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What changed in WEBSTER FINANCIAL CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of WEBSTER FINANCIAL CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+544 added−491 removedSource: 10-K (2025-03-03) vs 10-K (2024-02-27)

Top changes in WEBSTER FINANCIAL CORP's 2024 10-K

544 paragraphs added · 491 removed · 351 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

83 edited+62 added−59 removed71 unchanged
Biggest changeIn addition, publicly-traded bank holding companies with $50 billion or more in total consolidated assets are required to maintain a risk committee that is responsible for the oversight of enterprise risk management practices and that meets other statutory requirements.
Biggest changeAdditionally, in accordance with federal securities laws and regulations and the continued listed standards for the NYSE, we adopted our Policy for Recoupment of Incentive Compensation for our executive officers as of October 17, 2023, which has been included as Exhibit 97 to this Annual Report on Form 10-K. 9 Table of Contents Enterprise Risk Management Framework As a publicly-traded bank holding company with $50 billion or more in total consolidated assets, under federal banking laws, the Company is required to maintain a risk committee, led by an independent director, with at least one risk management expert, that is responsible for the oversight of its enterprise risk management framework and that meets other statutory and regulatory requirements set by the OCC.
The FDIC may terminate a depository institution's deposit insurance upon a finding that the institution's financial condition is unsafe or unsound, or that the institution has engaged in unsafe and unsound practices, or has violated any applicable law, regulation, rule, order, or condition imposed by the FDIC.
The FDIC may terminate a depository institution’s deposit insurance upon finding that the institution’s financial condition is unsafe or unsound, or that the institution has engaged in unsafe and unsound practices, or has violated any applicable law, regulation, rule, order, or condition imposed by the FDIC.
For instance, the deduction of mortgage servicing assets, certain DTAs, and capital investments in unconsolidated financial institutions is required to the extent that any one such category exceeds 10% of CET1 capital or exceeds 15% of CET1 capital in the aggregate. 5 Table of Contents The Basel III Capital Rules also include a capital conservation buffer comprised entirely of CET1 capital, which is considered in addition to the 4.5% CET1 capital ratio and is equal to 2.5% of risk-weighted assets for both the Holding Company and the Bank.
For instance, the deduction of mortgage servicing assets, certain DTAs, and capital investments in unconsolidated financial institutions is required to the extent that any one such category exceeds 10% of CET1 capital or exceeds 15% of CET1 capital in the aggregate. 4 Table of Contents The Basel III Capital Rules also include a capital conservation buffer comprised entirely of CET1 capital, which is considered in addition to the 4.5% CET1 capital ratio and is equal to 2.5% of risk-weighted assets for both the Company and the Bank.
Set forth in the paragraphs below is a summary of the significant elements of the laws and regulations applicable to the Holding Company and its bank and non-bank subsidiaries. The description that follows is qualified in its entirety by reference to the full text of the statutes, regulations, and policies that are described.
Set forth below is a summary of the significant elements of the laws and regulations applicable to the Holding Company and its bank and non-bank subsidiaries. The description that follows is qualified in its entirety by reference to the full text of the statutes, regulations, and policies that are described.
Risk-weighted assets serve as the base against which regulatory capital is measured, and are used to calculate the Holding Company's and the Bank's minimum capital ratios of CET1 Risk-Based Capital, Tier 1 Risk-Based Capital, Total Risk-Based Capital, and Tier 1 Leverage Capital, as defined in the regulations, which the Company is required to maintain.
Risk-weighted assets serve as the base against which regulatory capital is measured, and are used to calculate the Company’s and the Bank’s minimum capital ratios of CET1 Risk-Based Capital, Tier 1 Risk-Based Capital, Total Risk-Based Capital, and Tier 1 Leverage Capital, as defined in the regulations, which the Company is required to maintain.
Bank holding companies that qualify and elect to become financial holding companies, such as Webster Financial Corporation, may engage in any activity, or acquire and retain the shares of a company engaged in any activity, that is either financial in nature or incidental to such financial activity (as determined by the Board of Governors of the Federal Reserve System in consultation with the Secretary of the Treasury), or complementary to a financial activity, and that does not pose a substantial risk to the safety and soundness of depository institutions or the financial system (as solely determined by the Board of Governors of the Federal Reserve System).
Bank holding companies that qualify and elect to become financial holding companies, such as the Holding Company, may engage in any activity, or acquire and retain the shares of a company engaged in any activity, that is either financial in nature or incidental to such financial activity (as determined by the Board of Governors of the Federal Reserve System in consultation with the Secretary of the Treasury), or complementary to a financial activity, and that does not pose a substantial risk to the safety and soundness of depository institutions or the financial system (as solely determined by the Board of Governors of the Federal Reserve System).
Competition could intensify in the future as a result of industry consolidation, the increasing availability of products and services from non-bank organizations including financial technology companies, greater technological developments in the industry, and continued bank regulatory reforms. The Company faces substantial competition for deposits and loans throughout its market areas.
Competition could intensify in the future as a result of industry consolidation, the increasing availability of products and services from non-bank organizations, including financial technology companies, greater technological developments in the industry, and continued bank regulatory changes. The Company faces substantial competition for deposits and loans throughout its market areas.
The Company has adopted the Three Line Model, in which the First Line manages risks, ensures compliance, performs control activities, and works in coordination with the Second Line, who in turn provides additional expertise, support, and tools, and challenges risk management to enhance efficiency and effectiveness of the control environment.
The Company has adopted the Three Line Model of enterprise risk management, in which the First Line manages risks, ensures compliance, performs control activities, and works in coordination with the Second Line, who provides additional expertise, support, and tools, and challenges risk management to enhance efficiency and effectiveness of the control environment.
Consumer Protection and Consumer Financial Protection Bureau Supervision The CFPB is responsible for implementing, enforcing, and examining compliance with federal consumer financial protection laws. As an insured depository institution with more than $10 billion in total assets, the Bank is subject to supervision by the CFPB.
Consumer Protection and Consumer Financial Protection Bureau Supervision As an insured depository institution with more than $10 billion in total assets, the Bank is subject to supervision by the CFPB. The CFPB has been responsible for implementing, enforcing, and examining compliance with federal consumer financial protection laws.
As a registered bank holding company and a financial holding company, Webster Financial Corporation is subject to regulation under the BHC Act and to inspection, examination, and supervision by its primary federal regulator, the Board of Governors of the Federal Reserve System.
As a registered bank holding company and a financial holding company, the Holding Company is subject to regulation under the BHC Act and to inspection, examination, and supervision by its primary federal regulator, the Board of Governors of the Federal Reserve System.
Strategic Risk Strategic risk is defined as the risk to the Company's current or projected financial condition, expected returns and resilience arising from the inability to select and execute strategic choices, suboptimal company positioning, ineffective organizational structures, poor implementation of priorities and initiatives, inadequate risk management infrastructure, or the lack of responsiveness to changes in the financial services ecosystem and operating environment.
Strategic Risk Strategic risk is the risk to current or projected financial condition, expected returns and resilience arising from the inability to select and execute strategic choices, suboptimal company positioning, ineffective organizational structures, poor implementation of priorities and initiatives, inadequate risk management infrastructure, or the lack of responsiveness to changes in the financial services ecosystem and operating environment.
The Bank, as a member of the FHLB, is required to purchase and hold shares of FHLB capital stock for its membership and other activities in an amount equal to 0.05% of total assets as of December 31, 2022, up to a maximum of $5 million, plus an amount that varies from 3.0% to 4.0% depending on the maturities of its FHLB advances, of which there were $2.4 billion outstanding at December 31, 2023.
The Bank, as a member of the FHLB of Boston, is required to purchase and hold shares of FHLB capital stock for its membership and other activities in an amount equal to 0.05% of total assets as of December 31, 2023, up to a maximum of $5 million, plus an amount that varies from 3.0% to 4.0% depending on the maturities of its FHLB advances, of which there were $2.1 billion outstanding at December 31, 2024.
The FDIF is funded mainly through quarterly assessments on insured depository institutions, such as the Bank, and provides insurance coverage for certain deposits up to this maximum amount. The Bank's assessment is calculated in accordance with the FDIC's standardized risk-based methodology by multiplying its assessment rate by its assessment base, which are determined and paid each quarter.
The FDIF is funded mainly through quarterly assessments on insured depository institutions, such as the Bank, and provides insurance coverage for certain deposits up to this maximum amount. The Bank’s assessment is determined each quarter in accordance with the FDIC’s standardized risk-based methodology by multiplying its assessment rate by its assessment base.
In addition, reputational risk arises when the Company associates its brand with solutions and services offered through outsourced arrangements, negative publicity regarding matters such as unethical or deceptive business practices, violations of laws or regulations, high profile litigation, poor financial performance, poor execution, or inferior customer service.
In addition, reputation risk arises when Webster associates its brand with solutions and services offered through outsourced arrangements, negative publicity regarding matters such as unethical or deceptive business practices, violations of laws or regulations, high profile litigation, poor financial performance, poor execution, or inferior customer service.
As a publicly-traded company, Webster is also subject to the disclosure and regulatory requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, both of which are administered by the SEC. As a publicly-traded company with securities listed on the NYSE, Webster is subject to the rules of the NYSE.
As a publicly-traded company, the Holding Company is subject to the disclosure and regulatory requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, which are administered by the SEC. As a publicly-traded company with securities listed on the NYSE, the Holding Company is subject to the rules of the NYSE.
Available Information The Company files reports with the SEC, and makes available, free of charge, within the investor relations section of its internet website (http://investors.websterbank.com), its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after it electronically files such material with, or furnishes it to, the SEC.
Financial Statements and Supplementary Data. 1 Table of Contents Available Information The Company files reports with the SEC, and makes available, free of charge, within the investor relations section of its internet website (http://investors.websterbank.com), its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after it electronically files such material with, or furnishes it to, the SEC.
The Bank was in compliance with these requirements at December 31, 2023, and held a FHLB stock investment of $99.0 million. Source of Strength Doctrine Bank holding companies are required to serve as a source of financial strength to their subsidiary banks and commit resources to support each of their subsidiary banks.
The Bank was in compliance with these requirements at December 31, 2024, and held a FHLB stock investment of $91.7 million. Source of Strength Doctrine Bank holding companies are required to serve as a source of financial strength to their subsidiary banks and commit resources to support each of their subsidiary banks.
The Company has an Identity Theft Prevention Program in place, which is approved by the Board of Directors, satisfying its compliance with these requirements. Financial Privacy and Data Security The Company is subject to federal and certain state laws and regulations containing consumer privacy and data protection provisions addressing the treatment of nonpublic personal information about consumers by financial institutions.
The Company has an Identity Theft Prevention Program in place satisfying its compliance with these requirements. 7 Table of Contents Financial Privacy and Data Security The Company is subject to federal and certain state laws and regulations containing consumer privacy and data protection provisions addressing the treatment of nonpublic personal information about consumers by financial institutions.
Reputational risk may also impair the Company's competitiveness by affecting its ability to establish new relationships or continue servicing existing customers. Reputational risk is inherent in all Company's activities, especially when dealing with stakeholders such as customers, counterparties, investors, regulators, colleagues, and communities.
Reputation risk may also impair Webster’s competitiveness by affecting its ability to establish new relationships or continue servicing existing customers. Reputation risk is inherent in all business activities, especially when dealing with stakeholders such as customers, counterparties, investors, regulators, colleagues, and communities.
Accounting risk includes the risks that arise from the inability to (i) comply with GAAP and regulatory laws/guidelines; (ii) ensure a high integrity financial reporting process; and (iii) disclose appropriate information. The Treasury components of Financial risk are managed through interest rate, liquidity, and capital scenario analysis and stress testing. Accounting risk is managed through internal control over financial reporting.
Accounting risk includes the risks that arise from the inability to comply with GAAP and regulatory laws/guidelines, ensure a high integrity financial reporting process, and disclose appropriate information. The treasury components of financial risk are managed through interest rate, liquidity, and capital scenario analysis and stress testing.
Informational Technology risk is defined as the risk that systems handing information and process flows may not meet quality and efficiency standards in line with industry, customer, and regulatory expectations, or may fail causing outages, or that new systems may not be implemented in a timely manner.
Informational Technology risk is the risk that systems handling information and process flows may not meet quality and efficiency standards in line with industry, customer, and regulatory expectations, or may fail, causing outages, or that new systems may not be implemented timely.
Financial institutions that hold correspondent accounts for foreign banks or provide private banking services to foreign individuals are required to take measures to avoid dealing with certain foreign individuals or entities, including foreign banks with profiles that raise money laundering concerns, and are prohibited from dealing with foreign shell banks and persons from jurisdictions of particular concern. 10 Table of Contents Financial institutions also are required to establish internal anti-money laundering programs.
Financial institutions that hold correspondent accounts for foreign banks or provide private banking services to foreign individuals are required to take measures to avoid dealing with certain foreign individuals or entities, including foreign banks with profiles that raise money laundering concerns, and are prohibited from dealing with foreign shell banks and persons from jurisdictions of particular concern.
Accordingly, management aims to actively measure and management concentrations by portfolio, industry sector and specific sub-sectors, geography, single obligor, and other guidelines. The Company is primarily a relationship lender. In addition, the Company will only assume credit risk when it can effectively manage from an infrastructure or operational perspective, and it has industry, product, and market expertise.
Accordingly, management aims to actively measure and manage concentrations by portfolio, industry sector and specific sub-sectors, geography, affiliated obligors, and other guidelines. Webster is primarily a relationship lender. In addition, Webster will only assume credit risk when it can be effectively managed from an infrastructure or operational perspective, and it has industry, product, and market expertise.
Front Line Units, also referred to as First Line functions, represent process owners that engage in activities designed to generate revenue and reduce expenses, provide operational and technology services, and provide operational support and servicing in the delivery of products or services.
Detailed roles and responsibilities for each line are as follows: Front Line Units, also referred to as First Line Functions, represent process owners that engage in activities designed to generate revenue and reduce expenses, provide operational and technology services, and provide operational support and servicing in the delivery of products or services.
During the year ended December 31, 2023, the Bank declared and paid $600.0 million in dividends to the Holding Company and had $788.7 million of undistributed net income available for the declaration and payment of dividends at December 31, 2023.
During the year ended December 31, 2024, the Bank declared and paid $600.0 million in dividends to the Holding Company and had $747.3 million of undistributed net income available for the declaration and payment of dividends at December 31, 2024.
The Company seeks to achieve its performance objectives by making management decisions, such as the selection of strategic choices, applying planning assumptions, assessing internal capabilities and the external environment, ensuring capital and resources are dedicated to the right priorities, and ensuring effective execution by periodically reviewing specific plans.
Webster seeks to achieve its performance objectives by making management decisions, which include the selection of strategic choices, applying planning assumptions, assessing our internal capabilities and the external environment, ensuring capital and resources are dedicated to strategic priorities, and ensuring effective execution by periodically reviewing specific plans and execution.
There are a number of federal laws, which the Company is subject to, that are designed to protect borrowers and promote lending, including, but not limited to, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Debt Collection Procedures Act, the Truth in Lending Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Practices Act, and the Consumer Financial Protection Act of 2010.
There are also a number of federal laws, which the Bank has been subject to, that are designed to protect borrowers and promote lending, including, but not limited to, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Debt Collection Procedures Act, the Truth in Lending Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Practices Act, the Consumer Financial Protection Act of 2010, and the Gramm Leach Bliley Act regarding Privacy of Consumer Financial Information.
Further, the Bank’s failure to comply with the Equal Credit Opportunity Act and the Fair Housing Act could result in enforcement actions against it by the OCC, as well as other federal regulatory agencies, including the CFPB and the Department of Justice.
Further, the Bank’s failure to comply with the Equal Credit Opportunity Act and the Fair Housing Act could result in enforcement actions against it by the OCC, as well as other federal regulatory agencies, including the CFPB and the Department of Justice. The Bank received a CRA rating of Outstanding in its most recent examination.
The regulation also allows covered debit card issuers to receive 1 cent per transaction for fraud-prevention costs, provided that the debit card issuer meets the fraud-prevention standards established by the FRB. HSA Bank's interchange revenue is not subject to these rules.
The regulation also allows covered debit card issuers to receive 1 cent per transaction for fraud-prevention costs, provided that the debit card issuer meets the fraud-prevention standards established by the FRB. Interchange fees impact revenues of the Consumer Banking and HSA Bank operating segments, however, HSA Bank’s interchange revenue is not subject to these rules.
Competitive benefits packages that reflect the needs of the Company’s workforce are offered to employees, which include medical, dental, and vision plans, prescription benefits, life insurance and disability benefits, HSAs, wellness incentives, health coaching, and telemedicine, as well as paid parental leave, paid time off and paid holidays, matching 401(k) retirement savings plans, Employee Stock Purchase Plan, Employee Assistance Program, back-up child and elder care, Student Loan Repayment Program, pet insurance, and other wellness programs.
We also offer competitive benefits packages that reflect the needs of our workforce, which include medical, dental, and vision plans, prescription benefits, life insurance and disability benefits, HSAs, wellness incentives, health coaching, telemedicine, paid parental leave, paid time off and paid holidays, a matching 401(k) retirement savings plan, an employee stock purchase plan, an employee assistance program, a student loan repayment program, backup child and elder care, pet insurance, and wellness programs.
As of December 31, 2023, the Bank's significant wholly-owned subsidiaries included: Webster Servicing LLC, Webster Public Finance Corporation, Sterling National Funding Corporation, Webster Mortgage Investment Corporation, Sterling Business Credit LLC, Webster Wealth Advisors, Inc., Webster Licensing, LLC, Bend Financial, Inc., Interlink Insured Sweep LLC, Webster Investment Services, Inc., Webster Preferred Capital Corporation, and Webster Community Development Corporation.
As of December 31, 2024, the Bank’s active consolidated subsidiaries included: Webster Licensing, LLC, Webster Wealth Advisors, Inc., Bend Financial, Inc., InterLINK Insured Sweep LLC, Ametros Financial Corporation, Webster Servicing LLC, Webster Public Finance Corporation, Webster Mortgage Investment Corporation, Sterling National Funding Corp., Sterling REIT, Inc., Sterling Business Credit LLC, Webster Preferred Capital Corporation, and Webster Investment Services, Inc.
Certain covered transactions must be collateralized according to a schedule set forth in the statue. 8 Table of Contents In addition, Section 22(h) of the FRA and Federal Reserve Regulation O restricts loans to directors, executive officers, and principal stockholders or insiders.
The term covered transaction includes the making of loans, purchase of assets, the issuance of a guarantee, and similar types of transactions. Certain covered transactions must be collateralized according to a schedule set forth in the statue. In addition, Section 22(h) of the FRA and Federal Reserve Regulation O restricts loans to directors, executive officers, and principal stockholders or insiders.
