Webster Financial Corporation

07/27/2026 | Press release | Distributed by Public on 07/27/2026 13:44

Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company is a bank holding company that has elected to be treated as a financial holding company under the BHC Act, incorporated under the laws of Delaware in 1986, and headquartered in Stamford, Connecticut. The Company had $85.9 billion in total consolidated assets at June 30, 2026.
The Bank is a commercial bank with a national bank charter focused on providing financial products and services to businesses, individuals, and families. While its core footprint spans the Northeast from the New York metropolitan area to Rhode Island and Massachusetts, certain businesses operate in extended geographies. The Bank offers three differentiated lines of business: Commercial Banking, Healthcare Financial Services, and Consumer Banking.
The following discussion and analysis provides information that management believes is necessary to understand the Company's consolidated financial condition, results of operations, and cash flows for the three and six months ended June 30, 2026, as compared to the three and six months ended June 30, 2025. This information should be read in conjunction with the Condensed Consolidated Financial Statements, and the accompanying Notes thereto, contained in Part I - Item 1. Financial Statements of this report, and the Consolidated Financial Statements of this report, and the accompanying Notes thereto, contained in Part II - Item 8. Financial Statements and Supplementary Data of the Company's Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 27, 2026. The Company's consolidated financial condition, results of operations, and cash flows for the three and six months ended June 30, 2026, are not necessarily indicative of future results that may be attained for the entire year or other interim periods.
Proposed Transaction with Banco Santander
On February 3, 2026, Webster entered into a Transaction Agreement with Banco Santander and Webster Virginia Corporation, a wholly owned subsidiary of Webster incorporated in the State of Virginia. The Transaction Agreement provides that, upon the terms and subject to the conditions set forth therein, Banco Santander will acquire Webster in two steps. First, Webster will merge with and into Webster Virginia Corporation, with Webster Virginia Corporation continuing as the surviving corporation in such merger. Second, immediately following the completion of such merger, Banco Santander will acquire all outstanding shares of Webster Virginia Corporation through a statutory share exchange.
Based on Banco Santander's closing stock price on February 2, 2026, the Transaction has an aggregate value of approximately $12.3 billion. Under the terms of the Transaction Agreement, holders of Webster common stock will receive $48.75 in cash and 2.0548 ADSs for each share of Webster common stock that they own. Holders of Webster common stock will have the option to exchange ADSs received in connection with the Transaction for Ordinary Shares at no charge for a specified period following the completion of the Transaction.
The Transaction Agreement contains customary representations and warranties, covenants, and closing conditions. The Transaction was approved by Webster's stockholders on May 26, 2026, the Office of the Comptroller of the Currency on June 12, 2026, and the European Central Bank on July 21, 2026. The Transaction remains subject to customary closing conditions, including the approval of the Board of Governors of the Federal Reserve System. The Transaction is expected to close in the second half of 2026.
Additional information regarding the proposed Transaction can be found within Note 2: Business Developments in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements.
Joint Venture with Marathon Asset Management
On July 19, 2024, the Company, through its subsidiary, MW Advisor Holding, LLC, and Marathon Asset Management formed a private credit joint venture designed to deliver direct lending solutions for sponsor-backed middle market companies across the country. Information regarding joint venture activities that occurred during the year ended December 31, 2025, can be found within Note 2: Business Developments in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data of the Company's Annual Report on Form 10-K for the year ended December 31, 2025.
On July 1, 2026, CVC Capital Partners, a private markets investment firm, acquired 100% of Marathon Asset Management, which resulted in a change in control of Marathon Asset Management. Separately, Webster's Transaction with Banco Santander will result in a change of control of Webster. Pursuant to the operating agreement for Webster's joint venture with Marathon Asset Management, within 120 days after the consummation of a change in control, the non-affected member may elect to dissolve the joint venture, which would result in the wind-down of MW Advisor, LLC and Marathon Direct Lending SLP, LLC. As of the date of this Quarterly Report on Form 10-Q, Webster has not elected to dissolve the joint venture.
Results of Operations
The following table summarizes selected financial highlights and key performance indicators:
Three months ended June 30, Six months ended June 30,
(In thousands, except per share and ratio data) 2026 2025 2026 2025
Income and performance ratios:
Net income $ 256,789 $ 258,848 $ 503,020 $ 485,765
Net income applicable to common stockholders 249,442 251,695 488,721 472,079
Earnings per common share - diluted 1.56 1.52 3.05 2.81
Return on average assets (annualized) 1.19 % 1.29 % 1.17 % 1.22 %
Return on average tangible common stockholders' equity (annualized) (non-GAAP) 16.67 17.96 16.42 16.95
Return on average common stockholders' equity (annualized) 10.73 11.31 10.54 10.63
Non-interest income as a percentage of total revenue (1)
14.49 13.22 14.14 13.18
Asset quality:
ACL on loans and leases $ 723,846 $ 722,046 $ 723,846 $ 722,046
Non-performing assets (1)
430,174 537,050 430,174 537,050
ACL on loans and leases / total loans and leases 1.25 % 1.35 % 1.25 % 1.35 %
Net charge-offs / average loans and leases (annualized) 0.30 0.27 0.29 0.35
Non-performing loans and leases / total loans and leases (2)
0.74 1.00 0.74 1.00
Non-performing assets / total loans and leases plus OREO and repossessed assets (2)
0.74 1.00 0.74 1.00
ACL on loans and leases / non-performing loans and leases (2)
168.72 135.08 168.72 135.08
Other ratios:
Tangible common equity (non-GAAP) 7.60 % 7.46 % 7.60 % 7.46 %
Tier 1 Risk-Based Capital 12.20 11.86 12.20 11.86
Total Risk-Based Capital 14.16 14.05 14.16 14.05
CET1 Risk-Based Capital 11.71 11.35 11.71 11.35
Stockholders' equity / total assets 11.36 11.40 11.36 11.40
Net interest margin 3.26 3.44 3.31 3.46
Efficiency ratio (non-GAAP) 47.74 45.40 47.28 45.59
Equity and share related:
Common stockholders' equity $ 9,476,770 $ 9,053,638 $ 9,476,770 $ 9,053,638
Book value per common share 58.49 54.19 58.49 54.19
Tangible book value per common share (non-GAAP) 38.81 35.13 38.81 35.13
Common stock closing price 76.42 54.60 76.42 54.60
Dividends and equivalents declared per common share 0.40 0.40 0.80 0.80
Common shares outstanding 162,034 167,083 162,034 167,083
Weighted-average common shares outstanding - basic 159,989 165,884 159,763 167,524
Weighted-average common shares - diluted 160,183 166,131 160,017 167,853
(1)Total revenue reflects the sum of Net interest income and Non-interest income.
(2)Non-performing assets and the related asset quality ratios exclude the impact of net unamortized (discounts)/premiums and net unamortized deferred (fees)/costs on loans and leases.
Non-GAAP Financial Measures
The non-GAAP financial measures identified in the preceding table provide both management and investors with information useful in understanding the Company's financial position, results of operations, the strength of its capital position, and overall business performance. These non-GAAP financial measures are used by management for performance measurement purposes, as well as for internal planning and forecasting, and by securities analysts, investors, and other interested parties to assess peer company operating performance. Management believes that this presentation, together with the accompanying reconciliations, provides investors with a more complete understanding of the factors and trends affecting the Company's business and allows investors to view its performance in a similar manner.
Tangible book value per common share represents stockholders' equity, less preferred stock and goodwill and other net intangible assets ("tangible common equity"), divided by common shares outstanding at the end of the reporting period. The tangible common equity ratio represents tangible common equity divided by total assets, less goodwill and other net intangible assets ("tangible assets"). Both of these measures are used by management to evaluate the Company's capital position. The return on average tangible common stockholders' equity is calculated using net income less preferred stock dividends, adjusted for the tax-effected amortization of intangible assets, as a percentage of average tangible common equity. This measure is used by management to assess the Company's performance against its peer financial institutions. The efficiency ratio, which represents the costs expended to generate a dollar of revenue, is calculated excluding certain non-operational items in order to measure how well the Company is managing its recurring operating expenses.
These non-GAAP financial measures should not be considered a substitute for GAAP-basis financial measures. Because
non-GAAP financial measures are not standardized, it may not be possible to compare these with other companies that present financial measures having the same or similar names.
The following tables reconcile non-GAAP financial measures to the most comparable financial measures defined by GAAP:
June 30,
(Dollars and shares in thousands, except per share data) 2026 2025
Tangible book value per common share:
Stockholders' equity $ 9,760,749 $ 9,337,617
Less: Preferred stock 283,979 283,979
Goodwill and other intangible assets, net 3,188,976 3,184,039
Tangible common stockholders' equity $ 6,287,794 $ 5,869,599
Common shares outstanding 162,034 167,083
Tangible book value per common share $ 38.81 $ 35.13
Book value per common share (GAAP) $ 58.49 $ 54.19
Tangible common equity ratio:
Tangible common stockholders' equity $ 6,287,794 $ 5,869,599
Total assets $ 85,948,639 $ 81,914,270
Less: Goodwill and other intangible assets, net 3,188,976 3,184,039
Tangible assets $ 82,759,663 $ 78,730,231
Tangible common equity ratio 7.60 % 7.46 %
Common stockholders' equity to total assets (GAAP) 11.03 % 11.05 %
Three months ended June 30, Six months ended June 30,
(Dollars in thousands) 2026 2025 2026 2025
Return on average tangible common stockholders' equity (annualized):
Net income $ 256,789 $ 258,848 $ 503,020 $ 485,765
Less: Preferred stock dividends 4,162 4,162 8,325 8,325
Add: Intangible assets amortization, tax-effected 6,545 6,627 13,221 13,358
Adjusted net income $ 259,172 $ 261,313 $ 507,916 $ 490,798
Adjusted net income (annualized) $ 1,036,688 $ 1,045,252 $ 1,015,832 $ 981,596
Average stockholders' equity $ 9,698,316 $ 9,294,023 $ 9,668,443 $ 9,269,533
Less: Average preferred stock 283,979 283,979 283,979 283,979
Average goodwill and other intangible assets 3,194,100 3,188,946 3,199,022 3,193,509
Average tangible common stockholders' equity $ 6,220,237 $ 5,821,098 $ 6,185,442 $ 5,792,045
Return on average tangible common stockholders' equity (annualized) 16.67 % 17.96 % 16.42 % 16.95 %
Return on average common stockholders' equity (annualized) (GAAP) 10.73 % 11.31 % 10.54 % 10.63 %
Efficiency ratio:
Non-interest expense $ 384,962 $ 345,714 $ 764,071 $ 689,358
Less: Foreclosed property activities 34 541 77 1,058
Intangible assets amortization 9,005 9,093 18,191 18,330
Operating lease depreciation - 9 - 25
Transaction expenses 8,725 - 17,870 -
Strategic restructuring costs (1)
- - 3,636 -
FDIC special assessment - - (684) -
Non-interest expense $ 367,198 $ 336,071 $ 724,981 $ 669,945
Net interest income $ 632,744 $ 621,182 $ 1,267,147 $ 1,233,374
Add: FTE adjustment 16,626 13,870 31,983 27,481
Non-interest income 107,247 94,657 208,710 187,263
Other income (2)
12,617 10,528 25,445 21,560
Less: Operating lease depreciation - 9 - 25
Gain on sale of investment securities, net - - - 220
Adjusted income $ 769,234 $ 740,228 $ 1,533,285 $ 1,469,433
Efficiency ratio 47.74 % 45.40 % 47.28 % 45.59 %
Non-interest expense as a percentage of total revenue (GAAP)(3)
52.02 % 48.29 % 51.77 % 48.52 %
(1)Strategic restructuring costs reflect severance charges.
