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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

_______________________________________________________________________________

FORM 10-Q

_________________________________________________________________________________________________________________________________________-___________________________________________________________________________________________________

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2024

or

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ____ to ____

Commission File Number: 001-31486

_______________________________________________________________________________________

WEBSTER FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

 ______________________________________________________________________________________

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

200 Elm Street, Stamford, Connecticut 06902

(Address and zip code of principal executive offices)

(203) 578-2202

(Registrant’s telephone number, including area code)

______________________________________________________________________________

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ☒  Yes    ☐  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒  Yes    ☐  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes   ☒ No

The number of shares of common stock, par value $0.01 per share, outstanding as of November 1, 2024 was 171,410,365.

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INDEX

						Page No.
Key to Acronyms and Terms						ii
Forward-Looking Statements						iii
PART I – FINANCIAL INFORMATION
Item 1.			Financial Statements			34
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			1
Item 3.			Quantitative and Qualitative Disclosures about Market Risk			82
Item 4.			Controls and Procedures			82
PART II – OTHER INFORMATION
Item 1.			Legal Proceedings			83
Item 1A.			Risk Factors			83
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			83
Item 3.			Defaults Upon Senior Securities			83
Item 4.			Mine Safety Disclosures			83
Item 5.			Other Information			83
Item 6.			Exhibits			84
EXHIBIT INDEX						84
SIGNATURES						85

i

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KEY TO ACRONYMS AND TERMS

ACL			Allowance for credit losses
Agency CMBS			Agency commercial mortgage-backed securities
Agency CMO			Agency collateralized mortgage obligations
Agency MBS			Agency mortgage-backed securities
ALCO			Asset/Liability Committee
Ametros			Ametros Financial Corporation
AOCI (AOCL)			Accumulated other comprehensive income (loss), net of tax
ASC			Accounting Standards Codification
ASU or the Update			Accounting Standards Update
Basel III Capital Rules			Capital rules under a global regulatory framework developed by the Basel Committee on Banking Supervision
BHC Act			Bank Holding Company Act of 1956, as amended
CECL			Current expected credit losses
CET1			Common Equity Tier 1 Capital, defined by Basel III capital rules
CET1 Risk-Based Capital			Ratio of CET1 capital to total risk-weighted assets, defined by the Basel III Capital Rules
CFPB			Consumer Financial Protection Bureau
CMBS			Non-agency commercial mortgage-backed securities
COVID-19			Coronavirus
CRA			Community Reinvestment Act of 1977
DTA			Deferred tax asset
EAD			Exposure at default
FASB			Financial Accounting Standards Board
FDIC			Federal Deposit Insurance Corporation
FHLB			Federal Home Loan Bank
FICO			Fair Isaac Corporation
FRB			Federal Reserve Bank
FTE			Fully tax-equivalent
FTP			Funds Transfer Pricing, a matched maturity funding concept
GAAP			U.S. Generally Accepted Accounting Principles
Holding Company			Webster Financial Corporation
HSA			Health savings account
HSA Bank			HSA Bank, a division of Webster Bank, National Association
interLINK			Interlink Insured Sweep LLC
LGD			Loss given default
LIHTC			Low-income housing tax credit
MBS			Non-agency mortgage-backed securities
NAV			Net asset value
OCC			Office of the Comptroller of the Currency
OREO			Other real estate owned
PD			Probability of default
PPNR			Pre-tax, pre-provision net revenue
PTNR			Pre-tax, net revenue
ROU			Right-of-use
S&P			Standard and Poor’s Rating Services
SEC			United States Securities and Exchange Commission
SOFR			Secured overnight financing rate
Sterling			Sterling Bancorp, collectively with its consolidated subsidiaries
Tier 1 Leverage Capital			Ratio of Tier 1 capital to average tangible assets, defined by the Basel III Capital Rules
Tier 1 Risk-Based Capital			Ratio of Tier 1 capital to total risk-weighted assets, defined by the Basel III Capital Rules
Total Risk-Based Capital			Ratio of total capital to total risk-weighted assets, defined by the Basel III Capital Rules
UPB			Unpaid principal balance
Webster Bank or the Bank			Webster Bank, National Association, a wholly-owned subsidiary of Webster Financial Corporation
Webster or the Company			Webster Financial Corporation, collectively with its consolidated subsidiaries

ii

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “believes,” “anticipates,” “expects,” “intends,” “targeted,” “continue,” “remain,” “will,” “should,” “may,” “plans,” “estimates,” and similar references to future periods. However, these words are not the exclusive means of identifying such statements.

Examples of forward-looking statements include, but are not limited to:

▪projections of revenues, expenses, income or loss, earnings or loss per share, and other financial items;

▪statements of plans, objectives, and expectations of the Company or its management or Board of Directors;

▪statements of future economic performance; and

▪statements of assumptions underlying such statements.

Forward-looking statements are based on the Company’s current expectations and assumptions regarding its business, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. The Company’s actual results may differ materially from those contemplated by the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. Factors that could cause our actual results to differ from those discussed in any forward-looking statements include, but are not limited to:

▪our ability to successfully execute our business plan and strategic initiatives, and manage any risks or uncertainties;

▪continued regulatory changes or other mitigation efforts taken by government agencies in response to volatility in the banking industry;

▪volatility in Webster’s stock price due to investor sentiment and perception of the banking industry;

▪local, regional, national, and international economic conditions, and the impact they may have on us or our customers;

▪volatility and disruption in national and international financial markets, including as a result of geopolitical conflict;

▪the impact of unrealized losses in our available-for-sale securities portfolio;

▪changes in laws and regulations, or existing laws and regulations that we become subject to, including those concerning banking, taxes, dividends, securities, insurance, cybersecurity, and healthcare administration, with which we must comply;

▪adverse conditions in the securities markets that could lead to impairment in the value of our securities portfolio;

▪inflation, monetary fluctuation, and changes in interest rates, including the impact of such changes on economic conditions, customer behavior, funding costs, and our loans and leases and securities portfolios;

▪possible changes in governmental monetary and fiscal policies, including, but not limited to, Federal Reserve policies in connection with continued inflationary pressures;

▪the impact of the 2024 U.S presidential election;

▪the timely development and acceptance of new products and services, and the perceived value of those products and services by customers;

▪changes in deposit flows, consumer spending, borrowings, and savings habits;

▪our ability to implement new technologies and maintain secure and reliable information and technology systems;

▪the effects of any cybersecurity threats or fraudulent activity, including those that involve our third-party vendors and service providers;

▪performance by our counterparties and third-party vendors;

▪our ability to increase market share and control expenses;

▪changes in the competitive environment among banks, financial holding companies, and other traditional and non-traditional financial service providers;

▪our ability to maintain adequate sources of funding and liquidity;

▪our ability to attract, develop, motivate, and retain skilled employees;

▪changes in loan demand or real estate values;

▪changes in the mix of loan geographies, sectors, or types, and the level of non-performing assets, charge-offs, and delinquencies;

▪changes in our estimates of current expected credit losses based upon periodic review under relevant regulatory and accounting requirements;

▪the effect of changes in accounting policies and practices applicable to us, including impacts of recently adopted accounting guidance;

▪legal and regulatory developments, including any due to recent U.S. Supreme Court decisions, the resolution of legal proceedings or regulatory or other governmental inquiries, and the results of regulatory examinations or reviews;

iii

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▪our ability to navigate any environmental, social, governmental, and sustainability concerns of different stakeholders and activists that may arise from our business activities;

▪our ability to assess and monitor the effect of artificial intelligence on our business and operations; and

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

Any forward-looking statement in this Quarterly Report on Form 10-Q speaks only as of the date on which it is made. Factors or events that could cause the Company’s actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as may be required by law.

iv

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PART I – FINANCIAL INFORMATION

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

Webster Financial Corporation is a bank holding company and financial holding company under the BHC Act, incorporated under the laws of Delaware in 1986, and headquartered in Stamford, Connecticut. Webster Bank is a leading commercial bank in the Northeast that provides a wide range of digital and traditional financial solutions across three differentiated lines of business: Commercial Banking, Healthcare Financial Services, and Consumer Banking. While its core footprint spans the northeastern U.S. from New York to Massachusetts, certain businesses operate in extended geographies.

The following discussion and analysis provides information that management believes is necessary to understand the Company’s financial condition, results of operations, and cash flows for the three and nine months ended September 30, 2024, as compared to 2023. This information should be read in conjunction with the Condensed Consolidated Financial Statements, and accompanying Notes thereto, contained in Part I - Item 1. Financial Statements of this report, and the Consolidated Financial Statements, and accompanying Notes thereto, contained in Part II - Item 8. Financial Statements and Supplementary Data of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The Company’s financial condition, results of operations, and cash flows for the three and nine months ended September 30, 2024, as compared to 2023, are not necessarily indicative of future results that may be attained for the entire year or other interim periods.

Results of Operations

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

			At or for the three months ended September 30,												At or for the nine months ended September 30,
(In thousands, except per share and ratio data)			2024						2023						2024						2023
Income and performance ratios:
Net income			$	192,985					$	226,475					$	590,941					$	682,447
Net income available to common stockholders			188,823						222,313						578,454						669,960
Earnings per diluted common share			1.10						1.28						3.36						3.85
Return on average assets (annualized)			1.01		%				1.23		%				1.04		%				1.23		%
Return on average tangible common stockholders’ equity (annualized) (non-GAAP)			14.29						17.51						14.92						17.76
Return on average common stockholders’ equity (annualized)			8.67						11.00						9.02						11.11
Non-interest income as a percentage of total revenue			8.92						13.34						10.33						12.42
Asset quality:
ACL on loans and leases			$	687,798					$	635,438					$	687,798					$	635,438
Non-performing assets (1)			427,274						218,402						427,274						218,402
ACL on loans and leases / total loans and leases			1.32		%				1.27		%				1.32		%				1.27		%
Net charge-offs / average loans and leases (annualized)			0.27						0.23						0.28						0.19
Non-performing loans and leases / total loans and leases (1)			0.82						0.43						0.82						0.43
Non-performing assets / total loans and leases plus OREO and repossessed assets (1)			0.82						0.44						0.82						0.44
ACL on loans and leases / non-performing loans and leases (1)			161.60						295.48						161.60						295.48
Other ratios:
Tangible common equity (non-GAAP)			7.48		%				7.22		%				7.48		%				7.22		%
Tier 1 Risk-Based Capital			11.77						11.64						11.77						11.64
Total Risk-Based Capital			14.06						13.79						14.06						13.79
CET1 Risk-Based Capital			11.25						11.12						11.25						11.12
Stockholders’ equity / total assets			11.58						11.21						11.58						11.21
Net interest margin			3.36						3.49						3.34						3.49
Efficiency ratio (non-GAAP)			45.49						41.75						45.65						41.87
Equity and share related:
Common stockholders’ equity			$	8,914,071					$	7,915,222					$	8,914,071					$	7,915,222
Book value per common share			52.00						46.00						52.00						46.00
Tangible book value per common share (non-GAAP)			33.26						29.48						33.26						29.48
Common stock closing price			46.61						40.31						46.61						40.31
Dividends and equivalents declared per common share			0.40						0.40						1.20						1.20
Common shares issued and outstanding			171,428						172,056						171,428						172,056
Weighted-average common shares outstanding - basic			169,569						171,210						169,898						172,233
Weighted-average common shares outstanding - diluted			169,894						171,350						170,226						172,326

(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.

1

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Non-GAAP Financial Measures

The non-GAAP financial measures identified in the preceding table provide both management and investors with information useful in understanding the Company’s financial position, results of operations, the strength of its capital position, and overall business performance. These non-GAAP financial measures are used by management for performance measurement purposes, as well as for internal planning and forecasting, and by securities analysts, investors, and other interested parties to assess peer company operating performance. Management believes that this presentation, together with the accompanying reconciliations, provides investors with a more complete understanding of the factors and trends affecting the Company’s business and allows investors to view its performance in a similar manner.

Tangible book value per common share represents stockholders’ equity less preferred stock and goodwill and other intangible assets (tangible common equity) divided by common shares outstanding at the end of the reporting period. The tangible common equity ratio represents tangible common equity divided by total assets less goodwill and other intangible assets (tangible assets). Both of these measures are used by management to evaluate the Company’s capital position. The annualized return on average tangible common stockholders’ equity is calculated using net income available to common stockholders, adjusted for the annualized tax-effected amortization of intangible assets, as a percentage of average tangible common equity. This measure is used by management to assess the Company’s performance against its peer financial institutions. The efficiency ratio, which represents the costs expended to generate a dollar of revenue, is calculated excluding certain non-operational items in order to measure how well the Company is managing its recurring operating expenses.

These non-GAAP financial measures should not be considered a substitute for GAAP basis financial measures. Because
non-GAAP financial measures are not standardized, it may not be possible to compare these with other companies that present financial measures having the same or similar names.

The following tables reconcile non-GAAP financial measures to the most comparable financial measures defined by GAAP:

			At September 30,
(Dollars and shares in thousands, except per share data)			2024						2023
Tangible book value per common share:
Stockholders’ equity			$	9,198,050					$	8,199,201
Less: Preferred stock			283,979						283,979
Common stockholders’ equity			$	8,914,071					$	7,915,222
Less: Goodwill and other intangible assets			3,212,050						2,843,217
Tangible common stockholders’ equity			$	5,702,021					$	5,072,005
Common shares outstanding			171,428						172,056
Tangible book value per common share			$	33.26					$	29.48
Book value per common share (GAAP)			$	52.00					$	46.00
Tangible common equity ratio:
Tangible common stockholders’ equity			$	5,702,021					$	5,072,005
Total assets			$	79,453,900					$	73,130,851
Less: Goodwill and other intangible assets			3,212,050						2,843,217
Tangible assets			$	76,241,850					$	70,287,634
Tangible common equity ratio			7.48		%				7.22		%
Common stockholders’ equity to total assets (GAAP)			11.22		%				10.82		%

2

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			Three months ended September 30,												Nine months ended September 30,
(Dollars in thousands)			2024						2023						2024						2023
Return on average tangible common stockholders’ equity:
Net income			$	192,985					$	226,475					$	590,941					$	682,447
Less: Preferred stock dividends			4,162						4,162						12,487						12,487
Add: Intangible assets amortization, tax-effected			6,708						7,030						20,857						21,795
Adjusted net income			$	195,531					$	229,343					$	599,311					$	691,755
Adjusted net income (annualized)			$	782,124					$	917,372					$	799,081					$	922,340
Average stockholders’ equity			$	8,995,134					$	8,370,469					$	8,830,225					$	8,327,715
Less: Average preferred stock			283,979						283,979						283,979						283,979
Average goodwill and other intangible assets			3,238,115						2,847,560						3,192,104						2,851,264
Average tangible common stockholders’ equity			$	5,473,040					$	5,238,930					$	5,354,142					$	5,192,472
Return on average tangible common stockholders’ equity (annualized)			14.29		%				17.51		%				14.92		%				17.76		%
Return on average common stockholders’ equity (annualized) (GAAP)			8.67		%				11.00		%				9.02		%				11.11		%
Efficiency ratio:
Non-interest expense			$	348,958					$	362,578					$	1,010,902					$	1,039,134
Less: Foreclosed property activity			(687)						(492)						(1,381)						(1,186)
Intangible assets amortization			8,491						8,899						26,401						27,589
Operating lease depreciation			197						1,146						1,420						4,669
FDIC special assessment			(1,544)						—						10,318						—
Merger-related expenses (1)			—						61,625						3,139						131,838
Strategic restructuring costs and other (2)			22,169						—						22,169						—
Adjusted non-interest expense			$	320,332					$	291,400					$	948,836					$	876,224
Net interest income			$	589,883					$	587,136					$	1,729,919					$	1,766,248
Add: FTE adjustment			13,659						17,906						43,853						51,109
Non-interest income			57,741						90,382						199,392						250,522
Other income (3)			7,448						3,614						22,876						12,960
Less: Operating lease depreciation			197						1,146						1,420						4,669
(Loss) on sale of investment securities, net			(19,597)						—						(79,338)						(16,795)
Net (loss) on sale of factored receivables portfolio			(15,977)						—						(15,977)						—
Net gain on sale of mortgage servicing rights			—						—						11,655						—
Adjusted income			$	704,108					$	697,892					$	2,078,280					$	2,092,965
Efficiency ratio			45.49		%				41.75		%				45.65		%				41.87		%
Non-interest expense as a percentage of total revenue (GAAP)			53.88		%				53.52		%				52.40		%				51.52		%

(1)Merger-related expenses include Ametros acquisition expenses for the nine months ended September 30, 2024, and primarily Sterling merger expenses for the three and nine months ended September 30, 2023. Additional information regarding the Company’s business developments, including the acquisition of Ametros in January 2024, can be found within Note 2: Business Developments in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements.

(2)Strategic restructuring costs and other primarily includes severance, technology contract termination costs, and the partial impairment of the payroll finance customer relationship intangible asset for the three and nine months ended September 30, 2024.

(3)Other income (non-GAAP) includes the taxable equivalent of net income generated from LIHTC investments.

Net Interest Income

Net interest income is the Company’s primary source of revenue, representing 91.1% and 89.7% of total revenues for the three and nine months ended September 30, 2024, respectively, and 86.7% and 87.6% of total revenues for the three and nine months ended September 30, 2023, respectively. Net interest income is the difference between interest income on interest-earning assets (i.e., loans and leases and investment securities) and interest expense on interest-bearing liabilities (i.e., deposits and borrowings), which are used to fund interest-earning assets and other activities. Net interest margin is calculated as the ratio of FTE net interest income to average interest-earning assets.

Net interest income, net interest margin, and average yields and rates 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%.

3

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Net interest income and net interest margin are influenced by the volume and mix of interest-earning assets and interest-bearing liabilities, changes in interest rate levels, re-pricing frequencies, contractual maturities, prepayment behavior, and the use of interest rate derivative financial instruments. These factors are affected by changes in economic conditions, which impacts monetary policies, competition for loans and deposits, as well as the extent of interest lost on non-performing assets.

Comparison to Prior Year Quarter

Net interest income increased $2.7 million, or 0.5%, from $587.1 million for the three months ended September 30, 2023, to $589.9 million for the three months ended September 30, 2024. On an FTE basis, net interest income decreased $1.5 million. Net interest margin decreased 13 basis points from 3.49% for the three months ended September 30, 2023, to 3.36% for the three months ended September 30, 2024.

Average total interest-earning assets increased $2.7 billion, or 4.0%, from $67.1 billion for the three months ended September 30, 2023, to $69.8 billion for the three months ended September 30, 2024, primarily due to increases of $2.2 billion in average total investment securities, $0.9 billion in average loans and leases, and $0.2 billion in average loans held for sale, partially offset by $0.6 billion in average interest-bearing deposits held at the FRB. The average yield on interest-earning assets increased 20 basis points from 5.49% for the three months ended September 30, 2023, to 5.69% for the three months ended September 30, 2024, primarily due to increased yields on investment securities.

Average total investment securities increased $2.2 billion, or 15.0%, from $14.7 billion for the three months ended September 30, 2023, to $16.9 billion for the three months ended September 30, 2024, primarily due to a higher volume of purchases, partially offset by paydown activities and sales of available-for-sale securities. At September 30, 2024, and 2023, the average total investment securities portfolio comprised 24.2% and 21.9% of total average interest-earning assets, respectively. The average yield on investment securities increased 101 basis points from 3.09% for the three months ended September 30, 2023, to 4.10% for the three months ended September 30, 2024, primarily due to the reinvestment of funds received from the maturities and sales of lower yielding securities for securities at higher yields.

Average loans and leases increased $0.9 billion, or 1.6%, from $50.9 billion for the three months ended September 30, 2023, to $51.8 billion for the three months ended September 30, 2024, primarily due to growth in commercial real estate and residential mortgages, partially offset by a decrease in warehouse loans and the transfer of the payroll finance and factored receivables loan portfolios to held for sale in March 2024. At September 30, 2024, and 2023, average loans and leases comprised 74.1% and 75.8% of total average interest-earning assets, respectively. The average yield on loans and leases increased 2 basis points from 6.20% for the three months ended September 30, 2023, to 6.22% for the three months ended September 30, 2024, primarily due to the higher interest rate environment, partially offset by lower purchase accounting accretion on loans acquired in the Sterling merger.

Average loans held for sale were $216.7 million for the three months ended September 30, 2024, and comprised 0.3% of total average interest-earning assets at September 30, 2024. The balance primarily reflects the higher yielding payroll finance and factored receivables loan portfolios, which were classified as held for sale in March 2024. Average loans held for sale were not significant for the three months ended September 30, 2023.

Average interest-bearing deposits decreased $0.6 billion, or 47.0%, from $1.2 billion for the three months ended September 30, 2023, to $0.6 billion for the three months ended September 30, 2024, primarily due to the Company’s risk management approach to hold higher levels of on-balance sheet liquidity in 2023. At September 30, 2024, and 2023, average interest-bearing deposits comprised 0.9% and 1.8% of total average interest-earning assets, respectively. The average yield on interest-bearing deposits decreased 11 basis points from 5.32% for the three months ended September 30, 2023, to 5.21% for the three months ended September 30, 2024, primarily due to the lower target range for the federal funds rate.

Average total interest-bearing liabilities increased $2.4 billion, or 3.8%, from $63.8 billion for the three months ended September 30, 2023, to $66.2 billion for the three months ended September 30, 2024, primarily due to an increase of $3.0 billion in average total deposits, partially offset by decreases of $0.4 billion in average FHLB advances and $0.2 billion in average long term debt. The average rate on interest-bearing liabilities increased 35 basis points from 2.14% for the three months ended September 30, 2023, to 2.49% for the three months ended September 30, 2024, primarily due to growth in higher cost deposit products.

4

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Average total deposits increased $3.0 billion, or 5.0%, from $59.6 billion for the three months ended September 30, 2023, to $62.6 billion for the three months ended September 30, 2024, reflecting a $4.1 billion increase in interest-bearing deposits, partially offset by a $1.1 billion decrease in non-interest-bearing deposits. The overall net increase in average total deposits was primarily due to the acquisition of Ametros, and growth in interLINK, interest-bearing checking, and HSA deposits, partially offset by a decrease in non-interest-bearing demand and treasury brokered certificates of deposit. At September 30, 2024, and 2023, average total deposits comprised 94.6% and 93.5% of total average interest-bearing liabilities, respectively. The average rate on deposits increased 40 basis points from 1.96% for the three months ended September 30, 2023, to 2.36% for the three months ended September 30, 2024, primarily due to growth in higher cost deposit products, particularly money markets accounts. Average higher cost time deposits as a percentage of average total interest-bearing deposits decreased from 15.2% for the three months ended September 30, 2023, to 13.7% for the three months ended September 30, 2024, primarily due to a decrease in treasury brokered certificates of deposit.

Average FHLB advances decreased $0.4 billion, or 13.9%, from $2.9 billion for the three months ended September 30, 2023, to $2.5 billion for the three months ended September 30, 2024, primarily due to the paydown of short-term advances. At September 30, 2024, and 2023, average FHLB advances comprised 3.8% and 4.6% of total average interest-bearing liabilities, respectively. The average rate on FHLB advances increased 9 basis points from 5.34% for the three months ended September 30, 2023, to 5.43% for the three months ended September 30, 2024, primarily due to the refinancing of maturities in a higher interest rate environment.

Average long-term debt decreased $0.2 billion, or 13.3%, from $1.1 billion for the three months ended September 30, 2023, to $0.9 billion for the three months ended September 30, 2024, primarily due the maturity of the 4.375% senior-fixed rate notes in February 2024. At September 30, 2024, and 2023, average long-term debt comprised 1.4% and 1.6% of total average interest-bearing liabilities, respectively. The average rate on long-term debt decreased 14 basis points from 3.70% for the three months ended September 30, 2023, to 3.56% for the three months ended September 30, 2024, also primarily due to the maturity of the 4.375% senior-fixed rate notes in February 2024.

Comparison to Prior Year to Date

Net interest income decreased $36.3 million, or 2.1%, from $1.8 billion for the nine months ended September 30, 2023, to $1.7 billion for the nine months ended September 30, 2024. On an FTE basis, net interest income decreased $43.6 million. Net interest margin decreased 15 basis points from 3.49% for the nine months ended September 30, 2023, to 3.34% for the nine months ended September 30, 2024.

Average total interest-earning assets increased $1.2 billion, or 1.7%, from $67.8 billion for the nine months ended September 30, 2023, to $68.9 billion for the nine months ended September 30, 2024, primarily due to increases of $1.8 billion in average total investment securities, $0.7 billion in average loans and leases, and $0.1 billion in average loans held for sale, partially offset by decreases of $1.3 billion in average interest-bearing deposits held at the FRB and $0.1 billion in average FHLB and FRB stock. The average yield on interest-earning assets increased 35 basis points from 5.30% for the nine months ended September 30, 2023, to 5.65% for the nine months ended September 30, 2024, primarily due to loan growth and increased yields on investment securities.

Average total investment securities increased $1.8 billion, or 12.3%, from $14.7 billion for the nine months ended September 30, 2023, to $16.5 billion for the nine months ended September 30, 2024, primarily due a higher volume of purchases, partially offset by paydown activities and sales of available-for-sale securities. At September 30, 2024, and 2023, the total average investment securities portfolio comprised 23.9% and 21.7% of total average interest-earning assets, respectively. The average yield on investment securities increased 92 basis points from 2.95% for the nine months ended September 30, 2023, to 3.87% for the nine months ended September 30, 2024, primarily due to the reinvestment of funds received from the maturities and sales of lower yielding securities for securities at higher yields.

Average loans and leases increased $0.7 billion, or 1.3%, from $50.7 billion for the nine months ended September 30, 2023, to $51.4 billion for the nine months ended September 30, 2024, primarily due to growth in commercial real estate and residential mortgages, partially offset by a decrease in warehouse loans and the transfer of the payroll finance and factored receivables loan portfolios to held for sale in March 2024. At September 30, 2024, and 2023, average loans and leases comprised 74.5% and 74.8% of average total interest-earning assets, respectively. The average yield on loans and leases increased 21 basis points from 6.02% for the nine months ended September 30, 2023, to 6.23% for the nine months ended September 30, 2024, primarily due to the higher interest rate environment, partially offset by lower purchase accounting accretion on loans acquired in the Sterling merger.

5

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Average loans held for sale increased $115.0 million, or 319.6%, from $36.0 million for the nine months ended September 30, 2023, to $151.0 million for the nine months ended September 30, 2024, primarily due to the payroll finance and factored receivables loan portfolios, which were classified as held for sale in March 2024. At September 30, 2024, and September 30, 2024, average loans held for sale comprised 0.2% and 0.1% of total average interest-earnings assets, respectively. The average yield on loans held for sale increased 810 basis points from 1.68% for the nine months ended September 30, 2023, to 9.78% for the nine months ended September 30, 2024, primarily due to higher yields on the payroll finance and factored receivables loan portfolios classified as held for sale.

Average interest-bearing deposits decreased $1.3 billion, or 69.9%, from $1.9 billion for the nine months ended September 30, 2023, to $0.6 billion for the nine months ended September 30, 2024, primarily due to the Company’s risk management approach to hold higher levels of on-balance sheet liquidity in 2023. At September 30, 2024, and 2023, average interest-bearing deposits comprised 0.8% and 2.8% of total average interest-earnings assets, respectively. The average yield on interest-bearing deposits held at the FRB increased 27 basis points from 5.04% for the nine months ended September 30, 2023, to 5.31% for the nine months ended September 30, 2024, primarily due to the higher interest rate environment.

Average FHLB and FRB stock decreased $102.2 million, or 23.1%, from $442.4 million for the nine months ended September 30, 2023, to $340.2 million for the nine months ended September 30, 2024, primarily due to a lower FHLB stock investment required as a result of the decrease in FHLB advances. At September 30, 2024, and 2023, average FHLB and FRB stock comprised 0.5% and 0.7% of total average interest-earning assets, respectively. The average yield on FHLB and FRB stock decreased 34 basis points from 5.80% for the nine months ended September 30, 2023, to 5.46% for the nine months ended September 30, 2024, also primarily due to the reduction in the required FHLB stock investment.

Average total interest-bearing liabilities increased $1.0 billion, or 1.6%, from $64.3 billion for the nine months ended September 30, 2023, to $65.3 billion for the nine months ended September 30, 2024, primarily due to an increase of $4.0 billion in average total deposits, partially offset by decreases of $2.5 billion in average FHLB advances $0.2 billion in average long-term debt, and $0.1 billion in average federal funds purchased. The average rate on interest-bearing liabilities increased 53 basis points from 1.93% for the nine months ended September 30, 2023, to 2.46% for the nine months ended September 30, 2024, primarily due to the higher interest rate environment.

Average total deposits increased $4.0 billion, or 6.9%, from $57.7 billion for the nine months ended September 30, 2023, to $61.6 billion for the nine months ended September 30, 2024, primarily reflecting a $5.4 billion increase in interest-bearing deposits, partially offset by a $1.4 billion decrease in non-interest-bearing deposits. The overall net increase in deposits was primarily due to the acquisition of Ametros, and growth in interLINK, interest-bearing checking, and time deposits, partially offset by lower savings and non-interest-bearing demand deposits. At September 30, 2024, and 2023, average total deposits comprised 94.4% and 89.7% of total average interest-bearing liabilities, respectively. The average rate on deposits increased 71 basis points from 1.61% for the nine months ended September 30, 2023, to 2.32% for the nine months ended September 30, 2024, primarily due to the higher interest rate environment and growth in higher cost deposit products, such as money markets accounts and certificates of deposit. Average higher cost time deposits as a percentage of average total interest-bearing deposits increased from 13.5% for the nine months ended September 30, 2023, to 14.6% for the nine months ended September 30, 2024, primarily due to a shift in customer preferences from non-interest-bearing demand to higher rate retail certificates of deposit.

Average FHLB advances decreased $2.5 billion, or 50.0%, from $5.1 billion for the nine months ended September 30, 2023, to $2.6 billion for the nine months ended September 30, 2024, primarily due to the paydown of short-term advances. At September 30, 2024, and 2023, average FHLB advances comprised 3.9% and 7.9% of total average interest-bearing liabilities, respectively. The average rate on FHLB advances increased 38 basis points from 5.09% for the nine months ended September 30, 2023, to 5.47% for the nine months ended September 30, 2024, primarily due to the refinancing of maturities in a higher interest rate environment.

Average long-term debt decreased $0.2 billion, or 11.9%, from $1.1 billion for the nine months ended September 30, 2023, to $0.9 billion for the nine months ended September 30, 2024, primarily due the maturity of the 4.375% senior-fixed rate notes in February 2024. At September 30, 2024, and 2023, average long-term debt comprised 1.4% and 1.7% of total average interest-bearing liabilities, respectively. The average rate on long-term debt decreased 10 basis points from 3.68% for the three months ended September 30, 2024, to 3.58% for the nine months ended September 30, 2024, also primarily due to the maturity of the 4.375% senior-fixed rate notes in February 2024.

Average federal funds purchased decreased $148.7 million, or 67.2%, from $221.3 million for the nine months ended September 30, 2023, to $72.5 million for the nine months ended September 30, 2024, primarily due to the paydown of overnight funding and change in short-term borrowings mix. At September 30, 2024, and 2023, average federal funds purchased comprised 0.1% and 0.3% of total average interest-bearing liabilities, respectively. The average rate on federal funds purchased increased 84 basis points from 4.62% for the nine months ended September 30, 2023, to 5.46% for the nine months ended September 30, 2024, primarily due to the higher interest rate environment.