Internal Audit, also referred to as the Third Line Function, independently assesses the Company’s risk management processes and controls using methodology developed from professional auditing standards and regulatory guidance.
Independent Risk Management includes Enterprise Risk, which reports to the Chief Risk Officer, and Credit Risk Management which, reports to the Chief Credit Officer. Internal Audit, also referred to as the Third Line Function, independently assesses Webster’s risk management processes and controls using methodology developed from professional auditing standards and regulatory guidance.
In more serious instances, enforcement actions may include the issuance of directives to increase capital, the issuance of formal and informal agreements, the imposition of civil monetary penalties, the issuance of a cease and desist order that can be judicially enforced, the issuance of removal and prohibition orders against officers, directors, and other institution affiliated parties, the termination of the insured depository institution’s deposit insurance, the appointment of a conservator or receiver for the insured depository institution, and injunctions or restraining orders based upon a judicial determination that the FDIC, as receiver, would be harmed if such equitable relief was not granted.
In more serious instances, enforcement actions may include the issuance of directives to increase capital, the issuance of formal and informal agreements, the imposition of civil monetary penalties, the issuance of a cease and desist order that can be judicially enforced, the issuance of removal and prohibition orders against officers, directors, and other institution affiliated parties, the termination of the insured depository institution’s deposit insurance, the appointment of a conservator or receiver for the insured depository institution, and injunctions or restraining orders based upon a judicial determination that the FDIC, as receiver, would be harmed if such equitable relief was not granted. 6 Table of Contents Resolution Planning The FDIC requires certain insured depository institutions with more than $50 billion in total assets to periodically submit resolution plans to provide the FDIC with information about the bank that is essential to effective resolution planning and to support the execution of a resolution, if necessary.
Benefit plans are continually reviewed and evolved as necessary to remain competitive and meet the needs of the Company’s workforce. Learning and Development The Company is focused on investing in its current and future talent by actively supporting the success, growth, and career progression of its employees.
We continually review and evolve our benefit plans as necessary to remain competitive and meet the needs of our workforce. Learning and Talent Management. We are focused on investing in our current and future talent by actively supporting the success, growth, and career progression of our employees.
Dividends The Holding Company is dependent upon dividends from the Bank to provide funds for its cash requirements, including the payment of dividends to stockholders. Dividends paid by the Bank are subject to federal and state regulatory limitations.
The Bank’s initial information filing submission is due on or before April 1, 2026. Dividends The Holding Company is dependent upon dividends from the Bank to provide funds for its cash requirements, including the payment of dividends to stockholders. Dividends paid by the Bank are subject to federal and state regulatory limitations.
If a financial holding company or its bank ceases to be well capitalized or well managed, the Board of Governors of the Federal Reserve System may impose corrective capital and managerial requirements and activity restrictions. 4 Table of Contents Mergers and Acquisitions Under the BHC Act, prior approval from the Board of Governors of the Federal Reserve System is required in order for any bank holding company to acquire direct or indirect ownership or control of more than 5% of the voting shares of any bank, acquire all or substantially all of the assets of a bank, or merge or consolidate with any other bank holding company.
Mergers and Acquisitions Under the BHC Act, prior approval from the Board of Governors of the Federal Reserve System is required in order for any bank holding company to acquire direct or indirect ownership or control of more than 5% of the voting shares of any bank, acquire all or substantially all of the assets of a bank, or merge or consolidate with any other bank holding company.
Internal Audit undertakes these responsibilities through periodic reviews of the Company’s business activities, operations, and systems, and through special or retrospective reviews that may be specifically requested by the Audit Committee or management. Internal Audit is led by the Chief Audit Executive who reports to the Audit Committee.
Internal Audit undertakes these responsibilities through periodic reviews of Webster’s business activities, operations, and systems, and through special or retrospective reviews that may be specifically requested by the Audit Committee or management. Internal Audit is led by the Chief Audit Executive. 10 Table of Contents Information Risk Information risk encompasses Information Technology risk and Information Security risk.
The Information Risk Committee provides primary oversight to Information Risk. Reputational Risk Reputational risk is defined as the potential that negative publicity regarding the Company's conduct, business practices, or associations, whether true or not, will adversely affect its revenues, operations, and customer base, or require costly litigation or other defensive measures.
Additionally, the Information Risk Committee is responsible for providing oversight and governance of Information risk. Reputation Risk Reputation risk is the potential that negative publicity regarding Webster’s conduct, business practices, or associations, whether true or not, will adversely affect its revenues, operations, and customer base, or require costly litigation or other defensive measures.
Control of operational losses depends on identifying the types of transactions and operational risks faced at the enterprise and business level, and ensuring effective internal control processes are in place to mitigate these risks. The Operational Risk Management Committee provides primary oversight to Operational risk as a whole. The Litigation Risk Committee provides primary oversight to Legal risk.
Control of operational losses depends on identifying the types of transactions and operational risks faced at the enterprise and business level, and ensuring effective internal control processes are in place to mitigate these risks. The Head of Operational Risk is responsible for operational risk oversight.
Compliance risk is managed through the execution of a comprehensive Compliance Management Program, which is designed to identify and evaluate risks of non-compliance, assess, test, and monitor the effectiveness of internal controls, and report and escalate significant issues. The Regulatory Compliance Committee provides primary oversight to Compliance risk as a whole.
Corporate Compliance, a second line function, manages compliance risk through the execution of a comprehensive Compliance Management Program, which is designed to identify and evaluate risks of non-compliance, assess, test, and monitor the effectiveness of internal controls, and report and escalate significant issues.
The Third Line provides an independent and objective assurance to management and the Board of Directors and assesses whether the First and Second Line functions are operating effectively. Detailed roles and responsibilities for each line are outlined below.
The Third Line provides an independent and objective assurance to management and the Board and assesses whether the First and Second Line functions are operating effectively.
ITEM 1. BUSINESS General 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.
ITEM 1. BUSINESS General 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. As of December 31, 2024, Webster Financial Corporation had more than $79 billion in total consolidated assets.
Further, the Change in Bank Control Act of 1978 generally prohibits any person, acting directly or indirectly or in concert with other persons, from acquiring control of a covered institution without providing at least 60 days prior written notice to the FDIC or upon receipt of written notice that the FDIC does not disapprove of the acquisition.
Further, the Change in Bank Control Act of 1978 prohibits the Company from acquiring control of a bank regulated by the FDIC without providing at least 60 days prior written notice to the FDIC or upon receipt of written notice that the FDIC does not disapprove of the acquisition.
The Company's loan portfolio, which includes both commercial and consumer lending activity, is actively managed to avoid significant concentrations in borrowers, counterparties, industries, and solutions that could create excessive correlated risk. Diversification of the loan portfolio across commercial and industrial, specialty finance, and real estate lending is important in managing credit risk.
Webster’s loan portfolio is balanced to include both commercial and consumer lending activity, while closely managing concentrations in borrowers, counterparties, industries, and solutions to avoid excessive correlated risk. Diversification of the loan portfolio across commercial and industrial, specialty finance, commercial real estate, and residential lending is important in managing credit risk.
This buffer is designed to absorb losses during periods of economic stress, and is generally required in order to avoid limitations on capital distributions and certain discretionary bonus payments to executive officers.
This buffer is designed to absorb losses during periods of economic stress, and is generally required in order to avoid limitations on capital distributions and certain discretionary bonus payments to executive officers. Our regulatory capital ratios can be found in Part II under the section captioned “Liquidity and Capital Resources” contained in Item 7.
Strategic risk underscores the need for balance between risk and return, evaluating opportunity against the risk of loss of value. 13 Table of Contents The long-range strategic planning process ensures that strategic choices and initiatives are viewed with the overarching goal of allocating capital and resources to support strategies that create value for customers and stockholders and sustainably grow economic profit over time.
The long-range strategic planning process ensures that strategic choices and initiatives are viewed within the context of Webster’s strategic management framework and the overarching goal of allocating capital and resources to support strategies that create value for customers and sustainably grow economic profit over time.
Additional information regarding the Company's reportable segments can be found in Part II under the section captioned "Segment Reporting" contained in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, and within Note 21: Segment Reporting in the Notes to Consolidated Financial Statements contained in Item 8.
Management’s Discussion and Analysis of Financial Condition and Results of Operations, and within Note 21: Segment Reporting in the Notes to Consolidated Financial Statements contained in Item 8.
Reputational risk is managed through strong corporate governance, risk culture, and a Code of Ethics. Setting the tone at the top, the Board of Directors and executive leadership actively support risk awareness by mandating accurate and timely management information and communication. The Company's ethical standards are reinforced through recruiting, training, and performance management.
Reputation risk is managed through strong corporate governance, risk culture, and a Code of Business Conduct and Ethics. All colleagues, officers, and directors of Webster have the responsibility for protecting its reputation. Setting the tone at the top, the Board and executive leadership actively support risk awareness by mandating accurate and timely management information and communication.
At December 31, 2023, the Bank held an FRB of New York stock investment of $227.9 million. Federal Home Loan Bank System The FHLB System provides a central credit facility for its member institutions.
The remaining 50% is subject to call by the Board of Governors of the Federal Reserve System. At December 31, 2024, the Bank held a stock investment in the FRB of New York of $229.6 million. Federal Home Loan Bank System The FHLB System provides a central credit facility for its member institutions.
The Credit Risk Management Committee provides primary oversight to Credit risk. Compliance Risks Compliance risk is defined as the risk to current or anticipated earnings or capital arising from violations of, or non-compliance with, laws, rules, regulations, prescribed practices, internal policies and procedures, or prudent ethical standards.
Compliance Risk Compliance risk is the risk to current or anticipated earnings or capital arising from violations of, or non-compliance with, laws, rules, regulations, prescribed practices, internal policies and procedures, or prudent ethical standards. Compliance risk exposes Webster to fines, civil monetary penalties, payment of damages, and the voiding of contracts.
These guidelines prescribe standards relating to internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, compensation, fees, and benefits, asset quality, earnings, and stock valuation, as determined to be appropriate. 7 Table of Contents The OCC also has guidelines establishing heightened standards for large national banks, which establish minimum standards for the design and implementation of a risk governance framework.
These guidelines prescribe standards relating to internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, compensation, fees, and benefits, asset quality, earnings, and stock valuation, as determined to be appropriate.
Additional information regarding risks and uncertainties, and relevant risk factors that could impact the Company's business, results of operations, or financial condition can be found in Part I - Item 1A. Risk Factors and throughout Part II of this report. 14 Table of Contents
The Corporate Strategy Officer is responsible for strategic risk oversight. Additionally, the Enterprise Risk Management Committee is responsible for providing oversight and governance of strategic risk. Additional information regarding risks and uncertainties, and relevant risk factors that could impact the Company’s business, results of operations, or financial condition can be found in Part I - Item 1A.
Management's Discussion and Analysis of Financial Condition and Results of Operations, and within Note 2: Mergers and Acquisitions in the Notes to Consolidated Financial Statements contained in Item 8. Financial Statements and Supplementary Data. Subsidiaries and Reportable Segments The Holding Company's principal consolidated subsidiary is the Bank.
Management’s Discussion and Analysis of Financial Condition and Results of Operations, and within Note 14: Regulatory Capital and Restrictions in the Notes to Consolidated Financial Statements contained in Item 8. Financial Statements and Supplementary Data.
In addition, an insured depository institution with a ratio of tangible equity less than or equal to 2% is considered to be critically under capitalized.
As of December 31, 2024, the Bank was categorized as “well-capitalized” under each of its capital ratio categories. An insured depository institution with a ratio of tangible equity less than or equal to 2% is considered to be critically under capitalized.
The program enables the lines of business and corporate functions to establish accountability for performance and execution, and allows for timely and effective management of identified risks, control failures, or other related gap/deficiencies that are reinforced through incentive structures.
The framework enables the lines of business and corporate functions to establish accountability for the timely and effective management of identified risks, control failures, or other related gap/deficiencies that are reinforced through incentive structures. Webster seeks to control operational risk within an acceptable range, which is determined by the types of businesses in which it engages.
The Holding Company’s non-bank subsidiaries are also subject to regulation by the Board of Governors of the Federal Reserve System and other applicable federal and state agencies.
As a national banking association, the Bank derives its lending, investment, and other bank activity powers from the National Bank Act, as amended, and the regulations of the OCC promulgated thereunder. The Holding Company’s non-bank subsidiaries are also subject to regulation by the Board of Governors of the Federal Reserve System and other applicable federal and state agencies.
Credit risk can also arise from other solutions or services that involve customer obligations for the transfer of funds. The overall focus of Credit risk management is to balance returns relative to risk while operating within stated risk tolerances. The Company maintains underwriting standards consistent with its desired risk profile and robust credit process.
The overall focus of credit risk management is to balance returns relative to risk while operating within stated risk tolerances. Webster maintains underwriting standards consistent with our desired risk profile and robust credit processes.
A large bank is defined as a bank with more than $50 billion in average total consolidated assets from its four most recently filed quarterly Call Reports.
The OCC also has guidelines establishing heightened standards for large national banks, which establish minimum standards for the design and implementation of a risk governance framework. A large bank is defined as a bank with more than $50 billion in average total consolidated assets from its four most recently filed quarterly Call Reports.
The effectiveness of a financial institution in combating money laundering activities is a factor to be considered in any application submitted under the Bank Merger Act. The Company has in place a Bank Secrecy Act and USA PATRIOT Act compliance program and engages in very few transactions of any kind with foreign financial institutions or foreign persons.
The Company has in place a Bank Secrecy Act and USA PATRIOT Act compliance program and engages in very few transactions of any kind with foreign financial institutions or foreign persons. The Company also complies with the sanctions administered by the OFAC of the U.S.
Compliance risk exposes the Company to fines, civil monetary penalties, payment of damages, and the voiding of contracts. The Company's activities subject to overall compliance, consumer protection, and regulatory risk include deposit account management, lending products and services, privacy protections, investment management, and fiduciary services.
Webster’s activities with overall compliance, consumer protection, and regulatory risk include deposit account management, lending products and services, privacy protections, investment management, and fiduciary services.
Information Security risk is defined as the risk of unauthorized access, use, disclosure, disruption, modification, perusal, inspection, recording, or destruction of electronic or physical data.
Information Technology risk also includes the risk that data supporting internal/external reporting and business decisions is not complete, accurate or available timely. Information Security risk is the risk of unauthorized access, use, disclosure, disruption, modification, perusal, inspection, recording, or destruction of electronic or physical data.
Treasury risk includes the risk (i) of capital levels falling below supervisory expectations or being incommensurate with the level of risk; (ii) that the value of a security or investment will decrease; (iii) changes in interest rates could contribute to a reduction in earnings and net worth; and (iv) from decreases or changes in funding sources.
Treasury risk includes the risk of capital levels falling below supervisory expectations or being incommensurate with the level of risk; the risk that the value of a security or investment will decrease or losses may be incurred due to changes in market conditions such as interest rates, exchange rates, and market volatility; the risk that changes in interest rates could contribute to a reduction in earnings and net worth driven by differences in the rate at which Webster earns interest on its assets versus what it pays as interest on its liabilities; and the risk from decreases or changes in funding sources that could impact Webster’s ability to meet its obligations.
Total capital consists of Tier 1 capital and Tier 2 capital, as defined in the regulations. Tier 2 capital includes qualifying subordinated debt and the permissible portion of the ACL.
Total capital consists of Tier 1 capital and Tier 2 capital, as defined in the regulations. Tier 2 capital includes qualifying subordinated debt and the permissible portion of the ACL. In addition, the Basel III Capital Rules mandate that most deductions from or adjustments to regulatory capital be made to CET1 capital, not to the other components.
Further, as a national bank and a member of the Federal Reserve System, Webster Bank is required to subscribe to the capital stock of its district FRB in an amount equal to 6% of its capital and surplus, of which 50% is paid. The remaining 50% is subject to call by the Board of Governors of the Federal Reserve System.
Since March 26, 2020, the reserve requirement ratios on all net transaction accounts were reduced to zero percent, thereby eliminating reserve requirements for all depository institutions. 5 Table of Contents Further, as a national bank and a member of the Federal Reserve System, Webster Bank is required to subscribe to the capital stock of its district FRB in an amount equal to 6% of its capital and surplus, of which 50% is paid.
Employees have access to more than 490 courses offered through Webster Bank University, the Company's internal learning resource that offers on-demand webinars, e-learning, and in-person learning programs. The Company also provides unlimited access to self-directed e-learning courses taught by industry experts with curated learning paths that are designed specifically for their professional interests through the Company's LinkedIn partnership.
Our employees have access to our internal learning resource that offers virtual instructor-led training and on-demand programs. We also provide unlimited access to self-directed e-learning courses taught by industry experts with curated learning paths designed for specific professional interests. Significant investments in formal development programs are made to build our talent pipeline.
The Company also complies with the sanctions administered by the OFAC of the U.S. Department of the Treasury, which is responsible for administering economic sanctions that affect transactions with designated foreign countries, nations, and others.
Department of the Treasury, which is responsible for administering economic sanctions that affect transactions with designated foreign countries, nations, and others. The OFAC publishes lists of persons, organizations, and countries suspected of aiding, harboring, or engaging in terrorist acts, known as Specially Designated Nationals and Block Persons.
The FRA authorizes different ranges of reserve requirement ratios depending on the amount of transaction account balances held at each depository institution. Effective March 26, 2020, in response to the COVID-19 pandemic, the reserve requirement ratios on all net transaction accounts were reduced to zero percent, thereby eliminating reserve requirements for all depository institutions.
The FRA authorizes different ranges of reserve requirement ratios depending on the amount of transaction account balances held at each depository institution.
On January 24, 2024, the Bank acquired Ametros, a custodian and administrator of medical funds from insurance claims settlements that helps individuals manage their ongoing medical care through its CareGuard service and proprietary technology platform.
Ametros is a custodian and 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 Bank with a fast-growing source of low-cost and long-duration deposits, new sources of non-interest income, and enhanced its employee benefit and healthcare financial services expertise.
The OFAC publishes lists of persons, organizations, and countries suspected of aiding, harboring, or engaging in terrorist acts, known as Specially Designated Nationals and Block Persons. Blocked assets (i.e., property and bank deposits) cannot be paid out, withdrawn, set off, or transferred in any manner without a license from the OFAC.
Blocked assets (i.e., property and bank deposits) cannot be paid out, withdrawn, set off, or transferred in any manner without a license from the OFAC. Failure to comply with these sanctions could have serious legal and reputational consequences.
