)	927,501		13.1		928,845		14.2
CMBS	CMBS	131,604		1.9		149,613		2.3
Total held-to-maturity securities		$	7,063,505	100.0	%	$	6,564,879	100.0	%
Total held-to-maturity										Total held-to-maturity		$	7,680,075	100.0	%			$	7,074,797	100.0	%
Total investment securities	Total investment securities	$	14,862,482			$	14,457,576

(1)The balances at both March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, exclude the $0.2 million ACL recorded on held-to-maturity ~~securities of $0.3 million and $0.2 million, respectively.~~securities.

Available-for-sale securities decreased ~~$0.1~~$0.4 billion, or ~~1.2%~~4.0%, from ~~$7.9~~$9.0 billion at December 31, ~~2022,~~2023, to ~~$7.8~~$8.6 billion at
March 31, ~~2023,~~2024, primarily due to the sale of ~~$0.4~~$0.3 billion in ~~U.S. Treasury notes and~~Agency MBS, Corporate debt securities, and Municipal bonds and notes, which resulted in ~~$20.5~~$12.4 million of gross realized losses, ~~$3.8~~$2.6 million of which ~~was~~were attributed to a decline in credit quality, and ~~has~~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, and a favorable market value adjustment.~~categories. The average FTE yield inon 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, as compared to 1.98% for the three months ended March 31, 2022.~~2023. The 78109 basis point increase is primarily due to the reinvestment of funds received from the sale of lower yielding securities for securities at higher ~~market rates on securities purchased in the current period.~~interest rates.

At both March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, gross unrealized losses on available-for-sale securities were ~~$770.3 million and $864.5 million, respectively. The $94.2 million decrease is primarily due to a decline in long-term market rates.~~$0.8 billion. Available-for-sale securities are evaluated for credit losses on a quarterly basis. NoAt both March 31, 2024, and December 31, 2023, no ACL was recorded on available-for-sale securities as ~~of either period as~~ each of the securities in the ~~Company's~~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. AtAs of March 31, ~~2023,~~2024, based on current market conditions and the ~~Company's current~~Company’s targeted balance sheet composition strategy, the Company ~~has the intent~~intends to hold its available-for-sale securities in unrealized loss positions through the anticipated recovery ~~period, and it is more-likely-than-not that the Company will not have to sell these available-for-sale securities before the recovery of the entire amortized cost basis.~~period.

Held-to-maturity securities increased ~~$0.5~~$0.6 billion, or ~~7.6%~~8.6%, from ~~$6.6~~$7.1 billion at December 31, ~~2022,~~2023, to ~~$7.1~~$7.7 billion at
March 31, ~~2023,~~2024, primarily due to purchases exceeding paydown activities, particularly across the Agency MBS and Agency CMBS categories. The average FTE yield inon 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, ~~as compared to 2.06% for the three months ended March 31, 2022.~~respectively. The 7655 basis point increase is primarily due to higher ~~market~~interest rates on recent securities purchases, as compared to interest rates on securities ~~purchased in the current period.~~with paydown activities.

At March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, gross unrealized losses on held-to-maturity securities were ~~$751.0 million~~$0.9 billion and ~~$806.2 million,~~$0.8 billion, respectively. The ~~$55.2 million decrease~~$0.1 billion increase is primarily due to ~~a decline in long-term market~~higher interest rates. Held-to-maturity securities are evaluated for credit losses on a quarterly basis under the CECL methodology. At both March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, the ACL on held-to-maturity securities was ~~$0.3 million and~~ $0.2 ~~million, respectively.~~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, 2023
		1 Year or Less				1 - 5 Years				5 - 10 Years				After 10 Years				Total
	At March 31, 2024																																																					At March 31, 2024
	1 Year or Less																															1 Year or Less						1 - 5 Years						5 - 10 Years						After 10 Years				Total
(Dollars in thousands)	(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)		(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:	Available-for-sale:
U.S. Treasury notes		$	—	—	%	$	386,772	1.28	%	$	—	—	%	$	—	—	%	$	386,772	1.28	%

Government agency debentures

Government agency debentures

Government agency debentures	Government agency debentures	—		—		74,620		2.42		—		—		187,722		3.22		262,342		2.99		$	—		—	—	%	$	75,163		2.41	2.41	%	$	16,350		2.26	2.26	%	$	170,975		3.31	3.31	%	$	262,488		2.99	2.99	%
Municipal bonds and notes	Municipal bonds and notes	34,763		1.18		103,056		1.69		708,492		1.52		798,917		1.58		1,645,228		1.55
Agency CMO	Agency CMO	—		—		483		2.68		5,544		3.01		51,435		2.85		57,462		2.86
Agency MBS	Agency MBS	8		(5.27)		16,304		1.31		151,944		1.71		2,062,594		2.48		2,230,850		2.42
Agency CMBS	Agency CMBS	1,599		0.42		86,325		0.90		44,459		1.40		1,502,869		2.73		1,635,252		2.59
CMBS	CMBS	—		—		68,771		6.16		49,165		6.08		784,122		6.19		902,058		6.19

Corporate debt	Corporate debt	4,973		1.54		162,524		2.56		400,466		3.17		57,560		3.33		625,523		3.02
Corporate debt
Corporate debt
Private label MBS	Private label MBS	—		—		—		—		—		—		44,262		4.01		44,262		4.01
Other	Other	250		3.77		4,810		3.80		4,168		2.71		—		—		9,228		3.31
Total available-for-sale securities		$	41,593	1.21	%	$	903,665	2.00	%	$	1,364,238	2.19	%	$	5,489,481	3.00	%	$	7,798,977	2.73	%
Total available-for-sale																						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:	Held-to-maturity:
Agency CMO
Agency CMO
Agency CMO	Agency CMO	$	—	—	%	$	—	—	%	$	—	—	%	$	27,101	2.91	%	$	27,101	2.91	%	$	—		—	—	%	$	—		—	—	%	$	—		—	—	%	$	22,489		2.88	2.88	%	$	22,489		2.88	2.88	%
Agency MBS	Agency MBS	2		3.55		1,494		2.41		24,550		2.51		2,587,067		2.47		2,613,113		2.47
Agency CMBS	Agency CMBS	—		—		—		—		126,854		2.68		3,237,332		3.07		3,364,186		3.05
Municipal bonds and notes	Municipal bonds and notes	6,091		3.27		51,399		3.28		186,949		2.72		683,062		3.19		927,501		3.10
CMBS	CMBS	—		—		—		—		—		—		131,604		2.70		131,604		2.70
Total held-to-maturity securities		$	6,093	3.27	%	$	52,893	3.26	%	$	338,353	2.69	%	$	6,666,166	2.84	%	$	7,063,505	2.84	%
Total held-to-maturity																						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	Total investment securities	$	47,686	1.47	%	$	956,558	2.07	%	$	1,702,591	2.29	%	$	12,155,647	2.91	%	$	14,862,482	2.78	%	Total investment securities		$	61,467		2.61	2.61	%	$	660,061		2.69	2.69	%	$	1,473,440		2.30	2.30	%	$	14,086,248		3.81	3.81	%	$	16,281,216		3.63	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~~Company’s investment ~~securities'~~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.

Loans and Leases

The following table summarizes the amortized cost and percentage composition of the ~~Company's~~Company’s loans and leases:


		At March 31, 2023				At December 31, 2022					At March 31, 2024				At December 31, 2023
(Dollars in thousands)	(Dollars in thousands)	Amount		%		Amount		%		(Dollars in thousands)	Amount		%		Amount		%
Commercial non-mortgage	Commercial non-mortgage	$	16,939,373	33.3	%	$	16,392,795	32.9	%	Commercial non-mortgage	$	16,696,070	32.7	%	$	16,885,475	33.3	%
Asset-based	Asset-based	1,760,527		3.5		1,821,642		3.7
Commercial real estate	Commercial real estate	13,499,139		26.5		12,997,163		26.1
Multi-family	Multi-family	7,014,599		13.8		6,621,982		13.3
Equipment financing	Equipment financing	1,601,109		3.1		1,628,393		3.3
Warehouse lending		474,328		0.9		641,976		1.3

Residential
Residential
Residential	Residential	8,001,563		15.7		7,963,420		16.0
Home equity	Home equity	1,580,569		3.1		1,633,107		3.3
Other consumer	Other consumer	55,316		0.1		63,948		0.1
Total loans and leases (1)	Total loans and leases (1)	$	50,926,523	100.0	%	$	49,764,426	100.0	%	Total loans and leases (1)	$	51,098,642	100.0	%	$	50,726,052	100.0	%

(1)The amortized cost balances at March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, exclude the ACL recorded on loans and leases of ~~$613.9~~$641.4 million and ~~$594.7~~$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, 2023
	At March 31, 2024																	At March 31, 2024
(In thousands)	(In thousands)	1 Year or Less		1 - 5 Years		5 - 15 Years		After 15 Years		Total		(In thousands)	1 Year or Less	1 - 5 Years	5 - 15 Years	After 15 Years	Total
Fixed rate:	Fixed rate:
Commercial non-mortgage
Commercial non-mortgage
Commercial non-mortgage	Commercial non-mortgage	$	222,804	$	598,021	$	2,131,003	$	1,549,094	$	4,500,922
Asset-based	Asset-based	24,048		31,264		—		—		55,312
Commercial real estate	Commercial real estate	599,026		1,821,401		1,184,930		141,016		3,746,373
Multi-family	Multi-family	353,747		2,112,410		1,751,446		42,595		4,260,198
Equipment financing	Equipment financing	150,270		1,153,565		295,814		—		1,599,649

Residential	Residential	405		58,084		414,759		4,992,444		5,465,692
Residential
Residential
Home equity	Home equity	4,379		23,829		175,658		195,046		398,912
Other consumer	Other consumer	10,858		11,924		387		153		23,322
Total fixed rate loans and leases	Total fixed rate loans and leases	$	1,365,537	$	5,810,498	$	5,953,997	$	6,920,348	$	20,050,380
Variable rate:	Variable rate:
Commercial non-mortgage	Commercial non-mortgage	$	3,455,439	$	8,239,753	$	675,115	$	68,144	$	12,438,451
Commercial non-mortgage
Commercial non-mortgage
Asset-based	Asset-based	451,406		1,248,442		5,367		—		1,705,215
Commercial real estate	Commercial real estate	1,789,853		5,026,956		2,228,039		707,918		9,752,766
Multi-family	Multi-family	426,953		1,009,039		1,288,677		29,732		2,754,401
Equipment financing		1,460		—		—		—		1,460
Warehouse lending		474,328		—		—		—		474,328

Residential

Residential

Residential	Residential	722		10,905		319,947		2,204,297		2,535,871
Home equity	Home equity	2,253		7,215		150,431		1,021,758		1,181,657
Other consumer	Other consumer	6,574		16,873		2,554		5,993		31,994
Total variable rate loans and leases	Total variable rate loans and leases	$	6,608,988	$	15,559,183	$	4,670,130	$	4,037,842	$	30,876,143
Total loans and leases (1)	Total loans and leases (1)	$	7,974,525	$	21,369,681	$	10,624,127	$	10,958,190	$	50,926,523

(1)Amounts due exclude total accrued interest receivable of ~~$246.1~~$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.

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, 2024				At December 31, 2023
(In thousands)	Amount		%		Amount		%
Finance	$	3,928,510	23.5	%	$	4,109,280	24.4	%
Services	2,720,172		16.3		2,928,621		17.3
Communications	1,391,025		8.3		1,166,668		6.9
Healthcare	1,027,056		6.2		848,867		5.0
Manufacturing	996,336		6.0		1,163,798		6.9
Retail & Wholesale	780,762		4.7		874,547		5.2
Real Estate	773,660		4.6		815,769		4.8
Transportation & Public Utilities	550,132		3.3		547,967		3.3
Construction	447,574		2.7		477,303		2.8
Other	4,080,843		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, 2024				At December 31, 2023
Geography:	Amount		%		Amount		%
New York City	$	7,634,045	34.9	%	$	7,482,324	35.4	%
Other New York County	3,297,133		15.1		3,321,313		15.7
Connecticut	1,789,142		8.2		1,749,839		8.3
New Jersey	1,782,090		8.1		1,729,139		8.2
Massachusetts	1,336,681		6.1		1,338,936		6.3
Southeast	2,523,181		11.6		2,311,574		10.9
Other	3,507,230		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 & Warehouse	3,721,986		17.0		3,467,859		16.4
Retail	1,620,643		7.4		1,765,512		8.3
Healthcare & Senior Living	1,581,836		7.3		1,576,511		7.5
Construction	1,512,655		6.9		1,442,621		6.8
Office	986,182		4.5		1,041,451		4.9
Hotel	462,961		2.1		489,379		2.3
Other	4,086,653		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.

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~~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 ~~and warehouse lending~~ loans are underwritten after evaluating and understanding the borrower’s ability to operate and service its debt. Assessment of the ~~borrower's~~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. Warehouse lending loans are primarily made based on the borrower's ability to originate high-quality, first-mortgage residential loans that can be sold into the agency, government, or private jumbo markets, and secondarily on the underlying cash flows of 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. ~~Warehouse lending loans are generally uncommitted facilities.~~

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~~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 ~~$19.2~~$5.7 million, or ~~3.2%~~0.9%, from ~~$594.7~~$635.7 million at December 31, ~~2022,~~2023, to ~~$613.9~~$641.4 million at March 31, ~~2023,~~2024, primarily due to the impact of the current macroeconomic environment on credit performance and nominal organic loan ~~growth.~~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, 2023				At December 31, 2022
	At March 31, 2024														At March 31, 2024					At December 31, 2023
(Dollars in thousands)	(Dollars in thousands)	Amount		% (1)		Amount		% (1)		(Dollars in thousands)	Amount		% (1)			Amount		% (1)
Commercial non-mortgage	Commercial non-mortgage	$	196,019	31.9	%	$	197,950	33.3	%	Commercial non-mortgage	$	186,448	29.1	%		$	211,699	33.3	%
Asset-based	Asset-based	21,546		3.5		16,094		2.7
Commercial real estate	Commercial real estate	230,020		37.5		214,771		36.1
Multi-family	Multi-family	83,264		13.6		80,652		13.6
Equipment financing	Equipment financing	23,474		3.8		23,081		3.9
Warehouse lending		427		0.1		577		0.1

Residential
Residential
Residential	Residential	25,869		4.2		26,907		4.5
Home equity	Home equity	31,126		5.1		32,296		5.4
Other consumer	Other consumer	2,169		0.3		2,413		0.4
Total ACL on loans and leases	Total ACL on loans and leases	$	613,914	100.0	%	$	594,741	100.0	%	Total ACL on loans and leases	$	641,442	100.0	%		$	635,737	100.0	%

(1)The ACL allocated to a single loan and lease category does not preclude its availability to absorb losses in other categories.

1819

Methodology

The ~~Company's~~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, ~~risk ratings, and/or collateral types within its commercial and consumer portfolios,~~ 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 ~~loss rate, or discounted cash flow framework.~~

~~For portfolios using the PD/LGD/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. ~~Management's~~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~~loan’s amortization schedule, and prepayment rates.

Under the loss rate ~~method,~~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, ~~above,~~ 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. Under the discounted cash flow method, expected credit losses are determined by comparing the amortized cost of the asset at the balance sheet date to the present value of estimated future principal and interest payments expected to be collected over the remaining life of the asset. The Company's loss model generates cash flow projections at the loan level based on reasonable and supportable projections, from which management estimates payment collections adjusted for accelerated payments, recovery time, PD, and LGD.

The ~~Company's~~Company’s models incorporate a single economic forecast scenario and macroeconomic 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 ~~use input reversion and revert to the mean of macroeconomic variables in~~incorporate a reasonable and supportable ~~forecasts.~~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 isare used as an ~~input~~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~~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 ~~and collateral dependent loans where the borrower is experiencing financial difficulty,~~ 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~~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, ~~2022.~~2023.

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)	(Dollars in thousands)	At March 31, 2023			At December 31, 2022			(Dollars in thousands)	At March 31, 2024			At December 31, 2023
Non-performing loans and leases (1)	Non-performing loans and leases (1)	$	185,020		$	203,791
Total loans and leases	Total loans and leases	50,926,523			49,764,426
Non-performing loans and leases as a percentage of loans and leases	Non-performing loans and leases as a percentage of loans and leases	0.36		%	0.41		%	Non-performing loans and leases as a percentage of loans and leases	0.56		%	0.41		%

Non-performing assets (1)	Non-performing assets (1)	$	186,551		$	206,136
Non-performing assets (1)
Non-performing assets (1)
Total loans and leases	Total loans and leases	$	50,926,523		$	49,764,426
Add: OREO		1,531			2,345
Total loans and leases plus OREO		$	50,928,054		$	49,766,771
Non-performing assets as a percentage of loans and leases plus OREO		0.37		%	0.41		%
Add: OREO and repossessed assets
Total loans and leases plus OREO and repossessed assets
Non-performing assets as a percentage of loans and leases plus OREO and repossessed assets								Non-performing assets as a percentage of loans and leases plus OREO and repossessed assets	0.57		%	0.43		%

Non-performing assets (1)
Non-performing assets (1)
Non-performing assets (1)	Non-performing assets (1)	$	186,551		$	206,136
Total assets	Total assets	74,844,395			71,277,521
Non-performing assets as a percentage of total assets	Non-performing assets as a percentage of total assets	0.25		%	0.29		%	Non-performing assets as a percentage of total assets	0.38		%	0.29		%

ACL on loans and leases	ACL on loans and leases	$	613,914		$	594,741
ACL on loans and leases
ACL on loans and leases
Non-performing loans and leases (1)	Non-performing loans and leases (1)	185,020			203,791
ACL on loans and leases as a percentage of non-performing loans and leases	ACL on loans and leases as a percentage of non-performing loans and leases	331.81		%	291.84		%	ACL on loans and leases as a percentage of non-performing loans and leases	226.17		%	303.39		%

ACL on loans and leases
ACL on loans and leases
ACL on loans and leases	ACL on loans and leases	$	613,914		$	594,741
Total loans and leases	Total loans and leases	50,926,523			49,764,426
ACL on loans and leases as a percentage of loans and leases	ACL on loans and leases as a percentage of loans and leases	1.21		%	1.20		%	ACL on loans and leases as a percentage of loans and leases	1.26		%	1.25		%

ACL on loans and leases	ACL on loans and leases	$	613,914		$	594,741
Net charge-offs		98,084			67,288
Ratio of ACL on loans and leases to net charge-offs (2)		6.26x			8.84x
ACL on loans and leases
ACL on loans and leases									$	641,442		$	635,737
Net charge-offs (annualized)								Net charge-offs (annualized)	149,956			108,086
Ratio of ACL on loans and leases to net charge-offs (annualized)								Ratio of ACL on loans and leases to net charge-offs (annualized)	4.28x			5.88x

(1)Non-performing ~~assets~~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.

~~(2)Calculated for the March 31, 2023, period based on annualized year-to-date net charge-offs.~~

The following table summarizes net charge-offs ~~(recoveries)~~ as aan annualized percentage of average loans and leases for each category:

At or for the three months ended March 31,
2023 2022
(Dollars in thousands) Net
Charge-offs (Recoveries) Average Balance
% (1)
Net
Charge-offs (Recoveries) Average Balance
% (1)
Commercial non-mortgage $ 2,723 $ 16,635,874 0.07 % $ 8,663 $ 10,863,354 0.32 %
Asset-based 13,189 1,790,992 2.95 (50) 1,540,301 (0.01)
Commercial real estate 8,551 13,260,223 0.26 1,048 9,738,181 0.04
Multi-family 1,033 6,710,103 0.06 10 3,994,744 —
Equipment financing (660) 1,625,463 (0.16) 213 1,339,775 0.06
Warehouse lending — 409,580 — — 365,325 —
Residential (461) 7,995,327 (0.02) (44) 6,322,495 —
Home equity (421) 1,608,428 (0.10) (1,267) 1,658,938 (0.31)
Other consumer 567 59,202 3.83 356 89,716 1.59
Total $ 24,521 $ 50,095,192 0.20 % $ 8,929 $ 35,912,829 0.10 %

~~(1)Percentage represents annualized year-to-date net charge-offs (recoveries) to average loans and leases within the comparable category.~~


	At or for the three months ended March 31,
	2024						2023
(Dollars in thousands)	Net Charge-offs (Recoveries)		Average Balance		%		Net Charge-offs (Recoveries)		Average Balance		%
Commercial non-mortgage	$	31,333	$	16,941,546	0.74	%	$	2,723	$	16,635,874	0.07	%
Asset-based	—		1,523,616		—		13,189		1,790,992		2.95
Commercial real estate	2,112		13,719,196		0.06		8,551		13,260,223		0.26
Multi-family	1,128		7,684,569		0.06		1,033		6,710,103		0.06
Equipment financing	3,335		1,293,856		1.03		(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 consumer	859		50,955		6.74		567		59,202		3.83
Total	$	37,489	$	50,938,418	0.29	%	$	24,521	$	50,095,192	0.20	%

Net charge-offs increased $13.0 million, or 52.9%, from $24.5 million for the three months ended March 31, 2024, as ~~a percentage of average loans and leases were 0.20%~~compared to $37.5 million for the three months ended March 31, 2023, ~~and 0.10% for the three months ended March 31, 2022. The increased level of net charge-offs is~~ primarily due to ~~a full quarter impact of the Sterling merger on~~an increase in net charge-offs in ~~2023 as compared to~~ the ~~two-thirds impact for~~commercial non-mortgage category, partially offset by a decrease in net charge-offs in the ~~quarter in 2022, and the Company's current balance sheet composition strategy.~~asset-based lending category.

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, ~~2023,~~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 ~~recent~~ high-profile bank failures that occurred ~~during~~in 2023 and related turmoil in the ~~first quarter of 2023, and~~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, ~~bank~~ 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.

There are certain restrictions on the Bank's payment of dividends to the Holding Company, which can be found within
Note 10: 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, 2022. During the three months ended March 31, ~~2023,~~2024, the Bank paid ~~$150.0~~$175.0 million in dividends to the Holding Company. At March 31, ~~2023,~~2024, there ~~were $561.9~~was $598.6 million of retained earnings available for the payment of dividends by the Bank to the Holding Company. On April ~~26, 2023,~~24, 2024, the Bank was approved to pay the Holding Company ~~$100.0~~$125.0 million in dividends ~~during~~for the second quarter of ~~2023.~~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 ~~during~~for the three months ended
March 31, ~~2023.~~2024. On April ~~26, 2023,~~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 ~~Webster~~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, ~~2023,~~2024, the Holding Company ~~did not repurchase any~~repurchased 434,061 shares ~~of Webster common stock~~ under the ~~program.~~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, ~~2023,~~2024, the Company repurchased ~~284,725~~280,517 shares at a weighted-average price of ~~$52.90~~$48.11 per share, totaling ~~$15.1~~$13.5 million, for this purpose.

Webster Bank Liquidity. The ~~Bank's~~Bank’s primary source of funding is its core deposits. Including time deposits, the Bank had a loan to ~~total~~ deposit ratio of ~~92.1%~~84.1% and 83.5% at ~~both~~ March 31, ~~2023,~~2024, and December 31, ~~2022.~~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, ~~2023,~~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.

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~~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 ~~the~~ Basel III ~~Capital Rules~~ to ensure capital adequacy require ~~financial institutions~~the Holding Company and the Bank to maintain minimum ratios of ~~Common Equity~~CET1 Risk-Based Capital, Tier 1 Risk-Based Capital, ~~defined by the Basel III capital rules (CET1 capital), Tier 1 capital,~~ Total ~~capital to risk-weighted assets,~~Risk-Based Capital, and Tier 1 ~~capital to average tangible assets (as~~Leverage Capital, as defined in the ~~regulations).~~regulations. At March 31, ~~2023,~~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, ~~2023,~~2024, the regulatory capital benefit allowed from the delayed CECL adoption resulted in a ~~6, 6,~~3, 3, and 42 basis point increase to the Holding ~~Company's~~Company’s and the ~~Bank's~~Bank’s CET1 ~~capital to total risk-weighted assets (CET1 risk-based capital),~~Risk-Based Capital, Tier 1 ~~capital to total risk-weighted assets (Tier 1 risk-based capital),~~Risk-Based Capital, and Tier 1 ~~capital to average tangible assets (Tier 1 leverage capital),~~Leverage Capital, respectively, and a 1 basis point decrease to Total ~~capital to total risk-weighted assets (Total risk-based capital).~~Risk-Based Capital. Both the Holding ~~Company's~~Company’s and the ~~Bank's~~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 ~~10:~~9: Regulatory Capital and Restrictions in the Notes to Condensed Consolidated Financial Statements contained in Part I ~~-Item~~- Item 1. Financial Statements.

2223

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 isare 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 ~~both~~ 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.

With the acquisition of interLINK during the first quarter of 2023, the Bank received $2.9 billion of money market deposits at March 31, 2023, which added a unique source of core deposit funding and scalable liquidity to the Company's already differentiated, omnichannel deposit gathering capabilities.