6

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The following tables summarize daily average balances, interest, and average yield/rate by major category, and net interest margin on an FTE basis:

			Three months ended September 30,
			2024												2023
(Dollars in thousands)			Average Balance			Interest Income/Expense			Average Yield/Rate						Average Balance			Interest Income/Expense			Average Yield/Rate
Assets
Interest-earning assets:
Loans and leases (1)			$	51,752,193		$	820,209		6.22		%				$	50,912,188		$	804,930		6.20		%
Investment securities: (2)
Taxable			15,792,169			171,217			4.18						12,215,340			106,486			3.25
Non-taxable			1,094,295			8,139			2.97						2,471,458			13,511			2.19
Total investment securities			16,886,464			179,356			4.10						14,686,798			119,997			3.09
FHLB and FRB stock			340,330			4,383			5.12						355,495			7,619			8.50
Interest-bearing deposits (3)			629,180			8,374			5.21						1,187,096			16,132			5.32
Loans held for sale			216,735			5,400			9.97						6,756			17			1.03
Total interest-earning assets			69,824,902			$	1,017,722		5.69		%				67,148,333			$	948,695		5.49		%
Non-interest-earning assets			6,980,399												6,459,493
Total assets			$	76,805,301											$	73,607,826
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Demand deposits			$	10,243,045		$	—		—		%				$	11,335,734		$	—		—		%
Health savings accounts			8,546,941			3,257			0.15						8,235,632			3,126			0.15
Interest-bearing checking, money market and savings			36,599,576			286,280			3.11						32,673,899			214,891			2.61
Time deposits			7,190,093			81,538			4.51						7,342,757			75,938			4.10
Total deposits			62,579,655			371,075			2.36						59,588,022			293,955			1.96
Securities sold under agreements to repurchase			125,738			38			0.12						170,256			50			0.12
FHLB advances			2,535,497			35,172			5.43						2,945,136			40,196			5.34
Long-term debt (2)			911,834			7,895			3.56						1,051,380			9,452			3.70
Total interest-bearing liabilities			66,152,724			$	414,180		2.49		%				63,754,794			$	343,653		2.14		%
Non-interest-bearing liabilities			1,657,443												1,482,563
Total liabilities			67,810,167												65,237,357
Preferred stock			283,979												283,979
Common stockholders’ equity			8,711,155												8,086,490
Total stockholders’ equity			8,995,134												8,370,469
Total liabilities and stockholders’ equity			$	76,805,301											$	73,607,826
Net interest income (FTE)						$	603,542											$	605,042
Less: FTE adjustment						(13,659)												(17,906)
Net interest income						$	589,883											$	587,136
Net interest margin (FTE)									3.36		%										3.49		%

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

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

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

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			Nine months ended September 30,
			2024												2023
(Dollars in thousands)			Average Balance			Interest Income/Expense			Average Yield/Rate						Average Balance			Interest Income/Expense			Average Yield/Rate
Assets
Interest-earning assets:
Loans and leases (1)			$	51,376,513		$	2,430,382		6.23		%				$	50,733,691		$	2,313,030		6.02		%
Investment securities: (2)
Taxable			14,848,662			467,039			4.02						12,187,552			301,268			3.11
Non-taxable			1,656,742			30,892			2.48						2,512,744			40,730			2.16
Total investment securities			16,505,404			497,931			3.87						14,700,296			341,998			2.95
FHLB and FRB stock			340,222			13,901			5.46						442,429			19,204			5.80
Interest-bearing deposits (3)			563,217			22,763			5.31						1,872,657			71,536			5.04
Loans held for sale			150,985			11,075			9.78						35,982			454			1.68
Total interest-earning assets			68,936,341			$	2,976,052		5.65		%				67,785,055			$	2,746,222		5.30		%
Non-interest-earning assets			7,091,307												6,271,968
Total assets			$	76,027,648											$	74,057,023
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Demand deposits			$	10,327,076		$	—		—		%				$	11,775,500		$	—		—		%
Health savings accounts			8,560,303			9,654			0.15						8,259,408			9,243			0.15
Interest-bearing checking, money market and savings			35,227,682			799,939			3.03						31,442,258			516,646			2.20
Time deposits			7,508,481			258,716			4.60						6,192,415			169,736			3.66
Total deposits			61,623,542			1,068,309			2.32						57,669,581			695,625			1.61
Securities sold under agreements to repurchase			125,492			245			0.26						209,723			180			0.11
Federal funds purchased			72,537			3,015			5.46						221,266			7,760			4.62
FHLB advances			2,551,535			106,266			5.47						5,104,372			196,878			5.09
Long-term debt (2)			935,370			24,445			3.58						1,061,643			28,422			3.68
Total interest-bearing liabilities			65,308,476			$	1,202,280		2.46		%				64,266,585			$	928,865		1.93		%
Non-interest-bearing liabilities			1,888,947												1,462,723
Total liabilities			67,197,423												65,729,308
Preferred stock			283,979												283,979
Common stockholders’ equity			8,546,246												8,043,736
Total stockholders’ equity			8,830,225												8,327,715
Total liabilities and stockholders’ equity			$	76,027,648											$	74,057,023
Net interest income (FTE)						$	1,773,772											$	1,817,357
Less: FTE adjustment						(43,853)												(51,109)
Net interest income						$	1,729,919											$	1,766,248
Net interest margin (FTE)									3.34		%										3.49		%

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

(2)For the purposes of our average yield/rate and margin computations, unsettled trades on investment securities and unrealized gain (loss) balances on securities available-for-sale and senior fixed-rate note hedges are excluded.

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

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

			Three months ended September 30,												Nine months ended September 30,
			2024 vs. 2023 Increase (decrease) due to												2024 vs. 2023 Increase (decrease) due to
(In thousands)			Rate (1)			Volume			Total						Rate (1)			Volume			Total
Change in interest on interest-earning assets:
Loans and leases			$	9,533		$	5,746		$	15,279					$	110,820		$	6,532		$	117,352
Investment securities			42,638			16,721			59,359						115,994			39,939			155,933
FHLB and FRB stock			(2,911)			(325)			(3,236)						(867)			(4,436)			(5,303)
Interest bearing-deposits			(176)			(7,582)			(7,758)						1,248			(50,021)			(48,773)
Loans held for sale			5,396			(13)			5,383						11,021			(400)			10,621
Total interest income			$	54,480		$	14,547		$	69,027					$	238,216		$	(8,386)		$	229,830
Change in interest on interest-bearing liabilities:
Health savings accounts			$	13		$	118		$	131					$	74		$	337		$	411
Interest-bearing checking, money market, and savings			39,584			31,805			71,389						183,876			99,417			283,293
Time deposits			11,024			(5,424)			5,600						63,169			25,811			88,980
Securities sold under agreements to repurchase			1			(13)			(12)						137			(72)			65
Federal funds purchased			—			—			—						471			(5,216)			(4,745)
FHLB advances			567			(5,591)			(5,024)						7,852			(98,464)			(90,612)
Long-term debt			(266)			(1,291)			(1,557)						(493)			(3,484)			(3,977)
Total interest expense			$	50,923		$	19,604		$	70,527					$	255,086		$	18,329		$	273,415
Net change in net interest income			$	3,557		$	(5,057)		$	(1,500)					$	(16,870)		$	(26,715)		$	(43,585)

(1)The change attributable to mix, a combined impact of rate and volume, and other is included with the change due to rate.

Provision for Credit Losses

Comparison to Prior Year Quarter

The provision for credit losses increased $17.5 million, or 47.9%, from $36.5 million for the three months ended September 30, 2023, to $54.0 million for three months ended September 30, 2024, primarily due to the impact of the current macroeconomic environment on credit performance, risk rating migration, loan portfolio mix, and organic loan growth.

Comparison to Prior Year to Date

The provision for credit losses increased $43.8 million, or 38.1%, from $114.7 million for the nine months ended September 30, 2023, to $158.5 million for the nine months ended September 30, 2024. The balance for the nine months ended September 30, 2023, included a discrete merger-related charge of $6.8 million, which increased the provision for unfunded loan commitments. Excluding this charge, the provision for credit losses increased $37.0 million, primarily due to the impact of the current macroeconomic environment on credit performance, risk rating migration, loan portfolio mix, and organic loan growth.

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

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Non-Interest Income

			Three months ended September 30,												Nine months ended September 30,
(Dollars in thousands)			2024						2023						2024						2023
Deposit service fees			$	38,863					$	41,005					$	122,479					$	131,859
Loan and lease related fees			18,513						19,966						57,614						63,499
Wealth and investment services			8,367						7,254						24,847						21,232
Cash surrender value of life insurance policies			8,020						6,620						20,325						19,641
(Loss) on sale of investment securities, net			(19,597)						—						(79,338)						(16,795)
Other income			3,575						15,537						53,465						31,086
Total non-interest income			$	57,741					$	90,382					$	199,392					$	250,522

Comparison to Prior Year Quarter

Total non-interest income decreased $32.7 million, or 36.1%, from $90.4 million for the three months ended September 30, 2023, to $57.7 million for the three months ended September 30, 2024, primarily due to Net losses on sale of investment securities and a decrease in Other income.

For the three months ended September 30, 2024, net losses on sale of investment securities totaled $19.6 million, as the Company sold $304.3 million of available-for-sale Municipal bonds and notes, Agency MBS, and Agency CMBS for proceeds of $284.7 million. There were no sales of investment securities for the three months ended September 30, 2023. The amount included in non-interest income reflects the portion of the total loss that was not attributed to a decline in credit quality.

Other income decreased $11.9 million, or 77.0%, from $15.5 million for the three months ended September 30, 2023, to $3.6 million for the three months ended September 30, 2024, primarily due to the $16.0 million net loss on sale of the factored receivables portfolio and a decrease in treasury derivative income, partially offset by $6.9 million of incremental fee income related to the acquired Ametros business and a $4.4 million net gain on sale of multi-family loans (securitization).

Comparison to Prior Year to Date

Total non-interest income decreased $51.1 million, or 20.4%, from $250.5 million for the nine months ended September 30, 2023, to $199.4 million for the nine months ended September 30, 2024, primarily due to higher Net losses on sale of investment securities and decreases in Deposit service fees and Loan and lease related fees, partially offset by an increase in Other income.

Deposit service fees decreased $9.3 million, or 7.1%, from $131.8 million for the nine months ended September 30, 2023, to $122.5 million for the nine months ended September 30, 2024, primarily due to a decrease in overdraft and account service fees, partially offset by an increase in cash management fees.

Loan and lease related fees decreased $5.9 million, or 9.3%, from $63.5 million for the nine months ended September 30, 2023, to $57.6 million for the nine months ended September 30, 2024, primarily due to a decrease in loan servicing fees, partially offset by increased amendment fees and lower mortgage servicing rights amortization.

Net losses on sale of investment securities increased $62.5 million, or 372.4%, from $16.8 million for the nine months ended September 30, 2023, to $79.3 million for the nine months ended September 30, 2024. During the nine months ended September 30, 2024, the Company sold $1.6 billion of available-for-sale Municipal bonds and notes, Agency MBS, Agency CMBS, and Corporate debt securities for proceeds of $1.5 billion. During the nine months ended September 30, 2023, the Company sold $418.8 million of available-for-sale U.S. Treasury notes, Municipal bonds and notes, and Corporate debt securities for proceeds of $398.3 million. The amounts included in non-interest income reflect the portion of the losses that were not attributed to a decline in credit quality.

Other income increased $22.4 million, or 72.0%, from $31.1 million for the nine months ended September 30, 2023, to $53.5 million for the nine months ended September 30, 2024, primarily due to a $11.7 million net gain on sale of mortgage servicing rights, a $4.4 million net gain on sale of multi-family loans (securitization), $16.9 million of incremental fee income related to the acquired Ametros business, proceeds from bank-owned life insurance policies, and higher income generated from direct investments, partially offset by a $16.0 million net loss on sale of the factored receivables portfolio and a decrease in treasury derivative income.

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Non-Interest Expense

			Three months ended September 30,												Nine months ended September 30,
(Dollars in thousands)			2024						2023						2024						2023
Compensation and benefits			$	194,736					$	180,333					$	570,126					$	526,838
Occupancy			18,879						18,617						53,421						59,042
Technology and equipment			56,696						55,261						147,835						151,442
Intangible assets amortization			8,491						8,899						26,401						27,589
Marketing			4,224						4,810						12,612						13,446
Professional and outside services			16,001						26,874						43,048						88,693
Deposit insurance			13,555						13,310						52,843						39,356
Other expense			36,376						54,474						104,616						132,728
Total non-interest expense			$	348,958					$	362,578					$	1,010,902					$	1,039,134

Comparison to Prior Year Quarter

Total non-interest expense decreased $13.6 million, or 3.8%, from $362.6 million for the three months ended September 30, 2023, to $349.0 million for the three months ended September 30, 2024, primarily due to decreases in Professional and outside services and Other expense, partially offset by increases in Compensation and benefits and Technology and equipment.

Compensation and benefits increased $14.4 million, or 8.0%, from $180.3 million for the three months ended September 30, 2023, to $194.7 million for the three months ended September 30, 2024, primarily due to an increase in severance, the impact from the employees acquired in the Ametros acquisition, and higher compensation, performance-based incentives, and employee benefits.

Technology and equipment increased $1.4 million, or 2.6%, from $55.3 million for the three months ended September 30, 2023, to $56.7 million for the three months ended September 30, 2024, primarily due to an increase in technology contract termination costs, partially offset by higher technology and equipment costs in 2023 as a result of the core conversion of the legacy Webster and legacy Sterling platforms.

Professional and outside services decreased $10.9 million, or 40.5%, from $26.9 million for the three months ended September 30, 2023, to $16.0 million for the three months ended September 30, 2024, primarily due to a decrease in technology consulting fees, which were higher in 2023 as a result of the core conversion of the legacy Webster and legacy Sterling platforms.

Other expense decreased $18.1 million, or 33.2%, from $54.5 million for the three months ended September 30, 2023, to $36.4 million for the three months ended September 30, 2024, primarily due to a decrease in contract termination costs and check card expenses, partially offset by a $1.9 million impairment loss on the payroll finance customer relationship intangible asset.

Comparison to Prior Year to Date

Total non-interest expense remained relatively flat at approximately $1.0 billion for both the nine months ended September 30, 2024, and 2023. 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.

Compensation and benefits increased $43.3 million, or 8.2%, from $526.8 million for the nine months ended September 30, 2023, to $570.1 million for the nine months ended September 30, 2024, primarily due to an increase in severance, the impact from the employees acquired in the Ametros acquisition, and higher compensation, performance-based incentives, and employee benefits.

Occupancy decreased $5.6 million, or 9.5%, from $59.0 million for the nine months ended September 30, 2023, to $53.4 million for the nine months ended September 30, 2024, primarily due to a $3.4 million net gain recognized on an early lease termination.

Technology and equipment decreased $3.6 million, or 2.4%, from $151.4 million for the nine months ended September 30, 2023, to $147.8 million for the nine months ended September 30, 2024, primarily due to higher overall technology and equipment costs in 2023 as a result of the core conversion of the legacy Webster and legacy Sterling platforms, partially offset an increase in technology contract termination costs.

Professional and outside services decreased $45.7 million, or 51.5%, from $88.7 million for the nine months ended September 30, 2023, to $43.0 million for the nine months ended September 30, 2024, primarily due to a decrease in technology consulting fees, which were higher in 2023 as a result of the core conversion of the legacy Webster and legacy Sterling platforms.

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Deposit insurance increased $13.4 million, or 34.3%, from $39.4 million for the nine months ended September 30, 2023, to $52.8 million for the nine months ended September 30, 2024, primarily due to a net increase in the FDIC special assessment estimate.

Other expense decreased $28.1 million, or 21.2%, from $132.7 million for the nine months ended September 30, 2023, to $104.6 million for the nine months ended September 30, 2024, primarily due to a decrease in contract termination costs, pension, and other miscellaneous expenses, partially offset by a $1.9 million impairment loss on the payroll finance customer relationship intangible asset.

Income Taxes

Comparison to Prior Year Quarter

The Company recognized income tax expense of $51.7 million and $52.0 million for the three months ended September 30, 2024, and 2023, respectively, reflecting effective tax rates of 21.1% and 18.7%, respectively.

The decrease in income tax expense is primarily due to a lower level of pre-tax income recognized for the three months ended September 30, 2024. The increase in the effective tax rate primarily reflects the recognition of $4.1 million of net discrete tax expense in the three months ended September 30, 2024, which included $1.2 million attributable to 2023 tax return true-up adjustments and $2.9 million attributable to uncertain tax positions, as compared to $3.8 million of net discrete tax benefits associated with comparable items in the three months ended September 30, 2023, which included $4.1 million attributable to 2022 tax return true-up adjustments.

Comparison to Prior Year to Date

The Company recognized income tax expense of $169.0 million and $180.4 million for the nine months ended September 30, 2024, and 2023, respectively, reflecting effective tax rates of 22.2% and 20.9%, respectively.

The decrease in income tax expense is primarily due to a lower level of pre-tax income recognized for the nine months ended September 30, 2024. The increase in the effective tax rate primarily reflects the recognition of $13.2 million of net discrete tax expense in the nine months ended September 30, 2024, which included the $4.1 million mentioned above and $9.4 million in the three months ended March 31, 2024, as compared to $1.2 million of net discrete tax benefits associated with comparable items in the nine months ended September 30, 2023.

Additional information regarding the Company’s income taxes, including its DTAs, can be found within Note 9: Income Taxes in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

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Segment Reporting

The Company has three reportable segments, which reflect its primary differentiated lines of business: Commercial Banking, Healthcare Financial Services, and Consumer Banking. Segment performance is evaluated using PPNR, or PTNR, as appropriate. Certain Treasury activities and other functional divisions, such as information technology, human resources, risk management, bank operations, and the operations of interLINK, as well as amounts required to reconcile non-GAAP profitability metrics to those reported in accordance with GAAP, are included in the Corporate and Reconciling category.

Effective January 1, 2024, the Company realigned certain of its Business Banking operations to better serve its customers and deliver operational efficiencies. Under this realignment, $1.5 billion of loans and $2.2 billion of deposits were reassigned from Commercial Banking to Consumer Banking. Prior period amounts have been recast accordingly.

In addition, with the acquisition of Ametros on January 24, 2024, the Company formed a new reportable segment called Healthcare Financial Services, which includes the aggregated financial information of the HSA Bank and Ametros businesses.

The following is a description of the Company’s three reportable segments and their primary services at September 30, 2024:

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

Healthcare Financial Services offers consumer-directed healthcare solutions that includes HSAs, health reimbursement arrangements, the administration of medical insurance claim settlements, flexible spending accounts, and commuter benefits. Accounts are distributed nationwide directly to employers and individual consumers, as well as through national and regional insurance carriers, benefit consultants, and financial advisors.

Consumer Banking offers consumer deposit and fee-based services, residential mortgages, home equity lines, secured and unsecured loans, debit and credit card products, and investment services to individual consumers and small businesses through its Consumer Lending and Business Banking business units. Consumer Banking operates a distribution network consisting of 196 banking centers and 347 ATMs, a customer care center, and a full range of web and mobile-based banking services, primarily throughout southern New England and the New York metro and suburban markets.

Additional information regarding the Company’s reportable segments and its segment reporting methodology can be found within Note 14: Segment Reporting in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements of this report, and within Note 21: Segment Reporting in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

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Commercial Banking

Operating Results:

			Three months ended September 30,												Nine months ended September 30,
(In thousands)			2024						2023						2024						2023
Net interest income			$	338,424					$	365,003					$	1,017,954					$	1,084,674
Non-interest income			33,288						28,804						102,078						92,554
Non-interest expense			100,892						98,736						311,705						297,643
Pre-tax, pre-provision net revenue			$	270,820					$	295,071					$	808,327					$	879,585

Comparison to Prior Year Quarter

Commercial Banking’s PPNR decreased $24.3 million, or 8.2%, for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, due to a decrease in net interest income and an increase in non-interest expense, partially offset by an increase in non-interest income. The $26.6 million decrease in net interest income is primarily due to higher loan funding costs and higher deposit rates. The $4.5 million increase in non-interest income is primarily due to a $4.4 million net gain on sale of multi-family loans (securitization). The $2.2 million increase in non-interest expense is primarily due to higher compensation and benefits, operational support, and technology costs in order to support balance sheet growth.

Comparison to Prior Year to Date

Commercial Banking’s PPNR decreased $71.3 million, or 8.1%, for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, due to a decrease in net interest income and an increase in non-interest expense, partially offset by an increase in non-interest income. The $66.7 million decrease in net interest income is primarily due to lower average deposit balances, partially offset by higher loan yields. The $9.5 million increase in non-interest income is primarily due to a $4.4 million net gain on sale of multi-family loans (securitization) and higher cash management fees, partially offset by lower loan servicing fees. The $14.1 million increase in non-interest expense is primarily due to higher compensation and benefits, operational support, and technology costs in order to support commercial balance sheet growth.

Selected Balance Sheet and Off-Balance Sheet Information:

(In thousands)			At September 30, 2024						At December 31, 2023
Loans and leases			$	40,372,464					$	39,480,945
Deposits			17,123,868						16,053,850
Assets under administration / management (off-balance sheet)			2,968,023						2,911,293

Loans and leases increased $891.5 million, or 2.3%, at September 30, 2024, as compared to December 31, 2023, primarily due to organic growth in the Sponsor and Specialty Finance, Commercial Real Estate, Public Sector Finance, and Middle Market business units, partially offset by net principal paydowns in Asset-Based Lending and Equipment Finance business units. Total portfolio originations for the nine months ended September 30, 2024, and 2023, were $6.9 billion and $6.1 billion, respectively. The $0.8 billion increase was primarily due to higher originations across all lending business units except for Commercial Services, Private Banking, and Equipment Finance, which decreased in comparison to prior year to date.

Deposits increased $1.1 billion, or 6.7%, at September 30, 2024, as compared to December 31, 2023, primarily due to higher account balances in non-interest-bearing demand, money market, and savings resulting from seasonal net inflows.

Assets under administration and assets under management, in aggregate, increased $56.7 million, or 1.9%, at September 30, 2024, as compared to December 31, 2023, primarily due to an increase in investment account balances as a result of higher valuations in the equity markets.

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Healthcare Financial Services

Operating Results:

			Three months ended September 30,												Nine months ended September 30,
(In thousands)			2024						2023						2024						2023
Net interest income			$	93,940					$	77,669					$	271,742					$	224,820
Non-interest income			26,541						20,799						85,067						67,889
Non-interest expense			54,023						39,870						157,417						126,213
Pre-tax net revenue			$	66,458					$	58,598					$	199,392					$	166,496

Comparison to Prior Year Quarter

Healthcare Financial Services’ PTNR increased $7.9 million, or 13.4%, for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, due to increases in net interest income and non-interest income, partially offset by an increase in non-interest expense. The $16.3 million increase in net interest income is primarily due to the acquisition of Ametros, an increase in HSA net deposit spread, and HSA deposit growth. The $5.7 million increase in non-interest income is primarily due to incremental fee income related to the acquired Ametros business and higher interchange revenue, partially offset by lower customer account and other fees. The $14.1 million increase in non-interest expense is primarily due to incremental expenses related to the acquired Ametros business, higher service contract expenses related to account growth, and technology support costs.

Comparison to Prior Year to Date

Healthcare Financial Services’ PTNR increased $32.9 million, or 19.8%, for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, due to increases in net interest income and non-interest income, partially offset by an increase in non-interest expense. The $46.9 million increase in net interest income is primarily due to the acquisition of Ametros, an increase in HSA net deposit spread, and HSA deposit growth. The $17.2 million increase in non-interest income is primarily due to incremental fee income related to the acquired Ametros business, and higher interchange fees, partially offset by lower customer account and other fees. The $31.2 million increase in non-interest expense is primarily due to incremental expenses related to the acquired Ametros business, higher employee compensation, and higher service contract expenses related to account growth, partially offset by lower occupancy expenses.

Selected Balance Sheet and Off-Balance Sheet Information:

(In thousands)			At September 30, 2024						At December 31, 2023
Deposits			$	9,940,252					$	8,287,705
Assets under administration, through linked investment accounts (off-balance sheet)			5,205,485						4,641,830

Deposits increased $1.7 billion, or 19.9%, at September 30, 2024, as compared to December 31, 2023, primarily due to the acquisition of Ametros, additional HSA account holders, HSA deposit growth, and a discrete transfer of cash associated with accounts that were previously held by former investment partners.

Assets under administration, through linked investment accounts, increased $0.6 billion, or 12.1%, at September 30, 2024, as compared to December 31, 2023, primarily due additional HSA account holders and an increase in investment account balances as a result of higher valuations in the equity markets.

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Consumer Banking

Operating Results:

			Three months ended September 30,												Nine months ended September 30,
(In thousands)			2024						2023						2024						2023
Net interest income			$	202,122					$	221,698					$	610,578					$	684,985
Non-interest income			28,299						28,687						86,669						87,425
Non-interest expense			116,253						117,273						352,279						353,216
Pre-tax, pre-provision net revenue			$	114,168					$	133,112					$	344,968					$	419,194

Comparison to Prior Year Quarter

Consumer Banking’s PPNR decreased $19.0 million, or 14.2%, for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, due to decreases in net interest income and non-interest income, partially offset by a decrease in non-interest expense. The $19.6 million decrease in net interest income is primarily due to higher deposit rates, partially offset by loan and deposit growth. The $0.4 million decrease in non-interest income is primarily due to lower deposit service fees and loan related fees, partially offset by increases in ATM fees and investment services income. The $1.0 million decrease in non-interest expense is primarily due to lower compensation and benefits and lower processing costs, partially offset by higher technology costs.

Comparison to Prior Year to Date

Consumer Banking’s PPNR decreased $74.3 million, or 17.7%, for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, due to decreases in net interest income and non-interest income, partially offset by a decrease in non-interest expense. The $74.4 million decrease in net interest income is primarily due to higher deposit rates, partially offset by deposit growth and higher average loan balances. The $0.8 million decrease in non-interest income is primarily due to lower deposit service fees and loan servicing fees, partially offset by a $11.7 million net gain on sale of mortgage servicing rights and an increase in investment services income. The $0.9 million decrease in non-interest expense is primarily due to lower processing costs, partially offset by higher compensation and benefits and operational support costs.

Selected Balance Sheet and Off-Balance Sheet Information:,

(In thousands)			At September 30, 2024						At December 31, 2023
Loans			$	11,571,389					$	11,234,743
Deposits			27,019,826						26,251,722
Assets under administration (off-balance sheet)			7,947,518						7,876,437

Loans increased $336.6 million, or 3.0%, at September 30, 2024, as compared to December 31, 2023, primarily due to organic growth in residential mortgages, small business commercial non-real estate loans, and other consumer loans, partially offset by net principal paydowns in home equities and small business commercial real estate loans. Total portfolio originations for the nine months ended September 30, 2024, and 2023, were $1.3 billion and $1.2 billion, respectively.

Deposits increased $768.1 million, or 2.9%, at September 30, 2024, as compared to December 31, 2023, primarily due to higher balances in interest-bearing deposit products, particularly money market, savings, and certificates of deposit, which was driven by higher interest rates, partially offset by lower balances in non-interest-bearing demand accounts.

Assets under administration increased $71.1 million, or 0.9%, at September 30, 2024, as compared to December 31, 2023, primarily due to an increase in investment account balances as a result of higher valuations in the equity markets.

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Financial Condition

Total assets increased $4.5 billion, or 6.0%, from $74.9 billion at December 31, 2023, to $79.5 billion at September 30, 2024. The change in total assets was primarily attributed to the following items, which experienced changes greater than $100 million:

•Cash and cash equivalents increased $1.5 billion, primarily due to timing and seasonal net inflows of deposits;

•Total investment securities increased $1.1 billion, reflecting a $1.5 billion increase in the held-to-maturity portfolio, partially offset by a decrease of $0.4 billion in the available-for-sale portfolio. The net increase in total investment securities was primarily due to purchases exceeding paydown activities, particularly across the Agency MBS and Agency CMBS categories, partially offset by $1.6 billion in sales of Municipal bonds and notes, Agency MBS, Agency CMBS and Corporate debt;

•Loans held for sale increased $111.1 million. The $117.6 million balance at September 30, 2024, primarily comprises the Company’s payroll finance portfolio, which, along with the factored receivables portfolio, was classified as held for sale in March 2024 upon to Company’s initiation of a plan to actively market and sell the portfolios. The factored receivables portfolio was sold during the third quarter of 2024;

•Loans and leases increased $1.2 billion, primarily due to $8.3 billion of originations during the nine months ended September 30, 2024, particularly across the commercial non-mortgage and commercial real estate categories, partially offset by net principal paydowns, commercial loan sales, including the sale of the factored receivables portfolio and sale of multi-family loans (securitization), and the classification of the payroll finance portfolio as held for sale;

•Goodwill and other net intangible assets increased a combined $377.5 million, primarily due to the acquisition of Ametros on January 24, 2024, which resulted in the recognition of $228.2 million in goodwill, a $182.8 million core deposit intangible asset, and a $6.1 million trade name. Offsetting this increase was the $19.7 million customer relationship intangible asset write-off associated with the factored receivables portfolio sale and a $1.9 million impairment loss on the payroll finance customer relationship intangible asset; and

•Accrued interest receivable and other assets increased $323.8 million. Notable drivers of the change included increases in LIHTC investments, treasury derivative assets, other alternative investments, and miscellaneous receivables.

Total liabilities increased $4.0 billion, or 6.0%, from $66.3 billion at December 31, 2023, to $70.3 billion at September 30, 2024. The change in total liabilities was primarily attributed to the following items:

•Total deposits increased $3.7 billion, primarily reflecting an increase in interest-bearing deposits, as non-interest-bearing deposits remained relatively flat. The net increase in interest-bearing deposits was primarily due to an increase in interLINK money market sweep deposits, higher savings and checking account balances, which were due, in part, to seasonal net inflows, HSA deposit growth, and the addition of Ametros, partially offset by a decrease in brokered certificates of deposit;

•Securities sold under agreements to repurchase and other borrowings decreased $358.2 million, primarily due to the maturity of a $216.3 million non-callable, fixed repurchase agreement in January 2024, and a change in short-term funding mix. There were no federal funds purchased at September 30, 2024;

•FHLB advances increased $750.2 million, primarily due to a change in short-term funding mix;

•Long-term debt decreased $137.9 million, primarily due to the maturity of its 4.375% senior fixed-rate notes on
February 15, 2024; and

•Accrued expenses and other liabilities increased $16.3 million. Notable drivers of the change included an increase in unfunded commitments for LIHTC investments, partially offset by decreases in treasury derivative liabilities, accrued interest payable, and operating lease liabilities.

Total stockholders’ equity increased $0.5 billion, or 5.8%, from $8.7 billion at December 31, 2023, to $9.2 billion at September 30, 2024. The change in total stockholders’ equity was attributed to the following items:

•Net income of $590.9 million;

•Other comprehensive income, net of tax, of $177.3 million;

•Dividends paid to common and preferred stockholders of $206.6 million and $12.5 million, respectively;

•Stock-based compensation expense of $41.6 million; and

•Repurchases of common stock of $65.8 million under the Company’s common stock repurchase program and $16.9 million related to employee stock-based compensation plans.

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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 Company’s investment securities are classified into two major categories: available-for-sale and
held-to-maturity.

The ALCO manages the Company’s investment securities in accordance with regulatory guidelines and corporate policies, which include limitations on aspects such as concentrations in and types of investments, as well as minimum risk ratings per type of security. In addition, the OCC may further establish individual limits on certain types of investments if the concentration in any such security presents a safety and soundness concern. At September 30, 2024, and December 31, 2023, the Company had total investment securities of $17.2 billion and $16.0 billion, respectively, with an average risk weighting for regulatory purposes of 14.5% and 17.2%, respectively. The Bank held the entirety of the Company’s investment securities portfolio at both September 30, 2024, and December 31, 2023. However, the Holding Company may also directly hold investment securities.

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

			At September 30, 2024									At December 31, 2023
(In thousands)			Amount			%						Amount			%
Available-for-sale:
Government agency debentures			$	274,825		3.2		%				$	264,633		3.0		%
Municipal bonds and notes			190,982			2.2						1,573,233			17.6
Agency CMO			43,019			0.5						48,941			0.5
Agency MBS			3,972,180			46.2						3,347,098			37.4
Agency CMBS			2,736,835			31.9						2,288,071			25.5
CMBS			696,810			8.1						763,749			8.5
Corporate debt			629,116			7.3						622,155			6.9
Private label MBS			41,834			0.5						42,808			0.5
Other			9,377			0.1						9,041			0.1
Total available-for-sale			$	8,594,978		100.0		%				$	8,959,729		100.0		%
Held-to-maturity:
Agency CMO			$	20,753		0.2		%				$	23,470		0.3		%
Agency MBS			3,207,275			37.4						2,409,521			34.1
Agency CMBS			4,365,634			51.0						3,625,627			51.2
Municipal bonds and notes (1)			903,105			10.6						916,104			13.0
CMBS			69,340			0.8						100,075			1.4
Total held-to-maturity			$	8,566,107		100.0		%				$	7,074,797		100.0		%
Total investment securities			$	17,161,085								$	16,034,526

(1)The balances at both September 30, 2024, and December 31, 2023, exclude the $0.2 million ACL recorded on held-to-maturity securities.