Risk assessments evaluate inherent risk (likelihood and impact) and existing controls (control environment) to arrive at residual risk. 11 Table of Contents The Company has established and maintains a Risk Appetite Statement which provides guidance to management regarding the nature and level of residual risk that it is willing to take in pursuit of its objectives.
Webster maintains a Risk Appetite Statement, which provides the organization with guidance regarding the nature and level of residual risk that the Company is willing to accept in pursuit of its business strategy and financial plans.
Credit Risk Credit risk is defined as the risk of loss resulting from the failure of a borrower or counterparty to honor its financial or contractual obligations to the Company. Credit risk arises in the Company's lending operations, and in its funding and investment activities where counterparties have repayment or other obligations to the Company.
Credit risk arises in Webster’s lending operations, and in its funding and investment activities where counterparties have repayment or other obligations to Webster. Credit risk can also arise from other solutions or services that involve customer obligations for the transfer of funds.
This hybrid program gives participants a chance to learn with peers from across the Bank with three days in the classroom and the balance through virtual instructor led training. 3 Table of Contents Competition The Company is subject to strong competition from other commercial banks, savings banks, credit unions, non-bank health savings account trustees, consumer finance companies, investment companies, insurance companies, online lending and savings institutions, and other non-bank financial services companies.
Our mentoring program, which partners with our Business Resource Group network, is also an important resource to support colleagues with their professional growth based on their self-identified career development goals. 2 Table of Contents Competition The Company is subject to strong competition from other commercial banks, savings banks, credit unions, non-bank health savings account trustees, consumer finance companies, investment companies, insurance companies, online lending and savings institutions, and other non-bank financial services companies.
The Company also maintains strong fair and responsible banking practices, which permeate interactions with clients, vendors, and counterparties. The ERMC provides primary oversight to Reputational risk. Operational Risk Operational risk is defined as the risk of loss, whether direct or indirect, due to the inadequacy or failure of processes and systems, human error, or from external events.
The Chief Corporate Responsibility Officer is responsible for reputation risk oversight. Additionally, the Enterprise Risk Management Committee is responsible for providing oversight and governance of Reputation Risk. Operational Risk Operational risk is the risk of loss, whether direct or indirect, due to the inadequacy or failure of processes and systems, human error, or from external events.
Operational risk encompasses the following risks: Fraud, Third Parties, Human Capital, Business Operations, Model, Legal, and Physical Security. 12 Table of Contents The Company mitigates Operational risk through the establishment of an Operational Risk Management Program, which provides for a set of tools to identify, assess, monitor, and report operational risk activities.
Webster mitigates operational risk through an operational risk management framework, which provides for a set of tools to identify, assess, monitor, control, and report on operational risk.
Webster Bank, and its HSA Bank Division, 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, HSA Bank, and Consumer Banking. While its core footprint spans the northeastern U.S. from New York to Massachusetts, certain businesses operate in extended geographies.
Webster Bank is a commercial bank with a national bank charter focused on providing financial products and services to businesses, individuals, and families. While its core footprint spans the Northeast from the New York metropolitan area to Rhode Island and Massachusetts, certain businesses operate in extended geographies.
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.
The special assessment is to be collected for an anticipated total of ten quarterly assessment periods, which began with the second quarter of 2024. At December 31, 2024, the Company’s remaining accrual for its estimated special assessment charge was 8 Table of Contents $39.8 million.
The appetite balances a qualitative risk appetite statement, which is approved annually by the Board of Directors, with quantitative metrics in the form of board-level and management-level scorecards comprising key risk indicators with established risk tolerance levels. Tolerance levels are periodically reviewed by the respective oversight committees to ensure the alignment of risk appetite with the Company’s risk profile.
The Risk Appetite Statement contains a set of qualitative risk statements and quantitative Board level metrics along with the Board level tolerances, which are approved by the Board annually. Breaches of approved tolerances are required to be escalated and actioned in a timely manner.
The Bank received a CRA rating of Outstanding in its most recent examination. 9 Table of Contents Federal Deposit Insurance The standard deposit insurance coverage limit is $250,000 per depositor, per FDIC-insured bank, for each account ownership category.
Federal Deposit Insurance The standard deposit insurance coverage limit is $250,000 per depositor, per FDIC-insured bank, for each account ownership category, although the FDIC may guarantee uninsured deposits above the $250,000 limit under the statutory systemic risk exception, as was done with the Silicon Valley Bank and Signature Bank failures in March 2023.
Compensation and Benefits The Company's compensation program is designed to attract, retain, and reward performance and align incentives with the achievement of strategic goals and both short- and long-term operating objectives. The Company has an Incentive Compensation Oversight Committee that reviews and approves all business-line incentives and sales plans each year, which ensures consistent governance and behavior.
Our compensation program is designed to attract, retain, and reward performance and align incentives with achievement of our strategic plan, and both short- and long-term operating objectives. Our hiring, promotion, and retention practices are based on merit and qualifications, guided by the principles of fairness.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese law changes may be retroactive to previous periods and as a result, could negatively impact our current and future financial performance. 18 Table of Contents We are subject to examinations and challenges by taxing authorities. We are subject to federal and applicable state and local income tax regulations. Income tax regulations are often complex and require interpretation.
Biggest changeWe are subject to changes in tax laws that could increase our effective tax rates or cause an increase or decrease in our income tax liabilities. These law changes may be retroactive to previous periods and as a result, could negatively impact our current and future financial performance. We are subject to examinations and challenges by taxing authorities.
We actively monitor our available-for-sale securities portfolio and believe that it is not more likely than not that the Company will be required to sell securities before the recovery of the amortized cost basis. Nonetheless, our access to liquidity sources, financial condition, and results of operations, could be affected by unrealized losses if securities must be sold at a loss.
We actively monitor our available-for-sale securities portfolio and believe that it is not more likely than not that we will be required to sell securities before the recovery of the amortized cost basis. Nonetheless, our access to liquidity sources, financial condition, and results of operations, could be affected by unrealized losses if securities must be sold at a loss.
Our business, financial, accounting, data processing, or other operating systems and facilities, including mobile banking and other recently developed technologies, may stop operating properly or become disabled or compromised as a result of a number of factors that may be beyond our control.
Our business, financial, accounting, data processing, or other operating systems and facilities, including mobile banking applications and other recently developed technologies, may stop operating properly or become disabled or compromised as a result of a number of factors that may be beyond our control.
Changes in economic conditions affecting borrowers, the softening of macroeconomic variables that we are more susceptible to, along with new information regarding existing loans, identification of additional problems loans, and other factors, both within and outside our control, may indicate the need for an increase in the ACL on loans and leases.
Changes in economic conditions affecting borrowers, the softening of macroeconomic variables that we are more susceptible to, along with new information regarding existing loans, identification of additional problem loans, and other factors, both within and outside our control, may indicate the need for an increase in the ACL on loans and leases.
At December 31, 2023, approximately 75% of our loan and lease portfolio consisted of commercial non-mortgage, commercial real estate, and multi-family loans, and a large portion of the borrowers or properties associated with these loans are geographically concentrated in New York City and proximate areas.
At December 31, 2024, approximately 75% of our loan and lease portfolio consisted of commercial non-mortgage, commercial real estate, and multi-family loans, and a large portion of the borrowers or properties associated with these loans are geographically concentrated in New York City and proximate areas.
The soundness of other financial institutions could adversely affect our business. Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships.
Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships.
We continue to closely monitor the pace of inflation and the impacts of inflation on the larger market, including labor and supply chain impacts. 19 Table of Contents Our profitability depends significantly on local economic conditions in the states in which we conduct business.
We continue to closely monitor the pace of inflation and the impacts of inflation on the larger market, including labor and supply chain impacts. 20 Table of Contents Our profitability depends significantly on local economic conditions in the states in which we conduct business.
The unexpected loss of services of our key personnel could have a material adverse impact on the business because of their skills, knowledge of our markets, years of industry experience, and the difficulty of promptly finding qualified replacement personnel. Further, our business is primarily relationship-driven, in that many of our key employees have extensive customer relationships.
The unexpected loss of services of our key personnel could have a material adverse impact on the business because of their skills, knowledge of our markets, years of industry experience, and the difficulty of promptly finding qualified replacement personnel. 24 Table of Contents Further, our business is primarily relationship-driven, in that many of our key employees have extensive customer relationships.
However, the actual cost of an outstanding legal proceeding or threatened claim and assessment may be substantially higher than the amount accrued by management. Operational Risk We rely on third parties to perform significant operational services for us. Third parties perform significant operational services on our behalf.
However, the actual cost of an outstanding legal proceeding or threatened claim and assessment may be substantially higher than the amount accrued by management. 15 Table of Contents Operational Risk We rely on third parties to perform significant operational services for us. Third parties perform significant operational services on our behalf.
Under these circumstances, we are further subject to reinvestment risk to the extent that we cannot reinvest the cash received from such prepayments with interest rates comparable to pre-existing loans and securities. In a rising interest rate environment, which has occurred recently, competition for cost-effective deposits increases, making it more costly for the Bank to fund loan growth.
Under these circumstances, we are further subject to reinvestment risk to the extent that we cannot reinvest the cash received from such prepayments with interest rates comparable to pre-existing loans and securities. In a rising interest rate environment, competition for cost-effective deposits increases, making it more costly for the Bank to fund loan growth.
A project’s failure to realize these tax credits and other tax benefits may have a negative impact on our investment, and as a result, on our financial condition and results of operations. 22 Table of Contents Strategic Risk New lines of business or new products and services may subject us to additional risk.
A project’s failure to realize these tax credits and other tax benefits may have a negative impact on our investment, and as a result, on our financial condition and results of operations. Strategic Risk New lines of business or new products and services may subject us to additional risk.
Additional information regarding our commercial lending business can be found in Part II under the section captioned "Loans and Leases" contained in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Compliance Risk We are subject to extensive government regulation and supervision, which may interfere with our ability to conduct our business operations.
Additional information regarding our commercial lending business can be found in Part II under the section captioned “Loans and Leases” contained in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Compliance Risk We are subject to extensive government regulation and supervision, which may interfere with our ability to conduct our business operations.
In response to these inflationary pressures, the FRB has raised benchmark interest rates in recent months and may continue to raise interest rates in response to economic conditions, particularly a continued high rate of inflation. Amidst these uncertainties, financial markets have continued to experience volatility.
In response to these inflationary pressures, the FRB has raised benchmark interest rates in the past and may continue to raise interest rates in response to economic conditions, particularly in a continued high rate of inflation. Amidst these uncertainties, financial markets have continued to experience volatility.
These regulations affect our lending practices, capital structure, investment practices, dividend policy, and growth, among other things. Congress and federal regulatory agencies continuously review banking laws, regulations, and policies for possible changes, and proposed changes are to be expected if there is a change in the office of the President of the U.S.
These regulations affect our lending practices, capital structure, investment practices, dividend policy, and growth, among other things. Congress and federal regulatory agencies continuously review banking laws, regulations, and policies for possible changes, and proposed changes are to be expected as a result of a change in the office of the President of the U.S.
Many of these transactions could expose us to credit risk in the event of default of our counterparty or client. In addition, our credit risk may be impacted if the collateral held by us cannot be realized or is liquidated at prices not sufficient to recover the full amount of the financial instrument’s exposure due to us.
Many of these transactions could expose us to credit risk in the event of default of our counterparty or client. In addition, our credit risk may be impacted if the collateral held by us cannot be realized or is liquidated at prices not sufficient to recover the full amount of our investment in the financial instrument.
Increased ESG-related compliance costs for us as well as among our third-party suppliers, vendors, and various other parties within our supply chain could result in increases to our overall operational costs.
Increased corporate responsibility-related compliance costs for us, as well as among our third-party suppliers, vendors, and various other parties within our supply chain, could also result in increases to our overall operational costs.
Reputational Risk Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our ESG practices may impose additional costs on us or expose us to new or additional risks. Companies are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their ESG practices and disclosure.
Reputation Risk Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our corporate responsibility practices may impose additional costs on us or expose us to new or additional risks. Companies are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their corporate responsibility practices and disclosure.
The success of our business also depends on the general economic conditions of the significant markets in which we operate, particularly Connecticut, Massachusetts, Rhode Island, New York, and New Jersey.
The success of our business is dependent on the general economic conditions of the significant markets in which we operate, particularly Connecticut, Massachusetts, Rhode Island, New York, and New Jersey.
Any health care reform enacted may be phased in over a number of years, but could, with respect to the operations of HSA Bank, reduce revenues, increase costs, and require us to revise the ways in which we conduct business or put us at risk for loss of business.
Any health care reform enacted may be phased in over a number of years, but could, with respect to the operations of our Healthcare Financial Services segment, reduce revenues, increase costs, and require us to revise the ways in which we conduct business or put us at risk for loss of business.
Our accounting policies and methods are fundamental to understanding how we record and report our results of operations and financial condition. Accordingly, we exercise judgment in selecting and applying these accounting policies and methods so they comply with GAAP.
Changes in our accounting policies or in accounting standards could materially impact how we report our financial results. Our accounting policies and methods are fundamental to understanding how we record and report our results of operations and financial condition. Accordingly, we exercise judgment in selecting and applying these accounting policies and methods so they comply with GAAP.
Regulators have and may implement changes to these standards. If we fail to meet the minimum capital adequacy and liquidity guidelines and other requirements, our business activities, including lending and our ability to expand, either organically or through acquisitions, could be limited.
If we fail to meet the minimum capital adequacy and liquidity guidelines and other requirements, our business activities, including lending and our ability to expand, either organically or through acquisitions, could be limited.
Whether the Bank is able to pay dividends depends on its ability to generate sufficient net income and meet certain regulatory requirements, and the amount of such dividends may then be limited by federal and state laws.
These dividends are the principal source of funds to pay dividends to common and preferred stockholders. Whether the Bank is able to pay dividends depends on its ability to generate sufficient net income and meet certain regulatory requirements, and the amount of such dividends may then be limited by federal and state laws.
Failure to successfully keep pace with and adapt to technological change affecting the financial services industry could have a material adverse impact on our business and, in turn, our financial condition and results of operations. The loss of key partnerships could adversely affect our HSA Bank division and deposit administration activities.
Failure to successfully keep pace with and adapt to technological change affecting the financial services industry could have a material adverse impact on our business and, in turn, our financial condition and results of operations. The loss of key partnerships could adversely affect our Healthcare Financial Services segment and interLINK operations.
A significant merger or acquisition requires us to make estimates, including the fair values of assets acquired and liabilities assumed. GAAP requires us to record the assets and liabilities of an acquired business to their fair values at the time of the acquisition. With larger transactions, fair value and other estimations can take up to four quarters to finalize.
GAAP requires us to record the assets and liabilities of an acquired business to their fair values at the time of the acquisition. With larger transactions, fair value and other estimations can take up to four quarters to finalize.
Among other things, technology and other changes are allowing customers to complete financial transactions that historically have involved banks at one or both ends of the transaction. 23 Table of Contents Our ability to compete successfully depends on a number of factors, including, among other things: • the ability to develop, maintain, and build upon long-term customer relationships based on top quality service, high ethical standards, and safe, sound financial position; • the ability to expand our market position; • the scope, relevance, and pricing of products and services offered to meet customer needs and demands, including within the HSA market; • the rate at which we introduce new products and services relative to our competitors; • customer satisfaction with our level of service and products; and • industry and general economic trends.
Our ability to compete successfully depends on a number of factors, including, among other things: • the ability to develop, maintain, and build upon long-term customer relationships based on top quality service, high ethical standards, and safe, sound financial position; • the ability to expand our market position; • the scope, relevance, and pricing of products and services offered to meet customer needs and demands, including within the HSA market; • the rate at which we introduce new products and services relative to our competitors; • customer satisfaction with our level of service and products; and • industry and general economic trends.
There is significant competition for our existing partners, and our failure to retain our existing larger partner relationships upon expiration or the earlier loss of a relationship upon the exercise of a partner's early termination rights, or the expiration or termination of a substantial number of small partner relationships, could have a material adverse effect on our results of operations (including growth rates) and financial condition to the extent that we do not acquire new partners of similar size and profitability or otherwise grow our business.
If these health plan partners or other partners choose to align with our competitors or develop their own solutions, our business, financial condition, and results of operations could be adversely affected. 25 Table of Contents There is significant competition for our existing partners, and our failure to retain our existing larger partner relationships upon expiration or the earlier loss of a relationship upon the exercise of a partner’s early termination rights, or the expiration or termination of a substantial number of small partner relationships, could have a material adverse effect on our results of operations (including growth rates) and financial condition to the extent that we do not acquire new partners of similar size and profitability or otherwise grow our business.
Any such losses could materially or adversely affect our business, financial condition, or results of operations. We are subject to the risk of default by our counterparties and clients, particularly with respect to certain types of commercial loans. Many of our routine transactions expose us to credit risk in the event of default of our counterparties or clients.
Any such losses could materially or adversely affect our business, financial condition, or results of operations. 17 Table of Contents We are subject to the risk of default by our counterparties and clients, particularly with respect to certain types of commercial loans.
Our credit risk may be exacerbated when the collateral held cannot be realized or is liquidated at prices insufficient to cover the full amount of the loan or derivative exposure to us.
Many of our routine transactions expose us to credit risk in the event of default of our counterparties or clients. Our credit risk may be exacerbated when the collateral held cannot be realized or is liquidated at prices insufficient to cover the full amount of the loan or derivative exposure to us.
Investor advocacy groups, investment funds, and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions, and human rights.
Investor advocacy groups, investment funds, and influential investors are also increasingly focused on these practices, especially as they relate to the environment (including with respect to climate change), health and safety, inclusion and belonging, human capital management, labor conditions, and human rights.
Further, if we are the owner or former owner of a contaminated site, we may be subject to common law claims based on damages and costs incurred by others due to environmental contamination emanating from the property.
Further, if we are the owner or former owner of a contaminated site, we may be subject to common law claims based on damages and costs incurred by others due to environmental contamination emanating from the property. These remediation costs and liabilities could have a material adverse effect on our financial condition and results of operations.
While we make significant efforts to consider and plan for hypothetical disruptions in our deposit funding, market-related, geopolitical, or other events could impact the liquidity derived from deposits. Unrealized losses in our available-for-sale securities portfolio could negatively impact our business. As market interest rates have increased, we have experienced significant unrealized losses on our available-for-sale securities portfolio.
While we make significant efforts to consider and plan for hypothetical disruptions in our deposit funding, market-related, geopolitical, or other events could impact the liquidity derived from deposits. Realized and unrealized losses in our financial instruments, particularly in our available-for-sale securities portfolio, could negatively impact our business, financial condition, and results of operations.