(2)Other income (non-GAAP) reflects a tax-equivalent adjustment on income generated from low-income housing tax credit investments.
(3)Total revenue reflects the sum of Net interest income and Non-interest income.
Net Interest Income Analysis
The following tables summarize daily average balances, interest, and average yield/rate by major category, and net interest margin on an FTE basis:
Three months ended June 30,
2026 2025
(Dollars in thousands) Average
Balance 		Interest Income/Expense Average Yield/Rate Average
Balance 		Interest Income/Expense Average Yield/Rate
Assets:
Interest-earning assets:
Loans and leases (1)
$ 57,557,975 $ 798,650 5.50 % $ 53,277,897 $ 786,808 5.85 %
Investment securities:
Taxable 17,684,787 188,871 4.26 17,284,395 192,865 4.46
Non-taxable 1,136,890 9,311 3.28 941,237 7,166 3.05
Total investment securities 18,821,677 198,182 4.21 18,225,632 200,031 4.39
FHLB and FRB stock 429,937 5,283 4.93 346,514 4,243 4.91
Interest-bearing deposits (2)
3,024,245 27,885 3.65 2,096,578 23,368 4.41
Loans held for sale 12,939 2 0.07 58,024 7 0.04
Total interest-earning assets 79,846,773 $ 1,030,002 5.12 % 74,004,645 $ 1,014,457 5.44 %
Non-interest-earning assets 6,514,306 6,513,526
Total assets $ 86,361,079 $ 80,518,171
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Demand $ 9,962,207 $ - - % $ 10,109,928 $ - - %
Interest-bearing checking 12,116,284 53,150 1.76 9,772,340 42,390 1.74
Health savings accounts 9,367,769 3,966 0.17 9,137,704 3,635 0.16
Money market 23,954,940 184,047 3.08 21,645,531 190,853 3.54
Savings 6,755,888 23,292 1.38 7,462,151 31,624 1.70
Certificates of deposit 6,015,621 46,584 3.11 6,061,399 51,873 3.43
Brokered certificates of deposit 1,624,580 15,830 3.91 1,774,379 19,363 4.38
Total deposits 69,797,289 326,869 1.88 65,963,432 339,738 2.07
Securities sold under agreements to repurchase 68,416 20 0.12 111,005 218 0.78
FHLB advances 4,683,241 45,400 3.84 2,650,111 29,825 4.45
Long-term debt 722,347 8,343 4.62 885,773 9,624 4.35
Total borrowings 5,474,004 53,763 3.89 3,646,889 39,667 4.31
Total deposits and interest-bearing liabilities 75,271,293 $ 380,632 2.02 % 69,610,321 $ 379,405 2.18 %
Non-interest-bearing liabilities 1,391,470 1,613,827
Total liabilities 76,662,763 71,224,148
Preferred stock 283,979 283,979
Common stockholders' equity 9,414,337 9,010,044
Total stockholders' equity 9,698,316 9,294,023
Total liabilities and stockholders' equity $ 86,361,079 $ 80,518,171
Net interest income (FTE) $ 649,370 $ 635,052
Less: FTE adjustment (3)
(16,626) (13,870)
Net interest income $ 632,744 $ 621,182
Net interest margin (FTE) 3.26 % 3.44 %
Six months ended June 30,
2026 2025
(Dollars in thousands) Average
Balance 		Interest Income/Expense Average Yield/Rate Average
Balance 		Interest Income/Expense Average Yield/Rate
Assets:
Interest-earning assets:
Loans and leases (1)
$ 57,333,281 $ 1,587,986 5.52 % $ 52,925,112 $ 1,553,196 5.85 %
Investment securities:
Taxable 17,626,471 376,111 4.27 17,213,440 382,320 4.44
Non-taxable 1,098,361 17,802 3.24 956,662 14,520 3.04
Total investment securities 18,724,832 393,913 4.21 18,170,102 396,840 4.37
FHLB and FRB stock 405,759 9,781 4.86 335,310 8,197 4.93
Interest-bearing deposits (2)
2,617,680 47,938 3.64 1,958,803 43,300 4.40
Loans held for sale 13,516 20 0.29 43,459 22 0.10
Total interest-earning assets 79,095,068 $ 2,039,638 5.14 % 73,432,786 $ 2,001,555 5.43 %
Non-interest-earning assets 6,637,320 6,463,140
Total assets $ 85,732,388 $ 79,895,926
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Demand $ 10,040,885 $ - - % $ 10,196,846 $ - - %
Interest-bearing checking 11,704,534 98,419 1.70 9,741,252 83,289 1.72
Health savings accounts 9,464,500 7,912 0.17 9,222,141 7,195 0.16
Money market 23,961,705 365,106 3.07 21,381,682 373,960 3.53
Savings 6,801,579 47,011 1.39 7,284,366 59,767 1.65
Certificates of deposit 5,954,319 91,552 3.10 6,054,336 106,815 3.56
Brokered certificate of deposit 1,729,917 33,493 3.90 1,589,392 35,095 4.45
Total deposits 69,657,439 643,493 1.86 65,470,015 666,121 2.05
Securities sold under agreements to repurchase 123,794 1,082 1.74 177,413 1,894 2.12
FHLB advances 4,112,747 79,260 3.83 2,382,692 53,414 4.46
Long-term debt 722,249 16,673 4.62 886,003 19,271 4.35
Total borrowings 4,958,790 97,015 3.89 3,446,108 74,579 4.31
Total deposits and interest-bearing liabilities 74,616,229 $ 740,508 2.00 % 68,916,123 $ 740,700 2.16 %
Non-interest-bearing liabilities 1,447,716 1,710,270
Total liabilities 76,063,945 70,626,393
Preferred stock 283,979 283,979
Common stockholders' equity 9,384,464 8,985,554
Total stockholders' equity 9,668,443 9,269,533
Total liabilities and stockholders' equity $ 85,732,388 $ 79,895,926
Net interest income (FTE) $ 1,299,130 $ 1,260,855
Less: FTE adjustment (3)
(31,983) (27,481)
Net interest income $ 1,267,147 $ 1,233,374
Net interest margin (FTE) 3.31 % 3.46 %
(1)Non-accrual loans have been included in the computation of average balances.
(2)Interest-bearing deposits are a component of Cash and cash equivalents on the Condensed Consolidated Statements of Cash Flows included in Part I - Item 1. Financial Statements.
(3)FTE adjustments on loans and leases and investment securities are determined assuming a statutory federal income tax rate of 21%. Items computed on an FTE basis are considered non-GAAP financial measures, and are used by management to evaluate the comparability of the Company's revenue arising from both taxable and non-taxable sources.
The following table summarizes the change in net interest income attributable to changes in rate and volume, and reflects net interest income on an FTE basis:
Three months ended June 30, Six months ended June 30,
2026 vs. 2025
Increase (decrease) due to
2026 vs. 2025
Increase (decrease) due to
(In thousands)
Rate (1)
Volume Total
Rate (1)
Volume Total
Change in interest on interest-earning assets:
Loans and leases $ (55,918) $ 67,760 $ 11,842 $ (101,504) $ 136,294 $ 34,790
Investment securities (9,787) 7,938 (1,849) (17,686) 14,759 (2,927)
FHLB and FRB stock 18 1,022 1,040 (138) 1,722 1,584
Interest-bearing deposits (5,822) 10,339 4,517 (9,926) 14,564 4,638
Loans held for sale 1 (6) (5) 13 (15) (2)
Total interest income $ (71,508) $ 87,053 $ 15,545 $ (129,241) $ 167,324 $ 38,083
Change in interest on interest-bearing liabilities:
Interest-bearing checking $ 591 $ 10,169 $ 10,760 $ (1,658) $ 16,788 $ 15,130
Health savings accounts 239 92 331 528 189 717
Money market (27,168) 20,362 (6,806) (53,978) 45,124 (8,854)
Savings (5,339) (2,993) (8,332) (8,795) (3,961) (12,756)
Certificates of deposit (4,897) (392) (5,289) (13,498) (1,765) (15,263)
Brokered certificates of deposit (1,898) (1,635) (3,533) (4,705) 3,103 (1,602)
Securities sold under agreements to repurchase (114) (84) (198) (239) (573) (812)
FHLB advances (7,306) 22,881 15,575 (12,938) 38,784 25,846
Long-term debt 494 (1,775) (1,281) 964 (3,562) (2,598)
Total interest expense $ (45,398) $ 46,625 $ 1,227 $ (94,319) $ 94,127 $ (192)
Net change in net interest income $ (26,110) $ 40,428 $ 14,318 $ (34,922) $ 73,197 $ 38,275
(1)The change attributable to mix, a combined impact of rate and volume, and other is included with the change due to rate.
Comparison to Prior Year Quarter
Net interest income increased $11.5 million, or 1.9%, from $621.2 million for the three months ended June 30, 2025, to $632.7 million for the three months ended June 30, 2026, reflecting increases of $5.8 billion, or 7.9%, in average total interest-earning assets and $5.7 billion, or 8.1%, in average total deposits and interest-bearing liabilities. On an FTE basis, net interest income increased $14.3 million, or 2.3%. Net interest margin decreased 18 basis points from 3.44% for the three months ended June 30, 2025, to 3.26% for the three months ended June 30, 2026. As compared to the three months ended June 30, 2025, the average yield on average total interest-earning assets decreased 32 basis points and the average rate on average total deposits and interest-bearing liabilities decreased 16 basis points, both primarily due to the lower interest rate environment during the three months ended June 30, 2026, and the change in balance sheet composition.
The change in average total interest-earnings assets was primarily attributed to the following items:
•Average loans and leases increased $4.3 billion, or 8.0%, primarily due to increases in commercial non-mortgage, commercial real estate, and multi-family mortgages.