Available-for-sale securities decreased $0.4 billion, or 4.1%, from $9.0 billion at December 31, 2023, to $8.6 billion at
September 30, 2024, primarily due to the sale of $1.6 billion in Municipal bonds and notes, Agency MBS, Agency CMBS, and Corporate debt securities, which resulted in $81.9 million of net realized losses, $2.6 million of which were attributed to a decline in credit quality, and therefore, have been included in the Provision for credit losses. This decrease was partially offset by purchases exceeding paydown activities, particularly across the Agency MBS and Agency CMBS categories. The average FTE yield on the available-for-sale portfolio was 4.30% and 4.04% for the three and nine months ended September 30, 2024, respectively, as compared to 3.14% and 2.96% for the three and nine months ended September 30, 2023, respectively. The 116 and 108 basis point increases, respectively, are primarily due to higher interest rates on recent securities purchases, as compared to interest rates on securities with paydown activities or that were sold.

At September 30, 2024, and December 31, 2023, gross unrealized losses on available-for-sale securities were $0.6 billion and $0.8 billion, respectively. The $0.2 billion decrease was primarily due to lower interest rates, as well as net realized losses from sales of available-for-sale securities. Available-for-sale securities are evaluated for credit losses on a quarterly basis. At both September 30, 2024, and December 31, 2023, no ACL was recorded on available-for-sale securities as each of the securities in the Company’s portfolio are investment grade and current as to principal and interest, and their price changes are consistent with interest and credit spreads when adjusting for convexity, rating, and industry differences. As of September 30, 2024, based on current market conditions and the Company’s targeted balance sheet composition strategy, the Company intends to hold its available-for-sale securities in unrealized loss positions through the anticipated recovery period.

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Held-to-maturity securities increased $1.5 billion, or 21.1%, from $7.1 billion at December 31, 2023, to $8.6 billion at
September 30, 2024, primarily due to purchases exceeding paydown activities, particularly across the Agency MBS and Agency CMBS categories. The average FTE yield on the held-to-maturity portfolio was 3.90% and 3.68% for the three and nine months ended September 30, 2024, respectively, as compared to 3.01% and 2.94% for the three and nine months ended September 30, 2023, respectively. The 89 and 74 basis point increases, respectively, are primarily due to higher interest rates on recent securities purchases, as compared to interest rates on securities with paydown activities.

At September 30, 2024, and December 31, 2023, gross unrealized losses on held-to-maturity securities were $0.7 billion and $0.8 billion, respectively. The $0.1 billion decrease is primarily due to lower interest rates. Held-to-maturity securities are evaluated for credit losses on a quarterly basis under the CECL methodology. At both September 30, 2024, and December 31, 2023, the ACL on held-to-maturity securities was $0.2 million.

The following table summarizes the book value of investment securities by the earlier of either contractual maturity or call date, as applicable, along with the respective weighted-average yields:

			At September 30, 2024
			1 Year or Less						1 - 5 Years						5 - 10 Years						After 10 Years						Total
(Dollars in thousands)			Amount			Weighted- Average Yield (1)			Amount			Weighted- Average Yield (1)			Amount			Weighted- Average Yield (1)			Amount			Weighted- Average Yield (1)			Amount			Weighted- Average Yield (1)
Available-for-sale:
Government agency debentures			$	14,904		3.43		%	$	62,433		2.16		%	$	17,048		2.26		%	$	180,440		3.30		%	$	274,825		2.98		%
Municipal bonds and notes			7,317			2.63			1,868			4.12			90,822			2.04			90,975			2.35			190,982			2.23
Agency CMO			—			—			132			2.98			7,203			2.82			35,684			2.90			43,019			2.89
Agency MBS			—			—			4,623			1.25			13,455			2.27			3,954,102			4.27			3,972,180			4.26
Agency CMBS			—			—			—			—			28,047			2.28			2,708,788			4.92			2,736,835			4.89
CMBS			—			—			64,979			6.95			—			—			631,831			6.68			696,810			6.71
Corporate debt			4,969			2.28			211,918			2.94			363,577			3.29			48,652			3.61			629,116			3.19
Private label MBS			—			—			—			—			—			—			41,834			4.01			41,834			4.01
Other			—			—			4,982			3.80			4,395			2.70			—			—			9,377			3.28
Total available-for-sale			$	27,190		3.00		%	$	350,935		3.54		%	$	524,547		2.95		%	$	7,692,306		4.65		%	$	8,594,978		4.49		%
Held-to-maturity:
Agency CMO			$	—		—		%	$	—		—		%	$	—		—		%	$	20,753		2.91		%	$	20,753		2.91		%
Agency MBS			22			2.98			277			2.05			24,327			2.63			3,182,649			3.45			3,207,275			3.45
Agency CMBS			—			—			104,914			2.70			9,795			2.32			4,250,925			4.21			4,365,634			4.17
Municipal bonds and notes			39,396			2.86			45,980			2.71			225,520			2.84			592,209			3.27			903,105			3.11
CMBS			—			—			—			—			—			—			69,340			2.45			69,340			2.45
Total held-to-maturity			$	39,418		2.86		%	$	151,171		2.71		%	$	259,642		2.80		%	$	8,115,876		3.82		%	$	8,566,107		3.77		%
Total investment securities			$	66,608		2.92		%	$	502,106		3.29		%	$	784,189		2.90		%	$	15,808,182		4.22		%	$	17,161,085		4.13		%

(1)Weighted-average yields exclude FTE adjustments, and are calculated using the sum of the total book value multiplied by the yield divided by the sum of the total book value for each security, major type, and maturity bucket.

Additional information regarding the Company’s investment securities’ portfolios can be found within Note 3: Investment Securities in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements.

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Loans and Leases

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

			At September 30, 2024									At December 31, 2023
(Dollars in thousands)			Amount			%						Amount			%
Commercial non-mortgage			$	17,410,062		33.5		%				$	16,885,475		33.3		%
Asset-based			1,463,903			2.8						1,557,841			3.1
Commercial real estate			14,624,223			28.2						13,569,762			26.7
Multi-family			7,067,154			13.6						7,587,970			15.0
Equipment financing			1,247,027			2.4						1,328,786			2.6
Residential			8,576,612			16.5						8,227,923			16.2
Home equity			1,443,833			2.8						1,516,955			3.0
Other consumer			114,201			0.2						51,340			0.1
Total loans and leases (1)			$	51,947,015		100.0		%				$	50,726,052		100.0		%

(1)The amortized cost balances at September 30, 2024, and December 31, 2023, exclude the ACL recorded on loans and leases of $687.8 million and $635.7 million, respectively.

The following table summarizes loans and leases by contractual maturity, along with the indication of whether interest rates are fixed or variable:

			At September 30, 2024
(In thousands)			1 Year or Less			1 - 5 Years			5 - 15 Years			After 15 Years			Total
Fixed rate:
Commercial non-mortgage			$	138,609		$	940,983		$	2,472,126		$	1,452,683		$	5,004,401
Asset-based			45,627			509,604			—			—			555,231
Commercial real estate			615,036			2,059,748			941,340			114,702			3,730,826
Multi-family			401,873			3,591,600			878,270			73,879			4,945,622
Equipment financing			111,290			872,048			263,689			—			1,247,027
Residential			1,592			42,096			356,040			5,155,511			5,555,239
Home equity			2,665			21,904			168,773			213,540			406,882
Other consumer			11,905			69,673			8,179			75			89,832
Total fixed rate loans and leases			$	1,328,597		$	8,107,656		$	5,088,417		$	7,010,390		$	21,535,060
Variable rate:
Commercial non-mortgage			$	4,169,016		$	7,447,733		$	720,548		$	68,364		$	12,405,661
Asset-based			405,516			503,156			—			—			908,672
Commercial real estate			2,873,793			5,064,332			2,290,625			664,647			10,893,397
Multi-family			269,827			1,021,625			822,173			7,907			2,121,532
Residential			809			9,194			273,360			2,738,010			3,021,373
Home equity			1,025			5,757			106,282			923,887			1,036,951
Other consumer			6,529			16,140			1,700			—			24,369
Total variable rate loans and leases (1)			$	7,726,515		$	14,067,937		$	4,214,688		$	4,402,815		$	30,411,955
Total loans and leases (2)			$	9,055,112		$	22,175,593		$	9,303,105		$	11,413,205		$	51,947,015

(1)The Company has a customer back-to-back program, whereby it enters into interest rate derivatives with qualified customers and simultaneously enters into equal and opposite interest rate derivatives with dealer counterparties, to hedge interest rate risk. At September 30, 2024, there were 890 customer interest rate swaps arrangements with a total notional amount of $7.2 billion converting variable rate loan payments into fixed rate loan payments, and 42 customer interest rate cap arrangements with a total notional amount of $1.4 billion limiting how high interest rates can rise on variable rate loans and leases in a rising interest rate environment.

(2)Amounts due exclude total accrued interest receivable of $279.2 million.

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Portfolio Concentrations

The Company actively monitors and manages concentrations of credit risk pertaining to specific industries and geographies that may exist in its loan and lease portfolio.

At September 30, 2024, and December 31, 2023, commercial non-mortgage, commercial real estate, and multi-family loans comprised 75.3% and 75.0%, respectively, of the Company’s loan and lease portfolio, with a large portion of the borrowers or properties associated with these loans geographically concentrated in New York City and the proximate areas.

The following table summarizes commercial non-mortgage loans by industry, as determined using standardized industry classification codes, which are used by the Company to categorize loans based on the borrower’s type of business:

						At September 30, 2024									At December 31, 2023
(In thousands)						Amount			%						Amount			%
Finance						$	4,269,135		24.5		%				$	4,109,280		24.4		%
Services						2,744,013			15.8						2,928,621			17.3
Communications						1,390,254			8.0						1,166,668			6.9
Manufacturing						1,079,136			6.2						1,163,798			6.9
Healthcare						947,757			5.4						848,867			5.0
Retail & Wholesale						855,166			4.9						874,547			5.2
Real Estate						801,700			4.6						815,769			4.8
Transportation & Public Utilities						544,562			3.1						547,967			3.3
Construction						413,108			2.4						477,303			2.8
Other						4,365,231			25.1						3,952,655			23.4
Total Commercial non-mortgage						$	17,410,062		100.0		%				$	16,885,475		100.0		%

As illustrated above, the Company’s commercial non-mortgage portfolio is well diversified across industries, and concentrations are generally consistent from period to period. Any change in composition is consistent with the Company’s portfolio growth strategy.

The following tables summarize commercial real estate and multi-family loans by both geography and property type:

(In thousands)						At September 30, 2024									At December 31, 2023
Geography:						Amount			%						Amount			%
New York City						$	7,675,832		35.4		%				$	7,482,324		35.4		%
Other New York Counties						3,098,439			14.3						3,321,313			15.7
Connecticut						1,853,803			8.6						1,749,839			8.3
New Jersey						1,850,541			8.5						1,729,139			8.2
Massachusetts						1,332,119			6.1						1,338,936			6.3
Southeast						2,552,247			11.8						2,311,574			10.9
Other						3,328,396			15.3						3,224,607			15.2
Total Commercial real estate & Multi-family						$	21,691,377		100.0		%				$	21,157,732		100.0		%
Property Type:
Multi-family (1)						$	7,067,154		32.6		%				$	7,587,970		35.9		%
Industrial & Warehouse						3,750,303			17.3						3,467,859			16.4
Retail						1,679,600			7.7						1,765,512			8.3
Construction						1,536,889			7.1						1,442,621			6.8
Healthcare & Senior Living						1,485,306			6.9						1,576,511			7.5
Office						893,270			4.1						1,041,451			4.9
Hotel						462,958			2.1						489,379			2.3
Other						4,815,897			22.2						3,786,429			17.9
Total Commercial real estate & Multi-family						$	21,691,377		100.0		%				$	21,157,732		100.0		%

(1)Includes $1.4 billion and $1.3 billion of rent-regulated multi-family loans at September 30, 2024, and December 31, 2023, respectively.

Given the foundational change in office demand driven by the acceptance of remote work options, the commercial real estate market has experienced an increase in office property vacancies following the COVID-19 pandemic. As such, commercial real estate performance across the United States related to the office sector continues to be an area of uncertainty.

At September 30, 2024, the Company’s outstanding balance for commercial real estate office loans was $0.9 billion, or 1.7% of total loans and leases. In addition, at September 30, 2024, the Company has established reserves of $56.8 million against commercial real estate office loans. While the Company does anticipate ongoing change in the office sector, management believes that its reserve levels reflect the expected credit losses in the portfolio.

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Credit Policies and Procedures

The Bank has credit policies and procedures in place designed to support its lending activities within an acceptable level of risk, which are reviewed and approved by management and the Board of Directors on a regular basis. To assist with this process, management inspects reports generated by the Company’s loan reporting systems related to loan production, loan quality, concentrations of credit, loan delinquencies, non-performing loans, and potential problem loans.

Commercial non-mortgage, asset-based, and equipment finance loans are underwritten after evaluating and understanding the borrower’s ability to operate and service its debt. Assessment of the borrower’s management is a critical element of the underwriting process and credit decision. Once it has been determined that the borrower’s management possesses sound ethics and a solid business acumen, current and projected cash flows are examined to determine the ability of the borrower to repay obligations, as contracted. Commercial non-mortgage, asset-based, and equipment finance loans are primarily made based on the identified cash flows of the borrower, and secondarily on the underlying collateral provided by the borrower. However, the cash flows of borrowers may not be as expected, and the collateral securing these loans, as applicable, may fluctuate in value. Most commercial non-mortgage, asset-based, and equipment finance loans are secured by the assets being financed and may incorporate personal guarantees of the principal balance.

Commercial real estate loans, including multi-family, are subject to underwriting standards and processes similar to those for commercial non-mortgage, asset-based, and equipment finance loans. These loans are primarily viewed as cash flow loans, and secondarily as loans secured by real estate. Repayment of commercial real estate loans is largely dependent on the successful operation of the property securing the loan, the market in which the property is located, and the tenants of the property securing the loan. The properties securing the Company’s commercial real estate portfolio are diverse in terms of type and geographic location, which reduces the Company’s exposure to adverse economic events that may affect a particular market. Management monitors and evaluates commercial real estate loans based on collateral, geography, and risk grade criteria. All transactions are appraised to determine market value. Commercial real estate loans may be adversely affected by conditions in the real estate markets or in the general economy. Management periodically utilizes third-party experts to provide insight and guidance about economic conditions and trends affecting its commercial real estate loan portfolio.

Consumer loans are subject to policies and procedures developed to manage the specific risk characteristics of the portfolio. These policies and procedures, coupled with relatively small individual loan amounts and predominately collateralized loan structures, are spread across many different borrowers, minimizing the level of credit risk. Trend and outlook reports are reviewed by management on a regular basis, and policies and procedures are modified or developed, as needed. Underwriting factors for residential mortgage and home equity loans include the borrower’s FICO score, the loan amount relative to property value, and the borrower’s debt-to-income level. The Bank originates both qualified mortgage and non-qualified mortgage loans, as defined by applicable CFPB rules.

Allowance for Credit Losses on Loans and Leases

The ACL on loans and leases increased $52.1 million, or 8.2%, from $635.7 million at December 31, 2023, to $687.8 million at September 30, 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.

The following table summarizes the percentage allocation of the ACL across the loans and leases categories:

			At September 30, 2024									At December 31, 2023
(Dollars in thousands)			Amount			% (1)						Amount			% (1)
Commercial non-mortgage			$	260,011		37.8		%				$	211,699		33.3		%
Asset-based			25,258			3.7						15,828			2.5
Commercial real estate			250,033			36.4						248,921			39.2
Multi-family			83,783			12.2						80,582			12.7
Equipment financing			16,573			2.4						20,633			3.2
Residential			27,083			3.9						29,739			4.7
Home equity			19,942			2.9						26,154			4.1
Other consumer			5,115			0.7						2,181			0.3
Total ACL on loans and leases			$	687,798		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.

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Methodology

The Company’s ACL on loans and leases is considered to be a critical accounting policy. The ACL on loans and leases is a contra-asset account that offsets the amortized cost basis of loans and leases for the credit losses that are expected to occur over the life of the asset. Executive management reviews and advises on the adequacy of the allowance, which is maintained at a level that management deems to be sufficient to cover expected losses within the loan and lease portfolios.

The ACL on loans and leases is determined using the CECL model, whereby an expected lifetime credit loss is recognized at the origination or purchase of an asset, including those acquired through a business combination, which is then reassessed at each reporting date over the contractual life of the asset. The calculation of expected credit losses includes consideration of past events, current conditions, and reasonable and supportable economic forecasts that affect the collectability of the reported amounts. Generally, expected credit losses are determined through a pooled, collective assessment of loans and leases with similar risk characteristics. However, if the risk characteristics of a loan or lease change such that it no longer matches that of the collectively assessed pool, it is removed from the population and individually assessed for credit losses. The total ACL on loans and leases recorded by management represents the aggregated estimated credit loss determined through both the collective and individual assessments.

Collectively Assessed Loans and Leases. Collectively assessed loans and leases are segmented based on product type and credit quality, and expected losses are determined using models that follow a PD, LGD, EAD, or loss rate framework. For portfolios using the PD, LGD, and EAD framework, expected credit losses are calculated as the product of the probability of a loan defaulting, expected loss given the occurrence of a default, and the expected exposure of a loan at default. Summing the product across loans over their lives yields the lifetime expected credit losses for a given portfolio. The Company’s PD and LGD calculations are predictive models that measure the current risk profile of the loan pools using forecasts of future macroeconomic conditions, historical loss information, loan-level risk attributes, and credit quality indicators. The calculation of EAD follows an iterative process to determine the expected remaining principal balance of a loan based on historical paydown rates for loans of a similar segment within the same portfolio. The calculation of portfolio exposure in future quarters incorporates expected losses, the loan’s amortization schedule, and prepayment rates. Under the loss rate framework, expected credit losses are estimated using a loss rate that is multiplied by the amortized cost of the asset at the balance sheet date. For each loan segment identified, management applies an expected historical loss trend based on third-party loss estimates, and correlates them to observed economic metrics, and reasonable and supportable forecasts of economic conditions.

The Company’s models incorporate a single economic forecast scenario and macroeconomic assumptions over a reasonable
and supportable forecast period. The development of the reasonable and supportable forecast assumes each macroeconomic variable will revert to long-term expectations, with reversion characteristics unique to specific economic indicators and forecasts. The reasonable and supportable forecast period is two years after which the reversion period is one year. 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. Macroeconomic variables are selected for each class of financing receivable based on relevant factors, such as asset type and the correlation of the variables to credit losses, among others. Data from the forecast scenario of these macroeconomic variables are used as inputs to the modeled loss calculation.

A portion of the collective ACL is comprised of qualitative adjustments for risk characteristics that are not reflected or captured in the quantitative models but are likely to impact the measurement of estimated credit losses. Qualitative factors are based on management’s judgement of the Company, market, industry, or business specific data including loan trends, portfolio segment composition, and loan rating or credit scores. Qualitative adjustments may be applied in relation to economic forecasts when relevant facts and circumstances are expected to impact credit losses, particularly in times of significant volatility in economic activity.

Individually Assessed Loans and Leases. If the risk characteristics of a loan or lease change such that it no longer matches the risk characteristics of the collectively assessed pool, it is removed from the population and individually assessed for credit losses. Generally, all non-accrual loans and loans with a charge-off are individually assessed. The measurement method used to calculate the expected credit loss on an individually assessed loan or lease is dependent on the type and whether the loan or lease is considered to be collateral dependent. Methods for collateral dependent loans are either based on the fair value of the collateral less estimated cost to sell (when the basis of repayment is the sale of collateral), or the present value of the expected cash flows from the operation of the collateral. For non-collateral dependent loans, either a discounted cash flow method or other loss factor method is used. Any individually assessed loan or lease for which no specific valuation allowance is deemed necessary is either the result of sufficient cash flows or sufficient collateral coverage relative to the amortized cost of the asset.

Additional information regarding the Company’s ACL methodology can be found within Note 1: Summary of Significant Accounting Policies in the Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data of the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

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Asset Quality Ratios

The Company manages asset quality using risk tolerance levels established through the Company’s underwriting standards, servicing, and management of its loan and lease portfolio. Loans and leases for which a heightened risk of loss has been identified are regularly monitored to mitigate further deterioration and preserve asset quality in future periods. Non-performing assets, credit losses, and net charge-offs are considered by management to be key measures of asset quality.

The following table summarizes key asset quality ratios and their underlying components:

(Dollars in thousands)			At September 30, 2024						At December 31, 2023
Non-performing loans and leases (1)			$	425,617					$	209,544
Total loans and leases			51,947,015						50,726,052
Non-performing loans and leases as a percentage of loans and leases			0.82		%				0.41		%
Non-performing assets (1)			$	427,274					$	218,600
Total loans and leases			$	51,947,015					$	50,726,052
Add: OREO and repossessed assets			1,657						9,056
Total loans and leases plus OREO and repossessed assets			$	51,948,672					$	50,735,108
Non-performing assets as a percentage of loans and leases plus OREO    and repossessed assets			0.82		%				0.43		%
Non-performing assets (1)			$	427,274					$	218,600
Total assets			79,453,900						74,945,249
Non-performing assets as a percentage of total assets			0.54		%				0.29		%
ACL on loans and leases			$	687,798					$	635,737
Non-performing loans and leases (1)			425,617						209,544
ACL on loans and leases as a percentage of non-performing loans and leases			161.60		%				303.39		%
ACL on loans and leases			$	687,798					$	635,737
Total loans and leases			51,947,015						50,726,052
ACL on loans and leases as a percentage of loans and leases			1.32		%				1.25		%
ACL on loans and leases			$	687,798					$	635,737
Net charge-offs (annualized)			141,391						108,086
Ratio of ACL on loans and leases to net charge-offs (annualized)			4.86x						5.88x

(1)Non-performing asset balances and related asset quality ratios exclude the impact of net unamortized (discounts)/premiums and net unamortized deferred (fees)/costs on loans and leases.

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The following table summarizes net charge-offs as an annualized percentage of average loans and leases for each category:

			At or for the three months ended September 30,
			2024												2023
(Dollars in thousands)			Net Charge-offs (Recoveries)			Average Balance			% (1)						Net Charge-offs (Recoveries)			Average Balance			% (1)
Commercial non-mortgage			$	9,551		$	16,904,543		0.23		%				$	1,827		$	17,077,110		0.04		%
Asset-based			—			1,452,794			—						2,999			1,663,481			0.72
Commercial real estate			20,827			14,481,233			0.58						19,736			13,451,160			0.59
Multi-family			5,631			7,734,060			0.29						—			7,163,174			—
Equipment financing			(24)			1,261,715			(0.01)						2,506			1,479,821			0.68
Warehouse lending			—			—			—						—			282,845			—
Residential			(473)			8,390,613			(0.02)						(129)			8,200,938			(0.01)
Home equity			(799)			1,451,137			(0.22)						1,087			1,539,824			0.28
Other consumer			713			76,098			3.75						1,286			53,835			9.56
Total			$	35,426		$	51,752,193		0.27		%				$	29,312		$	50,912,188		0.23		%
			At or for the nine months ended September 30,
			2024												2023
(Dollars in thousands)			Net Charge-offs (Recoveries)			Average Balance			% (1)						Net Charge-offs (Recoveries)			Average Balance			% (1)
Commercial non-mortgage			$	53,201		$	16,858,873		0.42		%				$	5,808		$	16,936,954		0.05		%
Asset-based			5,048			1,483,084			0.45						16,188			1,736,374			1.24
Commercial real estate			32,367			14,101,337			0.31						48,129			13,407,047			0.48
Multi-family			12,976			7,834,893			0.22						1,033			6,962,983			0.02
Equipment financing			3,297			1,273,690			0.35						1,667			1,556,090			0.14
Warehouse lending			—			—			—						—			417,950			—
Residential			(815)			8,289,757			(0.01)						(963)			8,088,625			(0.02)
Home equity			(2,648)			1,474,676			(0.24)						(146)			1,572,045			(0.01)
Other consumer			2,617			60,203			5.80						2,369			55,623			5.68
Total			$	106,043		$	51,376,513		0.28		%				$	74,085		$	50,733,691		0.19		%

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

Comparison to Prior Year Quarter

Net charge-offs increased $6.1 million, or 20.9%, to $35.4 million for the three months ended September 30, 2024, as compared to $29.3 million for the three months ended September 30, 2023, primarily due to increases in net charge-offs in the commercial non-mortgage and multi-family categories, partially offset by a decrease in net charge-offs in the asset-based lending category.

Comparison to Prior Year to Date

Net charge-offs increased $31.9 million, or 43.1%, to $106.0 million for the nine months ended September 30, 2024, as compared to $74.1 million for the nine months ended September 30, 2023, primarily due to increases in net charge-offs in the commercial non-mortgage and multi-family categories, partially offset by decreases in net charge-offs in the asset-based lending and commercial real estate categories.

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Liquidity and Capital Resources

The Company manages its cash flow requirements through proactive liquidity measures at both the Holding Company and the Bank. In order to maintain stable, cost-effective funding, and to promote overall balance sheet strength, the liquidity position of the Company is continuously monitored, and adjustments are made to balance sources and uses of funds, as appropriate.

At September 30, 2024, management is not aware of any events that are reasonably likely to have a material adverse effect on the Company’s liquidity position, capital resources, or operating activities. Although regulatory agencies have not issued formal guidance mandating more stringent liquidity and capital requirements, the Company is anticipating a greater focus on the liquidity and capital adequacy of financial institutions in response to the high-profile bank failures that occurred in 2023 and related turmoil in the banking industry. The Company has taken appropriate measures to mitigate the risk that such requirements, if implemented, may have on its business, financial positions, and results of operations.

Cash inflows are provided through a variety of sources, including principal and interest payments on loans and investments, unpledged securities that can be sold or utilized to secure funding, and new deposits. The Company is committed to maintaining a strong base of core deposits, which consists of demand, interest-bearing checking, savings, health savings, and money market accounts, to support growth in its loan portfolios. Management actively monitors the interest rate environment and makes adjustments to its deposit strategy in response to evolving market conditions, funding needs, and client relationship dynamics.

Holding Company Liquidity. The primary source of liquidity at the Holding Company is dividends from the Bank. To a lesser extent, investment income, net proceeds from investment sales, borrowings, and public offerings may provide additional liquidity. The Holding Company generally uses its funds for principal and interest payments on senior notes, subordinated notes, and junior subordinated debt, dividend payments to preferred and common stockholders, repurchases of its common stock, and purchases of investment securities, as applicable.

During the three and nine months ended September 30, 2024, the Bank paid $100.0 million and $400.0 million in dividends to the Holding Company, respectively. At September 30, 2024, there was $762.3 million of retained earnings available for the payment of dividends by the Bank to the Holding Company. On October 22, 2024, the Bank was approved to pay the Holding Company $200.0 million in dividends for the fourth quarter of 2024.

There are certain restrictions on the Bank’s payment of dividends to the Holding Company, which can be found within
Note 9: Regulatory Capital and Restrictions in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements of this report, and in the section captioned “Supervision and Regulation” in Part I - Item 1. Business of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

The quarterly cash dividend to common stockholders remained at $0.40 per common share for the three months ended
September 30, 2024. On October 22, 2024, it was announced that the Holding Company’s Board of Directors had declared a quarterly cash dividend of $0.40 per share on Webster common stock. For the Series F Preferred Stock and Series G Preferred Stock, quarterly cash dividends of $328.125 per share and $16.25 per share, respectively, were declared. The Company continues to monitor economic forecasts, anticipated earnings, and its capital position in the determination of its dividend payments.

The Holding Company maintains a common stock repurchase program, which was approved by the Board of Directors, that authorizes management to purchase shares of its common stock in open market or privately negotiated transactions, through block trades, and pursuant to any adopted predetermined trading plan, subject to certain conditions. During the three months ended September 30, 2024, the Holding Company did not repurchase any shares of Webster common stock under the program. At September 30, 2024, the Holding Company’s remaining purchase authority was $228.0 million. In addition, the Company will periodically acquire common shares outside of the repurchase program related to employee stock compensation plan activity. During the three months ended September 30, 2024, the Company repurchased 5,502 shares at a weighted-average price of $45.10 per share, totaling $0.2 million, for this purpose.

Webster Bank Liquidity. The Bank’s primary source of funding is its core deposits. Including time deposits, the Bank had a loan to deposit ratio of 80.5% and 83.5% at September 30, 2024, and December 31, 2023, respectively.

The Bank is required by OCC regulations to maintain a sufficient level of liquidity to ensure safe and sound operations. The adequacy of liquidity, as assessed by the OCC, depends on factors such as overall asset and liability structure, market conditions, competition, and the nature of the institution’s deposit and loan customers. At September 30, 2024, the Bank exceeded all regulatory liquidity requirements. The Company has designed a detailed contingency plan in order to respond to any liquidity concerns in a prompt and comprehensive manner, including early detection of potential problems and corrective action to address liquidity stress scenarios.

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Capital Requirements. The Holding Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory actions by regulators that could have a direct material effect on the Company’s Condensed Consolidated Financial Statements. Under capital adequacy guidelines and/or the regulatory framework for prompt corrective action (applies to the Bank only), both the Holding Company and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated pursuant to regulatory directives. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by Basel III to ensure capital adequacy require the Holding Company and the Bank to maintain minimum ratios of CET1 Risk-Based Capital, Tier 1 Risk-Based Capital, Total Risk-Based Capital, and Tier 1 Leverage Capital, as defined in the regulations. At September 30, 2024, both the Holding Company and the Bank were classified as well-capitalized. Management believes that no events or changes have occurred subsequent to quarter-end that would change this designation.

During the third quarter of 2024, the Company performed a risk-weighted asset optimization analysis of certain of its loan portfolios and off-balance sheet commitments to determine eligibility for reduced risk-weighting. As a result of this analysis, the Company experienced a reduction in risk-weighted assets of approximately $2.1 billion, which, in turn, resulted in increases to its CET1 Risk-Based Capital, Tier 1 Risk-Based Capital, and Total Risk-Based Capital ratios of 41, 43, and 51 basis points, respectively, at September 30, 2024.

In accordance with regulatory capital rules, the Company elected an option to delay the estimated impact of the adoption of CECL on its regulatory capital over a two-year deferral period, which ended on January 1, 2022, and subsequent three-year transition period ending on December 31, 2024. During the three-year transition period, capital ratios will phase out the aggregate amount of the regulatory capital benefit provided from the delayed CECL adoption in the initial two years. For 2024, the Company is allowed 25% of the regulatory capital benefit as of December 31, 2021, with full absorption occurring in 2025. At September 30, 2024, the regulatory capital benefit allowed from the delayed CECL adoption resulted in a 3, 3, 3, and 2 basis point increase to the Holding Company’s and the Bank’s CET1 Risk-Based Capital, Tier 1 Risk-Based Capital, Total Risk-Based Capital, and Tier 1 Leverage Capital, respectively. Both the Holding Company’s and the Bank’s regulatory ratios remain in excess of being well-capitalized, even without the regulatory capital benefit of the delayed CECL adoption impact.

Additional information regarding the required regulatory capital levels and ratios applicable to the Holding Company and the Bank can be found within Note 9: Regulatory Capital and Restrictions in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements.

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Sources and Uses of Funds

Sources of Funds. Deposits are the primary source of cash flows for the Bank’s lending activities and general operational needs. Loan and securities repayments, proceeds from sales of loans and securities held for sale, and maturities also provide cash flows. While scheduled loan and securities repayments are a relatively stable source of funds, prepayments and other deposit inflows are influenced by economic conditions and prevailing interest rates, the timing of which are inherently uncertain. Additional sources of funds are provided by both short-term and long-term borrowings, and to a lesser extent, dividends received as part of the Bank's membership with the FHLB and FRB.

Deposits. The Bank offers a wide variety of checking and savings deposit products designed to meet the transactional and investment needs of its consumer and business customers. The Bank’s deposit services include, but are not limited to, ATM and debit card use, direct deposit, ACH payments, mobile banking, internet-based banking, banking by mail, account transfers, and overdraft protection, among others. The Bank manages the flow of funds in its deposit accounts and interest rates consistent with FDIC regulations. The Bank’s Consumer and Digital Pricing Committee and its Commercial and Institutional Liability and Loan Pricing Committee both meet regularly to determine pricing and marketing initiatives.

Total deposits were $64.5 billion and $60.8 billion at September 30, 2024, and December 31, 2023, respectively. The
$3.7 billion increase is primarily due to an increase in interLINK money market sweep deposits, higher savings and interest-bearing checking account balances, which were due, in part, from seasonal net inflows, HSA deposit growth, and the addition of Ametros, partially offset by a decrease in brokered certificates of deposit.