It could also result in us being required to take steps to increase our regulatory capital that may be dilutive to stockholders or limit our ability to pay dividends, or sell or refrain from acquiring assets. Our stock price can be volatile.
It could also result in us being required to take steps to increase our regulatory capital that may be dilutive to stockholders or limit our ability to pay dividends, or sell or refrain from acquiring assets. Our ability to grow is contingent upon access to capital, which may not be readily available to us.
In addition, changes in key personnel at the regulatory agencies, including the federal banking regulators, may result in differing interpretations of existing rules and guidelines, including more stringent enforcement and more severe penalties than previously. Disagreements between, or in, the U.S.
We face risks related to the adoption of future legislation and potential changes in federal regulatory agency leadership, policies, and priorities. Changes in key personnel at the regulatory agencies, including the federal banking regulators, may result in differing interpretations of rules and guidelines, including more stringent enforcement and more severe penalties than previously. Disagreements between, or in, the U.S.
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. 21 Table of Contents The Holding Company may not pay dividends to stockholders if it is not able to receive dividends from its subsidiary, Webster Bank.
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.
As cybersecurity threats and related regulations continue to evolve, we may be required to expend significant additional resources to modify our protective measures or to investigate and remediate any information security vulnerabilities.
As cybersecurity threats and related regulations continue to evolve, we may be required to expend significant additional resources to modify our protective measures or to investigate and remediate any information security vulnerabilities. We are subject to complex state and federal laws and regulations regarding data privacy and security, which impact how we conduct our business.
Changes to statutes, regulations, or regulatory policies, including changes in interpretation or implementation thereof, could affect us in substantial and unpredictable ways. For example, such changes could subject us to additional costs, limit the types of financial services and products we may offer, and restrict what we are able to charge for certain banking services.
Such changes could subject us to additional costs, limit the types of financial services and products we may offer, and restrict what we are able to charge for certain banking services, or lead to regulatory uncertainty.
Failure to comply with laws, regulations, or policies could result in sanctions by regulatory agencies, civil penalties, and reputation damage, which could have a material adverse effect on our business, financial condition, and results of operations. While we have policies and procedures designed to prevent these types of violations, there can be no assurance that such violations will not occur.
Failure to comply with laws, regulations, or policies could result in sanctions by regulatory agencies, civil penalties, and reputation damage, which could have a material adverse effect on our business, financial condition, and results of operations.
The Holding Company is a separate and distinct legal entity from the Bank and its non-banking subsidiaries. A substantial portion of the Holding Company’s revenues comes from dividends paid by the Bank. These dividends are the principal source of funds to pay dividends to common and preferred stockholders.
The Holding Company may not pay dividends to stockholders if it is not able to receive dividends from its subsidiary, Webster Bank. The Holding Company is a separate and distinct legal entity from the Bank and its non-banking subsidiaries. A substantial portion of the Holding Company’s revenues comes from dividends paid by the Bank.
Material estimates subject to change include, among other items, the allowance for credit losses, the carrying value of goodwill or other intangible assets, the fair value estimates of certain assets and liabilities, and the realization of deferred tax assets and liabilities.
Significant estimates subject to change include, among other items, the allowance for credit losses, the carrying value of goodwill or other intangible assets, the fair value estimates of certain assets and liabilities, and the realization of deferred tax assets and liabilities. 23 Table of Contents A significant merger or acquisition requires us to make estimates, including the fair values of assets acquired and liabilities assumed.
These remediation costs and liabilities could have a material adverse effect on our financial condition and results of operations. 16 Table of Contents Climate change manifesting as physical or transition risks could adversely affect our operations, businesses, and customers. There is an increasing concern over the risks of climate change and related environmental sustainability matters.
Climate change manifesting as physical or transition risks could adversely affect our operations, businesses, and customers. There is an increasing concern over the risks of climate change and related environmental sustainability matters.
The inaccuracy of that information or those representations affects our ability to evaluate the default risk of a counterparty or client accurately and could cause us to enter into unfavorable transactions, which could have a material adverse effect on our financial condition and results of operations. 17 Table of Contents In addition, we consider our commercial real estate loans and commercial and industrial loans to be higher risk categories in our loan portfolio because these loans are particularly sensitive to economic conditions.
The inaccuracy of that information or those representations affects our ability to evaluate the default risk of a counterparty or client accurately and could cause us to enter into unfavorable transactions, which could have a material adverse effect on our financial condition and results of operations.
Additionally, obtaining adequate funding to meet our deposit obligations may be more challenging during periods of elevated prevailing interest rates, such as the present period. Further, interest rates paid for borrowings generally exceed interest rates paid on deposits.
Additionally, obtaining adequate funding to meet our deposit obligations may be more challenging during periods of elevated prevailing interest rates. Further, interest rates paid for borrowings generally exceed interest rates paid on deposits. Our ability to attract and retain depositors during a time of actual or perceived distress of instability in the marketplace may be limited.
Health care reform could adversely affect our HSA Bank division. The enactment of future health care reform affecting HSAs at the federal or state level may affect our HSA Bank division as a bank custodian of HSAs.
The enactment of future health care reform affecting HSAs and/or workers compensation at the federal or state level may affect our Healthcare Financial Services segment as a bank custodian of HSAs and insurance claim settlements.
If financial markets remain volatile or if the aforementioned conditions result in further economic stress or recession, the performance of various segments of our business, including the value of our investment securities portfolio, could be significantly impacted. Inflation rose sharply throughout 2022, and continued to rise through the third quarter of 2023, at levels not seen for over 40 years.
If financial markets remain volatile or if the aforementioned conditions result in further economic stress or recession, the performance of various segments of our business, including the value of our investment securities portfolio, could be significantly impacted.
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.
This could affect our growth, profitability, and financial condition, including liquidity. 22 Table of Contents 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.
The financial services industry also faces increasing competitive pressure from the introduction of disruptive new technologies, such as blockchain and digital payments, often by non-traditional competitors and financial technology companies.
The financial services industry also faces increasing competitive pressure from the introduction of disruptive new technologies, such as blockchain and digital payments, often by non-traditional competitors and financial technology companies. Among other things, technology and other changes are allowing customers to complete financial transactions that historically have involved banks at one or both ends of the transaction.
Information Risk A failure or breach of our information systems, or those of our third-party vendors and service providers, including as a result of cyber-attacks, could disrupt our businesses, result in the misuse of confidential or proprietary information, damage our reputation, and cause losses.
If any of these events or circumstances actually occurs, our business, results of operations, or financial condition could be significantly impacted. Information Risk A failure or breach of our information systems, including as a result of cyber-attacks, could disrupt our businesses, result in the misuse of confidential or proprietary information, damage our reputation, and cause losses.
Transition risks, including changes in consumer preferences and additional regulatory requirements or taxes, could increase our expenses and undermine our strategies.
Transition risks, including changes in consumer preferences and additional regulatory requirements or taxes, could increase our expenses and undermine our strategies. Our reputation and client relationships may be damaged as a result of our practices related to climate change.
Additionally, significant unrealized losses could negatively impact market and/or customer perceptions of the Company, which could lead to a loss of depositor confidence and result in an increase in withdrawals, particularly among those with uninsured deposits. 20 Table of Contents The proportion of our deposit account balances that exceed the FDIC insurance limits may expose the Bank to enhanced liquidity risk in times of financial distress.
Additionally, significant unrealized losses could negatively impact market and/or customer perceptions of us, which could lead to a loss of depositor confidence and result in an increase in withdrawals, particularly among those with uninsured deposits.
In addition, if charge-offs in future periods exceed the ACL, we may need, depending on an analysis of the adequacy of the ACL, additional provisions to increase the ACL. An increase in the ACL would result in a decrease in net income, and could have a material adverse effect on our financial condition, results of operations, and regulatory capital position.
An increase in the ACL would result in a decrease in net income, and could have a material adverse effect on our financial condition, results of operations, and regulatory capital position. The soundness of other financial institutions could adversely affect our business.
However, because the timing and impact of climate change have limited predictability, our risk management strategies may not be effective in mitigating climate risk exposure. Credit Risk Our allowance for credit losses on loans and leases may be insufficient.
However, because the timing and impact of climate change have limited predictability, our risk management strategies may not be effective in mitigating climate risk exposure. 16 Table of Contents There may be risks resulting from the extensive use of models in our business.
The sustained higher rates experienced throughout 2023 and 2022 have negatively impacted the mortgage market, including our loan origination volume and refinancing activity. Adverse market conditions, including increased volatility, changes in interest rates and mortgage spreads, and reduced market demand could result in greater risk in retaining mortgage loans.
Adverse market conditions, including increased volatility, changes in interest rates and mortgage spreads, and reduced market demand could result in greater risk in retaining mortgage loans. A reduction in our residential mortgage origination and refinancing volume could have a materially adverse effect on our financial condition and results of operations.
In addition, our results of operations, financial position, and cash flows could be materially adversely affected by such changes. Financial Risk Difficult conditions or volatility in the U.S. economy and financial markets may have a materially adverse effect on our business, financial condition, and results of operations.
Difficulties associated with potential acquisitions that may result from these facts could have a material adverse impact on our business and, in turn, our financial condition and results of operations. Financial Risk Difficult conditions or volatility in the U.S. economy and financial markets may have a materially adverse effect on our business, financial condition, and results of operations.
Our ability to attract and retain depositors during a time of actual or perceived distress of instability in the marketplace may be limited. Higher mortgage rates and low inventory adversely impact our ability to originate or refinance residential mortgage loans. The residential mortgage lending business is sensitive to changes in interest rates, especially long-term interest rates.
Higher mortgage rates and low inventory adversely impact our ability to originate or refinance residential mortgage loans. The residential mortgage lending business is sensitive to changes in interest rates, especially long-term interest rates. Lower interest rates generally increase the volume of mortgage originations and refinancing, while higher interest rates generally cause that volume to decrease.
The nature of our business ordinarily results in certain legal proceedings and claims.
We are subject to financial and reputational risks from potential liability arising from lawsuits. The nature of our business ordinarily results in certain legal proceedings and claims.
The challenges made by taxing authorities may result in adjustments to the timing or amount of taxable income or deductions, or the allocation of income among tax jurisdictions. If any such challenges are made and are not resolved in our favor, they could have a material adverse effect on our financial condition and results of operations.
The challenges made by taxing authorities may result in adjustments to the timing or amount of taxable income or deductions, or the allocation of income among tax jurisdictions.
A reduction in our residential mortgage origination and refinancing volume could have a materially adverse effect on our financial condition and results of operations. We may be subject to more stringent capital and liquidity requirements, which could limit our business activities. The Holding Company and the Bank are subject to capital and liquidity requirements and standards.
We may be subject to more stringent capital and liquidity requirements, which could limit our business activities. The Company and the Bank are subject to capital and liquidity requirements and standards. Regulators have and may implement changes to these standards.
Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners, access to capital, and the price of our stock. 15 Table of Contents We are subject to financial and reputational risks from potential liability arising from lawsuits.
Any failure or perceived failure (whether or not valid) to pursue or fulfill our sustainability goals and aspirations, to comply with evolving regulatory requirements, or to meet investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners, access to capital, and the price of our stock.
In particular, health plan partners who provide high deductible health plan options are a significant source of new and existing HSA holders. If these health plan partners or other partners choose to align with our competitors or develop their own solutions, our business, financial condition, and results of operations could be adversely affected.
In particular, health plan partners who provide high deductible health plan options are a significant source of new and existing HSA holders.
The failure of banks to follow existing laws and regulations contributes to bank failures, which also adversely affects the banking industry and can lead to special FDIC assessments, such as what we will be paying in 2024. Changes in federal, state, or local tax laws may negatively impact our financial performance.
The failure of banks to follow existing laws and regulations contributes to bank failures, which also adversely affects the banking industry and can lead to special FDIC assessments, such as what we are currently subject to. Regulatory compliance expense likely will increase substantially when we reach $100 billion in assets, which is the next regulatory tier above us now.
In the event the Bank is unable to pay the Holding Company dividends, we may not be able to pay dividends to our common and preferred stockholders. Changes in our accounting policies or in accounting standards could materially impact how we report our financial results.
Additionally, the FRB could prohibit or limit our payment of dividends if it determines that payment of the dividend would constitute an unsafe or unsound practice. In the event the Bank is unable to pay the Holding Company dividends, we may not be able to pay dividends to our common and preferred stockholders.
Further, our ability to attract and retain employees may also be harmed if our response to climate change is perceived as ineffective or insufficient. We have developed and continue to enhance processes to assess and monitor the Bank's exposure to climate risk.
We have developed and continue to enhance processes to assess and monitor the Bank’s exposure to climate risk.
The risks associated with these types of loans could have a significant negative affect on our earnings in any quarter. In 2023, higher interest rates and inflation affected the profitability of new commercial real estate developments, the feasibility of some projects, and the volume of commercial real estate investments.
The risks associated with these types of loans could have a significant negative affect on our earnings in any quarter, which could have a material adverse affect on our business, financial condition, and results of operations. We are subject to commercial lending concentration risks.
Lower interest rates generally increase the volume of mortgage originations and refinancing, while higher interest rates generally cause that volume to decrease. Therefore, our residential mortgage performance is typically correlated to fluctuations in interest rates. The 10-year Treasury rate averaged 3.96% during 2023, which is 251 basis points higher than average rates experienced during 2021.
Therefore, our residential mortgage performance is typically correlated to fluctuations in interest rates. The sustained higher rates experienced throughout 2022 and 2023, and into 2024, have negatively impacted the mortgage market, including our loan origination volume and refinancing activity.
Removed
If any of these events or circumstances actually occurs, our business, results of operations, or financial condition could be significantly impacted.
Added
We are subject to complex and evolving data privacy laws, rules and contractual obligations (collectively “data privacy laws”) that relate to the privacy and security of the personal information of our customers and employees, or any other natural persons.
Removed
The commercial real estate market has experienced increased property vacancies and declining rent growth. We are subject to commercial lending concentration risks.
Added
These data privacy laws require, among other things, that we make certain privacy disclosures, maintain a robust security program, require disclosures and notifications during a cyber or information security incident, and regulate our collection, use, sharing, retention, and safeguarding of consumer or employee information.
Removed
We face risks related to the adoption of future legislation and potential changes in federal regulatory agency leadership, policies, and priorities. As a result of the bank failures in 2023, it is expected that the banking sector will be subject to more extensive legal and regulatory requirements within the next few years.
Added
State and federal regulators may also hold us responsible for privacy and data protection obligations performed by our third-party service providers while providing services to us, as well as disclosures and notifications during a cyber or information security incident.
Removed
We are subject to changes in tax laws that could increase our effective tax rates or cause an increase or decrease in our income tax liabilities.
Added
Consumers also have the option to direct us and other financial institutions not to share information about transactions and experiences with affiliated companies for the purpose of marketing products or services. 14 Table of Contents State regulators have also been increasingly active in implementing privacy and cybersecurity regulations.
Removed
Our HSA Bank division, the sweep deposit management program that we acquired with interLINK in January 2023, and the insurance claim settlement funds platform that we acquired in with Ametros in January 2024, all rely on partnerships with either health insurance carriers or other financial services partners to maximize our distribution model.
Added
Several states have also recently strengthened their data breach notification and data privacy requirements. We expect this trend of state-level activity in those areas to continue and are continually monitoring developments, particularly if the CFPB is no longer enforcing federal financial institution consumer privacy laws and regulations.
Added
As the regulatory environment becomes more rigorous, we anticipate that compliance with these requirements will result in additional costs and expenses, and may impact the way we conduct business.
Added
Our failure to comply with data privacy laws could result in potentially significant regulatory or governmental investigations, litigation, fines, or sanctions, or cause damage to our reputation, which could have a material adverse effect on our business, financial condition, or results of operations.
Added
We may not be able to successfully implement current or future information technology system enhancements and operational initiatives, which could adversely affect our business operations and profitability.
Added
We continue to invest significant resources in our core information technology systems in order to provide functionality and security at an appropriate level, and to improve our operating efficiency and to streamline our client experience. These initiatives significantly increase the complexity of our relationships with third-party service providers and such relationships may be difficult to unwind.
Added
We may not be able to successfully implement and integrate such system enhancements and initiatives, which could adversely impact our ability to comply with certain legal and regulatory requirements. In addition, these projects could have higher than expected costs and/or result in operating inefficiencies, which could increase the costs associated with the implementation as well as ongoing operations.
Added
Failure to properly utilize system enhancements that are implemented in the future could result in impairment charges that adversely impact our financial condition and results of operations, could result in significant costs to remediate or replace the defective components, and could impact our ability to compete.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Company requires information security education, training at the time of hire, and annually thereafter, by its employees (including contractors and other third parties for training purposes), designed to mitigate accidental information security incidents. Phishing simulation activities are regularly conducted to assess employees’ competency at identifying potential threats.
Biggest changeSenior and Executive management also participate in cybersecurity industry collaboration and information-sharing forums and utilize the information gained to drive protective and detective cybersecurity strategies and tactics. 27 Table of Contents The Company requires information security education, training at the time of hire, and annually thereafter, by its employees (including contractors and other third parties for training purposes), designed to mitigate accidental information security incidents.
Additional information regarding the Company’s risk management framework, including management-level and Board-level committee experience and expertise, oversight responsibilities, and information risk governance, can be found under the section captioned “Risk Management Framework” contained in Item 1. Business. 26 Table of Contents
Additional information regarding the Company’s risk management framework, including management-level and Board-level committee experience and expertise, oversight responsibilities, and information risk governance, can be found under the section captioned “Risk Management Framework” contained in Item 1. Business. 28 Table of Contents
However, it is possible that the Company could suffer such losses in the future. Information regarding risks from material cybersecurity threats can be found under the section captioned "Information Risk" contained in Item 1A. Risk Factors. Governance.
However, it is possible that the Company could suffer such losses in the future. Information regarding risks from material cybersecurity threats can be found under the section captioned “Information Risk” contained in Item 1A. Risk Factors. Governance.
In the event that the Chief Information Security Officer, in consultation with the Company’s Legal and Compliance teams, determines that a material cybersecurity incident has occurred, a dedicated Crisis Incident Response Team comprised of individuals from various departments across the organization is assigned to coordinate all planned cybersecurity incident-related response activities.
In the event that the CISO, in consultation with the Company’s Legal and Compliance teams, determines that a material cybersecurity incident has occurred, a dedicated Crisis Incident Response team comprised of individuals from various departments across the organization is assigned to coordinate all planned cybersecurity incident-related response activities.
Semi-annual cybersecurity maturity assessments are conducted by the Company’s Corporate Information Security team on its information systems using industry-standard guidelines and tools, including the Federal Financial Institutions Examination Council Cybersecurity Assessment Tool and the Center for Internet Security Critical Security Controls.