Total deposits were ~~$55.3~~$60.7 billion and ~~$54.1~~$60.8 billion at March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, respectively. The ~~$1.2 billion increase was~~nominal
$36.5 million decrease is primarily due to ~~the interLINK deposits,~~a $1.9 billion decrease in brokered certificates of deposit and lower balances in non-interest-bearing demand, partially offset by ~~customers rebalancing their~~higher balances across all other deposit ~~concentrations as a result~~products, the receipt of the ~~current banking environment. Customer preferences also shifted from lower rate checking~~remaining Ametros deposits that were held at other banks, and ~~savings products into higher rate certificates of~~organic HSA deposit ~~products, which are currently more attractive in the higher interest rate environment.~~growth.

The following table summarizes daily average balances of deposits by type and the weighted-average rates paid thereon:


	Three months ended March 31,																		Three months ended March 31,
	2024														2024					2023
(Dollars in thousands)										(Dollars in thousands)	Average Balance		Average Rate			Average Balance		Average Rate
Non-interest-bearing:
Demand
Demand
Demand											$	10,582,416	—	%		$	12,629,928	—	%
Interest-bearing:
Checking
Checking
Checking
Health savings accounts
Money market
Savings
Time deposits
Total interest-bearing
Total average deposits										Total average deposits	$	60,565,366	2.23	%		$	54,800,220	1.11	%

		Three months ended March 31,
		2023				2022
(Dollars in thousands)		Average Balance		Average Rate		Average Balance		Average Rate
Non-interest-bearing:
Demand		$	12,629,928	—	%	$	11,263,282	—	%
Interest-bearing:
Checking		8,822,549		1.44		7,699,097		0.06
Health savings accounts		8,292,450		0.15		7,759,465		0.06
Money market		12,884,558		2.57		9,093,101		0.15
Savings		8,146,263		0.49		7,524,238		0.03
Time deposits		4,024,472		2.43		2,544,286		0.21
Total interest-bearing		42,170,292		1.42		34,620,187		0.09
Total average deposits		$	54,800,220	1.11	%	$	45,883,469	0.07	%

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, ~~2023,~~2024, and December 31, ~~2022,~~2023, total uninsured deposits as per regulatory reporting requirements and reported on Schedule RC-O of the ~~Bank's~~Bank’s Call Report were ~~$20.8~~$20.7 billion and ~~$22.5~~$21.0 billion, respectively.

The following table summarizes uninsured deposits information at March 31, ~~2023,~~2024, after certain exclusions:

(In thousands)

At March 31, 2023

(In thousands)

Uninsured deposits, per regulatory reporting requirements

20,827,690

Less: Affiliate deposits

(1,671,727)

Less: Affiliate deposits

Collateralized deposits

(5,269,060)

Collateralized deposits

Uninsured deposits, after exclusions

13,886,903

Immediately available liquidity (1)

13,380,214

Immediately available liquidity (1)

Uninsured deposits coverage

96.4%

Uninsured deposits coverage

(1)Reflects ~~$6.5~~$10.8 billion and ~~$2.9~~$6.8 billion of additional borrowing capacity from the FHLB and the FRB, respectively, and ~~$4.0~~$1.2 billion ~~in unencumbered liquid assets.~~of interest-bearing deposits held at FRB.

2324

Uninsured deposits, after adjusting for affiliate deposits and collateralized deposits, represented ~~25.1%~~21.3% of total deposits at March 31, ~~2023.~~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~~Company’s uninsured deposits as a percentage of total deposits, adjusted for affiliate deposits and ~~and~~ collateralized deposits, is consistent with the percentage reported at March 31, ~~2023. In addition, the Company's immediately available liquidity has, and continues, to increase.~~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)	(In thousands)	March 31, 2023		(In thousands)	March 31, 2024
Portion of U.S. time deposits in excess of insurance limit	Portion of U.S. time deposits in excess of insurance limit	$	984,289	Portion of U.S. time deposits in excess of insurance limit	$	508,998
Time deposits otherwise uninsured with a maturity of:	Time deposits otherwise uninsured with a maturity of:
3 months or less	3 months or less	$	647,647
3 months or less
3 months or less					$	190,521
Over 3 months through 6 months	Over 3 months through 6 months	86,226		Over 3 months through 6 months	186,435
Over 6 months through 12 months	Over 6 months through 12 months	242,277		Over 6 months through 12 months	124,826
Over 12 months	Over 12 months	8,139		Over 12 months	7,216

Additional information regarding period-end deposit balances and rates can be found within Note 7:6: Deposits in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements.

Borrowings. The ~~Bank's~~Bank’s primary borrowing sources include securities sold under agreements to repurchase, federal funds purchased, FHLB advances, and long-term debt. Total ~~borrowed funds~~borrowings were ~~$9.9~~$4.9 billion and ~~$7.7~~$3.9 billion at March 31, ~~2023~~2024, and December 31, ~~2022,~~2023, respectively, and represented ~~13.3%~~6.5% and ~~10.8%~~5.2% of total assets, respectively. The ~~$2.2~~$1.0 billion increase is primarily due to ~~a $3.1~~increases of $1.3 billion ~~increase~~and $135.0 million in FHLB advances and federal funds purchased, respectively, partially offset by ~~a $0.9 billion decrease~~decreases of $231.5 million and $134.3 million in ~~federal funds purchased.~~

~~The Bank had additional borrowing capacity from the FHLB of $6.5 billion~~securities sold under agreements to repurchase and ~~$4.3 billion at March 31, 2023, and December 31, 2022,~~long-term debt, respectively. The Bank also had additional borrowing capacity from the FRB of $2.9 billion and $1.2 billion at March 31, 2023, and December 31, 2022, respectively. Unpledged investment securities of $1.1 billion at March 31, 2023, could have been used for collateral on borrowings or to increase borrowing capacity by either $0.8 billion with the FHLB or $1.1 billion with the FRB.

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 ~~$0.3 billion~~$126.9 million and $358.4 million at ~~both~~ March 31, ~~2023,~~2024, and December 31, ~~2022.~~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. ~~There were no federal~~Federal funds purchased totaled $235.0 million and $100.0 million at March 31, ~~2023, whereas federal funds purchased totaled $0.9 billion at~~2024, and December 31, ~~2022.~~2023, respectively. The ~~additional liquidity generated from~~$135.0 million increase is primarily due to the ~~interLINK deposit sweep program allowed for the paydown during the first quarter of 2023 of higher rate federal funds purchased.~~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 ~~$8.6~~$3.7 billion and ~~$5.5~~$2.4 billion at March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, respectively. The ~~$3.1~~$1.3 billion increase is ~~primarily~~also due to the change in short-term funding ~~needs and the strategic decision to maintain additional liquidity.~~mix.

Long-term debt consists of senior fixed-rate notes maturing in ~~2024 and~~ 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 ~~both~~ March 31, ~~2023, and December 31, 2022.~~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.

The following table summarizes daily average balances of borrowings by type and the weighted-average rates paid thereon:


	Three months ended March 31,																		Three months ended March 31,
	2024														2024					2023
(Dollars in thousands)										(Dollars in thousands)	Average Balance		Average Rate			Average Balance		Average Rate
Securities sold under agreements to repurchase										Securities sold under agreements to repurchase	$	130,653	0.52	%		$	243,848	0.11	%
Federal funds purchased
FHLB advances
Long-term debt

Total average borrowings
Total average borrowings
Total average borrowings											$	3,941,376	4.88	%		$	7,661,101	4.48	%

		Three months ended March 31,
		2023				2022
(Dollars in thousands)		Average Balance		Average Rate		Average Balance		Average Rate
Securities sold under agreements to repurchase		$	243,848	0.11	%	$	577,039	0.66	%
Federal funds purchased		671,175		4.62		—		—
FHLB advances		5,673,826		4.80		10,936		2.03
Long-term debt		1,072,252		3.65		896,310		3.34

Total average borrowings		$	7,661,101	4.48	%	$	1,484,285	2.26	%

Additional information regarding period-end borrowings balances and rates can be found within Note 8:7: 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 ~~Federal Home Loan Banks,~~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 to 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 ~~$359.9~~$153.1 million and ~~$221.4~~$99.0 million at March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, respectively. The most recent FHLB quarterly cash dividend was paid on May 2, ~~2023,~~2024, in an amount equal to an annual yield of ~~7.55%~~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 ~~$224.8~~$228.3 million and ~~$224.5~~$227.9 million at March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, respectively. The most recent FRB
semi-annual cash dividend was paid on December ~~31, 2022,~~29, 2023, in an amount equal to an annual yield of ~~3.63%~~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, ~~2023.~~2024. The actual timing and amounts of future cash payments may differ from the amounts presented. Based on the ~~Company's~~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)															Payments Due by Period (1)
(In thousands)	(In thousands)	2023		2024		2025		2026		2027		Thereafter		Total		(In thousands)	2024	2025	2026	2027	2028	Thereafter	Total
Senior notes	Senior notes	$	—	$	150,000	$	—	$	—	$	—	$	300,000	$	450,000
Subordinated notes	Subordinated notes	—		—		—		—		—		499,000		499,000
Junior subordinated debt	Junior subordinated debt	—		—		—		—		—		77,320		77,320
FHLB advances	FHLB advances	8,550,183		—		—		—		248		10,030		8,560,461
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	306,154		—		—		—		—		—		306,154

Federal funds purchased
Time deposits	Time deposits	3,168,801		1,132,496		132,543		53,306		36,616		6,017		4,529,779
Operating lease liabilities	Operating lease liabilities	25,520		35,817		32,625		29,568		24,584		81,932		230,046
Contingent consideration	Contingent consideration	4,798		11,241		—		—		—		—		16,039
Royalty liabilities	Royalty liabilities	1,035		8,572		1,417		—		—		—		11,024
Purchase obligations (2)	Purchase obligations (2)	120,718		25,329		13,087		5,895		2,229		1,287		168,545
Total contractual obligations	Total contractual obligations	$	12,177,209	$	1,363,455	$	179,672	$	88,769	$	63,677	$	975,586	$	14,848,368

(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 ~~$12.1~~$11.7 billion at March 31, ~~2023,~~2024, does not necessarily reflect future cash payments.

The Company also enters into commitments to invest in venture capital and private equity funds ~~as well as LIHTC investments~~and tax credit structures to assist the Bank in meeting its responsibilities under the CRA. The total unfunded commitment for these alternative investments was ~~$437.0~~$796.2 million at March 31, ~~2023.~~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~~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 ~~2023.~~2024. The ~~Company's~~Company’s non-qualified supplemental executive retirement plans and other post-employment benefit plans are unfunded.

At March 31, ~~2023,~~2024, the ~~Company's~~Company’s Condensed Consolidated Balance Sheet reflects a liability for uncertain tax positions of ~~$9.9~~$14.5 million and ~~$2.1~~$4.3 million of accrued interest and ~~penalties.~~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 ~~18:~~16: Commitments and Contingencies and Note ~~11:~~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~~Company’s Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

2627

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~~Company’s strategy and action. To facilitate this process, interest rate sensitivity is monitored on an ongoing basis by the ~~Company's~~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~~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.

~~Management~~The Company measures interest rate risk using simulation analysis and asset/liability modeling software to calculate the ~~Company's~~ earnings at risk and equity at risk. ~~Interest~~Essentially, interest rates are ~~generally~~ 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, ~~2023,~~2024, and December 31, ~~2022,~~2023, the flat rate base scenario assumed a federal funds rate of ~~5.00% and 4.50%, respectively.~~5.50%. The federal funds rate target range was ~~4.75-5.00%~~5.25-5.50% at both March 31, ~~2023,~~2024, and ~~4.25-4.50% at~~ December 31, 2022. Since interest rates rose sharply in 2022, and have continued to rise during the first quarter of 2023, management has incorporated the up and down 300 basis point rate scenarios back into its assessment of interest rate risk.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~~Company’s net interest income over a twelve-month period starting at March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, as compared to actual net interest income and assuming no changes in interest rates:

-300bp -200bp -100bp +100bp +200bp +300bp
March 31, 2023 (9.3)% (5.9)% (2.8)% 2.5% 5.3% 8.7%
December 31, 2022 n/a (6.9)% (3.3)% 3.2% 6.5% n/a


	-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%

~~Asset~~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 ~~decreased at~~generally remained unchanged from December 31, 2023, to March 31, ~~2023, as compared to December 31, 2022,~~2024. This was primarily due to ~~increased interest paid on deposits, the impact of additional customer cash flow hedges entered into during the quarter, and liquidity actions taken~~an increase in response to bank failures. Loans at floors were $0.4 billion at both December 31, 2022, and
March 31, 2023. While loans with floors,fixed-rate investment securities, which ~~are considered “in the money”, have the impact of reducing overall asset sensitivity, as interest rates continue to rise, these loans will move through their floors and reprice accordingly.~~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~~Company’s net interest income ~~for the subsequent~~over a twelve-month period starting at March 31, ~~2023,~~2024, and December 31, ~~2022:~~2023:

Short End of the Yield Curve Long End of the Yield Curve
-100bp -50bp +50bp +100bp -100bp -50bp +50bp +100bp
March 31, 2023 (3.3)% (1.5)% 1.1% 2.3% (2.3)% (1.1)% 1.1% 2.3%
December 31, 2022 (4.2)% (2.0)% 1.7% 3.3% (2.4)% (1.2)% 1.3% 2.6%


	Short End of the Yield Curve				Long 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.

~~Sensitivity~~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 ~~decreased at~~generally remained from December 31, 2023, to March 31, ~~2023, as compared to December 31, 2022,~~2024. This was also primarily due to ~~changes~~an increase in ~~balance sheet composition.~~

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, ~~2023,~~2024, and December 31, ~~2022:~~2023:


(Dollars in thousands)	(Dollars in thousands)	Book Value		Estimated Economic Value		Estimated Economic Value Change						(Dollars in thousands)	Book Value	Estimated Economic Value	Estimated Economic Value Change

						Estimated Economic Value Change
(Dollars in thousands)		Book Value		Estimated Economic Value

						-100bp
-100bp
-100bp
-100bp
-100bp
-100bp
-100bp
-100bp
-100bp
-100bp
-100bp
-100bp
-100bp													+100bp
March 31, 2024
Assets
Assets
Assets	Assets	$	74,844,395	$	71,005,024	$	1,304,906		$	(1,300,939)
Liabilities	Liabilities	66,550,101		60,711,526		2,020,093			(1,745,742)
Net	Net	$	8,294,294	$	10,293,498	$	(715,187)		$	444,803
Net change as % base net economic value	Net change as % base net economic value					(6.9)		%	4.3		%	Net change as % base net economic value				(6.4)	%	3.9	%

December 31, 2022
December 31, 2023
December 31, 2023
December 31, 2023
Assets
Assets
Assets	Assets	$	71,277,521	$	67,920,989	$1,161,794			$	(1,247,083)
Liabilities	Liabilities	63,221,335		55,951,495		1,959,399			(1,716,697)
Net	Net	$	8,056,186	$	11,969,494	$(797,605)			$	469,614
Net change as % base net economic value	Net change as % base net economic value					(6.7)%			3.9		%	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, ~~2023,~~2024, and December 31, ~~2022,~~2023, the ~~Company's~~Company’s duration gap was negative ~~1.2~~1.0 years and negative ~~1.4~~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~~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. ~~At March 31, 2023, long-term rates fell by 38 basis points as compared to December 31, 2022.~~

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~~Company’s interest rate risk position at March 31, ~~2023,~~2024, represents a reasonable level of risk given the current interest rate outlook. ~~Management~~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~~Company’s asset/liability management process can be found under the section captioned ~~"Asset/~~“Asset/Liability Management and Market ~~Risk"~~Risk ” contained in Part II - Item 7. ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations of the ~~Company's~~Company’s Annual Report on Form 10-K for the year ended
December 31, ~~2022.~~2023.

Critical Accounting Estimates

The preparation of the ~~Company's~~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~~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~~Company’s financial condition or results of operations. Management has identified that the ~~Company's~~Company’s most critical accounting estimates are those related to ~~the~~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~~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/~~PD, LGD, EAD, or loss rate ~~or discounted cash flow~~ 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 financial results.

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 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~~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~~Company’s valuation methodology, can be found under the section captioned ~~"Allowance~~“Allowance for Credit Losses on Loans and ~~Leases"~~Leases” contained elsewhere in this Item 2. ~~Management's~~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~~Company’s Annual Report on Form 10-K for the year ended December 31, ~~2022.~~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 ~~loans and leases and~~ the core deposit intangible asset acquired in the ~~Sterling merger include~~Ametros acquisition includes estimates related to discount rates, ~~credit risk,~~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 ~~Sterling merger~~Ametros acquisition can be found within Note 2: ~~Mergers and Acquisitions~~Business Developments in the Notes to Consolidated Financial Statements contained in Part III - Item 8.1. Financial ~~Statements and Supplementary Data included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.~~Statements.

ITEM 1. FINANCIAL STATEMENTS

WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS


		March 31, 2023		December 31, 2022
	March 31, 2024					March 31, 2024	December 31, 2023
(In thousands, except share data)	(In thousands, except share data)	(Unaudited)
Assets:	Assets:
Assets:
Assets:
Cash and due from banks
Cash and due from banks
Cash and due from banks	Cash and due from banks	$	201,683	$	264,118
Interest-bearing deposits	Interest-bearing deposits	2,232,388		575,825
Investment securities available-for-sale, at fair value	Investment securities available-for-sale, at fair value	7,798,977		7,892,697

Investment securities held-to-maturity, net of allowance for credit losses of $282 and $182		7,063,223		6,564,697
Investment securities held-to-maturity, net of allowance for credit losses of $184 and $209

Investment securities held-to-maturity, net of allowance for credit losses of $184 and $209

Investment securities held-to-maturity, net of allowance for credit losses of $184 and $209
Federal Home Loan Bank and Federal Reserve Bank stock	Federal Home Loan Bank and Federal Reserve Bank stock	584,724		445,900
Loans held for sale ($811 and $1,991 valued under fair value option)		210,724		1,991
Loans held for sale ($323 and $2,610 valued under fair value option)
Loans and leases	Loans and leases	50,926,523		49,764,426
Allowance for credit losses on loans and leases	Allowance for credit losses on loans and leases	(613,914)		(594,741)
Loans and leases, net	Loans and leases, net	50,312,609		49,169,685
Deferred tax assets, net	Deferred tax assets, net	315,525		371,634
Premises and equipment, net	Premises and equipment, net	431,432		430,184
Goodwill	Goodwill	2,631,465		2,514,104
Other intangible assets, net	Other intangible assets, net	229,845		199,342
Cash surrender value of life insurance policies	Cash surrender value of life insurance policies	1,233,994		1,229,169
Accrued interest receivable and other assets	Accrued interest receivable and other assets	1,597,806		1,618,175
Total assets	Total assets	$	74,844,395	$	71,277,521
Liabilities and stockholders' equity:
Liabilities and stockholders’ equity:
Deposits:	Deposits:
Deposits:
Deposits:
Non-interest-bearing
Non-interest-bearing
Non-interest-bearing	Non-interest-bearing	$	12,007,387	$	12,974,975
Interest-bearing	Interest-bearing	43,290,092		41,079,365
Total deposits	Total deposits	55,297,479		54,054,340
Securities sold under agreements to repurchase and other borrowings	Securities sold under agreements to repurchase and other borrowings	306,154		1,151,830
Federal Home Loan Bank advances	Federal Home Loan Bank advances	8,560,461		5,460,552
Long-term debt (1)		1,071,413		1,073,128
Long-term debt
Accrued expenses and other liabilities	Accrued expenses and other liabilities	1,314,594		1,481,485
Total liabilities	Total liabilities	66,550,101		63,221,335
Stockholders’ equity:	Stockholders’ equity:
Preferred stock, $0.01 par value: Authorized—3,000,000 shares;	Preferred stock, $0.01 par value: Authorized—3,000,000 shares;
Preferred stock, $0.01 par value: Authorized—3,000,000 shares;
Preferred stock, $0.01 par value: Authorized—3,000,000 shares;
Series F issued and outstanding—6,000 shares
Series F issued and outstanding—6,000 shares
Series F issued and outstanding—6,000 shares	Series F issued and outstanding—6,000 shares	145,037		145,037
Series G issued and outstanding—135,000 shares	Series G issued and outstanding—135,000 shares	138,942		138,942
Common stock, $0.01 par value: Authorized—400,000,000 shares;	Common stock, $0.01 par value: Authorized—400,000,000 shares;
Issued—182,778,045 shares	Issued—182,778,045 shares	1,828		1,828
Issued—182,778,045 shares
Issued—182,778,045 shares
Paid-in capital	Paid-in capital	6,137,743		6,173,240
Retained earnings	Retained earnings	2,856,745		2,713,861
Treasury stock, at cost—8,065,663 and 8,770,472 shares		(397,981)		(431,762)
Treasury stock, at cost—10,314,159 and 10,756,089 shares
Accumulated other comprehensive (loss), net of tax	Accumulated other comprehensive (loss), net of tax	(588,020)		(684,960)
Total stockholders' equity		8,294,294		8,056,186
Total liabilities and stockholders' equity		$	74,844,395	$	71,277,521
Total stockholders’ equity
Total liabilities and stockholders’ equity

See accompanying Notes to Condensed Consolidated Financial Statements.

WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

Three months ended

March 31,

Three months ended

March 31,

(In thousands, except per share data)

2023

2022

Interest Income:

Interest and fees on loans and leases

716,356

346,276

Taxable interest and dividends on investments

100,872

53,724

Interest and fees on loans and leases

Taxable interest on investment securities

Non-taxable interest on investment securities

13,684

9,802

Loans held for sale

Other interest and dividends

Total interest income

830,928

409,828

Interest Expense:

Deposits

150,204

7,399

Securities sold under agreements to repurchase and other borrowings

7,827

957

Securities sold under agreements to repurchase and other borrowings

Federal Home Loan Bank advances

68,126

Long-term debt

9,488

7,168

Long-term debt

Total interest expense

235,645

15,580

Net interest income

595,283

394,248

Net interest income

Provision for credit losses

46,749

188,845

Net interest income after provision for credit losses

548,534

205,403

Net interest income after provision for credit losses

Non-interest Income:

Deposit service fees

45,436

47,827

Deposit service fees

Loan and lease related fees

23,005

22,679

Wealth and investment services

6,587

10,597

Mortgage banking activities

428

Increase in cash surrender value of life insurance policies

6,728

6,732

(Loss) on sale of investment securities

(16,747)

—

Wealth and investment services

Cash surrender value of life insurance policies

(Loss) on sale of investment securities, net

Other income

5,698

15,772

Total non-interest income

70,766

104,035

Total non-interest income

Non-interest Expense:

Compensation and benefits

173,200

184,002

Compensation and benefits

Occupancy

20,171

18,615

Technology and equipment

44,366

55,401

Technology and equipment

Intangible assets amortization

9,497

6,387

Marketing

3,476

3,509

Marketing

Professional and outside services

32,434

54,091

Deposit insurance

12,323

5,222

Deposit insurance

Other expense

37,000

32,558

Total non-interest expense

332,467

359,785

Income (loss) before income taxes

286,833

(50,347)

Income tax expense (benefit)

65,829

(33,600)

Net income (loss)

221,004

(16,747)

Total non-interest expense

Income before income taxes

Income tax expense

Net income

Preferred stock dividends

4,163

3,431

Net income (loss) available to common stockholders

216,841

(20,178)

Preferred stock dividends

Net income available to common stockholders

Earnings (loss) per common share:

Earnings per common share:

Basic

1.24

(0.14)

Diluted

1.24

(0.14)

Diluted

See accompanying Notes to Condensed Consolidated Financial Statements.

WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

Three months ended

March 31,

(In thousands)

2023

2022

Net income (loss)

221,004

(16,747)

Other comprehensive income (loss), net of tax:

(In thousands)

Net income

Other comprehensive (loss) income, net of tax:

Investment securities available-for-sale

71,618

(244,879)

Derivative instruments

21,374

(7,844)

Derivative instruments

Defined benefit pension and other postretirement benefit plans

3,948

(420)

Other comprehensive income (loss), net of tax

96,940

(253,143)

Comprehensive income (loss)

317,944

(269,890)

Defined benefit pension and other postretirement benefit plans

Other comprehensive (loss) income, net of tax

Comprehensive income

See accompanying Notes to Condensed Consolidated Financial Statements.

WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)


	At or for the three months ended March 31, 2024																							At or for the three months ended March 31, 2024
(In thousands, except per share data)																(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 Stockholders’ Equity
Balance at December 31, 2023
		At or for the three months ended March 31, 2023
Net income
Net income
Net income
Other comprehensive (loss), net of tax
Common stock dividends and equivalents—$0.40 per share
Series F preferred stock dividends—$328.125 per share
Series G preferred stock dividends—$16.25 per share
Stock-based compensation

Common shares acquired from stock compensation plan activity
Common shares acquired from stock compensation plan activity
Common shares acquired from stock compensation plan activity
Common stock repurchase program
Balance at March 31, 2024

		At or for the three months ended March 31, 2023
		At or for the three months ended March 31, 2023
		At or for the three months ended March 31, 2023
(In thousands, except per share data)	(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 Stockholders' Equity		(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 Stockholders’ Equity
Balance at December 31, 2022	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	Adoption of ASU No. 2022-02	—		—		—		(4,245)		—		—		(4,245)
Net income	Net income	—		—		—		221,004		—		—		221,004
Other comprehensive income, net of tax	Other comprehensive income, net of tax	—		—		—		—		—		96,940		96,940
Common stock dividends and equivalents—$0.40 per share	Common stock dividends and equivalents—$0.40 per share	—		—		—		(69,712)		—		—		(69,712)
Series F preferred stock dividends—$328.125 per share	Series F preferred stock dividends—$328.125 per share	—		—		—		(1,969)		—		—		(1,969)
Series G preferred stock dividends—$16.25 per share	Series G preferred stock dividends—$16.25 per share	—		—		—		(2,194)		—		—		(2,194)

Stock-based compensation
Stock-based compensation
Stock-based compensation	Stock-based compensation	—		—		(33,471)		—		45,117		—		11,646
Exercise of stock options	Exercise of stock options	—		—		(2,026)		—		3,749		—		1,723
Common shares acquired from stock compensation plan activity	Common shares acquired from stock compensation plan activity	—		—		—		—		(15,085)		—		(15,085)

Balance at March 31, 2023	Balance at March 31, 2023	$	283,979	$	1,828	$	6,137,743	$	2,856,745	$	(397,981)	$	(588,020)	$	8,294,294

		At or for the three months ended March 31, 2022
(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 Stockholders' Equity
Balance at December 31, 2021		$	145,037	$	937	$	1,108,594	$	2,333,288	$	(126,951)	$	(22,580)	$	3,438,325

Net (loss)		—		—		—		(16,747)		—		—		(16,747)
Other comprehensive (loss), net of tax		—		—		—		—		—		(253,143)		(253,143)
Common stock dividends and equivalents—$0.40 per share		—		—		—		(36,234)		—		—		(36,234)
Series F preferred stock dividends—$328.125 per share		—		—		—		(1,969)		—		—		(1,969)
Series G preferred stock dividends—$16.25 per share		—		—		—		(1,463)		—		—		(1,463)
Issued in business contribution		138,942		891		5,040,291		—		—		—		5,180,124
Stock-based compensation		—		—		(19,098)		—		28,101		—		9,003
Exercise of stock options		—		—		(347)		—		758		—		411
Common shares acquired from stock compensation plan activity		—		—		—		—		(18,967)		—		(18,967)
Common stock repurchase program		—		—		—		—		(122,205)		—		(122,205)
Balance at March 31, 2022		$	283,979	$	1,828	$	6,129,440	$	2,276,875	$	(239,264)	$	(275,723)	$	8,177,135
Balance at March 31, 2023
Balance at March 31, 2023

See accompanying Notes to Condensed Consolidated Financial Statements.

WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


		Three months ended March 31,					Three months ended March 31,
(In thousands)	(In thousands)	2023		2022		(In thousands)	2024	2023
Operating Activities:	Operating Activities:
Net income (loss)		$	221,004	$	(16,747)
Net income
Net income
Net income
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	Provision for credit losses	46,749		188,845
Deferred income tax expense (benefit)		13,911		(28,543)
Stock-based compensation expense		11,646		9,003
Provision for credit losses
Provision for credit losses
Deferred income tax expense
Stock-based compensation

Depreciation and amortization of property and equipment and intangible assets	Depreciation and amortization of property and equipment and intangible assets	20,745		16,784
(Accretion) and amortization of interest-earning assets and borrowings		(4,388)		(19,854)
Depreciation and amortization of property and equipment and intangible assets
Depreciation and amortization of property and equipment and intangible assets
Net (accretion) and amortization of interest-earning assets and borrowings
Amortization of low-income housing tax credit investments	Amortization of low-income housing tax credit investments	21,478		10,377
Amortization of mortgage servicing assets		341		570
Reduction of right-of-use lease assets	Reduction of right-of-use lease assets	7,525		7,928
Net (gain) on sale, net of write-downs, of foreclosed properties and repossessed assets		(323)		(103)
Loss on disposal of property and equipment		5		1,662
Loss on sale of investment securities		16,747		—

Loss on sale of investment securities, net

Loss on sale of investment securities, net

Loss on sale of investment securities, net

Originations of loans held for sale
Originations of loans held for sale
Originations of loans held for sale	Originations of loans held for sale	(2,590)		(23,056)
Proceeds from sale of loans held for sale	Proceeds from sale of loans held for sale	3,832		26,753
Net (gain) on mortgage banking activities		(77)		(397)
Net (gain) on sale of loans not originated for sale		(95)		(1,816)
Net (gain) on sale of mortgage servicing rights

(Increase) in cash surrender value of life insurance policies	(Increase) in cash surrender value of life insurance policies	(6,728)		(6,732)
(Gain) from life insurance policies		(528)		(38)
Net (increase) decrease in derivative contract assets and liabilities		(48,570)		215,423
(Increase) in cash surrender value of life insurance policies
(Increase) in cash surrender value of life insurance policies

Net (increase) in accrued interest receivable and other assets		(8,150)		(69,651)
Other operating activities, net
Other operating activities, net
Other operating activities, net
Net decrease (increase) in derivative contract assets and liabilities

Net decrease (increase) in accrued interest receivable and other assets
Net decrease (increase) in accrued interest receivable and other assets
Net decrease (increase) in accrued interest receivable and other assets
Net (decrease) in accrued expenses and other liabilities	Net (decrease) in accrued expenses and other liabilities	(78,240)		(95,151)
Net cash provided by operating activities	Net cash provided by operating activities	214,294		215,257
Investing Activities:	Investing Activities:
Purchases of available-for-sale securities
Purchases of available-for-sale securities
Purchases of available-for-sale securities	Purchases of available-for-sale securities	(357,784)		(714,208)
Proceeds from principal payments, maturities, and calls of available-for-sale securities	Proceeds from principal payments, maturities, and calls of available-for-sale securities	119,033		283,474
Proceeds from sale of available-for-sale securities	Proceeds from sale of available-for-sale securities	395,358		—
Purchases of held-to-maturity securities	Purchases of held-to-maturity securities	(599,387)		(456,139)
Proceeds from principal payments, maturities, and calls of held-to-maturity securities	Proceeds from principal payments, maturities, and calls of held-to-maturity securities	99,992		280,080
Net (increase) decrease in Federal Home Loan Bank and Federal Reserve Bank stock		(138,824)		16,215
Net (increase) in Federal Home Loan Bank and Federal Reserve Bank stock
Alternative investments (capital calls), net of distributions	Alternative investments (capital calls), net of distributions	(3,184)		(5,661)
Net (increase) in loans	Net (increase) in loans	(1,478,986)		(674,472)
Proceeds from sale of loans not originated for sale	Proceeds from sale of loans not originated for sale	106,779		51,127
Proceeds from sale of mortgage servicing rights
Proceeds from sale of foreclosed properties and repossessed assets	Proceeds from sale of foreclosed properties and repossessed assets	1,745		231

Proceeds from sale of property and equipment
Additions to property and equipment	Additions to property and equipment	(10,293)		(4,644)
Proceeds from life insurance policies	Proceeds from life insurance policies	—		7,793
Net cash paid for acquisition of Ametros
Net cash paid for acquisition of interLINK	Net cash paid for acquisition of interLINK	(157,646)		—
Net cash paid for acquisition of Bend		—		(54,407)
Net cash received in merger with Sterling		—		513,960

Net cash (used for) investing activities

Net cash (used for) investing activities

Net cash (used for) investing activities	Net cash (used for) investing activities	(2,023,197)		(756,651)
						See accompanying Notes to Condensed Consolidated Financial Statements.
See accompanying Notes to Condensed Consolidated Financial Statements.
See accompanying Notes to Condensed Consolidated Financial Statements.

WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited), continued
Three months ended March 31,
(In thousands) 2023 2022
Financing Activities:
Net increase in deposits 1,236,463 1,235,442
Proceeds from Federal Home Loan Bank advances 15,450,000 —
Repayments of Federal Home Loan Bank advances (12,350,091) (94)
Net increase in securities sold under agreements to repurchase and other borrowings (845,676) (183,347)
Dividends paid to common stockholders (70,140) (36,234)
Dividends paid to preferred stockholders (4,163) (1,969)
Exercise of stock options 1,723 411
Common stock repurchase program — (122,205)
Common shares acquired related to stock compensation plan activity (15,085) (18,967)
Net cash provided by financing activities 3,403,031 873,037
Net increase in cash and cash equivalents 1,594,128 331,643
Cash and cash equivalents at beginning of period 839,943 461,570
Cash and cash equivalents at end of period $ 2,434,071 $ 793,213
Supplemental disclosure of cash flow information:
Interest paid $ 221,182 $ 15,457
Income taxes paid 6,334 7,112
Non-cash investing and financing activities:
Transfer of loans and leases to foreclosed properties and repossessed assets $ 607 $ 213
Transfer of loans and leases to loans held-for-sale 316,596 42,431
Merger with Sterling: (1)
Tangible assets acquired 17,607 26,919,975
Goodwill and other intangible assets (25,561) 2,149,532
Liabilities assumed (7,954) 24,403,343
Common stock issued — 5,041,182
Preferred stock exchanged — 138,942
Acquisition of Bend: (1)
Tangible assets acquired 294 15,731
Goodwill and other intangible assets (294) 38,966
Liabilities assumed — 290
Acquisition of interLINK:
Tangible assets acquired 6,417 —
Goodwill and other intangible assets 183,216 —
Liabilities assumed 15,948 —
Contingent consideration 16,039 —

~~(1)~~The activities presented for 2023 reflect adjustments recorded within the one-year measurement period, which were identified as a result of extended information gathering and new information that arose from integration activities. Additional information regarding these amounts can be found within Note 2: Mergers and Acquisitions and Note 6: Goodwill and Other Intangible Assets.



WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited), continued

	Three months ended March 31,
(In thousands)	2024		2023
Financing Activities:
Net (decrease) increase in deposits	(26,850)		1,236,463
Net increase in Federal Home Loan Bank advances	1,299,912		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 activities	933,300		3,403,031
Net (decrease) increase in cash and cash equivalents	(170,567)		1,594,128
Cash and cash equivalents, beginning of period	1,715,795		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 paid	11,240		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 sale	1,524		—
Transfer of loans and leases to loans held for sale	284,806		316,596


Acquisition of Ametros:
Tangible assets acquired	256,957		—
Goodwill and other intangible assets	417,085		—
Liabilities assumed	299,507		—
Forgiveness of long-term debt	12,875		—
Pre-existing equity interest	2,200		—
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.

Note 1: ~~Summary~~Basis of ~~Significant~~Presentation and Accounting ~~Policies~~

~~Nature of Operations~~

Webster Financial Corporation is a bank holding company and financial holding company under the BHC Act, incorporated under the laws of Delaware in 1986, and headquartered in Stamford, Connecticut. Webster Bank, along with its HSA Bank division, is a leading commercial bank in the Northeast that delivers a wide range of digital and traditional financial solutions to businesses, individuals, families, and partners across its three differentiated lines of business: Commercial Banking, HSA Bank, and Consumer Banking. While its core footprint spans from New York to Rhode Island and Massachusetts, certain businesses operate in extended geographies. HSA Bank is one of the largest providers of employee benefit solutions in the United States.Standards Updates

Basis of Presentation

The unaudited Condensed Consolidated Financial Statements of the Company have been prepared in accordance with GAAP for interim financial information and Article 10 of Regulation S-X. Certain information and footnote disclosures required by GAAP for complete financial statements have been omitted or condensed. Therefore, the ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements should be read in conjunction with the ~~Company's~~Company’s Annual Report on Form 10-K for the year ended
December 31, ~~2022.~~2023. The results of operations for the three months ended March 31, ~~2023,~~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 Condensed 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 the Company’s Condensed Consolidated Financial Statements.

Use of Estimates

The preparation of the Condensed Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Accounting Standards Adopted in the Current Period

ASU No. ~~2022-02—Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures~~

In March 2022, the FASB issued ASU No. 2022-02, which eliminates the accounting guidance for TDRs by creditors in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying the recognition and measurement guidance for TDRs, an entity must apply the loan refinancing and restructuring guidance in paragraphs 310-20-35-9 through 35-11 to determine whether a modification results in a new loan or a continuation of an existing loan. In addition, the Update requires that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost in the vintage disclosures required by paragraph 326-20-50-6.

Modifications to borrowers experiencing financial difficulty include principal forgiveness, interest rate reductions, payment delays, term extensions, or combinations thereof. Expected losses or recoveries on loans where modifications have been granted to borrowers experiencing financial difficulty have been factored into the ACL on loans and leases. Upon adoption of ASU 2022-02, the Company is no longer required to use a discounted cash flow (or reconcilable) method to measure the ACL resulting from a modification with a borrower experiencing financial difficulty. Accordingly, the Company now applies the same credit loss methodology it uses for similar loans that were not modified.

The Company adopted the Update on January 1, 2023. The Company elected the option to apply the modified retrospective transition method related to the recognition and measurement of TDRs, which resulted in a $5.9 million increase to the Allowance for Credit Losses on Loans and Leases and a $1.7 million decrease to Deferred Tax Assets, net, with a corresponding $4.2 million cumulative-effect adjustment to retained earnings as of the adoption date. The enhanced disclosure requirements provided for by the Update were adopted on a prospective basis. Reporting periods prior to the adoption of the Update are accounted for and presented in accordance with the applicable GAAP.

~~Refer to Note 4: Loans and Leases for additional information regarding modifications granted to borrowers experiencing financial difficulty.~~

~~ASU No. 2022-01—Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method~~

In March 2022, the FASB issued ASU No. 2022-01—Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method, which expands the current last-of-layer method of hedge accounting that permits only one hedged layer to allow multiple hedged layers of a single closed portfolio. To reflect that expansion, the last-of-layer method is renamed the portfolio layer method. Additionally, the amendments in this Update: (i) expand the scope of the portfolio layer method to include non-prepayable assets; (ii) specify eligible hedging instruments in a single-layer hedge; (iii) provide additional guidance on the accounting for and disclosure of hedge basis adjustments; and (iv) specify how hedge basis adjustments should be considered when determining credit losses for the assets included in the closed portfolio. An entity may also reclassify debt securities classified in the held-to-maturity category at the date of adoption to the available-for-sale category only if the entity applies portfolio layer method hedging to one or more closed portfolios that include those debt securities within a 30-day period.

The Company adopted the Update on January 1, 2023 on a prospective basis. The adoption of this guidance did not have a material impact on the Company's Consolidated Financial Statements. The entity did not reclassify any debt securities from the held-to-maturity category to the available-for-sale category as permitted upon adoption.

~~ASU No. 2021-08—Business Combinations (Topic 805)—Accounting for Contract Assets and Contract Liabilities from Contracts with Customers~~

In October 2021, the FASB issued ASU No. 2021-08—Business Combinations (Topic 805)—Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts.

~~The Company adopted the Update on January 1, 2023 on a prospective basis. The adoption of this guidance did not have a material impact on the Company's Consolidated Financial Statements.~~

~~Relevant Accounting Standards Issued But Not Yet Adopted~~

~~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~~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 elect to account for their tax equity investments, regardless of the program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. A reporting entity may make an accounting policy election to apply the proportional amortization method in accordance with paragraph 323-740-25-4 on a ~~tax-credit-program-by-tax-credit-program~~tax-credit-program by tax-credit-program basis rather than electing to ~~applying~~apply the 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 ~~credit~~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 ~~is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, with early~~on January 1, 2024. The adoption ~~permitted. The amendments generally must be applied~~of this guidance did not have a material impact on ~~either a modified retrospective or retrospective basis with a cumulative-effect adjustment to retained earnings reflecting~~ the difference between the previous method used to account for the tax equity investment and the application of the proportional amortization method since the investment was entered into. The Company is in the early assessment stages of evaluating the amendments and the impact of adoption on itsCompany’s Condensed Consolidated Financial Statements and ~~disclosures.~~

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. 2023-01—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 ~~live~~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 (ii) accounted for as a transfer between entities under common control through an adjustment to equity, if, and when, the lessee no longer controls the use of the underlying asset. Additionally, those leasehold improvements are subject to the impairment guidance in Topic 360, Property, Plant, and Equipment.

The Company adopted the Update ~~is effective for fiscal years beginning after December 15, 2023,~~on January 1, 2024. The adoption of this guidance did not have a material impact on the Company’s Condensed Consolidated Financial Statements and interim periods within those fiscal years, with early adoption permitted. The amendments either may be applied prospectively to all new and existing leasehold improvements recognized on or after the adoption date with any remaining unamortized balance of existing leasehold improvements amortized over their remaining useful life to the common control group determined at that date; or retrospectively to the beginning of the perioddisclosures as its operating lease arrangements in which ~~the entity first applied Topic 842, with any leasehold improvements that otherwise would~~it is lessee are currently not have been amortized or impaired recognized through a cumulative-effect adjustment to the opening balance of retained earnings at the beginning of the earliest period presented in accordance with Topic 842. The Company is in the early assessment stages of evaluating the amendments and the impact of adoption on its Consolidated Financial Statements.between entities under common control.

ASU No. 2022-03—Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale ~~Restrictions~~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 adopted the Update is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, with early adoption permitted. For all entities except investment companies, the amendments should be applied prospectively with any adjustments from the adoption of the amendments recognized in earnings and disclosed on ~~the date of adoption.~~January 1, 2024. The adoption of this guidance isdid not ~~expected to~~ have a material impact on the Company’s Condensed Consolidated Financial Statements ~~as the~~and disclosures. The Company does not currently consider contractual restrictions on the sale of an equity security in measuring fair value.

Relevant Accounting Standards Issued But Not Yet Adopted

ASU No. 2023-09—Income Taxes (Topic 740)—Improvements to Income Tax Disclosures

In 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 amount determined by multiplying pretax income from continuing operations by the application statutory rate; (ii) a qualitative description of the states and local jurisdictions that make up the majority (greater than 50%) of the effect of the state 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 effectiveness of income tax disclosures.

The Update is effective for 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 impact on its income tax disclosures.

ASU No. 2023-07—Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU No. 2023-07—Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures, to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. Specifically, the amendments in this Update require disclosure of: (i) significant segment expenses that are regularly provided to the chief 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 assessing segment performance and deciding how to allocate resources.

In addition, all annual disclosures about a reportable segment’s profit or loss and assets currently required by Topic 280, will be required in interim periods. Overall, the Update does not change how a public entity identifies its operating segments, aggregates those operating segments, or determines its reportable segments, or applies the quantitative thresholds to determine its reportable segments.

The Update is effective for annual 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 this guidance to determine the impact on its segment reporting disclosures.

Note 2: ~~Mergers~~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 ~~Acquisitions~~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 acquisition 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 the identifiable assets acquired and liabilities assumed based on their acquisition-date fair values, as summarized in the following table:


(In thousands)	Fair Value
Purchase price consideration	$	378,424
Assets:
Cash and due from banks	310
Premises and equipment	1,078
Other intangible assets	188,900
Deferred tax assets, net	(35,889)
Other assets:
Funds held in escrow	288,167
Accounts receivable	2,435
Prepaid expenses	1,166
Total other assets	291,768
Total assets acquired	$	446,167
Liabilities:
Interest-bearing deposits (1)	(20,622)
Other liabilities:
Accounts payable	684
Accrued expenses	4,270
Deferred revenue	20,391
Member’s funds	288,167
Operating lease liabilities	838
Total other liabilities	314,350
Total liabilities assumed	$	293,728
Net assets acquired	152,439
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 Bank 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 the 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 estimated acquisition-date fair value of the Company’s pre-existing equity interest in Ametros.

The $228.2 million of preliminary goodwill is not deductible for tax purposes. Information regarding the allocation of goodwill to the Company’s reportable segments can be found within Note 15: Segment Reporting.

The Company considers its valuations of other intangible assets, deferred taxes, and certain other assets and other liabilities to be provisional, as management continues to identify and assess information regarding the nature 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 three months ended March 31, 2024.

The following is a description of the valuation 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 products 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 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.

Sale of Mortgage Servicing Rights

On February 12, 2024, the Company sold the majority of its mortgage servicing portfolio, which comprised 9,184 individual mortgage loans with an aggregate UPB of $1.4 billion. In connection with the sale, the Company received net cash proceeds of $18.4 million and derecognized $6.7 million of mortgage servicing rights from Accrued interest receivable and other assets on the Condensed Consolidated Balance Sheet. The resulting $11.7 million net gain on sale of mortgage servicing rights is included in Other income on the Condensed Consolidated Statements of Operations.

interLINK Acquisition

On January 11, 2023, ~~Webster~~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 ~~provides~~provided the Company with access to a unique source of core deposit funding and scalable liquidity and ~~adds~~added another technology-enabled channel to its already differentiated, omnichannel deposit gathering capabilities.

The total purchase price of the acquisition 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, ~~for contingent consideration liabilities~~ can be found within Note ~~14:~~13: Fair Value Measurements.

The ~~transaction~~acquisition has been accounted for as a business combination, and 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 $15.9 million of royalty liabilities. ~~Fair value estimates of the acquired assets and assumed liabilities are subject to adjustment during the one-year measurement period following the closing of the acquisition.~~ The $143.2 million of ~~preliminary~~ goodwill recognized is deductible for tax purposes.

~~Bend Financial, Inc. Acquisition~~

On February 18, 2022, Webster acquired 100% of the equity interests of Bend, a cloud-based platform solution provider for HSAs, in exchange for cash of $55.3 million. The transaction was accounted for as a business combination, and resulted in the addition of $19.6 million in net assets measured at fair value, which primarily comprised $15.9 million of internal use software and a $3.0 million customer relationship intangible asset. The Company's valuations of the assets acquired and liabilities assumed in the Bend Acquisition were considered final as of March 31, 2023.

~~Merger with Sterling Bancorp~~

On January 31, 2022, Webster completed its merger with Sterling. The transaction was accounted for as a business combination. Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their fair values as of the merger effective date. The determination of fair value requires management to make estimates about discount rates, future expected cash flows, market conditions, and other future events that are highly subjective in nature and are subject to change. Fair value estimates of the assets acquired and liabilities assumed were subject to adjustment during the one-year measurement period following the closing of the merger if new information was obtained about facts and circumstances that existed as of the merger effective date that, if known, would have affected the measurement of the amounts recognized as of that date. Measurement period adjustments made during the first quarter of 2023 totaled a net $25.6 million, which pertained to other assets and other liabilities and their related deferred tax impact. The Company's valuations of the assets acquired and liabilities assumed in the merger with Sterling were considered final as of March 31, 2023.

~~The following table summarizes the allocation of the purchase price to the fair value of the identifiable assets acquired and liabilities assumed from Sterling as of January 31, 2022:~~
(In thousands) Unpaid Principal Balance Fair Value
Purchase price consideration $ 5,180,300
Assets:
Cash and due from banks 510,929
Interest-bearing deposits 3,207
Investment securities available-for-sale 4,429,948
Federal Home Loan Bank and Federal Reserve Bank Stock 150,502
Loans held for sale 23,517
Loans and leases:
Commercial non-mortgage $ 5,570,782 5,527,657
Asset-based 694,137 683,958
Commercial real estate 6,790,600 6,656,405
Multi-family 4,303,381 4,255,906
Equipment financing 1,350,579 1,314,311
Warehouse lending 647,767 643,754
Residential 1,313,785 1,281,637
Home equity 132,758 122,553
Other consumer 12,559 12,525
Total loans and leases $ 20,816,348 20,498,706
Deferred tax assets, net (59,716)
Premises and equipment 264,421
Other intangible assets 210,100
Bank-owned life insurance policies 645,510
Accrued interest receivable and other assets 986,729
Total assets acquired $ 27,663,853
Liabilities:
Non-interest-bearing deposits $ 6,620,248
Interest-bearing deposits 16,643,755
Securities sold under agreements to repurchase and other borrowings 27,184
Long-term debt 516,881
Accrued expenses and other liabilities 589,689
Total liabilities assumed $ 24,397,757
Net assets acquired 3,266,096
Goodwill $ 1,914,204

In connection with the merger with Sterling, the Company recorded $1.9 billion of goodwill, which represents the excess of the purchase price over the fair value of the net assets acquired. Information regarding the allocation of goodwill to the Company's reportable segments can be found within Note 16: Segment Reporting. For a description of the valuation methodologies used to estimate the fair values of the significant assets acquired and liabilities assumed, refer to Note 2: Mergers and Acquisitions of the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

~~Merger-Related Expenses and Exit Activities~~

~~The following table summarizes total merger-related expenses, which were primarily incurred in connection with the merger with Sterling:~~
Three months ended March 31,
(In thousands) 2023 2022
Compensation and benefits (1)
$ 11,112 $ 41,585
Occupancy 735 356
Technology and equipment (2)
(1,709) 19,085
Professional and outside services (3)
20,009 44,457
Marketing 135 —
Other expense (4)
(909) 3,012
Total merger-related expenses $ 29,373 $ 108,495

~~(1)Comprised primarily of severance and employee retention costs, and executive synergy stock awards.~~

~~(2)~~Comprised primarily of technology contract termination costs. Includes a reduction of $4.8 million to a previously recorded technology-related contract termination charge during the three months ended March 31, 2023, due to a change in the expected use of certain services post core conversion.

~~(3)Comprised primarily of advisory, legal, accounting, and other professional fees.~~

~~(4)~~Comprised primarily of contract termination costs, disposals on property and equipment, and other miscellaneous expenses. Includes a reduction of $1.7 million to a previously recorded contract termination charge during the three months ended
March 31, 2023, due to a decrease in volume usage.

