Company: WBS-PG
Filing Date: 2025-05-09
Form Type: 10-Q
Source: 0000801337-25-000026
Chunk: 108

Company: WEBSTER FINANCIAL CORP
Filing Date: 2025-05-09
Form: 10-Q
Item: Part I, Item 2
Chunk 108
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 period is two years after which the reversion period is one year. Models use output reversion and revert to mean historical portfolio loss rates on a straight-line basis in the third year of the forecast.

The Company incorporates forecasts of macroeconomic variables in the determination of expected credit losses. Macroeconomic variables are selected for each class of financing receivable based on relevant factors, such as asset type and the correlation of the variables to credit losses, among others. Data from the forecast scenario of these macroeconomic variables are used as inputs to the modeled loss calculation.

A portion of the collective ACL is comprised of qualitative adjustments for risk characteristics that are not reflected or captured in the quantitative models, but are likely to impact the measurement of estimated credit losses. Qualitative adjustments are based on management’s judgment of the Company, market, industry, or business specific data, and may be applied in relation to economic forecasts when relevant facts and circumstances are expected to impact credit losses, particularly in times of significant volatility in economic activity. Qualitative factors that are generally used in the Company’s models for all loan and lease portfolios include, but are not limited to, nature and volume of portfolio growth, credit quality trends, underwriting exception levels, quality of internal loan review, credit concentrations, and staffing trends. During the first quarter of 2025, the Company incorporated a new economic uncertainty qualitative factor in its models to reflect the estimated impact from proposed tariffs, a heightened risk of recession/inflation, and the general economic uncertainty that has developed, which resulted in an increase to the collective ACL of $19.4 million from December 31, 2024, to March 31, 2025. The qualitative portion of the collective ACL accounted for approximately 40% and 39% of the total ACL on loans and leases at March 31, 2025, and December 31, 2024, respectively. Excluding the impact from the new economic uncertainty qualitative factor in the first quarter of 2025, the balance of qualitative reserves primarily relates to credit quality trends and credit concentration factors, which remained relatively stable from period to period.

18

Individually Assessed Loans and Leases. If the risk characteristics of a loan or lease change such that it no longer matches the risk characteristics of the collectively assessed pool, it is removed from the population and individually assessed for credit losses. Generally, all non-accrual loans and loans with a charge-off are individually assessed. The measurement method used to calculate the expected credit loss on an individually assessed loan or lease