Regulatory Matters

12 Months Ended

Dec. 31, 2021

Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract]

Regulatory Matters

Regulatory Capital and Restrictions

Capital Requirements

Webster Financial Corporation and Webster 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 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 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 the Basel III Capital Rules to ensure capital adequacy require the Company to maintain minimum ratios of CET1 capital to total risk-weighted assets (CET1 risk-based capital), Tier 1 capital to total risk-weighted assets (Tier 1 risk-based capital), Total capital to total risk-weighted assets (Total risk-based capital), and Tier 1 capital to average tangible assets (Tier 1 leverage capital), as defined in the regulations.

CET1 capital consists of common shareholders’ equity less deductions for goodwill and other intangible assets, and certain deferred tax adjustments. Upon adoption of the Basel III Capital Rules, Webster elected to opt-out of the requirement to include certain components of accumulated other comprehensive income 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 permissible portions of subordinated debt and the allowance for credit losses.

At December 31, 2021 and 2020, both Webster Financial Corporation and Webster Bank were classified as well-capitalized. Management believes that no events or changes have occurred subsequent to year-end that would change this designation.

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

	At December 31, 2021
	Actual (1)				Minimum Requirement				Well Capitalized
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Webster Financial Corporation
CET1 risk-based capital	$	2,804,290	11.72	%	$	1,076,871	4.5	%	$	1,555,480	6.5	%
Total risk-based capital	3,265,064		13.64		1,914,436		8.0		2,393,046		10.0
Tier 1 risk-based capital	2,949,327		12.32		1,435,827		6.0		1,914,436		8.0
Tier 1 leverage capital	2,949,327		8.47		1,393,607		4.0		1,742,008		5.0
Webster Bank
CET1 risk-based capital	$	3,034,883	12.69	%	$	1,075,920	4.5	%	$	1,554,107	6.5	%
Total risk-based capital	3,273,300		13.69		1,912,747		8.0		2,390,934		10.0
Tier 1 risk-based capital	3,034,883		12.69		1,434,560		6.0		1,912,747		8.0
Tier 1 leverage capital	3,034,883		8.72		1,392,821		4.0		1,741,026		5.0
	At December 31, 2020
	Actual (1)				Minimum Requirement				Well Capitalized
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Webster Financial Corporation
CET1 risk-based capital	$	2,543,131	11.35	%	$	1,008,512	4.5	%	$	1,456,739	6.5	%
Total risk-based capital	3,045,652		13.59		1,792,910		8.0		2,241,137		10.0
Tier 1 risk-based capital	2,688,168		11.99		1,344,682		6.0		1,792,910		8.0
Tier 1 leverage capital	2,688,168		8.32		1,291,980		4.0		1,614,975		5.0
Webster Bank
CET1 risk-based capital	$	2,791,474	12.46	%	$	1,008,027	4.5	%	$	1,456,039	6.5	%
Total risk-based capital	3,071,505		13.71		1,792,048		8.0		2,240,060		10.0
Tier 1 risk-based capital	2,791,474		12.46		1,344,036		6.0		1,792,048		8.0
Tier 1 leverage capital	2,791,474		8.65		1,291,415		4.0		1,614,268		5.0

(1)In accordance with regulatory capital rules, Webster elected an option to delay the estimated impact of the adoption of CECL on its regulatory capital over a two-year deferral period ending on January 1, 2022, and subsequent three-year transition period ending on December 31, 2024. As a result, capital ratios and amounts exclude the impact of the increased ACL on loans and leases, held-to-maturity debt securities, and unfunded loan commitments attributed to the adoption of CECL on January 1, 2020, adjusted for an approximation of the after-tax provision for credit losses attributable to CECL relative to the incurred loss methodology during the deferral period.

Dividend Restrictions

Webster Financial Corporation is dependent upon dividends from Webster Bank to provide funds for the payment of dividends to shareholders and to provide 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 the net income for that year combined with the undistributed net income for the preceding two years. During the years ended December 31, 2021 and 2020, Webster Bank paid $200.0 million and $20.0 million in dividends to Webster Financial Corporation, to which no express approval from the OCC was required.

Cash Restrictions

Webster Bank is required under Federal Reserve regulations to maintain cash reserve balances in the form of vault cash or deposits held at a Federal Reserve Bank 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 was not required to hold cash reserve balances at both December 31, 2021 and 2020.