The following tables summarize the change in accrued expenses and other liabilities as it relates to severance and contract termination costs, which were primarily incurred in connection with the merger with Sterling:
Three months ended March 31, 2023
(In thousands) Severance Contract Termination Total
Balance, beginning of period $ 7,583 $ 30,362 $ 37,945
Additions charged to expense 6,196 — 6,196
Cash payments (6,993) — (6,993)
Other (825) (6,587) (7,412)
Balance, end of period $ 5,961 $ 23,775 $ 29,736
Three months ended March 31, 2022
(In thousands) Severance Contract Termination Total
Balance, beginning of period $ 10,835 $ — $ 10,835
Additions charged to expense 26,971 17,704 44,675
Cash payments (1,766) — (1,766)
Other (1)
(3,884) — (3,884)
Balance, end of period $ 32,156 $ 17,704 $ 49,860

~~(1)~~Reflects the release of $3.9 million from the Company's severance accrual, as the Company re-evaluated its strategic priorities as a combined organization in connection with the Sterling merger, which resulted in modifications to the Company's strategic initiatives that were previously announced in December 2020.

Note 3: Investment Securities

Available-for-Sale

The following tables summarize the amortized cost and fair value of available-for-sale securities by major type:




		At March 31, 2023								At March 31, 2024
(In thousands)	(In thousands)	Amortized Cost (1)		Unrealized Gains		Unrealized Losses		Fair Value
U.S. Treasury notes		$	407,224	$	—	$	(20,452)	$	386,772

Government agency debentures

Government agency debentures

Government agency debentures	Government agency debentures	302,067		—		(39,725)		262,342
Municipal bonds and notes	Municipal bonds and notes	1,707,779		7		(62,558)		1,645,228
Municipal bonds and notes
Municipal bonds and notes
Agency CMO
Agency CMO
Agency CMO	Agency CMO	61,728		—		(4,266)		57,462
Agency MBS	Agency MBS	2,496,654		368		(266,172)		2,230,850
Agency MBS
Agency MBS
Agency CMBS	Agency CMBS	1,889,561		3,542		(257,851)		1,635,252
Agency CMBS
Agency CMBS
CMBS
CMBS
CMBS	CMBS	927,591		—		(25,533)		902,058

Corporate debt	Corporate debt	714,359		—		(88,836)		625,523

Corporate debt

Corporate debt
Private label MBS
Private label MBS
Private label MBS	Private label MBS	48,325		—		(4,063)		44,262
Other	Other	10,061		—		(833)		9,228
Total available-for-sale securities		$	8,565,349	$	3,917	$	(770,289)	$	7,798,977
Other
Other
Total available-for-sale
Total available-for-sale
Total available-for-sale

		At December 31, 2023
		At December 31, 2022
		At December 31, 2023

		At December 31, 2023
(In thousands)	(In thousands)	Amortized Cost (1)		Unrealized Gains		Unrealized Losses		Fair Value
U.S. Treasury notes		$	755,968	$	—	$	(38,928)	$	717,040

Government agency debentures

Government agency debentures

Government agency debentures	Government agency debentures	302,018		—		(43,644)		258,374
Municipal bonds and notes	Municipal bonds and notes	1,719,110		5		(85,913)		1,633,202
Municipal bonds and notes
Municipal bonds and notes
Agency CMO
Agency CMO
Agency CMO	Agency CMO	64,984		—		(5,019)		59,965
Agency MBS	Agency MBS	2,461,337		26		(303,339)		2,158,024
Agency MBS
Agency MBS
Agency CMBS
Agency CMBS
Agency CMBS	Agency CMBS	1,664,600		—		(258,114)		1,406,486
CMBS	CMBS	929,588		—		(32,948)		896,640
CLO		2,108		—		(1)		2,107
CMBS
CMBS

Corporate debt

Corporate debt

Corporate debt	Corporate debt	795,999		—		(91,587)		704,412
Private label MBS	Private label MBS	48,895		—		(4,646)		44,249
Private label MBS
Private label MBS
Other	Other	12,548		—		(350)		12,198
Total available-for-sale securities		$	8,757,155	$	31	$	(864,489)	$	7,892,697
Other
Other
Total available-for-sale
Total available-for-sale
Total available-for-sale

(1)Accrued interest receivable on available-for-sale securities of ~~$41.4~~$43.6 million and ~~$36.9~~$42.5 million at March 31, ~~2023,~~2024, and
December 31, ~~2022,~~2023, respectively, is excluded from amortized cost and is included in Accrued interest receivable and other assets on the accompanying Condensed Consolidated Balance Sheets.

Unrealized Losses

The following tables summarize the gross unrealized losses and fair value of available-for-sale securities by length of time each major security type has been in a continuous unrealized loss position:


		At March 31, 2023														At March 31, 2024
		Less Than 12 Months				12 Months or More				Total						Less Than 12 Months		12 Months or More		Total
(Dollars in thousands)	(Dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Number of Holdings	Fair Value		Unrealized Losses		(Dollars in thousands)	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Number of Holdings	Fair Value	Unrealized Losses
U.S. Treasury notes		$	—	$	—	$	386,772	$	(20,452)	14	$	386,772	$	(20,452)

Government agency debentures
Government agency debentures
Government agency debentures	Government agency debentures	71,134		(3,714)		191,208		(36,011)		19	262,342		(39,725)
Municipal bonds and notes	Municipal bonds and notes	15,479		(239)		1,598,253		(62,319)		430	1,613,732		(62,558)
Agency CMO	Agency CMO	7,915		(228)		49,547		(4,038)		38	57,462		(4,266)
Agency MBS	Agency MBS	86,133		(3,319)		2,045,564		(262,853)		459	2,131,697		(266,172)
Agency CMBS	Agency CMBS	64,576		(933)		1,397,565		(256,918)		133	1,462,141		(257,851)
CMBS	CMBS	155,493		(2,056)		746,565		(23,477)		51	902,058		(25,533)

Corporate debt	Corporate debt	13,041		(1,158)		612,482		(87,678)		92	625,523		(88,836)
Corporate debt
Corporate debt
Private label MBS	Private label MBS	44,262		(4,063)		—		—		3	44,262		(4,063)
Other	Other	4,810		(190)		4,168		(643)		2	8,978		(833)
Total	Total	$	462,843	$	(15,900)	$	7,032,124	$	(754,389)	1,241	$	7,494,967	$	(770,289)

4240


		At December 31, 2022														At December 31, 2023
		Less Than Twelve Months				Twelve Months or Longer				Total						Less Than Twelve Months		Twelve Months or Longer		Total
(Dollars in thousands)	(Dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Number of Holdings	Fair Value		Unrealized Losses		(Dollars in thousands)	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Number of Holdings	Fair Value	Unrealized Losses
U.S. Treasury notes		$	337,563	$	(19,167)	$	379,477	$	(19,761)	23	$	717,040	$	(38,928)

Government agency debentures
Government agency debentures
Government agency debentures	Government agency debentures	258,374		(43,644)		—		—		19	258,374		(43,644)
Municipal bonds and notes	Municipal bonds and notes	1,616,771		(85,913)		—		—		444	1,616,771		(85,913)
Agency CMO	Agency CMO	55,693		(4,640)		4,272		(379)		39	59,965		(5,019)
Agency MBS	Agency MBS	1,641,544		(206,412)		515,206		(96,927)		460	2,156,750		(303,339)
Agency CMBS	Agency CMBS	485,333		(68,674)		921,153		(189,440)		132	1,406,486		(258,114)
CMBS	CMBS	273,150		(8,982)		598,490		(23,966)		52	871,640		(32,948)
CLO		—		—		2,107		(1)		1	2,107		(1)

Corporate debt
Corporate debt
Corporate debt	Corporate debt	692,990		(89,692)		8,421		(1,895)		105	701,411		(91,587)
Private label MBS	Private label MBS	44,249		(4,646)		—		—		3	44,249		(4,646)
Other	Other	12,198		(350)		—		—		4	12,198		(350)
Total	Total	$	5,417,865	$	(532,120)	$	2,429,126	$	(332,369)	1,282	$	7,846,991	$	(864,489)

The ~~$94.2~~$31.3 million ~~decrease~~increase in gross unrealized losses from December 31, ~~2022,~~2023, to March 31, ~~2023,~~2024, is primarily due to ~~a decline in long-term market~~higher interest rates. The Company assesses each available-for-sale security that is in an unrealized loss position to determine whether the decline in fair value below the amortized cost basis is a result ~~from~~of a credit loss or other factors. At both March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, no ACL was recorded on available-for-sale securities as each of the securities in the ~~Company's~~Company’s portfolio are investment grade, 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.

AtAs of March 31, ~~2023,~~2024, based on current market conditions and the ~~Company's current~~Company’s targeted balance sheet composition strategy, the Company ~~has the intent~~intends to hold its available-for-sale securities with unrealized loss positions through the anticipated recovery ~~period, and it is more-likely-than-not that the Company will not have to sell these available-for-sale securities before the recovery of the entire amortized cost basis.~~period. The issuers of these available-for-sale securities have not, to the Company’s knowledge, established any cause for default. Market prices are expected to approach par as the securities approach maturity.

Contractual Maturities

The following table summarizes the amortized cost and fair value of available-for-sale securities by contractual maturity:


		At March 31, 2023
	At March 31, 2024								At March 31, 2024
(In thousands)	(In thousands)	Amortized Cost		Fair Value		(In thousands)	Amortized Cost	Fair Value
Maturing within 1 year	Maturing within 1 year	$	41,886	$	41,593
After 1 year through 5 years	After 1 year through 5 years	953,221		903,665
After 5 through 10 years	After 5 through 10 years	1,469,500		1,364,238
After 10 years	After 10 years	6,100,742		5,489,481
Total available-for-sale securities		$	8,565,349	$	7,798,977
Total available-for-sale

Available-for-sale securities that 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

~~During~~The following table summarizes information related to sales of available-for-sales securities:



	Three months ended March 31,
(In thousands)	2024		2023
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, ~~the Company sold U.S. Treasury notes and Corporate debt securities classified as available-for-sale for proceeds of $395.4 million, which resulted in gross~~net realized losses on sale of available-for-sale securities were $12.4 million and $20.5 ~~million.~~million, respectively. Because $2.6 million and $3.8 million of the ~~total loss recognized was~~gross realized losses for the three months ended March 31, 2024 and 2023, respectively, were attributed to a decline in credit quality, ~~that portion of the charge has~~those portions have been included in the Provision for credit losses on the accompanying Condensed Consolidated Statements of Income. ~~There were no sales~~The amounts of ~~available-for-sale securities during~~$9.8 million and $16.7 million for the three months ended March 31, ~~2022.~~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.

Other Information

The following table summarizes the carrying value of available-for-sale securities pledged for deposits, borrowings, and other purposes:


(In thousands)	(In thousands)	At March 31, 2023		At December 31, 2022		(In thousands)	At March 31, 2024		At December 31, 2023
Pledged for deposits	Pledged for deposits	$	2,868,000	$	2,573,072	Pledged for deposits	$	2,418,726	$	2,102,115
Pledged for borrowings and other	Pledged for borrowings and other	3,848,039		1,195,101		Pledged for borrowings and other	5,687,136		6,111,430
Total available-for-sale securities pledged	Total available-for-sale securities pledged	$	6,716,039	$	3,768,173	Total available-for-sale securities pledged	$	8,105,862	$	8,213,545

At March 31, ~~2023,~~2024, the Company had callable available-for-sale securities with an aggregate carrying value of ~~$2.8~~$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, 2023
	At March 31, 2024																				At March 31, 2024
(In thousands)	(In thousands)	Amortized Cost (1)		Unrealized Gains		Unrealized Losses		Fair Value		Allowance		Net Carrying Value		(In thousands)	Amortized Cost (1)	Unrealized Gains	Unrealized Losses	Fair Value	Allowance	Net Carrying Value
Agency CMO	Agency CMO	$	27,101	$	—	$	(1,727)	$	25,374	$	—	$	27,101
Agency MBS	Agency MBS	2,613,113		1,458		(300,457)		2,314,114		—		2,613,113
Agency CMBS	Agency CMBS	3,364,186		3,790		(410,763)		2,957,213		—		3,364,186
Municipal bonds and notes	Municipal bonds and notes	927,501		2,957		(29,188)		901,270		282		927,219
CMBS	CMBS	131,604		—		(8,893)		122,711		—		131,604
Total held-to-maturity securities		$	7,063,505	$	8,205	$	(751,028)	$	6,320,682	$	282	$	7,063,223
Total held-to-maturity


		At December 31, 2022
	At December 31, 2023																				At December 31, 2023
(In thousands)	(In thousands)	Amortized Cost (1)		Unrealized Gains		Unrealized Losses		Fair Value		Allowance		Net Carrying Value		(In thousands)	Amortized Cost (1)	Unrealized Gains	Unrealized Losses	Fair Value	Allowance	Net Carrying Value
Agency CMO	Agency CMO	$	28,358	$	—	$	(2,060)	$	26,298	$	—	$	28,358
Agency MBS	Agency MBS	2,626,114		827		(339,592)		2,287,349		—		2,626,114
Agency CMBS	Agency CMBS	2,831,949		845		(407,648)		2,425,146		—		2,831,949
Municipal bonds and notes	Municipal bonds and notes	928,845		1,098		(47,183)		882,760		182		928,663
CMBS	CMBS	149,613		—		(9,713)		139,900		—		149,613
Total held-to-maturity securities		$	6,564,879	$	2,770	$	(806,196)	$	5,761,453	$	182	$	6,564,697
Total held-to-maturity

(1)Accrued interest receivable on held-to-maturity securities of ~~$20.2~~$22.6 million and ~~$24.2~~$24.9 million at March 31, ~~2023,~~2024, and
December 31, ~~2022,~~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)

2023

2022

Balance, beginning of period

182

214

Balance, beginning of period

Provision (benefit) for credit losses

100

(10)

(Benefit) provision for credit losses

Balance, end of period

282

204

Balance, end of period

Contractual Maturities

The following table summarizes the amortized cost and fair value of held-to-maturity securities by contractual maturity:


		At March 31, 2023
	At March 31, 2024								At March 31, 2024
(In thousands)	(In thousands)	Amortized Cost		Fair Value		(In thousands)	Amortized Cost	Fair Value
Maturing within 1 year	Maturing within 1 year	$	6,093	$	6,115
After 1 year through 5 years	After 1 year through 5 years	52,893		53,722
After 5 through 10 years	After 5 through 10 years	338,353		324,864
After 10 years	After 10 years	6,666,166		5,935,981
Total held-to-maturity securities		$	7,063,505	$	6,320,682
Total held-to-maturity

Held-to-maturity securities that 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 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~~Poor’s Rating Services, ~~Moody's~~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,~~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, ~~2023,~~2024, or December 31, ~~2022.~~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, 2023
Investment Grade
(In thousands) Aaa Aa1 Aa2 Aa3 A1 A2 Not Rated
Agency CMO $ — $ 27,101 $ — $ — $ — $ — $ —
Agency MBS — 2,613,113 — — — — —
Agency CMBS — 3,364,186 — — — — —
Municipal bonds and notes 350,578 163,138 254,843 116,343 38,134 4,165 300
CMBS 131,604 — — — — — —
Total held-to-maturity securities $ 482,182 $ 6,167,538 $ 254,843 $ 116,343 $ 38,134 $ 4,165 $ 300


		December 31, 2022
		Investment Grade
		March 31, 2024
		March 31, 2024
		March 31, 2024
	Investment Grade
(In thousands)
(In thousands)
(In thousands)	(In thousands)	Aaa		Aa1		Aa2		Aa3		A1		A2		Not Rated		Aaa	Aa1	Aa2	Aa3	A1	A3	Not Rated
Agency CMO	Agency CMO	$	—	$	28,358	$	—	$	—	$	—	$	—	$	—
Agency MBS	Agency MBS	—		2,626,114		—		—		—		—		—
Agency CMBS	Agency CMBS	—		2,831,949		—		—		—		—		—
Municipal bonds and notes	Municipal bonds and notes	336,035		163,312		255,235		116,870		38,177		4,165		15,051
CMBS	CMBS	149,613		—		—		—		—		—		—
Total held-to-maturity securities		$	485,648	$	5,649,733	$	255,235	$	116,870	$	38,177	$	4,165	$	15,051
Total held-to-maturity


	December 31, 2023
	Investment Grade
(In thousands)	Aaa		Aa1		Aa2		Aa3		A1		A3		Not Rated
Agency CMO	$	—	$	23,470	$	—	$	—	$	—	$	—	$	—
Agency MBS	—		2,409,521		—		—		—		—		—
Agency CMBS	—		3,625,627		—		—		—		—		—
Municipal bonds and notes	333,479		162,615		253,671		115,404		32,732		4,165		14,038
CMBS	100,075		—		—		—		—		—		—
Total held-to-maturity	$	433,554	$	6,221,233	$	253,671	$	115,404	$	32,732	$	4,165	$	14,038

At both March 31, ~~2023,~~2024, and December 31, ~~2022,~~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)	(In thousands)	At March 31, 2023		At December 31, 2022		(In thousands)	At March 31, 2024		At December 31, 2023
Pledged for deposits	Pledged for deposits	$	1,573,285	$	1,596,777	Pledged for deposits	$	1,557,987	$	1,212,824
Pledged for borrowings and other	Pledged for borrowings and other	5,057,769		260,735		Pledged for borrowings and other	5,732,569		5,582,379
Total held-to-maturity securities pledged	Total held-to-maturity securities pledged	$	6,631,054	$	1,857,512	Total held-to-maturity securities pledged	$	7,290,556	$	6,795,203

At March 31, ~~2023,~~2024, the Company had callable held-to-maturity securities with an aggregate carrying value of $0.9 billion.

4543

Note 4: Loans and Leases

The following table summarizes loans and leases by portfolio segment and class:


(In thousands)	(In thousands)	At March 31, 2023		At December 31, 2022		(In thousands)	At March 31, 2024	At December 31, 2023
Commercial non-mortgage	Commercial non-mortgage	$	16,939,373	$	16,392,795
Asset-based	Asset-based	1,760,527		1,821,642
Commercial real estate	Commercial real estate	13,499,139		12,997,163
Multi-family	Multi-family	7,014,599		6,621,982
Equipment financing	Equipment financing	1,601,109		1,628,393
Warehouse lending		474,328		641,976

Commercial portfolio
Commercial portfolio
Commercial portfolio	Commercial portfolio	41,289,075		40,103,951
Residential	Residential	8,001,563		7,963,420
Home equity	Home equity	1,580,569		1,633,107
Other consumer	Other consumer	55,316		63,948
Consumer portfolio	Consumer portfolio	9,637,448		9,660,475
Loans and leases	Loans and leases	$	50,926,523	$	49,764,426

The carrying amount of loans and leases at March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, includes net unamortized
(discounts)/premiums and net unamortized deferred (fees)/costs totaling ~~$(58.6)~~$(29.5) million and ~~$(68.7)~~$(33.8) million, respectively. Accrued interest receivable of ~~$246.1~~$284.1 million and ~~$226.3~~$270.4 million at March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, respectively, is excluded from the carrying amount of loans and leases and is included in Accrued interest receivable and other assets on the accompanying Condensed Consolidated Balance Sheets.

At March 31, ~~2023,~~2024, the Company had pledged ~~$15.0~~$17.8 billion and $1.2 billion of eligible loans as collateral to support borrowing capacity at the ~~FHLB.~~FHLB and FRB, respectively.

Non-Accrual and Past Due Loans and Leases

The following tables summarize the aging of accrual and non-accrual loans and leases by class:


		At March 31, 2023															At March 31, 2024
(In thousands)	(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-accrual		Total Past Due and Non-accrual		Current		Total Loans and Leases		(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-accrual	Total Past Due and Non-accrual	Current	Total Loans and Leases
Commercial non-mortgage	Commercial non-mortgage	$	6,916	$	162	$	215	$	69,129	$	76,422	$	16,862,951	$	16,939,373
Asset-based	Asset-based	—		—		—		9,428		9,428		1,751,099		1,760,527
Commercial real estate	Commercial real estate	15,171		—		175		33,966		49,312		13,449,827		13,499,139
Multi-family	Multi-family	1,929		—		—		—		1,929		7,012,670		7,014,599
Equipment financing	Equipment financing	2,472		105		—		13,018		15,595		1,585,514		1,601,109
Warehouse lending		—		—		—		—		—		474,328		474,328

Commercial portfolio
Commercial portfolio
Commercial portfolio	Commercial portfolio	26,488		267		390		125,541		152,686		41,136,389		41,289,075
Residential	Residential	7,112		3,347		—		25,291		35,750		7,965,813		8,001,563
Home equity	Home equity	3,977		1,649		—		28,873		34,499		1,546,070		1,580,569
Other consumer	Other consumer	415		104		213		106		838		54,478		55,316
Consumer portfolio	Consumer portfolio	11,504		5,100		213		54,270		71,087		9,566,361		9,637,448
Total	Total	$	37,992	$	5,367	$	603	$	179,811	$	223,773	$	50,702,750	$	50,926,523


		At December 31, 2022															At December 31, 2023
(In thousands)	(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-accrual		Total Past Due and Non-accrual		Current		Total Loans and Leases		(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-accrual	Total Past Due and Non-accrual	Current	Total Loans and Leases
Commercial non-mortgage	Commercial non-mortgage	$	8,434	$	821	$	645	$	71,884	$	81,784	$	16,311,011	$	16,392,795
Asset-based	Asset-based	5,921		—		—		20,024		25,945		1,795,697		1,821,642
Commercial real estate	Commercial real estate	1,494		23,492		68		39,057		64,111		12,933,052		12,997,163
Multi-family	Multi-family	1,157		—		—		636		1,793		6,620,189		6,621,982
Equipment financing	Equipment financing	806		9,988		—		12,344		23,138		1,605,255		1,628,393
Warehouse lending		—		—		—		—		—		641,976		641,976

Commercial portfolio
Commercial portfolio
Commercial portfolio	Commercial portfolio	17,812		34,301		713		143,945		196,771		39,907,180		40,103,951
Residential	Residential	8,246		3,083		—		25,424		36,753		7,926,667		7,963,420
Home equity	Home equity	5,293		2,820		—		27,924		36,037		1,597,070		1,633,107
Other consumer	Other consumer	1,028		85		13		148		1,274		62,674		63,948
Consumer portfolio	Consumer portfolio	14,567		5,988		13		53,496		74,064		9,586,411		9,660,475
Total	Total	$	32,379	$	40,289	$	726	$	197,441	$	270,835	$	49,493,591	$	49,764,426

4644

The following table provides additional information on non-accrual loans and leases:


		At March 31, 2023				At December 31, 2022
	At March 31, 2024												At March 31, 2024			At December 31, 2023
(In thousands)	(In thousands)	Non-accrual		Non-accrual with No Allowance		Non-accrual		Non-accrual with No Allowance		(In thousands)	Non-accrual	Non-accrual with No Allowance		Non-accrual	Non-accrual with No Allowance
Commercial non-mortgage	Commercial non-mortgage	$	69,129	$	12,382	$	71,884	$	12,598
Asset-based	Asset-based	9,428		1,330		20,024		1,491
Commercial real estate	Commercial real estate	33,966		1,502		39,057		90
Multi-family	Multi-family	—		—		636		—
Equipment financing	Equipment financing	13,018		1,895		12,344		2,240

Commercial portfolio	Commercial portfolio	125,541		17,109		143,945		16,419
Commercial portfolio
Commercial portfolio
Residential	Residential	25,291		10,674		25,424		10,442
Home equity	Home equity	28,873		15,114		27,924		15,193
Other consumer	Other consumer	106		4		148		5
Consumer portfolio	Consumer portfolio	54,270		25,792		53,496		25,640
Total	Total	$	179,811	$	42,901	$	197,441	$	42,059

~~Interest~~Additional interest income on non-accrual loans and leases that would have been recognized ~~as additional interest income~~in the Condensed Consolidated Statements of Income had ~~the~~such loans and leases been current in accordance with their ~~original~~contractual terms ~~totaled $6.1~~was $10.8 million and ~~$4.4~~$6.1 million for the three months ended
March 31, ~~2023,~~2024, and ~~2022,~~2023, respectively.

Allowance for Credit Losses on Loans and Leases

The following table summarizes the change in the ACL on loans and leases by portfolio segment:

At or for the three months ended March 31,
2023 2022
(In thousands) Commercial Portfolio Consumer Portfolio Total Commercial Portfolio Consumer Portfolio Total
ACL on loans and leases:
Balance, beginning of period $ 533,125 $ 61,616 $ 594,741 $ 257,877 $ 43,310 $ 301,187
Adoption of ASU No. 2022-02 7,704 (1,831) 5,873 — — —
Initial allowance for PCD loans and leases (1)
— — — 78,376 9,669 88,045
Provision (benefit) 38,757 (936) 37,821 184,327 4,741 189,068
Charge-offs (26,410) (1,098) (27,508) (11,248) (1,120) (12,368)
Recoveries 1,574 1,413 2,987 1,364 2,075 3,439
Balance, end of period $ 554,750 $ 59,164 $ 613,914 $ 510,696 $ 58,675 $ 569,371
Individually evaluated for credit losses 27,459 8,590 36,049 32,736 12,057 44,793
Collectively evaluated for credit losses $ 527,291 $ 50,574 $ 577,865 $ 477,960 $ 46,618 $ 524,578

~~(1)~~Represents the establishment of the initial reserve for PCD loans and leases, which is reported net of $48.3 million of day one charge-offs recognized at the date of acquisition in accordance with GAAP.