•Average total investment securities increased $0.6 billion, or 3.3%, reflecting an increase of $1.1 billion in available-for-sale securities, partially offset by a decrease of $0.5 billion in held-to-maturity securities, primarily due to the timing and volume of purchases and paydown activities.
•Average interest-bearing deposits held at the FRB of New York increased $0.9 billion, or 44.2%, primarily due to management's decision to hold higher levels of on-balance sheet liquidity.
The change in average total deposits and interest-bearing liabilities was primarily attributed to the following items:
•Average total deposits increased $3.8 billion, or 5.8%, primarily due to increases in interest-bearing checking and money market, partially offset by a decrease in savings.
•Average FHLB advances increased $2.0 billion, or 76.7%, primarily due to a change in the short-term funding mix.
•Average long-term debt decreased $0.2 billion, or 18.5%, primarily due to the repayment of $499.0 million, in aggregate, of subordinated notes during the fourth quarter of 2025, partially offset by the issuance of $350.0 million of subordinated notes during the third quarter of 2025.
Comparison to Prior Year to Date
Net interest income remained relatively flat at approximately $1.2 billion for the six months ended June 30, 2026 and 2025, experiencing increases of $5.7 billion in both average total interest-earning assets and average total deposits and interest-bearing liabilities. On an FTE basis, net interest income remained relatively flat at approximately $1.3 billion. Net interest margin decreased 15 basis points from 3.46% for the six months ended June 30, 2025, to 3.31% for the six months ended June 30, 2026. As compared to the six months ended June 30, 2025, the average yield on average total interest-earning assets decreased 29 basis points and the average rate on average total deposits and interest-bearing liabilities decreased 16 basis points, both primarily due to the lower interest rate environment during the six months ended June 30, 2026, and the change in balance sheet composition.
The change in average interest-earnings assets was primarily attributed to the following items:
•Average loans and leases increased $4.4 billion, or 8.3%, primarily due to increases in commercial non-mortgage, commercial real estate, multi-family mortgages, and residential mortgages.
•Average total investment securities increased $0.6 billion, or 3.1%, reflecting an increase of $1.0 billion in available-for-sale securities, partially offset by a decrease of $0.5 billion in held-to-maturity securities, primarily due to the timing and volume of purchases and paydown activities.
•Average interest-bearing deposits held at the FRB of New York increased $0.7 billion, or 33.6%, primarily due to management's decision to hold higher levels of on-balance sheet liquidity.
The change in average total deposits and interest-bearing liabilities was primarily attributed to the following items:
•Average total deposits increased $4.2 billion, or 6.4%, primarily due to increases in money market and interest-bearing checking, partially offset by a decrease in savings.
•Average FHLB advances increased $1.7 billion, or 72.6%, primarily due to a change in short-term funding mix.
•Average long-term debt decreased $0.2 billion, or 18.5%, primarily due to the repayment of $499.0 million, in aggregate, of subordinated notes during the fourth quarter of 2025, partially offset by the issuance of $350.0 million of subordinated notes during the third quarter of 2025.
Provision for Credit Losses
Comparison to Prior Year Quarter
The provision for credit losses decreased $15.0 million, or 32.3%, from $46.5 million for the three months ended June 30, 2025, to $31.5 million for three months ended June 30, 2026, primarily due to favorable risk rating migration trends and a decrease in individually assessed reserves, partially offset by higher charge-offs and loan growth.
Comparison to Prior Year to Date
The provision for credit losses decreased $38.5 million, or 31.0%, from $124.0 million for the six months ended June 30, 2025, to $85.5 million for the six months ended June 30, 2026, primarily due to favorable risk rating migration trends and lower charge-offs, partially offset by loan growth.
Non-Interest Income
Three months ended June 30, Six months ended June 30,
(In thousands) 2026 2025 2026 2025
Deposit service fees $ 42,256 $ 40,934 $ 83,771 $ 79,829
Loan and lease related fees 20,570 17,657 35,984 35,278
Wealth and investment services 7,526 7,779 14,735 15,568
Cash surrender value of life insurance policies 11,249 9,172 19,893 17,164
Gain on sale of investment securities, net - - - 220
Other income 25,646 19,115 54,327 39,204
Total non-interest income $ 107,247 $ 94,657 $ 208,710 $ 187,263
Comparison to Prior Year Quarter
Total non-interest income increased $12.5 million, or 13.3%, from $94.7 million for the three months ended June 30, 2025, to $107.2 million for the three months ended June 30, 2026, primarily due to an increase in Other income, which contributed to $6.5 million, or 51.9%, of the change. The increase in Other income was primarily due to increased income from bank owned life insurance events, the change in the credit valuation adjustment, and the acquisition of SecureSave, partially offset by lower direct investment gains. The remainder of the net increase in total non-interest income was attributed to higher loan syndication fees and immaterial changes across the other financial statement line items.
Comparison to Prior Year to Date
Total non-interest income increased $21.4 million, or 11.5%, from $187.3 million for the six months ended June 30, 2025, to $208.7 million for the six months ended June 30, 2026, also primarily due to an increase in Other income, which contributed to $15.1 million, or 70.5%%, of the change. The increase in Other income was primarily due to an increase in client hedging activities, the change in the credit valuation adjustment, increased income from bank owned life insurance events, increased revenues from Ametros, and the acquisition of SecureSave, partially offset by lower direct investment gains. The remainder of the net increase in total non-interest income was attributed to immaterial changes across the other financial statement line items.
Non-Interest Expense
Three months ended June 30, Six months ended June 30,
(In thousands) 2026 2025 2026 2025
Compensation and benefits $ 224,314 $ 199,930 $ 447,220 $ 398,575
Occupancy 19,749 19,337 39,235 39,054
Technology and equipment 50,504 45,932 100,135 93,651
Intangible assets amortization 9,005 9,093 18,191 18,330
Marketing 5,203 5,171 9,902 9,198
Professional and outside services 21,146 18,394 43,688 35,620
Deposit insurance 18,185 15,061 34,485 31,406
Other expense 36,856 32,796 71,215 63,524
Total non-interest expense $ 384,962 $ 345,714 $ 764,071 $ 689,358
Comparison to Prior Year Quarter
Total non-interest expense increased $39.3 million, or 11.4%, from $345.7 million for the three months ended June 30, 2025, to $385.0 million for the three months ended June 30, 2026. The following financial statement line items experienced changes greater than $3 million:
•Compensation and benefits increased $24.4 million, or 12.2%, primarily due to higher compensation and benefits costs and increased performance-based incentives.
•Technology and equipment increased $4.6 million, or 10.0%, primarily due to increased technology-related service contract maintenance costs.
•Professional and outside services included $7.6 million of Transaction expenses for the three months ended June 30, 2026. Excluding this amount, Professional and outside services decreased $4.9 million, or 26.6%, primarily due to a decrease in technology-related consulting fees.
•Deposit insurance increased $3.1 million, or 20.7%, primarily due to the increase in the Company's deposit insurance assessment base.
•Other expense increased $4.1 million, or 12.4%, primarily due to increased service contract costs and Transaction expenses.
Comparison to Prior Year to Date
Total non-interest expense increased $74.7 million, or 10.8%, from $689.4 million for the six months ended June 30, 2025, to $764.1 million for the six months ended June 30, 2026. The following financial statement line items experienced changes greater than $5 million:
•Compensation and benefits increased $48.6 million, or 12.2%, primarily due to higher compensation and benefits costs and increased performance-based incentives.
•Technology and equipment increased $6.5 million, or 6.9%, primarily due to increased technology-related service contract maintenance costs.
•Professional and outside services included $16.2 million of Transaction expenses for the six months ended June 30, 2026. Excluding this amount, Professional and outside services decreased $8.1 million, or 22.8%, primarily due to a decrease in technology-related consulting fees.
•Other expense increased $7.7 million, or 12.1%, primarily due to increased service contract costs and loan workout expenses.
Income Taxes
Comparison to Prior Year Quarter
The Company recognized income tax expense of $66.7 million for the three months ended June 30, 2026, and $64.8 million for the three months ended June 30, 2025, reflecting effective tax rates of 20.6% and 20.0%, respectively. The increase in both income tax expense and the effective tax rate was primarily due to the recognition of lower net discrete tax benefits in the current period, as compared to a year ago.
Comparison to Prior Year to Date
The Company recognized income tax expense of $123.3 million for the six months ended June 30, 2026 and $121.5 million for the six months ended June 30, 2025, reflecting effective tax rates of 19.7% and 20.0%, respectively. The increase in income tax expense was primarily due to a higher level of pre-tax income during the six months ended June 30, 2026, partially offset by the recognition of higher net discrete tax benefits in the current period, as compared to a year ago. The decrease in the effective tax rate was primarily due to the recognition of those higher discrete net tax benefits.
Additional information regarding the Company's income taxes, including its deferred tax assets, can be found within Note 8: Income Taxes in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data of the Company's Annual Report on Form 10-K for the year ended December 31, 2025.
Segment Reporting
The Company's operations are organized into three reportable segments that represent its differentiated lines of business: Commercial Banking, Healthcare Financial Services, and Consumer Banking. Additional information regarding the Company's reportable segments and its segment reporting methodology can be found within Note 15: Segment Reporting in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements.
Commercial Banking
Operating Results:
Three months ended June 30, Six months ended June 30,
(In thousands) 2026 2025 2026 2025
Net interest income $ 324,871 $ 318,518 $ 651,848 $ 637,641
Non-interest income 34,416 30,628 66,585 59,586
Non-interest expense 116,043 108,372 234,364 214,954
Pre-tax, pre-provision net revenue $ 243,244 $ 240,774 $ 484,069 $ 482,273
Comparison to Prior Year Quarter
Commercial Banking's PPNR increased $2.5 million, or 1.0%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025 due to increases in net interest income and non-interest income, partially offset by an increase in non-interest expense. The $6.4 million increase in net interest income was primarily due to higher average loan and deposit balances, partially offset by a lower net spread on loans and leases. The $3.8 million increase in non-interest income was primarily due to higher loan syndication fees and prepayment fees. The $7.7 million increase in non-interest expense was primarily due to higher compensation and benefits costs and increased investments in technology and operational process improvements.
Comparison to Prior Year to Date
Commercial Banking's PPNR increased $1.8 million, or 0.4%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, due to increases in net interest income and non-interest income, partially offset by an increase in non-interest expense. The $14.2 million increase in net interest income was primarily due to higher average loan and deposit balances, partially offset by a lower net spread on loans and leases. The $7.0 million increase in non-interest income was primarily due to increased client hedging activity, direct investment gains, and higher loan syndication fees. The $19.4 million increase in non-interest expense was primarily due to higher compensation and benefits costs, increased investments in technology and operational process improvements, and higher loan workout expenses.