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

			Three months ended September 30,
			2024									2023
(Dollars in thousands)			Average Balance			Average Rate						Average Balance			Average Rate
Non-interest-bearing:
Demand			$	10,243,045		—		%				$	11,335,734		—		%
Interest-bearing:
Checking			9,744,885			1.96						8,762,995			1.57
Health savings accounts			8,546,941			0.15						8,235,632			0.15
Money market			19,945,165			4.17						17,088,597			3.85
Savings			6,909,526			1.69						6,822,307			0.83
Time deposits			7,190,093			4.51						7,342,757			4.10
Total interest-bearing			52,336,610			2.82						48,252,288			2.44
Total average deposits			$	62,579,655		2.36		%				$	59,588,022		1.96		%
			Nine months ended September 30,
			2024									2023
(Dollars in thousands)			Average Balance			Average Rate						Average Balance			Average Rate
Non-interest-bearing:
Demand			$	10,327,076		—		%				$	11,775,500		—		%
Interest-bearing:
Checking			9,475,927			1.89						8,826,074			1.37
Health savings accounts			8,560,303			0.15						8,259,408			0.15
Money market			18,905,798			4.16						15,154,298			3.42
Savings			6,845,957			1.50						7,461,886			0.69
Time deposits			7,508,481			4.60						6,192,415			3.66
Total interest-bearing			51,296,466			2.78						45,894,081			2.02
Total average deposits			$	61,623,542		2.32		%				$	57,669,581		1.61		%

Uninsured deposits represent the portion of deposit accounts in U.S. offices that exceed the FDIC insurance limit or similar state deposit insurance regime, and amounts in any other uninsured investment or deposit accounts that are classified as deposits and not subject to any federal or state deposit insurance regimes. The Company calculates its uninsured deposit balances based on the methodologies and assumptions used for regulatory reporting requirements, which includes an estimated portion and affiliate deposits. At September 30, 2024, and December 31, 2023, total uninsured deposits as per regulatory reporting requirements and reported on Schedule RC-O of the Bank’s Call Report were $22.7 billion and $21.0 billion, respectively.

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The following table summarizes uninsured deposits information at September 30, 2024, after certain exclusions:

(In thousands)			At September 30, 2024
Uninsured deposits, per regulatory reporting requirements			$	22,745,086
Less: Affiliate deposits			(3,877,474)
Collateralized deposits			(5,677,567)
Uninsured deposits, after exclusions			$	13,190,045
Immediately available liquidity (1)			$	22,638,602
Uninsured deposits coverage			171.6%

(1)Reflects $11.1 billion and $9.2 billion of additional borrowing capacity from the FHLB and the FRB, respectively, and $2.4 billion of interest-bearing deposits held at FRB.

Uninsured deposits, after adjusting for affiliate deposits and collateralized deposits, represented 20.4% of total deposits at September 30, 2024. Management believes that this presentation provides a more accurate view of deposits at risk given that affiliate deposits are not customer facing, and therefore are eliminated upon consolidation, and collateralized deposits are secured by other means. As of the date of this Quarterly Report on Form 10-Q, the Company’s uninsured deposits as a percentage of total deposits, adjusted for affiliate deposits and collateralized deposits, is consistent with the percentage reported at September 30, 2024.

The following table summarizes the portion of U.S. time deposits in excess of the FDIC insurance limit and time deposits otherwise uninsured by contractual maturity:

(In thousands)			September 30, 2024
Portion of U.S. time deposits in excess of insurance limit			$	522,148
Time deposits otherwise uninsured with a maturity of:
3 months or less			$	251,896
Over 3 months through 6 months			240,689
Over 6 months through 12 months			28,797
Over 12 months			766

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

Borrowings. The Bank’s primary borrowing sources include securities sold under agreements to repurchase, federal funds purchased, FHLB advances, and long-term debt. Total borrowings were $4.1 billion and $3.9 billion at September 30, 2024, and December 31, 2023, respectively, and represented 5.2% of total assets. The $0.2 billion net increase is due to an increase of $0.7 billion in FHLB advances, partially offset by decreases of $0.3 billion, $0.1 billion, and $0.1 billion in securities sold under agreements to repurchase, fed funds purchased and long-term debt, respectively.

Securities sold under agreements to repurchase are generally a form of short-term funding for the Bank in which it sells securities to counterparties with an agreement to buy them back in the future at a fixed price. Securities sold under agreements to repurchase totaled $0.1 billion and $0.4 billion at September 30, 2024, and December 31, 2023, respectively. The $0.3 billion decrease is primarily due to the maturity of a $216.3 million non-callable, fixed repurchase agreement in January 2024, along with a change in short-term funding mix.

The Bank may also purchase term and overnight federal funds to meet its short-term liquidity needs. Due to a change in short-term funding mix, there were no federal funds purchased at September 30, 2024. Federal funds purchased totaled $0.1 billion at December 31, 2023.

FHLB advances are not only utilized as a source of funding, but also for interest rate risk management purposes. FHLB advances totaled $3.1 billion and $2.4 billion at September 30, 2024, and December 31, 2023, respectively. The $750.2 million increase is primarily due to a change in short-term funding mix.

Long-term debt consists of senior fixed-rate notes maturing in 2029, subordinated fixed-to-floating-rate notes maturing in 2029 and 2030, and floating-rate junior subordinated notes maturing in 2033. Long-term debt totaled $0.9 billion and $1.0 billion at September 30, 2024, and December 31, 2023, respectively. The $0.1 billion decrease is primarily due to the maturity of its 4.375% senior fixed-rate notes on February 15, 2024.

The Bank had additional borrowing capacity from the FHLB of $11.1 billion and $12.5 billion at September 30, 2024, and December 31, 2023, respectively. The Bank also had additional borrowing capacity from the FRB of $9.2 billion and $6.6 billion at September 30, 2024, and December 31, 2023, respectively. Unencumbered investment securities of $0.4 billion at September 30, 2024, could have been used for collateral on borrowings or to increase borrowing capacity by either $0.2 billion with the FHLB or $0.3 billion with the FRB.

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

			Three months ended September 30,
			2024									2023
(Dollars in thousands)			Average Balance			Average Rate						Average Balance			Average Rate
Securities sold under agreements to repurchase			$	125,738		0.12		%				$	170,256		0.12		%
FHLB advances			2,535,497			5.43						2,945,136			5.34
Long-term debt			911,834			3.56						1,051,380			3.70
Total average borrowings			$	3,573,069		4.77		%				$	4,166,772		4.72		%
			Nine months ended September 30,
			2024									2023
(Dollars in thousands)			Average Balance			Average Rate						Average Balance			Average Rate
Securities sold under agreements to repurchase			$	125,492		0.26		%				$	209,723		0.11		%
Federal funds purchased			72,537			5.46						221,266			4.62
FHLB advances			2,551,535			5.47						5,104,372			5.09
Long-term debt			935,370			3.58						1,061,643			3.68
Total average borrowings			$	3,684,934		4.82		%				$	6,597,004		4.69		%

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

Federal Home Loan Bank and Federal Reserve Bank Stock. The Bank is a member of the FHLB System, which consists of 11 district FHLBs, each of which is subject to the supervision and regulation of the Federal Housing Finance Agency. An activity-based capital stock investment in the FHLB is required in order for the Bank to maintain its membership and access advances and other extensions of credit for sources of funds and liquidity purposes. The FHLB capital stock investment is restricted as there is no market for it, and it can only be redeemed by the FHLB. The Bank held FHLB capital stock of $131.6 million and $99.0 million at September 30, 2024, and December 31, 2023, respectively. The most recent FHLB quarterly cash dividend was paid on November 4, 2024, in an amount equal to an annual yield of 8.36%.

The Bank is also required to hold FRB stock equal to 6% of its capital and surplus, of which 50% is paid. The remaining 50% is subject to call when deemed necessary by the Federal Reserve System. Similar to FHLB stock, the FRB capital stock investment is restricted as there is no market for it, and it can only be redeemed by the FRB. The Bank held FRB capital stock of $229.2 million and $227.9 million at September 30, 2024, and December 31, 2023, respectively. The most recent FRB semi-annual cash dividend was paid on June 28, 2024, in an amount equal to an annual yield of 4.44%.

Uses of Funds. The Company enters into various contractual obligations in the normal course of business that require future cash payments and that could impact its short-term and long-term liquidity and capital resource needs. The following table summarizes significant fixed and determinable contractual obligations at September 30, 2024. The actual timing and amounts of future cash payments may differ from the amounts presented. Based on the Company’s current liquidity position, it is expected that our sources of funds will be sufficient to fulfill these obligations when they come due.

			Payments Due by Period (1)
(In thousands)			2024			2025			2026			2027			2028			Thereafter			Total
Senior notes			$	—		$	—		$	—		$	—		$	—		$	300,000		$	300,000
Subordinated notes			—			—			—			—			—			499,000			499,000
Junior subordinated debt			—			—			—			—			—			77,320			77,320
FHLB advances			2,700,000			400,000			—			222			218			9,765			3,110,205
Securities sold under agreements to repurchase			100,232			—			—			—			—			—			100,232
Time deposits			3,330,154			3,957,088			65,166			33,570			19,819			14,234			7,420,031
Operating lease liabilities			7,092			40,696			36,121			31,489			27,754			87,481			230,633
Contingent consideration			12,500			207			—			—			—			—			12,707
Royalty liabilities			8,678			1,560			—			—			—			—			10,238
Total contractual obligations			$	6,158,656		$	4,399,551		$	101,287		$	65,281		$	47,791		$	987,800		$	11,760,366

(1)Interest payments on borrowings have been excluded.

In addition, in the normal course of business, the Company offers financial instruments with off-balance sheet risk to meet the financing needs of its customers. These transactions include commitments to extend credit and commercial and standby letters of credit, which involve, to a varying degree, elements of credit risk. Since many of these commitments are expected to expire unused or be only partially funded, the total commitment amount of $12.6 billion at September 30, 2024, does not necessarily reflect future cash payments.

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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 $818.4 million at September 30, 2024. However, the timing of capital calls cannot be reasonably estimated, and depending on the nature of the contract, the entirety of the capital committed by the Company may not be called.

Pension obligations are funded by the Company, as needed, to provide for participant benefit payments as it relates to the Company’s frozen, non-contributory, qualified defined benefit pension plan. Decisions to contribute to the defined benefit pension plan are made based upon pension funding requirements under the Pension Protection Act, the maximum amount deductible under the Internal Revenue Code, the actual performance of plan assets, and trends in the regulatory environment. The Company does not currently anticipate that it will be required to contribute to the defined benefit pension plan in 2024. The Company’s non-qualified supplemental executive retirement plans and other post-employment benefit plans are unfunded.

At September 30, 2024, the Company’s Condensed Consolidated Balance Sheet reflects a liability for uncertain tax positions of $13.9 million and $6.6 million of accrued interest and penalties, respectively. The ultimate timing and amount of any related future cash settlements cannot be predicted with reasonable certainty.

On November 29, 2023, the FDIC published a final rule implementing a special assessment for certain banks to recover losses incurred by protecting uninsured depositors of Silicon Valley Bank and Signature Bank upon their failure in March 2023. At September 30, 2024, the Company’s accrual for its estimated special assessment charge was $45.7 million, which is anticipated to be collected over a remainder of eight quarterly assessment periods. The FDIC retains the right to cease collection early, extend the special assessment collection period, and impose shortfall special assessments if actual losses exceed the amounts collected. The Company continues to monitor the estimated loss attributable to the protection of uninsured depositors at Silicon Valley Bank and Signature Bank, which could impact the amount of its accrued liability.

In connection with the completion of a multi-family securitization during the third quarter of 2024, the Company assumed an obligation to reimburse, or guarantee, losses incurred by the multi-family securitization trusts of up to 12% of the aggregate UPB of the loans at the time of sale. Essentially, this obligation represents a first credit loss enhancement provided by the Company. Based on the credit quality of the multi-family loans at the time of sale, among other factors, the Company estimated the fair value of its reimbursement obligation to be $3.3 million. However, in the event that value of the assets in the multi-family securitization trusts significantly declined, the Company’s maximum exposure to loss could be $36.4 million.

Additional information regarding credit-related financial instruments, the FDIC special assessment, alternative investments, and the multifamily securitization can be found within Note 16: Commitments and Contingencies, Note 10: Variable Interest Entities, and Note 2: Business Developments, respectively, in the Notes to the Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements of this report. Additional information regarding defined benefit pension and other postretirement benefit plans and income taxes can be found within Note 19: Retirement Benefit Plans and Note 9: Income Taxes, respectively, in the Notes to the Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

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Asset/Liability Management and Market Risk

An effective asset/liability management process must balance the risks and rewards from both short-term and long-term interest rate risk when determining the Company’s strategy and action. To facilitate this process, interest rate sensitivity is monitored on an ongoing basis by the Company’s ALCO, whose primary goal is to manage interest rate risk and maximize net income and net economic value over time in changing interest rate environments. The ALCO meets frequently to make decisions on the Company’s investment and funding portfolios based on the economic outlook, its interest rate expectations, the risk position, and other factors.

Four main tools are used for managing interest rate risk:

•the size, duration, and credit risk of the investment portfolio;

•the size and duration of the wholesale funding portfolio;

•interest rate contracts; and

•the pricing and structure of loans and deposits.

The Company measures interest rate risk using simulation analysis and asset/liability modeling software to calculate the earnings at risk and equity at risk. Essentially, interest rates are assumed to change up or down in a parallel fashion, and the net interest income results in each scenario are compared to a flat rate base scenario. The flat rate base scenario holds the end of period yield curve constant over a twelve-month forecast horizon. At September 30, 2024, and December 31, 2023, the flat rate base scenario assumed a federal funds rate of 5.00% and 5.50%, respectively. The federal funds rate target range was 4.75-5.00% at September 30, 2024, and 5.25-5.50% at December 31, 2023, respectively. Further, in the third quarter of 2024, other key model assumptions related to loan prepayment speeds, deposit beta, and average lives were updated based on the most recent studies. While these updates partially contributed to a change in asset/liability sensitivities, the overall impact to net interest income was not material.

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 September 30, 2024, and December 31, 2023, as compared to actual net interest income and assuming no changes in interest rates:

			-300bp			-200bp			-100bp			+100bp			+200bp			+300bp
September 30, 2024			(2.0)%			(0.7)%			—%			0.2%			0.3%			0.5%
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 September 30, 2024, as compared to 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, and an increase in higher cost deposit products, such as interLINK money market sweep deposits, certificates of deposit, and online savings.

The following table summarizes the estimated impact that yield curve twists or immediate non-parallel changes in interest rates of up and down 50 and 100 basis points might have on the Company’s net interest income over a twelve-month period starting at September 30, 2024, and December 31, 2023:

			Short End of the Yield Curve															Long End of the Yield Curve
			-100bp			-50bp			+50bp			+100bp						-100bp			-50bp			+50bp			+100bp
September 30, 2024			2.1%			1.1%			(0.8)%			(1.7)%						(2.3)%			(1.1)%			1.0%			2.0%
December 31, 2023			(1.8)%			(0.8)%			0.4%			0.7%						(2.3)%			(1.1)%			1.1%			2.2%

These non-parallel scenarios are modeled with the short end of the yield curve moving up or down 50 and 100 basis points, while the long end of the yield curve remains unchanged, and vice versa. The short end of the yield curve is defined as terms less than eighteen months, and the long end of the yield curve is defined as terms greater than eighteen months. The results reflect the annualized impact of immediate interest rate changes.

Sensitivity to the short end of the yield curve for net interest income changed from being asset sensitive to liability sensitive at September 30, 2024, as compared to December 31, 2023, primarily due to a change in deposit mix. As discussed above, in 2024, the Company experienced an increase in higher cost deposit products, such as interLINK money market sweep deposits, certificates of deposit, and online savings. In addition, the Company’s 2024 securities repositioning resulted in an increase in fixed-rate investment securities, further contributing to decreased asset sensitivity at the short end of the yield curve. Sensitivity to the long end of the yield curve generally remained unchanged from December 31, 2023, to September 30, 2024.

The following table summarizes the estimated economic value of assets and liabilities, and the corresponding estimated change in economic value if interest rates were to instantaneously increase or decrease by 100 basis points at September 30, 2024, and December 31, 2023:

(Dollars in thousands)			Book Value			Estimated Economic Value			Estimated Economic Value Change
									-100bp			+100bp
September 30, 2024
Assets			$	79,453,900		$	74,744,991		$	2,047,006		$	(2,182,312)
Liabilities			70,255,850			62,938,567			2,247,866			(1,962,062)
Net			$	9,198,050		$	11,806,424		$	(200,860)		$	(220,250)
Net change as % base net economic value									(1.7)		%	(1.9)		%
December 31, 2023
Assets			$	74,945,249		$	70,356,779		$	1,297,870		$	(1,350,496)
Liabilities			66,255,253			61,722,480			1,960,088			(1,786,228)
Net			$	8,689,996		$	8,634,299		$	(662,218)		$	435,732
Net change as % base net economic value									(7.7)		%	5.0		%

Changes in economic value can best be described through duration, which is a measure of the price sensitivity of financial instruments due to changes in interest rates. For fixed-rate financial instruments, it can be thought of as the weighted-average expected time to receive future cash flows, whereas for floating-rate financial instruments, it can be thought of as the weighted-average expected time until the next rate reset. Overall, the longer the duration, the greater the price sensitivity due to changes in interest rates. Generally, increases in interest rates reduce the economic value of fixed-rate financial assets as future discounted cash flows are worth less at higher interest rates. In a rising interest rate environment, the economic value of financial liabilities decreases for the same reason. A reduction in the economic value of financial liabilities is a benefit to the Company. Floating-rate financial instruments may have durations as short as one day, and therefore, may have very little price sensitivity due to changes in interest rates.

Duration gap represents the difference between the duration of financial assets and financial liabilities. A duration gap at or near zero would imply that the balance sheet is matched, and therefore, would exhibit no change in estimated economic value for changes in interest rates. At September 30, 2024, and December 31, 2023, the Company’s duration gap was negative 0.4 years and negative 1.1 years, respectively. A negative duration gap implies that the duration of financial liabilities is longer than the duration of financial assets, and therefore, liabilities have more price sensitivity than assets and will reset their interest rates at a slower pace. Consequently, the Company’s net estimated economic value would generally be expected to increase when interest rates rise, as the benefit of the decreased value of financial liabilities would more than offset the decreased value of financial assets. The opposite would generally be expected to occur when interest rates fall. Earnings would also generally be expected to increase when interest rates rise, and decrease when interest rates fall over the long term, absent the effects of any new business booked in the future.

These earnings and net economic value estimates are subject to factors that could cause actual results to differ, and also assume that management does not take any additional action to mitigate any positive or negative effects from changing interest rates. Management believes that the Company’s interest rate risk position at September 30, 2024, represents a reasonable level of risk given the current interest rate outlook. The Company continues to monitor interest rates and other relevant factors given recent market volatility and is prepared to take additional action, as necessary.

Additional information regarding the Company’s asset/liability management process can be found under the section captioned “Asset/Liability Management and Market Risk” contained in Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company’s Annual Report on Form 10-K for the year ended
December 31, 2023.

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Critical Accounting Estimates

The preparation of the Company’s Condensed Consolidated Financial Statements, and accompanying notes thereto, in accordance with GAAP and practices generally applicable to the financial services industry, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the disclosure of contingent assets and liabilities. While management’s estimates are made based on historical experience, current available information, and other factors that are deemed to be relevant, actual results could significantly differ from those estimates.

Accounting estimates are necessary in the application of certain accounting policies and can be susceptible to significant change in the near term. Critical accounting estimates are those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had, or are reasonably likely to have, a material impact on the Company’s financial condition or results of operations. Management has identified that the Company’s most critical accounting estimates are those related to its ACL on loans and leases and business combinations accounting policies. These accounting policies and their underlying estimates are discussed directly with the Audit Committee of the Board of Directors.

Allowance for Credit Losses on Loans and Leases

The ACL on loans and leases is a reserve established through a provision for credit losses charged to expense, which represents management’s best estimate of expected lifetime credit losses within the Company’s loan and lease portfolios at the balance sheet date. The calculation of expected credit losses is determined using predictive methods and models that follow a
PD, LGD, EAD, or loss rate framework and include consideration of past events, current conditions, macroeconomic variables (i.e., unemployment, gross domestic product, property values, and interest rate spreads), and reasonable and supportable economic forecasts that affect the collectability of the reported amounts. Changes to the ACL on loans and leases, and therefore, to the related provision for credit losses, can materially affect financial results.

The determination of the appropriate level of ACL on loans and leases inherently involves a high degree of subjectivity and requires the Company to make significant estimates of current credit risks and trends using existing qualitative and quantitative information, and reasonable and supportable forecasts of future economic conditions, all of which may undergo frequent and material changes. Changes in economic conditions affecting borrowers and macroeconomic variables that the Company is more susceptible to, unforeseen events such as natural disasters and pandemics, along with new information regarding existing loans, identification of additional problem loans, the fair value of underlying collateral, and other factors, both within and outside the Company’s control, may indicate the need for an increase or decrease in the ACL on loans and leases.

It is difficult to estimate the sensitivity of how potential changes in any one economic factor or input might affect the overall reserve because a wide variety of factors and inputs are considered in estimating the ACL and changes in those factors and inputs considered may not occur at the same rate and may not be consistent across all product types. Further, changes in factors and inputs may also be directionally inconsistent, such that improvement in one factor may offset deterioration in others.

Executive management reviews and advises on the adequacy of the ACL on loans and leases on a quarterly basis. Although the overall balance is determined based on specific portfolio segments and individually assessed assets, the entire balance is available to absorb credit losses for any of the loan and lease portfolios.

Additional information regarding the determination of the ACL on loans and leases, including the Company’s valuation methodology, can be found under the section captioned “Allowance for Credit Losses on Loans and Leases” contained elsewhere in this Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and within Note 1: Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements contained in
Part II - Item 8. Financial Statements and Supplementary Data included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Business Combinations

The acquisition method of accounting generally requires that the identifiable assets acquired and liabilities assumed in business combinations are recorded at fair value as of the acquisition date. The determination of fair value often involves the use of internal or third-party valuation techniques, such as discounted cash flow analyses or appraisals. Particularly, the valuation techniques used to estimate the fair value of the core deposit intangible asset acquired in the Ametros acquisition includes estimates related to discount rates, client attrition rates, an alternative cost of funds, and other relevant factors, which are inherently subjective. A description of the valuation methodologies used to estimate the fair values of the significant assets acquired and liabilities assumed from the Ametros acquisition can be found within Note 2: Business Developments in the Notes to Consolidated Financial Statements contained in Part I - Item 1. Financial Statements.

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ITEM 1. FINANCIAL STATEMENTS

WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

			September 30, 2024						December 31, 2023
(In thousands, except share data)			(Unaudited)
Assets:
Cash and due from banks			$	721,261					$	429,323
Interest-bearing deposits			2,476,290						1,286,472
Investment securities available-for-sale, at fair value			8,594,978						8,959,729
Investment securities held-to-maturity, net of allowance for credit losses of $171 and $209			8,565,936						7,074,588
Federal Home Loan Bank and Federal Reserve Bank stock			360,795						326,882
Loans held for sale ($478 and $2,610 valued under fair value option)			117,615						6,541
Loans and leases			51,947,015						50,726,052
Allowance for credit losses on loans and leases			(687,798)						(635,737)
Loans and leases, net			51,259,217						50,090,315
Deferred tax assets, net			273,174						369,212
Premises and equipment, net			411,070						429,561
Goodwill			2,868,068						2,631,465
Other intangible assets, net			343,982						203,135
Cash surrender value of life insurance policies			1,247,624						1,247,938
Accrued interest receivable and other assets			2,213,890						1,890,088
Total assets			$	79,453,900					$	74,945,249
Liabilities and stockholders’ equity:
Deposits:
Non-interest-bearing			$	10,744,524					$	10,732,516
Interest-bearing			53,769,906						50,051,768
Total deposits			64,514,430						60,784,284
Securities sold under agreements to repurchase and other borrowings			100,232						458,387
Federal Home Loan Bank advances			3,110,205						2,360,018
Long-term debt			910,963						1,048,820
Accrued expenses and other liabilities			1,620,020						1,603,744
Total liabilities			70,255,850						66,255,253
Stockholders’ equity:
Preferred stock, $0.01 par value: Authorized—3,000,000 shares;
Series F issued and outstanding—6,000 shares			145,037						145,037
Series G issued and outstanding—135,000 shares			138,942						138,942
Common stock, $0.01 par value: Authorized—400,000,000 shares;
Issued—182,778,045 shares			1,828						1,828
Paid-in capital			6,166,150						6,179,753
Retained earnings			3,654,363						3,282,530
Treasury stock, at cost—11,349,581 and 10,756,089 shares			(535,027)						(507,523)
Accumulated other comprehensive (loss), net of tax			(373,243)						(550,571)
Total stockholders’ equity			9,198,050						8,689,996
Total liabilities and stockholders’ equity			$	79,453,900					$	74,945,249

See accompanying Notes to Condensed Consolidated Financial Statements.

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

			Three months ended												Nine months ended
			September 30,												September 30,
(In thousands, except per share data)			2024						2023						2024						2023
Interest Income:
Interest and fees on loans and leases			$	809,184					$	793,626					$	2,399,326					$	2,281,955
Taxable interest on investment securities			168,583						99,884						454,242						281,234
Non-taxable interest on investment securities			8,139						13,511						30,892						40,730
Loans held for sale			5,400						17						11,075						454
Other interest and dividends			12,757						23,751						36,664						90,740
Total interest income			1,004,063						930,789						2,932,199						2,695,113
Interest Expense:
Deposits			371,075						293,955						1,068,309						695,625
Securities sold under agreements to repurchase and other borrowings			38						50						3,260						7,940
Federal Home Loan Bank advances			35,172						40,196						106,266						196,878
Long-term debt			7,895						9,452						24,445						28,422
Total interest expense			414,180						343,653						1,202,280						928,865
Net interest income			589,883						587,136						1,729,919						1,766,248
Provision for credit losses			54,000						36,500						158,500						114,747
Net interest income after provision for credit losses			535,883						550,636						1,571,419						1,651,501
Non-interest Income:
Deposit service fees			38,863						41,005						122,479						131,859
Loan and lease related fees			18,513						19,966						57,614						63,499
Wealth and investment services			8,367						7,254						24,847						21,232
Cash surrender value of life insurance policies			8,020						6,620						20,325						19,641
(Loss) on sale of investment securities, net			(19,597)						—						(79,338)						(16,795)
Other income			3,575						15,537						53,465						31,086
Total non-interest income			57,741						90,382						199,392						250,522
Non-interest Expense:
Compensation and benefits			194,736						180,333						570,126						526,838
Occupancy			18,879						18,617						53,421						59,042
Technology and equipment			56,696						55,261						147,835						151,442
Intangible assets amortization			8,491						8,899						26,401						27,589
Marketing			4,224						4,810						12,612						13,446
Professional and outside services			16,001						26,874						43,048						88,693
Deposit insurance			13,555						13,310						52,843						39,356
Other expense			36,376						54,474						104,616						132,728
Total non-interest expense			348,958						362,578						1,010,902						1,039,134
Income before income taxes			244,666						278,440						759,909						862,889
Income tax expense			51,681						51,965						168,968						180,442
Net income			192,985						226,475						590,941						682,447
Preferred stock dividends			4,162						4,162						12,487						12,487
Net income available to common stockholders			$	188,823					$	222,313					$	578,454					$	669,960
Earnings per common share:
Basic			$	1.10					$	1.29					$	3.37					$	3.85
Diluted			1.10						1.28						3.36						3.85

See accompanying Notes to Condensed Consolidated Financial Statements.

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

			Three months ended												Nine months ended
			September 30,												September 30,
(In thousands)			2024						2023						2024						2023
Net income			$	192,985					$	226,475					$	590,941					$	682,447
Other comprehensive income (loss), net of tax:
Investment securities available-for-sale			208,516						(174,594)						162,436						(188,013)
Derivative instruments			46,059						(22,711)						14,460						(48,860)
Defined benefit pension and other postretirement benefit plans			81						349						432						6,054
Other comprehensive income (loss), net of tax			254,656						(196,956)						177,328						(230,819)
Comprehensive income			$	447,641					$	29,519					$	768,269					$	451,628

See accompanying Notes to Condensed Consolidated Financial Statements.

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

			At or for the three months ended September 30, 2024
(In thousands, except per share data)			Preferred Stock			Common Stock			Paid-In Capital			Retained Earnings			Treasury Stock, at cost			Accumulated Other Comprehensive (Loss), Net of Tax			Total Stockholders’ Equity
Balance at June 30, 2024			$	283,979		$	1,828		$	6,153,286		$	3,534,351		$	(536,277)		$	(627,899)		$	8,809,268
Net income			—			—			—			192,985			—			—			192,985
Other comprehensive income, net of tax			—			—			—			—			—			254,656			254,656
Common stock dividends and equivalents—$0.40 per share			—			—			—			(68,811)			—			—			(68,811)
Series F preferred stock dividends—$328.125 per share			—			—			—			(1,968)			—			—			(1,968)
Series G preferred stock dividends—$16.25 per share			—			—			—			(2,194)			—			—			(2,194)
Stock-based compensation			—			—			12,864			—			1,496			—			14,360
Common shares acquired from stock compensation plan activity			—			—			—			—			(250)			—			(250)
Common stock repurchase program			—			—			—			—			4			—			4
Balance at September 30, 2024			$	283,979		$	1,828		$	6,166,150		$	3,654,363		$	(535,027)		$	(373,243)		$	9,198,050
			At or for the three months ended September 30, 2023
(In thousands, except per share data)			Preferred Stock			Common Stock			Paid-In Capital			Retained Earnings			Treasury Stock, at cost			Accumulated Other Comprehensive (Loss), Net of Tax			Total Stockholders’ Equity
Balance at June 30, 2023			$	283,979		$	1,828		$	6,150,713		$	3,017,445		$	(455,416)		$	(718,823)		$	8,279,726
Net income			—			—			—			226,475			—			—			226,475
Other comprehensive (loss), net of tax			—			—			—			—			—			(196,956)			(196,956)
Common stock dividends and equivalents—$0.40 per share			—			—			—			(69,428)			—			—			(69,428)
Series F preferred stock dividends—$328.125 per share			—			—			—			(1,968)			—			—			(1,968)
Series G preferred stock dividends—$16.25 per share			—			—			—			(2,194)			—			—			(2,194)
Stock-based compensation			—			—			14,133			—			250			—			14,383
Common shares acquired from stock compensation plan activity			—			—			—			—			(361)			—			(361)
Common stock repurchase program			—			—			—			—			(50,476)			—			(50,476)
Balance at September 30, 2023			$	283,979		$	1,828		$	6,164,846		$	3,170,330		$	(506,003)		$	(915,779)		$	8,199,201

37

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			At or for the nine months ended September 30, 2024
(In thousands, except per share data)			Preferred Stock			Common Stock			Paid-In Capital			Retained Earnings			Treasury Stock, at cost			Accumulated Other Comprehensive (Loss), Net of Tax			Total Shareholders' Equity
Balance at December 31, 2023			$	283,979		$	1,828		$	6,179,753		$	3,282,530		$	(507,523)		$	(550,571)		$	8,689,996
Net income			—			—			—			590,941			—			—			590,941
Other comprehensive income, net of tax			—			—			—			—			—			177,328			177,328
Common stock dividends and equivalents—$1.20 per share			—			—			—			(206,621)			—			—			(206,621)
Series F preferred stock dividends—$984.38 per share			—			—			—			(5,906)			—			—			(5,906)
Series G preferred stock dividends—$48.75 per share			—			—			—			(6,581)			—			—			(6,581)
Stock-based compensation			—			—			(13,603)			—			55,156			—			41,553
Common shares acquired from stock compensation plan activity			—			—			—			—			(16,869)			—			(16,869)
Common stock repurchase program			—			—			—			—			(65,791)			—			(65,791)
Balance at September 30, 2024			$	283,979		$	1,828		$	6,166,150		$	3,654,363		$	(535,027)		$	(373,243)		$	9,198,050
			At or for the nine months ended September 30, 2023
(In thousands, except per share data)			Preferred Stock			Common Stock			Paid-In Capital			Retained Earnings			Treasury Stock, at cost			Accumulated Other Comprehensive (Loss), Net of Tax			Total Shareholders' Equity
Balance at December 31, 2022			$	283,979		$	1,828		$	6,173,240		$	2,713,861		$	(431,762)		$	(684,960)		$	8,056,186
Adoption of ASU No. 2022-02			—			—			—			(4,245)			—			—			(4,245)
Net income			—			—			—			682,447			—			—			682,447
Other comprehensive (loss), net of tax			—			—			—			—			—			(230,819)			(230,819)
Common stock dividends and equivalents—$1.20 per share			—			—			—			(209,246)			—			—			(209,246)
Series F preferred stock dividends—$984.38 per share			—			—			—			(5,906)			—			—			(5,906)
Series G preferred stock dividends—$48.75 per share			—			—			—			(6,581)			—			—			(6,581)
Stock-based compensation			—			—			(6,368)			—			46,563			—			40,195
Exercise of stock options			—			—			(2,026)			—			3,749			—			1,723
Common shares acquired from stock compensation plan activity			—			—			—			—			(15,765)			—			(15,765)
Common stock repurchase program			—			—			—			—			(108,788)			—			(108,788)
Balance at September 30, 2023			$	283,979		$	1,828		$	6,164,846		$	3,170,330		$	(506,003)		$	(915,779)		$	8,199,201

See accompanying Notes to Condensed Consolidated Financial Statements.