	At or for the three months ended March 31,
	2024						2023
(In thousands)	Commercial Portfolio		Consumer Portfolio		Total		Commercial Portfolio		Consumer Portfolio		Total
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)
Recoveries	553		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 losses	60,786		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

To measure credit risk for the commercial portfolio, the Company employs a dual grade credit risk grading system for estimating the PD and 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 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"~~“Special Mention” rating has a potential weakness that, if left uncorrected, may result in deterioration of the repayment prospects for the asset. AAn (8) ~~"Substandard"~~“Substandard” rating has a well-defined weakness that jeopardizes the full repayment of the debt. A (9) ~~"Doubtful"~~“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"~~“Loss” rating are considered uncollectible and ~~are~~ 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's~~borrower’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.

To measure credit risk for the consumer portfolio, the most relevant credit characteristic is the FICO score, which is a widely used credit scoring system that ranges from 300 to 850. A lower FICO score is indicative of higher credit risk and a higher FICO score is indicative of lower credit risk. FICO scores are updated on at least on a quarterly basis.

The factors such as past due status, employment status, collateral, geography, loans discharged in bankruptcy, and the status of first lien position loans on second lien position loans, are also considered to be consumer portfolio credit quality indicators. For portfolio monitoring purposes, the Company estimates the current value of property secured as collateral for home equity and residential first mortgage lending products on an ongoing basis. The estimate is based on home price indices compiled by the S&P/Case-Shiller Home Price Indices. Real estate price data is applied to the loan portfolios taking into account the age of the most recent valuation and geographic area.

The following tables summarize the amortized cost basis of commercial loans and leases by Composite Credit Risk Profile grade and origination year:


		At March 31, 2023
	At March 31, 2024																										At March 31, 2024
(In thousands)	(In thousands)	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total		(In thousands)	2024	2023	2022	2021	2020	Prior	Revolving Loans Amortized Cost Basis	Total
Commercial non-mortgage:	Commercial non-mortgage:
Risk rating:	Risk rating:
Risk rating:
Risk rating:
Pass
Pass
Pass	Pass	$	867,446	$	5,084,158	$	1,781,158	$	864,566	$	708,271	$	1,156,948	$	5,992,440	$	16,454,987
Special mention	Special mention	25,083		62,638		24,644		12,727		15,640		8,631		30,522		179,885
Substandard	Substandard	22,393		59,838		15,155		46,558		35,660		56,930		67,967		304,501

Doubtful
Total commercial non-mortgage	Total commercial non-mortgage	914,922		5,206,634		1,820,957		923,851		759,571		1,222,509		6,090,929		16,939,373
Current period gross write-offs	Current period gross write-offs	324		103		101		395		169		2,105		—		3,197
Asset-based:	Asset-based:
Risk rating:	Risk rating:
Risk rating:
Risk rating:
Pass
Pass
Pass	Pass	2,000		21,486		—		8,868		10,585		51,172		1,514,179		1,608,290
Special mention	Special mention	—		—		—		—		—		495		66,053		66,548
Substandard	Substandard	—		—		—		—		1,330		—		84,359		85,689
Total asset-based	Total asset-based	2,000		21,486		—		8,868		11,915		51,667		1,664,591		1,760,527
Current period gross write-offs	Current period gross write-offs	—		—		—		—		13,189		—		—		13,189
Commercial real estate:	Commercial real estate:
Risk rating:	Risk rating:
Risk rating:
Risk rating:
Pass
Pass
Pass	Pass	921,252		3,438,768		1,999,831		1,481,136		1,547,577		3,591,701		139,886		13,120,151
Special mention	Special mention	4,225		22,788		43,548		42,519		51,379		74,390		4,499		243,348
Substandard	Substandard	—		515		2,453		212		31,137		101,323		—		135,640

Total commercial real estate	Total commercial real estate	925,477		3,462,071		2,045,832		1,523,867		1,630,093		3,767,414		144,385		13,499,139
Total commercial real estate
Total commercial real estate
Current period gross write-offs	Current period gross write-offs	—		—		—		—		—		8,950		—		8,950
Multi-family:	Multi-family:
Risk rating:	Risk rating:
Risk rating:
Risk rating:
Pass
Pass
Pass	Pass	508,429		1,930,324		1,051,536		449,185		666,060		2,189,520		93,523		6,888,577
Special mention	Special mention	—		37,686		—		13,243		370		40,800		8,402		100,501
Substandard	Substandard	—		—		—		377		—		25,144		—		25,521

Total multi-family	Total multi-family	508,429		1,968,010		1,051,536		462,805		666,430		2,255,464		101,925		7,014,599

Total multi-family

Total multi-family
Current period gross write-offs	Current period gross write-offs	—		—		—		—		—		1,033		—		1,033
Equipment financing:	Equipment financing:
Risk rating:	Risk rating:
Risk rating:
Risk rating:
Pass
Pass
Pass	Pass	132,662		367,476		316,521		295,379		277,878		145,561		—		1,535,477
Special mention	Special mention	—		—		170		—		11,583		6,540		—		18,293
Substandard	Substandard	—		3,183		14,918		12,013		4,527		12,698		—		47,339
Total equipment financing	Total equipment financing	132,662		370,659		331,609		307,392		293,988		164,799		—		1,601,109
Current period gross write-offs	Current period gross write-offs	—		—		—		—		—		41		—		41
Warehouse lending:
Risk rating:
Pass		—		—		—		—		—		—		474,328		474,328
Total warehouse lending		—		—		—		—		—		—		474,328		474,328
Current period gross write-offs		—		—		—		—		—		—		—		—

Total commercial portfolio

Total commercial portfolio

Total commercial portfolio	Total commercial portfolio	$	2,483,490	$	11,028,860	$	5,249,934	$	3,226,783	$	3,361,997	$	7,461,853	$	8,476,158	$	41,289,075
Current period gross write-offs	Current period gross write-offs	$	324	$	103	$	101	$	395	$	13,358	$	12,129	$	—	$	26,410

4846


		At December 31, 2022
	At December 31, 2023																										At December 31, 2023
(In thousands)	(In thousands)	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total		(In thousands)	2023	2022	2021	2020	2019	Prior	Revolving Loans Amortized Cost Basis	Total
Commercial non-mortgage:	Commercial non-mortgage:
Pass
Pass
Pass	Pass	$	5,154,781	$	1,952,158	$	965,975	$	792,977	$	593,460	$	780,200	$	5,670,532	$	15,910,083
Special mention	Special mention	104,277		15,598		21,168		263		14,370		7,770		40,142		203,588
Substandard	Substandard	28,203		11,704		69,954		36,604		70,634		16,852		41,917		275,868
Doubtful	Doubtful	—		—		—		1		—		—		3,255		3,256
Total commercial non-mortgage	Total commercial non-mortgage	5,287,261		1,979,460		1,057,097		829,845		678,464		804,822		5,755,846		16,392,795
Current period gross write-offs
Asset-based:	Asset-based:
Pass
Pass
Pass	Pass	19,659		3,901		9,424		14,413		5,163		55,553		1,551,250		1,659,363
Special mention	Special mention	—		—		—		—		—		—		80,476		80,476
Substandard	Substandard	—		—		—		1,491		—		—		80,312		81,803
Total asset-based	Total asset-based	19,659		3,901		9,424		15,904		5,163		55,553		1,712,038		1,821,642
Current period gross write-offs
Commercial real estate:	Commercial real estate:
Pass
Pass
Pass	Pass	3,420,635		2,246,672		1,556,185		1,605,869		1,058,730		2,681,052		97,832		12,666,975
Special mention	Special mention	21,878		8,995		7,264		37,570		47,419		66,652		1,000		190,778
Substandard	Substandard	519		2,459		216		31,163		47,021		57,997		—		139,375
Doubtful		—		—		—		1		—		34		—		35

Total commercial real estate	Total commercial real estate	3,443,032		2,258,126		1,563,665		1,674,603		1,153,170		2,805,735		98,832		12,997,163
Total commercial real estate
Total commercial real estate
Current period gross write-offs
Multi-family:	Multi-family:
Pass
Pass
Pass	Pass	1,992,980		1,057,705		507,065		694,066		444,564		1,748,337		51,655		6,496,372
Special mention	Special mention	37,677		—		—		95		40,307		726		8,838		87,643
Substandard	Substandard	—		—		382		—		12,681		24,904		—		37,967
Total multi-family	Total multi-family	2,030,657		1,057,705		507,447		694,161		497,552		1,773,967		60,493		6,621,982
Current period gross write-offs
Equipment financing:	Equipment financing:
Pass
Pass
Pass	Pass	388,641		345,792		331,419		308,441		98,874		83,264		—		1,556,431
Special mention	Special mention	—		185		—		11,965		6,775		25		—		18,950
Substandard	Substandard	314		16,711		18,436		5,016		5,307		7,228		—		53,012
Total equipment financing	Total equipment financing	388,955		362,688		349,855		325,422		110,956		90,517		—		1,628,393
Warehouse lending:
Pass		—		—		—		—		—		—		641,976		641,976
Current period gross write-offs

Total commercial portfolio

Total warehouse lending		—		—		—		—		—		—		641,976		641,976

Total commercial portfolio	Total commercial portfolio	$	11,169,564	$	5,661,880	$	3,487,488	$	3,539,935	$	2,445,305	$	5,530,594	$	8,269,185	$	40,103,951

Total commercial portfolio
Current period gross write-offs

4947

The following tables summarize the amortized cost basis of consumer loans by FICO score and origination year:

At March 31, 2023
(In thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total
Residential:
Risk rating:
800+ $ 15,014 $ 681,916 $ 1,043,662 $ 468,357 $ 150,282 $ 993,219 $ — $ 3,352,450
740-799 69,297 866,867 863,689 308,974 111,803 716,299 — 2,936,929
670-739 18,719 346,423 326,999 91,487 62,585 393,008 — 1,239,221
580-669 63 46,328 52,355 14,004 10,532 125,882 — 249,164
579 and below — 53,275 3,563 3,963 99,840 63,158 — 223,799
Total residential 103,093 1,994,809 2,290,268 886,785 435,042 2,291,566 — 8,001,563
Current period gross write-offs — — — — — 211 — 211
Home equity:
Risk rating:
800+ 6,211 26,483 35,954 25,557 8,524 63,613 434,492 600,834
740-799 4,088 29,016 31,860 18,237 6,556 38,748 375,534 504,039
670-739 4,421 15,017 17,246 6,262 4,153 34,796 257,878 339,773
580-669 408 2,984 2,504 1,483 903 13,456 74,873 96,611
579 and below 202 419 766 643 529 6,120 30,633 39,312
Total home equity 15,330 73,919 88,330 52,182 20,665 156,733 1,173,410 1,580,569
Current period gross write-offs — — — — — 108 — 108
Other consumer:
Risk rating:
800+ 140 443 207 479 843 266 17,207 19,585
740-799 266 782 2,589 1,332 1,933 570 7,675 15,147
670-739 154 838 409 1,815 3,117 975 8,836 16,144
580-669 58 304 216 297 694 159 1,294 3,022
579 and below 22 120 43 41 127 55 1,010 1,418
Total other consumer 640 2,487 3,464 3,964 6,714 2,025 36,022 55,316
Current period gross write-offs 435 — 3 114 126 101 — 779
Total consumer portfolio $ 119,063 $ 2,071,215 $ 2,382,062 $ 942,931 $ 462,421 $ 2,450,324 $ 1,209,432 $ 9,637,448
Current period gross write-offs $ 435 $ — $ 3 $ 114 $ 126 $ 420 $ — $ 1,098
At December 31, 2022
(In thousands) 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis Total
Residential:
800+ $ 527,408 $ 954,568 $ 469,518 $ 160,596 $ 28,361 $ 997,409 $ — $ 3,137,860
740-799 963,026 946,339 311,295 111,913 43,684 689,771 — 3,066,028
670-739 381,515 350,671 103,999 62,365 18,451 384,687 — 1,301,688
580-669 40,959 49,648 14,484 5,836 2,357 138,107 — 251,391
579 and below 52,464 3,693 2,057 84,032 1,299 62,908 — 206,453
Total residential 1,965,372 2,304,919 901,353 424,742 94,152 2,272,882 — 7,963,420
Home equity:
800+ 25,475 35,129 25,612 7,578 12,545 55,352 465,318 627,009
740-799 26,743 35,178 17,621 8,111 7,765 32,270 398,692 526,380
670-739 18,396 16,679 8,175 3,635 7,614 30,060 259,646 344,205
580-669 2,848 3,068 1,520 1,456 1,163 13,607 76,614 100,276
579 and below 426 386 651 661 563 4,736 27,814 35,237
Total home equity 73,888 90,440 53,579 21,441 29,650 136,025 1,228,084 1,633,107
Other consumer:
800+ 495 218 544 1,045 247 56 19,196 21,801
740-799 888 2,624 1,959 2,494 941 364 12,218 21,488
670-739 977 603 2,480 4,238 1,041 118 6,107 15,564
580-669 211 117 337 801 173 54 2,223 3,916
579 and below 169 101 29 116 36 21 707 1,179
Total other consumer 2,740 3,663 5,349 8,694 2,438 613 40,451 63,948
Total consumer portfolio $ 2,042,000 $ 2,399,022 $ 960,281 $ 454,877 $ 126,240 $ 2,409,520 $ 1,268,535 $ 9,660,475


	At March 31, 2024
(In thousands)	2024		2023		2022		2021		2020		Prior		Revolving Loans Amortized Cost Basis		Total
Residential:
Risk rating:
800+	$	31,773	$	258,518	$	876,330	$	1,085,654	$	425,046	$	1,029,578	$	—	$	3,706,899
740-799	63,609		336,781		660,935		748,992		300,885		713,330		—		2,824,532
670-739	16,063		139,978		334,526		284,846		88,711		518,781		—		1,382,905
580-669	887		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 residential	112,332		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
740-799	1,373		23,922		19,804		26,051		12,507		37,911		333,256		454,824
670-739	3,970		14,475		14,413		15,265		7,083		30,424		241,202		326,832
580-669	354		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 equity	7,016		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
740-799	9		975		536		465		596		833		6,149		9,563
670-739	392		618		435		324		720		781		4,520		7,790
580-669	146		122		176		92		118		250		1,134		2,038
579 and below	—		77		97		49		14		31		569		837
Total other consumer	603		2,274		1,617		2,805		1,590		2,357		43,306		54,552
Current period gross write-offs	890		—		11		18		26		144		—		1,089
Total consumer portfolio	119,951		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

5048


	At December 31, 2023
(In thousands)	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Residential:
Risk rating:
800+	$	214,446	$	847,009	$	1,096,109	$	451,307	$	141,919	$	910,117	$	—	$	3,660,907
740-799	363,696		703,568		755,750		279,946		112,303		633,578		—		2,848,841
670-739	137,460		293,699		292,255		95,838		48,412		346,663		—		1,214,327
580-669	20,208		52,962		45,770		14,840		10,492		106,497		—		250,769
579 and below	6,909		52,690		11,749		1,345		128,714		51,672		—		253,079
Total residential	742,719		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
740-799	24,772		20,069		27,147		13,888		5,158		34,190		355,926		481,150
670-739	15,857		15,655		15,389		5,992		3,189		29,454		242,189		327,725
580-669	3,080		3,786		1,991		1,658		1,115		9,988		70,102		91,720
579 and below	696		1,109		1,079		576		552		6,319		34,242		44,573
Total home equity	71,452		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
740-799	1,318		586		486		730		690		381		7,180		11,371
670-739	526		570		358		981		1,210		79		3,549		7,273
580-669	69		169		129		153		303		56		1,983		2,862
579 and below	125		97		61		11		28		1		590		913
Total other consumer	2,470		1,778		2,947		2,064		2,486		594		39,001		51,340
Current period gross write-offs	3,263		7		2		218		377		363		—		4,230
Total consumer portfolio	816,641		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 borrower is experiencing financial difficulty and when repayment is substantially expected to be provided through the operation or sale of collateral. At March 31, 2023, and December 31, 2022, the carrying amount of collateral dependent commercial loans and leases totaled $28.1 million and $43.8 million, respectively, and the carrying amount of collateral dependent consumer loans totaled $40.4 million and $45.2 million, respectively. Commercial non-mortgage loans,
asset-based loans, and equipment financing loans and leases 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.

At March 31, 2024, and December 31, 2023, the carrying amount of collateral dependent loans was $50.0 million and $66.1 million, respectively, for commercial loans and leases, and $23.8 million and $22.7 million, respectively, for consumer loans. The ACL for collateral dependent loans and leases is individually assessed based on the fair value of the collateral less costs to ~~sell.~~sell at the reporting date. At March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, the collateral value associated with collateral dependent loans and leases ~~totaled $79.1~~was $78.1 million and ~~$108.0~~$93.7 million, respectively.

Modifications ~~for~~to Borrowers Experiencing Financial Difficulty

On January 1, 2023, the Company adopted ASU 2022-02, which eliminates the accounting guidance for TDRs and enhances the disclosure requirements for certain loan modifications when a borrower is experiencing financial difficulty. For a description of the Company's accounting policies related to the accounting and reporting of TDRs, for which comparative period information is presented, refer to Note 1: Summary of Significant Accounting Policies of the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

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 ~~extension,~~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 ~~which~~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 ~~that~~ a payment delay of three ~~month~~months or less ~~payment delay generally would~~to be ~~considered~~ 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 to consumer borrowers subject to its loss mitigation program and includes them in its disclosures to the extent that the modification is considered other-than-insignificant.

The following ~~table summarizes~~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 during the three months ended March 31, 2023:~~granted:


		For the three months ended March 31, 2024
		For the three months ended March 31, 2024
		For the three months ended March 31, 2024
(In thousands)	(In thousands)	Interest Rate Reduction		Term Extension		Combination - Term Extension and Interest Rate Reduction		Total		% of Total Class (2)		(In thousands)	Interest Rate Reduction		Term Extension		Payment Delay		Combination - Term Extension and Interest Rate Reduction		Total		% of Total Class (2)
Commercial non-mortgage	Commercial non-mortgage	$	7	$	29,884	$	—	$	29,891	0.2	%	Commercial non-mortgage	$	1,934	$	18,124	$	50,038	$	1,099	$	71,195	0.4	%
Asset-based
Commercial real estate
Multi-family
Equipment financing

Commercial real estate		—		17,116		—		17,116		0.1

Residential
Residential
Residential
Home equity	Home equity	—		57		64		121		—

Total (1)	Total (1)	$	7	$	47,057	$	64	$	47,128	0.1	%
Total (1)
Total (1)													$	2,563	$	78,090	$	50,038	$	1,299	$	131,990	0.3	%


	For the three months ended March 31, 2023
(In thousands)	Interest Rate Reduction		Term Extension		Combination - Term Extension and Interest Rate Reduction		Total		% of Total Class (2)
Commercial non-mortgage	$	7	$	29,884	$	—	$	29,891	0.2	%

Commercial real estate	—		17,116		—		17,116		0.1




Home equity	—		57		64		121		—

Total (1)	$	7	$	47,057	$	64	$	47,128	0.1	%

(1)The total amortized cost excludes accrued interest receivable of $0.8 million and $0.2 ~~million.~~million at March 31, 2024, and 2023, respectively.

(2)Represents the total amortized cost of the loans modified ~~during the reporting period~~ as a percentage of the ~~period-end~~total period end loan balance by class.

The following ~~table describes~~tables describe the financial effect of the modifications made to borrowers experiencing financial ~~difficulty during the three months ended March 31, 2023:~~difficulty:


			For the three months ended March 31, 2024
			Financial Effect (1)
Interest Rate Reduction:
Commercial non-mortgage			Reduced weighted average interest rate by 2.5%



Term Extension:
Commercial non-mortgage			Extended term by a weighted average of 0.5 years
Asset-based			Extended term by a weighted average of 0.3 years
Commercial real estate			Extended term by a weighted average of 0.3 years
Multi-family			Extended term by a weighted average of 0.7 years


Payment Delay:
Commercial non-mortgage			Provided 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-mortgage			Reduced weighted average interest rate by 4.5%


Term Extension:
Commercial non-mortgage			Extended term by a weighted average of 0.6 years

Commercial real estate			Extended term by a weighted average of 1.0 year

Home equity			Extended term by a weighted average of 8.8 years






Combination - Term Extension and Interest Rate Reduction:
~~Combination:~~

Home equity			Extended 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 ~~table summarizes~~tables summarize the aging of loans that ~~have~~had been modified ~~during~~in the twelve months preceding March 31, 2024, and in the three months ended March 31, 2023:


	At March 31, 2024																										At March 31, 2024
(In thousands)														(In thousands)	Current		30-59 Days Past Due		60-89 Days Past Due				90+ Days Past Due					Non-Accrual			Total
Commercial non-mortgage														Commercial non-mortgage	$	77,451	$	—	$	19			$	—				$	97,587		$	175,057
Asset-based														Asset-based	42,331								—					42,331
Commercial real estate														Commercial real estate	24,859						—				169					25,028
Multi-family														Multi-family	—		18,103		22,406				—					9,481			49,990
Equipment financing														Equipment financing	1,762						—				317					2,079

Residential
Residential
Residential															1,258						—				764					2,022
Home equity														Home equity	510						—				86					596

Total
Total
Total															$	148,171	$	18,103	$	22,425			$	—				$	108,404		$	297,103

		At March 31, 2023
		At March 31, 2023
		At March 31, 2023
(In thousands)	(In thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Non-Accrual		Total		(In thousands)	Current		30-59 Days Past Due		60-89 Days Past Due				90+ Days Past Due					Non-Accrual			Total
Commercial non-mortgage	Commercial non-mortgage	$	3,562	$	—	$	—	$	—	$	26,329	$	29,891	Commercial non-mortgage	$	3,562	$	—	$	—			$	—				$	26,329		$	29,891

Commercial real estate
Commercial real estate
Commercial real estate	Commercial real estate	17,116		—		—		—		—		17,116		17,116								—				17,116

Home equity	Home equity	23		—		—		—		98		121

Home equity

Home equity															23						—				98					121

Total	Total	$	20,701	$	—	$	—	$	—	$	26,427	$	47,128
Total
Total															$	20,701	$	—	$	—			$	—				$	26,427		$	47,128

There were no$17.8 million of commercial non-mortgage loans made to borrowers experiencing financial difficulty that were modified in the preceding twelve months and 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.~~defaulted were not significant. For the purposes of this disclosure, a payment default is defined as 90 or more days past due and ~~still~~ 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.

~~Troubled Debt Restructurings Prior to the Adoption of ASU 2022-02~~

~~The following table summarizes information related to TDRs:~~


~~(In thousands)~~	~~At December 31, 2022~~
~~Accrual status~~	$	~~110,868~~
~~Non-accrual status~~	~~83,954~~
~~Total TDRs~~	$	~~194,822~~

~~Additional funds committed to borrowers in TDR status~~	$	~~1,724~~
~~Specific reserves for TDRs included in the ACL on loans and leases:~~
~~Commercial portfolio~~	$	~~14,578~~
~~Consumer portfolio~~	~~3,559~~

~~The following table summarizes loans and leases modified as TDRs by class and modification type during the three months ended March 31, 2022:~~
(Dollars in thousands) Number of
Contracts
Recorded
Investment (1)
Commercial non-mortgage
Term extension 2 $ 98
Combination - Term extension and interest rate reduction 2 92
Residential
Other (2)
5 2,985
Home equity
Combination - Term extension and interest rate reduction 4 44
Other (2)
17 1,242
Total TDRs 30 $ 4,461

~~(1)Post-modification balances approximated pre-modification balances. The aggregate amount of charge-offs due to restructurings was not significant.~~

~~(2)Other included covenant modifications, forbearance, discharges under Chapter 7 bankruptcy, or other concessions.~~

During the three months ended March 31, 2022, the portion of TDRs deemed to uncollectible and charged-off totaled $9.1 million for the commercial portfolio and $0.1 million for the consumer portfolio. There were no significant loans and leases modified as TDRs within the previous twelve months and for which there was a payment default during the three months ended March 31, 2022.

5351

~~Note 5: Transfers and Servicing of Financial Assets~~

The Company originates and sells residential mortgage loans in the normal course of business, primarily to
government-sponsored entities through established programs and securitizations. Residential mortgage origination fees, adjustments for changes in fair value, and any gain or loss recognized on residential mortgage loans sold are included in Mortgage banking activities on the accompanying Condensed Consolidated Statements of Income.

~~The following table summarizes information related to mortgage banking activities:~~
Three months ended March 31,
(In thousands) 2023 2022
Net gain on sale $ 77 $ 397
Origination fees 11 135
Fair value adjustment (29) (104)
Mortgage banking activities $ 59 $ 428
Proceeds from sale $ 3,832 $ 26,753
Loans sold with servicing rights retained 1,229 25,363

Under certain circumstances, the Company may decide to sell loans that were not originated or otherwise acquired with the intent to sell. During the three months ended March 31, 2023, and 2022, the Company sold commercial loans not originated for sale for proceeds of $106.7 million and $51.1 million, respectively, which resulted in net gains on sale of $0.1 million and
$1.8 million, respectively.

