Part III: Definitive Proxy Statement (the “Proxy Statement”) for the Annual Meeting of Shareholders to be held on April 22, 2021.

PART 1I

ITEM 1. BUSINESS

Webster Financial Corporation (the Holding Company) is a bank holding company and financial holding company under the Bank Holding Company Act of 1956, as amended (BHC Act), incorporated under the laws of Delaware in 1986, and headquartered in Waterbury,Stamford, Connecticut. Webster Bank, National Association (Webster Bank), and its HSA Bank division (HSA Bank), deliver a wide range of banking, investment, and financial services to individuals, families, and businesses. Webster Bank serves consumer and business customers with mortgage lending, financial planning, trust, and investment services through a distribution network consisting of banking centers, ATMs, a customer care center, and a full range of web and mobile-based banking services throughout southernthe northeastern U.S. from New England and Westchester County, New York.York to Massachusetts. It also offers equipment financing, commercial real estate lending, asset-based lending, and treasury and payment solutions, primarily in the eastern U.S. HSA Bank is a leading provider of health savings accounts while(HSAs), and also deliveringdelivers health reimbursement arrangements, and flexible spending and commuter benefit account administration services to employers and individuals in all 50 states.

Additional information regarding Webster's reportable segments can be found in Part II under the section captioned "Segment Reporting" contained Item 7. Management's Discussion and business certified banking center managers, supported by a teamAnalysis of customer care center bankersFinancial Condition and industryResults of Operations and product specialists.within Note 21: Segment Reporting in the Notes to Consolidated Financial Statements contained in Item 8. Financial Statements and Supplementary Data.

Human Capital Resources

As a values-driven organization, our employees are the cornerstone of our success. At December 31, 2021, Webster had 3,3453,245 total employees, comprisedwhich included 2,424 full-time, 452 part-time, and 369 temporary employees, and consisted of 63%approximately 60% female and 37%40% male at December 31, 2020, which is substantially unchanged from December 31, 2019. Noemployees. None of our employees arewere represented by a collective bargaining agreement.

We believe that our focus on diversity, equity, inclusion, and belonging (DEIB) is a critical component of how we support the increasingly diverse perspectives of our employees and clients. It is not only key to our long-term growth, but also having a workforce comprised of diverse identities, backgrounds, and experiences better helps the clients and communities we serve. Our commitment to DEIB starts with Webster's senior leadership team, who continuously work to ensure that DEIB is integrated into the way we do business. Webster provides itshas established a DEIB Council, which serves as a platform where senior leaders and representatives of our various business resource groups shape the strategy and actions of our DEIB efforts. The Council currently comprises 22 employee members across the organization and is co-chaired by our Chief Executive Officer and Executive Vice President of Business Banking, both of whom make recommendations on ways to integrate DEIB in the areas of education and awareness, talent development, employee engagement, and client and community service. We also have an appointed DEIB Officer to expand our DEIB programs and grow partnerships within our local communities, and to promote a diverse workforce in an open, inclusive environment.

Webster's compensation program aims to attract, retain, and reward high-performing talent at all levels of the organization through a pay-for-performance philosophy. Variable payment opportunities are available to all employees, with comprehensiveincluding corporate incentive plans, sales/service commission or incentive plans, and equity plans for senior-level executives. Comprehensive benefits some of whichand wellness resources are provided on a contributory basis,to employees, including medical, dental, vision, wellness incentives, life insurance, voluntary supplemental life insurance, short-term and dental plans,long-term disability, as well as a 401(k) retirement savings plan with a company match, component, life insurance,Employee Stock Purchase Plan, Employee Assistance Program, parental leave, and short-term and long-term disability coverage. Additional benefits offered include paid time off, family leave,off. Webster shares in the costs of benefits with its employees by paying approximately 80% of all insurance costs. In addition, Webster contributes to participating employees’ HSAs through earned incentives for completing activities such as biometric screenings, wellness physicals, and dental exams. Benefit trends are reviewed regularly and plans are adjusted accordingly to remain competitive. We believe that our current benefits practices play a key role in employee assistance programs. The Company's compensation package is designed to maintain market competitive total rewards programs for all employees in order to attract and retain superior talent. Theretention. At December 31, 2021, the average employee tenure iswas approximately 8.6 years at December 31, 2020.8.2 years.

Competition

Webster is subject to strong competition from banks, thrifts, credit unions, non-bank health savings account trustees, consumer finance companies, investment companies, insurance companies, and online lending and savings institutions. Certain of these competitors are larger financial institutions with substantially greater resources, lending limits, larger branch systems, and a wider array of commercial and consumer banking services than Webster. Competition could intensify in the future as a result of industry consolidation, the increasing availability of products and services from non-bank entities,organizations, greater technological developments in the industry, and continued bank regulatory reforms.

Webster faces substantial competition for deposits and loans throughout its market areas. The primary factors in competing for deposits are interest rates, personalized services, the quality and range of financial services, convenience of office locations and hours, mobile banking, and other automated services. Competition for deposits comes from other commercial banks, thrifts, credit unions, non-bank health savings account trustees, mutual funds, and other investment alternatives. The primary factors in competing for consumer and commercial loans are interest rates, loan origination fees, ease and convenience of loan origination channels, the quality and range of lending services, personalized service, and the ability to close within customers’ desired time frame. Competition for the origination of loans comes primarily from commercial banks, non-bank lenders, savings institutions, mortgage banking firms, mortgage brokers, online lenders, and insurance companies. Other factors whichthat affect competition include the general and local economic conditions, current interest rate levels, and volatility in the lending markets.

Webster and its bank and non-bank subsidiaries are subject to comprehensiveextensive regulation under federal and state laws. The regulatory framework applicable to bank holding companies and their subsidiary banksdepository institutions is intended to protect depositors, the Federal Deposit Insurance Fund, (DIF),consumers, and the U.S. banking system as a whole. This system iswhole, not designed to protect equitynecessarily investors in bank holding companies. companies such as Webster.

Set forth below is a summary of the significant elements of the laws and regulations applicable to Webster and its bank and non-bank subsidiaries. The description that follows is qualified in its entirety by reference to the full text of the statutes, regulations, and policies that are described. SuchBanking statutes, regulations, and policies are subject to ongoingcontinually under review by Congress, state legislatures, and federal and state regulatory agencies. A changeChanges in any of the statutes, regulations, or regulatory policies applicable to Webster and its bank and non-bank subsidiaries, including how they are implemented or interpreted, could have a material effect on the results of the Company.

Webster Financial Corporation is a separate and distinct legal entity from Webster Bank and its other subsidiaries. As a registered bank holding company and a financial holding company, itWebster is subject to regulation under the BHC Act and to inspection, examination, and supervision by its primary regulator, the Board of Governors of the Federal Reserve System and is regulated under the BHC Act.System. Webster is under the jurisdiction of the SEC and isalso subject to the disclosure and other regulatory requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, asboth of which are administered by the SEC.United States Securities and Exchange Commission (SEC). As a company with securities listed on the New York Stock Exchange (NYSE), Webster is subject to the rules for companies listed on the New York Stock Exchange. In addition, the Consumer Financial Protection Bureau (CFPB) supervises Webster for compliance with federal consumer financial protection laws. Webster is also subject to oversight by state attorneys general for compliance with state consumer protection laws. Webster’s non-bank subsidiaries are subject to federal and state laws and regulations, including regulations of the Federal Reserve System.NYSE for listed companies.

Webster Bank is organized as a national banking association under the National Bank Act. Webster BankAct, and is subject to the supervision of and to regular examination by the Office of the Comptroller of the Currency (OCC) as, its primary federal regulator, as well as by the Federal Deposit Insurance Corporation (FDIC) as, its deposit insurer. As a national banking association, Webster Bank’s depositsBank derives its lending, investment, and other bank activity powers from the National Bank Act, as amended, and the regulations of the OCC promulgated thereunder. In addition, the Consumer Financial Protection Bureau (CFPB) supervises the Bank to ensure compliance with federal consumer financial protection laws.

Webster’s non-bank subsidiaries are insuredalso subject to regulation by the FDIC up to the applicable deposit insurance limits in accordance with FDIC laws and regulations.

Created as a response to the COVID-19 pandemic evolves,2008 financial crisis, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act) significantly altered the financial system regulatory regime in the United States. Since its enactment, the financial services industry has been subject to increased regulation and oversight through enhanced federal government accountability and transparency measures.

On May 24, 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 (EGRRCPA) was signed into law, which repealed and amended certain provisions of the Dodd-Frank Act, providing regulatory relief to smaller, less complex banking organizations primarily as it relates to enhanced prudential standards, and stress testing and liquidity requirements (discussed further below). In addition to amending the Dodd-Frank Act, EGRRCPA also modified other provisions regarding bank compliance, consumer protection, and securities laws, to which the federal banking agencies continue to issue additionalhave issued certain corresponding guidance and regulations with respect to the implementation, lifecycle, and eligibility requirements for the various CARES Act programs as well as industry-specific recovery procedures for COVID-19. The Company continues to assess the impact of the CARES Act, the potential impact of new COVID-19 legislation, and other statutes, regulations, and supervisory guidance related to the COVID-19 pandemic. The CARES Act also amended the Small Business Administration loan program, in which the Bank participates, to create a guaranteed, unsecured loan program, the Paycheck Protection Program (PPP), to fund operational costs of eligible businesses, organizations and self-employed persons during COVID-19. In December 2020, Congress revived the PPP and allocated additional PPP funds for 2021. As a result, the Small Business Administration is anticipated to modify prior guidance and promulgate new regulations and guidance to conform with and implement the new provisions during the first quarter of 2021. As a participating PPP lender, the Bank continues to monitor legislative, regulatory, and supervisory developments related thereto.proposed or final rules.

Webster Financial Corporation is a bank holding company as defined underIn general, the BHC Act. The BHC Act generally limits the business of bank holding companies to banking, managing, or controlling banks and other activities that the Board of Governors of the Federal Reserve System has determined to be so closely related to banking as to be a proper incident thereto.banking. Bank holding companies that have electedqualify and elect to become financial holding companies, such as Webster, Financial Corporation, may engage in any activity, or acquire and retain the shares of a company engaged in any activity, that is either (i) financial in nature or incidental to such financial activity (as determined by the Board of Governors of the Federal Reserve System in consultation with the Secretary of the Treasury) or (ii) complementary to a financial activity, and that does not pose a substantial risk to the safety and soundness of depository institutions or the financial system (as solely determined by the Board of Governors of the Federal Reserve System). Activities that are financial in nature include securities underwriting, dealing and dealing,market making, sponsoring mutual funds and investment companies, insurance underwriting, and making merchant banking investments.banking.