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

			Nine months ended September 30,
(In thousands)			2024						2023
Operating Activities:
Net income			$	590,941					$	682,447
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses			158,500						114,747
Deferred income tax (benefit)			(5,495)						(27,986)
Stock-based compensation			41,553						40,195
Depreciation and amortization of property and equipment and intangible assets			52,628						58,649
Net (accretion) and amortization of interest-earning assets and borrowings			(59,789)						(15,787)
Amortization of low-income housing tax credit investments			63,844						54,284
Reduction of right-of-use lease assets			23,910						24,228
Loss on sale of investment securities, net			79,338						16,795
Originations of loans held for sale			(5,236)						(9,900)
Proceeds from sale of loans held for sale			6,660						11,250
Net loss on sale of factored receivables portfolio			15,977						—
Net (gain) on sale of mortgage servicing rights			(11,655)						—
(Increase) in cash surrender value of life insurance policies			(20,325)						(19,641)
Other operating activities, net			(22,460)						(1,136)
Net (increase) in loans held for sale			(33,472)						—
Net (increase) decrease in derivative contract assets and liabilities			(120,933)						94,600
Net decrease (increase) in accrued interest receivable and other assets			198,151						(3,183)
Net (decrease) in accrued expenses and other liabilities			(439,153)						(128,728)
Net cash provided by operating activities			512,984						890,834
Investing Activities:
Purchases of available-for-sale securities			(1,631,620)						(930,546)
Proceeds from principal payments, maturities, and calls of available-for-sale securities			608,524						456,384
Proceeds from sale of available-for-sale securities			1,538,030						398,296
Purchases of held-to-maturity securities			(1,778,098)						(619,957)
Proceeds from principal payments, maturities, and calls of held-to-maturity securities			320,439						312,720
Net (increase) decrease in Federal Home Loan Bank and Federal Reserve Bank stock			(33,913)						139,815
Alternative investments (capital calls), net of distributions			(16,735)						(18,095)
Net (increase) in loans			(1,982,260)						(905,906)
Proceeds from sale of loans not originated for sale			567,729						512,622
Proceeds from sale of mortgage servicing rights			18,310						—
Proceeds from sale of foreclosed properties and repossessed assets			6,962						4,443
Proceeds from sale of property and equipment			4,417						4,145
Additions to property and equipment			(23,505)						(33,980)
Proceeds from life insurance policies			28,247						17,207
Net cash paid for acquisition of Ametros			(359,460)						—
Net cash paid for acquisition of interLINK			—						(157,646)
Net cash (used for) investing activities			(2,732,933)						(820,498)
See accompanying Notes to Condensed Consolidated Financial Statements.

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WEBSTER FINANCIAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited), continued
			Nine months ended September 30,
(In thousands)			2024						2023
Financing Activities:
Net increase in deposits			3,747,738						6,267,722
Net increase (decrease) in Federal Home Loan Bank advances			750,187						(3,650,334)
Net (decrease) in securities sold under agreements to repurchase and other borrowings			(358,155)						(994,339)
Repayment of long-term debt			(132,550)						(16,752)
Payment of contingent consideration			(4,050)						—
Dividends paid to common stockholders			(206,707)						(209,333)
Dividends paid to preferred stockholders			(12,487)						(12,487)
Exercise of stock options			—						1,723
Common stock repurchase program			(65,402)						(107,983)
Common shares acquired related to stock compensation plan activity			(16,869)						(15,765)
Net cash provided by financing activities			3,701,705						1,262,452
Net (decrease) increase in cash and cash equivalents			1,481,756						1,332,788
Cash and cash equivalents, beginning of period			1,715,795						839,943
Cash and cash equivalents, end of period			$	3,197,551					$	2,172,731
Supplemental disclosure of cash flow information:
Interest paid			$	1,234,838					$	877,678
Income taxes paid			110,302						213,796
Non-cash investing and financing activities:
Transfer of loans and leases to foreclosed properties and repossessed assets			$	2,305					$	4,091
Transfer of returned lease equipment to assets held for sale			4,942						—
Transfer of loans and leases to loans held for sale			652,823						557,462
Acquisition of Ametros:
Tangible assets acquired			256,957						—
Goodwill and other intangible assets			417,085						—
Liabilities assumed			299,507						—
Forgiveness of long-term debt			12,875						—
Pre-existing equity interest			2,200						—
Acquisition of interLINK:
Tangible assets acquired			—						6,417
Goodwill and other intangible assets			—						183,216
Liabilities assumed			—						15,948
Contingent consideration			—						16,039
Acquisition of Bend:
Tangible assets acquired			—						294
Goodwill and other intangible assets			—						(294)
Merger with Sterling:
Tangible assets acquired			—						17,607
Goodwill and other intangible assets			—						(25,561)
Liabilities assumed			—						(7,954)

See accompanying Notes to Condensed Consolidated Financial Statements.

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Note 1: Basis of Presentation and Accounting Standards Updates

Basis of Presentation

The unaudited Condensed Consolidated Financial Statements of the Company have been prepared in accordance with GAAP for interim financial information and Article 10 of Regulation S-X. Certain information and footnote disclosures required by GAAP for complete financial statements have been omitted or condensed. Therefore, the Condensed Consolidated Financial Statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The results of operations for the three and nine months ended September 30, 2024, are not necessarily indicative of the future results that may be attained for the entire year or other interim periods.

In the opinion of management, all necessary adjustments have been reflected to present fairly the financial position, results of operations, and cash flows for the reporting periods presented. Intercompany transactions and balances have been eliminated in consolidation. Assets under administration or assets under management that the Company holds or manages in a fiduciary or agency capacity for customers are not included in the Condensed Consolidated Financial Statements.

Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications did not have a material impact on the Company’s Condensed Consolidated Financial Statements.

Use of Estimates

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

Accounting Standards Adopted in the Current Period

ASU No. 2023-02—Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (a consensus of the Emerging Issues Task Force)

In March 2023, the FASB issued ASU No. 2023-02—Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (a consensus of the Emerging Issues Task Force), which permits reporting entities to elect to account for their tax equity investments, regardless of the program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. A reporting entity may make an accounting policy election to apply the proportional amortization method in accordance with paragraph 323-740-25-4 on a tax-credit-program by tax-credit-program basis rather than electing to apply the proportional amortization method at the reporting entity level or to individual investments.

A reporting entity that applies the proportional amortization method to qualifying tax equity investments must account for the receipt of the investment tax credits using the flow-through method under Topic 740, Income Taxes, even if the entity applies the deferral method for other investment tax credits received. The amendments also remove certain guidance for Qualified Affordable Housing Project Investments, require the application of the delayed equity contribution guidance to all tax equity investments, and require specific disclosures that must be applied to all investments that generate income tax credits and other income tax benefits from a tax credit program for which the entity has elected to apply the proportional amortization method in accordance with Subtopic 323-740.

The Company adopted the Update on January 1, 2024. The adoption of this guidance did not have a material impact on the Company’s Condensed Consolidated Financial Statements and disclosures as its investments in tax credit structures are currently limited to LIHTC investments, which are already being accounted for using the proportional amortization method.

ASU No. 2023-01—Leases (Topic 842): Common Control Arrangements

In March 2023, the FASB issued ASU No. 2023-01—Leases (Topic 842): Common Control Arrangements, which requires that leasehold improvements associated with leases between entities under common control be: (i) amortized by the lessee over the useful lives of the leasehold improvements to the common control group (regardless of the lease term) as long as the lessee controls the use of the underlying asset (the leased asset) through a lease; however, if the lessor obtained the right to control the use of the underlying asset through a lease with another entity not within the same common control group, the amortization period may not exceed the amortization period of the common control group; and (ii) accounted for as a transfer between entities under common control through an adjustment to equity, if, and when, the lessee no longer controls the use of the underlying asset. Additionally, those leasehold improvements are subject to the impairment guidance in Topic 360, Property, Plant, and Equipment.

The Company adopted the Update on January 1, 2024. The adoption of this guidance did not have a material impact on the Company’s Condensed Consolidated Financial Statements and disclosures as its operating lease arrangements in which it is lessee are currently not between entities under common control.

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ASU No. 2022-03—Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restriction

In June 2022, the FASB issued ASU No. 2022-03—Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security, and therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction, and requires the following disclosures for equity securities subject to contractual sale restrictions: (i) the fair value of equity securities subject to contractual sale restrictions reflected on the balance sheet; (ii) the nature and remaining duration of the restriction(s); and (iii) the circumstances that could cause a lapse in the restriction(s).

The Company adopted the Update on January 1, 2024. The adoption of this guidance did not have a material impact on the Company’s Condensed Consolidated Financial Statements and disclosures. The Company does not currently consider contractual restrictions on the sale of an equity security in measuring fair value.

Relevant Accounting Standards Issued But Not Yet Adopted

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

In December 2023, the FASB issued ASU No. 2023-09—Income Taxes (Topic 740)—Improvements to Income Tax Disclosures, to provide more transparency about income tax information through improvements to income tax disclosures, primarily related to the rate reconciliation and income taxes paid information. Specifically, the amendments in this Update require disclosure of: (i) a tabular reconciliation, using both percentages and reporting currency amounts, with prescribed categories that are required to be disclosed, and the separate disclosure and disaggregation of prescribed reconciling items with an effect equal to 5% or more of the amount determined by multiplying pretax income from continuing operations by the application statutory rate; (ii) a qualitative description of the states and local jurisdictions that make up the majority (greater than 50%) of the effect of the state and local income taxes; and (iii) amount of income taxes paid, net of refunds received, disaggregated by federal, state, and foreign taxes and by individual jurisdictions that comprise 5% or more of total income taxes paid, net of refunds received. The amendments in this Update also include certain other amendments to improve the effectiveness of income tax disclosures.

The Update is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The amendments should be applied on a prospective basis; however, retrospective application is permitted. The Company is currently evaluating this guidance to determine the impact on its income tax disclosures.

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

In November 2023, the FASB issued ASU No. 2023-07—Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures, to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. Specifically, the amendments in this Update require disclosure of: (i) significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss; (ii) an amount for other segment items by reportable segment and a description of its composition; and (iii) the title and position of the chief operating decision maker and an explanation of how the chief operating decision maker uses each reported measure of segment profit or loss in assessing segment performance and deciding how to allocate resources.

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

The Update is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The amendments should be applied retrospectively to all prior periods presented in the financial statements, in which, upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company is currently evaluating this guidance, which it will adopt in the fourth quarter of 2024, to determine the impact on its segment reporting disclosures.

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Note 2: Business Developments

Ametros Acquisition

On January 24, 2024, the Bank acquired all of the equity interest in Ametros from Long Ridge Capital Management
(the “Seller”). Ametros is a custodian and administrator of medical funds from insurance claim settlements that helps individuals manage their ongoing medical care through its CareGuard service and proprietary technology platform. The acquisition provided the Company with a fast-growing source of low-cost and long-duration deposits, new sources of non-interest income, and will enhance its employee benefit and healthcare financial services expertise.

The acquisition was accounted for as a business combination. Accordingly, the total purchase price, which included cash paid of $359.7 million, the forgiveness of $12.9 million in long-term debt, and the assumption of a $5.8 million liability for the Seller’s transaction expenses, has been preliminarily allocated to the identifiable assets acquired and liabilities assumed based on their acquisition-date fair values, as summarized in the following table:

(In thousands)			Fair Value
Purchase price consideration			$	378,424
Assets:
Cash and due from banks			310
Premises and equipment			1,078
Other intangible assets			188,900
Deferred tax assets, net			(35,889)
Other assets:
Funds held in escrow			288,167
Accounts receivable			2,435
Prepaid expenses			1,166
Total other assets			291,768
Total assets acquired			$	446,167
Liabilities:
Interest-bearing deposits (1)			(20,622)
Other liabilities:
Accounts payable			684
Accrued expenses			4,270
Deferred revenue			20,391
Members’ funds			288,167
Operating lease liabilities			838
Total other liabilities			314,350
Total liabilities assumed			$	293,728
Net assets acquired			152,439
Pre-existing equity interest (2)			$	2,200
Goodwill			$	228,185

(1)The $20.6 million reflects the amount held in Ametros’ operating cash account at the Bank on January 24, 2024. Upon acquisition, such cash and the Bank’s corresponding deposit liability owed to Ametros were eliminated in consolidation, which resulted in a decrease to interest-bearing deposits for the Bank and the Bank’s legal title to the funds being held in such operating cash account.

(2)Prior to the acquisition date, the Company had a 0.6% equity interest in Ametros. The consideration transferred reflects the purchase price for the remaining 99.4% of the business. Upon acquisition, the Company recognized a $1.5 million gain in Other income on the accompanying Condensed Consolidated Statement of Income, which represents the difference between the cost basis and estimated acquisition-date fair value of the Company’s pre-existing equity interest in Ametros.

The $228.2 million of preliminary goodwill is not deductible for tax purposes. Information regarding the allocation of goodwill to the Company’s reportable segments can be found within Note 14: Segment Reporting.

The Company considers its valuations of other intangible assets, deferred taxes, and certain other assets and other liabilities to be provisional, as management continues to identify and assess information regarding the nature of these assets acquired and liabilities assumed, including extended information gathering and management review procedures. Although the Company believes that the information available as of September 30, 2024, provides a reasonable basis for estimating fair value, it is possible that additional information becomes available during the one-year measurement period following the close of the acquisition, which could result in changes to the fair values presented.

The results of operations related to the acquired Ametros business are included in the Company’s Condensed Consolidated Statements of Income subsequent to the acquisition date, and were not material for the three and nine months ended September 30, 2024.

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The following is a description of the valuation methodologies used to estimate the fair values of the significant assets acquired and liabilities assumed:

Other intangible assets. The Company identified and recognized a $182.8 million core deposit intangible asset and a
$6.1 million trade name intangible asset. A core deposit intangible asset represents the value of relationships with deposit customers. The fair value of the core deposit intangible asset was estimated using a net cost savings method, a form of discounted cash flow methodology, which gave appropriate consideration to expected client attrition rates and other applicable adjustments to the projected deposit balance, the interest cost and net maintenance cost associated with the client deposit base, an alternative cost of funds, and a discount rate that was used to discount the future economic benefits of the core deposit intangible asset to present value. The core deposit intangible asset is being amortized on an accelerated basis over an estimated useful life of 25 years, which is the period over which the estimated economic benefits are estimated to be received. The fair value of the trade name intangible asset for the Ametros brand was estimated using a relief-from-royalty methodology, which models the cost savings from owning the brand rather than licensing it from a third party. The trade name intangible asset is being amortized on a straight-line basis over an estimated useful life of 5 years.

Funds held in escrow and Members’ funds. Funds held in escrow represent amounts held in interest-bearing checking accounts at insured depository institutions other than the Bank for the purpose of providing post-settlement medical administration services on a respective member’s behalf. Members’ funds is the corresponding liability to the Funds held in escrow. Given that these amounts can be withdrawn and/or directed for use on demand, as long as in accordance with the terms of the settlement agreement, their carrying amount is a reasonable estimate of fair value.

Multi-family Securitization

On September 30, 2024, the Company completed a multi-family securitization, in which it transferred $303.9 million of
multi-family loans ($302.5 million carrying amount plus $1.4 million accrued interest receivable) to a third-party depositor, who placed the multi-family loans into a third-party trust, in exchange for net cash proceeds of $311.6 million. Through a
two-step process, pass-through certificates were issued, which are secured by the multi-family loans and guaranteed by Freddie Mac. The transfer of the multi-family loans was accounted for as a sale in accordance with ASC 860, Transfers and Servicing. Servicing rights were not retained.

Per the terms of the securitization agreement, the Company assumed an obligation to reimburse Freddie Mac for any payments made under Freddie Mac’s guarantee of the certificates. The reimbursement obligation covers losses up to 12% of the aggregate UPB of the multi-family loans at the time of sale, and is secured in full by an irrevocable letter of credit issued by the FHLB. Essentially, this reimbursement obligation represents a first credit loss enhancement provided by the Company to Freddie Mac. Based on the credit quality of the multi-family loans at the time of sale, among other factors, the Company estimated the fair value of its reimbursement obligation to be $3.3 million. The fair value of the reimbursement obligation is included in Accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets.

Including the reimbursement obligation, the transaction resulted in a net gain on sale of $4.4 million, which is included in Other income on the Condensed Consolidated Statements of Income.

Until the Company’s obligation to reimburse Freddie Mac for the first 12% of losses is reduced to 25% of the initial amount, it may have the option to exercise certain contingent repurchase rights over the transferred multi-family loans, unless it elects to waive or assign those rights. At the time of sale, the Company does not intend to repurchase any of the multi-family loans.

Held-for-Sale Payroll Finance Portfolio and Sale of Factored Receivables Portfolio

In March 2024, the Company initiated a plan to actively sell its payroll finance and factored receivables loan portfolios, along with the related customer contracts. This decision was a direct result of the Company’s continuous reassessment of its strategic model in an effort to identify opportunities to improve its core financial products and services.

On September 27, 2024, the Company sold its factored receivables loan portfolio of $124.1 million, and the related customer contracts, for proceeds of $129.2 million. After the write-off of the factored receivables customer relationship intangible asset, which had a net carrying amount of $19.7 million, less $1.3 million of selling costs, the sale of assets resulted in a $16.0 million net loss on sale. The net loss is included in Other income on the Condensed Consolidated Statements of Income and in the Corporate and Reconciling category for segment reporting purposes in accordance with the Company’s methodology.

As of the third quarter of 2024, the Company still intends to sell its payroll finance loan portfolio, which had a carrying amount of $117.1 million at September 30, 2024. Accordingly, the portfolio remains classified as held for sale, and therefore, is included in Loans held for sale on the Condensed Consolidated Balance Sheets.

Joint Venture with Marathon Asset Management

On July 19, 2024, the Company entered into an agreement with Marathon Asset Management to form a private credit joint venture which will deliver direct lending solutions for sponsor-backed middle market companies across the country.

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Sale of Mortgage Servicing Rights

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

interLINK Acquisition

On January 11, 2023, the Company acquired 100% ownership of interLINK from StoneCastle Partners LLC. interLINK is a technology-enabled deposit management platform that administers over $9 billion of deposits from FDIC-insured cash sweep programs between banks and broker/dealers and clearing firms. The acquisition provided the Company with access to a unique source of core deposit funding and scalable liquidity and added another technology-enabled channel to its already differentiated, omnichannel deposit gathering capabilities.

The total purchase price of the acquisition was $174.6 million, which included cash paid of $158.6 million and $16.0 million of contingent consideration measured at fair value. The contingent consideration is payable in cash upon the achievement of discrete customer and deposit growth events within three years of the acquisition date. Additional information regarding contingent consideration, including the determination of fair value, can be found within Note 13: Fair Value Measurements.

The acquisition has been accounted for as a business combination, and resulted in the addition of $31.4 million in net assets measured at fair value, which primarily comprised $36.0 million of broker dealer relationship intangible assets, $6.0 million of developed technology, a $4.0 million non-competition agreement intangible asset, and $15.9 million of royalty liabilities. The $143.2 million of goodwill recognized is deductible for tax purposes.

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Note 3: Investment Securities

Available-for-Sale

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

			At September 30, 2024
(In thousands)			Amortized Cost (1)			Unrealized Gains			Unrealized Losses			Fair Value
Government agency debentures			$	302,358		$	—		$	(27,533)		$	274,825
Municipal bonds and notes			203,162			22			(12,202)			190,982
Agency CMO			45,724			—			(2,705)			43,019
Agency MBS			4,115,543			50,987			(194,350)			3,972,180
Agency CMBS			2,970,365			31,874			(265,404)			2,736,835
CMBS			709,793			112			(13,095)			696,810
Corporate debt			679,659			283			(50,826)			629,116
Private label MBS			44,651			—			(2,817)			41,834
Other			9,849			—			(472)			9,377
Total available-for-sale			$	9,081,104		$	83,278		$	(569,404)		$	8,594,978
			At December 31, 2023
(In thousands)			Amortized Cost (1)			Unrealized Gains			Unrealized Losses			Fair Value
Government agency debentures			$	302,212		$	—		$	(37,579)		$	264,633
Municipal bonds and notes			1,626,126			8			(52,901)			1,573,233
Agency CMO			52,994			—			(4,053)			48,941
Agency MBS			3,568,140			32,461			(253,503)			3,347,098
Agency CMBS			2,569,438			18,204			(299,571)			2,288,071
CMBS			788,478			—			(24,729)			763,749
Corporate debt			704,569			—			(82,414)			622,155
Private label MBS			46,635			—			(3,827)			42,808
Other			9,830			—			(789)			9,041
Total available-for-sale			$	9,668,422		$	50,673		$	(759,366)		$	8,959,729

(1)Accrued interest receivable on available-for-sale securities of $34.5 million and $42.5 million at September 30, 2024, and December 31, 2023, respectively, is excluded from amortized cost and is included in Accrued interest receivable and other assets on the accompanying Condensed Consolidated Balance Sheets.

Unrealized Losses

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

			At September 30, 2024
			Less Than 12 Months									12 Months or More									Total
(Dollars in thousands)			Fair Value			Unrealized Losses						Fair Value			Unrealized Losses						Number of Holdings			Fair Value			Unrealized Losses
Government agency debentures			$	—		$	—					$	274,825		$	(27,533)					19			$	274,825		$	(27,533)
Municipal bonds and notes			706			—						179,577			(12,202)						84			180,283			(12,202)
Agency CMO			—			—						43,019			(2,705)						35			43,019			(2,705)
Agency MBS			25,301			(189)						1,656,239			(194,161)						362			1,681,540			(194,350)
Agency CMBS			51,045			(335)						1,624,626			(265,069)						134			1,675,671			(265,404)
CMBS			—			—						602,858			(13,095)						39			602,858			(13,095)
Corporate debt			—			—						614,519			(50,826)						85			614,519			(50,826)
Private label MBS			—			—						41,834			(2,817)						3			41,834			(2,817)
Other			—			—						9,377			(472)						2			9,377			(472)
Total			$	77,052		$	(524)					$	5,046,874		$	(568,880)					763			$	5,123,926		$	(569,404)

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			At December 31, 2023
			Less Than Twelve Months									Twelve Months or Longer									Total
(Dollars in thousands)			Fair Value			Unrealized Losses						Fair Value			Unrealized Losses						Number of Holdings			Fair Value			Unrealized Losses
Government agency debentures			$	—		$	—					$	264,633		$	(37,579)					19			$	264,633		$	(37,579)
Municipal bonds and notes			18,066			(124)						1,536,656			(52,777)						386			1,554,722			(52,901)
Agency CMO			—			—						48,941			(4,053)						36			48,941			(4,053)
Agency MBS			71,187			(272)						1,945,221			(253,231)						457			2,016,408			(253,503)
Agency CMBS			430,070			(16,137)						1,314,681			(283,434)						145			1,744,751			(299,571)
CMBS			43,844			(856)						719,905			(23,873)						42			763,749			(24,729)
Corporate debt			4,278			(27)						617,877			(82,387)						91			622,155			(82,414)
Private label MBS			—			—						42,808			(3,827)						3			42,808			(3,827)
Other			—			—						9,041			(789)						2			9,041			(789)
Total			$	567,445		$	(17,416)					$	6,499,763		$	(741,950)					1,181			$	7,067,208		$	(759,366)

The $190.0 million decrease in gross unrealized losses from December 31, 2023, to September 30, 2024, is primarily due to lower interest rates, as well as net realized losses from sales of available-for-sale securities. The Company assesses each available-for-sale security that is in an unrealized loss position to determine whether the decline in fair value below the amortized cost basis is a result of a credit loss or other factors. At both September 30, 2024, and December 31, 2023, no ACL was recorded on available-for-sale securities as each of the securities in the Company’s portfolio are investment grade, current as to principal and interest, and their price changes are consistent with interest and credit spreads when adjusting for convexity, rating, and industry differences.

As of September 30, 2024, based on current market conditions and the Company’s targeted balance sheet composition strategy, the Company intends to hold its available-for-sale securities with unrealized loss positions through the anticipated recovery period. The issuers of these available-for-sale securities have not, to the Company’s knowledge, established any cause for default. Market prices are expected to approach par as the securities approach maturity.

Contractual Maturities

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

			At September 30, 2024
(In thousands)			Amortized Cost						Fair Value
Maturing within 1 year			$	27,407					$	27,190
After 1 year through 5 years			363,330						350,935
After 5 through 10 years			570,885						524,547
After 10 years			8,119,482						7,692,306
Total available-for-sale			$	9,081,104					$	8,594,978

Available-for-sale securities that are not due at a single maturity date have been categorized based on the maturity date of the underlying collateral. Actual principal cash flows may differ from this categorization as borrowers have the right to prepay their obligations with or without prepayment penalties.

Sales of Available-for Sale Securities

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

			Three months ended September 30,												Nine months ended September 30,
(In thousands)			2024						2023						2024						2023
Proceeds from sales			$	284,698					$	—					$	1,538,030					$	398,295
Gross realized gains			$	—					$	—					$	2,240					$	—
Gross realized losses (1)			(19,597)						—						(84,148)						(20,531)

(1)For the nine months ended September 30, 2024, and 2023, respectively, $2.6 million and $3.8 million of the gross realized losses were attributed to a decline in credit quality. Accordingly, these amounts have been included in the Provision for credit losses on the accompanying Condensed Consolidated Statements of Income. The $79.3 million and $16.8 million included in non-interest income for the nine months ended September 30, 2024, and 2023, respectively, reflect the amounts that were not attributed to a decline in credit quality. There were no gross realized losses included in the Provision for credit losses for the three months ended September 30, 2024.

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Other Information

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

(In thousands)			At September 30, 2024						At December 31, 2023
Pledged for deposits			$	1,936,253					$	2,102,115
Pledged for borrowings and other			6,216,117						6,111,430
Total available-for-sale securities pledged			$	8,152,370					$	8,213,545

Held-to-Maturity

The following tables summarize the amortized cost, fair value, and ACL on held-to-maturity securities by major type:

			At September 30, 2024
(In thousands)			Amortized Cost (1)			Unrealized Gains			Unrealized Losses			Fair Value						Allowance			Net Carrying Value
Agency CMO			$	20,753		$	—		$	(1,282)		$	19,471					$	—		$	20,753
Agency MBS			3,207,275			24,719			(239,695)			2,992,299						—			3,207,275
Agency CMBS			4,365,634			40,366			(475,879)			3,930,121						—			4,365,634
Municipal bonds and notes			903,105			1,913			(23,663)			881,355						171			902,934
CMBS			69,340			—			(3,470)			65,870						—			69,340
Total held-to-maturity			$	8,566,107		$	66,998		$	(743,989)		$	7,889,116					$	171		$	8,565,936

			At December 31, 2023
(In thousands)			Amortized Cost (1)			Unrealized Gains			Unrealized Losses			Fair Value						Allowance			Net Carrying Value
Agency CMO			$	23,470		$	—		$	(1,728)		$	21,742					$	—		$	23,470
Agency MBS			2,409,521			1,141			(284,776)			2,125,886						—			2,409,521
Agency CMBS			3,625,627			18,586			(514,534)			3,129,679						—			3,625,627
Municipal bonds and notes			916,104			2,440			(24,877)			893,667						209			915,895
CMBS			100,075			—			(6,426)			93,649						—			100,075
Total held-to-maturity			$	7,074,797		$	22,167		$	(832,341)		$	6,264,623					$	209		$	7,074,588

(1)Accrued interest receivable on held-to-maturity securities of $26.4 million and $24.9 million at September 30, 2024, and December 31, 2023, respectively, is excluded from amortized cost and is included in Accrued interest receivable and other assets on the accompanying Condensed Consolidated Balance Sheets.

An ACL on held-to-maturity securities is recorded for certain Municipal bonds and notes to account for expected lifetime credit losses. Agency securities represent obligations issued by a U.S. government-sponsored enterprise or other federally-related entity and are either explicitly or implicitly guaranteed, and therefore, assumed to be zero loss. Held-to-maturity securities with gross unrealized losses and no ACL are considered to be high credit quality, and therefore, zero credit loss has been recorded.

The following table summarizes the activity in the ACL on held-to-maturity securities:

			Three months ended September 30,												Nine months ended September 30,
(In thousands)			2024						2023						2024						2023
Balance, beginning of period			$	182					$	216					$	209					$	182
(Benefit) provision for credit losses			(11)						(13)						(38)						21
Balance, end of period			$	171					$	203					$	171					$	203

Contractual Maturities

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

			At September 30, 2024
(In thousands)			Amortized Cost						Fair Value
Maturing within 1 year			$	39,418					$	39,402
After 1 year through 5 years			151,171						144,784
After 5 through 10 years			259,642						255,799
After 10 years			8,115,876						7,449,131
Total held-to-maturity			$	8,566,107					$	7,889,116

Held-to-maturity securities that are not due at a single maturity date have been categorized based on the maturity date of the underlying collateral. Actual principal cash flows may differ from this categorization as borrowers have the right to prepay their obligations with or without prepayment penalties.

48

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Credit Quality Information

The Company monitors the credit quality of held-to-maturity securities through credit ratings provided by Standard & Poor’s Rating Services, Moody’s Investor Services, Fitch Ratings, Inc., Kroll Bond Rating Agency, or DBRS Inc. Credit ratings express opinions about the credit quality of a security and are updated at each quarter end. Investment grade securities are rated BBB- or higher by S&P, or Baa3 or higher by Moody’s, and are generally considered by the rating agencies and market participants to be of low credit risk. Conversely, securities rated below investment grade, which are labeled as speculative grade by the rating agencies, are considered to have distinctively higher credit risk than investment grade securities. There were no speculative grade held-to-maturity securities at either September 30, 2024, or December 31, 2023. Held-to-maturity securities that are not rated are collateralized with U.S. Treasury obligations.

The following tables summarize the amortized cost of held-to-maturity securities based on their lowest publicly available credit rating:

			At September 30, 2024
			Investment Grade
(In thousands)			Aaa			Aa1			Aa2			Aa3			A1						A3									Not Rated
Agency CMO			$	—		$	20,753		$	—		$	—		$	—					$	—								$	—
Agency MBS			—			3,207,275			—			—			—						—									—
Agency CMBS			—			4,365,634			—			—			—						—									—
Municipal bonds and notes			341,729			158,735			245,150			110,733			27,794						4,165									14,799
CMBS			69,340			—			—			—			—						—									—
Total held-to-maturity			$	411,069		$	7,752,397		$	245,150		$	110,733		$	27,794					$	4,165								$	14,799

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

At both September 30, 2024, and December 31, 2023, there were no held-to-maturity securities past due under the terms of their agreements nor in non-accrual status.

Other Information

The following table summarizes the carrying value of held-to-maturity securities pledged for deposits, borrowings, and other purposes:

(In thousands)			At September 30, 2024						At December 31, 2023
Pledged for deposits			$	2,155,063					$	1,212,824
Pledged for borrowings and other			6,344,307						5,582,379
Total held-to-maturity securities pledged			$	8,499,370					$	6,795,203

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Note 4: Loans and Leases

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

(In thousands)			At September 30, 2024						At December 31, 2023
Commercial non-mortgage			$	17,410,062					$	16,885,475
Asset-based			1,463,903						1,557,841
Commercial real estate			14,624,223						13,569,762
Multi-family			7,067,154						7,587,970
Equipment financing			1,247,027						1,328,786
Commercial portfolio			41,812,369						40,929,834
Residential			8,576,612						8,227,923
Home equity			1,443,833						1,516,955
Other consumer			114,201						51,340
Consumer portfolio			10,134,646						9,796,218
Loans and leases			$	51,947,015					$	50,726,052

The carrying amount of loans and leases at September 30, 2024, and December 31, 2023, includes net unamortized
(discounts)/premiums and net unamortized deferred (fees)/costs totaling $(13.0) million and $(33.8) million, respectively. Accrued interest receivable of $279.2 million and $270.4 million at September 30, 2024, and December 31, 2023, respectively, is excluded from the carrying amount of loans and leases and is included in Accrued interest receivable and other assets on the accompanying Condensed Consolidated Balance Sheets.