In addition, the Company may retain servicing rights on its residential mortgage loans sold in the normal course of business. At March 31, 2023, and December 31, 2022, the aggregate principal balance of residential mortgage loans serviced for others totaled $1.9 billion and $2.0 billion, respectively. Mortgage servicing rights are held at the lower of cost, net of accumulated amortization, or fair market value, and are included in Accrued interest receivable and other assets on the accompanying Condensed Consolidated Balance Sheets. 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 market value.

~~The following table presents the change in the carrying amount for mortgage servicing rights:~~
Three months ended March 31,
(In thousands) 2023 2022
Balance, beginning of period $ 9,515 $ 9,237
Acquired from Sterling — 859
Additions 15 209
Amortization (341) (570)
Balance, end of period $ 9,189 $ 9,735

Loan servicing fees, net of mortgage servicing rights amortization, were $1.3 million and $1.1 million for the three months ended March 31, 2023, and 2022, respectively, and are included in Loan and lease related fees on the accompanying Condensed Consolidated Statements of Income. Information regarding the fair value of loans held for sale and mortgage servicing rights can be found within Note 14: Fair Value Measurements.

Note 6:5: Goodwill and Other Intangible Assets

Goodwill

The following table summarizes changes in the carrying amount of goodwill:


(In thousands)	(In thousands)	At March 31, 2023	At December 31, 2022		(In thousands)	At March 31, 2024			At December 31, 2023
Balance, beginning of period	Balance, beginning of period		$	2,514,104			$	538,373
Ametros acquisition (1)
interLINK acquisition	interLINK acquisition		143,216				—
Sterling merger (1)			(25,561)				1,939,765
Bend acquisition (1)			(294)				35,966
Bend acquisition
Sterling merger
Balance, end of period	Balance, end of period		$	2,631,465			$	2,514,104

(1)Reflects ~~adjustments~~the $228.2 million of preliminary goodwill recorded ~~within~~in connection with the ~~one-year measurement period, which were identified as a result~~Ametros acquisition in January 2024, and $8.4 million of extended information gathering and new information that arose from integration activities. The allocation of the purchase price and goodwill calculations for both the Sterling merger and Bend acquisition are final as of March 31, 2023.other adjustments.

Information regarding goodwill by reportable segment can be found within Note ~~16:~~14: Segment Reporting.

Other Intangible Assets

The following table summarizes other intangible assets:
At March 31, 2023 At December 31, 2022
(In thousands) Gross Carrying
Amount Accumulated
Amortization Net Carrying
Amount Gross Carrying
Amount Accumulated
Amortization Net Carrying
Amount
Core deposits $ 146,037 $ 41,237 $ 104,800 $ 146,037 $ 36,710 $ 109,327
Customer relationships (1)
151,000 29,755 121,245 115,000 24,985 90,015
Non-competition agreement (1)
4,000 200 3,800 — — —
Total other intangible assets $ 301,037 $ 71,192 $ 229,845 $ 261,037 $ 61,695 $ 199,342


	At March 31, 2024						At 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 relationships	151,000		46,654		104,346		151,000		43,116		107,884
Non-competition agreement	4,000		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 amount is ~~attributed~~due to the Ametros acquisition in January 2024, which resulted in the identification and recognition of ~~interLINK, in which the Company identified and recorded~~ a ~~$36.0~~$182.8 million core deposit intangible asset ~~for broker dealer relationships, which is being amortized on an accelerated basis over an estimated useful life of 10 years,~~ and a ~~$4.0~~$6.1 million ~~non-competition agreement, which is being amortized on a straight-line basis over an estimated useful life of 5 years.~~trade name.

The remaining estimated aggregate future amortization expense for other intangible assets is as follows:


(In thousands)	(In thousands)	At March 31, 2023		(In thousands)	At March 31, 2024 (1)
Remainder of 2023		$	26,710
2024		29,618
Remainder of 2024
2025	2025	25,956
2026	2026	25,565
2027	2027	25,565
2028
Thereafter	Thereafter	96,431

(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.

5552

Note 7:6: Deposits

The following table summarizes deposits by type:


(In thousands)	(In thousands)	At March 31, 2023		At December 31, 2022		(In thousands)	At March 31, 2024	At December 31, 2023
Non-interest-bearing:	Non-interest-bearing:
Demand	Demand	$	12,007,387	$	12,974,975
Demand
Demand
Interest-bearing:	Interest-bearing:
Health savings accounts
Health savings accounts
Health savings accounts	Health savings accounts	8,272,507		7,944,892
Checking	Checking	8,560,750		9,237,529
Money market	Money market	14,203,858		11,062,652
Savings	Savings	7,723,198		8,673,343
Time deposits	Time deposits	4,529,779		4,160,949
Total interest-bearing	Total interest-bearing	$	43,290,092	$	41,079,365
Total deposits	Total deposits	$	55,297,479	$	54,054,340

Time deposits, money market, and interest-bearing checking obtained through brokers (1)	Time deposits, money market, and interest-bearing checking obtained through brokers (1)	$	1,268,506	$	1,964,873
Time deposits, money market, and interest-bearing checking obtained through brokers (1)
Time deposits, money market, and interest-bearing checking obtained through brokers (1)
Aggregate amount of time deposit accounts that exceeded the FDIC limit	Aggregate amount of time deposit accounts that exceeded the FDIC limit	1,457,289		1,894,950
Demand deposit overdrafts reclassified as loan balances	Demand deposit overdrafts reclassified as loan balances	6,832		8,721

(1)Excludes ~~$2.9~~$5.8 billion and $5.7 billion of money market sweep deposits received through interLINK at March 31, ~~2023.~~2024, and December 31, 2023, respectively.

The following table summarizes the scheduled maturities of time deposits:


(In thousands)	(In thousands)	At March 31, 2023		(In thousands)	At March 31, 2024
Remainder of 2023		$	3,168,801
2024		1,132,496
Remainder of 2024
2025	2025	132,543
2026	2026	53,306
2027	2027	36,616
2028
Thereafter	Thereafter	6,017
Total time deposits	Total time deposits	$	4,529,779

Note 8:7: Borrowings

The following table summarizes securities sold under agreements to repurchase and other borrowings:


	At March 31, 2024																At March 31, 2024								At December 31, 2023
(Dollars in thousands)										(Dollars in thousands)		Total Outstanding			Rate					Total Outstanding			Rate

		At March 31, 2023				At December 31, 2022
(Dollars in thousands)		Total Outstanding		Rate		Total Outstanding		Rate

Securities sold under agreements to repurchase (1)

Securities sold under agreements to repurchase (1)

Securities sold under agreements to repurchase (1)	Securities sold under agreements to repurchase (1)	$	306,154	0.11	%	$	282,005	0.11	%	$	126,886		0.12	0.12	%			$	358,387		3.43	3.43	%
Federal funds purchased	Federal funds purchased	—		—		869,825		4.44

Securities sold under agreements to repurchase and other borrowings	Securities sold under agreements to repurchase and other borrowings	$	306,154	0.11	%	$	1,151,830	3.38	%
Securities sold under agreements to repurchase and other borrowings
Securities sold under agreements to repurchase and other borrowings												$	361,886		3.58	%				$	458,387		3.88	%

(1)The Company has the right of offset with respect to all repurchase agreement assets and liabilities. Total securities sold under agreements to repurchase are presented as gross 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~~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 summarizes information for FHLB advances:


		At March 31, 2023				At December 31, 2022
	At March 31, 2024															At March 31, 2024						At December 31, 2023
(Dollars in thousands)	(Dollars in thousands)	Total Outstanding		Weighted- Average Contractual Coupon Rate		Total Outstanding		Weighted- Average Contractual Coupon Rate		(Dollars in thousands)	Total Outstanding		Weighted- Average Contractual Coupon Rate				Total Outstanding		Weighted- Average Contractual Coupon Rate
Maturing within 1 year	Maturing within 1 year	$	8,550,183	5.18	%	$	5,450,187	4.40	%	Maturing within 1 year	$	3,650,000	5.50	5.50	%		$	2,350,000	5.53	5.53	%
After 1 but within 2 years	After 1 but within 2 years	—		—		—		—
After 2 but within 3 years	After 2 but within 3 years	—		—		—		—
After 3 but within 4 years	After 3 but within 4 years	—		—		—		—
After 4 but within 5 years	After 4 but within 5 years	486		1.35		252		—
After 5 years	After 5 years	9,792		2.07		10,113		2.09
Total FHLB advances	Total FHLB advances	$	8,560,461	5.18	%	$	5,460,552	4.39	%	Total FHLB advances	$	3,659,930	5.49	5.49	%		$	2,360,018	5.52	5.52	%

Aggregate carrying value of assets pledged as collateral		$	19,778,232			$	13,692,379
Aggregate market value of assets pledged as collateral
Aggregate market value of assets pledged as collateral
Aggregate market value of assets pledged as collateral
Remaining borrowing capacity at FHLB	Remaining borrowing capacity at FHLB	6,509,929				4,291,326
Remaining borrowing capacity at FHLB
Remaining borrowing capacity at FHLB

The Bank may borrow up to the amount of eligible mortgages and securities that have been pledged as collateral to secure FHLB advances, which includes certain residential and commercial real estate loans, home equity lines of credit, CMBS, Agency MBS, Agency CMO, U.S. Treasury notes, and MBS. The Bank was in compliance with its FHLB collateral requirements at both March 31, ~~2023,~~2024, and December 31, ~~2022.~~2023.

The following table summarizes long-term debt:


(Dollars in thousands)	(Dollars in thousands)		At March 31, 2023		At December 31, 2022		(Dollars in thousands)	At March 31, 2024	At December 31, 2023
4.375%	4.375%	Senior fixed-rate notes due February 15, 2024	$	150,000	$	150,000
4.100%	4.100%	Senior fixed-rate notes due March 25, 2029 (1)	332,119		333,458
4.000%	4.000%	Subordinated fixed-to-floating rate notes due December 30, 2029	274,000		274,000
3.875%	3.875%	Subordinated fixed-to-floating rate notes due November 1, 2030	225,000		225,000
Junior subordinated debt Webster Statutory Trust I floating-rate notes due September 17, 2033 (2)			77,320		77,320
Junior subordinated debt Webster Statutory Trust I floating-rate notes due September 17, 2033 (3)
Total senior and subordinated debt	Total senior and subordinated debt		1,058,439		1,059,778
Discount on senior fixed-rate notes	Discount on senior fixed-rate notes		(701)		(756)
Debt issuance cost on senior fixed-rate notes	Debt issuance cost on senior fixed-rate notes		(1,723)		(1,824)
Premium on subordinated fixed-to-floating rate notes	Premium on subordinated fixed-to-floating rate notes		15,398		15,930
Long-term debt (1)	Long-term debt (1)		$	1,071,413	$	1,073,128

(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 ~~$32.1~~$26.8 million and ~~$33.5~~$28.1 million at March 31, ~~2023,~~2024, and December 31, ~~2022,~~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 ~~which~~ varies quarterly based on 3-month ~~LIBOR~~SOFR plus a credit spread adjustment plus a market spread of 2.95%, ~~was 7.86% and 7.69%~~which yielded 8.54% at March 31, ~~2023,~~2024, and 8.59% at December 31, ~~2022, respectively.~~2023.

5754

Note 9:8: Accumulated Other Comprehensive ~~Income~~ (Loss), Net of Tax

The following tables summarize the changes in each component of accumulated other comprehensive ~~income~~ (loss), net of tax:

Three months ended March 31, 2023
(In thousands) Securities Available
For Sale Derivative Instruments Defined Benefit Pension and Other Postretirement Benefit Plans Total
Balance, beginning of period $ (631,160) $ (8,874) $ (44,926) $ (684,960)
Other comprehensive income before reclassifications 56,635 20,782 3,553 80,970
Amounts reclassified from accumulated other comprehensive (loss) 14,983 592 395 15,970
Other comprehensive income, net of tax 71,618 21,374 3,948 96,940
Balance, end of period $ (559,542) $ 12,500 $ (40,978) $ (588,020)
Three months ended March 31, 2022
(In thousands) Securities Available
For Sale Derivative Instruments Defined Benefit Pension and Other Postretirement Benefit Plans Total
Balance, beginning of period $ 4,536 $ 6,070 $ (33,186) $ (22,580)
Other comprehensive (loss) before reclassifications (244,879) (8,613) (719) (254,211)
Amounts reclassified from accumulated other comprehensive income (loss) — 769 299 1,068
Other comprehensive (loss), net of tax (244,879) (7,844) (420) (253,143)
Balance, end of period $ (240,343) $ (1,774) $ (33,606) $ (275,723)


	Three months ended March 31, 2024
(In thousands)	Investment Securities Available-for-Sale		Derivative Instruments		Defined Benefit Pension and Other Postretirement Benefit Plans		Total
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-Sale		Derivative Instruments		Defined Benefit Pension and Other Postretirement Benefit Plans		Total
Balance, beginning of period	$	(631,160)	$	(8,874)	$	(44,926)	$	(684,960)
Other comprehensive income before reclassifications	56,635		20,782		3,553		80,970
Amounts reclassified from accumulated other comprehensive (loss)	14,983		592		395		15,970
Other comprehensive income, net of tax	71,618		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 ~~income~~ (loss):


Accumulated Other Comprehensive Income (Loss) Components		Three months ended			Associated Line Item on the Condensed Consolidated Statements of Income
		March 31,
			2023					2022
Accumulated Other Comprehensive (Loss) Components

											Accumulated Other Comprehensive (Loss) Components			Three months ended									Associated Line Item on the Condensed Consolidated Statements of Income
March 31,
2024
2024
2024
(In thousands)
(In thousands)
(In thousands)	(In thousands)
Investment securities available-for-sale:	Investment securities available-for-sale:
Net holding (losses)			$	(20,483)		$	—	(Loss) on sale of investment securities
Investment securities available-for-sale:
Investment securities available-for-sale:
Net unrealized holding (losses)
Net unrealized holding (losses)
Net unrealized holding (losses)											$	(12,396)						$	(20,483)					(Loss) on sale of investment securities, net (1)

Tax benefit

Tax benefit

Tax benefit	Tax benefit		5,500			—		Income tax expense	3,275				5,500				5,500				Income tax expense					Income tax expense
Net of tax	Net of tax		$	(14,983)		$	—
Derivative instruments:	Derivative instruments:
Derivative instruments:
Derivative instruments:
Hedge terminations
Hedge terminations
Hedge terminations	Hedge terminations		$	(76)		$	(77)	Interest expense	$	(34)			$			$	(76)			Interest expense					Interest expense
Premium amortization	Premium amortization		(736)			(978)		Interest income	Premium amortization		(272)				(736)				(736)			Interest income					Interest income
Tax benefit	Tax benefit		220			286		Income tax expense	Tax benefit		4				220				220			Income tax expense					Income tax expense
Net of tax	Net of tax		$	(592)		$	(769)
Defined benefit pension and other postretirement benefit plans:	Defined benefit pension and other postretirement benefit plans:
Defined benefit pension and other postretirement benefit plans:
Defined benefit pension and other postretirement benefit plans:
Actuarial net loss amortization	Actuarial net loss amortization		$	(542)		$	(411)	Other expense
Actuarial net loss amortization
Actuarial net loss amortization											$	(657)						$	(542)					Other expense

Tax benefit
Tax benefit
Tax benefit	Tax benefit		147			112		Income tax expense	178				147				147				Income tax expense					Income tax expense
Net of tax	Net of tax		$	(395)		$	(299)

(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 is attributed to a decline in credit quality, in which the amount realized is then included in the Provision for credit losses. During the three months ended March 31, 2024, and 2023, $2.6 million and $3.8 million of the net losses realized on sale of investment securities available-for-sale were included in the Provision for credit losses, respectively.

5855

Note ~~10:~~9: Regulatory Capital and Restrictions

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 financial statements. Under capital adequacy guidelines and/or the regulatory framework for prompt corrective action ~~(such provisions apply~~(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 ~~the~~ Basel III ~~Capital Rules~~ to ensure capital adequacy require the Holding Company and the Bank to maintain minimum ratios of CET1 ~~capital to total risk-weighted assets (CET1 risk-based capital),~~Risk-Based Capital, Tier 1 ~~capital to total risk-weighted assets (Tier 1 risk-based capital),~~Risk-Based Capital, Total ~~capital to total risk-weighted assets (Total risk-based capital),~~Risk-Based Capital, and Tier 1 ~~capital to average tangible assets (Tier 1 leverage capital),~~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. ~~Upon~~At the time of initial adoption of the Basel III Capital Rules, the Company had elected to opt-out of the requirement to include certain components of AOCI in CET1 capital. Tier 1 capital consists of CET1 capital plus preferred stock. Total capital consists of Tier 1 capital and Tier 2 capital, as defined in the regulations. Tier 2 capital includes ~~permissible portions of~~qualifying subordinated debt and the permissible portion of the ACL.

At March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, both the Holding Company and the Bank were classified as well-capitalized. Management believes that no events or changes have occurred subsequent to ~~year-end~~period end that would change this designation.

The following tables provides information on the capital ratios for the Holding Company and the Bank:
At March 31, 2023

Actual (1)
Minimum Requirement Well Capitalized
(Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio
Webster Financial Corporation
CET1 risk-based capital $ 5,796,578 10.42 % $ 2,503,935 4.5 % $ 3,616,794 6.5 %
Total risk-based capital 7,229,512 12.99 4,451,439 8.0 5,564,299 10.0
Tier 1 risk-based capital 6,080,557 10.93 3,338,580 6.0 4,451,439 8.0
Tier 1 leverage capital 6,080,557 8.65 2,812,832 4.0 3,516,040 5.0
Webster Bank
CET1 risk-based capital $ 6,605,427 11.89 % $ 2,500,320 4.5 % $ 3,611,573 6.5 %
Total risk-based capital 7,162,664 12.89 4,445,013 8.0 5,556,266 10.0
Tier 1 risk-based capital 6,605,427 11.89 3,333,760 6.0 4,445,013 8.0
Tier 1 leverage capital 6,605,427 9.40 2,810,676 4.0 3,513,345 5.0


	At March 31, 2024
	Actual (1)				Minimum Requirement				Well Capitalized
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio










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 Capital	6,207,020		11.08		3,361,883		6.0		4,482,510		8.0
Total Risk-Based Capital	7,400,017		13.21		4,482,510		8.0		5,603,138		10.0
Tier 1 Leverage Capital	6,207,020		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 Capital	6,588,389		11.78		3,355,930		6.0		4,474,574		8.0
Total Risk-Based Capital	7,191,796		12.86		4,474,574		8.0		5,593,217		10.0
Tier 1 Leverage Capital	6,588,389		9.04		2,913,783		4.0		3,642,229		5.0

At December 31, 2022

Actual (1)
Minimum Requirement Well Capitalized
(Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio
Webster Financial Corporation
CET1 risk-based capital $ 5,822,369 10.71 % $ 2,446,344 4.5 % $ 3,533,608 6.5 %
Total risk-based capital 7,203,029 13.25 4,349,056 8.0 5,436,320 10.0
Tier 1 risk-based capital 6,106,348 11.23 3,261,792 6.0 4,349,056 8.0
Tier 1 leverage capital 6,106,348 8.95 2,730,212 4.0 3,412,765 5.0
Webster Bank
CET1 risk-based capital $ 6,661,504 12.28 % $ 2,442,058 4.5 % $ 3,527,417 6.5 %
Total risk-based capital 7,165,935 13.20 4,341,437 8.0 5,426,796 10.0
Tier 1 risk-based capital 6,661,504 12.28 3,256,078 6.0 4,341,437 8.0
Tier 1 leverage capital 6,661,504 9.77 2,727,476 4.0 3,409,345 5.0


	At December 31, 2023
	Actual (1)				Minimum Requirement				Well Capitalized
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
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 Capital	6,472,412		11.62		3,342,920		6.0		4,457,227		8.0
Total Risk-Based Capital	7,643,423		13.72		4,457,227		8.0		5,571,534		10.0
Tier 1 Leverage Capital	6,472,412		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 Capital	6,913,443		12.43		3,337,113		6.0		4,449,484		8.0
Total Risk-Based Capital	7,494,332		13.47		4,449,484		8.0		5,561,855		10.0
Tier 1 Leverage Capital	6,913,443		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.

5956

Dividend Restrictions

The Holding Company is dependent upon dividends from the Bank to provide funds for the payment of dividends to stockholders and for other cash requirements. Dividends paid by the Bank are subject to various federal and state regulatory limitations. Express approval by the OCC is required if the effect of dividends declared would cause the regulatory capital of the Bank to fall below specified minimum levels or if the amount would exceed net income for that year combined with undistributed net income for the preceding two years.

The Bank paid the Holding Company $175.0 million and $150.0 million in dividends ~~during~~for the three months ended March 31, 2024, and 2023, respectively, for which no express approval from the OCC was required. ~~No dividends were paid by the Bank to the Holding Company during the three months ended March 31, 2022.~~

Cash Restrictions

The Bank is required under Federal Reserve 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.

Note ~~11:~~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~~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~~Company’s Annual Report on Form 10-K for the year ended December 31, ~~2022.~~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 Sterling merger in 2022, the Company acquired assets held in a separate Rabbi Trust that had been previously established to fund obligations due under the Greater New York Savings Bank ~~Directors'~~Directors’ Retirement Plan.

Investments held in 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'~~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 ~~14:~~13: Fair Value Measurements.

Non-Consolidated

~~Low-Income~~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 and the Company does not have the obligation to absorb losses and/or the right to receive benefits.~~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~~Company’s LIHTC investments and related unfunded commitments:

(In thousands) March 31, 2023 December 31, 2022
Gross investment in LIHTC investments $ 798,085 $ 797,453
Accumulated amortization (90,902) (69,424)
Net investment in LIHTC investments $ 707,183 $ 728,029
Unfunded commitments for LIHTC investments $ 329,023 $ 335,959


(In thousands)	March 31, 2024		December 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~~Company’s LIHTC investments isand the related unfunded commitments are included in Accrued interest receivable and other assets ~~on the accompanying Condensed Consolidated Balance Sheets,~~ and ~~represents the Company's maximum exposure to loss. The related unfunded commitments are included in~~ Accrued expenses and other liabilities on the accompanying Condensed Consolidated Balance ~~Sheets. There~~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 no$158.7 million and zero of net commitments approved to fund LIHTC investments, ~~during~~respectively.

The following table summarizes the ~~three months ended March 31, 2023, or 2022.~~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)	2024		2023
Income tax credits and other income tax benefits from LIHTC investments	$	(28,024)	$	(21,898)
Investment amortization from LIHTC investments	20,413		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.

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~~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 8:7: 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~~Company’s other non-marketable investments was ~~$165.1~~$193.2 million and ~~$144.9~~$190.1 million at March 31, ~~2023,~~2024, and December 31, ~~2022,~~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 ~~$273.0~~$306.3 million and ~~$243.9~~$307.2 million, respectively. Additional information regarding the fair value of other non-marketable investments can be found within
Note ~~14:~~13: Fair Value Measurements.

Note ~~12:~~11: Earnings Per Common Share

The following table summarizes the calculation of basic and diluted earnings per common share:

Three months ended March 31,

(In thousands, except per share data)

2023

2022

(In thousands, except per share data)

Net income

221,004

(16,747)

Less: Preferred stock dividends

4,163

3,431

Less: Preferred stock dividends

Net income available to common stockholders

216,841

(20,178)

Less: Earnings allocated to participating securities

1,845

—

Less: Earnings allocated to participating securities

Earnings applicable to common stockholders

214,996

(20,178)

Weighted-average common shares outstanding - basic

172,766

147,394

Weighted-average common shares outstanding - basic

Add: Effect of dilutive stock options and restricted stock

117

—

Add: Effect of dilutive stock options and restricted stock

Weighted-average common shares outstanding - diluted

172,883

147,394

Basic earnings per common share

1.24

(0.14)

Basic earnings per common share

Diluted earnings per common share

1.24

(0.14)

Diluted earnings per common share

Earnings per common share 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 from performance-based restricted stock that were not included in the computation of dilutive earnings per common share because they were anti-dilutive under the treasury stock method were ~~85,033~~54,586 and ~~341,904~~85,033 for the three months ended March 31, 2024, and 2023, ~~and 2022, respectively.~~respectively,

6160

Note ~~13:~~12: Derivative Financial Instruments

Derivative Positions and Offsetting

Derivatives Designated as Hedging Instruments. Interest rate swaps allow the Company to change the fixed or variable nature of an interest rate without the exchange of the underlying notional amount. Certain pay fixed/receive variable interest rate swaps are designated as cash flow hedges to 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 Company to limit the potential adverse impact of variable interest 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 the counterparty if interest rates rise above the cap rate, and interest rate floors 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 economic risks, but does not designate the instruments in hedge relationships. In addition, the Company enters into derivative contracts to accommodate customer needs. Derivative contracts with customers are offset with dealer counterparty transactions structured with matching terms to ensure minimal impact on earnings.