TheUnder the BHC Act, Bank Merger Act, and other federal and state statutes regulateprior approval from the direct and indirect acquisitionBoard of depository institutions. The BHC Act requiresGovernors of the Federal Reserve System prior approvalis required in order for aany bank holding company to (i) acquire directlydirect or indirectly,indirect ownership or control of more than 5% or moreof the voting shares of any classbank, (ii) acquire all or substantially all of voting securities of a commercial bank or its parent holding company, and for a company other than a bank holding company to acquire 25% or more of any class of voting securitiesthe assets of a bank, or (iii) merge or consolidate with any other bank holding company. In AprilOn January 30, 2020, the Federal Reserve System adoptedissued a final rule codifying the presumptions used inthat revised its regulations related to determinations of whether a company has the ability to exercise a controlling influence over another company for purposes of the BHC Act, thereby expanding the number of presumptions for use in such determination and providing greater transparency on the types of relationships that the Federal Reserve System generally views as supporting a determination of control. UnderThe new rule became effective April 1, 2020.

Further, the Change in Bank Control Act of 1978 generally prohibits any person, or company may not acquire,acting directly or indirectly or in concert with other persons, from acquiring control of a bankcovered institution without providing at least 60 days prior written notice and receiving a non-objection fromto the appropriate federal banking agency. FDIC or upon receipt of written notice that the FDIC does not disapprove of the acquisition.

UnderOn September 29, 2021, the Bank Merger Review Modernization Act of 2021 was introduced in Congress to amend the prior approval ofcurrent bank merger processes and requirements under the appropriateFDIA. Among its provisions, the legislation would authorize the CFPB to deny bank merger applications if the new consolidated institution would not have adequate systems in place to ensure compliance with federal banking agency is required for insured depository institutions to merge or enter into purchase and assumption transactions.  In reviewing applications seeking approval of merger or purchase and assumption transactions, theconsumer laws. Other provisions would require federal banking agencies will consider, among other things,to perform a cost-benefit analysis and apply an enhanced competitive effects analysis for a proposed bank merger on the competitive effect and public benefitsapplicable banking markets as well as the performance of the transactions, the capital position of the combined banks, the applicant’s performance recordmerging institutions under the Community Reinvestment Act of 1977 (CRA). Following its introduction, the legislation was referred to committee and no further action thereon has occurred. Webster continues to monitor the status of this legislation to determine what impact, if any, its potential passage and entry into law may have on the Holding Company and Webster Bank.

Under the Basel III Capital Rules, Webster's assets, exposures, and certain off-balance sheet commitments and obligations are subject to risk weights used to determine risk-weighted assets. Risk weights can range from 0% for U.S. government securities to 1,250% for certain tranches of complex securitization or equity exposures. Risk-weighted assets serve as the base against which regulatory capital is measured, and are used to calculate Webster's and Webster Banks' minimum capital ratios of CET1 capital to total risk-weighted assets (CET1 risk-based capital), Tier 1 capital to total risk-weighted assets (Tier 1 risk-based capital), Total capital to total risk-weighted assets (Total risk-based capital), and Tier 1 capital to average tangible assets (Tier 1 leverage capital), as defined in the effectivenessregulations, which Webster is required to maintain. CET1 capital consists of common shareholders' equity less deductions for goodwill and other intangible assets, and certain deferred tax adjustments. At the time of initial adoption of the merging banksBasel III Capital Rules, Webster had elected to opt-out of the requirement to include certain components of accumulated other comprehensive income (AOCI) in combating money laundering.CET1 capital. Tier 1 capital consists of CET1 capital plus preferred stock. Total capital consists of Tier 1 capital and Tier 2 capital (as defined in the regulations). Tier 2 capital includes subordinated debt and the permissible portion of the ACL.

Section 165 of the Dodd-Frank imposesAct requires the Board of Governors of the Federal Reserve System to establish enhanced prudential standards onfor larger banking organizations. However,bank holding companies. On October 10, 2019, pursuant to the enactment of the EGRRCPA, makesthe Federal Reserve Board, along with other federal bank regulatory agencies, adopted two rules outlining tailored prudential standards allowing bank holding companies with less than $100total consolidated assets of $250 billion in assets,or less, such as Webster Financial Corporation, to be exempt from thecertain enhanced capital and liquidity prudential standards imposed under Section 165, including but not limited to, thecompany-run stress testing, capital planning, liquidity coverage ratio, and resolution planning and enhanced liquidity and risk management requirements, therein. Further, on October 15, 2019, EGRRCPA was amended by raising the applicability threshold for company-run stress test requirements for bank holding companies from $10 billion or more in assets to $250 billion or more in assets. As a result,among others. Although Webster Financial Corporation is relieved from the requirementno longer required to conduct company-run stress testing for itself and Webster Bank. However, while the federal banking agencies will not require company-run stress testing, the capital planning and risk management practices ofBank, the Company will continue to be reviewed through regular supervisory processes of the Federal Reserve System and the OCC. The Company will continuecontinues to perform certain stress tests internally and incorporateincorporates the economic models and information developed through its stress testing program into its risk management and businesscapital planning activities.

In addition, under a prior rule issued by the Federal Reserve Board that implemented Section 165 of the Dodd-Frank Act's enhanced prudential standards, certain publicly traded bank holding companies are required by Dodd-Frank,to establish a risk committee that is responsible for the oversight of enterprise risk management (ERM) practices and that meets other statutory requirements. The EGRRCPA raised the threshold for mandatory application of the risk committee requirement from publicly traded bank holding companies with more than $10 billion or more in total consolidated assets were subject to certain rules, including a requirement to establish a separate risk committee of independent directors to manage enterprise-wide risk. EGRRCPA subsequently increased the asset threshold for requiring a bank holding company to establish a separate risk committee of independent directors from $10 billion to $50 billion.billion or more. Notwithstanding the changesthis change implemented by EGRRCPA, the CompanyWebster has retainedmaintained its standing Risk Committee of the Board of Directors.Directors, which is comprised of at least three independent directors.

Federal Reserve System regulations require depository institutions to maintain cash reserves against theirits transaction accounts primarily interest-bearing and regular checking accounts.non-personal time deposits for the purposes of implementing monetary policy. The required cash reserves canreserve requirement must be satisfied in the form of vault cash and, if vault cash does not fully satisfy the required cash reserves, in the form ofis insufficient, by maintaining a balance maintained within an account at a Federal Reserve Banks (FRBs)Bank (FRB). The regulations requireFederal Reserve Act (FRA) authorizes different ranges of reserve requirement ratios depending on the amount of transaction account balances held at each depository institution. Pursuant to the FRA, a zero percent reserve requirement ratio shall be applied to total reservable liabilities that Webster maintain cash reserves against aggregatedo not exceed a certain amount, known as the reserve requirement exemption amount. In addition, transaction accounts in excessaccount balances maintained over the reserve requirement exemption amount and up to a certain amount, known as the low reserve tranche, may be subject to a reserve requirement ratio of not more than 3 percent (and which may be zero), and transaction account balances over the exempt amount.low reserve tranche may be subject to a reserve requirement ratio of not more than 14 percent (and which may be zero). The reserve requirement exemption and the low reserve tranche are both subject to adjustment on an annual basis, as applicable, by the Board of Governors of the Federal Reserve System generally makes annual adjustments to the tiered cash reserve requirements, however, effectiveSystem.

Effective March 26, 2020, they resetin response to the COVID-19 pandemic, the reserve requirement ratios on all net transaction accounts were reduced to zero to address liquidity concerns due to COVID-19.percent, thereby eliminating reserve requirements for all depository institutions. The annual indexation of the reserve requirement remains subject to adjustmentexemption amount and the low reserve tranche for 2021 was required by statute, but did not affect depository institutions' reserve requirements, which has remained at zero.

Further, as conditions warrant.

The Federal Home Loan Bank (FHLB) System provides a central credit facility for its member institutions. Webster Bank, isas a member of the FHLB, of Boston and is required to purchase and hold shares of FHLB capital stock in the FHLB for bothits membership and activity-based purposes. Capital stock requirements includeother activities in an amount equal to 0.35% of the aggregate principal amount of the Bank’sits unpaid residential mortgage loans and similar obligations at the beginning of each year, up to a maximum of $25 million, plus an amount that varies from 3.0% to 4.5% depending on the maturities of its FHLB advances, of which totaled approximately $0.1 billionthere were $11.0 million outstanding at December 31, 2020.2021. Webster Bank was in compliance with these requirements with aat December 31, 2021, and held an FHLB of Boston stock investment of $17.5 million at December 31, 2020.$11.3 million.

Section 616 of the Dodd-Frank Act and Federal Reserve System policy requiresregulations require that bank holding companies to actserve as a source of financial and managerial strength to their subsidiary banks. Section 616 of Dodd-Frank codified the requirement that bank holding companies act as a source of financial strength. As a result, Webster Financial Corporation is expected tobanks and commit resources to support Webster Bank, includingeach of their subsidiary banks. This support may be required at times when Webster Financial Corporation maythe Holding Company is not be in a financial position to provide such resources. Any capital loans byresources without adversely affecting its ability to meet other obligations. The Federal Reserve System may require a bank holding company to any ofmake capital injections into a troubled subsidiary bank and may charge the bank holding company with engaging in unsafe and unsound practices if it fails to commit resources to such a subsidiary bank, or if it undertakes actions that the Federal Reserve System believes might jeopardize the bank holding company's ability to commit resources to such subsidiary bank. Capital loans by banking holding companies to its subsidiary banks arewould be subordinate in right of payment to deposits and to certain other indebtednessdebts of suchthe subsidiary banks. The U.S. bankruptcy code provides that, inbank. In the event of a bank holding company’s bankruptcy, any commitment by thea bank holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank willwould be assumed by the bankruptcy trustee and entitled to a priority of payment.

