Mergers and Acquisitions (Tables)

12 Months Ended

Dec. 31, 2022

Business Combination and Asset Acquisition [Abstract]

The following table summarizes the determination of the purchase price consideration:


(In thousands, except share and per share data)
Webster common stock issued	87,965,239
Price per share of Webster common stock on January 31, 2022	$	56.81
Consideration for outstanding common stock	4,997,305
Consideration for preferred stock exchanged	138,942
Consideration for replacement equity awards (1)	43,877
Cash in lieu of fractional shares	176
Total purchase price consideration	$	5,180,300

(1)The fair value of the replacement equity awards issued by the Company and included in the consideration transferred pertains to services performed prior to the merger effective date. The fair value attributed to services performed after the merger effective date is being recognized over the required service vesting period for each award and recorded as Compensation and benefits expense on the accompanying Consolidated Statements of Income.

Summary of Purchase Price Allocation

The following table summarizes the preliminary allocation of the purchase price to the fair value of the identifiable assets acquired and liabilities assumed from Sterling:


(In thousands)	Unpaid Principal Balance		Fair Value
Purchase price consideration			$	5,180,300
Assets:
Cash and due from banks			510,929
Interest-bearing deposits			3,207
Investment securities AFS			4,429,948
FHLB and FRB Stock			150,502
Loans held for sale			23,517
Loans and leases:
Commercial non-mortgage	$	5,570,782	5,527,657
Asset-based	694,137		683,958
Commercial real estate	6,790,600		6,656,405
Multi-family	4,303,381		4,255,906
Equipment financing	1,350,579		1,314,311
Warehouse lending	647,767		643,754
Residential	1,313,785		1,281,637
Home equity	132,758		122,553
Other consumer	12,559		12,525
Total loans and leases	$	20,816,348	20,498,706
Deferred tax assets, net			(51,487)
Premises and equipment (1)			264,421
Other intangible assets			210,100
Bank-owned life insurance policies			645,510
Accrued interest receivable and other assets			960,893
Total assets acquired			$	27,646,246
Liabilities:
Non-interest-bearing deposits			$	6,620,248
Interest-bearing deposits			16,643,755
Securities sold under agreements to repurchase and other borrowings			27,184
Long-term debt			516,881

Accrued expenses and other liabilities (1)			597,643
Total liabilities assumed			$	24,405,711
Net assets acquired			3,240,535
Goodwill			$	1,939,765

(1)Includes $100.0 million of ROU lease assets and $106.9 million of operating lease liabilities reported within Premises and equipment and Accrued expenses and other liabilities, respectively, which were measured based upon the estimated present value of the remaining lease payments. In addition, ROU lease assets were adjusted for favorable and unfavorable terms of the lease when compared to market terms, as applicable.

Schedule of PCD Loans and Leases by Portfolio Segment

The following table reconciles the unpaid principal balance to the fair value of PCD loans and leases by portfolio segment:


(In thousands)	Commercial		Consumer		Total
Unpaid principal balance	$	3,394,963	$	541,471	$	3,936,434
ACL at acquisition	(115,464)		(20,852)		(136,316)
Non-credit (discount)	(40,947)		(2,784)		(43,731)
Fair value	3,238,552		517,835		3,756,387

Summary of Supplemental Pro Forma Information

The following table summarizes supplemental pro forma financial information giving effect to the merger as if it had been completed on January 1, 2021:


	Years ended December 31,
(In thousands)		2022		2021
Net interest income		$	1,961,005	$	1,802,862
Non-interest income		440,783		487,301
Net income		869,639		574,927

Summary of Supplemental Pro Forma Information Adjustments

In addition, the supplemental pro forma financial information was adjusted for merger-related expenses, as follows:


	Years ended December 31,
(In thousands)		2022		2021
Compensation and benefits (1)		$	79,001	$	13,987
Occupancy (2)		36,586		256
Technology and equipment (3)		24,688		290
Marketing		416		—
Professional and outside services (4)		73,070		22,273
Other expense (5)		32,700		648
Total merger-related expenses		$	246,461	$	37,454

(1)Comprised primarily of employee severance and retention costs, and executive restricted stock awards.

(2)Comprised primarily of charges associated with the Company’s 2022 corporate real estate consolidation plan. Additional information regarding this corporate real estate consolidation plan can be found within Note 6: Premises and Equipment and
Note 7: Leasing.

(3)Comprised primarily of technology contract termination costs.

(4)Comprised primarily of advisory, legal, and consulting fees.

(5)Comprised primarily of disposals on property and equipment, contract termination costs, and other miscellaneous expenses.

Schedule of Restructuring Reserve by Type of Cost

The following table summarizes the change in accrued expenses and other liabilities for the year ended December 31, 2022, as it relates to severance and contract termination costs, which were primarily incurred in connection with the Sterling merger:



(In thousands)	Severance		Contract Termination		Total
Balance, beginning of period	$	10,835	$	—	$	10,835
Additions charged to expense	36,092		34,152		70,244
Cash payments	(35,014)		(3,790)		(38,804)
Other (1)	(4,330)		—		(4,330)
Balance, end of period	$	7,583	$	30,362	$	37,945

(1)Primarily reflects the release of $4.1 million from the Company's severance accrual at the beginning of the year. In connection with the Sterling merger, the Company re-evaluated its strategic priorities as a combined organization, which resulted in modifications to the Company's strategic initiatives that were announced in December 2020.