The following tables present the notional amounts and fair values, including accrued interest, of derivative positions:


		At March 31, 2023
		Asset Derivatives				Liability Derivatives
	At March 31, 2024															At March 31, 2024
	Asset Derivatives												Asset Derivatives				Liability Derivatives
(In thousands)	(In thousands)	Notional Amounts		Fair Value		Notional Amounts		Fair Value		(In thousands)	Notional Amounts	Fair Value		Notional Amounts	Fair Value
Designated as hedging instruments:	Designated as hedging instruments:
Interest rate derivatives (1)	Interest rate derivatives (1)	$	3,750,000	$	25,892	$	1,750,000	$	5,493
Interest rate derivatives (1)
Interest rate derivatives (1)
Not designated as hedging instruments:	Not designated as hedging instruments:
Interest rate derivatives (1)
Interest rate derivatives (1)
Interest rate derivatives (1)	Interest rate derivatives (1)	7,417,679		219,149		7,411,878		323,123
Mortgage banking derivatives (2)	Mortgage banking derivatives (2)	1,973		16		—		—
Other (3)	Other (3)	169,276		171		659,603		651
Total not designated as hedging instruments	Total not designated as hedging instruments	7,588,928		219,336		8,071,481		323,774
Gross derivative instruments, before netting	Gross derivative instruments, before netting	$	11,338,928	245,228		$	9,821,481	329,267
Less: Master netting agreements	Less: Master netting agreements			30,506				30,506
Cash collateral				181,853				400
Cash collateral received/paid
Total derivative instruments, after netting	Total derivative instruments, after netting			$	32,869			$	298,361

		At December 31, 2022
		Asset Derivatives				Liability Derivatives
		At December 31, 2023
		At December 31, 2023
		At December 31, 2023
	Asset Derivatives												Asset Derivatives				Liability Derivatives
(In thousands)	(In thousands)	Notional Amounts		Fair Value		Notional Amounts		Fair Value		(In thousands)	Notional Amounts	Fair Value		Notional Amounts	Fair Value
Designated as hedging instruments:	Designated as hedging instruments:
Interest rate derivatives (1)	Interest rate derivatives (1)	$	1,350,000	$	1,515	$	1,750,000	$	9,632
Interest rate derivatives (1)
Interest rate derivatives (1)
Not designated as hedging instruments:	Not designated as hedging instruments:
Interest rate derivatives (1)
Interest rate derivatives (1)
Interest rate derivatives (1)	Interest rate derivatives (1)	7,024,507		221,225		7,022,844		403,952
Mortgage banking derivatives (2)	Mortgage banking derivatives (2)	3,283		32		—		—
Other (3)	Other (3)	161,934		134		606,478		915
Total not designated as hedging instruments	Total not designated as hedging instruments	7,189,724		221,391		7,629,322		404,867
Gross derivative instruments, before netting	Gross derivative instruments, before netting	$	8,539,724	222,906		$	9,379,322	414,499
Less: Master netting agreements	Less: Master netting agreements			16,129				16,129
Cash collateral				184,095				—
Cash collateral received/paid
Total derivative instruments, after netting	Total derivative instruments, after netting			$	22,682			$	398,370

(1)Balances related to clearing houses are presented as a single unit of account. In accordance with their rule books, clearing houses legally characterize variation margin payments as settlement of derivatives rather than collateral against derivative positions. ~~At March 31, 2023, and December 31, 2022, notional~~Notional amounts of interest rate swaps cleared through clearing houses ~~include $2.4 billion~~included $91.0 million and ~~$2.7 billion~~$113.8 million for asset derivatives ~~respectively,~~at March 31, 2024, and ~~$1.9 million and zero for liability derivatives,~~December 31, 2023, respectively. The related fair values ~~approximate~~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 residential loans ~~exclude~~excluded approved floating rate commitments of ~~$3.8~~$1.7 million and ~~$2.4~~$1.0 million at March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, respectively.

(3)Other derivatives include foreign currency forward contracts related to lending arrangements, a Visa equity swap transaction, and risk participation agreements. Notional amounts of risk participation agreements ~~include $154.9~~included $300.5 million and ~~$125.6~~$299.2 million for asset derivatives and ~~$589.7~~$707.6 million and ~~$559.2~~$682.9 million for liability derivatives at March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, respectively, which ~~have~~had insignificant related fair values.

6261

The following tables ~~present fair value positions transitioned from gross~~represent the off-setting derivative financial instruments that are subject to ~~net upon applying counterparty~~matter netting agreements:


		At March 31, 2023
		At March 31, 2024
		At March 31, 2024
		At March 31, 2024
(In thousands)	(In thousands)	Gross Amount Recognized		Derivative Offset Amount		Cash Collateral Received/Pledged		Net Amount Presented		Amounts Not Offset
Asset derivatives	Asset derivatives	$	220,259	$	30,506	$	181,853	$	7,900	$	8,270
Asset derivatives
Asset derivatives
Liability derivatives
Liability derivatives
Liability derivatives	Liability derivatives	31,360		30,506		400		454		5,032

		At December 31, 2023
		At December 31, 2022
		At December 31, 2023

		At December 31, 2023
(In thousands)	(In thousands)	Gross Amount Recognized		Derivative Offset Amount		Cash Collateral Received/Pledged		Net Amount Presented		Amounts Not Offset
Asset derivatives	Asset derivatives	$	217,246	$	16,129	$	184,095	$	17,022	$	17,392
Asset derivatives
Asset derivatives
Liability derivatives	Liability derivatives	16,129		16,129		—		—		1,545
Liability derivatives
Liability derivatives

Derivative Activity

The following table summarizes the income statement effect of derivatives designated as hedging instruments:
Recognized In Three months ended March 31,
(In thousands) Net Interest Income 2023 2022
Fair value hedges:
Recognized on derivatives Deposits $ (10,235) $ —
Recognized on hedged items Deposits 10,427 —
Net recognized on fair value hedges $ (192) $ —
Cash flow hedges:
Interest rate derivatives Long-term debt $ 76 $ 76
Interest rate derivatives Interest and fees on loans and leases (736) 2,559
Net recognized on cash flow hedges $ (812) $ 2,483

~~The following table summarizes information related to fair value hedging adjustments:~~
Condensed Consolidated Balance Sheet Line Item in Which Hedged Item is Located Carrying Amount of Hedged Item Cumulative Amount of Fair Value Hedging Adjustment Included in Carrying Amount
(In thousands) At March 31,
2023 At December 31,
2022 At March 31,
2023 At December 31,
2022
Deposits $ 410,254 $ — $ 10,254 $ —
Long-term debt (1)
332,119 333,458 32,119 33,458


	Recognized In	Three months ended March 31,
(In thousands)	Net Interest Income	2024		2023
Fair value hedges:
Interest rate derivatives	Deposits interest expense	$	(1,320)	$	(10,235)
Hedged item	Deposits interest expense	—		10,427
Net recognized on fair value hedges (1)		$	1,320	$	(192)
Cash flow hedges:
Interest rate derivatives	Long-term debt interest expense	$	34	$	76
Interest rate derivatives	Interest 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 value hedging relationship on ~~its long-term debt~~$400.0 million of deposits, which pertained to a portion of Ametros’ member deposits, in ~~2020.~~2023. The $1.3 million basis adjustment included in the carrying amount ~~is being~~of deposits at December 31, 2023, was amortized into interest expense ~~over~~in January 2024 upon the ~~remaining life~~acquisition of ~~the long-term debt.~~Ametros.

~~The following table summarizes the income statement effect of derivatives not designated as hedging instruments:~~
Recognized In Three months ended March 31,
(In thousands) Non-interest Income 2023 2022
Interest rate derivatives Other income $ (3,687) $ 6,445
Mortgage banking derivatives Mortgage banking activities (16) (49)
Other Other income (735) 397
Total not designated as hedging instruments $ (4,438) $ 6,793

Time-value premiums, which are amortized on a straight-line basis, are excluded from the assessment of hedge effectiveness for purchased options designated as cash flow hedges. ~~At March 31, 2023, the~~The remaining unamortized balance of time-value premiums at March 31, 2024, was ~~$2.1~~$0.3 million. Over the next twelve months, an estimated $30.4 million decrease to interest income ~~of $9.5 million~~ will be reclassified from ~~AOCI~~(AOCL) relating to cash flow hedge gain/loss, and an estimated increase to interest expense of $0.3 million will be reclassified from AOCI relating to cash flow hedge terminations. At March 31, 2023, the remaining unamortized loss on terminated cash flow hedges was $0.3 million.loss. The maximum length of time over which forecasted transactions are hedged is ~~4.9~~3.0 years.

Additional information regarding cash flow hedge activity impacting ~~AOCI~~(AOCL) and the related amounts reclassified to net income can be found within Note 9:8: Accumulated Other Comprehensive ~~Income~~ (Loss), Net of Tax.

The following table summarizes the income statement effect of derivatives not designated as hedging instruments:


	Recognized In	Three months ended March 31,
(In thousands)	Non-interest Income	2024		2023
Interest rate derivatives	Other income	$	1,290	$	(3,687)
Mortgage banking derivatives	Mortgage banking activities	(22)		(16)
Other	Other income	1,277		(735)
Total not designated as hedging instruments		$	2,545	$	(4,438)

Derivative Exposure. At March 31, ~~2023,~~2024, the Company had ~~$38.7~~$2.3 million in initial margin ~~collateral~~ posted at clearing ~~houses. In addition, $187.3~~houses, and $290.3 million of cash collateral received is included in Cash and due from banks on the accompanying Condensed Consolidated Balance Sheets. The Company regularly evaluates the credit risk of its 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. ~~Current~~The current net credit exposure relating to ~~interest rate derivatives~~derivative contracts with ~~the Bank's~~ customers was ~~$24.9~~$16.7 million at March 31, ~~2023.~~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 derivatives~~derivative contracts with ~~the Bank's~~ customers ~~totaled $97.8~~was $112.0 million at
March 31, ~~2023.~~2024. The Company has incorporated a credit valuation adjustment (contra-liability) to reflect non-performance risk in the fair value measurement of its derivatives, which totaled ~~$5.3~~$7.5 million and ~~$8.4~~$6.2 million at March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, respectively. Various factors impact changes in the valuation adjustment over time, such as changes in the credit spreads of the contracted parties, and changes in market rates and volatilities, which affect the total expected exposure of the derivative instruments.

Note ~~14:~~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. The determination of fair value may require the use of estimates when quoted market prices are not available. Fair value estimates made at a specific point in time are based on management’s judgments regarding future expected losses, current economic conditions, the risk characteristics of each financial instrument, and other subjective factors that cannot be determined with precision.

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 active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels within the fair value hierarchy are as follows:

•Level 1: Inputs to the valuation methodology are unadjusted 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 techniques that require significant management judgment or estimation.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Available-for-Sale 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 fair value hierarchy. ~~U.S. Treasury notes have a readily determinable fair value, and accordingly, 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. These 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~~service’s results and has a process in place to challenge their valuations and ~~methodologies that appear unusual or unexpected.~~methodologies. Government agency debentures, Municipal bonds and notes, Agency CMO, Agency MBS, Agency CMBS, CMBS, CLO, Corporate debt, Private label MBS, and 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. Except 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 resulting fair value is then validated against valuations performed by ~~independent third parties.~~dealer counterparties. These derivative instruments are classified within Level 2 of the fair value hierarchy.

Mortgage Banking Derivatives. The Company uses forward sales of mortgage loans and mortgage-backed securities 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 this in-between time period, the Company is subject to the risk that market interest rates may change. If rates rise, investors generally will pay less to purchase mortgage loans, which would result in a reduction in the gain on sale of the loans, or possibly a loss. In an effort to mitigate this risk, forward delivery sales commitments are established in 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. Accordingly, mortgage banking derivatives are classified within Level 2 of the fair value hierarchy.

Originated Loans Held For Sale. The Company has elected to measure originated loans held for sale at 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 these loans. The fair value of originated loans held for sale is based on quoted market prices of similar loans sold in conjunction with securitization transactions. Accordingly, originated loans held for sale are classified within Level 2 of the fair value hierarchy.

The following table compares the fair value to the ~~unpaid principal balance~~UPB of originated loans held for sale:

At March 31, 2023

At December 31, 2022

At March 31, 2024

At December 31, 2023

(In thousands)

Fair Value

Unpaid Principal Balance

Difference

Fair Value

Unpaid Principal Balance

Difference

(In thousands)

Fair Value

UPB

Difference

Fair Value

UPB

Difference

Originated loans held for sale

811

684

127

1,991

1,631

360

Rabbi Trust Investments. Investments held in each of the ~~Company's~~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. ~~The Company has elected to measure the Rabbi Trusts' investments at fair value.~~ Accordingly, the Rabbi ~~Trusts'~~Trusts’ investments are classified within Level 1 of the fair value hierarchy. At both
March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, the total cost basis of the investments held in the Rabbi Trusts was ~~$10.0~~$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, ~~2023,~~2024, and December 31, ~~2022,~~2023, equity investments with a readily determinable fair value had a total carrying amount of ~~$0.5~~$1.2 million and ~~$0.4~~$0.9 million, respectively, with no remaining unfunded commitment. During the three months ended March 31, ~~2023,~~2024, there were total write-ups in fair value of ~~$0.1~~$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~~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, ~~2023,~~2024, and December 31, ~~2022,~~2023, these alternative investments had a total carrying amount of ~~$27.0~~$38.6 million and ~~$89.2~~$35.9 million, respectively, and a remaining unfunded commitment of ~~$28.5~~$27.9 million and ~~$82.7~~$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 ~~were initially~~ 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 ~~table summarizes~~tables summarize the unobservable inputs used to derive the estimated fair value of the Company’s contingent consideration liabilities ~~at March 31, 2023~~ (dollars in thousands):


	At March 31, 2024																At March 31, 2024
Agreement	Agreement	Maximum Amount		Probability of Achievement	Payment Term (in years)	Discount Rate	Fair Value		Agreement	Maximum Amount		Probability of Achievement	Payment Term (in years)	Discount Rate	Fair Value
(i) Re-sign broker dealers(1)	(i) Re-sign broker dealers(1)	$	4,826	99.0 %	0.22	5.50 %	$	4,798	(i) Re-sign broker dealers(1)	$	207	99.0 %	1.63	6.40 %	$	182
(ii) Deposit program growth	(ii) Deposit program growth	$	12,500	100.0 %	1.97	5.50 %	$	11,241	(ii) Deposit program growth	$	12,500	100.0 %	0.75	6.40 %	$	11,568


	At December 31, 2023
Agreement	Maximum Amount		Probability of Achievement	Payment Term (in years)	Discount Rate	Fair Value
(i) Re-sign broker dealers (1)	$	4,826	99.0 %	1.88	6.40 %	$	4,232
(ii) Deposit program growth	$	12,500	100.0 %	1.00	6.40 %	$	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.

The following tables summarize the fair values of assets and liabilities measured at fair value on a recurring basis:




		At March 31, 2023						At March 31, 2024
(In thousands)	(In thousands)	Level 1		Level 2		Level 3		Total		(In thousands)	Level 1	Level 2	Level 3	Total
Financial Assets:	Financial Assets:
Available-for-sale securities:	Available-for-sale securities:
U.S. Treasury notes		$	386,772	$	—	$	—	$	386,772
Available-for-sale securities:
Available-for-sale securities:

Government agency debentures

Government agency debentures

Government agency debentures	Government agency debentures	—		262,342		—		262,342
Municipal bonds and notes	Municipal bonds and notes	—		1,645,228		—		1,645,228
Agency CMO	Agency CMO	—		57,462		—		57,462
Agency MBS	Agency MBS	—		2,230,850		—		2,230,850
Agency CMBS	Agency CMBS	—		1,635,252		—		1,635,252
CMBS	CMBS	—		902,058		—		902,058

Corporate debt	Corporate debt	—		625,523		—		625,523
Corporate debt
Corporate debt
Private label MBS	Private label MBS	—		44,262		—		44,262
Other	Other	—		9,228		—		9,228
Total available-for-sale securities	Total available-for-sale securities	386,772		7,412,205		—		7,798,977
Gross derivative instruments, before netting (1)	Gross derivative instruments, before netting (1)	82		245,146		—		245,228
Originated loans held for sale	Originated loans held for sale	—		811		—		811
Investments held in Rabbi Trusts	Investments held in Rabbi Trusts	11,992		—		—		11,992
Alternative investments (2)		476		—		—		27,486
Alternative investments
Alternative investments measured at NAV (2)
Total financial assets	Total financial assets	$	399,322	$	7,658,162	$	—	$	8,084,494
Financial Liabilities:	Financial Liabilities:
Gross derivative instruments, before netting (1)	Gross derivative instruments, before netting (1)	$	557	$	328,710	$	—	$	329,267
Gross derivative instruments, before netting (1)
Gross derivative instruments, before netting (1)
Contingent consideration	Contingent consideration	—		—		16,039		16,039
Total financial liabilities	Total financial liabilities	$	557	$	328,710	$	16,039	$	345,306




		At December 31, 2022						At December 31, 2023
(In thousands)	(In thousands)	Level 1		Level 2		Level 3		Total		(In thousands)	Level 1	Level 2	Level 3	Total
Financial Assets:	Financial Assets:
Available-for-sale securities:	Available-for-sale securities:
U.S. Treasury notes		$	717,040	$	—	$	—	$	717,040
Available-for-sale securities:
Available-for-sale securities:

Government agency debentures

Government agency debentures

Government agency debentures	Government agency debentures	—		258,374		—		258,374
Municipal bonds and notes	Municipal bonds and notes	—		1,633,202		—		1,633,202
Agency CMO	Agency CMO	—		59,965		—		59,965
Agency MBS	Agency MBS	—		2,158,024		—		2,158,024
Agency CMBS	Agency CMBS	—		1,406,486		—		1,406,486
CMBS	CMBS	—		896,640		—		896,640
CLO		—		2,107		—		2,107

Corporate debt
Corporate debt
Corporate debt	Corporate debt	—		704,412		—		704,412
Private label MBS	Private label MBS	—		44,249		—		44,249
Other	Other	—		12,198		—		12,198
Total available-for-sale securities	Total available-for-sale securities	717,040		7,175,657		—		7,892,697
Gross derivative instruments, before netting (1)	Gross derivative instruments, before netting (1)	79		222,827		—		222,906
Originated loans held for sale	Originated loans held for sale	—		1,991		—		1,991
Investments held in Rabbi Trusts	Investments held in Rabbi Trusts	12,103		—		—		12,103
Alternative investments (2)		430		—		—		89,678
Alternative investments
Alternative investments measured at NAV (2)
Total financial assets	Total financial assets	$	729,652	$	7,400,475	$	—	$	8,219,375
Financial Liabilities:	Financial Liabilities:
Gross derivative instruments, before netting (1)	Gross derivative instruments, before netting (1)	$	843	$	413,656	$	—	$	414,499
Gross derivative instruments, before netting (1)
Gross derivative instruments, before netting (1)
Contingent consideration
Total financial liabilities

(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, can be found within Note ~~13:~~12: Derivative Financial Instruments.

(2)Certain alternative investments are recorded at NAV. Assets measured at NAV are not classified within the fair value hierarchy.

6665

Assets Measured at Fair Value on a Non-Recurring Basis

The Company measures certain assets at 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.

Alternative Investments. The measurement alternative has been elected for alternative investments without readily determinable fair values that do not qualify for the NAV 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 classified within Level 2 of the fair value hierarchy. At March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, the carrying amount of these alternative investments was ~~$46.1~~$55.3 million and ~~$42.8~~$53.1 million, respectively, of which ~~none~~$1.4 million and ~~$5.9~~$7.9 million, respectively, were considered to be measured at fair value. During the three months ended March 31, 2024, there was $1.7 million in total
write-ups due to observable price changes and $0.5 million of total write-downs due to impairment.

Loans Transferred to Held for Sale. Once a decision has been made to sell loans not previously classified as held for sale, these loans are transferred into the held for sale category and carried at the lower of cost or fair value, 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 generally pertains to loans with observable inputs, and therefore, are classified within Level 2 of the fair value hierarchy. However, should these loans include adjustments for changes in loan characteristics based on unobservable inputs, the loans would then be classified within Level 3 of the fair value hierarchy. At March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, there were ~~$209.9~~$239.3 million and ~~zero~~$3.9 million loans that were transferred to held for sale on the Condensed Consolidated Balance ~~Sheet.~~Sheet, respectively.

Collateral Dependent Loans and Leases. Loans and leases for which repayment is substantially expected to be provided through the operation or sale of collateral are considered collateral dependent, and are valued based on the estimated fair value of the collateral, less estimated costs to sell at the reporting date, using customized discounting criteria. Accordingly, collateral dependent loans and leases are classified within Level 3 of the fair value hierarchy.

Other Real Estate Owned and Repossessed Assets. OREO and repossessed assets are held at the lower of cost or fair value and are considered to be measured at fair value when recorded below cost. The fair value of OREO is calculated using independent appraisals or internal valuation methods, less estimated selling costs, 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 when determining fair value. Accordingly, OREO and repossessed assets are classified within Level 3 of the fair value hierarchy. At March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, the total ~~book~~carrying value of OREO and repossessed assets was ~~$1.5~~$5.6 million and ~~$2.3~~$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, ~~2023,~~2024, was ~~$16.4~~$9.1 million.

Estimated Fair Values of Financial Instruments and Mortgage Servicing Assets

The Company is required to disclose the estimated fair values of certain financial instruments and mortgage servicing rights. The following is a description of the valuation methodologies used to estimate fair value for those assets and liabilities.

Cash and Cash Equivalents. Given 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, approximates fair value. Cash and cash equivalents are classified within Level 1 of the fair value hierarchy.

Held-to-Maturity Securities. When quoted market prices are not available, the Company employs an independent pricing service that utilizes matrix pricing to calculate fair value. These fair value measurements consider observable data, such as dealer quotes, market spreads, cash flows, yield curves, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and the respective terms and conditions for debt instruments. Management maintains procedures to monitor the pricing ~~service's~~service’s results and has a process in place to challenge their valuations and ~~methodologies that appear unusual or unexpected.~~methodologies. Held-to-maturity securities, which include Agency CMO, Agency MBS, Agency CMBS, Municipal bonds and notes, and CMBS, are classified within Level 2 of the fair value hierarchy.

Loans and Leases, net. Except for collateral dependent loans and leases, the fair value of loans and leases held for investment is estimated using a discounted cash flow methodology, based on future prepayments and market interest rates inclusive of an illiquidity ~~premium~~discount for comparable loans and leases. The associated cash flows are then adjusted for associated credit risks and other potential losses, as appropriate. Loans and leases are classified within Level 3 of the fair value hierarchy.

6766

Mortgage Servicing Rights. Mortgage servicing rights are initially measured at fair value and 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 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. Accordingly, the primary risk inherent in valuing mortgage servicing rights is the impact of fluctuating interest rates on the related servicing revenue stream. Mortgage servicing rights 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 value hierarchy.

Securities Sold Under Agreements to Repurchase and Other Borrowings. The fair value of securities sold under agreements to repurchase and other 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 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 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 and long-term debt are classified within Level 2 of the fair value hierarchy.

The following table summarizes the carrying amounts, estimated fair values, and classifications within the fair value hierarchy of selected financial instruments and mortgage servicing rights:


		At March 31, 2023				At December 31, 2022					At March 31, 2024		At December 31, 2023
(In thousands)	(In thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		(In thousands)	Carrying Amount	Fair Value		Carrying Amount	Fair Value
Assets:	Assets:
Level 1	Level 1
Level 1
Level 1
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents	Cash and cash equivalents	$	2,434,071	$	2,434,071	$	839,943	$	839,943
Level 2	Level 2
Held-to-maturity investment securities		7,063,223		6,320,682		6,564,697		5,761,453
Held-to-maturity investment securities, net
Held-to-maturity investment securities, net
Held-to-maturity investment securities, net
Level 3	Level 3
Loans and leases, net	Loans and leases, net	50,312,609		48,825,894		49,169,685		47,604,463
Mortgage servicing assets		9,189		26,959		9,515		27,043
Loans and leases, net
Loans and leases, net
Mortgage servicing rights
Liabilities:	Liabilities:
Level 2	Level 2
Level 2
Level 2
Deposit liabilities
Deposit liabilities
Deposit liabilities	Deposit liabilities	$	50,767,700	$	50,767,700	$	49,893,391	$	49,893,391
Time deposits	Time deposits	4,529,779		4,471,757		4,160,949		4,091,979
Securities sold under agreements to repurchase and other borrowings	Securities sold under agreements to repurchase and other borrowings	306,154		306,113		1,151,830		1,151,797
FHLB advances	FHLB advances	8,560,461		8,560,329		5,460,552		5,459,218
Long-term debt (1)	Long-term debt (1)	1,071,413		1,005,178		1,073,128		1,001,779

(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.

6867

~~Note 15: Retirement Benefit Plans~~

~~Defined Benefit Pension and Other Postretirement Benefits~~

~~The following tables summarize the components of net periodic benefit cost (income):~~
Three months ended March 31,
2023 2022
(In thousands) Pension SERP OPEB Pension SERP OPEB
Service cost $ — $ — $ 7 $ — $ — $ 6
Interest cost 2,211 67 380 1,377 15 144
Expected return on plan assets (2,699) — — (3,669) — —
Amortization of actuarial loss (gain) 1,216 1 (675) 422 7 (18)
Net periodic benefit cost (income) $ 728 $ 68 $ (288) $ (1,870) $ 22 $ 132

The components of net periodic benefit cost (income) are included in Other expense on the accompanying Condensed Consolidated Statements of Income. The weighted-average expected long-term rate of return on plan assets for the three months ended March 31, 2023, was 5.50%, as determined at the beginning of the year.