In addition, under the National Bank Act, if theWebster Bank's capital stock of Webster Bank is impaired by losses or otherwise, the OCC is authorized to require payment of the deficiency by assessment upon the Holding Company. If the assessment is not paid within three months after receiving notice thereof, the OCC could order a sale of the Webster Bank stock held by Webster Financial Corporation to cover any deficiency.

The Capital Rules provide for a number of deductions from and adjustments to CET1 capital. These include, for example, the requirement that mortgage servicing assets, certain deferred tax assets (DTAs), and significant investments in non-consolidated financial institutions be deducted from CET1 capital to the extent that any one such category exceeds 10% of CET1 capital or all such items in the aggregate exceed 15% of CET1 capital.

In more serious cases,instances, enforcement actions may include (i) the issuance of directives to increase capital;capital, the issuance of formal and informal agreements;agreements, (ii) the imposition of civil monetary penalties;penalties, (iii) the issuance of a cease and desist order that can be judicially enforced;enforced, (iv) the issuance of removal and prohibition orders against officers, directors, and other institution affiliated parties;parties, (v) the termination of the insured depository institution’s deposit insurance;insurance, (vi) the appointment of a conservator or receiver for the insured depository institution;institution, and the enforcement of such actions through(vii) injunctions or restraining orders based upon a judicial determination that the FDIC, as receiver, would be harmed if such equitable relief was not granted.

Under federal law, transactionsTransactions between insured depository institutions and their affiliates are governed by Sections 23A and 23B of the Federal Reserve Act (FRA)FRA and Federal Reserve Regulation W. In a bank holding company context, at a minimum, the parent holding company of a national bank, and any companies whichthat are controlled by such parent holding company, are considered affiliates of the bank. Generally, sections 23A and 23B of the FRA are intended to protect insured depository institutions from losses arising from transactions with non-insured affiliates by (i) limiting the extent to which a bankan institution or its subsidiaries may engage in covered transactions with any one affiliate and with all affiliates of the bank in the aggregate, and (ii) requiring that all such transactions be on terms consistent with safesubstantially the same, or at least favorable, to the institution or subsidiary as those provided to a non-affiliate. The term covered transaction includes the making of loans, purchase of assets, the issuance of a guarantee, and sound banking practices.similar types of transactions. Certain covered transactions must be collateralized according to a schedule set forth in the statue.

Further,In addition, Section 22(h) of the FRA and its implementingFederal Reserve Regulation O restricts loans to directors, executive officers, and principal stockholders or insiders. UnderPursuant to Section 22(h), loans to insiders and their related interests may not exceed, together with all other outstanding loans to such persons and affiliated entities, the institution’s total capital and surplus. Loans to insiders above specified amounts must receive the prior approval of the Board of Directors. Further, under Section 22(h) of the FRA, loans to directors, executive officers, and principal stockholders must be made on terms substantially the same as offered in comparable transactions to other persons, except that such insiders may receive preferential loans made under a benefit or compensation program that is widely available to the bank’sinstitution's employees and does not give preference to the insider over the employees. Further, loans to insiders and their related interests may not exceed, together with all other outstanding loans to such persons and affiliated entities, the institution’s total capital and surplus. Loans to insiders above specified amounts must receive prior approval from the Company's Board of Directors. Section 22(g) of the FRA places additional limitations on loans to executive officers.

The Dodd-Frank Act centralized the responsibility for consumer financial protection by creatingthrough the establishment of the CFPB, an independent agency charged with responsibility for implementing, enforcing, and examining compliance with federal consumer financial protection laws. The CompanyAs an insured depository institution with more than $10 billion in total assets, Webster Bank is subject to supervision by the CFPB. Webster is subject to a number of federal and state laws designed to protect borrowers and promote lending, including, but not limited to, various sectors of the economy and population. These laws include the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Debt Collection Procedures Act, the Truth in Lending Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Practices Act, various state law counterparts, and the Consumer Financial Protection Act of 2010, which is part of Dodd-Frank.the Dodd-Frank does not preventAct. The Dodd-Frank Act permits states from adopting stricterto adopt more stringent consumer protection standards. State regulation of financial productslaws and potential enforcement actions could also adversely affectallows state attorneys general to enforce the Company’s business, financial condition or operations.consumer protection rules issued by the CFPB.

The ability-to-repay provision ofIn addition, the Truth in Lending Act requires creditors to make a reasonable, good faith determinations that borrowers are abledetermination of a consumer's ability to repay their mortgages beforemortgage loans prior to extending the credit based on a number ofthem credit. In making ability-to-repay determinations, creditors must consider numerous underwriting factors, as prescribed therein, and consideration of financial information about the borrower from reasonablyuse reliable third-party documents. Under Dodd-Frank andrecords to verify the information they use to evaluate such factors. Alternatively, the creditor can originate qualified mortgage provisions of the Truth in Lending Act, commonly known as the Qualified Mortgage (QM) Rule, loans meeting the definition of qualified mortgagemortgages (QMs), which are entitled to a presumption that the lendercreditor making the loan satisfied the ability-to-repay requirements. A QM is generally defined as a loan without negative amortization, interest-only payments, balloon payments, or terms exceeding 30 years. The presumptionconsumer is also required to have a conclusive presumption/total debt-to-income ratio that is less than or equal to 43%. Further, the Truth in Lending Act provides a safe harbor for prime loans meeting QM requirementsthat satisfy the definition of a qualified mortgage and are not higher-priced and a refutablerebuttable presumption for higher-priced/subprime loans meetinghigher-priced mortgage loans.

On December 10, 2020, the CFPB issued two final rules amending the ability-to-repay and QM requirements.rules of the Truth in Lending Act. The QM definition incorporatesfirst replaces the statutory requirements, such as not allowing negative amortization or terms longer than 30 years. The QM Rule also adds an explicit maximumexisting 43% debt-to-income ratio for borrowerslimit in the General QM definition with price-based thresholds, among other changes, and the second creates a new category of QMs, called the Seasoned QM. A loan is eligible to become a Seasoned QM if the loan meets certain product restrictions at the end of the 36-month seasoning period, including (i) is secured by a first lien, (ii) has a fixed rate, (iii) has regular, substantially equal periodic payments that are fully amortizing, does not allow negative amortization, and does not have a balloon payment, (iv) the term does not exceed 30 years, and (v) is not a higher-priced mortgage. The first rule has a mandatory compliance date of October 1, 2022. The second rule applies to meetcovered transactions for which institutions received an application after March 1, 2021, however due to the QM definition, though some mortgages36-month seasoning period, there was no immediate impact to Webster.

In addition, on December 7, 2021, the CFPB issued a final rule amending Regulation Z, which implements the Truth in Lending Act, to address the anticipated sunset of LIBOR for consumer financial products, which is expected to be discontinued for most U.S. Dollar (USD) tenors in June 2023. Specifically, the CFPB is amending: (i) the open-end and closed-end provisions to provide examples of replacement indices for LIBOR indices that meet GSE, FHA,certain Regulation Z standards, (ii) to permit creditors for home equity lines of credit and VA underwritingcard issuers for credit card accounts to transition existing accounts that use a LIBOR index to a replacement index on or after April 1, 2022, if certain conditions are met, (iii) to address change-in-terms notice for home equity lines of credit and credit card accounts and how they apply to accounts transitioning away from using a LIBOR index, and (iv) to address how the rate reevaluation provisions applicable to credit card accounts apply to the transition from using a LIBOR index to a replacement index.

The Commodity Futures Trading Commission and SEC jointly issued final rules and guidelines, may,implementing provisions of the Dodd-Frank Act, that required certain regulated entities to establish programs to address risks of identity theft. In accordance with these rules, financial institutions and creditors are required to develop and implement a written identity theft prevention program designed to detect, prevent, and mitigate identity theft in connection with certain existing accounts or the opening of new accounts. The rules include guidelines to assist entities in the formulation and maintenance of programs that would satisfy the requirements of the rules. Further, the rules established special requirements for a period not to exceed seven years, meet the QM definition without beingany credit and debit card issuers that are subject to the 43% debt-to-income limits. The CFPBCommodity Futures Trading Commission and SEC jurisdictions to assess the validity of notifications of changes of address under certain circumstances. Webster has an Identity Theft Prevention Program in place, which is expected to continue to issue and amend rules implementingapproved by the consumer financial protection laws, which may impact Webster Bank’s operations.Board of Directors, satisfying its compliance with these requirements.

Webster is subject to federal laws, including the Gramm-Leach-Bliley Act and certain state laws and regulations containing consumer privacy and data protection provisions. These provisions limitThe Gramm-Leach-Bliley Act, along with the abilityimplemented regulations issued by the federal banking regulatory agencies, govern the treatment of banks and other financial institutions to disclose nonpublic personal information about consumers to affiliated and non-affiliated third parties and limit the reuse of certain consumer information received from non-affiliatedby financial institutions. These provisions require noticeSubject to certain exceptions, the Financial Privacy Rule of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certainthe Gramm-Leach-Bliley Act states that financial institutions are prohibited from disclosing nonpublic personal information about a consumer to affiliates or non-affiliatednonaffiliated third parties, by meansunless the institution satisfies various notice and opt-out requirements and the consumer has not elected to opt out of opt-out or opt-in authorizations.the disclosure. Regardless as to whether a financial institution shares nonpublic personal information, the institution must provide notice of its privacy policies and practices to its consumers, and must follow redisclosure and reuse limitations on any nonpublic personal information it receives from a nonaffiliated financial institution.

TheIn addition, the Safeguards Rule of the Gramm-Leach-Bliley Act requires that each financial institutions implementinstitution develops, implements, and maintains a comprehensive written information security programsprogram that includeis inclusive of certain prescribed elements and contains appropriate administrative, technical, and physical safeguards to protect consumer information. FederalThe federal banking regulatory agencies have also adopted guidelines for establishing information security standards and programs to protect such information. These guidelines, alonginformation, with related regulatory materials, increasinglyan increased focus on risk management and processes related to information technology, and the use of third-parties inthird-parties. The expectation from the provision of financial products and services. The federal bankbanking regulatory agencies expectis that financial institutions to establishhave established lines of defense and to ensure that their risk management processes address the riskrisks posed by compromised customer credentials, and also expectthat the financial institutions to maintaininstitution has sufficient business continuity planning processes to ensure rapid recovery, resumption, and maintenance of the institution’s operations after a cyber-attack.

