Regulatory Matters

3 Months Ended

Mar. 31, 2020

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 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: common equity tier 1 capital, defined by Basel III capital rules (CET1 capital), 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 March 31, 2020
	Actual (1)				Minimum Requirement				Well Capitalized
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Webster Financial Corporation
CET1 risk-based capital	$	2,459,318	10.95	%	$	1,010,688	4.5	%	$	1,459,883	6.5	%
Total risk-based capital	2,943,209		13.10		1,796,779		8.0		2,245,974		10.0
Tier 1 risk-based capital	2,604,355		11.60		1,347,584		6.0		1,796,779		8.0
Tier 1 leverage capital	2,604,355		8.61		1,209,381		4.0		1,511,727		5.0
Webster Bank
CET1 risk-based capital	$	2,596,274	11.58	%	$	1,009,288	4.5	%	$	1,457,860	6.5	%
Total risk-based capital	2,857,808		12.74		1,794,289		8.0		2,242,862		10.0
Tier 1 risk-based capital	2,596,274		11.58		1,345,717		6.0		1,794,289		8.0
Tier 1 leverage capital	2,596,274		8.59		1,209,218		4.0		1,511,522		5.0

	At December 31, 2019
	Actual				Minimum Requirement				Well Capitalized
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Webster Financial Corporation
CET1 risk-based capital	$	2,516,361	11.56	%	$	979,739	4.5	%	$	1,415,179	6.5	%
Total risk-based capital	2,950,181		13.55		1,741,758		8.0		2,177,198		10.0
Tier 1 risk-based capital	2,661,398		12.22		1,306,319		6.0		1,741,758		8.0
Tier 1 leverage capital	2,661,398		8.96		1,188,507		4.0		1,485,634		5.0
Webster Bank
CET1 risk-based capital	$	2,527,645	11.61	%	$	979,497	4.5	%	$	1,414,829	6.5	%
Total risk-based capital	2,739,108		12.58		1,741,328		8.0		2,176,660		10.0
Tier 1 risk-based capital	2,527,645		11.61		1,305,996		6.0		1,741,328		8.0
Tier 1 leverage capital	2,527,645		8.51		1,187,953		4.0		1,484,941		5.0

(1)In accordance with regulatory capital rules, the Company elected an option to delay the estimated impact of CECL on its regulatory capital over a two-year deferral and subsequent three-year transition period ending December 31, 2024. As a result, capital ratios and amounts as of March 31, 2020 exclude the impact of the increased allowance for credit losses on loans, held-to-maturity debt securities and unfunded loan commitments attributed to the adoption of CECL.

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 the Bank to fall below specified minimum levels, or exceed the net income for that year combined with the undistributed net income for the preceding two years. Webster Bank paid no dividends to Webster Financial Corporation during the three months ended March 31, 2020 compared to $80 million during the three months ended March 31, 2019.

Cash Restrictions. Webster Bank is required by Federal Reserve System regulations to hold cash reserve balances on hand or with a Federal Reserve Bank. To address potential impacts of the COVID-19 pandemic the Federal Reserve reset the requirement to zero, effective March 26, 2020.