At September 30, 2024, the Company had pledged $18.0 billion and $2.1 billion of eligible loans as collateral to support borrowing capacity at the FHLB and FRB, respectively.

Non-Accrual and Past Due Loans and Leases

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

			At September 30, 2024
(In thousands)			30-59 Days Past Due and Accruing			60-89 Days Past Due and Accruing			90 or More Days Past Due and Accruing			Non-accrual			Total Past Due and Non-accrual			Current (1)			Total Loans and Leases
Commercial non-mortgage			$	27,873		$	800		$	71		$	201,274		$	230,018		$	17,180,044		$	17,410,062
Asset-based			—			—			—			29,762			29,762			1,434,141			1,463,903
Commercial real estate			4,632			5,905			—			141,975			152,512			14,471,711			14,624,223
Multi-family			25,550			—			—			6,205			31,755			7,035,399			7,067,154
Equipment financing			15,278			1,246			—			13,298			29,822			1,217,205			1,247,027
Commercial portfolio			73,333			7,951			71			392,514			473,869			41,338,500			41,812,369
Residential			12,047			6,141			—			9,328			27,516			8,549,096			8,576,612
Home equity			7,382			1,993			—			20,611			29,986			1,413,847			1,443,833
Other consumer			135			20			—			114			269			113,932			114,201
Consumer portfolio			19,564			8,154			—			30,053			57,771			10,076,875			10,134,646
Total			$	92,897		$	16,105		$	71		$	422,567		$	531,640		$	51,415,375		$	51,947,015

(1)At September 30, 2024, there were $29.6 million commercial loans that had reached their contractual maturity but were actively in the process of being refinanced with the Company. Due to the status of the refinancing, these commercial loans have been reported as current in the table above. In October 2024, all of such commercial loans were approved and refinanced.

			At December 31, 2023
(In thousands)			30-59 Days Past Due and Accruing			60-89 Days Past Due and Accruing			90 or More Days Past Due and Accruing			Non-accrual			Total Past Due and Non-accrual			Current			Total Loans and Leases
Commercial non-mortgage			$	2,270		$	890		$	94		$	122,855		$	126,109		$	16,759,366		$	16,885,475
Asset-based			—			—			—			35,068			35,068			1,522,773			1,557,841
Commercial real estate			1,459			—			184			11,383			13,026			13,556,736			13,569,762
Multi-family			5,198			2,340			—			—			7,538			7,580,432			7,587,970
Equipment financing			3,966			8			—			9,828			13,802			1,314,984			1,328,786
Commercial portfolio			12,893			3,238			278			179,134			195,543			40,734,291			40,929,834
Residential			14,894			6,218			—			5,704			26,816			8,201,107			8,227,923
Home equity			5,676			3,285			—			23,545			32,506			1,484,449			1,516,955
Other consumer			410			94			—			142			646			50,694			51,340
Consumer portfolio			20,980			9,597			—			29,391			59,968			9,736,250			9,796,218
Total			$	33,873		$	12,835		$	278		$	208,525		$	255,511		$	50,470,541		$	50,726,052

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

			At September 30, 2024									At December 31, 2023
(In thousands)			Non-accrual			Non-accrual with No Allowance						Non-accrual			Non-accrual with No Allowance
Commercial non-mortgage			$	201,274		$	13,340					$	122,855		$	20,066
Asset-based			29,762			1,080						35,068			1,330
Commercial real estate			141,975			48,678						11,383			2,681
Multi-family			6,205			6,109						—			—
Equipment financing			13,298			1,092						9,828			1,584
Commercial portfolio			392,514			70,299						179,134			25,661
Residential			9,328			4,328						5,704			856
Home equity			20,611			12,243						23,545			12,471
Other consumer			114			3						142			49
Consumer portfolio			30,053			16,574						29,391			13,376
Total			$	422,567		$	86,873					$	208,525		$	39,037

Additional interest income on non-accrual loans and leases that would have been recognized in the Condensed Consolidated Statements of Income had such loans and leases been current in accordance with their contractual terms was $13.7 million and $7.8 million for the three months ended September 30, 2024, and 2023, respectively, and $28.9 million and $18.6 million for the nine months ended September 30, 2024, and 2023, respectively.

Allowance for Credit Losses on Loans and Leases

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

			At or for the three months ended September 30,
			2024												2023
(In thousands)			Commercial Portfolio			Consumer Portfolio			Total						Commercial Portfolio			Consumer Portfolio			Total
ACL on loans and leases:
Balance, beginning of period			$	621,720		$	47,635		$	669,355					$	572,653		$	56,258		$	628,911
Provision (benefit)			49,923			3,946			53,869						38,908			(3,069)			35,839
Charge-offs			(36,362)			(997)			(37,359)						(27,360)			(3,642)			(31,002)
Recoveries			377			1,556			1,933						292			1,398			1,690
Balance, end of period			$	635,658		$	52,140		$	687,798					$	584,493		$	50,945		$	635,438

			At or for the nine months ended September 30,
			2024												2023
(In thousands)			Commercial Portfolio			Consumer Portfolio			Total						Commercial Portfolio			Consumer Portfolio			Total
ACL on loans and leases:
Balance, beginning of period			$	577,663		$	58,074		$	635,737					$	533,125		$	61,616		$	594,741
Adoption of ASU No. 2022-02			—			—			—						7,704			(1,831)			5,873
Provision (benefit)			164,884			(6,780)			158,104						116,489			(7,580)			108,909
Charge-offs			(108,179)			(3,745)			(111,924)						(75,715)			(5,825)			(81,540)
Recoveries			1,290			4,591			5,881						2,890			4,565			7,455
Balance, end of period			$	635,658		$	52,140		$	687,798					$	584,493		$	50,945		$	635,438
Individually evaluated for credit losses			70,489			651			71,140						40,756			6,421			47,177
Collectively evaluated for credit losses			$	565,169		$	51,489		$	616,658					$	543,737		$	44,524		$	588,261

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Credit Quality Indicators

To measure credit risk for the commercial portfolio, the Company employs a dual grade credit risk grading system for estimating the PD and LGD. The credit risk grade system assigns a rating to each borrower and to the facility, which together form a Composite Credit Risk Profile. The credit risk grade system categorizes borrowers by common financial characteristics that measure the credit strength of borrowers and facilities by common structural characteristics. The Composite Credit Risk Profile has ten grades, with each grade corresponding to a progressively greater risk of loss. Grades (1) to (6) are considered pass ratings, and grades (7) to (10) are considered criticized, as defined by the regulatory agencies. A (7) “Special Mention” rating has a potential weakness that, if left uncorrected, may result in deterioration of the repayment prospects for the asset. An (8) “Substandard” rating has a well-defined weakness that jeopardizes the full repayment of the debt. A (9) “Doubtful” rating has all of the same weaknesses as a substandard asset with the added characteristic that the weakness makes collection or liquidation in full, given current facts, conditions, and values, improbable. Assets classified as a (10) “Loss” rating are considered uncollectible and charged-off. Risk ratings, which are assigned to differentiate risk within the portfolio, are reviewed on an ongoing basis and revised to reflect changes in a borrower’s current financial position and outlook, risk profile, and the related collateral and structural position. Loan officers review updated financial information or other loan factors on at least an annual basis for all pass rated loans to assess the accuracy of the risk grade. Criticized loans undergo more frequent reviews and enhanced monitoring.

To measure credit risk for the consumer portfolio, the most relevant credit characteristic is the FICO score, which is a widely used credit scoring system that ranges from 300 to 850. A lower FICO score is indicative of higher credit risk and a higher FICO score is indicative of lower credit risk. FICO scores are updated at least quarterly. The factors such as past due status, employment status, collateral, geography, loans discharged in bankruptcy, and the status of first lien position loans on second lien position loans, are also considered to be consumer portfolio credit quality indicators. For portfolio monitoring purposes, the Company estimates the current value of property secured as collateral for home equity and residential first mortgage lending products on an ongoing basis. The estimate is based on home price indices compiled by the S&P/Case-Shiller Home Price Indices. Real estate price data is applied to the loan portfolios taking into account the age of the most recent valuation and geographic area.

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

			At September 30, 2024
(In thousands)			2024			2023			2022			2021			2020			Prior			Revolving Loans Amortized Cost Basis			Total
Commercial non-mortgage:
Risk rating:
Pass			$	2,227,475		$	2,136,476		$	3,231,956		$	1,112,368		$	625,736		$	1,251,279		$	5,740,365		$	16,325,655
Special mention			30,056			61,614			110,319			77,877			37,745			6,614			44,739			368,964
Substandard			25,985			159,538			192,397			81,165			18,697			64,904			172,739			715,425
Doubtful			—			—			—			1			—			16			1			18
Total commercial non-mortgage			2,283,516			2,357,628			3,534,672			1,271,411			682,178			1,322,813			5,957,844			17,410,062
Current period gross write-offs			—			5,212			26,953			10,619			3,842			3,003			4,625			54,254
Asset-based:
Risk rating:
Pass			1,300			11,121			—			—			—			20,813			1,203,689			1,236,923
Special mention			—			12			—			—			—			5,491			90,369			95,872
Substandard			—			3,173			—			—			—			1,870			126,065			131,108
Total asset-based			1,300			14,306			—			—			—			28,174			1,420,123			1,463,903
Current period gross write-offs			—			—			—			—			—			—			5,049			5,049
Commercial real estate:
Risk rating:
Pass			1,429,531			2,372,434			3,497,373			1,578,183			1,013,834			3,612,783			192,998			13,697,136
Special mention			—			72,845			72,288			95,443			54,427			88,926			7,641			391,570
Substandard			—			48,848			16,966			58,708			108,363			301,421			1,211			535,517
Total commercial real estate			1,429,531			2,494,127			3,586,627			1,732,334			1,176,624			4,003,130			201,850			14,624,223
Current period gross write-offs			—			855			1,244			1,578			15,477			13,368			—			32,522
Multi-family:
Risk rating:
Pass			561,027			1,437,177			1,387,273			899,371			303,485			2,220,181			16,981			6,825,495
Special mention			—			—			93,391			20,446			31,717			4,584			—			150,138
Substandard			—			—			—			30,493			33,051			27,977			—			91,521
Total multi-family			561,027			1,437,177			1,480,664			950,310			368,253			2,252,742			16,981			7,067,154
Current period gross write-offs			—			—			—			1,574			—			11,402			—			12,976
Equipment financing:
Risk rating:
Pass			269,798			252,544			225,575			152,853			106,450			149,338			—			1,156,558
Special mention			1,353			4,646			2,092			4,483			445			520			—			13,539
Substandard			297			27,604			19,979			13,779			5,694			9,577			—			76,930
Total equipment financing			271,448			284,794			247,646			171,115			112,589			159,435			—			1,247,027
Current period gross write-offs			—			—			—			—			—			3,378			—			3,378
Total commercial portfolio			4,546,822			6,588,032			8,849,609			4,125,170			2,339,644			7,766,294			7,596,798			41,812,369
Current period gross write-offs			$	—		$	6,067		$	28,197		$	13,771		$	19,319		$	31,151		$	9,674		$	108,179

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			At December 31, 2023
(In thousands)			2023			2022			2021			2020			2019			Prior			Revolving Loans Amortized Cost Basis			Total
Commercial non-mortgage:
Pass			$	2,602,444		$	4,089,327		$	1,371,139		$	711,362		$	610,199		$	952,097		$	5,970,588		$	16,307,156
Special mention			15,184			60,240			61,235			33,111			—			720			48,561			219,051
Substandard			48,849			104,087			23,258			28,222			44,612			30,426			79,778			359,232
Doubtful			—			8			—			—			3			25			—			36
Total commercial non-mortgage			2,666,477			4,253,662			1,455,632			772,695			654,814			983,268			6,098,927			16,885,475
Current period gross write-offs			325			7,637			1,775			512			969			4,391			—			15,609
Asset-based:
Pass			23,007			—			—			—			3,280			34,999			1,333,271			1,394,557
Special mention			651			763			—			—			3,676			—			29,610			34,700
Substandard			—			—			—			—			1,330			—			127,254			128,584
Total asset-based			23,658			763			—			—			8,286			34,999			1,490,135			1,557,841
Current period gross write-offs			—			—			—			—			13,189			3,900			—			17,089
Commercial real estate:
Pass			2,265,428			3,502,425			1,831,005			1,195,732			1,193,642			3,112,770			176,668			13,277,670
Special mention			850			4,675			14,463			31,405			23,443			37,688			1,210			113,734
Substandard			25,802			16,179			9,545			15,418			58,602			52,812			—			178,358
Total commercial real estate			2,292,080			3,523,279			1,855,013			1,242,555			1,275,687			3,203,270			177,878			13,569,762
Current period gross write-offs			4,632			—			12,617			3,813			2,754			38,569			—			62,385
Multi-family:
Pass			1,597,599			1,934,100			1,041,416			442,888			595,676			1,920,618			—			7,532,297
Special mention			—			—			—			—			260			35,942			—			36,202
Substandard			—			—			—			364			11,563			7,544			—			19,471
Total multi-family			1,597,599			1,934,100			1,041,416			443,252			607,499			1,964,104			—			7,587,970
Current period gross write-offs			—			—			—			—			—			3,447			—			3,447
Equipment financing:
Pass			335,874			297,186			232,304			176,061			183,679			69,927			—			1,295,031
Special mention			—			—			116			—			90			—			—			206
Substandard			—			9,144			8,064			6,600			4,285			5,456			—			33,549
Total equipment financing			335,874			306,330			240,484			182,661			188,054			75,383			—			1,328,786
Current period gross write-offs			—			—			—			2,633			3,304			42			—			5,979
Total commercial portfolio			6,915,688			10,018,134			4,592,545			2,641,163			2,734,340			6,261,024			7,766,940			40,929,834
Current period gross write-offs			$	4,957		$	7,637		$	14,392		$	6,958		$	20,216		$	50,349		$	—		$	104,509

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

			At September 30, 2024
(In thousands)			2024			2023			2022			2021			2020			Prior			Revolving Loans Amortized Cost Basis			Total
Residential:
Risk rating:
800+			$	185,906		$	300,420		$	886,534		$	1,117,281		$	440,301		$	972,679		$	—		$	3,903,121
740-799			454,632			297,264			603,169			680,205			233,383			655,401			—			2,924,054
670-739			121,094			118,842			315,446			258,185			94,342			516,973			—			1,424,882
580-669			8,567			14,819			59,966			38,553			13,119			97,778			—			232,802
579 and below			—			3,341			10,924			19,471			1,851			56,166			—			91,753
Total residential			770,199			734,686			1,876,039			2,113,695			782,996			2,298,997			—			8,576,612
Current period gross write-offs			—			—			—			—			—			116			—			116
Home equity:
Risk rating:
800+			8,705			26,031			23,648			33,995			23,516			56,771			372,304			544,970
740-799			8,498			22,877			21,462			24,900			11,860			34,214			327,017			450,828
670-739			7,274			14,459			13,685			12,264			6,030			30,923			235,126			319,761
580-669			1,406			2,329			2,330			2,413			587			11,192			69,499			89,756
579 and below			—			812			2,164			832			659			3,322			30,729			38,518
Total home equity			25,883			66,508			63,289			74,404			42,652			136,422			1,034,675			1,443,833
Current period gross write-offs			—			—			—			—			—			173			278			451
Other consumer:
Risk rating:
800+			3,355			448			256			1,803			96			301			23,264			29,523
740-799			30,644			747			390			393			244			556			4,924			37,898
670-739			38,280			425			425			171			362			213			3,594			43,470
580-669			932			120			101			76			42			94			1,128			2,493
579 and below			11			93			65			37			15			25			571			817
Total other consumer			73,222			1,833			1,237			2,480			759			1,189			33,481			114,201
Current period gross write-offs			2,695			17			26			20			70			168			182			3,178
Total consumer portfolio			869,304			803,027			1,940,565			2,190,579			826,407			2,436,608			1,068,156			10,134,646
Current period gross write-offs			$	2,695		$	17		$	26		$	20		$	70		$	457		$	460		$	3,745

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			At December 31, 2023
(In thousands)			2023			2022			2021			2020			2019			Prior			Revolving Loans Amortized Cost Basis			Total
Residential:
Risk rating:
800+			$	214,446		$	847,009		$	1,096,109		$	451,307		$	141,919		$	910,117		$	—		$	3,660,907
740-799			363,696			703,568			755,750			279,946			112,303			633,578			—			2,848,841
670-739			137,460			293,699			292,255			95,838			48,412			346,663			—			1,214,327
580-669			20,208			52,962			45,770			14,840			10,492			106,497			—			250,769
579 and below			6,909			52,690			11,749			1,345			128,714			51,672			—			253,079
Total residential			742,719			1,949,928			2,201,633			843,276			441,840			2,048,527			—			8,227,923
Current period gross write-offs			—			—			387			—			153			4,630			—			5,170
Home equity:
Risk rating:
800+			27,047			27,439			35,927			25,586			8,110			56,062			391,616			571,787
740-799			24,772			20,069			27,147			13,888			5,158			34,190			355,926			481,150
670-739			15,857			15,655			15,389			5,992			3,189			29,454			242,189			327,725
580-669			3,080			3,786			1,991			1,658			1,115			9,988			70,102			91,720
579 and below			696			1,109			1,079			576			552			6,319			34,242			44,573
Total home equity			71,452			68,058			81,533			47,700			18,124			136,013			1,094,075			1,516,955
Current period gross write-offs			—			4			81			—			104			3,114			—			3,303
Other consumer:
Risk rating:
800+			432			356			1,913			189			255			77			25,699			28,921
740-799			1,318			586			486			730			690			381			7,180			11,371
670-739			526			570			358			981			1,210			79			3,549			7,273
580-669			69			169			129			153			303			56			1,983			2,862
579 and below			125			97			61			11			28			1			590			913
Total other consumer			2,470			1,778			2,947			2,064			2,486			594			39,001			51,340
Current period gross write-offs			3,263			7			2			218			377			363			—			4,230
Total consumer portfolio			816,641			2,019,764			2,286,113			893,040			462,450			2,185,134			1,133,076			9,796,218
Current period gross write-offs			$	3,263		$	11		$	470		$	218		$	634		$	8,107		$	—		$	12,703

Collateral Dependent Loans and Leases

A non-accrual loan or lease is considered collateral dependent when the borrower is experiencing financial difficulty and when repayment is substantially expected to be provided through the operation or sale of collateral. Commercial non-mortgage loans,
asset-based loans, and equipment financing loans and leases are generally secured by machinery and equipment, inventory, receivables, or other non-real estate assets, whereas commercial real estate, multi-family, residential, home equity, and other consumer loans are secured by real estate.

At September 30, 2024, and December 31, 2023, the carrying amount of collateral dependent loans was $110.1 million and $66.1 million, respectively, for commercial loans and leases, and $26.4 million and $22.7 million, respectively, for consumer loans. The ACL for collateral dependent loans and leases is individually assessed based on the fair value of the collateral less costs to sell at the reporting date. At September 30, 2024, and December 31, 2023, the collateral value associated with collateral dependent loans and leases was $142.2 million and $93.7 million, respectively.

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Modifications to Borrowers Experiencing Financial Difficulty

In certain circumstances, the Company enters into agreements to modify the terms of loans to borrowers experiencing financial difficulty. A variety of solutions are offered to borrowers experiencing financial difficulty, including loan modifications that may result in principal forgiveness, interest rate reductions, payment delays, term extensions, or a combination thereof. The following is a description of each of these types of modifications:

•Principal forgiveness – The outstanding principal balance of a loan may be reduced by a specified amount. Principal forgiveness may occur voluntarily as part of a negotiated agreement with a borrower, or involuntarily through a bankruptcy proceeding.

•Interest rate reductions – Includes modifications where the contractual interest rate of the loan has been reduced.

•Payment delays – Deferral arrangements that allow borrowers to delay a scheduled loan payment to a later date. Deferred loan payments do not affect the original contractual maturity terms of the loan. Modifications that result in only an insignificant payment delay are not disclosed. The Company generally considers a payment delay of three months or less to be insignificant.

•Term extensions – Extensions of the original contractual maturity date of the loan.

•Combination – Combination includes loans that have undergone more than one of the above loan modification types.

Significant judgment is required to determine if a borrower is experiencing financial difficulty. These considerations vary by portfolio class. The Company has identified modifications to borrowers experiencing financial difficulty that are included in its disclosures as follows:

•Commercial: The Company evaluates modifications of loans to commercial borrowers that are rated substandard or worse, and includes the modifications in its disclosures to the extent that the modification is considered
other-than-insignificant.

•Consumer: The Company generally evaluates all modifications of loans to consumer borrowers subject to its loss mitigation program and includes them in its disclosures to the extent that the modification is considered other-than-insignificant.

The following tables summarize the amortized cost basis at September 30, 2024, and 2023, of loans modified to borrowers experiencing financial difficulty, disaggregated by class and type of concession granted:

			For the three months ended September 30, 2024
(In thousands)			Interest Rate Reduction						Term Extension						Payment Delay						Combination - Term Extension and Interest Rate Reduction																								Total						% of Total Class (2)
Commercial non-mortgage			$	—					$	33,694					$	—					$	280																							$	33,974					0.2		%
Asset-based			—						17,142						—						—																								17,142						1.2
Commercial real estate			—						23,940						—						—																								23,940						0.2
Equipment financing			—						276						—						—																								276						—
Residential									48						—						682																								730						—
Home equity			—						322						—						—																								322						—
Total (1)			$	—					$	75,422					$	—					$	962																							$	76,384					0.1		%

			For the nine months ended September 30, 2024
(In thousands)			Interest Rate Reduction						Term Extension						Payment Delay						Combination - Term Extension and Interest Rate Reduction																								Total						% of Total Class (2)
Commercial non-mortgage			$	10					$	112,098					$	34,669					$	1,209																							$	147,986					0.9		%
Asset-based			—						24,809						—						—																								24,809						1.7
Commercial real estate			—						63,697						356						—																								64,053						0.4
Multi-family			—						6,109						—						—																								6,109						0.1
Equipment financing			—						744						—						—																								744						0.1
Residential			622						48						—						815																								1,485						—
Home equity			—						367						—						120																								487						—
Total (1)			$	632					$	207,872					$	35,025					$	2,144																							$	245,673					0.5		%

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			For the three months ended September 30, 2023
(In thousands)			Interest Rate Reduction						Term Extension						Payment Delay						Combination - Term Extension and Interest Rate Reduction						Combination - Term Extension and Payment Delay												Combination -Term Extension, Interest Rate Reduction, & Principal Forgiveness						Total						% of Total Class (2)
Commercial non-mortgage			$	—					$	26,970					$	—					$	940					$	17,798											$	—					$	45,708					0.3		%
Asset-based			—						13,317						—						—						—												896						14,213						0.9
Commercial real estate			—						768						—						17,247						506												—						18,521						0.1
Residential			257						138						—						—						—												—						395						—
Home equity			118						—						4						308						—												—						430						—
Total (1)			$	375					$	41,193					$	4					$	18,495					$	18,304											$	896					$	79,267					0.2		%

			For the nine months ended September 30, 2023
(In thousands)			Interest Rate Reduction						Term Extension						Payment Delay						Combination - Term Extension and Interest Rate Reduction						Combination - Term Extension and Payment Delay												Combination - Term Extension, Interest Rate Reduction, & Principal Forgiveness						Total						% of Total Class (2)
Commercial non-mortgage			$	—					$	65,470					$	9,409					$	1,253					$	29,314											$	—					$	105,446					0.6		%
Asset-based			—						13,317						—						—						—												896						14,213						0.9
Commercial real estate			—						3,928						182						17,247						506												—						21,863						0.2
Equipment financing			—						—						1,362						—						—												—						1,362						0.1
Residential			257						1,287						1,600						—						—												—						3,144						—
Home equity			181						105						4						516						—												—						806						0.1
Total (1)			$	438					$	84,107					$	12,557					$	19,016					$	29,820											$	896					$	146,834					0.3		%

(1)The total amortized cost excludes accrued interest receivable of $0.2 million for both the three months ended September 30, 2024, and 2023, and $0.6 million and $0.3 million for the nine months ended September 30, 2024, and 2023, respectively.

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

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty:

			For the three months ended September 30, 2024
			Financial Effect (1)
Term Extension:
Commercial non-mortgage			Extended term by a weighted average of 0.9 years
Asset-based			Extended term by a weighted average of 3.9 years
Commercial real estate			Extended term by a weighted average of 1.0 year

			For the nine months ended September 30, 2024
			Financial Effect (1)
Term Extension:
Commercial non-mortgage			Extended term by a weighted average of 0.7 years
Asset-based			Extended term by a weighted average of 2.9 years
Commercial real estate			Extended term by a weighted average of 1.1 years
Multi-family			Extended term by a weighted average of 1.4 years
Payment Delay:
Commercial non-mortgage			Provided payment deferrals for a weighted average of 0.5 years

(1)Certain disclosures related to financial effects of 2024 modifications do not include those deemed to be immaterial.

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			For the three months ended September 30, 2023
			Financial Effect
Interest Rate Reduction:
Residential			Reduced weighted average interest rate by 2.3%
Home equity			Reduced weighted average interest rate by 0.3%
Term Extension:
Commercial non-mortgage			Extended term by a weighted average of 1.3 years
Asset-based			Extended term by a weighted average of 0.4 years
Commercial real estate			Extended term by a weighted average of 0.8 years
Residential			Extended term by a weighted average of 4.9 years
Payment Delay:
Home equity			Provided partial payment deferrals for a weighted average of 0.4 years
Combination - Term Extension and Interest Rate Reduction:
Commercial non-mortgage			Extended term by a weighted average of 0.6 years and reduced weighted average interest rate by 2.0%
Commercial real estate			Extended term by a weighted average of 3.0 years and reduced weighted average interest rate by 2.4%
Home equity			Extended term by a weighted average of 19.6 years and reduced weighted average interest rate by 2.5%
Combination - Term Extension and Payment Delay:
Commercial non-mortgage			Extended term by a weighted average of 1.2 years and provided partial payment deferrals for a weighted average of 2.0 years
Commercial real estate			Extended term by a weighted average of 0.5 years and provided payment deferrals for a weighted average of 0.5 years
Combination - Term Extension, Interest Rate Reduction, and Principal Forgiveness:
Asset-based			Extended term by a weighted average of 4.6 years, reduced weighted average interest rate by 10.8%, and provided 1/3 principal forgiveness contingent upon payment

			For the nine months ended September 30, 2023
			Financial Effect
Interest Rate Reduction:
Residential			Reduced weighted average interest rate by 2.3%
Home equity			Reduced weighted average interest rate by 0.3%
Term Extension:
Commercial non-mortgage			Extended term by a weighted average of 1.1 years
Asset-based			Extended term by a weighted average of 0.4 years
Commercial real estate			Extended term by a weighted average of 1.9 years
Residential			Extended term by a weighted average of 1.8 years
Home equity			Extended term by a weighted average of 11.5 years
Payment Delay:
Commercial non-mortgage			Provided partial payment deferrals for a weighted average of 0.5 years
Commercial real estate			Provided payment deferrals for a weighted average of 0.3 years to be received at contractual maturity
Equipment financing			Provided partial payment deferrals for a weighted average of 0.5 years
Residential			Provided payment deferrals for a weighted average of 1.0 year
Home equity			Provided partial payment deferrals for a weighted average of 0.4 years
Combination - Term Extension and Interest Rate Reduction:
Commercial non-mortgage			Extended term by a weighted average of 1.4 years and reduced weighted average interest rate by 1.8%
Commercial real estate			Extended term by a weighted average of 3.0 years and reduced weighted average interest rate by 2.4%
Home equity			Extended term by a weighted average of 16.8 years and reduced weighted average interest rate by 2.1%
Combination - Term Extension and Interest Rate Reduction:
Commercial non-mortgage			Extended term by a weighted average of 1.1 years and provided payment deferrals for a weighted average of 1.9 years
Commercial real estate			Extended term by a weighted average of 0.5 years and provided payment deferrals for a weighted average of 0.5 years
Combination - Term Extension, Interest Rate Reduction, and Principal Forgiveness:
Asset-based			Extended term by a weighted average of 4.6 years, reduced weighted average interest rate by 10.8%, and provided 1/3 principal forgiveness contingent upon payment

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The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following tables summarize the aging of loans that had been modified in the twelve months preceding September 30, 2024, and in the nine months ended September 30, 2023:

			At September 30, 2024
(In thousands)			Current						30-59 Days Past Due						60-89 Days Past Due						90 or More Days Past Due						Non-Accrual						Total
Commercial non-mortgage			$	35,166					$	799					$	—					$	—					$	113,269					$	149,234
Asset-based			24,809						—						—						—						—						24,809
Commercial real estate			41,210						—						—						—						22,843						64,053
Multi-family			—						—						—						—						6,109						6,109
Equipment financing			130						333						—						—						539						1,002
Residential			1,571						—						—						—						48						1,619
Home equity			182						—						—						—						305						487
Total			$	103,068					$	1,132					$	—					$	—					$	143,113					$	247,313
			At September 30, 2023
(In thousands)			Current						30-59 Days Past Due						60-89 Days Past Due						90 or More Days Past Due						Non-Accrual						Total
Commercial non-mortgage			$	51,613					$	—					$	—					$	—					$	53,833					$	105,446
Asset-based			13,317						—						—						—						896						14,213
Commercial real estate			4,435						—						—						—						17,428						21,863
Equipment financing			1,362						—						—						—						—						1,362
Residential			327						—						—						—						2,817						3,144
Home equity			240						—						—						—						566						806
Total			$	71,294					$	—					$	—					$	—					$	75,540					$	146,834

Loans made to borrowers experiencing financial difficulty that were modified in the preceding twelve months and that had a payment default during the three months ended September 30, 2024, were not significant. There were $17.8 million of commercial non-mortgage loans made to borrowers experiencing financial difficulty that were modified in the form of term extensions in the preceding twelve months and that had a payment default during the nine months ended September 30, 2024. These loans were re-modified during the three months ended June 30, 2024, again in the form of term extensions. Loans made to borrowers experiencing financial difficulty that were both modified and had a payment default during the three and nine months ended September 30, 2023, were not significant.

For the purposes of this disclosure, a payment default is defined as 90 or more days past due and accruing. Non-accrual loans that are modified to borrowers experiencing financial difficulty remain on non-accrual status until the borrower has demonstrated performance under the modified terms. Commitments to lend additional funds to borrowers experiencing financial difficulty whose loans had been modified were not significant.

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Note 5: Goodwill and Other Intangible Assets

Goodwill

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

(In thousands)			At September 30, 2024						At December 31, 2023
Balance, beginning of period			$	2,631,465					$	2,514,104
Ametros acquisition (1)			236,603						—
interLINK acquisition			—						143,216
Bend acquisition			—						(294)
Sterling merger			—						(25,561)
Balance, end of period			$	2,868,068					$	2,631,465

(1)Reflects the $228.2 million of preliminary goodwill recorded in connection with the Ametros acquisition in January 2024, and $8.4 million of other adjustments.

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

Other Intangible Assets

The following table summarizes other intangible assets:

			At September 30, 2024												At December 31, 2023
(In thousands)			Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount						Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount
Core deposits (1)			$	328,837		$	71,099		$	257,738					$	146,037		$	53,986		$	92,051
Customer relationships (2)			122,063			43,706			78,357						151,000			43,116			107,884
Non-competition agreement			4,000			1,400			2,600						4,000			800			3,200
Trade name (1)			6,100			813			5,287						—			—			—
Total other intangible assets			$	461,000		$	117,018		$	343,982					$	301,037		$	97,902		$	203,135

(1)The increase in the gross carrying amount is due to the Ametros acquisition in January 2024, which resulted in the identification and recognition of a $182.8 million core deposit intangible asset and a $6.1 million trade name.

(2)The decrease in the net carrying amount is primarily due to the write-off of the factored receivables customer relationship intangible asset, which had a net carrying amount of $19.7 million ($27.0 million gross carrying amount net of $7.3 million in accumulated amortization), in connection with the sale of the factored receivables portfolio in September 2024. Further, the Company also recognized a $1.9 million impairment loss on its payroll finance customer relationship intangible asset during the third quarter of 2024, resulting from higher customer attrition and a reduction in forecasted future cash flows. At September 30, 2024, the fair value of the payroll finance customer relationship intangible asset was estimated to be $28.0 million, and is included in Commercial Banking for segment reporting purposes.