Further, pursuantPursuant to interpretive guidance issued under the Gramm-Leach-Bliley Act and certain state data breach notification laws, financial institutions are required to notify customers of security breaches that result in unauthorized access to their non-publicnonpublic personal information. InFurther, on November 18, 2021, the Board of Governors of the Federal Reserve System, the OCC, and the FDIC issued a final rule that requires a banking organization to notify its primary regulator of certain types of computer security incidents that result in harm to the confidentiality, integrity, or availability of an information system or the information that the system processes, stores, or transmits, as soon as possible and no later than 36 hours after the banking organization determines that a notification incident has occurred. The final rule also requires a bank service provider to notify each affected banking organization customer as soon as possible when the bank service provider determines that is has experienced a computer-security incident that has caused, or is reasonably likely to cause, a material service disruption or degradation for four or more hours. The final rule becomes effective April 1, 2022, and compliance with the final rule is required by May 1, 2022.

Back on October 19, 2016, the federal bank regulatory agencies issuedBoard of Governors of the Federal Reserve System, the OCC, and the FDIC approved an advance notice of proposed rulesrulemaking inviting comment on a set of potential enhanced cybersecurity risk-management and resilience standards that would apply to very large financial institutions and interconnected entities under their supervision, as well as to services provided by third parties to these institutions. TheAlthough the comment period for these proposed rules hashad since closed, and a final rule has not yet been published. Althoughpublished, the proposed rules wouldwere considered to apply only to bankdepository institutions and depository institution holding companies and banks with total consolidated assets of $50 billion or more, in total consolidated assets, these rules could influence the federal bank regulatory agencies’ expectations and supervisory requirements for information security standards and cybersecurity programs of financial institutions with less than $50 billion in total consolidated assets, such as the Company.which includes Webster effective February 1, 2022.

The Federal Deposit Insurance ActFDIA provides that, in the event of the liquidation or other resolution of an insured depository institution, including the Bank, the claims of depositors of the institution including(including the claims of the FDIC as subrogee of insured depositorsdepositors) and certain claims for administrative expenses of the FDIC as a receiver will have priority over other general unsecured claims against the institution. If an insured depository institution fails, claims of insured and uninsured depositors, along with claims of the FDIC, willwould have priority in payment ahead of unsecured, non-deposit creditors, including the parent bank holding company,Holding Company, with respect to any extensions of credit they have made to such insured depository institution.

The FDIC’sstandard deposit insurance coverage limit is $250,000 per depositor, per insuredFDIC-insured bank, for each account ownership category. Substantially all of the deposits ofThe Federal Deposit Insurance Fund is funded mainly through quarterly assessments on insured depository institutions, such as Webster Bank, are insuredand provides insurance coverage for certain deposits up to applicable limits by the DIF of the FDIC and are subject to deposit insurance assessments to maintain the DIF.this maximum amount.

The Bank’s quarterlyWebster Bank's assessment is calculated usingin accordance with the FDIC’sFDIC's standardized risk-based methodology by multiplying its assessment methodology, determined by the FDIC, which multiplies the Bank’s assessment baserate by its assessment rate.base, which are determined and paid each quarter. The assessment base is defined asequals the Bank's average consolidated total assets less the average tangible equity ofduring the Bank. The assessment period. As a large bank, or generally one with $10 billion or more in assets, Webster Bank is assigned an individual rate is based on measures of the institution’s capitala scorecard, which combines CAMELS (capital adequacy, asset quality, management, earnings, liquidity, and sensitivity to market risk, commonly known as CAMELSsensitivity) component ratings, which are certain financial measures used to assess an institution’smeasure a bank's ability to withstand asset-related stress and funding-related stress, and a measure of loss severity that estimates the relative magnitude of potential losses to the FDIC in the event of the Bank’s failure. The FDIC also hasbank's failure, to produce a score that is then converted to an assessment rate. Assessment rates could be subject to adjustment by the ability to make discretionary adjustments to the baseFDIC. For instance, assessment rate to reflect idiosyncratic quantitativerates decrease for issuance of long-term unsecured debt, including senior unsecured debt and qualitative risk factorssubordinated debt, increase for holdings of long-term unsecured or subordinated debt issued by other banks, and increase for significant holdings of brokered deposits for large banks that are not captured in the FDIC’s standardized risk-based assessment methodology.well-rated or not well-capitalized.

Under the Federal Deposit Insurance Act,FDIA, the FDIC may terminate a depository institution's deposit insurance upon a finding that the institution's financial condition is unsafe or unsound, or that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order, or condition imposed by the FDIC. Webster’s management is not aware of any practice, condition,violation, or violationcondition that might lead to the termination of its deposit insurance.

The Dodd-Frank requiredAct requires the federal bankingbank regulatory agencies and the SEC to establish joint regulations or guidelines for specified regulated entitiescovered financial institutions with at least $1 billion in total consolidated assets, which includesincluding the Holding Company and Websterthe Bank, prohibitingto prohibit incentive-based payment arrangements that encourage inappropriate risks by providing an executive officer, employee, director, or principal shareholder with excessive compensation, fees, or benefits that could lead to a material financial loss to the entity. The federal banking agencies and the SECinstitution. A proposed regulationsrule was issued in 2016, which havehas not yet been finalized. If the regulationsrules are adopted in the form initially, proposed in 2016, they will restrict the manner in which executive compensation is presently structured.

Webster Bank has a responsibility under the CRA as implemented by OCC regulations to help meet the credit needs of its communities, including low and moderate-income neighborhoods. The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution’s discretion to develop the types of products andor services that it believes are best suited to its particular community. TheIn connection with its examination, the OCC examinesassesses Webster Bank’s record of compliance with the CRA. In addition, the Equal Credit Opportunity Act and the Fair Housing Act prohibit discrimination in lending practices on the basis of characteristics specified in those statutes. WebsterThe Bank’s failure to comply with the provisions of the CRA could, at a minimum, result in regulatory restrictions on its activities, andas well as the activities of Webster Financial Corporation. WebsterWebster. Further, the Bank’s failure to comply with the Equal Credit Opportunity Act and the Fair Housing Act could result in enforcement actions against it by the OCC, as well as other federal regulatory agencies, including the CFPB and the Department of Justice. Webster Bank’s latest OCCBank received a CRA rating was Outstanding.

On December 17, 2019,June 5, 2020, the OCC and the FDIC issuedadopted a joint notice of proposed rulemakingfinal rule to strengthen and modernize the regulations implementingCRA by clarifying and expanding the CRA. The rulemaking was intended to (i) clarify which activities that qualify for CRA credit, (ii) updateupdating where activities count for CRA credit, (iii) createcreating a more transparentconsistent and objective method for measuringevaluating CRA performance, and (iv) provideproviding for more transparent, consistent,timely and timelytransparent CRA-related data collection, record keeping,recordkeeping, and reporting. On May 20,The final rule took effect on October 1, 2020, and Webster Bank was required to comply with several of the more material components by January 1, 2023. However, on December 14, 2021, the OCC issued itsadopted a final rule that rescinded the June 2020 CRA rule (discussed above) and replaced it with a rule that is largely based on the 1995 CRA modernization in keeping with these purposes. However, at the same time, the FDIC announced its withdrawal from the joint rulemaking withrules, as amended, that were issued by the OCC, citing the impactBoard of Governors of the COVID-19 pandemic as the reason for its withdrawal. As a consequence, the OCC’sFederal Reserve System, and FDIC. This final rule only applies to national banks such as Webster Bank. Webster Financial Corporation and Webster Bank do not anticipate anysavings institutions, and is intended to facilitate the ongoing interagency work to modernize the CRA regulatory framework and promote consistency for all insured depository institutions. All banks are required to comply with the final rules by January 1, 2022, except for the public file and public notice requirements, which have a compliance date of April 1, 2022. There was no adverse impact to the Bank's CRA compliance as a result ofunder the OCC's final rule, but Webster will continue to monitor its developments and assess the impact if any, of further changes, if any, to the CRA regulations proposed by the FDIC andOCC, Board of Governors of the Federal Reserve System.System, and FDIC.

Under Title III of the USAUniting and Strengthening America by Providing Appropriate Tools Requirement to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act,Act), all financial institutions are required to take certain measures to identify their customers, prevent money laundering, monitor customer transactions, and report suspicious activity to U.S. law enforcement agencies. Financial institutions also are required to respond to requests for information from federal banking agencies and law enforcement agencies. Information sharing among financial institutions for the above purposes is encouraged by an exemption granted to complying financial institutions from the privacy provisions of the Gramm-Leach-Bliley Act and other privacy laws. Financial institutions that hold correspondent accounts for foreign banks or provide private banking services to foreign individuals are required to take measures to avoid dealing with certain foreign individuals or entities, including foreign banks with profiles that raise money laundering concerns, and are prohibited from dealing with foreign “shell banks” and persons from jurisdictions of particular concern. The primary federal banking agencies and the Secretary of the Treasury have adopted regulations to implement several of these provisions. All financial institutions also are required to establish internal anti-money laundering programs. The effectiveness of a financial institution in combating money laundering activities is a factor to be considered in any application submitted by the financial institution under the Bank Merger Act. Webster has in place a Bank Secrecy Act and USA PATRIOT Act compliance program and engages in very few transactions of any kind with foreign financial institutions or foreign persons.

The United States government has imposedOffice of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury is responsible for administering economic sanctions that affect transactions with designated foreign countries, nationals,nations, and others. These are typically known as the “OFAC” rules based on their administration by the U.S. Treasury Department Office of Foreign Assets Control. The Office of Foreign Assets Control-administeredOFAC-administered sanctions targeting countries take many different forms. Generally, theyforms, and generally contain one or more of the following elements: (i) restrictions on trade with or investment in a sanctioned country, including prohibitions against direct or indirect imports from and exports to a sanctioned country and prohibitions on U.S. persons engaging in financial transactions relating to making investments in, or providing investment-related advice or assistance to, a sanctioned country; and (ii) a blocking of assets in which the government or specially designated nationals of the sanctioned country have an interest, by prohibiting transfers of property subject to U.S. jurisdiction (including property in the possession or control of U.S. persons). OFAC also publishes lists of persons, organizations, and countries suspected of aiding, harboring, or engaging in terrorist acts, known as Specially Designated Nationals and Block Persons. Blocked assets (property(i.e., property and bank deposits) cannot be paid out, withdrawn, set off, or transferred in any manner without a license from the Office of Foreign Assets Control.OFAC. Failure to comply with these sanctions could have serious legal and reputational consequences.