Semi-annual cybersecurity maturity assessments are conducted by the Company’s Corporate Information Security team on its information systems using industry-standard guidelines and tools, including the National Institute of Standards Cybersecurity Framework, the Federal Financial Institutions Examination Council Cybersecurity Assessment Tool, and the Center for Internet Security Critical Security Controls.
The Company has an Information Security Risk Management Program and a Technology Risk Management Program under its Risk Management Framework for the identification, assessment, measurement, mitigation, monitoring, and internal reporting of risks associated with its information systems, information assets, and third parties, including vendors and service providers.
The Company has a Technology Risk Management Program (First Line), including Cyber and Information Risk Management, and an Information Risk Management Program (Second Line) under its Enterprise Risk Management Framework for the identification, assessment, measurement, mitigation, monitoring, and internal reporting of risks associated with its information systems, information assets, and third parties, including vendors and service providers.
The Information Security Risk Management Program and Technology Risk Management Program align with the Company’s Third-Party Risk Management Program in regard to protecting information assets. The Information Security Risk Management Program and Technology Risk Management Program are managed by the Company’s Corporate Information Security team, led by the Chief Information Security Officer.
The Cyber and Information Security Risk Management Program and Technology Risk Management Program align with the Company’s Third-Party Risk Management Program in regard to protecting information assets. The Cyber and Information Security Risk Management Program and Technology Risk Management Program are managed by the Company’s Corporate Information Security team, led by the CISO and the CIO.
Oversight of information security risk and information technology risk is the operational responsibility of the Information Risk Committee, which is a management committee, with additional oversight from the Enterprise Risk Management Committee, which is also a management committee, and the Risk Committee of the Board of Directors.
Oversight of information security risk and information technology risk is the responsibility of the Information Risk Committee, a management committee, with additional oversight from the Enterprise Risk Management Committee, a management committee, and the Risk and Technology Committees of the Board of Directors.
Employees are assigned incremental training requirements should they fail to identify simulated phishing emails through the initial training. The Company’s Corporate Information Security team members are also responsible for completing additional mandatory annual training to understand the processes, procedures, and technical requirements for securing information assets across the enterprise.
The Company’s Corporate Information Security team members are also responsible for completing additional mandatory annual training to understand the processes, procedures, and technical requirements for securing information assets across the enterprise.
Materiality determinations are made under the Company's Disclosure Controls and Procedures to ensure timely cybersecurity incident disclosure notification in accordance with securities laws and/or regulations. Material Cybersecurity Threat Risks. The Company has not experienced any material losses relating to cybersecurity threats or incidents for the year ended December 31, 2023.
Materiality determinations are made under the Company’s Disclosure Controls and Procedures to ensure timely cybersecurity incident disclosure notification in accordance with securities laws and/or regulations. Material Cybersecurity Threat Risks. Risks from cybersecurity threats have not materially affected the Company, its business strategy, results of operations, or financial condition for the year ended December 31, 2024.
On average, the Corporate Information Security team members have over a decade of cybersecurity experience and hold over 100 industry-leading certifications in cybersecurity. All information security managers have attained a bachelor’s degree in a related field of study, with several also having a related master’s degree.
On average, the other Corporate Information Security team members have over a decade of cybersecurity experience and hold over 100 industry-leading certifications in cybersecurity.
Tabletop exercises are held regularly at the Senior and Executive management levels, and annually at the Board of Directors level, to validate roles and responsibilities, and response protocols respective to cybersecurity threats. 25 Table of Contents Employees, contractors, and third parties are required to immediately report any suspected cybersecurity threats to the Corporate Information Security team for triaging.
Tabletop exercises are held regularly at the Senior and Executive management levels to validate roles and responsibilities and response protocols respective to cybersecurity threats. The outcomes of these tabletop exercises are reviewed annually at the Board of Directors level.
Independent third parties test the Company’s cyber capabilities and audit its cloud security. The Company regularly tests its systems to discover and address any potential vulnerabilities. Senior and Executive management also participate in cybersecurity industry collaboration and information-sharing forums and utilize the information gained to drive protective and detective cybersecurity strategies and tactics.
Independent third parties test the Company’s cyber capabilities and audit its cloud security. The Company regularly tests its systems to discover and address any potential vulnerabilities.
Added
Our CISO has over 25 years of financial services industry experience, with varying positions in information technology, security, and risk management. She has numerous industry certifications, including Certified Information Systems Security Professional and Certified in Risk and Information Systems Controls certifications.
Added
She is a member of ISACA’s global Governance of Enterprise Information & Technology Advisory Group and Securing AI Certification Working Group. Our CIO has over 25 years of relevant experience in large scale digital transformation, strategic planning, talent development, global technology delivery, and operational experience.
Added
Our CIO has deep expertise across the financial services industry and in leading organizations through change. He is a member of the CNBC Technology Executive Council, where he contributes to ongoing discussions and insights on the latest trends and challenges in technology.
Added
In addition, he is a member of the Wall Street Journal CIO Network, a collective community of leading technology experts from the world’s most influential companies. Both our CISO and CIO also participate in various financial services industry committees and cybersecurity advisory boards.
Added
For most of these certifications, there is a continuing professional education requirement to maintain a consistent level of learning by completing certain professional activities, such as attending conferences and workshops, completing online training courses, and participating in professional association meetings, throughout the certification cycle to maintain an active credential.
Added
Further, each employee is responsible for an effective cybersecurity defense which is enforced with mandatory cyber awareness training, periodic newsletters, and security updates.
Added
Phishing simulation activities are regularly conducted to assess employees’ competency at identifying potential threats. Employees are assigned incremental training requirements should they fail to identify simulated phishing emails through the initial training.
Added
Employees, contractors, and third parties are required to immediately report any suspected cybersecurity threats to the Corporate Information Security team for triaging.
Added
On at least a quarterly basis, the Corporate Information Security team provides reports on updates to the Company’s information risk profile, emerging risks and threats, results of examinations, status of remediation plans and/or results of remediation activities, risk reports and risk assessment results, and risk metric results to the Information Risk Committee, who then provides such information to the Enterprise Risk Management Committee and the Risk Committee of the Board of Directors.
Added
In addition, on at least a quarterly basis, this information, along with updates on key cybersecurity initiatives, is shared with the Technology Committee of the Board of Directors, who provides oversight on information security and information technology strategy and governance.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeCommercial Banking maintains offices across a geographic footprint that ranges from Massachusetts to California. Premises are located in Boston, Massachusetts; Westerly, Rhode Island; Conshohocken, and Radnor, Pennsylvania; Baltimore, and Columbia, Maryland; Atlanta, Georgia; Dallas, Texas; and Laguna Niguel, and Ladera Ranch, California. HSA Bank is headquartered in Milwaukee, Wisconsin, with an additional leased office in Sheboygan, Wisconsin.
Biggest changeCommercial Banking maintains leased facilities across a geographic footprint that ranges from Massachusetts to California. Offices are located in Boston, Massachusetts; Westerly, Rhode Island; Garden City, New York; Conshohocken, Pennsylvania; Baltimore, Maryland; Atlanta, Georgia; Dallas, Texas; and Ladera Ranch, California. Healthcare Financial Services includes HSA Bank and Ametros.
Additional corporate functions are housed in owned facilities in Waterbury, Connecticut, and in leased facilities in Southington, Hartford, and New Haven, Connecticut; Providence, Rhode Island; Boston, Massachusetts; Jericho, White Plains, and New York, New York; and Paramus, New Jersey. The Company considers its properties to be suitable and adequate for its current business needs.
Additional corporate functions are housed in owned facilities in Waterbury, and in leased facilities in Southington, Hartford, and New Haven, Connecticut; Providence, Rhode Island; Boston, Massachusetts; Jericho, White Plains, and New York, New York; and Paramus, New Jersey. The Company considers its properties to be suitable and adequate for its current business needs.
Consumer Banking operates a distribution network that consists of 198 banking centers: Location Leased Owned Total Connecticut 61 34 95 Massachusetts 9 9 18 Rhode Island 4 3 7 New York 38 40 78 Total 112 86 198 Additional information regarding the Company's owned facilities and leased locations can be found within Note 6: Premises and Equipment and Note 7: Leasing, respectively, in the Notes to Consolidated Financial Statements contained in Part II - Item 8.
Consumer Banking operates a distribution network that consists of 196 banking centers: Location Leased Owned Total Connecticut 61 34 95 Massachusetts 9 9 18 Rhode Island 4 3 7 New York 37 39 76 Total 111 85 196 Additional information regarding the Company’s owned facilities and leased locations can be found within Note 6: Premises and Equipment and Note 7: Leasing, respectively, in the Notes to Consolidated Financial Statements contained in Part II - Item 8.
Added
HSA Bank maintains leased facilities in Milwaukee, and Sheboygan, Wisconsin, and Ametros maintains a leased facility in Wilmington, Massachusetts.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS Information regarding legal proceedings can be found within Note 23: Commitments and Contingencies in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data, which is incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 27 Table of Contents PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS Information regarding legal proceedings can be found within Note 23: Commitments and Contingencies in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data, which is incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 29 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 27 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 28 Item 6. [Reserved] 29 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 30 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 62 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 29 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 30 Item 6. [Reserved] 31 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 32 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 62 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities The following table provides information with respect to any purchase of equity securities for the 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 December 31, 2023: 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) October 1, 2023 - October 31, 2023 11,505 $ 38.25 — $ 293,356,942 November 1, 2023 - November 30, 2023 537 42.21 — 293,356,942 December 1, 2023 - December 31, 2023 1,058 47.78 — 293,356,942 Total 13,100 39.18 — 293,356,942 (1) All 13,100 of the shares purchased during the three months ended December 31, 2023, were acquired outside of the Company's common stock repurchase program at market prices and related to employee share-based compensation plan activity.
Biggest changeIssuer Purchases of Equity Securities The following table provides information with respect to any purchase of the 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 December 31, 2024: Period Total Number of Shares Purchased (1) Average Price Paid Per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Amount Available for Purchase Under the Plans or Programs (3) October 1, 2024 - October 31, 2024 1,585 $ 45.92 — $ 227,952,190 November 1, 2024 - November 30, 2024 815 60.64 — 227,952,190 December 1, 2024 - December 31, 2024 3,399 59.16 — 227,952,190 Total 5,799 55.75 — 227,952,190 (1) All 5,799 of the shares purchased during the three months ended December 31, 2024, were acquired outside of the Company’s common stock repurchase program at market prices and related to employee share-based compensation plan activity.
Information regarding dividend restrictions can be found under the section captioned "Supervision and Regulation" in Part I - Item 1. Business and within Note 14: Regulatory Capital and Restrictions in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data, which are incorporated herein by reference.
Information regarding dividend restrictions can be found under the section captioned “Supervision and Regulation” in Part I - Item 1. Business and within Note 14: Regulatory Capital and Restrictions in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data, which are incorporated herein by reference.
This existing repurchase program will remain in effect until fully utilized or until modified, superseded, or terminated. 28 Table of Contents Performance Graph The performance graph compares the yearly percentage change in the Company's cumulative total stockholder return on its common stock over the last five years to the cumulative total return of (i) the Standard & Poor’s 500 Index (S&P 500 Index) and (ii) the Keefe, Bruyette & Woods Regional Banking Index (KRX Index), assuming the reinvestment of dividends and an initial investment of $100 on December 31, 2018.
This existing repurchase program will remain in effect until fully utilized or until modified, superseded, or terminated. 30 Table of Contents Performance Graph The performance graph compares the yearly percentage change in the Company ’ s cumulative total stockholder return on its common stock over the last five years to the cumulative total return of (i) the Standard & Poor’s 500 Index (S&P 500 Index) and (ii) the Keefe, Bruyette & Woods Regional Banking Index (KRX Index), assuming the reinvestment of dividends and an initial investment of $100 on December 31, 2019.
Recent Sales of Unregistered Securities There were no unregistered securities sold by the Company during the three year period ended December 31, 2023.
Recent Sales of Unregistered Securities There were no unregistered securities sold by the Company during the year ended December 31, 2024.
ITEM 5. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company's common stock is traded on the NYSE under the symbol WBS. At February 23, 2024, there were 8,352 holders of record, as determined by Broadridge Corporate Issuer Solutions, Inc., the Company's transfer agent.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company’s common stock is traded on the NYSE under the symbol WBS. At February 28, 2025, there were 7,944 holders of record, as determined by Broadridge Corporate Issuer Solutions, Inc., the Company’s transfer agent.
Period Ending December 31, 2018 2019 2020 2021 2022 2023 Webster Financial Corporation $ 100 $ 112 $ 93 $ 126 $ 111 $ 123 S&P 500 Index $ 100 $ 131 $ 156 $ 200 $ 164 $ 207 KRX Index $ 100 $ 124 $ 113 $ 155 $ 144 $ 143
Period Ending December 31, 2019 2020 2021 2022 2023 2024 Webster Financial Corporation $ 100 $ 83 $ 113 $ 99 $ 110 $ 124 KRX Index $ 100 $ 91 $ 125 $ 116 $ 116 $ 131 S&P 500 Index $ 100 $ 118 $ 152 $ 125 $ 157 $ 197

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe average rate on securities sold under agreements to repurchase decreased 20 basis points from 0.78% for the year ended December 31, 2022, to 0.58% for the year ended December 31, 2023, primarily due to the Company's extinguishment of its two long-term structured repurchase agreements in the third quarter of 2022, which were contracted at a higher cost. 35 Table of Contents The following table summarizes daily average balances, interest, and average yield/rate by major category, and net interest margin on an FTE basis: Years ended December 31, 2023 2022 2021 (In thousands) Average Balance Interest Income/Expense Average Yield/Rate Average Balance Interest Income/Expense Average Yield/Rate Average Balance Interest Income/Expense Average Yield/Rate Assets Interest-earning assets: Loans and leases (1) $ 50,637,569 $ 3,113,709 6.15 % $ 43,751,112 $ 1,967,761 4.50 % $ 21,584,872 $ 765,682 3.55 % Investment securities: (2) Taxable 12,350,012 423,289 3.22 12,067,294 295,158 2.36 8,507,766 155,902 1.88 Non-taxable 2,489,732 54,207 2.18 2,461,428 50,442 2.05 720,977 27,728 3.85 Total investment securities 14,839,744 477,496 3.06 14,528,722 345,600 2.31 9,228,743 183,630 2.03 FHLB and FRB stock 408,673 24,785 6.06 289,595 8,775 3.03 76,015 1,224 1.61 Interest-bearing deposits (3) 1,564,255 80,475 5.14 596,912 9,651 1.62 1,379,081 1,875 0.14 Loans held for sale 28,710 734 2.56 9,842 78 0.80 10,705 246 2.30 Total interest-earning assets 67,478,951 $ 3,697,199 5.42 % 59,176,183 $ 2,331,865 3.91 % 32,279,416 $ 952,657 2.97 % Non-interest-earning assets 6,344,931 5,586,025 1,955,330 Total assets $ 73,823,882 $ 64,762,208 $ 34,234,746 Liabilities and Equity Interest-bearing liabilities: Deposits: Demand deposits $ 11,596,949 $ — — % $ 12,912,894 $ — — % $ 6,897,464 $ — — % Health savings accounts 8,249,332 12,366 0.15 7,826,576 6,315 0.08 7,390,702 5,777 0.08 Interest-bearing checking, money market, and savings 31,874,457 756,521 2.37 28,266,128 115,271 0.41 12,843,843 6,936 0.05 Time deposits 6,531,610 252,531 3.87 2,838,502 16,966 0.60 2,105,809 7,418 0.35 Total deposits 58,252,348 1,021,418 1.75 51,844,100 138,552 0.27 29,237,818 20,131 0.07 Securities sold under agreements to repurchase 210,676 1,231 0.58 466,282 3,614 0.78 527,250 3,027 0.57 Federal funds purchased 167,495 7,871 4.70 598,269 15,444 2.58 16,036 13 0.08 Other borrowings — — — — 1 — — — — FHLB advances 4,275,394 222,537 5.21 1,965,577 58,557 2.98 108,216 1,708 1.58 Long-term debt (2) 1,058,621 37,934 3.69 1,031,446 34,283 3.44 565,271 16,876 3.22 Total interest-bearing liabilities 63,964,534 $ 1,290,991 2.02 % 55,905,674 $ 250,451 0.45 % 30,454,591 $ 41,755 0.14 % Non-interest-bearing liabilities 1,535,393 1,135,046 441,391 Total liabilities 65,499,927 57,040,720 30,895,982 Preferred stock 283,979 272,179 145,037 Common stockholders' equity 8,039,976 7,449,309 3,193,727 Total stockholders' equity 8,323,955 7,721,488 3,338,764 Total liabilities and equity $ 73,823,882 $ 64,762,208 $ 34,234,746 Net interest income (FTE) 2,406,208 2,081,414 910,902 Less: FTE adjustment (68,939) (47,128) (9,813) Net interest income $ 2,337,269 $ 2,034,286 $ 901,089 Net interest margin (FTE) 3.52 % 3.49 % 2.84 % (1) Non-accrual loans have been included in the computation of average balances.