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

(In thousands)			At September 30, 2024
Remainder of 2024			$	9,681
2025			36,051
2026			34,083
2027			33,033
2028			30,162
Thereafter			200,972

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Note 6: Deposits

The following table summarizes deposits by type:

(In thousands)			At September 30, 2024						At December 31, 2023
Non-interest-bearing:
Demand			$	10,744,524					$	10,732,516
Interest-bearing:
Health savings accounts			8,951,383						8,287,889
Checking			10,016,651						8,994,095
Money market			20,460,382						17,662,826
Savings			6,921,459						6,642,499
Time deposits			7,420,031						8,464,459
Total interest-bearing			$	53,769,906					$	50,051,768
Total deposits			$	64,514,430					$	60,784,284
Time deposits, money market, and interest-bearing checking obtained through brokers (1)			$	2,352,485					$	3,673,733
Aggregate amount of time deposit accounts that exceeded the FDIC limit			1,360,398						1,221,887
Demand deposit overdrafts reclassified as loan balances			4,350						10,432

(1)Excludes $7.3 billion and $5.7 billion of money market sweep deposits received through interLINK at September 30, 2024, and December 31, 2023, respectively.

The following table summarizes the scheduled maturities of time deposits:

(In thousands)			At September 30, 2024
Remainder of 2024			$	3,330,154
2025			3,957,088
2026			65,166
2027			33,570
2028			19,819
Thereafter			14,234
Total time deposits			$	7,420,031

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Note 7: Borrowings

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

			At September 30, 2024									At December 31, 2023
(Dollars in thousands)			Total Outstanding			Rate						Total Outstanding			Rate
Securities sold under agreements to repurchase (1)			$	100,232		0.12		%				$	358,387		3.43		%
Federal funds purchased			—			—						100,000			5.48
Securities sold under agreements to repurchase and other borrowings			$	100,232		0.12		%				$	458,387		3.88		%

(1)The Company has the right of offset with respect to all repurchase agreement assets and liabilities. Total securities sold under agreements to repurchase are presented as gross transactions, as only liabilities are outstanding for the periods presented.

Securities sold under agreements to repurchase, all of which have an original maturity of one year or less for the periods presented, are used as a source of borrowed funds and are collateralized by Agency MBS. The Company’s repurchase agreement counterparties are limited to primary dealers in government securities, and commercial and municipal customers through the Corporate Treasury function. The Company may also purchase unsecured term and overnight federal funds to satisfy its short-term liquidity needs.

The following table summarizes information for FHLB advances:

			At September 30, 2024									At December 31, 2023
(Dollars in thousands)			Total Outstanding			Weighted- Average Contractual Coupon Rate						Total Outstanding			Weighted- Average Contractual Coupon Rate
Maturing within 1 year			$	3,100,000		5.11		%				$	2,350,000		5.53		%
After 1 but within 2 years			—			—						—			—
After 2 but within 3 years			—			—						—			—
After 3 but within 4 years			441			1.36						235			—
After 4 but within 5 years			649			1.75						228			2.75
After 5 years			9,115			2.02						9,555			2.07
Total FHLB advances			$	3,110,205		5.10		%				$	2,360,018		5.52		%
Aggregate market value of assets pledged as collateral			$	20,239,948								$	20,734,035
Remaining borrowing capacity at FHLB			11,064,800									12,535,423

The Bank may borrow up to a discounted amount of eligible mortgages and securities that have been pledged as collateral to secure FHLB advances, which includes certain residential and commercial real estate loans, home equity lines of credit, CMBS, Agency MBS, Agency CMO, U.S. Treasury notes, and MBS. The Bank was in compliance with its FHLB collateral requirements at both September 30, 2024, and December 31, 2023.

The following table summarizes long-term debt:

(Dollars in thousands)						At September 30, 2024						At December 31, 2023
4.375%			Senior fixed-rate notes due February 15, 2024			$	—					$	132,550
4.100%			Senior fixed-rate notes due March 25, 2029 (2)			324,090						328,104
4.000%			Subordinated fixed-to-floating rate notes due December 30, 2029			274,000						274,000
3.875%			Subordinated fixed-to-floating rate notes due November 1, 2030			225,000						225,000
Junior subordinated debt Webster Statutory Trust I floating-rate notes due September 17, 2033 (3)						77,320						77,320
Total senior and subordinated debt						900,410						1,036,974
Discount on senior fixed-rate notes						(448)						(537)
Debt issuance cost on senior fixed-rate notes						(1,204)						(1,419)
Premium on subordinated fixed-to-floating rate notes						12,205						13,802
Long-term debt (1)						$	910,963					$	1,048,820

(1)The classification of debt as long-term is based on the initial term of greater than one year as of the date of issuance.

(2)The Company de-designated its fair value hedging relationship on these senior fixed-rate notes in 2020. A basis adjustment of $24.1 million and $28.1 million at September 30, 2024, and December 31, 2023, respectively, is included in the carrying value and is being amortized over the remaining life of the senior fixed-rate notes.

(3)The interest rate on the Webster Statutory Trust I floating-rate notes varies quarterly based on 3-month SOFR plus a credit spread adjustment plus a market spread of 2.95%, which yielded 8.15% at September 30, 2024, and 8.59% at December 31, 2023.

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

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

			Three months ended September 30, 2024															Nine months ended September 30, 2024
(In thousands)			Investment Securities Available-for-Sale			Derivative Instruments			Defined Benefit Pension and Other Postretirement Benefit Plans			Total						Investment Securities Available-for-Sale			Derivative Instruments			Defined Benefit Pension and Other Postretirement Benefit Plans			Total
Balance, beginning of period			$	(563,530)		$	(34,468)		$	(29,901)		$	(627,899)					$	(517,450)		$	(2,869)		$	(30,252)		$	(550,571)
Other comprehensive income (loss) before reclassifications			194,146			46,027			(347)			239,826						102,273			13,968			(954)			115,287
Amounts reclassified from accumulated other comprehensive (loss)			14,370			32			428			14,830						60,163			492			1,386			62,041
Other comprehensive income, net of tax			208,516			46,059			81			254,656						162,436			14,460			432			177,328
Balance, end of period			$	(355,014)		$	11,591		$	(29,820)		$	(373,243)					$	(355,014)		$	11,591		$	(29,820)		$	(373,243)

			Three months ended September 30, 2023															Nine months ended September 30, 2023
(In thousands)			Investment Securities Available-for-Sale			Derivative Instruments			Defined Benefit Pension and Other Postretirement Benefit Plans			Total						Investment Securities Available-for-Sale			Derivative Instruments			Defined Benefit Pension and Other Postretirement Benefit Plans			Total
Balance, beginning of period			$	(644,579)		$	(35,023)		$	(39,221)		$	(718,823)					$	(631,160)		$	(8,874)		$	(44,926)		$	(684,960)
Other comprehensive (loss) income before reclassifications			(174,594)			(23,132)			—			(197,726)						(203,031)			(50,473)			3,553			(249,951)
Amounts reclassified from accumulated other comprehensive (loss)			—			421			349			770						15,018			1,613			2,501			19,132
Other comprehensive (loss) income, net of tax			(174,594)			(22,711)			349			(196,956)						(188,013)			(48,860)			6,054			(230,819)
Balance, end of period			$	(819,173)		$	(57,734)		$	(38,872)		$	(915,779)					$	(819,173)		$	(57,734)		$	(38,872)		$	(915,779)

The following table further summarizes the amounts reclassified from accumulated other comprehensive (loss):

Accumulated Other Comprehensive (Loss) Components			Three months ended												Nine months ended									Associated Line Item on the Condensed Consolidated Statements of Income
			September 30,												September 30,
			2024						2023						2024						2023
(In thousands)
Investment securities available-for-sale:
Net unrealized holding (losses)			$	(19,597)					$	—					$	(81,908)					$	(20,531)		(Loss) on sale of investment securities, net (1)
Tax benefit			5,227						—						21,745						5,513			Income tax expense
Net of tax			$	(14,370)					$	—					$	(60,163)					$	(15,018)
Derivative instruments:
Hedge terminations			$	—					$	(67)					$	(34)					$	(242)		Interest expense
Premium amortization			(44)						(510)						(533)						(1,970)			Interest income
Tax benefit			12						156						75						599			Income tax expense
Net of tax			$	(32)					$	(421)					$	(492)					$	(1,613)
Defined benefit pension and other postretirement benefit plans:
Actuarial net loss amortization			$	(587)					$	(479)					$	(1,902)					$	(1,562)		Other expense
Other			—						—						—						(1,869)			Other expense
Tax benefit			159						130						516						930			Income tax expense
Net of tax			$	(428)					$	(349)					$	(1,386)					$	(2,501)

(1)Losses realized on sale of investment securities available-for-sale are generally included as a component of non-interest income on the accompanying Condensed Consolidated Statements of Income unless any portion or all of the loss is attributed to a decline in credit quality, in which the amount is instead included in the Provision for credit losses. For the nine months ended September 30, 2024, and 2023, respectively, $2.6 million and $3.8 million of realized losses were included in the Provision for credit losses. There were no realized losses included in the Provision for credit losses for the three months ended September 30, 2024.

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Note 9: Regulatory Capital and Restrictions

Capital Requirements

The Holding Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory actions by regulators that could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and/or the regulatory framework for prompt corrective action (applies to the Bank only), both the Holding Company and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated pursuant to regulatory directives. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by Basel III to ensure capital adequacy require the Holding Company and the Bank to maintain minimum ratios of CET1 Risk-Based Capital, Tier 1 Risk-Based Capital, Total Risk-Based Capital, and Tier 1 Leverage Capital, as defined in the regulations. CET1 capital consists of common stockholders’ equity less deductions for goodwill and other intangible assets, and certain deferred tax adjustments. At the time of initial adoption of the Basel III Capital Rules, the Company had elected to opt-out of the requirement to include certain components of AOCI in CET1 capital. Tier 1 capital consists of CET1 capital plus preferred stock. Total capital consists of Tier 1 capital and Tier 2 capital, as defined in the regulations. Tier 2 capital includes qualifying subordinated debt and the permissible portion of the ACL.

At September 30, 2024, and December 31, 2023, both the Holding Company and the Bank were classified as well-capitalized. Management believes that no events or changes have occurred subsequent to period end that would change this designation.

The following tables provides information on the capital ratios for the Holding Company and the Bank:

			At September 30, 2024
			Actual (1)									Minimum Requirement									Well Capitalized
(Dollars in thousands)			Amount			Ratio						Amount			Ratio						Amount			Ratio
Webster Financial Corporation
CET1 Risk-Based Capital			$	6,167,118		11.25		%				$	2,466,576		4.5		%				$	3,562,833		6.5		%
Tier 1 Risk-Based Capital			6,451,097			11.77						3,288,768			6.0						4,385,025			8.0
Total Risk-Based Capital			7,709,023			14.06						4,385,025			8.0						5,481,281			10.0
Tier 1 Leverage Capital			6,451,097			8.68						2,973,373			4.0						3,716,716			5.0
Webster Bank
CET1 Risk-Based Capital			$	6,815,676		12.46		%				$	2,461,541		4.5		%				$	3,555,559		6.5		%
Tier 1 Risk-Based Capital			6,815,676			12.46						3,282,055			6.0						4,376,073			8.0
Total Risk-Based Capital			7,485,076			13.68						4,376,073			8.0						5,470,092			10.0
Tier 1 Leverage Capital			6,815,676			9.18						2,970,270			4.0						3,712,837			5.0

			At December 31, 2023
			Actual (1)									Minimum Requirement									Well Capitalized
(Dollars in thousands)			Amount			Ratio						Amount			Ratio						Amount			Ratio
Webster Financial Corporation
CET1 Risk-Based Capital			$	6,188,433		11.11		%				$	2,507,190		4.5		%				$	3,621,497		6.5		%
Tier 1 Risk-Based Capital			6,472,412			11.62						3,342,920			6.0						4,457,227			8.0
Total Risk-Based Capital			7,643,423			13.72						4,457,227			8.0						5,571,534			10.0
Tier 1 Leverage Capital			6,472,412			9.06						2,857,890			4.0						3,572,362			5.0
Webster Bank
CET1 Risk-Based Capital			$	6,913,443		12.43		%				$	2,502,835		4.5		%				$	3,615,206		6.5		%
Tier 1 Risk-Based Capital			6,913,443			12.43						3,337,113			6.0						4,449,484			8.0
Total Risk-Based Capital			7,494,332			13.47						4,449,484			8.0						5,561,855			10.0
Tier 1 Leverage Capital			6,913,443			9.69						2,855,212			4.0						3,569,015			5.0

(1)In accordance with regulatory capital rules, the Company elected an option to delay the estimated impact of the adoption of CECL on its regulatory capital over a two-year deferral period, which ended on January 1, 2022, and a subsequent three-year transition period ending on December 31, 2024. During the three-year transition period, regulatory capital ratios will phase out the aggregate amount of the regulatory capital benefit provided from the delayed CECL adoption in the initial two years. For 2023 and 2024, the Company is allowed 50% and 25%, respectively, of the regulatory capital benefit as of December 31, 2021, with full absorption occurring in 2025.

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Dividend Restrictions

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

The Bank paid the Holding Company dividends of $100.0 million and $400.0 million for the three and nine months ended September 30, 2024, respectively, and $250.0 million and $500.0 million for the three and nine months ended September 30, 2023, respectively, for which no express approval from the OCC was required.

Cash Restrictions

The Bank is required under Federal Reserve regulations to maintain cash reserve balances in the form of vault cash or deposits held at a FRB to ensure that it is able to meet customer demands. The reserve requirement ratio is subject to adjustment as economic conditions warrant. Effective March 26, 2020, the Federal Reserve reset the requirement to zero in order to address liquidity concerns resulting from the COVID-19 pandemic. Pursuant to this action, the Bank has not been required to hold cash reserve balances since that date.

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Note 10: Variable Interest Entities

The Company has an investment interest in the following entities that each meet the definition of a variable interest entity. Information regarding the Company’s consolidation of variable interest entities can be found within Note 1: Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Consolidated

Rabbi Trusts. The Company established a Rabbi Trust to meet its obligations due under the Webster Bank Deferred Compensation Plan for Directors and Officers and to mitigate expense volatility. The funding of the Rabbi Trust and the discontinuation of the Webster Bank Deferred Compensation Plan for Directors and Officers occurred during 2012. In connection with the Sterling merger in 2022, the Company acquired assets held in a separate Rabbi Trust that had been previously established to fund obligations due under the Greater New York Savings Bank Directors’ Retirement Plan.

Investments held in the Rabbi Trusts consist primarily of mutual funds that invest in equity and fixed income securities. The Company is considered the primary beneficiary of these Rabbi Trusts as it has the power to direct the activities of the Rabbi Trusts that most significantly impact its economic performance and it has the obligation to absorb losses and/or the right to receive benefits of the Rabbi Trusts that could potentially be significant.

The Rabbi Trusts’ assets are included in Accrued interest receivable and other assets on the accompanying Condensed Consolidated Balance Sheets. Investment earnings and any changes in fair value are included in Other income on the accompanying Condensed Consolidated Statements of Income. Additional information regarding the Rabbi Trusts’ investments can be found within Note 13: Fair Value Measurements.

Non-Consolidated

Low Income Housing Tax Credit Investments. The Company makes non-marketable equity investments in entities that sponsor affordable housing and other community development projects that qualify for the LIHTC Program pursuant to Section 42 of the Internal Revenue Code. The purpose of these investments is not only to assist the Bank in meeting its responsibilities under the CRA, but also to provide a return, primarily through the realization of tax benefits. While the Company’s investment in an entity may exceed 50% of its outstanding equity interests, the entity is not consolidated as the Company is not the primary beneficiary. The Company has determined that it is not the primary beneficiary due to its inability to direct the activities that most significantly impact economic performance. The Company applies the proportional amortization method to subsequently measure its investments in qualified affordable housing projects.

The following table summarizes the Company’s LIHTC investments and related unfunded commitments:

(In thousands)			At September 30, 2024						At December 31, 2023
Gross investment in LIHTC investments			$	1,370,069					$	1,135,192
Accumulated amortization			(205,043)						(141,199)
Net investment in LIHTC investments			$	1,165,026					$	993,993
Unfunded commitments for LIHTC investments			$	701,671					$	549,258

The aggregate carrying value of the Company’s LIHTC investments and the related unfunded commitments are included in Accrued interest receivable and other assets and Accrued expenses and other liabilities, respectively, on the accompanying Condensed Consolidated Balance Sheets. The Company’s maximum exposure to loss related to its LIHTC investments is generally the aggregate carrying value as of each reporting date. However, income tax credits recognized related to these investments are subject to recapture by taxing authorities for up to a period of 15 years based on compliance provisions that are required to be met at the project level. During the nine months ended September 30, 2024, and 2023, there were $234.9 million and $120.9 million of net commitments approved to fund LIHTC investments, respectively.

The following table summarizes the amount of income tax credits and other income tax benefits, and investment amortization generated from the Company’s LIHTC investments, which are recognized as a component of income tax expense:

			Three months ended September 30,												Nine months ended September 30,
(In thousands)			2024						2023						2024						2023
Income tax credits and other income tax benefits from LIHTC investments			$	(30,406)					$	(25,039)					$	(85,612)					$	(69,232)
Investment amortization from LIHTC investments			21,595						17,989						63,844						54,284

Both the income tax credits and other income tax benefits, and investment amortization generated from the Company’s LIHTC investments, are included as a component of operating activities on the Condensed Consolidated Statements of Cash Flows.

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Webster Statutory Trust. The Company owns all the outstanding common stock of Webster Statutory Trust, a financial vehicle that has issued, and in the future may issue, trust preferred securities. The Company is not the primary beneficiary of Webster Statutory Trust. Webster Statutory Trust’s only assets are junior subordinated debentures that are issued by the Company, which were acquired using the proceeds from the issuance of trust preferred securities and common stock. The junior subordinated debentures are included in Long-term debt on the accompanying Condensed Consolidated Balance Sheets, and the related interest expense is included in Long-term debt on the accompanying Condensed Consolidated Statements of Income. Additional information regarding these junior subordinated debentures can be found within Note 7: Borrowings.

Multi-family Securitization Trusts. As previously discussed in Note 2: Business Developments, on September 30, 2024, the Company completed a multi-family securitization. The Company has determined that it is not the primary beneficiary of the multi-family securitization trusts since it does not have the power to direct the activities that would have the most significant impact on their economic performance. The Company’s maximum exposure related to the multi-family securitization trusts is $36.4 million, which represents its obligation to Freddie Mac to guarantee losses up to 12% of the aggregate UPB of the loans at the time of sale. The obligation is secured in full by an irrevocable letter of credit issued by the FHLB.

Other Non-Marketable Investments. The Company invests in alternative investments comprising interests in non-public entities that cannot be redeemed since the underlying equity is distributed as the investment is liquidated. The ultimate timing and amount of these distributions cannot be predicted with reasonable certainty. For each of these alternative investments that is classified as a variable interest entity, the Company has determined that it is not the primary beneficiary due to its inability to direct the activities that most significantly impact economic performance. The aggregate carrying value of the Company’s other non-marketable investments was $209.2 million and $190.1 million at September 30, 2024, and December 31, 2023, respectively, which is included in Accrued interest receivable and other assets on the accompanying Condensed Consolidated Balance Sheets, and its maximum exposure to loss, including unfunded commitments, was $325.9 million and $307.2 million, respectively. Additional information regarding the fair value of other non-marketable investments can be found within
Note 13: Fair Value Measurements.

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Note 11: Earnings Per Common Share

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

			Three months ended September 30,												Nine months ended September 30,
(In thousands, except per share data)			2024						2023						2024						2023
Net income			$	192,985					$	226,475					$	590,941					$	682,447
Less: Preferred stock dividends			4,162						4,162						12,487						12,487
Net income available to common stockholders			188,823						222,313						578,454						669,960
Less: Earnings allocated to participating securities			2,024						2,146						6,136						6,211
Earnings applicable to common stockholders			$	186,799					$	220,167					$	572,318					$	663,749
Weighted-average common shares outstanding - basic			169,569						171,210						169,898						172,233
Add: Effect of dilutive stock options and restricted stock			325						140						328						93
Weighted-average common shares outstanding - diluted			169,894						171,350						170,226						172,326
Basic earnings per common share			$	1.10					$	1.29					$	3.37					$	3.85
Diluted earnings per common share			1.10						1.28						3.36						3.85

Earnings per common share is calculated under the two-class method in which all earnings (distributed and undistributed) are allocated to common stock and participating securities based on their respective rights to receive dividends. The Company may grant restricted stock, restricted stock units, non-qualified stock options, incentive stock options, or stock appreciation rights to certain employees and directors under its stock-based compensation programs, which entitle recipients to receive non-forfeitable dividends during the vesting period on a basis equivalent to the dividends paid to holders of common stock. These unvested awards meet the definition of participating securities.

Potential common shares from performance-based restricted stock that were not included in the computation of dilutive earnings per common share because they were anti-dilutive under the treasury stock method was zero for both the three and nine months ended September 30, 2024, and 96,415 and 187,349 for the three and nine months ended September 30, 2023, respectively.

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Note 12: Derivative Financial Instruments

Derivative Positions and Offsetting

Derivatives Designated as Hedging Instruments. Interest rate swaps allow the Company to change the fixed or variable nature of an interest rate without the exchange of the underlying notional amount. Certain pay fixed/receive variable interest rate swaps are designated as cash flow hedges to effectively convert variable-rate debt into fixed-rate debt, whereas certain receive fixed/pay variable interest rate swaps are designated as fair value hedges to effectively convert fixed-rate long-term debt into variable-rate debt. Certain purchased options are also designated as cash flow hedges. Purchased options allow the Company to limit the potential adverse impact of variable interest rates by establishing a cap rate or floor rate in exchange for an upfront premium. The purchased options designated as cash flow hedges represent interest rate caps where payment is received from the counterparty if interest rates rise above the cap rate, and interest rate floors where payment is received from the counterparty when interest rates fall below the floor rate.

Derivatives Not Designated as Hedging Instruments. The Company also enters into other derivative transactions to manage economic risks, but does not designate the instruments in hedge relationships. In addition, the Company enters into derivative contracts to accommodate customer needs. Derivative contracts with customers are offset with dealer counterparty transactions structured with matching terms to ensure minimal impact on earnings.

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

			At September 30, 2024
			Asset Derivatives									Liability Derivatives
(In thousands)			Notional Amounts			Fair Value						Notional Amounts			Fair Value
Designated as hedging instruments:
Interest rate derivatives (1)			$	3,250,000		$	18,249					$	1,750,000		$	1,622
Not designated as hedging instruments:
Interest rate derivatives (1)			8,545,771			261,921						8,561,581			262,052
Mortgage banking derivatives (2)			1,446			12						—			—
Other (3)			352,478			487						818,233			807
Total not designated as hedging instruments			8,899,695			262,420						9,379,814			262,859
Gross derivative instruments, before netting			$	12,149,695		280,669						$	11,129,814		264,481
Less: Master netting agreements						70,682									70,682
Cash collateral received/paid						126,741									14,216
Total derivative instruments, after netting						$	83,246								$	179,583
			At December 31, 2023
			Asset Derivatives									Liability Derivatives
(In thousands)			Notional Amounts			Fair Value						Notional Amounts			Fair Value
Designated as hedging instruments:
Interest rate derivatives (1)			$	2,750,000		$	11,140					$	2,700,000		$	13,679
Not designated as hedging instruments:
Interest rate derivatives (1)			8,284,356			319,122						8,272,197			321,064
Mortgage banking derivatives (2)			2,798			37						—			—
Other (3)			340,553			337						731,055			1,067
Total not designated as hedging instruments			8,627,707			319,496						9,003,252			322,131
Gross derivative instruments, before netting			$	11,377,707		330,636						$	11,703,252		335,810
Less: Master netting agreements						55,949									55,949
Cash collateral received/paid						232,190									—
Total derivative instruments, after netting						$	42,497								$	279,861

(1)Balances related to clearing houses are presented as a single unit of account. In accordance with their rule books, clearing houses legally characterize variation margin payments as settlement of derivatives rather than collateral against derivative positions. Notional amounts of interest rate swaps cleared through clearing houses included $74.8 million and $113.8 million for asset derivatives at September 30, 2024, and December 31, 2023, respectively. The related fair values approximated zero. There were no interest rate swaps cleared through clearing houses for liability derivatives at both September 30, 2024, and December 31, 2023.

(2)Notional amounts related to residential loans excluded approved floating rate commitments of $1.3 million and $1.0 million at September 30, 2024, and December 31, 2023, respectively.

(3)Other derivatives include foreign currency forward contracts related to lending arrangements, a Visa equity swap transaction, and risk participation agreements. Notional amounts of risk participation agreements included $295.0 million and $299.2 million for asset derivatives and $772.5 million and $682.9 million for liability derivatives at September 30, 2024, and December 31, 2023, respectively, which had insignificant related fair values.

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The following tables represent the off-setting derivative financial instruments that are subject to master netting agreements:

			At September 30, 2024
(In thousands)			Gross Amount Recognized			Derivative Offset Amount			Cash Collateral Received/Paid			Net Amount Presented
Asset derivatives			$	199,071		$	70,682		$	126,741		$	1,648
Liability derivatives			84,898			70,682			14,216			—
			At December 31, 2023
(In thousands)			Gross Amount Recognized			Derivative Offset Amount			Cash Collateral Received/Paid			Net Amount Presented
Asset derivatives			$	289,778		$	55,949		$	232,190		$	1,639
Liability derivatives			55,949			55,949			—			—

Derivative Activity

The following table summarizes the income statement effect of derivatives designated as hedging instruments:

			Recognized In			Three months ended September 30,												Nine months ended September 30,
(In thousands)			Net Interest Income			2024						2023						2024						2023
Fair value hedges:
Interest rate derivatives			Deposits interest expense			$	—					$	7,393					$	(1,320)					$	8,086
Hedged item			Deposits interest expense			—						(6,145)						—						(5,870)
Net recognized on fair value hedges (1)						$	—					$	(1,248)					$	1,320					$	(2,216)
Cash flow hedges:
Interest rate derivatives			Long-term debt interest expense			$	—					$	68					$	34					$	243
Interest rate derivatives			Interest and fees on loans and leases			(12,104)						(4,197)						(34,715)						(5,657)
Net recognized on cash flow hedges						$	(12,104)					$	(4,265)					$	(34,749)					$	(5,900)

(1)The Company de-designated its fair value hedging relationship on $400.0 million of deposits, which pertained to a portion of Ametros’ member deposits, in 2023. The $1.3 million basis adjustment included in the carrying amount of deposits at December 31, 2023, was amortized into interest expense in January 2024 upon the acquisition of Ametros.

Over the next twelve months, an estimated $0.3 million increase to interest income will be reclassified from (AOCL) relating to cash flow hedge gain/loss. The maximum length of time over which forecasted transactions are hedged is 2.5 years. Additional information regarding cash flow hedge activity impacting (AOCL) and the related amounts reclassified to net income can be found within Note 8: Accumulated Other Comprehensive (Loss), Net of Tax.

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

			Recognized In			Three months ended September 30,												Nine months ended September 30,
(In thousands)			Non-interest Income			2024						2023						2024						2023
Interest rate derivatives			Other income			$	(5,373)					$	1,474					$	(5,817)					$	(2,407)
Mortgage banking derivatives			Mortgage banking activities			5						4						(25)						(24)
Other			Other income			(1,655)						1,552						281						(104)
Total not designated as hedging instruments						$	(7,023)					$	3,030					$	(5,561)					$	(2,535)

Derivative Exposure

At September 30, 2024, the Company had $127.2 million of cash collateral received and $15.7 million of cash collateral posted included in Cash and due from banks on the accompanying Condensed Consolidated Balance Sheets. In addition, the Company had $1.8 million in initial margin posted at clearing houses. The Company regularly evaluates the credit risk of its derivative customers, taking into account the likelihood of default, net exposures, and remaining contractual life, among other related factors. Credit risk exposure is mitigated as transactions with customers are generally secured by the same collateral of the underlying transactions. The current net credit exposure relating to derivative contracts with customers was $81.6 million at September 30, 2024. In addition, the Company also monitors potential future exposure, representing its best estimate of exposure to remaining contractual maturity. The potential future exposure relating to derivative contracts with customers was $110.2 million at September 30, 2024. The Company has incorporated a credit valuation adjustment (contra-liability) to reflect non-performance risk in the fair value measurement of its derivatives, which totaled $3.7 million and $6.2 million at September 30, 2024, and December 31, 2023, respectively. Various factors impact changes in the valuation adjustment over time, such as changes in the credit spreads of the contracted parties, and changes in market rates and volatilities, which affect the total expected exposure of the derivative instruments.

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Note 13: Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The determination of fair value may require the use of estimates when quoted market prices are not available. Fair value estimates made at a specific point in time are based on management’s judgments regarding future expected losses, current economic conditions, the risk characteristics of each financial instrument, and other subjective factors that cannot be determined with precision.

The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels within the fair value hierarchy are as follows:

•Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date.

•Level 2: Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, rate volatility, prepayment speeds, and credit ratings), or inputs that are derived principally from or corroborated by market data, correlation, or other means.

•Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. This includes certain pricing models or other similar techniques that require significant management judgment or estimation.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Available-for-Sale Securities. When unadjusted quoted prices are available in an active market, the Company classifies its available-for-sale investment securities within Level 1 of the fair value hierarchy. When quoted market prices are not available, the Company employs an independent pricing service that utilizes matrix pricing to calculate fair value. These fair value measurements consider observable data, such as dealer quotes, market spreads, cash flows, yield curves, live trading levels, trade execution data, market consensus prepayments speeds, credit information, and the respective terms and conditions for debt instruments. Management maintains procedures to monitor the pricing service’s results and has a process in place to challenge their valuations and methodologies. Government agency debentures, Municipal bonds and notes, Agency CMO, Agency MBS, Agency CMBS, CMBS, Corporate debt, Private label MBS, and Other available-for-sale securities are classified within Level 2 of the fair value hierarchy.

Derivative Instruments. The fair values presented for derivative instruments include any accrued interest. Foreign exchange contracts are valued based on unadjusted quoted prices in active markets, and accordingly, are classified within Level 1 of the fair value hierarchy. Except for mortgage banking derivatives, all other derivative instruments are valued using third-party valuation software, which considers the present value of cash flows discounted using observable forward rate assumptions. The resulting fair value is then validated against valuations performed by dealer counterparties. These derivative instruments are classified within Level 2 of the fair value hierarchy.

Mortgage Banking Derivatives. The Company uses forward sales of mortgage loans and mortgage-backed securities to manage the risk of loss associated with its mortgage loan commitments and mortgage loans held for sale. Prior to closing and funding certain single-family residential mortgage loans, an interest rate lock commitment is generally extended to the borrower. During this in-between time period, the Company is subject to the risk that market interest rates may change. If rates rise, investors generally will pay less to purchase mortgage loans, which would result in a reduction in the gain on sale of the loans, or possibly a loss. In an effort to mitigate this risk, forward delivery sales commitments are established in which the Company agrees to either deliver whole mortgage loans to various investors or issue mortgage-backed securities. The fair value of mortgage banking derivatives is determined based on current market prices for similar assets in the secondary market. Accordingly, mortgage banking derivatives are classified within Level 2 of the fair value hierarchy.

Originated Loans Held For Sale. The Company has elected to measure originated loans held for sale at fair value under the fair value option per ASC Topic 825, Financial Instruments. Electing to measure originated loans held for sale at fair value reduces certain timing differences and better reflects the price the Company would expect to receive from the sale of these loans. The fair value of originated loans held for sale is based on quoted market prices of similar loans sold in conjunction with securitization transactions. Accordingly, originated loans held for sale are classified within Level 2 of the fair value hierarchy.

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

			At September 30, 2024																		At December 31, 2023
(In thousands)			Fair Value						UPB						Difference						Fair Value						UPB						Difference
Originated loans held for sale			$	478					$	407					$	71					$	2,610					$	2,658					$	(48)

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Rabbi Trust Investments. Investments held in each of the Company’s Rabbi Trusts consist primarily of mutual funds that invest in equity and fixed income securities. Shares of these mutual funds are valued based on the NAV as reported by the trustee of the funds, which represents quoted prices in active markets. Accordingly, the Rabbi Trusts’ investments are classified within Level 1 of the fair value hierarchy. At September 30, 2024, and December 31, 2023, the total cost basis of the investments held in the Rabbi Trusts was $9.3 million and $9.2 million, respectively.

Alternative Investments. Equity investments have a readily determinable fair value when unadjusted quoted prices are available in an active market for identical assets. Accordingly, these alternative investments are classified within Level 1 of the fair value hierarchy. At December 31, 2023, equity investments with a readily determinable fair value had a total carrying amount of $0.9 million, with no remaining unfunded commitment. During the second quarter of 2024, the Company sold its equity investments with a readily determinable fair value for proceeds of $1.2 million. Prior to the sale, these alternative investments experienced total write-ups in fair value of $0.3 million.

