Regulatory Matters

9 Months Ended

Sep. 30, 2019

Broker-Dealer, Net Capital Requirement, SEC Regulation [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 Office of the Comptroller of the Currency (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 adjustments. 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, 2019
	Actual				Minimum Requirement				Well Capitalized
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Webster Financial Corporation
CET1 risk-based capital	$	2,461,028	11.63	%	$	952,020	4.5	%	$	1,375,140	6.5	%
Total risk-based capital	2,895,006		13.68		1,692,480		8.0		2,115,600		10.0
Tier 1 risk-based capital	2,606,065		12.32		1,269,360		6.0		1,692,480		8.0
Tier 1 leverage capital	2,606,065		8.99		1,158,906		4.0		1,448,632		5.0
Webster Bank
CET1 risk-based capital	$	2,617,731	12.37	%	$	952,532	4.5	%	$	1,375,879	6.5	%
Total risk-based capital	2,829,352		13.37		1,693,390		8.0		2,116,737		10.0
Tier 1 risk-based capital	2,617,731		12.37		1,270,042		6.0		1,693,390		8.0
Tier 1 leverage capital	2,617,731		9.04		1,158,512		4.0		1,448,140		5.0

	At December 31, 2018
	Actual				Minimum Requirement				Well Capitalized
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Webster Financial Corporation
CET1 risk-based capital	$	2,284,978	11.44	%	$	898,972	4.5	%	$	1,298,514	6.5	%
Total risk-based capital	2,722,194		13.63		1,598,172		8.0		1,997,715		10.0
Tier 1 risk-based capital	2,430,015		12.16		1,198,629		6.0		1,598,172		8.0
Tier 1 leverage capital	2,430,015		9.02		1,077,303		4.0		1,346,628		5.0
Webster Bank
CET1 risk-based capital	$	2,170,566	10.87	%	$	898,317	4.5	%	$	1,297,569	6.5	%
Total risk-based capital	2,385,425		11.95		1,597,008		8.0		1,996,260		10.0
Tier 1 risk-based capital	2,170,566		10.87		1,197,756		6.0		1,597,008		8.0
Tier 1 leverage capital	2,170,566		8.06		1,076,712		4.0		1,345,889		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. Federal and state banking regulations limit the amount of dividends that may be paid by Webster Bank, without the express approval of the OCC, to its retained net profits, defined by the OCC as net income less dividends declared during the period, for the preceding two years plus retained net profits up to the date of any dividend declaration. In addition, the effect of any dividend declaration must not cause the regulatory capital of Webster Bank to fall below specified minimum levels and, 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 $170 million during the nine months ended September 30, 2019 compared to $220 million during the nine months ended September 30, 2018.

Cash Restrictions

Webster Bank is required by Federal Reserve System regulations to hold cash reserve balances on hand or with a Federal Reserve Bank. Pursuant to this requirement, it held $93.2 million at September 30, 2019 and $81.2 million at December 31, 2018. These restricted cash amounts are included in cash and due from banks, on the consolidated balance sheet.