Company: WBS-PG
Filing Date: 2025-05-09
Form Type: 10-Q
Source: 0000801337-25-000026
Chunk: 150

Company: WEBSTER FINANCIAL CORP
Filing Date: 2025-05-09
Form: 10-Q
Item: Part I, Item 2
Chunk 150
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31, 2025, is primarily due to additional loan and lease reserves resulting from uncertainty in the current macroeconomic environment and risk rating migration, partially offset by net charge-offs, particularly across the commercial non-mortgage, commercial real estate, and asset-based categories.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 March 31, 2025, and December 31, 2024, the Company’s concentration of credit risk associated with commercial real estate and multi-family loans, in aggregate, represented 40.3% and 40.7% of total loans and leases, respectively. At both March 31, 2025, and December 31, 2024, the Company’s concentration of credit risk associated with commercial non-mortgage loans represented 34.4% of total loans and leases.

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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) “Special Mention” rating has a potential weakness that, if left uncorrected, may result in deterioration of the repayment prospects for the asset. An (8) “Substandard” rating has a well-defined weakness that jeopardizes the full repayment of the debt. A (9) “Doubtful” rating has all of the same weaknesses as a substandard asset with the added characteristic that the weakness makes collection or liquid