Equity investments that do not have a readily determinable fair value may qualify for the NAV practical expedient if they meet certain requirements. The Company’s alternative investments measured at NAV consist of investments in non-public entities that cannot be redeemed since investments are distributed as the fund is liquidated. Alternative investments measured at NAV are not classified within the fair value hierarchy. At September 30, 2024, and December 31, 2023, these alternative investments had a total carrying amount of $40.8 million and $35.9 million, respectively, and a remaining unfunded commitment of $25.3 million and $29.8 million, respectively.

Contingent Consideration. The Company recorded contingent consideration at fair value related to two earn-out agreements associated with the acquisition of interLINK in January 2023. The terms of the purchase agreement specified that the seller would receive earn-outs based on the ability of the Company to: (i) re-sign the existing broker dealers under contract, and (ii) generate $2.5 billion in new broker dealer deposit programs within three years of the acquisition date. The estimated fair values of the contingent consideration liabilities are measured on a recurring basis and determined using an income approach considering management’s evaluation of the probability of achievement, forecasted achievement date (payment term), and a discount rate equivalent to the cost of debt. These significant inputs, which are the responsibility of management and calculated with the assistance of a third-party valuation specialist, are not observable, and accordingly, are classified within Level 3 of the fair value hierarchy.

The following tables summarize the unobservable inputs used to derive the estimated fair value of the Company’s contingent consideration liabilities (dollars in thousands):

			At September 30, 2024
Agreement			Maximum Amount			Probability of Achievement			Payment Term (in years)			Discount Rate			Fair Value
(i) Re-sign broker dealers (1)			$	207		99.0 %			1.13			6.40 %			$	182
(ii) Deposit program growth			$	12,500		100.0 %			0.25			6.40 %			$	11,568

			At December 31, 2023
Agreement			Maximum Amount			Probability of Achievement			Payment Term (in years)			Discount Rate			Fair Value
(i) Re-sign broker dealers			$	4,826		99.0 %			1.88			6.40 %			$	4,232
(ii) Deposit program growth			$	12,500		100.0 %			1.00			6.40 %			$	11,568

(1)The Company re-signed one of the existing broker dealers under contract in January 2024, which resulted in the cash payment of $4.6 million during the first quarter of 2024 to settle a portion of its contingent consideration obligation with StoneCastle Partners LLC in accordance with the purchase agreement.

Contingent consideration liabilities are included within Accrued expenses and other liabilities on the accompanying Condensed Consolidated Balance Sheets. Any fair value adjustments to contingent consideration liabilities are included in Other expense on the accompanying Condensed Consolidated Statements of Income.

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

			At September 30, 2024
(In thousands)			Level 1			Level 2			Level 3						Total
Financial Assets:
Available-for-sale securities:
Government agency debentures			$	—		$	274,825		$	—					$	274,825
Municipal bonds and notes			—			190,982			—						190,982
Agency CMO			—			43,019			—						43,019
Agency MBS			—			3,972,180			—						3,972,180
Agency CMBS			—			2,736,835			—						2,736,835
CMBS			—			696,810			—						696,810
Corporate debt			—			629,116			—						629,116
Private label MBS			—			41,834			—						41,834
Other			—			9,377			—						9,377
Total available-for-sale securities			—			8,594,978			—						8,594,978
Gross derivative instruments, before netting (1)			391			280,278			—						280,669
Originated loans held for sale			—			478			—						478
Investments held in Rabbi Trusts			13,318			—			—						13,318
Alternative investments measured at NAV (2)			—			—			—						40,847
Total financial assets			$	13,709		$	8,875,734		$	—					$	8,930,290
Financial Liabilities:
Gross derivative instruments, before netting (1)			$	717		$	263,764		$	—					$	264,481
Contingent consideration			—			—			11,750						11,750
Total financial liabilities			$	717		$	263,764		$	11,750					$	276,231

			At December 31, 2023
(In thousands)			Level 1			Level 2			Level 3						Total
Financial Assets:
Available-for-sale securities:
Government agency debentures			$	—		$	264,633		$	—					$	264,633
Municipal bonds and notes			—			1,573,233			—						1,573,233
Agency CMO			—			48,941			—						48,941
Agency MBS			—			3,347,098			—						3,347,098
Agency CMBS			—			2,288,071			—						2,288,071
CMBS			—			763,749			—						763,749
Corporate debt			—			622,155			—						622,155
Private label MBS			—			42,808			—						42,808
Other			—			9,041			—						9,041
Total available-for-sale securities			—			8,959,729			—						8,959,729
Gross derivative instruments, before netting (1)			217			330,419			—						330,636
Originated loans held for sale			—			2,610			—						2,610
Investments held in Rabbi Trusts			11,900			—			—						11,900
Alternative investments			959			—			—						959
Alternative investments measured at NAV (2)			—			—			—						35,888
Total financial assets			$	13,076		$	9,292,758		$	—					$	9,341,722
Financial Liabilities:
Gross derivative instruments, before netting (1)			$	970		$	334,840		$	—					$	335,810
Contingent consideration			—			—			15,800						15,800
Total financial liabilities			$	970		$	334,840		$	15,800					$	351,610

(1)Additional information regarding the impact of netting derivative assets and derivative liabilities, as well as the impact from offsetting cash collateral paid to the same derivative counterparties, can be found within Note 12: Derivative Financial Instruments.

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

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Assets Measured at Fair Value on a Non-Recurring Basis

The Company measures certain assets at fair value on a non-recurring basis. The following is a description of the valuation methodologies used for assets measured at fair value on a non-recurring basis.

Alternative Investments. The measurement alternative has been elected for alternative investments without readily determinable fair values that do not qualify for the NAV practical expedient. The measurement alternative requires investments to be measured at cost minus impairment, if any, plus or minus adjustments resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. Accordingly, these alternative investments are classified within Level 2 of the fair value hierarchy. At September 30, 2024, and December 31, 2023, the carrying amount of these alternative investments was $61.5 million and $53.1 million, respectively, of which $7.4 million and $7.9 million, respectively, were considered to be measured at fair value. During the three and nine months ended September 30, 2024, there were $0.2 million and $2.7 million, respectively, in total write-ups due to observable price changes, and zero and $0.8 million of total write-downs due to impairment, respectively.

Loans Transferred to Held for Sale. Once a decision has been made to sell loans not previously classified as held for sale, these loans are transferred into the held for sale category and carried at the lower of cost or fair value, less estimated costs to sell. At the time of transfer and classification as held for sale, any amount by which cost exceeds fair value is accounted for as a valuation allowance. This activity generally pertains to loans with observable inputs, and therefore, are classified within Level 2 of the fair value hierarchy. However, should these loans include adjustments for changes in loan characteristics based on unobservable inputs, the loans would then be classified within Level 3 of the fair value hierarchy. At September 30, 2024, and December 31, 2023, there were $117.1 million and $3.9 million loans that were transferred to held for sale on the Condensed Consolidated Balance Sheet, respectively.

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

Other Real Estate Owned and Repossessed Assets. OREO and repossessed assets are held at the lower of cost or fair value and are considered to be measured at fair value when recorded below cost. The fair value of OREO is calculated using independent appraisals or internal valuation methods, less estimated selling costs, and may consider available pricing guides, auction results, and price opinions. Certain repossessed assets may also require assumptions about factors that are not observable in an active market when determining fair value. Accordingly, OREO and repossessed assets are classified within Level 3 of the fair value hierarchy. At September 30, 2024, and December 31, 2023, the total carrying value of OREO and repossessed assets was $1.7 million and $9.1 million, respectively. In addition, the amortized cost of consumer loans secured by residential real estate property that were in process of foreclosure at September 30, 2024, was $10.1 million.

Estimated Fair Values of Financial Instruments and Mortgage Servicing Assets

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

Cash and Cash Equivalents. Given the short time frame to maturity, the carrying amount of cash and cash equivalents, which comprises cash and due from banks and interest-bearing deposits, approximates fair value. Cash and cash equivalents are classified within Level 1 of the fair value hierarchy.

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

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

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Mortgage Servicing Rights. Mortgage servicing rights are initially measured at fair value and subsequently measured using the amortization method. The Company assesses mortgage servicing rights for impairment each quarter and establishes or adjusts the valuation allowance to the extent that amortized cost exceeds the estimated fair market value. Fair value is calculated as the present value of estimated future net servicing income and relies on market based assumptions for loan prepayment speeds, servicing costs, discount rates, and other economic factors. Accordingly, the primary risk inherent in valuing mortgage servicing rights is the impact of fluctuating interest rates on the related servicing revenue stream. Mortgage servicing rights are classified within Level 3 of the fair value hierarchy.

Deposit Liabilities. The fair value of deposit liabilities, which comprises demand deposits, interest-bearing checking, savings, health savings, and money market accounts, reflects the amount payable on demand at the reporting date. Deposit liabilities are classified within Level 2 of the fair value hierarchy.

Time Deposits. The fair value of fixed-maturity certificates of deposit is estimated using rates that are currently offered for deposits with similar remaining maturities. Time deposits are classified within Level 2 of the fair value hierarchy.

Securities Sold Under Agreements to Repurchase and Other Borrowings. The fair value of securities sold under agreements to repurchase and other borrowings that mature within 90 days approximates their carrying value. The fair value of securities sold under agreements to repurchase and other borrowings that mature after 90 days is estimated using a discounted cash flow methodology based on current market rates and adjusted for associated credit risks, as appropriate. Securities sold under agreements to repurchase and other borrowings are classified within Level 2 of the fair value hierarchy.

Federal Home Loan Bank Advances and Long-Term Debt. The fair value of FHLB advances and long-term debt is estimated using a discounted cash flow methodology in which discount rates are matched with the time period of the expected cash flows and adjusted for associated credit risks, as appropriate. FHLB advances and long-term debt are classified within Level 2 of the fair value hierarchy.

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

			At September 30, 2024												At December 31, 2023
(In thousands)			Carrying Amount						Fair Value						Carrying Amount						Fair Value
Assets:
Level 1
Cash and cash equivalents			$	3,197,551					$	3,197,551					$	1,715,795					$	1,715,795
Level 2
Held-to-maturity investment securities, net			8,565,936						7,889,116						7,074,588						6,264,623
Level 3
Loans and leases, net			51,259,217						49,655,650						50,090,315						48,048,106
Mortgage servicing rights			1,378						3,558						8,523						24,495
Liabilities:
Level 2
Deposit liabilities			$	57,094,399					$	57,094,399					$	52,319,825					$	52,319,825
Time deposits			7,420,031						7,405,341						8,464,459						8,426,708
Securities sold under agreements to repurchase and other borrowings			100,232						100,219						458,387						458,380
FHLB advances			3,110,205						3,108,393						2,360,018						2,358,381
Long-term debt (1)			910,963						867,375						1,048,820						999,918

(1)Any unamortized premiums/discounts, debt issuance costs, or basis adjustments to long-term debt, as applicable, are excluded from the determination of fair value.

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Note 14: Segment Reporting

The Company has three reportable segments, which reflect its primary differentiated lines of business: Commercial Banking, Healthcare Financial Services, and Consumer Banking. Segment performance is evaluated using PPNR, or PTNR, as appropriate. Certain Treasury activities and other functional divisions, such as information technology, human resources, risk management, bank operations, and the operations of interLINK, as well as amounts required to reconcile non-GAAP profitability metrics to those reported in accordance with GAAP, are included in the Corporate and Reconciling category.

Effective January 1, 2024, the Company realigned certain of its Business Banking operations to better serve its customers and deliver operational efficiencies. Under this realignment, $1.5 billion of loans and $2.2 billion of deposits were reassigned, and $77.2 million of goodwill was reallocated on a relative fair value basis, from Commercial Banking to Consumer Banking. There was no goodwill impairment as a result of this realignment. Prior period amounts have been recast accordingly.

In addition, with the acquisition of Ametros on January 24, 2024, the Company formed a new reportable segment called Healthcare Financial Services, which includes the aggregated financial information of the HSA Bank and Ametros businesses. The allocation of the purchase price for the Ametros acquisition is considered preliminary at September 30, 2024. The $228.2 million of preliminary goodwill recorded related to Ametros has been allocated entirely to Healthcare Financial Services.

The allocation of the purchase price for the interLINK acquisition on January 11, 2023, was considered final as of June 30, 2023. The $143.2 million of goodwill recorded related to interLINK was allocated entirely to Commercial Banking.

The following is a description of the Company’s three reportable segments and their primary services at September 30, 2024:

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

Healthcare Financial Services offers consumer-directed healthcare solutions that includes HSAs, health reimbursement arrangements, the administration of medical insurance claim settlements, flexible spending accounts, and commuter benefits. Accounts are distributed nationwide directly to employers and individual consumers, as well as through national and regional insurance carriers, benefit consultants, and financial advisors.

Consumer Banking offers consumer deposit and fee-based services, residential mortgages, home equity lines, secured and unsecured loans, debit and credit card products, and investment services to individual consumers and small businesses through its Consumer Lending and Business Banking business units. Consumer Banking operates a distribution network consisting of 196 banking centers and 347 ATMs, a customer care center, and a full range of web and mobile-based banking services, primarily throughout southern New England and the New York metro and suburban markets.

Segment Reporting Methodology

The Company uses an internal profitability reporting system to generate information by reportable segment, which is based on a series of management estimates for FTP and allocations for non-interest expense, provision for credit losses, income taxes, and equity capital. These estimates and allocations, certain of which are subjective in nature, are periodically reviewed and refined. For additional information regarding the Company’s segment reporting methodology, please refer to Note 21: Segment Reporting in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

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

			At September 30, 2024
(In thousands)			Commercial Banking			Healthcare Financial Services			Consumer Banking									Corporate and Reconciling			Consolidated Total
Goodwill			$	1,960,363		$	285,670		$	622,035								$	—		$	2,868,068
Total assets			42,912,424			485,353			12,614,978									23,441,145			79,453,900
			At December 31, 2023
(In thousands)			Commercial Banking			Healthcare Financial Services			Consumer Banking									Corporate and Reconciling			Consolidated Total
Goodwill			$	1,951,945		$	57,485		$	622,035								$	—		$	2,631,465
Total assets			41,843,297			122,421			12,327,403									20,652,128			74,945,249

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

			Three months ended September 30, 2024
(In thousands)			Commercial Banking			Healthcare Financial Services			Consumer Banking						Corporate and Reconciling			Consolidated Total
Net interest income			$	338,424		$	93,940		$	202,122					$	(44,603)		$	589,883
Non-interest income			33,288			26,541			28,299						(30,387)			57,741
Non-interest expense			100,892			54,023			116,253						77,790			348,958
Pre-tax, pre-provision net revenue			270,820			66,458			114,168						(152,780)			298,666
Provision for credit losses			48,813			—			5,056						131			54,000
Income before income taxes			222,007			66,458			109,112						(152,911)			244,666
Income tax expense			49,064			17,478			26,842						(41,703)			51,681
Net income			$	172,943		$	48,980		$	82,270					$	(111,208)		$	192,985

			Three months ended September 30, 2023
(In thousands)			Commercial Banking			Healthcare Financial Services			Consumer Banking						Corporate and Reconciling			Consolidated Total
Net interest income			$	365,003		$	77,669		$	221,698					$	(77,234)		$	587,136
Non-interest income			28,804			20,799			28,687						12,092			90,382
Non-interest expense			98,736			39,870			117,273						106,699			362,578
Pre-tax, pre-provision net revenue			295,071			58,598			133,112						(171,841)			314,940
Provision (benefit) for credit losses			41,032			—			(5,193)						661			36,500
Income before income taxes			254,039			58,598			138,305						(172,502)			278,440
Income tax expense			56,651			15,822			34,714						(55,222)			51,965
Net income			$	197,388		$	42,776		$	103,591					$	(117,280)		$	226,475

			Nine months ended September 30, 2024
(In thousands)			Commercial Banking			Healthcare Financial Services			Consumer Banking						Corporate and Reconciling			Consolidated Total
Net interest income			$	1,017,954		$	271,742		$	610,578					$	(170,355)		$	1,729,919
Non-interest income			102,078			85,067			86,669						(74,422)			199,392
Non-interest expense			311,705			157,417			352,279						189,501			$	1,010,902
Pre-tax, pre-provision net revenue			808,327			$	199,392		344,968						(434,278)			918,409
Provision (benefit) for credit losses			161,786			—			(3,682)						396			158,500
Income before income tax expense			646,541			199,392			348,650						(434,674)			759,909
Income tax expense			142,886			52,440			85,768						(112,126)			168,968
Net income			$	503,655		$	146,952		$	262,882					$	(322,548)		$	590,941

			Nine months ended September 30, 2023
(In thousands)			Commercial Banking			Healthcare Financial Services			Consumer Banking						Corporate and Reconciling			Consolidated Total
Net interest income			$	1,084,674		$	224,820		$	684,985					$	(228,231)		$	1,766,248
Non-interest income			92,554			67,889			87,425						2,654			250,522
Non-interest expense			297,643			126,213			353,216						262,062			1,039,134
Pre-tax, pre-provision net revenue			879,585			166,496			419,194						(487,639)			977,636
Provision for credit losses			99,334			—			9,575						5,838			114,747
Income before income tax expense			780,251			166,496			409,619						(493,477)			862,889
Income tax expense			173,996			44,954			102,814						(141,322)			180,442
Net income			$	606,255		$	121,542		$	306,805					$	(352,155)		$	682,447

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Note 15: Revenue from Contracts with Customers

The following tables summarize revenues recognized in accordance with ASC Topic 606, Revenue from Contracts with Customers. These disaggregated amounts, together with sources of other non-interest income that are subject to other GAAP topics, have been reconciled to non-interest income by reportable segment as presented within Note 14: Segment Reporting.

			Three months ended September 30, 2024
(In thousands)			Commercial Banking			Healthcare Financial Services			Consumer Banking			Corporate and Reconciling			Consolidated Total
Non-interest Income:
Deposit service fees			$	4,561		$	18,111		$	16,397		$	(206)		$	38,863
Loan and lease related fees (1)			3,976			—			—			—			3,976
Wealth and investment services			3,277			—			5,095			(5)			8,367
Other income			—			8,430			417			1,021			9,868
Revenue from contracts with customers			11,814			26,541			21,909			810			61,074
Other sources of non-interest income			21,474			—			6,390			(31,197)			(3,333)
Total non-interest income			$	33,288		$	26,541		$	28,299		$	(30,387)		$	57,741

			Three months ended September 30, 2023
(In thousands)			Commercial Banking			Healthcare Financial Services			Consumer Banking			Corporate and Reconciling			Consolidated Total
Non-interest Income:
Deposit service fees			$	3,982		$	19,573		$	16,325		$	1,125		$	41,005
Loan and lease related fees (1)			4,274			—			—			—			4,274
Wealth and investment services			2,861			—			4,393			—			7,254
Other income			—			1,226			3,541			1,092			5,859
Revenue from contracts with customers			11,117			20,799			24,259			2,217			58,392
Other sources of non-interest income			17,687			—			4,428			9,875			31,990
Total non-interest income			$	28,804		$	20,799		$	28,687		$	12,092		$	90,382

			Nine months ended September 30, 2024
(In thousands)			Commercial Banking			Healthcare Financial Services			Consumer Banking			Corporate and Reconciling			Consolidated Total
Non-interest Income:
Deposit service fees			$	15,563		$	60,623		$	46,745		$	(452)		$	122,479
Loan and lease related fees (1)			11,541			—			—			—			11,541
Wealth and investment services			9,663			—			15,200			(16)			24,847
Other income			—			24,444			650			2,952			28,046
Revenue from contracts with customers			36,767			85,067			62,595			2,484			186,913
Other sources of non-interest income			65,311			—			24,074			(76,906)			12,479
Total non-interest income			$	102,078		$	85,067		$	86,669		$	(74,422)		$	199,392
			Nine months ended September 30, 2023
(In thousands)			Commercial Banking			Healthcare Financial Services			Consumer Banking			Corporate and Reconciling			Consolidated Total
Non-interest Income:
Deposit service fees			$	12,589		$	62,651		$	55,895		$	724		$	131,859
Loan and lease related fees (1)			13,024			—			—			—			13,024
Wealth and investment services			8,501			—			12,746			(15)			21,232
Other income			—			5,238			5,097			3,146			13,481
Revenue from contracts with customers			34,114			67,889			73,738			3,855			179,596
Other sources of non-interest income			58,440			—			13,687			(1,201)			70,926
Total non-interest income			$	92,554		$	67,889		$	87,425		$	2,654		$	250,522

(1)A portion of Loan and lease related fees on the Condensed Consolidated Statements of Income comprises income generated from factored receivables and payroll financing activities that is within the scope of ASC Topic 606.

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Major Revenue Streams

Deposit service fees consist of fees earned from commercial and consumer customer deposit accounts, such as account maintenance and cash management/analysis fees, as well as other transactional service charges (i.e., insufficient funds, wire transfers, stop payment fees, etc.). Performance obligations for account maintenance services and cash management/analysis fees are satisfied on a monthly basis at a fixed transaction price, whereas performance obligations for other deposit service charges that result from various customer-initiated transactions are satisfied at a point-in-time when the service is rendered. Payment for deposit service fees is generally received immediately or in the following month through a direct charge to the customers’ accounts. Certain commercial customer contracts include credit clauses, whereby the Company will grant credit upon the customer meeting pre-determined conditions, which can be used to offset fees. On occasion, the Company may also waive certain fees. Fee waivers are recognized as a reduction to revenue in the period the waiver is granted to the customer.

The deposit service fees revenue stream also includes interchange fees earned from debit and credit card transactions. The transaction price for interchange services is based on the transaction value and the interchange rate set by the card network. Performance obligations for interchange fees are satisfied at a point-in-time when the cardholder’s transaction is authorized and settled. Payment for interchange fees is generally received immediately or in the following month.

Factored receivables non-interest income consists of fees earned from accounts receivable management services. The Company factors accounts receivable, with and without recourse, for customers whereby the Company purchases their accounts receivable at a discount and assumes the risk, as applicable, and ownership of the assets through direct cash receipt from the end consumer. Factoring services are performed in exchange for a non-refundable fee at a transaction price based on a percentage of the gross invoice amount of each receivable purchased, subject to a minimum required amount. The performance obligation for factoring services is generally satisfied at a point-in-time when the receivable is assigned to the Company. However, should the commission earned not meet or exceed the minimum required annual amount, the difference between that and the actual amount is recognized at the end of the contract term. Other fees associated with factoring receivables may include wire transfer and technology fees, field examination fees, and Uniform Commercial Code fees, where the performance obligations are satisfied at a point-in-time when the services are rendered. Payment from the customer for factoring services is generally received immediately or within the following month. As previously discussed in Note 2: Business Developments, the Company sold its factored receivables loan portfolio, which included the related customer contracts, in the third quarter of 2024. As a result, the Company will no longer generate income from factored receivables activities.

Payroll finance non-interest income consists of fees earned from performing payroll financing and business process outsourcing services, including full back-office technology and tax accounting services, along with payroll preparation, making payroll tax payments, invoice billings, and collections for independently-owned temporary staffing companies nationwide. Performance obligations for payroll finance and business processing activities are either satisfied upon completion of the support services or as payroll remittances are made on behalf of customers to fund their employee payroll, which generally occurs on a weekly basis. The agreed-upon transaction price is based on a fixed-percentage per the terms of the contract, which could be subject to a hold-back reserve to provide for any balances that are assessed to be at risk of collection. When the Company collects on amounts due from end consumers on behalf of its customers and at the time of financing payroll, the Company retains the agreed-upon transaction price payable for the performance of its services and remits an amount to the customer net of any advances and payroll tax withholdings, as applicable.

Wealth and investment services consist of fees earned from asset management, trust administration, and investment advisory services, and through facilitating securities transactions. Performance obligations for asset management and trust administration services are satisfied on a monthly or quarterly basis at a transaction price based on a percentage of the period-end market value of the assets under administration. Payment for asset management and trust administration services is generally received a few days after period-end through a direct charge to the customers’ accounts. Performance obligations for investment advisory services are satisfied over the period in which the services are provided through a time-based measurement of progress, and the agreed-upon transaction price with the customer varies depending on the nature of the services performed. Performance obligations for facilitating securities transactions are satisfied at a point-in-time when the securities are sold at a transaction price that is based on a percentage of the contract value. Payment for both investment advisory services and facilitating securities transactions may be received in advance of the service, but generally is received immediately or in the following period, in arrears.

Contracts with customers generated accounts receivable and deferred revenue of $2.5 million and $22.1 million, respectively, at September 30, 2024. Both of these balances were recorded in connection with contracts with customers from the acquired Ametros business. Ametros’ contracts with customers include a fixed, non-refundable fee that represents an advance payment for access to future discounted medical products and services. This up-front fee is initially deferred and subsequently recognized into Other income ratably over the estimated life expectancy of the member. An insignificant amount of such fee revenue was recognized during the three and nine months ended September 30, 2024. Contracts with customers did not generate significant contract assets or contract liabilities at December 31, 2023.

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Note 16: Commitments and Contingencies

Credit-Related Financial Instruments

In the normal course of business, the Company offers financial instruments with off-balance sheet risk to meet the financing needs of its customers. These transactions include commitments to extend credit, standby letters of credit, and commercial letters of credit, which involve, to varying degrees, elements of credit risk.

The following table summarizes the outstanding amounts of credit-related financial instruments with off-balance sheet risk:

(In thousands)			At September 30, 2024						At December 31, 2023
Commitments to extend credit			$	12,020,473					$	12,026,597
Standby letters of credit			509,422						482,462
Commercial letters of credit			26,093						54,382
Total credit-related financial instruments with off-balance sheet risk			$	12,555,988					$	12,563,441

The Company enters into contractual commitments to extend credit to its customers (i.e., revolving credit arrangements, term loan commitments, and short-term borrowing agreements), generally with fixed expiration dates or other termination clauses and that require payment of a fee. Substantially all of the Company’s commitments to extend credit are contingent upon its customers maintaining specific credit standards at the time of loan funding, and are often secured by real estate collateral. Since the majority of the Company’s commitments typically expire without being funded, the total contractual amount does not necessarily represent the Company’s future payment requirements.

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

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

Allowance for Credit Losses on Unfunded Loan Commitments

An ACL is recorded under the CECL methodology and included in Accrued expenses and other liabilities on the accompanying Condensed Consolidated Balance Sheets to provide for the unused portion of commitments to lend that are not unconditionally cancellable by the Company. At September 30, 2024, and December 31, 2023, the ACL on unfunded loan commitments totaled $22.6 million and $24.7 million, respectively.Litigation

The Company is subject to certain legal proceedings and unasserted claims and assessments in the ordinary course of business. Legal contingencies are evaluated based on information currently available, including advice of counsel and assessment of available insurance coverage. The Company establishes an accrual for specific legal matters when it determines that the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable. Once established, each accrual is adjusted to reflect any subsequent developments. Legal contingencies are subject to inherent uncertainties, and unfavorable rulings may occur that could cause the Company to either adjust its litigation accrual or incur actual losses that exceed the current estimate, which ultimately could have a material adverse effect, either individually or in the aggregate, on its business, financial condition, or operating results. The Company will consider settlement of cases when it is in the best interests of the Company and its stakeholders. The Company intends to defend itself in all claims asserted against it, and management currently believes that the outcome of these contingencies will not be material, either individually or in the aggregate, to the Company or its consolidated financial position.

Federal Deposit Insurance Corporation Special Assessment

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 special assessment is to be collected for an anticipated total of ten quarterly assessment periods, which began during the second quarter of 2024. At September 30, 2024, and December 31, 2023, the Company’s accrual for its estimated special assessment charge was $45.7 million and $47.2 million, respectively. The FDIC retains the right to cease collection early, extend the special assessment collection period, and impose shortfall special assessments if actual losses exceed the amounts collected. The Company continues to monitor the estimated loss attributable to the protection of uninsured depositors at Silicon Valley Bank and Signature Bank, which could impact the amount of its accrued liability.

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Note 17: Subsequent Events

The Company has evaluated subsequent events from the date of the Condensed Consolidated Financial Statements, and accompanying Notes thereto, through the date of issuance, and determined that no significant events were identified requiring recognition or disclosure.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information regarding quantitative and qualitative disclosures about market risk can be found in Part I within Note 12: Derivative Financial Instruments in the Notes to the Condensed Consolidated Financial Statements contained in Item 1. Financial Statements, and under the section captioned “Asset/Liability Management and Market Risk” contained in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, which are incorporated herein by reference.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, under the supervision and with the participation of the Chief Executive Officer (who is our principal executive officer) and Chief Financial Officer (who is our principal financial officer), evaluated the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of September 30, 2024. The term “disclosure controls and procedures” means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of September 30, 2024, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

Because of its inherent limitations, management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

The following table provides information with respect to any purchase of equity securities for the Company’s 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 September 30, 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)
July 1, 2024 - July 31, 2024			3,086			$	45.05		—			$	227,952,190
August 1, 2024 - August 31, 2024			799			45.21			—			227,952,190
September 1, 2024 - September 30, 2024			1,617			45.13			—			227,952,190
Total			5,502			45.10			—			227,952,190

(1)During the three months ended September 30, 2024, 5,502 of the total number of shares purchased were acquired at market prices outside of the Company’s common stock repurchase program and related to employee share-based compensation plan activity.

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

(3)The Company maintains a common stock repurchase program, which was approved by the Board of Directors on October 24, 2017, that authorizes management to purchase shares of Webster common stock in open market or privately negotiated transactions, through block trades, and pursuant to any adopted predetermined trading plan, subject to the availability and trading price of stock, general market conditions, alternative uses for capital, regulatory considerations, and the Company’s financial performance. On April 27, 2022, the Board of Directors increased management’s authority to repurchase shares of Webster common stock under the repurchase program by $600.0 million in shares. This existing repurchase program will remain in effect until fully utilized or until modified, superseded, or terminated.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

No director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408 of Regulation S-K, during the quarter ended September 30, 2024.

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ITEM 6. EXHIBITS

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

Exhibit Number

Exhibit Description

Exhibit Included

Incorporated by Reference

Form

Exhibit

Filing Date

2

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

8-K

2.1

4/23/2021

3

Certificate of Incorporation and Bylaws.

3.1

Fourth Amended and Restated Certificate of Incorporation

10-Q

3.1

8/9/2016

3.2.1

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

8-K

3.1

4/28/2023

3.2.2

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

8-K

3.2

2/1/2022

3.3

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

8-K

3.1

6/11/2008

3.4

Certificate of Designations establishing the rights of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series B

8-K

3.1

11/24/2008

3.5

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

8-K

3.1

7/31/2009

3.6

Certificate of Designations establishing the rights of the Company’s Non-Voting Perpetual Participating Preferred Stock, Series D

8-K

3.2

7/31/2009

3.7

Certificate of Designations establishing the rights of the Company’s 6.40% Series E Non-Cumulative Perpetual Preferred Stock

8-A12B

3.3

12/4/2012

3.8

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

8-A12B

3.3

12/12/2017

3.9

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

8-A12B

3.4

2/1/2022

3.10

Bylaws, as amended effective March 15, 2020

8-K

3.1

3/17/2020

3.11

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

8-K

3.5

2/1/2022

10.1

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

DEF 14A

A

3/15/2023

10.2

Change in Control Agreement, dated as of July 15, 2024, by and between Webster Financial Corporation and William Neal Holland

8-K

10.1

7/15/2024

10.3

Non-Competition Agreement, dated as of July 15, 2024, by and between Webster Financial Corporation and William Neal Holland

8-K

10.2

7/15/2024

31.1

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

X

31.2

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

X

32.1

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

X (1)

32.2

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

X (1)

101

The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, formatted in Inline Extensible Business Reporting Language (iXBRL) includes: (i) Cover Page, (ii) Condensed Consolidated Balance Sheets, (iii) Condensed Consolidated Statements Of Income, (iv) Condensed Consolidated Statements Of Comprehensive Income, (v) Condensed Consolidated Statements Of Stockholders’ Equity, (vi) Condensed Consolidated Statements Of Cash Flows, and (vii) Notes to Condensed Consolidated Financial Statements, tagged in summary and in detail.

X

104

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

X

(1)Exhibit is furnished herewith and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

WEBSTER FINANCIAL CORPORATION

(Registrant)

Date: November 8, 2024

By:

/s/ John R. Ciulla

John R. Ciulla

Chief Executive Officer, Chairman, and Director

(Principal Executive Officer)

Date: November 8, 2024

By:

/s/ Neal Holland

Neal Holland

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

Date: November 8, 2024

By:

/s/ Albert J. Wang

Albert J. Wang

Executive Vice President and Chief Accounting Officer

(Principal Accounting Officer)

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