Note ~~16:~~14: Segment Reporting

The ~~Company's operations are organized into~~Company has three reportable segments, ~~that represent~~which reflect its primary ~~businesses:~~differentiated lines of business: Commercial Banking, ~~HSA Bank,~~Healthcare Financial Services, and Consumer Banking. ~~These segments reflect how executive management responsibilities are assigned, how discrete financial information~~Segment performance is evaluated ~~the type of customer served, and how products and services are provided.~~using PPNR, or PTNR, as appropriate. Certain Treasury activities ~~including~~and other functional divisions, such as information technology, human resources, risk management, bank operations, and the operations of interLINK, ~~along with the~~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, 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 ~~connection~~addition, with the acquisition of ~~interLINK~~Ametros on January ~~11, 2023,~~24, 2024, the ~~$143.2 million~~Company formed a new reportable segment called Healthcare Financial Services, which includes the aggregated financial information of ~~preliminary goodwill recorded has been allocated entirely to Commercial Banking. In addition, as previously discussed in Note 2: Mergers~~the HSA Bank and Acquisitions and
Note 6: Goodwill and Other Intangible Assets, theAmetros businesses. The allocation of the purchase price for ~~both~~ the ~~Sterling merger and Bend~~Ametros acquisition ~~are final as of~~is considered preliminary at March 31, ~~2023. Accordingly,~~2024. The $228.2 million of ~~the total $1.9 billion in~~preliminary goodwill recorded ~~in connection with the Sterling merger, $1.7 billion and $0.2 billion has been allocated~~related to ~~Commercial Banking and Consumer Banking, respectively. The $35.7 million of goodwill recorded in connection with the Bend acquisition~~Ametros has been allocated entirely to ~~HSA Bank.~~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

The Company uses an internal profitability reporting system to generate information by reportable segment, which is based on a series of management estimates for ~~funds transfer pricing,~~FTP and allocations for non-interest expense, provision for credit losses, income taxes, and equity capital. These estimates and allocations, certain of which are subjective in nature, are periodically reviewed and refined. ~~Changes~~For additional information regarding the Company’s segment reporting methodology, please refer to Note 21: Segment Reporting in ~~estimates~~the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and ~~allocations that affect the results of any reportable segment do not affect the consolidated financial position or results of operations~~Supplementary Data of the ~~Company as a whole. The full profitability measurement reports, which are prepared~~Company’s Annual Report on Form 10-K for ~~each reportable segment, reflect non-GAAP reporting methodologies. The differences between full profitability and GAAP results are reconciled in~~ the ~~Corporate and Reconciling category.~~

The Company allocates interest income and interest expense to each business through an internal matched maturity FTP process. The goal of the FTP allocation is to encourage loan and deposit growth consistent with the Company’s overall profitability objectives. The FTP process considers the specific interest rate risk and liquidity risk of financial instruments and other assets and liabilities in each line of business. Loans are assigned an FTP rate for funds used and deposits are assigned an FTP rate for funds provided. The allocation considers the origination date and the earlier of the maturity date or the repricing date of a financial instrument to assign an FTP rate for loans and deposits originated each day. The FTP process transfers the corporate interest rate risk exposure to the Treasury function included within the Corporate and Reconciling category where such exposures are centrally managed.

The Company allocates a majority of non-interest expense to each reportable segment using an activity and driver-based costing process. Costs, including shared services and back-office support areas, are analyzed, pooled by process, and assigned to the appropriate reportable segment. The combination of direct revenue, direct expenses, funds transfer pricing, and allocations of non-interest expense produces PPNR, which is the basis the segments are reviewed by executive management. The Company also allocates the provision for credit losses to each reportable segment based on management's estimate of the expected loss content in each of the specific loan and lease portfolios. The ACL on loans and leases is included in total assets within the Corporate and Reconciling category. Business development expenses, such as merger-related and strategic initiatives costs, are also generally included in the Corporate and Reconciling category.

year ended December 31, 2023.

The following tables present balance sheet information, including the appropriate allocations, for the ~~Company's~~Company’s reportable segments and the Corporate and Reconciling category:


		At March 31, 2023
		At March 31, 2024
		At March 31, 2024
		At March 31, 2024
(In thousands)	(In thousands)	Commercial Banking		HSA Bank		Consumer Banking		Corporate and Reconciling		Consolidated Total		(In thousands)	Commercial Banking	Healthcare Financial Services	Consumer Banking	Corporate and Reconciling	Consolidated Total
Goodwill	Goodwill	$	2,029,204	$	57,485	$	544,776	$	—	$	2,631,465
Total assets	Total assets	45,868,138		123,478		10,597,860		18,254,919		74,844,395

		At December 31, 2022
		At December 31, 2023
		At December 31, 2023
		At December 31, 2023
(In thousands)	(In thousands)	Commercial Banking		HSA Bank		Consumer Banking		Corporate and Reconciling		Consolidated Total		(In thousands)	Commercial Banking	Healthcare Financial Services	Consumer Banking	Corporate and Reconciling	Consolidated Total
Goodwill	Goodwill	$	1,904,291	$	57,779	$	552,034	$	—	$	2,514,104
Total assets	Total assets	44,380,582		122,729		10,625,334		16,148,876		71,277,521

The following tables present operating results, including the appropriate allocations, for the Company’s reportable segments and the Corporate and Reconciling category:


		Three months ended March 31, 2023										Three months ended March 31, 2024
(In thousands)	(In thousands)	Commercial Banking		HSA Bank		Consumer Banking		Corporate and Reconciling		Consolidated Total		(In thousands)	Commercial Banking	Healthcare Financial Services	Consumer Banking	Corporate and Reconciling	Consolidated Total
Net interest income	Net interest income	$	384,314	$	71,730	$	210,583	$	(71,344)	$	595,283
Non-interest income	Non-interest income	35,397		24,067		25,959		(14,657)		70,766
Non-interest expense	Non-interest expense	108,509		43,700		106,879		73,379		332,467
Pre-tax, pre-provision net revenue	Pre-tax, pre-provision net revenue	311,202		52,097		129,663		(159,380)		333,582
Provision for credit losses		36,037		—		1,784		8,928		46,749
Income (loss) before income taxes		275,165		52,097		127,879		(168,308)		286,833
Income tax expense (benefit)		69,066		14,066		33,760		(51,063)		65,829
Net income (loss)		$	206,099	$	38,031	$	94,119	$	(117,245)	$	221,004
Provision (benefit) for credit losses
Income before income taxes
Income tax expense
Net income


		Three months ended March 31, 2022										Three months ended March 31, 2023
(In thousands)	(In thousands)	Commercial Banking		HSA Bank		Consumer Banking		Corporate and Reconciling		Consolidated Total		(In thousands)	Commercial Banking	Healthcare Financial Services	Consumer Banking	Corporate and Reconciling	Consolidated Total
Net interest income	Net interest income	$	287,069	$	44,577	$	136,677	$	(74,075)	$	394,248
Non-interest income	Non-interest income	38,743		26,958		27,901		10,433		104,035
Non-interest expense	Non-interest expense	89,240		36,409		95,510		138,626		359,785
Pre-tax, pre-provision net revenue	Pre-tax, pre-provision net revenue	236,572		35,126		69,068		(202,268)		138,498
Provision (benefit) for credit losses		181,931		—		7,136		(222)		188,845
Income (loss) before income taxes		54,641		35,126		61,932		(202,046)		(50,347)
Income tax expense (benefit)		10,055		9,414		16,053		(69,122)		(33,600)
Net income (loss)		$	44,586	$	25,712	$	45,879	$	(132,924)	$	(16,747)
Provision for credit losses
Income before income taxes
Income tax expense
Net income

7069

Note ~~17:~~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 ~~16:~~14: Segment Reporting.
Three months ended March 31, 2023
(In thousands) Commercial Banking HSA Bank Consumer Banking Corporate and
Reconciling Consolidated
Total
Non-interest Income:
Deposit service fees $ 5,390 $ 22,092 $ 18,024 $ (70) $ 45,436
Loan and lease related fees (1)
4,427 — — — 4,427
Wealth and investment services (2)
2,767 — 3,828 (8) 6,587
Other income — 1,975 358 932 3,265
Revenue from contracts with customers 12,584 24,067 22,210 854 59,715
Other sources of non-interest income 22,813 — 3,749 (15,511) 11,051
Total non-interest income $ 35,397 $ 24,067 $ 25,959 $ (14,657) $ 70,766
Three months ended March 31, 2022
(In thousands) Commercial Banking HSA Bank Consumer Banking Corporate and
Reconciling Consolidated
Total
Non-interest Income:
Deposit service fees $ 6,685 $ 25,134 $ 15,963 $ 45 $ 47,827
Loan and lease related fees (1)
4,498 — — — 4,498
Wealth and investment services 3,134 — 7,471 (8) 10,597
Other income — 1,824 385 — 2,209
Revenue from contracts with customers 14,317 26,958 23,819 37 65,131
Other sources of non-interest income 24,426 — 4,082 10,396 38,904
Total non-interest income $ 38,743 $ 26,958 $ 27,901 $ 10,433 $ 104,035



	Three months ended March 31, 2024
(In thousands)	Commercial Banking		Healthcare Financial Services		Consumer Banking		Corporate 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 services	3,178		—		4,751		(5)		7,924
Other income	—		9,009		(183)		1,044		9,870
Revenue from contracts with customers	12,642		31,061		19,364		938		64,005
Other sources of non-interest income	21,638		—		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 Banking		Healthcare Financial Services		Consumer Banking		Corporate 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 services	2,767		—		3,828		(8)		6,587
Other income	—		1,975		358		932		3,265
Revenue from contracts with customers	11,430		24,067		23,364		854		59,715
Other sources of non-interest income	22,290		—		4,272		(15,511)		11,051
Total non-interest income	$	33,720	$	24,067	$	27,636	$	(14,657)	$	70,766

(1)A portion of ~~loan~~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.

~~(2)~~
Effective as of the fourth quarter of 2022, the wealth and investment services revenue stream was impacted by the restructuring of a process in which the Company offers brokerage, investment advisory, and certain insurance-related services to customers. The staff providing these services, who had previously been employees of the Bank, are now employees of a third-party service provider. As a result, the Company now recognizes income from this program on a net basis, which thereby reduces gross reported wealth and investment services non-interest income and the related compensation and benefits non-interest expense on the accompanying Condensed Consolidated Statements of Income.

~~Contracts with customers did not generate significant contract assets and liabilities at March 31, 2023, or December 31, 2022.~~

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'~~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~~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.

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'~~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.

Note ~~18:~~16: Commitments and Contingencies

Credit-Related Financial Instruments

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, standby letters of credit, and commercial letters of credit, 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 March 31,
2023 At December 31, 2022
Commitments to extend credit $ 11,711,880 $ 11,237,496
Standby letters of credit 378,585 380,655
Commercial letters of credit 52,987 53,512
Total credit-related financial instruments with off-balance sheet risk $ 12,143,452 $ 11,671,663


(In thousands)	At March 31, 2024		At December 31, 2023
Commitments to extend credit	$	11,171,394	$	12,026,597
Standby letters of credit	497,573		482,462
Commercial letters of credit	36,300		54,382
Total credit-related financial instruments with off-balance sheet risk	$	11,705,267	$	12,563,441

The Company enters into contractual commitments to extend credit to its customers (i.e., revolving credit arrangements, term loan commitments, and short-term borrowing agreements), generally with fixed expiration dates or other termination clauses and that require payment of a fee. Substantially all of the ~~Company's~~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~~Company’s commitments typically expire without being funded, the total contractual amount does not necessarily represent the ~~Company's~~Company’s future payment requirements.

Standby letters of credit are written conditional commitments issued by the Company to guarantee its ~~customers'~~customers’ performance to a third party. In the event the customer does not perform in accordance with the terms of its agreement with a third-party, the Company would be required to fund the commitment. The contractual amount of each standby letter of credit represents the maximum amount of potential future payments the Company could be required to make. Historically, the majority of the ~~Company's~~Company’s standby letters of credit expire without being funded. However, if the commitment were funded, the Company has recourse against the customer. The ~~Company's~~Company’s standby letter of credit agreements are often secured by cash or other collateral.

Commercial letters of credit are issued to finance either domestic or foreign customer trade arrangements. As a general rule, drafts are committed to be drawn when the goods underlying the transaction are in transit. Similar to standby letters of credit, the ~~Company's~~Company’s commercial letter of credit agreements are often secured by the underlying goods subject to trade.

Allowance for Credit Losses on Unfunded Loan Commitments

An ACL is recorded under the CECL methodology and included in Accrued expenses and other liabilities on the accompanying Condensed Consolidated Balance Sheets to provide for the unused portion of commitments to lend that are not unconditionally cancellable by the Company. At March 31, ~~2023,~~2024, and December 31, ~~2022,~~2023, the ACL on unfunded loan commitments totaled ~~$26.1~~$24.5 million and ~~$27.7~~$24.7 million, respectively.

Litigation

The Company is subject to certain legal proceedings and unasserted claims and assessments in the ordinary course of business. Legal contingencies are evaluated based on information currently available, including advice of counsel and assessment of available insurance coverage. The Company establishes an accrual for specific legal matters when it determines that the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable. Once established, each accrual is adjusted to reflect any subsequent developments. Legal contingencies are subject to inherent uncertainties, and unfavorable rulings may occur 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 its stakeholders. The Company intends to defend itself in all claims asserted against it, and management currently believes that the outcome of these contingencies will not be material, either individually or in the aggregate, to the Company or its consolidated financial position.

Federal Deposit Insurance Corporation Special Assessment

Note ~~19:~~17: Subsequent Events

The Company has evaluated subsequent events from the date of the Condensed Consolidated Financial Statements, and accompanying Notes thereto, through 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 Part I within
Note ~~13:~~12: Derivative Financial Instruments in the Notes to the Consolidated Financial Statements contained in Item 1. Financial Statements, and under the section captioned ~~"Asset/~~“Asset/Liability Management and Market ~~Risk"~~Risk” contained in Item 2. ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations, which are incorporated herein by reference.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, under the supervision and with the participation of the Chief Executive Officer (who is our principal executive officer) and Chief Financial Officer (who is our principal financial officer), evaluated the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the ~~"Exchange Act"~~“Exchange Act”), as of March 31, ~~2023.~~2024. The term ~~"disclosure~~“disclosure controls and ~~procedures"~~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~~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 that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of March 31, ~~2023,~~2024, our disclosure controls and procedures were ~~not effective due to the un-remediated material weaknesses in internal control over~~

financial reporting related to certain general information technology controls specific to logical access, which was previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2022. Prior to the filing of this Quarterly Report on Form 10-Q (this "Form 10-Q"), we completed substantive procedures for the quarter ended March 31, 2023. Based on these procedures, management believes that our Condensed Consolidated Financial Statements included in this Form 10-Q have been prepared in accordance with GAAP. For additional information, please refer to Part II - Item 9A. of the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

~~Remediation~~

Management is in process of implementing measures designed to ensure that the control deficiencies contributing to the material weaknesses are remediated, such that these controls are designed, implemented, and operating effectively. The remediation actions include: (i) designing and implementing controls related to deprovisioning, privileged access, and user access reviews, (ii) developing an enhanced risk assessment process to evaluate logical access, and (iii) improving the existing training program associated with control design and implementation. We believe that these actions will remediate the material weaknesses. The material weaknesses will not be considered remediated, however, until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We expect that the remediation of these material weaknesses will be completed prior to the end of 2023.effective.

Changes in Internal Control Over Financial Reporting

~~Other than the ongoing remediation efforts described above, there~~There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act), during the quarter ended March 31, ~~2023,~~2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

Because of its inherent limitations, management does not expect that our disclosure controls and procedures or our internal control over financial reporting will 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 error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information regarding legal proceedings can be found within Note ~~18:~~16: Commitments and Contingencies in the Notes to Consolidated Financial Statements contained in Part I - Item 1. Financial Statements, which is incorporated herein by reference.

ITEM 1A. RISK FACTORS

~~In addition~~There have been no material changes to ~~the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider~~ the risk factors ~~contained~~previously disclosed in ~~Part I - Item 1A. Risk Factors of~~ the ~~Company's~~Company’s Annual Report on Form 10-K for the year ended December 31, ~~2022, which could materially affect our business, results of operations, or financial condition. During the three months ended March 31, 2023, the Company made updates to the following risk factor:~~

~~Our stock price can be volatile.~~

Stock price volatility may make it more difficult for stockholders to resell their common stock when they want and at prices that they find attractive. Our stock price can fluctuate significantly in response to a variety of factors including, among other things:

•~~actual or anticipated variations in results of operations;~~

•~~recommendations or projections by securities analysts;~~

•~~operating and stock price performance of other companies that investors deem comparable to us;~~

•~~news reports relating to trends, concerns, and other issues in the financial services and healthcare industries;~~

•~~perceptions in the marketplace regarding us and/or our competitors;~~

•~~new technology used, or services offered, by competitors;~~

•significant acquisitions or business combinations, strategic partnerships, joint ventures, or capital commitments by or involving us or our competitors, including those of competitor "failed" banks acquired by other competitors;

•~~changes in dividends and capital returns;~~

•~~issuance of additional shares of Webster common stock;~~

•~~changes in government regulations; and~~

•~~geopolitical conditions such as acts or threats of terrorism or military conflicts, including any military conflict between Russia and Ukraine.~~

General market fluctuations, including real or anticipated changes in the strength of the economy, industry factors and general economic and political conditions and events, such as economic slowdowns or recessions, interest rate changes, credit loss trends, among other factors, could also cause our stock price to decrease regardless of operating results.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 for the ~~Company's~~Company’s common stock made by or on behalf of the Company or any “affiliated purchaser,” as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, during the three months ended March 31, ~~2023:~~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, 2023 - January 31, 2023 22,744 $ 47.53 — $ 401,340,164
February 1, 2023 - February 28, 2023 97,937 54.58 — 401,340,164
March 1, 2023 - March 31, 2023 164,044 52.63 — 401,340,164
Total 284,725 52.90 — 401,340,164


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, 2024	42,931	$	51.28	—	$	293,356,942
February 1, 2024 - February 29, 2024	273,192	46.96		215,824	283,232,096
March 1, 2024 - March 31, 2024	398,455	47.35		218,237	272,952,140
Total	714,578	47.44		434,061	272,952,140

(1)~~All of the shares purchased during~~During the three months ended March 31, ~~2023,~~2024, 280,517 of the total number of shares purchased were acquired at market prices outside of the ~~Company's~~Company’s common stock repurchase program and related to employee share-based compensation plan activity.

(2)The average price paid per share is calculated on a trade date basis and excludes commissions and other transaction costs.

(3)The Company maintains a common stock repurchase program, which was approved by the Board of Directors on October 24, 2017, that authorizes management to purchase shares of Webster common stock in 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~~Company’s financial performance. On April 27, 2022, the Board of Directors increased ~~management's~~management’s authority to repurchase shares of Webster common stock under the 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 applicable~~John 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.

7675

ITEM 6. EXHIBITS

A list of exhibits to this Form 10-Q is set forth below.

Exhibit Number Exhibit Description Exhibit Included Incorporated by Reference
Form Exhibit Filing Date
2
Agreement and Plan of Merger, dated as of April 18, 2021, by and between Sterling Bancorp and Webster Financial Corporation
8-K 2.1 4/23/2021
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 Amendment to Fourth Amended and Restated Certificate of Incorporation of Webster Financial Corporation, effective as of January 31, 2022
8-K 3.2 2/1/2022
3.3
Certificate of Amendment to Fourth Amended and Restated Certificate of Incorporation of Webster Financial Corporation, effective as of April 28, 2023
8-K 3.1 4/28/2023
3.4
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
3.5
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
3.6
Certificate of Designations establishing the rights of the Company's Perpetual Participating Preferred Stock, Series C
8-K 3.1 7/31/2009
3.7
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
3.8
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
3.9
Certificate of Designations establishing the rights of the Company's 5.25% Series F Non-Cumulative Perpetual Preferred Stock
8-A12B 3.3 12/12/2017
3.10
Certificate of Designations establishing the rights of the Company's 6.50% Series G Non-Cumulative Perpetual Preferred Stock
8-A12B 3.4 2/1/2022
3.11
Bylaws, as amended effective March 15, 2020
8-K 3.1 3/17/2020
3.12
Amendment to Bylaws of Webster Financial Corporation, effective as of January 31, 2022
8-K 3.5 2/1/2022
10.1
Webster Financial Corporation 2021 Stock Incentive Plan (as amended and restated effective April 26, 2023)
DEF 14A A 3/15/2023
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 (1)
32.2
Written statement pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by the Chief Financial Officer.
X (1)
101 The following financial information from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, 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
104 Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101) X

Exhibit Number

Exhibit Description

Exhibit Included

Incorporated by Reference

Form

Exhibit

Filing Date

Agreement and Plan of Merger, dated as of April 18, 2021, by and between Sterling Bancorp and Webster Financial Corporation

8-K

2.1

4/23/2021

Certificate of Incorporation and Bylaws.

3.1

Fourth Amended and Restated Certificate of Incorporation

10-Q

3.1

8/9/2016

3.2.1

Certificate of Amendment to Fourth Amended and Restated Certificate of Incorporation of Webster Financial Corporation, effective as of April 28, 2023

8-K

3.1

4/28/2023

3.2.2

Certificate of Amendment to Fourth Amended and Restated Certificate of Incorporation of Webster Financial Corporation, effective as of January 31, 2022

8-K

3.2

2/1/2022

3.3

Certificate of Designations establishing the rights of the Company's 8.50% Series A Non-Cumulative Perpetual Convertible Preferred Stock

8-K

3.1

6/11/2008

3.4

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

3.5

Certificate of Designations establishing the rights of the Company ’s Perpetual Participating Preferred Stock, Series C

8-K

3.1

7/31/2009

3.6

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

3.7

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

3.8

Certificate of Designations establishing the rights of the Company ’s 5.25% Series F Non-Cumulative Perpetual Preferred Stock

8-A12B

3.3

12/12/2017

3.9

Certificate of Designations establishing the rights of the Company ’s 6.50% Series G Non-Cumulative Perpetual Preferred Stock

8-A12B

3.4

2/1/2022

3.10

Bylaws, as amended effective March 15, 2020

8-K

3.1

3/17/2020

3.11

Amendment to Bylaws of Webster Financial Corporation, effective as of January 31, 2022

8-K

3.5

2/1/2022

10.1

Webster Financial Corporation 2021 Stock Incentive Plan (as amended and restated effective April 26, 2023)

DEF 14A

3/15/2023

31.1

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by the Chief Executive Officer.

31.2

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by the Chief Financial Officer.

32.1

Written statement pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by the Chief Executive Officer.

X (1)

32.2

Written statement pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by the Chief Financial Officer.

X (1)

101

The 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.

104

Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101)

(1)Exhibit is furnished herewith and shall not be deemed 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.

7776

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 ~~8, 2023~~10, 2024

By:

/s/ John R. Ciulla

John R. Ciulla

~~President,~~ Chief Executive Officer, Chairman, and Director

(Principal Executive Officer)

Date: May ~~8, 2023~~10, 2024

By:

/s/ Glenn I. MacInnes

Glenn I. MacInnes

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

Date: May ~~8, 2023~~10, 2024

By:

/s/ Albert J. Wang

Albert J. Wang

Executive Vice President and Chief Accounting Officer

(Principal Accounting Officer)

7877


	Three months ended March 31, 2023
(In thousands)	Severance		Contract Termination		Total
Balance, beginning of period	$	7,583	$	30,362	$	37,945
Additions charged to expense	6,196		—		6,196
Cash payments	(6,993)		—		(6,993)
Other	(825)		(6,587)		(7,412)
Balance, end of period	$	5,961	$	23,775	$	29,736

	Three months ended March 31, 2022
(In thousands)	Severance		Contract Termination		Total
Balance, beginning of period	$	10,835	$	—	$	10,835
Additions charged to expense	26,971		17,704		44,675
Cash payments	(1,766)		—		(1,766)
Other (1)	(3,884)		—		(3,884)
Balance, end of period	$	32,156	$	17,704	$	49,860




(Dollars in thousands)	Number of Contracts	Recorded Investment (1)
Commercial non-mortgage
Term extension	2	$	98

Combination - Term extension and interest rate reduction	2	92









Residential


Other (2)	5	2,985
Home equity


Combination - Term extension and interest rate reduction	4	44
Other (2)	17	1,242
Total TDRs	30	$	4,461



	Three months ended March 31, 2023
(In thousands)		Securities Available For Sale		Derivative Instruments		Defined Benefit Pension and Other Postretirement Benefit Plans		Total
Balance, beginning of period		$	(631,160)	$	(8,874)	$	(44,926)	$	(684,960)
Other comprehensive income before reclassifications		56,635		20,782		3,553		80,970
Amounts reclassified from accumulated other comprehensive (loss)		14,983		592		395		15,970
Other comprehensive income, net of tax		71,618		21,374		3,948		96,940
Balance, end of period		$	(559,542)	$	12,500	$	(40,978)	$	(588,020)


Condensed Consolidated Balance Sheet Line Item in Which Hedged Item is Located	Carrying Amount of Hedged Item				Cumulative Amount of Fair Value Hedging Adjustment Included in Carrying Amount
(In thousands)	At March 31, 2023		At December 31, 2022		At March 31, 2023		At December 31, 2022
Deposits	$	410,254	$	—	$	10,254	$	—
Long-term debt (1)	332,119		333,458		32,119		33,458