FederalThe Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) implemented a broad range of corporate governance and state legislaturesaccounting measures to increase corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies, and to protect investors by improving the accuracy and reliability of disclosures under federal securities laws. We are subject to Sarbanes-Oxley because we are required to file periodic reports with the SEC under the Securities and Exchange Act of 1934. Among other things, Sarbanes-Oxley and/or its implementing regulations have established new membership requirements and additional responsibilities for our audit committee, imposed restrictions on the relationship between us and our outside auditors (including restrictions on the types of non-audit services our auditors may introduce legislationprovide to us), imposed additional responsibilities for our external financial statements on our Chief Executive Officer and Chief Financial Officer, expanded the disclosure requirements for our corporate insiders, required our management to evaluate our disclosure controls and procedures and our internal control over financial reporting, and required our auditors to issue a report on our internal control over financial reporting.

Webster defines risk as the potential that events, expected or unexpected, may have an adverse effect on its earnings, capital, or enterprise value. Webster maintains a structured ERM framework that provides an integrated, forward-looking approach to identifying, prioritizing, and managing key risk categories across the organization, including strategic, financial (treasury and accounting), information, credit, operational, compliance, legal, and reputational risk.

Risk identification is a continuous process and occurs at the transaction, portfolio, and enterprise levels. Approaches used to identify risk include workshops, interviews, process analysis, key risk indicators, risk assessment and data analysis. Identified risks are assessed based on qualitative and quantitative factors to understand the likelihood that such events will occur and the degree to which they will impact Webster’s ability to achieve its strategic and business objectives if they occur. Risk assessments, which are performed by the financial services industry. In addition, federal banking agencies may introduce regulatory initiatives that are likelyfirst or second line of defense functions, evaluate inherent risk (likelihood and impact) and existing controls (control environment) to impact the financial services industry, generally. Such initiatives may include proposals to expand or contract the powers of bank holding companies and/or depository institutions or proposals to substantially change the financial institution regulatory system. Such legislation could change banking statutes and the operating environment of the Company in substantial and unpredictable ways. If enacted, such legislation could increase or decrease the cost of doing business, limit or expand permissible activities, or affect the competitive balance among banks, savings associations, credit unions, and other financial institutions. The Company cannot predict whether any such legislation will be enacted, or, if enacted, the effect that it or any implementing regulations would have on the financial condition or results of operations of the Company. A change in statutes, regulations, or regulatory policies applicable to Webster or any of its subsidiaries could have a material effect on the business of the Company.arrive at residual risk.

Webster has established operating and oversight structures including policies, processes, people, and control/oversight systems that support risk-related decision making designed to ensure appropriate authority, accountability, independence, and clarity of roles and responsibilities. The Board of Directors oversees Webster's strategic and financial plan.

The Chief Financial Officer is responsible for overseeing market, liquidity, and capital risk management activities. The Chief Information Officer is responsible for overseeing information security and technology risk programs. The General Counsel is responsible for overseeing legal risk activities. Webster’s Enterprise Risk Management Committee (ERMC) was formed to support the design and execution of the risk management program and, which is chaired by the Chief Risk Officer, is the management committee responsible for overseeing Webster's risk management process, including monitoring the severity, direction, and is comprisedtrend of risks relative to business strategies and market conditions, assessing management’s ability to manage and mitigate risks, and ensuring implementation of Webster's executive officersrisk appetite and seniorstrategy. It also directly oversees strategic risk officers.and reputational risk, and reviews identified emerging risks to Webster. The ERMC reports itshas six subcommittees: (i) the Operational Risk Management Committee, (ii) the Credit Risk Management Committee, (iii) the Asset Liability Committee, (iv) the Information Risk Committee, (v) the Regulatory Oversight Committee, and (vii) the Litigation Risk Management Committee. The ERMC subcommittees aggregate and report risk information using established taxonomies and rating methodologies, which categorize risk data based on shared characteristics in order to assess risks on a common scale, and regularly report and submit their findings to the ERMC and the Risk Committee of the Board.Board of Directors.

Strategic Risk representsrisk is comprised of (i) strategic development risk, or the inability to define the vision, understand the environment, or formulate a strategy, as well as the types and amount of risk of ineffectiveinherent in carrying out the strategy selection and execution.achieving the desired business objectives, and (ii) strategic execution risk, or the inability to translate strategy from theoretical into action from the failure to allocate resources to sustain the strategy and/or the failure to adapt to changes. Webster maintains a comprehensive and continuousan active strategic reviewplanning process that informsis long-term oriented and continuously refined to respond to changes in the long-rangeoperating environment. ERM and the line of business risk managers, in consultation with the respective executives, perform an annual long range plan assessment of Webster's strategic choices and initiatives in order to understand and communicate to the Board of Directors the impact on Webster's risk profile from management's execution of the long range plan. Webster's long-range plan, which is developed by the Operating Management Committee consisting ofto align with Webster's executive officers, addresses strategic risks, and is aligned with our risk appetite, capital plan and liquidity requirements. Therequirements, is subject to annual review and approval by the Board reviews the impact of Directors, as well as significant strategic choices onactions, such as mergers and acquisitions or key strategic partnerships, as they arise.

The Asset Liability Committee (ALCO), a subcommittee of ERMC, is responsible for the oversight, management, and strategic direction of interest rate risk, liquidity, capital, balance sheet composition (in conjunction with the Credit Risk Management Committee), and pricing. The Treasurer serves as the chair of ALCO, or the Asset/Liability Management Manager in the absence of the planTreasurer. Other members include the Chief Executive Officer, Chief Financial Officer, Chief Risk Officer, Director of Financial Planning and updatesAnalysis, Wholesale Bank Manager, Funding Manager, and the BoardHead of Commercial Bank.

The Information Risk Committee, a subcommittee of ERMC, is responsible for overseeing information technology and security risk, including mergers/acquisitionstechnology risk and partnershipscybersecurity, and for reviewing the development, implementation, and maintenance of Webster’s Information Security Program and its related comprehensive set of technology policies, which align with key strategic partners are reviewedregulatory guidance and approved byindustry standards. The Director of Information Technology serves as the Board. Atchair of the business level, processes are in place to understandInformation Risk Committee, and its members include the strategic risk impact of new, expanded or modified productsChief Information Officer, Chief Risk Officer, and services and to provide appropriate level of review and approval.Chief Information Security Officer.

The Credit Risk Management Committee, (CRMC) meets regularly to review keya subcommittee of the ERMC, is responsible for oversight and management of credit risk topics, issues, portfoliosacross the organization at Webster. It qualitatively and policies. The CRMC reviews Webster’squantitatively assesses credit risk scorecard, which covers keyand provides a point of view regarding the overall risk indicatorsprofile and limits established as partasset mix of the Company’sportfolio to support strategic decision making. It also shares credit risk appetite framework.information as it relates to business line strategy, policy, practices, and controls. The CRMC is chaired by the Chief Credit Officer and includes executives and senior managers fromserves as the first and second lines of defense. Important findings regarding credit quality and trends within the loan and investment portfolios are regularly reported to the ERMC and Risk Committeechair of the BoardCredit Risk Management Committee, and its members include both risk and line of Directors.

Compliance risk is defined as the risk of non-compliance with banking laws and regulations, including new regulations and changes to existing regulations, and the associated harm to consumers and customers. The Regulatory Oversight Committee, a subcommittee of the ERMC, is responsible for overseeing Webster's compliance with applicable laws and regulations, including but not limited to, anti-money laundering, fair and responsible banking, lending, privacy, deposit, and investments. The Director of Corporate Compliance serves has the developmentchair of the Regulatory Oversight Committee, and implementation of Webster’s operational risk management framework. The Operational Risk Management Committee regularly reports its findings to the ERMC and Risk Committee/ Board of Directors.

The General Counsel chairsLitigation Risk Management Committee, a subcommittee of the ERMC, oversees Webster's litigation risk management. The primary responsibility of the Litigation Risk Management Committee which is comprised of executive officersto collect and key senior managers, and overseesreview information on all aspects of legal risk including the review of material pending litigation litigation-relateddeemed to present material risk to Webster as a whole or any of its constituent entities. Other responsibilities include reviewing and making recommendations regarding the litigation related standards and procedures at Webster to ensure such do not increase the magnitude for likelihood of litigation risk, as well as identifying, monitoring, and reporting on emerging trends in litigation and developments in the law relating to Webster's conduct of business. TheGeneral Counsel serves as the chair of the Litigation Risk Management Committee, regularly reportsand its findingsmembers include the Chief Risk Officer, Chief Accounting Officer or Controller, and Chief Financial Officer.

Accordingly, Webster has set up a governance structure to ensure risks and issues are appropriately discussed and resolved. This involves a senior management level working group, an executive management level Steering Committee, and regular updates to the ERMC and the Risk Committee/Board of Directors.

measures are monitoredWebster has adopted the SOFR rate and related conventions associated with the product line as the LIBOR replacement index and ARRC recommended fallback language for impacted contracts, as well as the recommended spread adjustments for legacy loans and/or derivative products. The Bank continues to work with applicable vendors to ensure risk issuesthe impacted loan, security, and derivative applications are mitigatedupdated to support the processing of SOFR-based products and related conventions over a timeline consistent with regulatory guidance and Webster’s transition plan. The Bank began offering SOFR-based loans and derivatives to its customers in October 2021. As of January 1, 2022, Webster no longer originates new contracts using any LIBOR index, as defined by regulatory guidance.

Webster files reports with the SEC, and makes available, free of charge, on its internet website (www.wbst.com) its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or resolved. The Chief Audit Executive reports functionallyfurnished pursuant to Section 13(a) or 15(d) of the

ITEM 1A. RISK FACTORS

Investment in ourWebster's securities involves risks and uncertainties, some of which are inherent in the financial services industry and others of which are more specific to our business. The discussion below addresses the material risks and uncertainties, of which we are currently aware, that could adversely affect our business, and impact results of operations, or financial condition. Before making an investment decision, you should carefully consider the risks and uncertainties described below together with all of the other information included or incorporated by reference in this report. If any of thethese events or circumstances described in the following risks factors actually occurs, our business, results of operations, or financial condition could be harmed assignificantly impacted.

