Company: WBS-PG
Filing Date: 2025-11-10
Form Type: 10-Q
Source: 0000801337-25-000104
Chunk: 124

Company: WEBSTER FINANCIAL CORP
Filing Date: 2025-11-10
Form: 10-Q
Item: Part I, Item 2
Chunk 124
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 cash flow loans, and secondarily as loans secured by real estate. Repayment of commercial real estate loans is largely dependent on the successful operation of the property securing the loan, the market in which the property is located, and the tenants of the property securing the loan. Management monitors and evaluates commercial real estate loans based on collateral, geography, and risk grade criteria. All transactions are appraised to determine market value. Commercial real estate loans may be adversely affected by conditions in the real estate markets or in the general economy. Management periodically utilizes third-party experts to provide insight and guidance about economic conditions and trends affecting its commercial real estate loan portfolio.

The Bank requires a valuation of real estate collateral, which generally includes third-party appraisals, at the time of origination or renewal in accordance with regulatory guidance. On an annual basis, appraisal assumptions and other factors are internally reviewed to determine whether an incremental third-party appraisal is warranted. New appraisals are obtained sooner if a loan becomes adversely classified, substandard, or non-accrual.

Consumer loans are subject to policies and procedures developed to manage the specific risk characteristics of the portfolio. These policies and procedures, coupled with relatively small individual loan amounts and predominately collateralized loan structures, are spread across many different borrowers, minimizing the level of credit risk. Trend and outlook reports are reviewed by management on a regular basis, and policies and procedures are modified or developed, as needed. Underwriting factors for residential mortgage and home equity loans include the borrower’s FICO score, the loan amount relative to property value, and the borrower’s debt-to-income level. The Bank originates both qualified mortgage and non-qualified mortgage loans.

Allowance for Credit Losses on Loans and Leases

The ACL on loans and leases increased $38.3 million, or 5.6%, from $689.6 million at December 31, 2024, to $727.9 million at September 30, 2025, primarily due to additional reserves resulting from uncertainty in the current macroeconomic environment and loan growth, partially offset by net charge-offs and improvements in risk rating migration. 

The following table summarizes the percentage allocation of the ACL across the loans and leases categories:September 30, 2025December 31, 2024(Dollars in thousands)Amount% (1)Amount% (1)Commercial non-mortgage$286,19939.3 %$270,61339.2 %Asset-based28,0933.9 30,049