Biggest changeThe average rate on average federal funds purchased increased 85 basis points from 4.70% for the year ended December 31, 2023, to 5.55% for the year ended December 31, 2024, primarily due to increases in market rates. 36 Table of Contents The following table summarizes daily average balances, interest, and average yield/rate by major category, and net interest margin on an FTE basis: Years ended December 31, 2024 2023 2022 (In thousands) Average Balance Interest Income/Expense Average Yield/Rate Average Balance Interest Income/Expense Average Yield/Rate Average Balance Interest Income/Expense Average Yield/Rate Assets: Interest-earning assets: Loans and leases (1) $ 51,597,443 $ 3,224,653 6.25 % $ 50,637,569 $ 3,113,709 6.15 % $ 43,751,112 $ 1,967,761 4.50 % Investment securities: (2) Taxable 15,823,052 651,507 4.12 13,057,669 423,289 3.22 12,424,967 295,158 2.36 Non-taxable 1,533,701 38,758 2.53 2,569,015 54,207 2.18 2,540,540 50,442 2.05 Total investment securities 17,356,753 690,265 3.98 15,626,684 477,496 3.06 14,965,507 345,600 2.31 FHLB and FRB stock 330,418 18,633 5.64 408,673 24,785 6.06 289,595 8,775 3.03 Interest-bearing deposits (3) 723,688 37,341 5.16 1,564,255 80,475 5.14 596,912 9,651 1.62 Loans held for sale 143,812 13,911 9.67 28,710 734 2.56 9,842 78 0.80 Total interest-earning assets 70,152,114 $ 3,984,803 5.68 % 68,265,891 $ 3,697,199 5.42 % 59,612,968 $ 2,331,865 3.91 % Non-interest-earning assets (2) 6,461,020 5,557,991 5,149,240 Total assets $ 76,613,134 $ 73,823,882 $ 64,762,208 Liabilities and Stockholders’ Equity: Interest-bearing liabilities: Demand deposits $ 10,387,807 $ — — % $ 11,596,949 $ — — % $ 12,912,894 $ — — % Health savings accounts 8,650,485 13,139 0.15 8,249,332 12,366 0.15 7,826,576 6,315 0.08 Interest-bearing checking, money market, and savings 35,789,961 1,070,949 2.99 31,874,457 756,521 2.37 28,266,128 115,271 0.41 Time deposits 7,597,612 343,116 4.52 6,531,610 252,531 3.87 2,838,502 16,966 0.60 Total deposits 62,425,865 1,427,204 2.29 58,252,348 1,021,418 1.75 51,844,100 138,552 0.27 Securities sold under agreements to repurchase 142,025 1,098 0.77 210,676 1,231 0.58 466,282 3,614 0.78 Federal funds purchased 54,303 3,015 5.55 167,495 7,871 4.70 598,269 15,444 2.58 Other borrowings — — — — — — — 1 — FHLB advances 2,296,048 125,329 5.46 4,275,394 222,537 5.21 1,965,577 58,557 2.98 Long-term debt (2) 903,603 32,253 3.57 1,027,869 37,934 3.69 995,341 34,283 3.44 Total interest-bearing liabilities 65,821,844 $ 1,588,899 2.41 % 63,933,782 $ 1,290,991 2.02 % 55,869,569 $ 250,451 0.45 % Non-interest-bearing liabilities (2) 1,871,615 1,566,145 1,171,151 Total liabilities 67,693,459 65,499,927 57,040,720 Preferred stock 283,979 283,979 272,179 Common stockholders’ equity 8,635,696 8,039,976 7,449,309 Total stockholders’ equity 8,919,675 8,323,955 7,721,488 Total liabilities and stockholders' equity $ 76,613,134 $ 73,823,882 $ 64,762,208 Net interest income (FTE) 2,395,904 2,406,208 2,081,414 Less: FTE adjustment (57,517) (68,939) (47,128) Net interest income $ 2,338,387 $ 2,337,269 $ 2,034,286 Net interest margin (FTE) 3.42 % 3.52 % 3.49 % (1) Non-accrual loans have been included in the computation of average balances.
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.
Additional sources of funds are provided by both short-term and long-term borrowings, and to a lesser extent, dividends received as part of the Bank’s membership with the FHLB and FRB. Deposits. The Bank offers a wide variety of checking and savings deposit products designed to meet the transactional and investment needs of its consumer and business customers.
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.
An activity-based capital stock investment in the FHLB is required in order for the Bank to maintain its membership and access advances and other extensions of credit for sources of funds and liquidity purposes. The FHLB capital stock investment is restricted as there is no market for it, and it can only be redeemed by the FHLB.
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. 49 Table of Contents 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.
While the Company does anticipate ongoing change in the traditional office sector, management believes that its reserve levels reflect the expected credit losses in the portfolio. 49 Table of Contents 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.
The Company is committed to maintaining a strong base of core deposits, which consist 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.
The Company is committed to maintaining a strong base of core deposits, which consist of demand, interest-bearing checking, savings, health savings, and money market accounts, to support growth in its loan portfolios. Management actively monitors the interest rate environment and makes adjustments to its deposit strategy in response to evolving market conditions, funding needs, and client relationship dynamics.
Net interest income, net interest margin, yields, and ratios on an FTE basis are considered non-GAAP financial measures, and are used by management to evaluate the comparability of the Company's revenue arising from both taxable and non-taxable sources. FTE adjustments are determined assuming a statutory federal income tax rate of 21%.
Net interest income, net interest margin, average yields, and ratios on an FTE basis are considered non-GAAP financial measures, and are used by management to evaluate the comparability of the Company’s revenue arising from both taxable and non-taxable sources. FTE adjustments are determined assuming a statutory federal income tax rate of 21%.
Additional information regarding the required regulatory capital levels and ratios applicable to the Holding Company and the Bank can be found within Note 14: Regulatory Capital and Restrictions in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data. 54 Table of Contents Sources and Uses of Funds Sources of Funds.
Additional information regarding the required regulatory capital levels and ratios applicable to the Company and the Bank can be found within Note 14: Regulatory Capital and Restrictions in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data. 54 Table of Contents Sources and Uses of Funds Sources of Funds.
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.
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 allowance is deemed necessary is either the result of sufficient cash flows or sufficient collateral coverage relative to the amortized cost of the asset.
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.
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.
Individually Assessed Loans and Leases . If the risk characteristics of a loan or lease change such that it no longer matches the risk characteristics of the collectively assessed pool, it is removed from the population and individually assessed for credit losses. Generally, all non-accrual loans and loans with a charge-off are individually assessed.
If the risk characteristics of a loan or lease change such that it no longer matches the risk characteristics of the collectively assessed pool, it is removed from the population and individually assessed for credit losses. Generally, all non-accrual loans and loans with a charge-off are individually assessed.
Under capital adequacy guidelines and/or the the regulatory framework for prompt corrective action (applies to the Bank only), both the Holding Company and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated pursuant to regulatory directives.
Under capital adequacy guidelines and/or the regulatory framework for prompt corrective action (applies to the Bank only), both the 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.
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.
Methods for collateral dependent commercial 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.
To assist with this process, management inspects reports generated by the Company's loan reporting systems related to loan production, loan quality, concentrations of credit, loan delinquencies, non-performing loans, and potential problem loans. Commercial non-mortgage, asset-based, equipment finance, and warehouse lending loans are underwritten after evaluating and understanding the borrower’s ability to operate and service its debt.
To assist with this process, management inspects reports generated by the Company’s loan reporting systems related to loan production, loan quality, concentrations of credit, loan delinquencies, non-performing loans, and potential problem loans. Commercial non-mortgage, asset-based, and equipment finance loans are underwritten after evaluating and understanding the borrower’s ability to operate and service its debt.
The following table summarizes the estimated impact that yield curve twists or immediate non-parallel changes in interest rates of up and down 50 and 100 basis points might have on the Company's net interest income for the subsequent twelve-month period starting at December 31, 2023, and 2022: Short End of the Yield Curve Long End of the Yield Curve -100bp -50bp +50bp +100bp -100bp -50bp +50bp +100bp December 31, 2023 (1.8)% (0.8)% 0.4% 0.7% (2.3)% (1.1)% 1.1% 2.2% December 31, 2022 (4.2)% (2.0)% 1.7% 3.3% (2.4)% (1.2)% 1.3% 2.6% 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 following table summarizes the estimated impact that yield curve twists or immediate non-parallel changes in interest rates of up and down 50 and 100 basis points might have on the Company’s net interest income for the subsequent twelve-month period starting at December 31, 2024, and 2023: Short End of the Yield Curve Long End of the Yield Curve -100bp -50bp +50bp +100bp -100bp -50bp +50bp +100bp December 31, 2024 2.1% 1.0% (0.7)% (1.6)% (2.2)% (1.0)% 1.0% 1.9% 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 Company was not required to contribute to the defined benefit pension plan in 2023, nor does it currently anticipate that it will be required to contribute in 2024. The Company's non-qualified supplemental executive retirement plans and other post-employment benefit plans are unfunded.
The Company was not required to contribute to the defined benefit pension plan in 2024, nor does it currently anticipate that it will be required to contribute in 2025. The Company’s non-qualified supplemental executive retirement plans and other post-employment benefit plans are unfunded.
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 December 31, 2023, the Bank exceeded all regulatory liquidity requirements.
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 December 31, 2024, the Bank exceeded all regulatory liquidity requirements.
Financial Statements and Supplementary Data. 56 Table of Contents Federal Home Loan Bank and Federal Reserve Bank Stock. The Bank is a member of the FHLB System, which consists of eleven district FHLBs, each of which is subject to the supervision and regulation of the Federal Housing Finance Agency.
Financial Statements and Supplementary Data. 56 Table of Contents Federal Home Loan Bank and Federal Reserve Bank Stock. The Bank is a member of the FHLB System, which consists of 11 district FHLBs, each of which is subject to the supervision and regulation of the Federal Housing Finance Agency.
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 ultimate timing and amount of any related future cash settlements cannot be predicted with reasonable certainty. 57 Table of Contents 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.
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.
However, if the risk characteristics of a loan or lease change such that it no longer aligns to 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.
As of the date of this Annual Report on Form 10-K, the Company's uninsured deposits as a percentage of total deposits, adjusted for affiliate deposits and collateralized deposits, is consistent with the percentage reported at December 31, 2023.
As of the date of this Annual Report on Form 10-K, the Company’s uninsured deposits as a percentage of total deposits, adjusted for affiliate deposits and collateralized deposits, is consistent with the percentage reported at December 31, 2024.
Although the financial statement caption as a whole did not change significantly, notable fluctuations were experienced in Compensation and benefits, Occupancy, Technology and equipment, Professional and outside services, Deposit insurance, and Other expense.
Although the financial statement caption as a whole did not change significantly, notable fluctuations were experienced in Compensation and benefits, Occupancy, Professional and outside services, Deposit insurance, and Other expense.
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.
Executive management reviews and advises on the adequacy of the allowance on a quarterly basis, which is maintained at a level that management deems to be sufficient to cover expected losses within the loan and lease portfolios.
Collectively Assessed Loans and Leases . Collectively assessed loans and leases are segmented based on product type and credit quality, and expected losses are determined using models that follow a PD, LGD, EAD, or loss rate framework.
Collectively Assessed Loans and Leases . Collectively assessed loans and leases are segmented based on product type and credit quality, and expected losses are determined using models that follow a PD, LGD, or EAD framework.
Based on its estimates, management believes it is more likely than not that the Company will realize its DTAs, net of the valuation allowance, at December 31, 2023.
Based on its estimates, management believes it is more likely than not that the Company will realize its DTAs, net of the valuation allowance, at December 31, 2024.
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 $12.6 billion at December 31, 2023, does not necessarily reflect future cash payments.
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 $12.2 billion at December 31, 2024, does not necessarily reflect future cash payments.
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 December 31, 2023, and 2022, total uninsured deposits as per regulatory reporting requirements and reported on Schedule RC-O of the Bank's Call Report were $21.0 billion and $22.5 billion, respectively.
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 December 31, 2024, and 2023, total uninsured deposits as per regulatory reporting requirements and reported on Schedule RC-O of the Bank’s Call Report were $22.6 billion and $21.0 billion, respectively.
Additional information regarding the determination of the ACL on loans and leases, including the Company's valuation methodology, can be found in Part II under the section captioned "Allowance for Credit Losses on Loans and Leases" contained elsewhere in this Item 7.
Additional information regarding the determination of the ACL on loans and leases, including the Company’s valuation methodology, can be found in Part II under the section captioned “Allowance for Credit Losses on Loans and Leases” contained elsewhere in this Item 7.
There are certain restrictions on the Bank's payment of dividends to the Holding Company, which can be found within the section captioned "Supervision and Regulation" in Part I - Item 1. Business, and within Note 14: Regulatory Capital and Restrictions in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data.
There are certain restrictions on the Bank’s payment of dividends to the Holding Company, which can be found within the section captioned “Supervision and Regulation” in Part I - Item 1. Business, and within Note 14: Regulatory Capital and Restrictions in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data.
Management believes that the Company's interest rate risk position at December 31, 2023, represents a reasonable level of risk given the current interest rate outlook.
Management believes that the Company’s interest rate risk position at December 31, 2024, represents a reasonable level of risk given the current interest rate outlook.
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 December 31, 2023, and 2022, the Company's duration gap was negative 1.1 years and negative 1.4 years, respectively.
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 December 31, 2024, and 2023, the Company’s duration gap was 0.0 years and negative 1.1 years, respectively.
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.
(2) In accordance with regulatory capital rules, the Company elected 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, which ended on December 31, 2024.
Additional information regarding the Company's income taxes, including DTAs, can be found within Note 9: Income Taxes in the Notes to Consolidated Financial Statements contained in Part II - Item 8.
Additional information regarding the Company’s income taxes, including 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.
Additional information regarding credit-related financial instruments and the FDIC special assessment, alternative investments, defined benefit pension and other postretirement benefit plans, and income taxes can be found within Note 23: Commitments and Contingencies, Note 15: Variable Interest Entities, Note 19: Retirement Benefit Plans, and Note 9: Income Taxes, respectively, in the Notes to Consolidated Financial Statements contained in Part II - Item 8.
Additional information regarding credit-related financial instruments and the FDIC special assessment, alternative investments, the multi-family securitization, defined benefit pension and other postretirement benefit plans, and income taxes can be found within Note 23: Commitments and Contingencies, Note 15: Variable Interest Entities, Note 5: Transfers and Servicing of Financial Assets, Note 19: Retirement Benefit Plans, and Note 9: Income Taxes, respectively, in the Notes to Consolidated Financial Statements contained in Part II - Item 8.
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.
During the three-year transition period, regulatory capital ratios phased out the aggregate amount of the regulatory capital benefit provided from the delayed CECL adoption in the initial two years. For 2023 and 2024, the Company was allowed 50% and 25%, respectively, of the regulatory capital benefit as of December 31, 2021, with full absorption occurring in 2025.
Financial Statements and Supplementary Data. Borrowings. The Bank's primary borrowing sources include securities sold under agreements to repurchase, federal funds purchased, FHLB advances, and long-term debt. Total borrowed funds were $3.9 billion and $7.7 billion at December 31, 2023, and 2022, respectively, and represented 5.2% and 10.8% of total assets, respectively.
Financial Statements and Supplementary Data. Borrowings. The Bank’s primary borrowing sources include securities sold under agreements to repurchase, federal funds purchased, FHLB advances, and long-term debt. Total borrowings were $3.4 billion and $3.9 billion at December 31, 2024, and 2023, respectively, and represented 4.3% and 5.2% of total assets, respectively.
Additional information regarding the Company's provision for credit losses and ACL can be found under the sections captioned "Loans and Leases" through "Allowance for Credit Losses on Loans and Leases" contained elsewhere in this Item 7.
Additional information regarding the Company’s provision for credit losses and ACL can be found under the sections captioned “Loans and Leases” through “Allowance for Credit Losses on Loans and Leases” contained elsewhere in this Item 7.
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 $0.4 billion and $0.3 billion at December 31, 2023, and 2022, respectively.
Securities sold under agreements to repurchase are generally a form of short-term funding for the Bank in which it sells securities to counterparties with an agreement to buy them back in the future at a fixed price. Securities sold under agreements to repurchase remained relatively flat at $0.3 billion at both December 31, 2024, and 2023, respectively.
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.
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.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis provides information that management believes is necessary to understand the Company's financial condition, results of operations, and cash flows for the year ended December 31, 2023, as compared to 2022.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis provides information that management believes is necessary to understand the Company ’ s consolidated financial condition, results of operations, and cash flows for the year ended December 31, 2024, as compared to 2023.
The Company also enters into commitments to invest in venture capital and private equity funds and tax credit structures to assist the Bank in meeting its responsibilities under the CRA. The total unfunded commitment for these alternative investments was $0.7 billion at December 31, 2023.
The Company also enters into commitments to invest in venture capital and private equity funds and tax credit structures to assist the Bank in meeting its responsibilities under the CRA. The total unfunded commitment for these alternative investments was $837.2 million at December 31, 2024.
A description of the valuation methodologies used to estimate the fair values of the significant assets acquired and liabilities assumed from the Sterling merger can be found within Note 2: Mergers and Acquisitions in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data.
A description of the valuation methodologies used to estimate the fair values of the significant assets acquired and liabilities assumed in the Ametros acquisition can be found within Note 2: Acquisitions and Joint Ventures in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data.
Financial Statements and Supplementary Data. 30 Table of Contents Results of Operations The following table summarizes selected financial highlights and key performance indicators: At or for the years ended December 31, (In thousands, except per share data) 2023 2022 2021 Income and performance ratios: Net income $ 867,840 $ 644,283 $ 408,864 Net income available to common stockholders 851,190 628,364 400,989 Earnings per diluted common share 4.91 3.72 4.42 Return on average assets 1.18 % 0.99 % 1.19 % Return on average tangible common stockholders' equity (non-GAAP) 16.95 13.34 15.35 Return on average common stockholders' equity 10.59 8.44 12.56 Non-interest income as a percentage of total revenue 11.85 17.81 26.41 Asset quality: ACL on loans and leases $ 635,737 $ 594,741 $ 301,187 Non-performing assets (1) 218,600 206,136 112,590 ACL on loans and leases / total loans and leases 1.25 % 1.20 % 1.35 % Net charge-offs / average loans and leases 0.21 0.15 0.02 Non-performing loans and leases / total loans and leases (1) 0.41 0.41 0.49 Non-performing assets / total loans and leases plus OREO and repossessed assets (1) 0.43 0.41 0.51 ACL on loans and leases / non-performing loans and leases (1) 303.39 291.84 274.36 Other ratios: Tangible common equity (non-GAAP) 7.73 % 7.38 % 7.97 % Tier 1 risk-based capital 11.62 11.23 12.32 Total risk-based capital 13.72 13.25 13.64 CET1 risk-based capital 11.11 10.71 11.72 Stockholders' equity / total assets 11.60 11.30 9.85 Net interest margin 3.52 3.49 2.84 Efficiency ratio (non-GAAP) 42.15 43.42 56.16 Equity and share related: Common equity $ 8,406,017 $ 7,772,207 $ 3,293,288 Book value per common share 48.87 44.67 36.36 Tangible book value per common share (non-GAAP) 32.39 29.07 30.22 Common stock closing price 50.76 47.34 55.84 Dividends and equivalents declared per common share 1.60 1.60 1.60 Common shares issued and outstanding 172,022 174,008 90,584 Weighted-average common shares outstanding - basic 171,775 167,452 89,983 Weighted-average common shares outstanding - diluted 171,883 167,547 90,206 (1) Non-performing asset balances and related asset quality ratios exclude the impact of net unamortized (discounts)/premiums and net unamortized deferred (fees)/costs on loans and leases. 31 Table of Contents Non-GAAP Financial Measures The non-GAAP financial measures identified in the preceding table provide both management and investors with information useful in understanding the Company's financial position, results of operations, the strength of its capital position, and overall business performance.