Although Webster consummated its merger with Sterling on January 31, 2022, we expect integration of systems, operations, and personnel to continue over the next several years. The successful integration of Webster and Sterling will depend, in part, on our ability to combine and manage the businesses of Webster and Sterling in a result.manner that permits growth opportunities, including enhanced revenues and revenue synergies, operating efficiencies, an expanded market reach, and that does not materially disrupt the existing customer relationships of Webster or Sterling nor could result in decreased revenues due to loss of customers. If we are not able to successfully achieve these objectives, the anticipated benefits of the merger may not be fully realized or at all, or may take longer to realize than expected.

Risks RelatingFailure to achieve these anticipated benefits could also result in increased costs, decreases in the Economy, Financial Markets,amount of expected revenues, and Interest Rates

Webster has incurred and will continue to incur significant, nonrecurring costs in connection with developmentsits merger with Sterling, as there are a large number of processes, policies, procedures, operations, technologies, and systems that need to be integrated. In addition, the merger may increase the Company's compliance and legal risks, including increased litigation or regulatory actions such as fines or restrictions, related to business practices or operations of the combined business.

While the Company has planned that a certain level of expenses will be incurred, there are many factors beyond Webster’s control that could affect the total amount or timing of integration expenses. Further, many of the expenses that will be incurred are, by nature, difficult to estimate accurately and could, particularly in the current economicnear term, exceed the anticipated cost savings that Webster expects to achieve. Overall, the amount and market environment:

On occasion, we may implement new lines of business or offer new products and services within existing lines of business. There are substantial risks and uncertainties associated with these efforts, particularly in instances where markets are not worsen. Difficult economic conditionsfully developed. In developing and marketing new lines of business and/or new products and services, we may invest significant time and resources. Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved, and price and profitability targets may not prove feasible. External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences may also impact the successful implementation of a new line of business and/or a new product or service. Further, any new line of business and/or new product or service could adversely affecthave a significant impact on the effectiveness of our system of internal controls. Failure to successfully manage these risks in the development and implementation of new lines of business and/or new products or services could have a material adverse effect on our business, results of operations, and financial condition.

A significant percentage of our loans are secured by real estate, primarily across the Northeast. Our success depends, in large part, upon economic conditionson our ability to attract and retain skilled people. Competition for the best people in Southern New Englandmost activities in which we engage can be intense, and our other geographic markets. These areas have been and continuewe may not be able to be affected byhire sufficiently skilled people or retain them. In addition, the transition to an increased remote work environment, which we believe is likely to survive the COVID-19 pandemic including Connecticut, where we are headquartered,for many organizations, may exacerbate the challenges of attracting and New York, Massachusetts, Rhode Island, and Wisconsin, in which we have significant operations. Continued difficult economic conditions or further adverse changes in such localretaining skilled employees as job markets could reduce our growth in loans and deposits, increase problem loans and charge-offs, and otherwise negatively affect our performance and financial condition.

Further, our business is primarily relationship-driven, in that many of our investments. Refer to Asset/Liability Management and Market Risk section in the Management’s Discussion and Analysis within this document for more information regarding the impactkey employees have extensive customer relationships. The loss of the interest rate environment.

We face substantial competition in all areas of our operations from a variety of different competitors, both within and beyond our financial markets, many of which are larger and may have more financial resources than we do. Such competitors primarily include national, regional, community, and communityinternet banks within the various markets in which we operate. We also face competition from many other types of financial institutions, including without limitation, savings and loans, credit unions, non-bank health savings account trustees, finance companies, brokerage firms, insurance companies, online lenders, factoring companies, and other financial intermediaries. Some of the financial servicesthese organizations with which the Company competes are not subject to the same degree of regulation as is imposed on bank holding companies and federally insured depository institutions, which may give them certain advantages over the Companygreater flexibility in accessing funding and in providing various services. Other organizations are larger than we are and may be able to achieve greater economies of scale or offer a broader range of products and services, or better pricing on products and services, than we can offer.

The financial services industry could become even more competitive as a result of legislative regulatory, and technologicalregulatory changes, and continued consolidation. TechnologyIn addition, as customer preferences and expectations continue to evolve, technology has lowered barriers to entry and has made it possible for non-banks to offer products and services traditionally provided by banks. Additionally, dueThe financial services industry also faces increasing competitive pressure from the introduction of disruptive new technologies, such as blockchain and digital payments, often by non-traditional competitors and financial technology companies. Among other things, technology and other changes are allowing customers to their size, many competitors may be able to achieve economiescomplete financial transactions that historically have involved banks at one or both ends of scale and, as a result, may offer a broader range of products and services than we do, as well as better pricing for those products and services.the transaction.

Failure to perform in any of these areas could significantly weaken our competitive position, which could adversely affect our growth and profitability, whichand in turn, could have a material adverse effect on our financial condition and results of operations.

The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. These new technologies may be superior to, or render obsolete, the technologies currently used in our products and services. Our future success depends, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in our operations. Many of our competitors, because of their larger size and available capital, have substantially greater resources to invest in technological improvements. Developing or acquiring new technologies and incorporating them into our products and services may require significant investment, take considerable time, and ultimately may not be successful. We cannot predict which technological developments or innovations will become widely adopted or how those technologies may be regulated. We also may not be able to effectively market new technology-driven products and services to our customers. Failure to successfully keep pace with and adapt to technological change affecting the financial services industry could have a material adverse impact on our business and, in turn, our financial condition and results of operations.

Our HSA Bank division relies on partnerships with various health insurance carriers and other partners to maximize our distribution model. In particular, health plan partners who provide high deductible health plan options are a significant source of new and existing health savings accountHSA holders. If these health plan partners or other partners choose to align with our competitors or develop their own solutions, our business, financial condition, and results of operations business, and prospects could be adversely affected.

The failureU.S. business environment and financial markets have experienced volatility in recent years and may continue to adaptdo so in the foreseeable future. The prolonged low-interest rate environment resulting from the COVID-19 pandemic, despite a recovering economy, has presented a challenge for the financial services industry. There can be no assurance that economic conditions will return to these changes could negatively impact ourpre-pandemic levels or will not further worsen.

Financial services industries continually experience rapid technological change with frequent introductionsThe success of new technology-drivenour business depends on the general economic conditions of the significant markets in which we operate, particularly Connecticut, Massachusetts, Rhode Island, New York, and New Jersey. Difficult economic conditions or adverse changes in such local markets, whether caused by inflation, recession, unemployment, changes in housing or securities markets, or other factors, could reduce demand for our loans and deposits, increase problem loans and charge-offs, cause a decline in the value of collateral securing loans, and otherwise negatively affect our performance and financial condition.

Our financial condition and results of operations are significantly affected by changes in market interest rates. To a large degree, our consolidated earnings are dependent on net interest income, which is the difference between the interest income earned from our interest-earning assets and the interest expense paid on our interest-bearing liabilities. Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions, the competitive environment within our markets, consumer preferences for specific loan and deposit products, and services. An effective usepolicies of technology can increase efficiency, enable financial institutions to better serve customers,various governmental and reduce costs. However, some new technologies needed to compete effectively resultregulatory agencies, in incremental operating costsparticular the FRB. Changes in monetary policy, including changes in interest rates, could influence the amount of interest we receive on loans and capital investments. Our future success depends in part uponsecurities, the amount of interest we pay on deposits and borrowings, our ability to addressoriginate loans and obtain deposits, and the needsfair market value of our customers by using technology to providefinancial assets and liabilities.

Increased interest rates may decrease demand for interest-rate based products and services, including loans and deposits, and may it more difficult for borrowers to meet obligations under variable or adjustable-rate loans and other debt instruments. Decreased interest rates often result in increased prepayments on loans and securities, as borrowers refinance their loans to reduce borrowing costs. Under these circumstances, we are further subject to reinvestment risk to the extent that will satisfy customer demands,we are unable to reinvest the cash received from such prepayments that have interest rates comparable to pre-existing loans and securities. Moreover, if the rates paid on interest-bearing liabilities increase at a faster rate than the yields received on interest-earning assets, our net interest income, and therefore earnings, could be adversely affected. Conversely, earnings could also be adversely affected if the yields received on interest-earning assets fall more quickly than the rates paid on interest-bearing liabilities.

The Holding Company and Webster Bank are subject to capital and liquidity requirements and standards imposed as well asa result of the Dodd-Frank Act (as amended by EGRRCPA) and the U.S. Basel III Capital Rules. Regulators have and may implement changes to create additional efficienciesthese standards. If we fail to meet the minimum capital adequacy and liquidity guidelines and other requirements, our business activities, including lending and our ability to expand, either organically or through acquisitions, could be limited. It could also result in operations. Manyus being required to take steps to increase our regulatory capital that may be dilutive to shareholders or limit our ability to pay dividends, or sell or refrain from acquiring assets.

The Holding Company is a separate and distinct legal entity from our banking and non-banking subsidiaries. A substantial portion of our competitors, becausethe Holding Company’s revenues comes from dividends paid by Webster Bank. These dividends are the principal source of their larger sizefunds to pay dividends to common and available capital, have substantially greater resourcespreferred shareholders. Whether the Bank is able to invest in technological improvements. Wepay dividends depends on its ability to generate sufficient net income and meet certain regulatory requirements, and the amount of such dividends may then be limited by federal and state laws. In the event the Bank is unable to pay the Holding Company dividends, we may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and servicespay dividends to our customers within the same time frame ascommon and preferred shareholders.

Our accounting policies and methods are fundamental to successfully keep paceunderstanding how we record and report our results of operations and financial condition. Accordingly, we exercise judgment in selecting and applying these accounting policies and methods so they comply with technologicalGAAP. The Financial Accounting Standards Board (FASB), SEC, and other regulatory bodies that establish accounting standards periodically change affecting the financial services industryaccounting and reporting standards, or the interpretation of those standards, that govern the preparation of our financial statements. These changes are beyond our control, can be hard to predict, and could materially impact how we report our results of operations and financial condition. We could be required to apply a new or revised standard retrospectively, which may result in us having to restate our prior period financial statements by material amounts.

