Company: WBS-PG
Filing Date: 2025-11-10
Form Type: 10-Q
Source: 0000801337-25-000104
Chunk: 27

Company: WEBSTER FINANCIAL CORP
Filing Date: 2025-11-10
Form: 10-Q
Item: Part I, Item 1
Chunk 27
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,798 Individually evaluated for credit losses81,824 680 82,504 70,489 651 71,140 Collectively evaluated for credit losses$560,878 $84,515 $645,393 $565,169 $51,489 $616,658 (1)The $38.3 million increase in the ACL on loans and leases from December 31, 2024, to September 30, 2025, is 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.Concentrations of Credit RiskConcentrations of credit risk may exist when a number of borrowers are engaged in similar activities, or activities in the same geographic region, and have similar economic characteristics that would cause them to be similarly impacted by changes in economic or other conditions. Concentrations of credit risk are controlled and monitored as part of the Company’s credit policies and procedures. The Company is a regional financial services holding company in the Northeast U.S. with a commercial concentration primarily in five geographic markets: New York City, Other New York Counties, Connecticut, New Jersey, and Massachusetts; and secondarily in the Southeast and Other states. At September 30, 2025, and December 31, 2024, the Company’s concentration of credit risk associated with commercial real estate and multi-family loans, in aggregate, represented 39.8% and 40.7% of total loans and leases, respectively. At September 30, 2025, and December 31, 2024, the Company’s concentration of credit risk associated with commercial non-mortgage loans represented 35.3% and 34.4% of total loans and leases, respectively.

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Credit Quality IndicatorsTo measure credit risk for the commercial portfolio, the Company employs a dual grade credit risk grading system for estimating the PD and LGD. The credit risk grade system assigns a rating to each borrower and to the facility, which together form a Composite Credit Risk Profile. The credit risk grade system categorizes borrowers by common financial characteristics that measure the credit strength of borrowers and facilities by common structural characteristics. The Composite Credit Risk Profile has ten grades, with each grade corresponding to a progressively greater risk of loss. Grades (1) to (6) are considered pass ratings, and grades (7) to (10) are considered criticized, as defined by the regulatory agencies. A (7