Results of Operations The following table summarizes selected financial highlights and key performance indicators: At or for the years ended December 31, (In thousands, except per share data) 2024 2023 2022 Income and performance ratios: Net income $ 768,707 $ 867,840 $ 644,283 Net income available to common stockholders 752,057 851,190 628,364 Earnings per diluted common share 4.37 4.91 3.72 Return on average assets 1.00 % 1.18 % 0.99 % Return on average tangible common stockholders’ equity (non-GAAP) 14.35 16.95 13.34 Return on average common stockholders’ equity 8.71 10.59 8.44 Non-interest income as a percentage of total revenue 9.72 11.85 17.81 Asset quality: ACL on loans and leases $ 689,566 $ 635,737 $ 594,741 Non-performing assets (1) 461,751 218,600 206,136 ACL on loans and leases / total loans and leases 1.31 % 1.25 % 1.20 % Net charge-offs / average loans and leases 0.32 0.21 0.15 Non-performing loans and leases / total loans and leases (1) 0.88 0.41 0.41 Non-performing assets / total loans and leases plus OREO and repossessed assets (1) 0.88 0.43 0.41 ACL on loans and leases / non-performing loans and leases (1) 149.47 303.39 291.84 Other ratios: Tangible common equity (non-GAAP) 7.45 % 7.73 % 7.38 % Tier 1 Risk-Based Capital 12.06 11.62 11.23 Total Risk-Based Capital 14.24 13.72 13.25 CET1 Risk-Based Capital 11.54 11.11 10.71 Stockholders’ equity / total assets 11.56 11.60 11.30 Net interest margin 3.42 3.52 3.49 Efficiency ratio (non-GAAP) 45.43 42.15 43.42 Equity and share related: Common stockholders’ equity $ 8,849,235 $ 8,406,017 $ 7,772,207 Book value per common share 51.63 48.87 44.67 Tangible book value per common share (non-GAAP) 32.95 32.39 29.07 Common stock closing price 55.22 50.76 47.34 Dividends and equivalents declared per common share 1.60 1.60 1.60 Common shares issued and outstanding 171,391 172,022 174,008 Weighted-average common shares outstanding - basic 169,820 171,775 167,452 Weighted-average common shares - diluted 170,192 171,883 167,547 (1) Non-performing asset balances and related asset quality ratios exclude the impact of net unamortized (discounts)/premiums and net unamortized deferred (fees)/costs on loans and leases. 32 Table of Contents Non-GAAP Financial Measures The non-GAAP financial measures identified in the preceding table provide both management and investors with information useful in understanding the Company’s financial position, results of operations, the strength of its capital position, and overall business performance.
Floating-rate loans at floors pay a higher interest rate than a loan at a fully indexed rate without a floor, as with a floor, there is a limit on how low the interest rate can fall.
In the loan portfolio, floors are a benefit to interest income in low interest rate environments. Floating-rate loans at floors pay a higher interest rate than a loan at a fully indexed rate without a floor, as with a floor, there is a limit on how low the interest rate can fall.
The change in total liabilities was attributed to the following: • Total deposits increased $6.8 billion, reflecting a $8.9 billion increase in interest-bearing deposits, partially offset by a $2.2 billion decrease in non-interest-bearing deposits.
The change in total liabilities was attributed to the following: • Total deposits increased $4.0 billion, reflecting a $4.4 billion increase in interest-bearing deposits, partially offset by a $0.4 billion decrease in non-interest-bearing deposits.
The Bank's primary source of funding is its core deposits. Including time deposits, the Bank had a loan to total deposit ratio of 83.5% and 92.1% at December 31, 2023, and 2022, respectively. The Bank is required by OCC regulations to maintain a sufficient level of liquidity to ensure safe and sound operations.
Including time deposits, the Bank had a loan to total deposit ratio of 81.1% and 83.5% at December 31, 2024, and 2023, respectively. The Bank is required by OCC regulations to maintain a sufficient level of liquidity to ensure safe and sound operations.
The Company's financial condition and operating results for the year ended December 31, 2023, are not necessarily indicative of the financial condition or operating results that may be attained in future periods.
The Company ’ s consolidated financial condition and operating results for the year ended December 31, 2024, are not necessarily indicative of the consolidated financial condition or operating results that may be attained in future periods.
Qualitative factors are based on management's judgement of the Company, market, industry, or business specific data including loan trends, portfolio segment composition, and loan rating or credit scores. Qualitative adjustments may be applied in relation to economic forecasts when relevant facts and circumstances are expected to impact credit losses, particularly in times of significant volatility in economic activity.
Qualitative adjustments are based on management’s judgment of the Company, market, industry, or business specific data, 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.
For portfolios using the PD, LGD, and EAD framework, expected credit losses are calculated as the product of the probability of a loan defaulting, expected loss given the occurrence of a default, and the expected exposure of a loan at default. Summing the product across loans over their lives yields the lifetime expected credit losses for a given portfolio.
Under these frameworks, 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.
Average interest-bearing deposits held at the FRB increased $1.0 billion, or 162.1%, from $0.6 billion for the year ended December 31, 2022, to $1.6 billion for the year ended December 31, 2023, which was a direct result of the Company's risk management approach to hold higher levels of on-balance sheet liquidity in 2023.
Average interest-bearing deposits decreased $0.9 billion, or 53.7%, from $1.6 billion for the year ended December 31, 2023, to $0.7 billion for the year ended December 31, 2024, which was a direct result of the Company’s risk management approach to hold higher levels of on-balance sheet liquidity in 2023.
At December 31, 2023, and 2022, the Company's gross DTAs included $64.2 million and $66.9 million, respectively, applicable to SALT net operating loss and credit carryforwards that are available to offset future taxable income, generally through 2032.
At December 31, 2024, and 2023, the Company’s gross DTAs included $67.7 million and $64.2 million, respectively, applicable to SALT net operating loss and credit carryforwards that are available to offset future taxable income.
The change in stockholders' equity was attributed to the following: • The adoption of ASU No. 2022-02, which resulted in a $4.3 million cumulative-effect adjustment to retained earnings; • Net income recognized of $867.8 million; • Other comprehensive income, net of tax, of $134.4 million; • Dividends paid to common and preferred stockholders of $278.3 million and $16.7 million, respectively; • Stock-based compensation expense of $54.1 million; • Stock options exercised of $1.7 million; and • Repurchases of common stock of $108.8 million under the Company's common stock repurchase program and $16.3 million related to employee share-based compensation plans. 45 Table of Contents Investment Securities Through its Corporate Treasury function, the Company maintains and invests in debt securities that are primarily used to provide a source of liquidity for operating needs, to generate interest income, and as a means to manage the Company's interest-rate risk.
The change in stockholders’ equity was attributed to the following: • Net income recognized of $768.7 million; • Other comprehensive loss, net of tax, of $5.8 million; • Dividends paid to common and preferred stockholders of $275.4 million and $16.7 million, respectively; • Stock-based compensation expense of $55.1 million; • Stock options exercised of $0.3 million; and • Repurchases of common stock of $65.8 million under the Company’s common stock repurchase program and $17.2 million related to employee share-based compensation plans. 45 Table of Contents 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, as a means to manage the Company’s interest-rate risk, and to generate interest income.
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) At December 31, 2023 Portion of U.S. time deposits in excess of insurance limit $ 463,387 Time deposits otherwise uninsured with a maturity of: 3 months or less $ 172,427 Over 3 months through 6 months 178,642 Over 6 months through 12 months 105,791 Over 12 months 6,527 Additional information regarding period-end deposit balances and rates can be found within Note 10: Deposits in the Notes to Consolidated Financial Statements contained in Part II - Item 8.
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) At December 31, 2024 Portion of U.S. time deposits in excess of insurance limit $ 536,327 Time deposits otherwise uninsured with a maturity of: 3 months or less $ 326,291 Over 3 months through 6 months 195,162 Over 6 months through 12 months 14,009 Over 12 months 865 Additional information regarding period-end deposit balances and rates can be found within Note 10: Deposits in the Notes to Consolidated Financial Statements contained in Part II - Item 8.
Certain models use output reversion and revert to mean historical portfolio loss rates on a straight-line basis in the third year of the forecast. Other models incorporate a reasonable and supportable forecast of various macroeconomic variables over the remaining life of the Company's assets. The Company incorporates forecasts of macroeconomic variables in the determination of expected credit losses.
Models use output reversion and revert to mean historical portfolio loss rates on a straight-line basis in the third year of the forecast. The Company incorporates forecasts of macroeconomic variables in the determination of expected credit losses.
Allowance for Credit Losses on Loans and Leases The ACL on loans and leases increased $41.0 million, or 6.9%, from $594.7 million at December 31, 2022, to $635.7 million at December 31, 2023, primarily due to the impact of the current macroeconomic environment on credit performance and organic loan growth, partially offset by net charge-offs.
Allowance for Credit Losses on Loans and Leases The ACL on loans and leases increased $53.9 million, or 8.5%, from $635.7 million at December 31, 2023, to $689.6 million at December 31, 2024, primarily due to the impact of the current macroeconomic environment on credit performance, risk rating migration, loan portfolio mix, and organic loan growth, partially offset by net charge-offs.
At December 31, 2023, and 2022, average total investment securities comprised 22.0% and 24.6% of average total interest-earning assets, respectively.
At December 31, 2024, and 2023, average total investment securities comprised 24.7% and 22.9% of average total interest-earning assets, respectively.
At December 31, 2023, and 2022, average FHLB advances comprised 6.7% and 3.5% of total average interest-bearing liabilities, respectively. The average rate on FHLB advances increased 223 basis points from 2.98% for the year ended December 31, 2022, to 5.21% for the year ended December 31, 2023, primarily due to the higher interest rate environment.
At December 31, 2024, and 2023, average FHLB advances comprised 3.5% and 6.7% of total average interest-bearing liabilities, respectively. The average rate on average FHLB advances increased 25 basis points from 5.21% for the year ended December 31, 2023, to 5.46% for the year ended December 31, 2024, primarily due to the refinancing of maturities at higher market rates.
Excluding this charge, the provision for credit losses increased $45.2 million, primarily due to the impact of the current macroeconomic environment on credit performance and organic loan growth.
Excluding this charge, the provision for credit losses increased $78.1 million, primarily due to the impact of the current macroeconomic environment on credit performance, risk rating migration, loan portfolio mix, and organic loan growth.
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. 53 Table of Contents Capital 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 Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies.
The Holding Company generally uses its funds for principal and interest payments on senior notes, subordinated notes, and junior subordinated debt, dividend payments to preferred and common stockholders, repurchases of its common stock, and purchases of investment securities, as applicable. During the year ended December 31, 2023, the Bank paid $600.0 million in dividends to the Holding Company.
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.
The Bank also had additional borrowing capacity from the FRB of $6.6 billion and $1.2 billion at December 31, 2023, and 2022, respectively. Unencumbered investment securities of $1.2 billion at December 31, 2023, could have been used for collateral on borrowings or to increase borrowing capacity by either $0.8 billion with the FHLB or $1.0 billion with the FRB.
Unencumbered investment securities of $1.0 billion at December 31, 2024, could have been used for collateral on borrowings or to increase borrowing capacity by either $0.8 billion with the FHLB or $0.9 billion with the FRB.
Net interest margin increased 3 basis points from 3.49% for the year ended December 31, 2022, to 3.52% for the year ended December 31, 2023.
Net interest margin decreased 10 basis points from 3.52% for the year ended December 31, 2023, to 3.42% for the year ended December 31, 2024.
The following table summarizes key asset quality ratios and their underlying components: At or for the years ended December 31, (In thousands) 2023 2022 2021 Non-performing loans and leases (1) $ 209,544 $ 203,791 $ 109,778 Total loans and leases 50,726,052 49,764,426 22,271,729 Non-performing loans and leases as a percentage of loans and leases 0.41 % 0.41 % 0.49 % Non-performing assets (1) $ 218,600 $ 206,136 $ 112,590 Total loans and leases $ 50,726,052 $ 49,764,426 $ 22,271,729 Add: OREO and repossessed assets 9,056 2,345 2,812 Total loans and leases plus OREO and repossessed assets $ 50,735,108 $ 49,766,771 $ 22,274,541 Non-performing assets as a percentage of loans and leases plus OREO and repossessed assets 0.43 % 0.41 % 0.51 % Non-performing assets (1) $ 218,600 $ 206,136 $ 112,590 Total assets 74,945,249 71,277,521 34,915,599 Non-performing assets as a percentage of total assets 0.29 % 0.29 % 0.32 % ACL on loans and leases $ 635,737 $ 594,741 $ 301,187 Non-performing loans and leases (1) 209,544 203,791 109,778 ACL on loans and leases as a percentage of non-performing loans and leases 303.39 % 291.84 % 274.36 % ACL on loans and leases $ 635,737 $ 594,741 $ 301,187 Total loans and leases 50,726,052 49,764,426 22,271,729 ACL on loans and leases as a percentage of loans and leases 1.25 % 1.20 % 1.35 % ACL on loans and leases $ 635,737 $ 594,741 $ 301,187 Net charge-offs (2) 108,086 67,288 3,829 Ratio of ACL on loans and leases to net charge-offs 5.88x 8.84x 78.66x (1) Non-performing asset balances and related asset quality ratios exclude the impact of net unamortized (discounts)/premiums and net unamortized deferred (fees)/costs on loans and leases.
The following table summarizes key asset quality ratios and their underlying components: At or for the years ended December 31, (In thousands) 2024 2023 2022 Non-performing loans and leases (1) (2) $ 461,326 $ 209,544 $ 203,791 Total loans and leases 52,505,168 50,726,052 49,764,426 Non-performing loans and leases as a percentage of loans and leases 0.88 % 0.41 % 0.41 % Total non-performing loans and leases (1) $ 461,326 $ 209,544 $ 203,791 Add: OREO and repossessed assets 425 9,056 2,345 Total Non-performing assets (1) $ 461,751 $ 218,600 $ 206,136 Total loans and leases plus OREO and repossessed assets $ 52,505,593 $ 50,735,108 $ 49,766,771 Non-performing assets as a percentage of loans and leases plus OREO and repossessed assets 0.88 % 0.43 % 0.41 % Non-performing assets (1) $ 461,751 $ 218,600 $ 206,136 Total assets 79,025,073 74,945,249 71,277,521 Non-performing assets as a percentage of total assets 0.58 % 0.29 % 0.29 % ACL on loans and leases $ 689,566 $ 635,737 $ 594,741 Non-performing loans and leases (1) 461,326 209,544 203,791 ACL on loans and leases as a percentage of non-performing loans and leases 149.47 % 303.39 % 291.84 % ACL on loans and leases $ 689,566 $ 635,737 $ 594,741 Total loans and leases 52,505,168 50,726,052 49,764,426 ACL on loans and leases as a percentage of loans and leases 1.31 % 1.25 % 1.20 % ACL on loans and leases $ 689,566 $ 635,737 $ 594,741 Net charge-offs 166,914 108,086 67,288 Ratio of ACL on loans and leases to net charge-offs 4.13x 5.88x 8.84x (1) Non-performing asset balances and related asset quality ratios exclude the impact of net unamortized (discounts)/premiums and net unamortized deferred (fees)/costs on loans and leases.
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.
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 following table summarizes the percentage allocation of the ACL across the loans and leases categories: At December 31, 2023 2022 (In thousands) Amount % (1) Amount % (1) Commercial non-mortgage $ 211,699 33.3 % $ 197,950 33.3 % Asset-based 15,828 2.5 16,094 2.7 Commercial real estate 248,921 39.2 214,771 36.1 Multi-family 80,582 12.7 80,652 13.6 Equipment financing 20,633 3.2 23,081 3.9 Warehouse lending — — 577 0.1 Residential 29,739 4.7 26,907 4.5 Home equity 26,154 4.1 32,296 5.4 Other consumer 2,181 0.3 2,413 0.4 Total ACL on loans and leases $ 635,737 100.0 % $ 594,741 100.0 % (1) The ACL allocated to a single loan and lease category does not preclude its availability to absorb losses in other categories. 50 Table of Contents Methodology The Company's ACL on loans and leases is considered to be a critical accounting policy.
The following table summarizes the percentage allocation of the ACL across the loans and leases categories: At December 31, 2024 2023 (In thousands) Amount % (1) Amount % (1) Commercial non-mortgage $ 270,613 39.2 % $ 211,699 33.3 % Asset-based 30,049 4.4 15,828 2.5 Commercial real estate 245,124 35.5 248,921 39.2 Multi-family 70,998 10.3 80,582 12.7 Equipment financing 19,087 2.8 20,633 3.2 Residential 27,354 4.0 29,739 4.7 Home equity 19,625 2.8 26,154 4.1 Other consumer 6,716 1.0 2,181 0.3 Total ACL on loans and leases $ 689,566 100.0 % $ 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. 50 Table of Contents Methodology The Company’s ACL on loans and leases is considered to be a critical accounting policy.
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 Consolidated Financial Statements.
Failure to meet minimum capital requirements can initiate certain mandatory actions by regulators that could have a direct material effect on the Company’s Consolidated Financial Statements.
Total portfolio originations for the years ended December 31, 2023, and 2022, were $9.2 billion and $14.7 billion, respectively. The $5.5 billion decrease was primarily due to a decrease in commercial real estate and commercial non-mortgage originations.
Total portfolio originations for the years ended December 31, 2024, and 2023, were $9.7 billion and $9.0 billion, respectively. The $0.7 billion increase was primarily due to increases in commercial non-mortgage and equipment finance originations, partially offset by a decrease in commercial real estate originations.
At both December 31, 2023, and 2022, no ACL was recorded on available-for-sale securities as each of the securities in the Company's portfolio are investment grade and current as to principal and interest, and their price changes are consistent with interest and credit spreads when adjusting for convexity, rating, and industry differences.
Each of the Company’s other available-for-sale securities in an unrealized loss position at December 31, 2024, are investment grade, current as to principal and interest, and their price changes are consistent with interest and credit spreads when adjusting for duration, convexity, rating, and industry differences.
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.
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.
Additional information regarding the merger with Sterling can be found within Note 2: Mergers and Acquisitions in the Notes to Consolidated Financial Statements contained in Part II - Item 8.
Additional information regarding the acquisition of Ametros can be found within Note 2: Acquisitions and Joint Ventures in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data.
The following table summarizes daily average balances of borrowings by type and the weighted-average rates paid thereon: Years ended December 31, 2023 2022 2021 (In thousands) Average Balance Average Rate Average Balance Average Rate Average Balance Average Rate Securities sold under agreements to repurchase $ 210,676 0.58 % $ 466,282 0.78 % $ 527,250 0.57 % Federal funds purchased 167,495 4.70 598,269 2.58 16,036 0.08 FHLB advances 4,275,394 5.21 1,965,577 2.98 108,216 1.58 Long-term debt 1,058,621 3.69 1,031,446 3.44 565,271 3.22 Total average borrowings $ 5,712,186 4.74 % $ 4,061,574 2.78 % $ 1,216,773 1.84 % Additional information regarding period-end borrowings balances and rates can be found within Note 11: Borrowings in the Notes to Consolidated Financial Statements contained in Part II - Item 8.
The following table summarizes daily average balances of borrowings by type and the weighted-average rates paid thereon: Years ended December 31, 2024 2023 2022 (In thousands) Average Balance Average Rate Average Balance Average Rate Average Balance Average Rate Securities sold under agreements to repurchase $ 142,025 0.77 % $ 210,676 0.58 % $ 466,282 0.78 % Federal funds purchased 54,303 5.55 167,495 4.70 598,269 2.58 FHLB advances 2,296,048 5.46 4,275,394 5.21 1,965,577 2.98 Long-term debt 903,603 3.57 1,027,869 3.69 995,341 3.44 Total average borrowings $ 3,395,979 4.76 % $ 5,681,434 4.74 % $ 4,025,469 2.78 % Additional information regarding period-end borrowings balances and rates can be found within Note 11: Borrowings in the Notes to Consolidated Financial Statements contained in Part II - Item 8.
The following table summarizes net charge-offs (recoveries) as a percentage of average loans and leases for each category: At or for the years ended December 31, 2023 2022 2021 (In thousands) Net Charge-offs (Recoveries) Average Balance % Net Charge-offs (Recoveries) Average Balance % Net Charge-offs (Recoveries) Average Balance % Commercial non-mortgage $ 13,531 $ 16,900,423 0.08 % $ 44,250 $ 13,625,382 0.32 % $ 2,305 $ 6,829,799 0.03 % Asset-based 17,088 1,699,064 1.01 4,473 1,746,888 0.26 (1,447) 950,602 (0.15) Commercial real estate 62,208 13,397,036 0.46 20,471 11,299,259 0.18 4,483 5,324,853 0.08 Multi-family 3,447 7,072,507 0.05 1,298 6,025,702 0.02 — 1,114,977 — Equipment financing 4,949 1,509,948 0.33 931 1,660,935 0.06 375 614,055 0.06 Warehouse lending — 316,729 — — 537,430 — — — — Residential 3,601 8,126,878 0.04 (1,377) 7,112,890 (0.02) (1,149) 4,953,100 (0.02) Home equity (123) 1,560,707 (0.01) (4,201) 1,663,198 (0.25) (4,289) 1,681,921 (0.26) Other consumer 3,385 54,277 6.24 1,443 79,428 1.82 3,551 115,565 3.07 Total $ 108,086 $ 50,637,569 0.21 % $ 67,288 $ 43,751,112 0.15 % $ 3,829 $ 21,584,872 0.02 % 52 Table of Contents Liquidity and Capital Resources The Company manages its cash flow requirements through proactive liquidity measures at both the Holding Company and the Bank.
The following table summarizes net charge-offs (recoveries) as a percentage of average loans and leases for each category: At or for the years ended December 31, 2024 2023 2022 (In thousands) Net Charge-offs (Recoveries) Average Balance % Net Charge-offs (Recoveries) Average Balance % Net Charge-offs (Recoveries) Average Balance % Commercial non-mortgage $ 88,525 $ 17,071,748 0.52 % $ 13,531 $ 16,900,423 0.08 % $ 44,250 $ 13,625,382 0.32 % Asset-based 6,090 1,474,703 0.41 17,088 1,699,064 1.01 4,473 1,746,888 0.26 Commercial real estate 39,776 14,222,437 0.28 62,208 13,397,036 0.46 20,471 11,299,259 0.18 Multi-family 22,761 7,622,410 0.30 3,447 7,072,507 0.05 1,298 6,025,702 0.02 Equipment financing 10,239 1,258,733 0.81 4,949 1,509,948 0.33 931 1,660,935 0.06 Warehouse lending — — — — 316,729 — — 537,430 — Residential (953) 8,403,098 (0.01) 3,601 8,126,878 0.04 (1,377) 7,112,890 (0.02) Home equity (2,890) 1,464,894 (0.20) (123) 1,560,707 (0.01) (4,201) 1,663,198 (0.25) Other consumer 3,366 79,420 4.24 3,385 54,277 6.24 1,443 79,428 1.82 Total $ 166,914 $ 51,597,443 0.32 % $ 108,086 $ 50,637,569 0.21 % $ 67,288 $ 43,751,112 0.15 % Net charge-offs increased $58.8 million, or 54.4%, to $166.9 million for the year ended December 31, 2024, as compared to $108.1 million for the year ended December 31, 2023, primarily due to increases in net charge-offs in the commercial non-mortgage, multi-family, and equipment finance categories, partially offset by decreases in net charge-offs in the commercial real estate and asset-based lending categories. 52 Table of Contents Liquidity and Capital Resources The Company manages its cash flow requirements through proactive liquidity measures at both the Holding Company and the Bank.
This information should be read in conjunction with the Company's Consolidated Financial Statements, and the accompanying Notes thereto, contained in Part II - Item 8. Financial Statements and Supplementary Data, as well as other information set forth throughout this report. For discussion and analysis of the Company's 2022 results, as compared to 2021, refer to Part II - Item 7.
This information should be read in conjunction with the Company ’ s Consolidated Financial Statements, and the accompanying Notes thereto, contained in Part II - Item 8. Financial Statements and Supplementary Data, as well as other information set forth throughout this report.
The average yield on loans and leases increased 165 basis points from 4.50% for the year ended December 31, 2022, to 6.15% for the year ended December 31, 2023, primarily due to the higher interest rate environment, partially offset by lower purchase accounting accretion on loans and leases that were acquired from Sterling.
The average yield on average loans and leases increased 10 basis points from 6.15% for the year ended December 31, 2023, to 6.25% for the year ended December 31, 2024, primarily due to higher market rates, partially offset by lower purchase accounting accretion on loans acquired in the Sterling merger.
The following table summarizes the estimated impact that gradual parallel changes in interest rates of up and down 100, 200, and 300 basis points might have on the Company’s net interest income over a twelve-month period starting at December 31, 2023, and 2022, as compared to actual net interest income and assuming no changes in interest rates: -300bp -200bp -100bp +100bp +200bp +300bp December 31, 2023 (7.2)% (4.5)% (2.0)% 1.7% 3.3% 5.4% December 31, 2022 n/a (6.9)% (3.3)% 3.2% 6.5% n/a Asset sensitivity in terms of net interest income decreased at December 31, 2023, as compared to at December 31, 2022, primarily due to changes in the overall balance sheet composition, which included the addition of $5.7 billion in price-sensitive deposits from interLINK, an increase in interest paid on deposits, and the implementation of incremental asset sensitivity measures, such as hedges and the investment of fixed-rate debt securities to extend duration.
The following table summarizes the estimated impact that gradual parallel changes in interest rates of up and down 100, 200, and 300 basis points might have on the Company’s net interest income over a twelve-month period starting at December 31, 2024, and 2023, as compared to actual net interest income and assuming no changes in interest rates: -300bp -200bp -100bp +100bp +200bp +300bp December 31, 2024 (1.6)% (0.6)% —% 0.4% 0.6% 0.8% December 31, 2023 (7.2)% (4.5)% (2.0)% 1.7% 3.3% 5.4% Asset sensitivity in terms of net interest income decreased at December 31, 2024, as compared to at December 31, 2023, primarily due to changes in the overall balance sheet composition, which included an increase in fixed-rate investment securities as a result of securities repositioning in 2024, an increase in fixed-rate residential loans, and an increase in higher cost deposit products, such as interLINK money market sweep deposits, certificates of deposit, and online savings, partially offset by a decrease in demand deposit accounts.
The following tables reconcile non-GAAP financial measures to the most comparable financial measures defined by GAAP: At December 31, (In thousands, except per share data) 2023 2022 2021 Tangible book value per common share: Stockholders' equity $ 8,689,996 $ 8,056,186 $ 3,438,325 Less: Preferred stock 283,979 283,979 145,037 Goodwill and other intangible assets 2,834,600 2,713,446 556,242 Tangible common stockholders' equity $ 5,571,417 $ 5,058,761 $ 2,737,046 Common shares outstanding 172,022 174,008 90,584 Tangible book value per common share $ 32.39 $ 29.07 $ 30.22 Book value per common share (GAAP) $ 48.87 $ 44.67 $ 36.36 Tangible common equity ratio: Tangible common stockholders' equity $ 5,571,417 $ 5,058,761 $ 2,737,046 Total assets $ 74,945,249 $ 71,277,521 $ 34,915,599 Less: Goodwill and other intangible assets 2,834,600 2,713,446 556,242 Tangible assets $ 72,110,649 $ 68,564,075 $ 34,359,357 Tangible common equity ratio 7.73 % 7.38 % 7.97 % Common stockholders' equity to total assets (GAAP) 11.22 % 10.90 % 9.43 % For the years ended December 31, (In thousands) 2023 2022 2021 Return on average tangible common stockholders' equity: Net income $ 867,840 $ 644,283 $ 408,864 Less: Preferred stock dividends 16,650 15,919 7,875 Add: Intangible assets amortization, tax-affected 28,604 25,233 3,565 Net income adjusted for preferred stock dividends and intangible assets amortization $ 879,794 $ 653,597 $ 404,554 Average stockholders' equity $ 8,323,955 $ 7,721,488 $ 3,338,764 Less: Average preferred stock 283,979 272,179 145,037 Average goodwill and other intangible assets 2,848,114 2,548,254 558,462 Average tangible common stockholders' equity $ 5,191,862 $ 4,901,055 $ 2,635,265 Return on average tangible common stockholders' equity 16.95 % 13.34 % 15.35 % Return on average common stockholders' equity (GAAP) 10.59 % 8.44 % 12.56 % 32 Table of Contents For the years ended December 31, (In thousands) 2023 2022 2021 Efficiency ratio: Non-interest expense $ 1,416,355 $ 1,396,473 $ 745,100 Less: Foreclosed property activity (1,282) (906) (535) Intangible assets amortization 36,207 31,940 4,513 Operating lease depreciation 5,569 8,193 — Merger-related expenses 162,517 246,461 37,454 Strategic initiatives charges — (3,032) 7,168 Common stock contribution to charitable foundation — 10,500 — FDIC special assessment 47,164 — — Other expense (1) — — 2,526 Non-interest expense $ 1,166,180 $ 1,103,317 $ 693,974 Net interest income $ 2,337,269 $ 2,034,286 $ 901,089 Add: Tax-equivalent adjustment 68,939 47,128 9,813 Non-interest income 314,337 440,783 323,372 Other income (2) 18,059 22,887 1,344 Less: Operating lease depreciation 5,569 8,193 — (Loss) on sale of investment securities (33,620) (6,751) — Gain on extinguishment of borrowings — 2,548 — Income $ 2,766,655 $ 2,541,094 $ 1,235,618 Efficiency ratio 42.15 % 43.42 % 56.16 % Non-interest expense as a percentage of total revenue (GAAP) 53.41 % 56.42 % 60.85 % (1) Other expense (non-GAAP) includes debt prepayments costs in 2021.
The following tables reconcile non-GAAP financial measures to the most comparable financial measures defined by GAAP: At December 31, (In thousands, except per share data) 2024 2023 2022 Tangible book value per common share: Stockholders’ equity $ 9,133,214 $ 8,689,996 $ 8,056,186 Less: Preferred stock 283,979 283,979 283,979 Goodwill and other intangible assets 3,202,369 2,834,600 2,713,446 Tangible common stockholders’ equity $ 5,646,866 $ 5,571,417 $ 5,058,761 Common shares outstanding 171,391 172,022 174,008 Tangible book value per common share $ 32.95 $ 32.39 $ 29.07 Book value per common share (GAAP) $ 51.63 $ 48.87 $ 44.67 Tangible common equity ratio: Tangible common stockholders’ equity $ 5,646,866 $ 5,571,417 $ 5,058,761 Total assets $ 79,025,073 $ 74,945,249 $ 71,277,521 Less: Goodwill and other intangible assets 3,202,369 2,834,600 2,713,446 Tangible assets $ 75,822,704 $ 72,110,649 $ 68,564,075 Tangible common equity ratio 7.45 % 7.73 % 7.38 % Common stockholders’ equity to total assets (GAAP) 11.20 % 11.22 % 10.90 % For the years ended December 31, (In thousands) 2024 2023 2022 Return on average tangible common stockholders’ equity: Net income $ 768,707 $ 867,840 $ 644,283 Less: Preferred stock dividends 16,650 16,650 15,919 Add: Intangible assets amortization, tax-affected 28,505 28,604 25,233 Net income adjusted for preferred stock dividends and intangible assets amortization $ 780,562 $ 879,794 $ 653,597 Average stockholders’ equity $ 8,919,675 $ 8,323,955 $ 7,721,488 Less: Average preferred stock 283,979 283,979 272,179 Average goodwill and other intangible assets 3,195,988 2,848,114 2,548,254 Average tangible common stockholders’ equity $ 5,439,708 $ 5,191,862 $ 4,901,055 Return on average tangible common stockholders’ equity 14.35 % 16.95 % 13.34 % Return on average common stockholders’ equity (GAAP) 8.71 % 10.59 % 8.44 % 33 Table of Contents For the years ended December 31, (In thousands) 2024 2023 2022 Efficiency ratio: Non-interest expense $ 1,351,279 $ 1,416,355 $ 1,396,473 Less: Foreclosed property activity (1,413) (1,282) (906) Intangible assets amortization 36,082 36,207 31,940 Operating lease depreciation 1,541 5,569 8,193 Merger-related expenses (1) 3,139 162,517 246,461 Common stock contribution to charitable foundation — — 10,500 FDIC special assessment 10,318 47,164 — Strategic restructuring costs and other (2) 22,169 — (3,032) Adjusted non-interest expense $ 1,279,443 $ 1,166,180 $ 1,103,317 Net interest income $ 2,338,387 $ 2,337,269 $ 2,034,286 Add: FTE adjustment 57,517 68,939 47,128 Non-interest income 251,899 314,337 440,783 Other income (3) 29,440 18,059 22,887 Less: Operating lease depreciation 1,541 5,569 8,193 (Loss) on sale of investment securities, net (136,224) (33,620) (6,751) Gain on extinguishment of borrowings — — 2,548 Net (loss) on sale of factored receivables portfolio (15,977) — — Net gain on sale of mortgage servicing rights 11,655 — — Adjusted income $ 2,816,248 $ 2,766,655 $ 2,541,094 Efficiency ratio 45.43 % 42.15 % 43.42 % Non-interest expense as a percentage of total revenue (GAAP) 52.17 % 53.41 % 56.42 % (1) Merger-related expenses included Ametros acquisition expenses for the year ended December 31, 2024, and primarily Sterling merger expenses for the years ended December 31, 2023, and 2022.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on March 10, 2023.
For discussion and analysis of the Company ’ s 2023 results, as compared to 2022, refer to Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on February 27, 2024.
The following table summarizes daily average balances of deposits by type and the weighted-average rates paid thereon: Years ended December 31, 2023 2022 2021 (In thousands) Average Balance Average Rate Average Balance Average Rate Average Balance Average Rate Non-interest-bearing: Demand $ 11,596,949 — % $ 12,912,894 — % $ 6,897,464 — % Interest-bearing: Checking 8,845,284 1.48 8,842,792 0.34 3,929,941 0.04 Health savings accounts 8,249,332 0.15 7,826,576 0.08 7,390,702 0.08 Money market 15,769,533 3.61 10,797,645 0.66 3,526,373 0.11 Savings 7,259,640 0.78 8,625,691 0.16 5,387,529 0.02 Time deposits 6,531,610 3.87 2,838,502 0.60 2,105,809 0.35 Total interest-bearing 46,655,399 2.19 38,931,206 0.36 22,340,354 0.09 Total average deposits $ 58,252,348 1.75 % $ 51,844,100 0.27 % $ 29,237,818 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 following table summarizes daily average balances of deposits by type and the weighted-average rates paid thereon: Years ended December 31, 2024 2023 2022 (In thousands) Average Balance Average Rate Average Balance Average Rate Average Balance Average Rate Non-interest-bearing: Demand $ 10,387,807 — % $ 11,596,949 — % $ 12,912,894 — % Interest-bearing: Checking 9,555,367 1.89 8,845,284 1.48 8,842,792 0.34 Health savings accounts 8,650,485 0.15 8,249,332 0.15 7,826,576 0.08 Money market 19,354,659 4.05 15,769,533 3.61 10,797,645 0.66 Savings 6,879,935 1.54 7,259,640 0.78 8,625,691 0.16 Certificates of deposit 5,896,230 4.30 4,534,008 3.34 2,519,417 0.27 Brokered certificates of deposit 1,701,382 5.25 1,997,602 5.07 319,085 3.24 Total interest-bearing 52,038,058 2.74 46,655,399 2.19 38,931,206 0.36 Total average deposits $ 62,425,865 2.29 % $ 58,252,348 1.75 % $ 51,844,100 0.27 % 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.
At December 31, 2023, and 2022, the Company recorded a valuation allowance on its DTAs of $28.7 million and $29.2 million, respectively. The valuation allowance at December 31, 2023, is primarily related to the portion of SALT net operating loss carryforwards that, in management's judgment, is not more likely than not to be realized.
At December 31, 2024, and 2023, the Company’s valuation allowance on its DTAs was $64.4 million and $28.7 million, respectively, of which $62.7 million and $28.7 million, respectively, were related to the portion of SALT net operating loss and credit carryforwards that, in management’s judgment, are not more likely than not to be realized.
During the year ended December 31, 2023, the Holding Company repurchased 2,667,149 shares under the repurchase program at a weighted-average price of $40.49 per share, totaling $108.0 million. At December 31, 2023, the Holding Company's remaining purchase authority was $293.4 million.
During the year ended December 31, 2024, the Holding Company repurchased 1,408,426 shares under the repurchase program at a weighted-average price of $46.44 per share, totaling $65.4 million. At December 31, 2024, the Holding Company’s remaining purchase authority was $228.0 million.
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.
Commercial non-mortgage, asset-based, and equipment finance loans are primarily made based on the identified cash flows of the borrower, and secondarily on the underlying collateral provided by the borrower. However, the cash flows of borrowers may not be as expected, and the collateral securing these loans, as applicable, may fluctuate in value.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Information regarding quantitative and qualitative disclosures about market risk can be found in Part II under the section captioned "Asset/Liability Management and Market Risk" contained in Item 7.
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Information regarding quantitative and qualitative disclosures about market risk can be found in Part II under the section captioned “Asset/Liability Management and Market Risk” contained in Item 7.

Other WBS 10-K year-over-year comparisons