The preparation of our consolidated financial statements in conformity with GAAP requires management to make difficult, subjective, or complex judgments about matters that are uncertain, which include assumptions and estimates of current risks and future trends, all of which may undergo material changes. Materially different amounts could be reported under different conditions or using different assumptions and estimates. Because of the inherent uncertainty of estimates involved in preparing our financial statements, we may be required to significantly adjust the financial statements as actual events unfold, which could have a material adverse effect on our financial condition and results of operations. In particular, we could be required to take actions that include, but are not limited to, increasing the ACL and/or sustaining credit losses that are significantly higher than the provided allowance, increasing the valuation allowance on our DTAs should new negative evidence become available indicating that it is more likely than not that some or a portion of our net DTA will not be realized, or recognizing a significant impairment charge for assets.

GAAP requires us to record the assets and liabilities of an acquired business to their fair values at the time of the acquisition. With larger transactions, such as our recent merger with Sterling, fair value and other estimations can take up to four quarters to finalize. These estimates, and their revisions, can have a substantial effect on the presentation of our financial condition and operating results after the transaction closes. In addition, the excess of the purchase price over the fair value of the assets acquired, net of liabilities assumed, is recorded as goodwill. If the estimates that we have used at any financial statement date are significantly revised in the future, there could be a material negative impact on our businessgoodwill or other acquisition-related intangibles and our results of operations for the period in turn,which the revisions are made.

GAAP requires that goodwill be tested for impairment at the reporting unit level on at least an annual basis or more frequently should a triggering event occur. An impairment loss is to be recognized if the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit. A significant decline in our expected future cash flows, a continued period of local and national economic disruption, changes to financial markets, slower growth rates, or other external factors, all of which can be highly unpredictable, may impact fair value calculations and require us to recognize an impairment loss in the future. Such impairment loss may be significant and have a material adverse effect on our financial condition and results of operations.

As a financial institution, we depend on our ability to process, record, and monitor a large number of customer transactions, and customer, public, and regulatory expectations regarding operational and information security have increased over time.transactions. Accordingly, our operational systems and infrastructure must continue to be safeguarded and monitored for potential failures, disruptions, and breakdowns. Our business, financial, accounting, data processing systems, or other operating systems and facilities, including mobile banking and other recently developed technologies, may stop operating properly or become disabled or compromised as a result of a number of factors that may be wholly or partially beyond our control. For example, there could be sudden increases in customer transaction volume;volume, electrical or telecommunications outages;outages, natural disasters; pandemics;disasters, pandemics, events arising from political or social matters, including terrorist acts;acts, and cyber-attacks. Although we have business continuity plans and believe we have robust information security procedures and controls in place, disruptions or failures in the physical infrastructure or operating systems that support our businesses and customers or cyber-attacks or security breaches of the

ThirdAdditionally, third parties with whom we do business or that facilitate our business activities, including exchanges, clearing houses, financial intermediaries, or vendors that provide services or security solutions for our operations, could also be sources of operational and information security risk to us, including breakdowns or failures of their own systems, capacity constraints, and cyber-attacks.

In recent years, information security risks for financial institutions have increasedrisen due in part to the increased sophistication and activities of organized crime, hackers, terrorists, hostile foreign governments, activists, and other external parties. There have been several instances involving financial services and consumer-based companies reporting unauthorized access to, and disclosure of, client or customer information or the destruction or theft of corporate data. There have also been highly publicized cases where hackers have requested ransom-payments in exchange for allowing access to systems and/or not disclosing customer information. In addition, as a result of the COVID-19 pandemic and the related increase in remote working by our personnel and the personnel of other companies, the risk of cyber-attacks, breaches or similar events, whether through our systems or those of third parties on which we rely, has increased.

Although to date we haveWebster has not experienced any material losses relating to cyber-attacks or other information security breaches, there can be no assurance that we will not suffer such losses in the future. Our inherent risk and exposure to these matters remains heightened, and as a result, the continued development and enhancement of our controls, processes, and practices designed to protect and facilitate the recovery of our systems, computers, software, data, and networks from attack, damage, or unauthorized access remainremains a high priority for us. As an additional layer of protection,While we have purchased network and privacy liability risk insurance coverage which(which includes digital asset loss, business interruption loss, network security liability, privacy liability, network extortion, and data breach coverage, thoughcoverage), there can be no assurance that such insurance will fully cover any and all actual losses. As cyber threats and related regulations continue to evolve, we may be required to expend significant additional resources to modify our protective measures or to investigate and remediate any information security vulnerabilities.

Our businessWe maintain an ACL on loans and leases, which is subject to periodic fluctuations based on national and local economic conditions. These fluctuations are not predictable, cannot be controlled and may have a material adverse impact on our operations and financial condition. For example, declines in housing activity including declines in building permits, and home prices, may make it more difficultreserve established through a provision for our borrowers to sell their homes or refinance their debt. Sales may also slow, which could strain the resources of real estate developers and builders. We may suffer higher credit losses ascharged to expense, that represents management’s best estimate of probable credit losses over the life of the loan or lease within our existing portfolio. The determination of the appropriate level of ACL on loans and leases inherently involves a resulthigh degree of thesesubjectivity and requires us to make significant estimates of current credit risks and trends using existing qualitative and quantitative information and reasonable supportable forecasts of future economic conditions, all of which may undergo frequent and material changes. Changes in economic conditions affecting borrowers, the softening of macroeconomic variables that we are more susceptible to, along with new information regarding existing loans, identification of additional problems loans, and other factors, both within and outside our control, may indicate the resulting impactneed for an increase in the ACL on our borrowers. A declining economy could negatively affect employment levelsloans and impact the ability of our borrowers to service their debt. leases.

Bank regulatory agencies also periodically review our allowance for credit lossesACL and may require an increase in the provision for credit losses or the recognition of furtheradditional loan charge-offs, based on judgments different than those of management. In addition, if charge-offs in future periods exceed the allowance for credit losses,ACL, we may need, depending on an analysis of the adequacy of the allowance for credit losses,ACL, additional provisions to increase the allowance for credit losses. Any increasesACL. An increase in the allowance for credit losses willACL would result in a decrease in net income, and maycould have a material adverse effect on our financial condition, results of operations, and regulatory capital position.

Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial position,institutions. Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships. We have exposure to many different industries and counterparties, and we routinely execute transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds, and other institutional clients. As a result, defaults by, or even rumors or questions about one or more financial services companies, or the financial services industry in general, have led, and may further lead to market-wide liquidity problems and could lead to losses or defaults by us or by other institutions. Many of these transactions could expose us to credit risk in the event of default of our counterparty or client. In addition, our credit risk may be impacted if the collateral held by us cannot be realized or is liquidated at prices not sufficient to recover the full amount of the financial instrument’s exposure due to us. There is no assurance that any such losses would not materially or adversely affect our business, financial condition, or results of operationsoperations.

IfMany of our goodwill were determined to be impaired it could have a negative impact on our profitability.

We are subject to extensive federal and applicable state regulation and supervision, primarily through Webster Bank and certain non-bank subsidiaries. Banking regulations are primarily intended to protect depositors, the Federal Deposit Insurance Fund, and the safety and soundness of the U.S banking system as a whole, not shareholders. These regulations affect our lending practices, capital structure, investment practices, dividend policy, and growth, among other things. Congress and federal regulatory agencies continuously review banking laws, regulations, and policies for possible changes, and proposed changes are to be expected from the current Administration. Changes to statutes, regulations, or regulatory policies, including changes in interpretation or implementation thereof, could affect us in substantial and unpredictable ways. For example, such changes could subject us to additional costs, limit the types of financial services and products we may offer, and restrict what we are able to charge for certain banking services. Failure to comply with laws, regulations, or policies could result in sanctions by regulatory agencies, civil penalties, and reputation damage, which could have a material adverse effect on our business.business, financial condition, and results of operations. While we have policies and procedures designed to prevent these types of violations, there can be no assurance that such violations will not occur.

Management regularly reviews and updates our internal controls, disclosure controls and procedures, and corporate governance policies and procedures. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of our controls and procedures, failure to implement any necessary improvement of our controls and procedures, or failure to comply with regulations related to controls and procedures could have a material adverse effect on our business, results of operations, and financial condition.

As a financial institution, we are inherently exposed to risk in the form of theft and other fraudulent activities by employees, customers, or other third parties targeting Webster or Webster’s customers or data. Such activity may also negativelytake many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering, and other dishonest acts. Although we devote substantial resources to maintaining effective policies and internal controls to identify and prevent such incidents, given the increasing sophistication of possible perpetrators, we may experience financial losses or reputational harm as a result of fraud.

Third parties perform significant operational services on our behalf. For instance, we depend on our vendor-provided core banking processing systems to process a large number of increasingly complex transactions on a daily basis. Accordingly, we are exposed to the risk that vendors and third-party service providers might not perform in accordance with their contracts or service agreements, whether due to changes in their organizational structure, strategic focus, support for existing products, technology, services, financial condition, or for any other reason. Their failure to perform could be disruptive to our operations, which could have a materially adverse impact on our business, results of operations, and financial condition. Although we require third-party service providers to have business continuity and disaster recovery plans that are aligned with our plans, we cannot be assured that such plans will operate successfully or in a timely manner so as to prevent any such material adverse impact.

LIBOR and certain other interest rate benchmarks are the timingsubject of recent national, international, and other regulatory guidance and reform. On March 5, 2021, the United Kingdom administrator of LIBOR announced that the 1-month, 3-month, 6-month and 12-month USD LIBOR settings would cease to exist after June 30, 2023, and certain other LIBOR settings, including the 1-week and 2-month USD LIBOR settings, would cease to exist after December 31, 2021. Accordingly, all existing LIBOR obligations will transition to another benchmark after December 31, 2021, June 30, 2023, or earlier. The U.S. federal banking agencies issued a statement in November 2020 encouraging banks to transition away from USD LIBOR as soon as practicable and to stop entering into new contracts that use USD LIBOR by December 31, 2021.

Central banks and regulators in major jurisdictions including the United States have convened working groups to find, and implement the transition to suitable replacements for interbank offered rates. To identify a successor rate for USD LIBOR, the Board of Governors of the Federal Reserve Board and the FRB of New York formed the ARRC. On July 29, 2021, the ARRC formally recommended SOFR as its preferred alternative replacement rate for LIBOR. Webster has adopted SOFR as the LIBOR replacement rate and began offering SOFR-based lending solutions and derivative contracts to our customers in October 2021. As of January 1, 2022, Webster no longer originates new contracts using any sale. Our stock price can fluctuate widely in responseLIBOR index, as defined by regulatory guidance.

