Regulatory Matters

9 Months Ended

Sep. 30, 2017

Regulatory Capital Requirements [Abstract]

Regulatory Matters

Regulatory Matters

Capital Requirements

Webster Financial Corporation is subject to regulatory capital requirements administered by the Federal Reserve System, while Webster Bank is subject to regulatory capital requirements administered by the OCC. Regulatory authorities can initiate certain mandatory actions if Webster Financial Corporation or Webster Bank fail to meet minimum capital requirements, which could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, both Webster Financial Corporation and Webster Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. These quantitative measures require minimum amounts and ratios to ensure capital adequacy.

Basel III total risk-based capital is comprised of three categories: CET1 capital, additional Tier 1 capital, and Tier 2 capital. CET1 capital includes common shareholders' equity, less deductions for goodwill, other intangibles, and certain deferred tax liabilities. Common shareholders' equity, for purposes of CET1 capital, excludes AOCL components as permitted by the opt-out election taken by Webster upon adoption of Basel III. Tier 1 capital is comprised of CET1 capital plus perpetual preferred stock, while Tier 2 capital includes qualifying subordinated debt and qualifying allowance for credit losses, that together equal total capital.

The following table provides information on the capital ratios for Webster Financial Corporation and Webster Bank:

	At September 30, 2017
	Actual				Minimum Requirement				Well Capitalized
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Webster Financial Corporation
CET1 risk-based capital	$	2,031,955	10.99	%	$	832,149	4.5	%	$	1,201,993	6.5	%
Total risk-based capital	2,436,332		13.17		1,479,376		8.0		1,849,220		10.0
Tier 1 risk-based capital	2,154,665		11.65		1,109,532		6.0		1,479,376		8.0
Tier 1 leverage capital	2,154,665		8.36		1,030,973		4.0		1,288,717		5.0
Webster Bank
CET1 risk-based capital	$	2,061,764	11.16	%	$	831,319	4.5	%	$	1,200,794	6.5	%
Total risk-based capital	2,266,110		12.27		1,477,900		8.0		1,847,376		10.0
Tier 1 risk-based capital	2,061,764		11.16		1,108,425		6.0		1,477,900		8.0
Tier 1 leverage capital	2,061,764		8.00		1,030,260		4.0		1,287,825		5.0

	At December 31, 2016
	Actual				Minimum Requirement				Well Capitalized
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Webster Financial Corporation
CET1 risk-based capital	$	1,932,171	10.52	%	$	826,504	4.5	%	$	1,193,840	6.5	%
Total risk-based capital	2,328,808		12.68		1,469,341		8.0		1,836,677		10.0
Tier 1 risk-based capital	2,054,881		11.19		1,102,006		6.0		1,469,341		8.0
Tier 1 leverage capital	2,054,881		8.13		1,010,857		4.0		1,263,571		5.0
Webster Bank
CET1 risk-based capital	$	1,945,332	10.61	%	$	825,228	4.5	%	$	1,191,995	6.5	%
Total risk-based capital	2,141,939		11.68		1,467,071		8.0		1,833,839		10.0
Tier 1 risk-based capital	1,945,332		10.61		1,100,304		6.0		1,467,071		8.0
Tier 1 leverage capital	1,945,332		7.70		1,010,005		4.0		1,262,507		5.0

Dividend Restrictions

Webster Financial Corporation is dependent upon dividends from Webster Bank to provide funds for its cash requirements, including payments of dividends to shareholders. Banking regulations may limit the amount of dividends that may be paid. Approval by regulatory authorities is required if the effect of dividends declared would cause the regulatory capital of Webster Bank to fall below specified minimum levels, or if dividends declared exceed the net income for that year combined with the undistributed net income for the preceding two years. In addition, the OCC has discretion to prohibit any otherwise permitted capital distribution on general safety and soundness grounds. Dividends paid by Webster Bank to Webster Financial Corporation totaled $80 million during the nine months ended September 30, 2017 compared to $115 million during the nine months ended September 30, 2016.

Cash Restrictions

Webster Bank is required by Federal Reserve System regulations to hold cash reserve balances on hand or with the Federal Reserve Bank. Pursuant to this requirement, Webster Bank held $76.7 million and $58.6 million at September 30, 2017 and December 31, 2016, respectively.