Selected Balance Sheet and Off-Balance Sheet Information:
(In thousands) June 30,
2026 		December 31,
2025
Loans and leases $ 45,062,831 $ 43,762,010
Deposits 17,225,709 17,278,467
Assets under administration / management (off-balance sheet) 2,910,224 2,820,973
Loans and leases increased $1.3 billion, or 3.0%, at June 30, 2026, as compared to at December 31, 2025, primarily due to growth across Commercial Real Estate, Sponsor and Specialty Finance, and Verticals and Regional Banking, partially offset by net principal paydowns in Asset-Based Lending. Total portfolio originations were $6.2 billion for the six months ended June 30, 2026 and $5.4 billion for the six months ended June 30, 2025. The $0.8 billion increase was primarily due to increased Commercial Real Estate originations.
Deposits decreased $0.1 billion, or 0.3%, at June 30, 2026, as compared to at December 31, 2025, primarily due to seasonal outflows from public municipal deposit clients.
Assets under administration and assets under management, in aggregate, increased $0.1 billion, or 3.2%, at June 30, 2026, as compared to at December 31, 2025, primarily due to changes in market conditions and customer investment mix.
Healthcare Financial Services
Operating Results:
Three months ended June 30, Six months ended June 30,
(In thousands) 2026 2025 2026 2025
Net interest income $ 100,869 $ 97,625 $ 200,902 $ 193,986
Non-interest income 31,242 28,687 65,464 58,077
Non-interest expense 60,871 55,453 122,623 111,173
Pre-tax, pre-provision net revenue $ 71,240 $ 70,859 $ 143,743 $ 140,890
Comparison to Prior Year Quarter
Healthcare Financial Services' PPNR increased $0.4 million, or 0.5%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, due to increases in net interest income and non-interest income, partially offset by an increase in non-interest expense. The $3.2 million increase in net interest income was primarily due to higher deposit balances, partially offset by lower deposit spreads. The $2.6 million increase in non-interest income was primarily due to increased revenues from Ametros, higher interchange fees, and the acquisition of SecureSave. The $5.4 million increase in non-interest expense was primarily due to the acquisition of SecureSave, as well as higher compensation and benefits costs, and other expenses.
Comparison to Prior Year to Date
Healthcare Financial Services' PPNR increased $2.9 million, or 2.0%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, due to increases in net interest income and non-interest income, partially offset by an increase in non-interest expense. The $6.9 million increase in net interest income was primarily due to higher deposit balances, partially offset by lower deposit spreads. The $7.4 million increase in non-interest income was primarily due to increased revenues from Ametros, higher interchange fees, and the acquisition of SecureSave. The $11.5 million increase in non-interest expense was primarily due to the acquisition of SecureSave, as well as higher compensation and benefits costs, consulting fees, marketing expenses, and other expenses.
Selected Balance Sheet and Off-Balance Sheet Information:
(In thousands) June 30,
2026 		December 31,
2025
Deposits $ 10,649,736 $ 10,417,888
Assets under administration, through linked investment accounts (off-balance sheet) 7,464,685 6,508,605
Deposits increased $231.8 million, or 2.2%, at June 30, 2026, as compared to at December 31, 2025, primarily due to additional HSA Bank and Ametros account holders.
Assets under administration, through linked investment accounts, increased $1.0 billion, or 14.7%, at June 30, 2026, as compared to at December 31, 2025, primarily due to the impact from additional HSA Bank account holders and changes in market conditions.
Consumer Banking
Operating Results:
Three months ended June 30, Six months ended June 30,
(In thousands) 2026 2025 2026 2025
Net interest income $ 209,231 $ 212,672 $ 417,554 $ 414,736
Non-interest income 25,408 24,591 48,597 50,795
Non-interest expense 129,258 123,044 255,525 245,700
Pre-tax, pre-provision net revenue $ 105,381 $ 114,219 $ 210,626 $ 219,831
Comparison to Prior Year Quarter
Consumer Banking's PPNR decreased $8.8 million, or 7.7%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, due to a decrease in net interest income and an increase in non-interest expense, partially offset by a increase in non-interest income. The $3.4 million decrease in net interest income was primarily due to a lower interest rate spread on deposits and lower average deposit balances, partially offset by a higher interest rate spread on loans and higher average loan balances. The $0.8 million increase in non-interest income was primarily due to higher deposit and loan servicing fee income. The $6.2 million increase in non-interest expense was primarily due to higher compensation and benefits costs and operational support costs, partially offset by decreased investments in technology and lower equipment costs.
Comparison to Prior Year to Date
Consumer Banking's PPNR decreased $9.2 million, or 4.2%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, due to a decrease in non-interest income and an increase in non-interest expense, partially offset by an increase in net interest income. The $2.8 million increase in net interest income was primarily due to higher average loan balances and a higher interest rate spread on loans, partially offset by lower average deposit balances. The $2.2 million decrease in non-interest income was primarily due to lower investment services income and non-recurring gains from investment portfolio sales a year ago, partially offset by increased deposit service fee income. The $9.8 million increase in non-interest expense was primarily due to higher compensation and benefits costs and operational support costs, partially offset by decreased investments in technology and lower equipment costs.
Selected Balance Sheet and Off-Balance Sheet Information:
(In thousands) June 30,
2026 		December 31,
2025
Loans $ 12,801,613 $ 12,827,465
Deposits 27,292,831 27,663,514
Assets under administration (off-balance sheet) 7,296,591 8,009,314
Loans remained relatively flat at approximately $12.8 billion at June 30, 2026, and at December 31, 2025, due to net principal paydowns in home equity loans/lines of credit, other consumer loans, and business banking commercial loans, offset by growth in residential mortgages. Total portfolio originations were $1.0 billion for the six months ended June 30, 2026, and $1.1 billion for the six months ended June 30, 2025. The $0.1 billion decrease was primarily due to lower residential mortgage originations, partially offset by higher business banking commercial loan originations.
Deposits decreased $0.4 billion, or 1.3%, at June 30, 2026, as compared to at December 31, 2025, primarily due to decreases in savings and money market, partially offset by increases in non-interest bearing demand, interest-bearing checking, and certificates of deposit.
Assets under administration decreased $0.7 billion, or 8.9%, at June 30, 2026, as compared to at December 31, 2025, primarily due to changes in market conditions.
Financial Condition
Total assets increased $1.9 billion, or 2.2%, from $84.1 billion at December 31, 2025, to $86.0 billion at June 30, 2026. The change in total assets was primarily attributed to the following items, which experienced changes greater than $100 million:
•Cash and cash equivalents increased $0.3 billion, primarily due to an increase in interest-bearing deposits held at the FRB of New York as a result of management's decision to hold higher levels of on-balance sheet liquidity;
•Total investment securities, net increased $0.3 billion, reflecting an increase of $0.6 billion in the available-for-sale portfolio, partially offset by a decrease of $0.3 billion in the held-to-maturity portfolio. The net increase in total investment securities was primarily due to purchases exceeding paydown activities, particularly across the Agency MBS, Agency CMBS, and CMBS categories;
•Loans and leases increased $1.3 billion, primarily reflecting net increases of $1.1 billion in commercial non-mortgage and $0.4 billion in multi-family, partially offset by a net decrease of $0.2 billion in asset-based. During the six months ended June 30, 2026, loan originations for portfolio were $7.2 billion.
Total liabilities increased $1.6 billion, or 2.2%, from $74.6 billion at December 31, 2025, to $76.2 billion at June 30, 2026. The change in total liabilities was primarily attributed to the following items, which experienced changes greater than $100 million:
•Total deposits increased $1.5 billion, reflecting a $1.6 billion increase in interest-bearing deposits, partially offset by a $0.1 billion decrease in non-interest-bearing deposits. The net increase in total deposits was primarily due to increases in interest-bearing checking and money market, partially offset by decreases in brokered certificates of deposit and savings;
•Securities sold under agreements to repurchase decreased $0.5 billion, primarily due to a change in short-term funding mix;
•FHLB advances increased $0.7 billion, also primarily due to a change in short-term funding mix;
Total stockholders' equity increased $0.3 billion, or 2.8%, from $9.5 billion at December 31, 2025, to $9.8 billion at June 30, 2026. The change in total stockholders' equity was primarily attributed to the following items, which experienced changes greater than $100 million:
•Retained earnings increased $0.4 billion, reflecting net income of $0.5 billion, partially offset by dividends paid to common and preferred stockholders, in aggregate, of $0.1 billion.
Investment Securities
Through its Corporate Treasury function, the Company maintains and invests in debt securities that are primarily used to provide a source of liquidity for operating needs, as a means to manage the Company's interest-rate risk, and to generate interest income. The Company's investment securities are classified into two major categories: available-for-sale and
held-to-maturity.
The ALCO manages the Company's investment securities in accordance with regulatory guidelines and corporate policies, which include limitations on aspects such as concentrations in and types of investments, as well as minimum risk ratings per type of security. In addition, the OCC may further establish individual limits on certain types of investments at the Bank if the concentration in such security presents a safety and soundness concern. Although the Bank held the entirety of the Company's investment securities portfolio at June 30, 2026, and at December 31, 2025, the Company may also directly hold investments.
The following table summarizes the carrying amount and percentage composition of the Company's investment securities:
June 30, 2026 December 31, 2025
(Dollars in thousands) Amount % Amount %
Available-for-sale:
Government agency debentures $ 195,171 1.8 % $ 197,650 2.0 %
Agency CMO 22,492 0.2 24,856 0.2
Agency MBS 5,312,381 50.2 5,057,273 50.5
Agency CMBS 3,742,196 35.3 3,526,010 35.2
Municipal bonds and notes 109,229 1.0 109,619 1.1
CMBS 880,553 8.3 718,412 7.2
Corporate debt 292,938 2.8 328,145 3.3
Private label MBS 35,939 0.3 38,052 0.4
Other 9,429 0.1 9,483 0.1
Total available-for-sale $ 10,600,328 100.0 % $ 10,009,500 100.0 %
Held-to-maturity:
Agency CMO $ 15,063 0.2 % $ 16,791 0.2 %
Agency MBS 2,569,979 33.4 2,767,869 34.7
Agency CMBS 4,253,522 55.3 4,295,308 53.9
Municipal bonds and notes (1)
794,654 10.3 824,734 10.4
CMBS 61,831 0.8 64,970 0.8
Total held-to-maturity $ 7,695,049 100.0 % $ 7,969,672 100.0 %
Total investment securities $ 18,295,377 $ 17,979,172
(1)Excludes an ACL of $0.1 million at June 30, 2026, and at December 31, 2025.
Available-for-sale securities increased $0.6 billion, or 5.9%, from $10.0 billion at December 31, 2025, to $10.6 billion at June 30, 2026, primarily due to purchases exceeding paydown activities, particularly across the Agency MBS, Agency CMBS, and CMBS categories. The average FTE yield on the available-for-sale portfolio was 4.58% for the three and six months ended June 30, 2026, as compared to 4.72% and 4.70% for the three and six months ended June 30, 2025, respectively. The 14 basis points decrease for the three months ended June 30, 2026, and the 12 basis points decrease for the six months ended June 30, 2026, were primarily due to lower reinvestment rates and reduced discount accretion.
Gross unrealized losses on available-for-sale securities were $0.6 billion at June 30, 2026, and $0.5 billion at December 31, 2025. The $0.1 billion increase was primarily due to higher market interest rates and wider securities spreads. There was no ACL recorded on available-for-sale securities at June 30, 2026, and at December 31, 2025. Each of the Company's available-for-sale securities in an unrealized loss position at June 30, 2026, is investment grade, current as to principal and interest, and has had price changes that are consistent with interest and credit spreads when adjusting for duration, convexity, rating, and industry differences. Based on current market conditions and the Company's targeted balance sheet composition strategy, the Company intends to hold its available-for-sale securities in unrealized loss positions through the anticipated recovery period.
Held-to-maturity securities decreased $0.3 billion, or 3.4%, from $8.0 billion at December 31, 2025, to $7.7 billion at
June 30, 2026, primarily due to paydown activities across the Agency MBS, Agency CMBS, and Municipal bonds and notes categories. There were no purchases of held-to-maturity securities during the three and six months ended June 30, 2026. The average FTE yield on the held-to-maturity portfolio was 3.69% for the three and six months ended June 30, 2026, as compared to 3.99% and 3.98% for the three and six months ended June 30, 2025, respectively. The 30 basis points decrease for the three months ended June 30, 2026, and the 29 basis point decrease for the six months ended June 30, 2026, were primarily due to reduced discount accretion and continued paydowns.
Gross unrealized losses on held-to-maturity securities were $0.9 billion at June 30, 2026, and $0.8 billion at December 31, 2025. The $0.1 billion increase was primarily due to higher market interest rates and wider securities spreads. Held-to-maturity securities are evaluated for credit losses on a quarterly basis under the CECL methodology. The ACL on held-to-maturity securities was $0.1 million at June 30, 2026, and at December 31, 2025.
The following table summarizes the maturity distribution of investment securities by the earlier of either contractual maturity or call date, as applicable, along with their respective weighted-average yields:
June 30, 2026
1 Year or Less 1 - 5 Years 5 - 10 Years After 10 Years Total
(Dollars in thousands) Amount
Weighted-
Average
Yield (1)
Amount
Weighted-
Average
Yield (1)
Amount
Weighted-
Average
Yield (1)
Amount
Weighted-
Average
Yield (1)
Amount
Weighted-
Average
Yield (1)
Available-for-sale:
Government agency debentures $ - - % $ - - % $ 99,613 2.51 % $ 123,275 3.76 % $ 222,888 3.20 %
Agency CMO - - - - 1,471 3.37 23,178 2.82 24,649 2.85
Agency MBS 7 1.38 981 1.31 3,575 3.76 5,426,961 4.71 5,431,524 4.71
Agency CMBS - - 133,732 4.53 699,206 4.42 3,303,269 4.26 4,136,207 4.30
Municipal bonds and notes 296 4.15 3,160 2.71 78,745 2.78 33,768 2.69 115,969 2.76
CMBS - - - - - - 879,080 5.24 879,080 5.24
Corporate debt - - 157,971 3.82 158,142 3.36 - - 316,113 3.59
Private label MBS - - - - - - 39,619 4.01 39,619 4.01
Other 5,000 3.80 4,893 2.69 - - - - 9,893 3.25
Total available-for-sale $ 5,303 3.81 % $ 300,737 4.10 % $ 1,040,752 3.95 % $ 9,829,150 4.58 % $ 11,175,942 4.51 %
Held-to-maturity:
Agency CMO $ - - % $ - - % $ - - % $ 15,063 2.75 % $ 15,063 2.75 %
Agency MBS - - 1,497 2.56 60,055 2.89 2,508,427 3.39 2,569,979 3.38
Agency CMBS - - 92,986 2.66 - - 4,160,536 3.74 4,253,522 3.71
Municipal bonds and notes 101,253 2.59 53,964 3.38 183,223 3.17 456,214 3.42 794,654 3.26
CMBS - - - - - - 61,831 2.39 61,831 2.39
Total held-to-maturity $ 101,253 2.59 % $ 148,447 2.92 % $ 243,278 3.10 % $ 7,202,071 3.58 % $ 7,695,049 3.54 %
Total investment securities (2)
$ 106,556 2.66 % $ 449,184 3.71 % $ 1,284,030 3.79 % $ 17,031,221 4.16 % $ 18,870,991 4.12 %
(1)Weighted-average yields exclude FTE adjustments and hedge adjustments, and are calculated on a pre-tax basis using the current yield inclusive of premium amortization and discount accretion for each security, major type, and maturity bucket.
(2)Available-for-sale securities and held-to-maturity securities are presented at amortized cost before any allowance for credit losses.
Additional information regarding the Company's investment securities' portfolios can be found within Note 3: Investment Securities in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements.
Loans and Leases
The following table summarizes the amortized cost and percentage composition of the Company's loans and leases:
June 30, 2026 December 31, 2025
(Dollars in thousands) Amount % Amount %
Commercial non-mortgage $ 21,497,447 37.1 % $ 20,405,237 36.0 %
Asset-based 1,036,823 1.8 1,231,231 2.2
Commercial real estate 15,345,465 26.5 15,326,007 27.1
Multi-family 7,447,623 12.9 7,008,839 12.4
Equipment financing 1,204,691 2.1 1,258,882 2.2
Residential 9,600,445 16.6 9,599,577 17.0
Home equity 1,341,382 2.3 1,370,513 2.4
Other consumer 394,802 0.7 396,824 0.7
Total loans and leases (1)
$ 57,868,678 100.0 % $ 56,597,110 100.0 %
(1)Excludes an ACL of $723.8 million at June 30, 2026, and $719.4 million at December 31, 2025.
The following table summarizes loans and leases by contractual maturity, along with the indication of whether interest rates are fixed or variable:
June 30, 2026
(In thousands) 1 Year or Less 1 - 5 Years 5 - 15 Years After 15 Years Total
Fixed-rate:
Commercial non-mortgage $ 188,450 $ 1,076,778 $ 2,984,342 $ 1,721,118 $ 5,970,688
Asset-based 37,352 374,159 - - 411,511
Commercial real estate 753,146 2,075,337 565,976 81,389 3,475,848
Multi-family 798,301 3,539,771 527,949 146,636 5,012,657
Equipment financing 63,553 805,823 335,315 - 1,204,691
Residential 2,586 25,105 372,944 5,643,663 6,044,298
Home equity 2,366 22,953 139,103 202,583 367,005
Other consumer 16,615 297,540 49,844 30 364,029
Total fixed-rate loans and leases $ 1,862,369 $ 8,217,466 $ 4,975,473 $ 7,795,419 $ 22,850,727
Variable-rate:
Commercial non-mortgage $ 5,115,853 $ 8,158,014 $ 2,165,424 $ 87,468 $ 15,526,759
Asset-based 287,681 337,631 - - 625,312
Commercial real estate 2,118,954 6,975,063 2,332,342 443,258 11,869,617
Multi-family 247,398 1,676,762 506,673 4,133 2,434,966
Residential 300 6,631 202,554 3,346,662 3,556,147
Home equity 3,176 4,931 74,452 891,818 974,377
Other consumer 6,833 21,613 - 2,327 30,773
Total variable-rate loans and leases $ 7,780,195 $ 17,180,645 $ 5,281,445 $ 4,775,666 $ 35,017,951
Total loans and leases (1)
$ 9,642,564 $ 25,398,111 $ 10,256,918 $ 12,571,085 $ 57,868,678
(1)Amounts due exclude total accrued interest receivable of $286.2 million.
Allowance for Credit Losses on Loans and Leases
The following table summarizes the percentage allocation of the ACL across the loan and lease categories:
June 30, 2026 December 31, 2025
(Dollars in thousands) Amount
% (1)
Amount
% (1)
Commercial non-mortgage $ 299,758 41.4 % $ 280,934 39.1 %
Asset-based 19,241 2.7 19,950 2.8
Commercial real estate 225,396 31.1 254,764 35.4
Multi-family 81,210 11.2 62,131 8.6
Equipment financing 10,724 1.5 13,598 1.9
Residential 37,795 5.2 37,769 5.2
Home equity 24,913 3.5 25,313 3.5
Other consumer 24,809 3.4 24,952 3.5
Total ACL on loans and leases $ 723,846 100.0 % $ 719,411 100.0 %
(1)The ACL allocated to a single loan and lease category does not preclude its availability to absorb losses in other categories.
Information regarding the Company's ACL methodology can be found within Note 1: Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data of the Company's Annual Report on Form 10-K for the year ended December 31, 2025. There were no changes to the Company's ACL methodology during the six months ended June 30, 2026.
Credit Policies and Procedures
Information regarding the Company's credit policies and procedures can be found under the section captioned "Allowance for Credit Losses on Loans and Leases" contained in Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company's Annual Report on Form 10-K for the year ended December 31, 2025. There were no changes to the Company's credit policies and procedures during the six months ended June 30, 2026.
Asset Quality Ratios
The Company manages asset quality using risk tolerance levels established through the Company's underwriting standards, servicing, and management of its loan and lease portfolio. Loans and leases for which a heightened risk of loss has been identified are regularly monitored to mitigate further deterioration and preserve asset quality in future periods. Non-performing assets, credit losses, and net charge-offs are considered by management to be key measures of asset quality.
The following table summarizes key asset quality ratios and their underlying components:
(Dollars in thousands) June 30,
2026 		December 31, 2025
Non-performing loans and leases (1) (2)
$ 429,023 $ 500,684
Total loans and leases 57,868,678 56,597,110
Non-performing loans and leases as a percentage of total loans and leases 0.74 % 0.88 %
Non-performing loans and leases (1) (2)
$ 429,023 $ 500,684
Add: OREO and repossessed assets 1,151 1,472
Total non-performing assets (1)
$ 430,174 $ 502,156
Total loans and leases plus OREO and repossessed assets $ 57,869,829 $ 56,598,582
Non-performing assets as a percentage of total loans and leases plus OREO
and repossessed assets 		0.74 % 0.89 %
Non-performing assets (1)
$ 430,174 $ 502,156
Total assets 85,948,639 84,073,663
Non-performing assets as a percentage of total assets 0.50 % 0.60 %
ACL on loans and leases $ 723,846 $ 719,411
Non-performing loans and leases (1) (2)
429,023 500,684
ACL on loans and leases as a percentage of non-performing loans and leases 168.72 % 143.69 %
ACL on loans and leases $ 723,846 $ 719,411
Total loans and leases 57,868,678 56,597,110
ACL on loans and leases as a percentage of total loans and leases 1.25 % 1.27 %
ACL on loans and leases $ 723,846 $ 719,411
Net charge-offs (3)
167,828 179,203
Ratio of ACL on loans and leases to net charge-offs 4.31x 4.01x
(1)Non-performing asset balances and related asset quality ratios exclude the impact of net unamortized (discounts)/premiums and net unamortized deferred (fees)/costs on loans and leases.
(2)The decrease from December 31, 2025, to June 30, 2026, was primarily due to commercial real estate and asset-based.
(3)Amount has been annualized for the June 30, 2026, period based on year-to-date net charge-offs.
The following tables summarize net charge-offs (recoveries) as a percentage of average loans and leases for each category:
Three months ended June 30,
2026 2025
(Dollars in thousands) Net
Charge-offs (Recoveries) 		Average Balance
% (1)
Net
Charge-offs (Recoveries) 		Average Balance
% (1)
Commercial non-mortgage $ 12,334 $ 21,241,063 0.23 % $ 12,632 $ 18,489,292 0.27 %
Asset-based 7,202 1,083,842 2.66 5,819 1,360,288 1.71
Commercial real estate 14,845 15,242,986 0.39 16,493 14,438,078 0.46
Multi-family 2,801 7,380,185 0.15 72 6,864,083 -
Equipment financing 2,659 1,223,713 0.87 1,526 1,214,142 0.50
Residential (321) 9,617,402 (0.01) (807) 9,228,988 (0.03)
Home equity (463) 1,346,737 (0.14) (503) 1,391,259 (0.14)
Other consumer 3,641 422,047 3.45 1,169 291,767 1.60
Total $ 42,698 $ 57,557,975 0.30 % $ 36,401 $ 53,277,897 0.27 %
Six months ended June 30,
2026 2025
(Dollars in thousands) Net
Charge-offs (Recoveries) 		Average Balance
% (1)
Net
Charge-offs (Recoveries) 		Average Balance
% (1)
Commercial non-mortgage $ 25,897 $ 20,974,189 0.25 % $ 40,015 $ 18,223,296 0.44 %
Asset-based 14,483 1,127,341 2.57 15,587 1,384,597 2.25
Commercial real estate 29,913 15,331,420 0.39 33,724 14,438,104 0.47
Multi-family 4,157 7,266,053 0.11 247 6,881,952 0.01
Equipment financing 4,599 1,233,198 0.75 1,593 1,213,700 0.26
Residential (560) 9,625,729 (0.01) (840) 9,107,684 (0.02)
Home equity (1,517) 1,352,484 (0.22) (788) 1,400,813 (0.11)
Other consumer 6,942 422,867 3.28 1,820 274,966 1.32
Total $ 83,914 $ 57,333,281 0.29 % $ 91,358 $ 52,925,112 0.35 %
(1)Percentage represents annualized net charge-offs (recoveries) to average loans and leases within the comparable category.
Comparison to Prior Year Quarter
Net charge-offs increased $6.3 million, or 17.3%, to $42.7 million for the three months ended June 30, 2026, as compared to $36.4 million for the three months ended June 30, 2025, primarily due to increases in multi-family and other consumer, asset-based, and equipment financing, partially offset by a decrease in commercial real estate.
Comparison to Prior Year to Date
Net charge-offs decreased $7.5 million, or 8.1%, to $83.9 million for the six months ended June 30, 2026, as compared to $91.4 million for the six months ended June 30, 2025, primarily due to decreases in commercial non-mortgage and commercial real estate, partially offset by increases in other consumer, multi-family, and equipment financing.
Liquidity and Capital Resources
The Company manages its cash flow requirements through proactive liquidity measures at both the Company and the Bank. In order to maintain stable, cost-effective funding, and to promote overall balance sheet strength, the liquidity position of the Company is continuously monitored, and adjustments are made to balance sources and uses of funds, as appropriate.
Cash inflows are provided through a variety of sources, including principal and interest payments on loans and investments, unpledged securities that can be sold or utilized to secure funding, and new deposits. The Company is committed to maintaining a strong base of core deposits, which consists of demand, interest-bearing checking, health savings, money market, and savings accounts, to support growth in its loan portfolios. Management actively monitors the interest rate environment and makes adjustments to its deposit strategy in response to evolving market conditions, funding needs, and client relationship dynamics.
Company Liquidity. The primary source of liquidity at the Company is dividends from the Bank. To a lesser extent, investment income, net proceeds from investment sales, borrowings, and public offerings may provide additional liquidity. The Company generally uses its funds for principal and interest payments on senior notes, subordinated notes, and junior subordinated debt, dividend payments to preferred and common stockholders, repurchases of its common stock, and purchases of debt and equity securities, as applicable.
There are certain restrictions on the Bank's payment of dividends to the Company, which can be found within
Note 10: Regulatory Capital and Restrictions in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements of this report, and under the section captioned "Supervision and Regulation" in Part I - Item 1. Business of the Company's Annual Report on Form 10-K for the year ended December 31, 2025. During the three and six months ended June 30, 2026, the Bank paid $150.0 million and $450.0 million, respectively, in dividends to the Company. At June 30, 2026, there was $400.8 million of retained earnings available for the payment of dividends by the Bank to the Company.
On April 29, 2026, it was announced that the Company's Board of Directors had declared quarterly cash dividends of $0.40 per share on Webster common stock, $328.125 per share on the Series F Preferred Stock, and $16.25 per share on the Series G Preferred Stock. The Company continues to monitor economic forecasts, anticipated earnings, and its capital position in the determination of its dividend payments. In accordance with the Transaction Agreement, quarterly cash dividends on Webster common stock, the Series F Preferred Stock, and the Series G Preferred Stock may not exceed $0.40 per share, $328.125 per share, and $16.25 per share, respectively, without prior written consent from Banco Santander.
The Company maintains a common stock repurchase program that permits management to repurchase shares of Webster common stock in open market or private transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the SEC, subject to the availability and trading price of stock, general market conditions, alternative uses for capital, regulatory considerations, and the Company's financial performance. In accordance with the Transaction Agreement, effective as of February 3, 2026, the Company paused repurchases under its common stock repurchase program through the completion of the Transaction. There were no common stock repurchases under the Company's common stock repurchase program in 2026 prior to the execution of the Transaction Agreement. Additional information regarding the Company's common stock repurchase program can be found in Part II - Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Periodically, the Company will acquire common stock outside of its repurchase program related to employee stock compensation plan activity. During the three and six months ended June 30, 2026, the Company repurchased 9,438 and 430,300 shares, respectively, at a weighted-average price of $70.56 and $71.68 per share, respectively, totaling $0.7 million and $30.8 million, respectively, for this purpose.
Bank Liquidity. The Bank's primary source of funding is its core deposits. Including time deposits, the Bank had a loan to total deposit ratio of 82.3% at June 30, 2026, and at December 31, 2025.
The Bank is required by OCC regulations to maintain a sufficient level of liquidity to ensure safe and sound operations. The adequacy of liquidity, as assessed by the OCC, depends on factors such as overall asset and liability structure, market conditions, competition, and the nature of the institution's deposit and loan customers. At June 30, 2026, the Bank exceeded all regulatory liquidity requirements. The Company has designed a detailed contingency plan in order to respond to any liquidity concerns in a prompt and comprehensive manner, including early detection of potential problems and corrective action to address liquidity stress scenarios.
Capital Requirements. The Company and the Bank are subject to various regulatory capital requirements administered by the federal bank regulatory 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 Condensed Consolidated Financial Statements. Under capital adequacy guidelines and/or the regulatory framework for prompt corrective action, which applies to the Bank only, both the Company and the 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, as adopted in the U.S., to ensure capital adequacy require the Company and the Bank to maintain minimum ratios of CET1 Risk-Based Capital, Tier 1 Risk-Based Capital, Total Risk-Based Capital, and Tier 1 Leverage Ratio, as defined in the regulations.
The following table presents the minimum ratios required at June 30, 2026, and at December 31, 2025:
Adequately Capitalized Well Capitalized
CET1 Risk-Based Capital 4.5 % 6.5 %
Tier 1 Risk-Based Capital 6.0 8.0
Total Risk-Based Capital 8.0 10.0
Tier 1 Leverage Ratio 4.0 5.0
Both the Company and the Bank were classified as "well-capitalized" at June 30, 2026, and at December 31, 2025. Management believes that no events or changes have occurred subsequent to quarter-end and through the date of this Quarterly Report on Form 10-Q that would change this designation.
The Company's and the Bank's capital ratios, which exceeded the minimum regulatory requirements, were as follows:
June 30, 2026
December 31, 2025
(Dollars in thousands) Capital/Assets Ratio Capital/Assets Ratio
Webster Financial Corporation
CET1 Risk-Based Capital $ 6,826,758 11.71 % $ 6,441,440 11.20 %
Tier 1 Risk-Based Capital 7,110,737 12.20 6,725,419 11.69 %
Total Risk-Based Capital 8,254,693 14.16 7,861,688 13.67 %
Tier 1 Leverage Ratio 7,110,737 8.48 6,725,419 8.33 %
Risk-weighted assets 58,290,138 57,511,986
Webster Bank
CET1 Risk-Based Capital $ 7,134,807 12.23 % $ 7,007,352 12.19 %
Tier 1 Risk-Based Capital 7,134,807 12.23 7,007,352 12.19 %
Total Risk-Based Capital 7,855,305 13.47 7,720,373 13.43 %
Tier 1 Leverage Ratio 7,134,807 8.51 7,007,352 8.69 %
Risk-weighted assets 58,336,993 57,474,351
Additional information regarding the required regulatory capital levels and ratios applicable to the Company and the Bank can be found within Note 10: Regulatory Capital and Restrictions in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements.
Sources and Uses of Funds
Sources of Funds. Deposits are the primary source of cash flows for the Bank's lending activities and general operational needs. Loan and securities repayments, proceeds from sales of loans and securities held for sale, and maturities also provide cash flows. While scheduled loan and securities repayments are a relatively stable source of funds, prepayments and other deposit inflows are influenced by economic conditions and prevailing interest rates, the timing of which are inherently uncertain. Additional sources of funds are provided by both short-term and long-term borrowings, and to a lesser extent, dividends received as part of the Bank's membership with the FHLB of Boston and FRB of New York.
Deposits. The Bank offers a wide variety of checking and savings deposit products designed to meet the transactional and investment needs of its consumer and business customers. The Bank's deposit services include, but are not limited to, ATM and debit card use, direct deposit, ACH payments, mobile banking, internet-based banking, banking by mail, account transfers, and overdraft protection, among others. The Bank manages the flow of funds in its deposit accounts and interest rates consistent with FDIC regulations. The Bank's Consumer and Digital Pricing Committee and its Commercial and Institutional Liability and Loan Pricing Committee both meet regularly to determine pricing and marketing initiatives. In addition, the Bank may use brokered certificates of deposit as a funding source, which are managed based on established limits set by the ALCO.
Total deposits were $70.3 billion at June 30, 2026, and $68.8 billion at December 31, 2025. The $1.5 billion net increase in total deposits was primarily due to increases in interest-bearing checking and money market, partially offset by decreases in brokered certificates of deposit and savings.
The following tables summarize daily average balances of deposits by type and the weighted-average rates paid thereon:
Three months ended June 30,
2026 2025
(Dollars in thousands) Average
Balance 		Average Rate Average
Balance 		Average Rate
Non-interest-bearing:
Demand $ 9,962,207 - % $ 10,109,928 - %
Interest-bearing:
Checking 12,116,284 1.76 9,772,340 1.74
Health savings accounts 9,367,769 0.17 9,137,704 0.16
Money market 23,954,940 3.08 21,645,531 3.54
Savings 6,755,888 1.38 7,462,151 1.70
Certificates of deposit 6,015,621 3.11 6,061,399 3.43
Brokered certificates of deposit 1,624,580 3.91 1,774,379 4.38
Total interest-bearing 59,835,082 2.19 55,853,504 2.44
Total average deposits $ 69,797,289 1.88 % $ 65,963,432 2.07 %
Six months ended June 30,
2026 2025
(Dollars in thousands) Average
Balance 		Average Rate Average
Balance 		Average Rate
Non-interest-bearing:
Demand $ 10,040,885 - % $ 10,196,846 - %
Interest-bearing:
Checking 11,704,534 1.70 9,741,252 1.72
Health savings accounts 9,464,500 0.17 9,222,141 0.16
Money market 23,961,705 3.07 21,381,682 3.53
Savings 6,801,579 1.39 7,284,366 1.65
Certificates of deposit 5,954,319 3.10 6,054,336 3.56
Brokered certificates of deposit 1,729,917 3.90 1,589,392 4.45
Total interest-bearing 59,616,554 2.18 55,273,169 2.43
Total average deposits $ 69,657,439 1.86 % $ 65,470,015 2.05 %
Uninsured deposits represent the portion of deposit accounts in U.S. offices that exceed the FDIC insurance limit or similar state deposit insurance regimes, and amounts in any other uninsured investment or deposit accounts that are classified as deposits and not subject to any federal or state deposit insurance regime. The Company calculates its uninsured deposit balances based on the methodologies and assumptions used for regulatory reporting requirements, which includes an estimated portion and affiliate deposits. Total uninsured deposits as per regulatory reporting requirements, and as reported on Schedule RC-O of the Bank's Call Report, were $24.4 billion at June 30, 2026, and $23.8 billion, at December 31, 2025.
The following table summarizes the portion of U.S. time deposits in excess of the FDIC insurance limit and time deposits otherwise uninsured by contractual maturity:
(In thousands) June 30, 2026
Portion of U.S. time deposits in excess of insurance limit $ 651,990
Time deposits otherwise uninsured with a maturity of:
3 months or less $ 408,500
Over 3 months through 6 months 80,720
Over 6 months through 12 months 162,583
Over 12 months 187
Additional information regarding period-end deposit balances and rates can be found within Note 6: Deposits in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements.
Borrowings. The Bank's primary borrowing sources include securities sold under agreements to repurchase, federal funds purchased, FHLB advances, and long-term debt. Total borrowings were $4.5 billion at June 30, 2026, and $4.3 billion at December 31, 2025, and represented 5.2% and 5.1% of total assets, respectively. The $0.2 billion increase was primarily due to an increase of $0.7 billion in FHLB advances, partially offset by a decrease of $0.5 billion in securities sold under agreements to repurchase.
Securities sold under agreements to repurchase are generally a form of short-term funding for the Bank in which it sells securities to counterparties with an agreement to buy them back in the future at a fixed price. Securities sold under agreements to repurchase totaled $0.1 billion at June 30, 2026, and $0.6 billion at December 31, 2025. The $0.5 billion decrease was primarily due to a change in short-term funding mix.
The Bank may also purchase term and overnight federal funds to meet its short-term liquidity needs. There were no federal funds purchased at June 30, 2026, and at December 31, 2025.
FHLB advances are not only utilized as a source of funding, but also for interest rate risk management purposes. FHLB advances totaled $3.7 billion at June 30, 2026, and $3.0 billion at December 31, 2025. The $0.7 billion increase was primarily due to a change in short-term funding mix.
Long-term debt consists of senior notes maturing in 2029, subordinated notes maturing in 2035, and junior subordinated notes maturing in 2033. Long-term debt totaled approximately $0.7 billion at June 30, 2026, and at December 31, 2025.
At June 30, 2026, the Bank had additional borrowing capacity of $13.0 billion from the FHLB of Boston and $10.0 billion from the FRB of New York. Unencumbered investment securities of $2.9 billion at June 30, 2026, could also have been used for collateral on borrowings or to increase borrowing capacity by either $1.6 billion with the FHLB of Boston or $2.0 billion with the FRB of New York.
The following table summarizes daily average balances of borrowings by type and the weighted-average rates paid thereon:
Three months ended June 30,
2026 2025
(Dollars in thousands) Average
Balance 		Average Rate Average
Balance 		Average Rate
Securities sold under agreements to repurchase $ 68,416 0.12 % $ 111,005 0.78 %
FHLB advances 4,683,241 3.84 2,650,111 4.45
Long-term debt 722,347 4.62 885,773 4.35
Total average borrowings $ 5,474,004 3.89 % $ 3,646,889 4.31 %
Six months ended June 30,
2026 2025
(Dollars in thousands) Average
Balance 		Average Rate Average
Balance 		Average Rate
Securities sold under agreements to repurchase $ 123,794 1.74 % $ 177,413 2.12 %
FHLB advances 4,112,747 3.83 2,382,692 4.46
Long-term debt 722,249 4.62 886,003 4.35
Total average borrowings $ 4,958,790 3.89 % $ 3,446,108 4.31 %
Additional information regarding period-end borrowings balances and rates can be found within Note 7: Borrowings in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements.
Federal Home Loan Bank and Federal Reserve Bank Stock. The Bank is a member of the FHLB System, which consists of 11 district FHLBs, each of which is subject to the supervision and regulation of the Federal Housing Finance Agency. An activity-based capital stock investment in a FHLB is required in order for the Bank to maintain its membership and access advances and other extensions of credit for sources of funds and liquidity purposes. The FHLB capital stock investment is restricted as there is no market for it, and it can only be redeemed by the applicable FHLB. The Bank held FHLB of Boston capital stock of $156.1 million at June 30, 2026, and $125.2 million at December 31, 2025. The most recent FHLB quarterly cash dividend was paid on May 4, 2026, in an amount equal to an annual yield of 6.71%.
The Bank is also required to hold FRB stock equal to 6% of its capital and surplus, of which 50% is paid. The remaining 50% is subject to call when deemed necessary by the Federal Reserve. Similar to FHLB stock, the FRB capital stock investment is restricted as there is no market for it, and it can only be redeemed by the applicable FRB. The Bank held FRB of New York capital stock of $232.3 million at June 30, 2026, and $231.2 million at December 31, 2025. The most recent FRB semi-annual cash dividend was paid on June 30, 2026, in an amount equal to an annual yield of 4.54%.
Uses of Funds. The Company enters into various contractual obligations in the normal course of business that require future cash payments and that could impact its short-term and long-term liquidity and capital resource needs. The following table summarizes significant fixed and determinable contractual obligations at June 30, 2026. The actual timing and amounts of future cash payments may differ from the amounts presented. Based on the Company's current liquidity position, it is expected that our sources of funds will be sufficient to fulfill these obligations when they come due.
Payments Due by Period (1)
(In thousands) 2026 2027 2028 2029 2030 Thereafter Total
Senior notes $ - $ - $ - $ 300,000 $ - $ - $ 300,000
Subordinated notes - - - - - 350,000 350,000
Junior subordinated debt - - - - - 77,320 77,320
FHLB advances 3,650,000 193 193 601 3,606 6,653 3,661,246
Securities sold under agreements to repurchase 73,395 - - - - - 73,395
Time deposits 6,786,557 1,502,434 25,584 16,317 21,404 9,953 8,362,249
Operating lease liabilities 16,390 37,485 35,786 31,483 24,941 80,699 226,784
Royalty liabilities 500 1,000 1,000 1,000 1,000 3,806 8,306
Total contractual obligations $ 10,526,842 $ 1,541,112 $ 62,563 $ 349,401 $ 50,951 $ 528,431 $ 13,059,300
(1)Interest payments on borrowings and obligations arising from agreements to purchases goods or receive services have been excluded.
The Company enters into commitments to invest in venture capital and private equity funds and tax credit structures to assist the Bank in meeting its responsibilities under the CRA. The total unfunded commitment for these alternative investments was $686.2 million at June 30, 2026. However, the timing of capital calls cannot be reasonably estimated, and depending on the nature of the contract, the entirety of the capital committed by the Company may not be called.
Pension obligations are funded by the Company, as needed, to provide for participant benefit payments as it relates to the Company's frozen, non-contributory, qualified defined benefit pension plan. Decisions to contribute to the defined benefit pension plan are made based upon pension funding requirements under the Pension Protection Act, the maximum amount deductible under the Internal Revenue Code, the actual performance of plan assets, and trends in the regulatory environment. The Company is not required to contribute to the defined benefit pension plan in 2026, nor does it anticipate that it will be required to contribute in 2027. The Company's non-qualified supplemental executive retirement plans and other post-employment benefit plans are unfunded.
In connection with the completion of a multi-family securitization in 2024, the Company assumed an obligation to reimburse Freddie Mac, or guarantee, losses incurred by the multi-family securitization trusts of up to 12% of the aggregate UPB of the loans at the time of sale. Essentially, this obligation represents a first credit loss enhancement provided by the Company. Based on the credit quality of the multi-family loans, among other factors, the Company estimated the amount of its reimbursement obligation to be $3.3 million at June 30, 2026. The Company has not yet been required to make any guarantee payments to Freddie Mac. However, in the event that the value of the assets in the multi-family securitization trusts significantly declined, the Company's maximum exposure to loss could be $36.4 million.
In connection with the SecureSave acquisition completed in December 2025, the Company recorded contingent consideration related to one earn-out agreement. The earn-out is based on total program deposits measured as of three future measurement dates, with a payment due only if total program deposits exceed the program deposit threshold and, if so, (i) equal to total program deposits multiplied by the applicable earn-out rate for the measurement dates on December 31, 2026, and December 31, 2027, and (ii) equal to the total program deposits in excess of the program deposit threshold multiplied by the earn-out rate for the measurement date on December 31, 2028. The contingent consideration is payable in cash up to an aggregate maximum of $35.0 million.
In connection with the formation of the joint venture with Marathon Asset Management, the Company and Marathon Asset Management agreed to collectively make a capital contribution to a certain investment fund formed in connection with the joint venture (the "Fund") for an amount equal to the lesser of $20 million or 2% of total capital commitments from limited partners to the Fund. At its discretion, the Company may contribute amounts exceeding this commitment, up to BHC Act limitations (less than 25% of the Fund's total equity interests and less than 5% of its voting equity interests). Although the Company is currently prepared to make its capital contribution to the Fund, the change in control of Marathon Asset Management and the the anticipated change in control of the Company create uncertainty as to whether and when any such contribution will occur.
At June 30, 2026, the Company's Condensed Consolidated Balance Sheet reflects a liability for uncertain tax positions of $10.7 million and a liability for accrued interest and penalties of $6.2 million. The ultimate timing and amount of any related future cash settlements cannot be predicted with reasonable certainty.
In the normal course of business, the Company offers financial instruments with off-balance sheet risk to meet the financing needs of its customers. These transactions include commitments to extend credit and commercial and standby letters of credit, which involve, to a varying degree, elements of credit risk. Since many of these commitments are expected to expire unused or be only partially funded, the total commitment amount of $13.3 billion at June 30, 2026, does not necessarily reflect future cash payments.
In 2023, the FDIC issued a final rule implementing a special assessment for certain banks to recover losses to the DIF associated with protecting uninsured depositors of Silicon Valley Bank and Signature Bank upon their failure in March 2023. The Company paid its eighth and final quarterly special assessment during the first quarter of 2026, and its remaining accrual for its estimated special assessment liability was zero as of March 31, 2026. The Company will continue to monitor the estimated loss attributable to the protection of uninsured depositors at Silicon Valley Bank and Signature Bank, which could impact the amount of its accrued liability. In December 2025, the FDIC issued an interim final rule outlining a process for a potential offset to regular quarterly deposit insurance assessments for banks subject to the special assessment if the special assessment amount collected ultimately exceeds losses to the DIF. The FDIC plans to provide additional updates on future offsets or a one-time final shortfall special assessment collection, if any, through future invoices.
Additional information regarding each of the obligations discussed above can be found within (i) the Notes to the Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements of this report, specifically Note 11: Variable Interest Entities for alternative investments and the joint venture with Marathon Asset Management, Note 14: Fair Value Measurements for the SecureSave contingent consideration, and Note 17: Commitments and Contingencies for credit-related financial instruments and the FDIC special assessment; and (ii) the Notes to the Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data of the Company's Annual Report on Form 10-K for the year ended December 31, 2025, specifically Note 2: Business Developments for the multi-family securitization, Note 8: Income Taxes for income taxes, and Note 18: Retirement Benefit Plans for defined benefit pension and other post-retirement benefit plans.
Asset/Liability Management and Market Risk
The Company's ALCO uses four main tools to manage interest rate risk: (i) the size, duration, and credit risk of the investment portfolio; (ii) the size and duration of the wholesale funding portfolio; (iii) interest rate contracts; and (iv) the pricing and structure of loans and deposits. Interest rate risk is measured using simulation analysis and asset/liability modeling software to calculate the Company's earnings at risk and equity at risk. Earnings at risk is defined as the change in net interest income due to changes in interest rates. Equity at risk is defined as the change in the net economic value of financial assets, financial liabilities, and off-balance sheet financial instruments due to changes in interest rates compared to a base net economic value.
Information regarding the key model assumptions and methods used to calculate the Company's earnings at risk and equity at risk, along with other information regarding the Company's overall asset/liability management process, can be found under the section captioned "Asset/Liability Management and Market Risk" contained in Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company's Annual Report on Form 10-K for the year ended December 31, 2025. There were no changes to management's asset/liability management process during the six months ended June 30, 2026, that had a material impact on its measurement of interest rate risk.
The following table summarizes the estimated impact that gradual parallel changes in interest rates of up and down 100, 200, and 300 basis points might have on the Company's net interest income over a 12-month period starting at June 30, 2026, and at December 31, 2025, as compared to actual net interest income and assuming no changes in interest rates:
-300bp -200bp -100bp +100bp +200bp +300bp
June 30, 2026 (0.2)% -% 0.1% (0.1)% (0.3)% (0.7)%
December 31, 2025 (0.9)% (0.6)% (0.2)% 0.2% 0.2% 0.1%
As compared to at December 31, 2025, in both a rising and falling interest rate environment, asset sensitivity decreased at June 30, 2026, primarily due to the change in balance sheet composition.
The following table summarizes the estimated impact that yield curve twists or immediate non-parallel changes in interest rates of up and down 50 and 100 basis points might have on the Company's net interest income over a 12-month period starting at June 30, 2026, and at December 31, 2025:
Short End of the Yield Curve Long End of the Yield Curve
-100bp -50bp +50bp +100bp -100bp -50bp +50bp +100bp
June 30, 2026 1.8% 0.9% (0.8)% (1.5)% (2.2)% (1.1)% 0.9% 1.7%
December 31, 2025 1.3% 0.6% (0.5)% (1.1)% (2.3)% (1.1)% 1.0% 1.9%
As compared to December 31, 2025, in both a rising and falling interest rate environment, sensitivity to the short end of the yield curve increased at June 30, 2026, primarily due to an increase in interest-bearing deposits. As compared to December 31, 2025, in both a rising and falling interest rate environment, sensitivity to the long end of the yield curve slightly decreased at June 30, 2026, primarily due to a decreases in fixed-rate investment securities and loans.
The following table summarizes the estimated economic value of financial assets, financial liabilities, and off-balance sheet financial instruments and the corresponding estimated change in economic value if interest rates were to instantaneously increase or decrease by 100, 200, and 300 basis points at June 30, 2026, and at December 31, 2025:
Estimated
Economic
Value 		Estimated Economic Value Change
(Dollars in thousands) -300bp -200bp -100bp +100bp +200bp +300bp
June 30, 2026
Assets $ 81,353,643 $ 4,628,014 $ 3,456,693 $ 2,110,797 $ (2,304,846) $ (4,071,028) $ (5,629,562)
Liabilities 68,605,677 5,162,643 3,248,078 1,533,973 (1,368,469) (2,587,884) (3,677,502)
Net $ 12,747,966 $ (534,629) $ 208,615 $ 576,824 $ (936,377) $ (1,483,144) $ (1,952,060)
Net change as % base net economic value (4.2) % 1.6 % 4.5 % (7.3) % (11.6) % (15.3) %
December 31, 2025
Assets $ 79,584,542 $ 4,528,862 $ 3,372,921 $ 2,097,645 $ (2,285,952) $ (3,966,009) $ (5,499,807)
Liabilities 67,085,524 7,166,552 $ 4,486,746 2,095,930 (1,891,143) (3,444,959) (4,918,786)
Net $ 12,499,018 $ (2,637,690) $ (1,113,825) $ 1,715 $ (394,809) $ (521,050) $ (581,021)
Net change as % base net economic value (21.1) % (8.9) % - % (3.2) % (4.2) % (4.6) %
Changes in economic value can best be described through duration, which is a measure of the price sensitivity of financial assets and financial liabilities due to changes in interest rates. The Company's duration gap, which represents the difference between the duration of financial assets and financial liabilities, was a positive 0.8 at June 30, 2026, and zero at December 31, 2025. A duration gap at or near zero implies that the balance sheet is matched, and therefore, would exhibit no change in estimated economic value for changes in interest rates. Overall, the longer the duration, the greater the price sensitivity due to changes in interest rates.
These earnings and net economic value estimates are subject to factors that could cause actual results to differ, and also assume that management does not take any additional action to mitigate any positive or negative effects from changing interest rates. Management believes that the Company's interest rate risk position at June 30, 2026, represents a reasonable level of risk given the current interest rate outlook. Management continues to monitor interest rates and other relevant factors given recent market volatility and is prepared to take additional action, as necessary.
Critical Accounting Estimates
The preparation of the Company's Condensed Consolidated Financial Statements, and accompanying notes thereto, in accordance with GAAP and practices generally applicable to the financial services industry, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities. While management's estimates are made based on historical experience, current available information, and other factors that are deemed to be relevant, actual results could significantly differ from those estimates.
Accounting estimates are necessary in the application of certain accounting policies and can be susceptible to significant change in the near term. Critical accounting estimates are those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had, or are reasonably likely to have, a material impact on the Company's financial condition or results of operations. Management has identified that the Company's most critical accounting estimates are those related to its ACL on loans and leases accounting policy. This accounting policy and its underlying estimates are discussed directly with the Audit Committee of the Board of Directors.
Allowance for Credit Losses on Loans and Leases
The determination of the appropriate level of an ACL on loans and leases inherently involves a high degree of subjectivity and requires the Company to make significant estimates of current credit risks and trends using existing qualitative and quantitative information, and reasonable and supportable forecasts of future economic conditions, all of which may undergo frequent and material changes. Additional information regarding the determination of the ACL on loans and leases, including the Company's valuation methodology, can be found within Note 1: Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data of the Company's Annual Report on Form 10-K for the year ended December 31, 2025.
The Company's ACL on loans and leases is particularly sensitive to changes in forecasted macroeconomic conditions during the reasonable and supportable forecast period. The Company performs a sensitivity analysis using probability-weighted scenarios to quantify the impact on the ACL resulting from hypothetical changes in key macroeconomic variable inputs to the CECL models, including, but not limited to, gross domestic product, the unemployment rate, and property values. At June 30, 2026, the results of this sensitivity analysis indicated that, by applying a 100% weighting to a 90th percentile downside scenario, which suggests that there is a 90% probability that the economy will perform better and a 10% probability that it will perform worse, the Company's ACL on loans and leases would increase by approximately $92.2 million, or 12.7%. The downside scenario used is characterized by an economic recession beginning in the second quarter of 2026 and lasting through the fourth quarter of 2026, and assumes that, from the first quarter of 2026 through the fourth quarter of 2026, real gross domestic product declines cumulatively by 2.5%; unemployment begins to increase significantly in the second quarter of 2026, peaking at 8.5% in the second quarter of 2027; and house prices drop 11.8% over the course of 2026. This does not represent management's expectations of future economic conditions nor the impact to estimated credit losses if those hypothetical conditions were to occur during the reasonable and supportable forecast period.
Webster Financial Corporation published this content on July 27, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on July 27, 2026 at 19:45 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]