The market transition away from LIBOR to alternative reference rates is complex and could have a varietyrange of factors, among other things:adverse effects on our business, financial condition, and results of operations. In particular, the transition could:

The ongoing COVID-19 pandemictransition away from LIBOR to SOFR will require the transition to or development of appropriate systems, models, and analytics to effectively transition our risk management and other processes from LIBOR-based products to those based on SOFR. Webster has resulted in severe volatility indeveloped a Working Group, Steering Committee, and LIBOR transition plan aligned with regulatory guidance and ARRC best practices and is actively working to develop processes, systems, and personnel to support this transition. Timelines and priorities include assessing the financial markets, includingimpact on our common stock,customers, as well as assessing system requirements for operational processes. There can be no guarantee that our efforts will successfully mitigate the operational risks associated with the transition away from LIBOR to SOFR as the alternative reference rate. The effect of these developments on our funding costs, loan, investment, and meaningfully lower stock prices for many companies.

The nature of our business ordinarily results in a certain amount of claimslegal proceedings and legal action.claims. Whether claims and relatedor legal actions are founded or unfounded, if such claims and legal actions are not resolved in a manner favorable to us, they may result in significant financial liability and/or adversely affect how the market perceives us, the products and services we offer, as well as impact customer demand for those products and services. Any financial liability or reputation damage could have a material adverse effect on our business, which in turn, could have a material adverse effect on our financial condition and results of operations.

We assess our liabilities and contingencies in connection with outstanding legal proceedings as well asand certain threatened claims utilizingand assessments using the latest and most reliable information. For matters where a loss is not probable or the amount of the loss cannot be estimated, no accrual is established. For mattersidentified where it is probable that we will incur a loss and the amount can be reasonably estimated, we will establish an accrual for the loss. Once established, the accrual is then adjusted, periodicallyas needed, to reflect any relevant developments. TheHowever, the actual cost of anyan outstanding legal proceedingsproceeding or threatened claims, however,claim and assessment, may turn out to be substantially higher than the amount accrued. Theseaccrued by management.

A significant portion of our loan portfolio is secured by real property. In the normal course of business, we may foreclose on and take title of properties securing certain loans, and there is a risk that hazardous or toxic substances could be found on these properties. If hazardous or toxic substances are found, we may be held liable for remediation costs, may adversely affectincluding significant investigation and clean-up costs and for personal injury or property damage. In addition, environmental contamination could materially reduce the affected property’s value or limit our business, results of operations,ability to use or sell the affected property. Although we have policies and prospects.

The COVID-19 pandemic has severely disrupted economic activity in the U.S. and continues to cause disruption both worldwide and in the markets in which we operate. The extent of these impacts will depend on future developments, including among others, governmental, regulatory, and private sector actions and responses, actions taken to contain or prevent further spread, the continued emergence of new and highly contagious variants of the virus, and the use and effectiveness of vaccines and other treatments, each of which cannot be predicted with certainty.

Our business is dependent upon the ability and willingness of our customers to conduct banking and other financial transactions, including the payment of loan obligations. COVID-19 has and continues to disrupt the business, activities, and operations of our customers, which may implement new lines of business, offer newcause a decline in demand for our products and services within existing lineswhich may, in turn, result in a significant decrease in our business, negatively impacting our liquidity position and financial results. Our financial results could also be adversely impacted due to an inability of business, or shift our asset mix. There are substantial risks and uncertaintiescustomers to meet their loan commitments because of their losses associated with the effects of COVID-19, resulting in increased risk of delinquencies, defaults, foreclosures, declining collateral values, and other losses. Moreover, current and future governmental action may temporarily require the Company to conduct business differently with respect to foreclosures, repossessions, payments, deferrals, and other customer-related transactions.

Further, we rely upon our third-party vendors to conduct business and to process, record, and monitor transactions. If any of these efforts, particularlyvendors are unable to continue to provide us with these services, it could negatively impact our ability to serve our customers. While we have business continuity plans and other safeguards in instances whereplace, there is no assurance that such plans and safeguards will be effective. Our workforce also has been, is, and may continue to be impacted by COVID-19. We have taken precautions to protect the markets are not fully developed. In developingsafety and marketing new lineswell-being of business and/our employees and customers, including temporary branch and office closures during the early phase of the pandemic, but no assurance can be given that our actions will be adequate or newappropriate, nor can we predict the level of disruption which will occur to our employees’ ability to provide customer support and service in the future. The pandemic could also negatively impact availability of key personnel and employee productivity which could adversely impact our ability to deliver products and services and/or shifting asset mix, we may invest significant time and resources. Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved, and price and profitability targets may not prove attainable. External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service. Furthermore, any new line of business and/or new product or service could have a significant impact on the effectivenessto our customers. While most of our system of internal controls. Failureemployees have returned to successfully manage these risksour offices, the increase in remote and work-at-home arrangements in our workforce has also resulted in heightened cybersecurity, information security, and operational risks.

It is possible that the pandemic and its aftermath will lead to a prolonged economic slowdown or recession in the developmentU.S. economy or in our markets. The ultimate impacts of COVID-19 are uncertain and implementation of new lines of business or new products or services could have a material adverse effect on our business, financial condition, liquidity, and results of operations, and financial condition.operations. Moreover, the effects of the COVID-19 pandemic may heighten the other risks described in this Annual Report on Form 10-K.

ITEM 2. PROPERTIES

The Company maintainsEffective January 31, 2022, in connection with its merger with Sterling, Webster relocated its corporate headquarters infrom Waterbury to Stamford, Connecticut. This ownedleased facility houses the Company’s primary executive and administrative functions, as welland serves as the principal banking headquarters of Webster Bank. Additional administrative functions are housed in an owned facilityfacilities in Waterbury and New Britain, Connecticut, and in leased facilities in StamfordSouthington, Connecticut, and Southington, Connecticut. The CompanyJericho, Pearl River, White Plains, and New York, New York. Webster considers its properties to be suitable and adequate for presentits current business needs.

Additional information regarding Webster's owned facilities and leased locations can be found within Note 7: Premises and Equipment and Note 8: Leasing in the Notes to complete these actions by the end of the second quarter of 2021. The final number of banking centers consolidated may vary from the plan.Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data, respectively.

ITEM 3. LEGAL PROCEEDINGS

From time to time Webster Financial Corporation, or its subsidiaries, are subject to certainInformation regarding legal proceedings can be found within Note 23: Commitments and claimsContingencies in the ordinary course of business. Management presently believes that the ultimate outcome of these proceedings, individuallyNotes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and in the aggregate, will not be material to Webster or its consolidated financial position. Webster establishes an accrual for specific legal matters when it determines that the likelihood of an unfavorable outcomeSupplementary Data, which is probable and the loss is reasonably estimable. Legal proceedings are subject to inherent uncertainties, and unfavorable rulings could occur that could cause Webster to adjust its litigation accrual or could have, individually or in the aggregate, a material adverse effect on its business, financial condition, or operating results. Webster believes it has defenses to all claims asserted against it in existing litigation matters and intends to defend itself in those matters.incorporated herein by reference.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

PART II

Webster Financial Corporation’sCorporation's common shares tradestock is traded on the New York Stock ExchangeNYSE under the symbol WBS.

NoThere were no unregistered securities were sold by Webster Financial Corporation during the three year period ended December 31, 2020.2021.

The following table provides information with respect to any purchase of equity securities for Webster Financial Corporation’s common stock made by or on behalf of Webster or any “affiliated purchaser,” as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, during the three months ended December 31, 2020:2021:

The performance graph compares Webster Financial Corporation’sthe yearly percentage change in Webster's cumulative total shareholder return on its common stock over the last five fiscal years to the cumulative total return of (i) the Standard & Poor’s 500 Index (S&P 500 Index) and (ii) the Keefe, Bruyette & Woods Regional Banking Index (KRX Index)., assuming the reinvestment of dividends and an initial investment of $100 on December 31, 2016. The KRX Index is a market-capitalization weighted index comprised of 50 regional banks or thrifts located throughout the United States.

Cumulative total shareholder return is measured by dividing totalthe sum of the cumulative amount of dividends assuming dividend reinvestment, for the measurement period, plusassuming dividend reinvestment, and the difference between the share price change for aat the end and the beginning of the measurement period, by the share price at the beginning of the measurement period. The plotted points represent the cumulative total shareholder return over a five-year period assumes a simultaneous initial investment of $100, on December 31, 2015, in Webster Financial Corporation common stock and in eachthe last trading day of the indices above.fiscal year indicated. Historical performance shown on the graph is not necessarily indicative of future performance.

ITEM 6. SELECTED FINANCIAL DATA

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The non-GAAP financial measures identified in the preceding table provide both management and investors with information useful in understanding Webster's financial performance, performance trendsposition, operating results, the strength of its capital position, and financial position.overall business performance. These measures are used by management for internal planning and forecasting purposes, as well as by securities analysts, investors, and other interested parties to compareassess peer company operating performance. Management believes this presentation, together with the accompanying reconciliations, provides a 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 shareholders’ equity less preferred stock and goodwill and other intangible assets divided by common shares outstanding at the end of the period. TangibleThe tangible common equity ratio represents shareholders’ equity less preferred stock, and goodwill, and other intangible assets, divided by total assets less goodwill and other intangible assets. ReturnBoth of these measures are used by management to evaluate the strength of the Company's capital position. The return on average tangible common shareholders' equity measuresis calculated using the Company’sCompany's net income available to common shareholders, adjusted for the tax-effected amortization of intangible assets, as a percentage of average shareholders’ equity less average preferred stock, and average goodwill, and average other intangible assets. This measure is used by management to assess Webster's performance against its peer financial institutions. The efficiency ratio, which measuresrepresents the costs expended to generate a dollar of revenue, is calculated excluding certain non-operational items. items in order to measure how the Company is managing its recurring operating expenses.

These non-GAAP financial measures should not be considered a substitute for GAAP basis measures and results.financial measures. Because non-GAAP financial measures are not standardized, it may not be possible to compare these measures with other companies that present financial measures having the same or similar names.

The following tables reconcile non-GAAP financial measures withto the most comparable financial measures defined by GAAP: