WEBSTER FINANCIAL CORP (WBS)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Company is a bank holding company that has elected to be treated as a financial holding company under the BHC Act, incorporated under the laws of Delaware in 1986, and headquartered in Stamford, Connecticut. The Company had $85.9 billion in total consolidated assets at June 30, 2026.

The Bank is a commercial bank with a national bank charter focused on providing financial products and services to businesses, individuals, and families. While its core footprint spans the Northeast from the New York metropolitan area to Rhode Island and Massachusetts, certain businesses operate in extended geographies. The Bank offers three differentiated lines of business: Commercial Banking, Healthcare Financial Services, and Consumer Banking.

The following discussion and analysis provides information that management believes is necessary to understand the Company’s consolidated financial condition, results of operations, and cash flows for the three and six months ended June 30, 2026, as compared to the three and six months ended June 30, 2025. This information should be read in conjunction with the Condensed Consolidated Financial Statements, and the accompanying Notes thereto, contained in Part I - Item 1. Financial Statements of this report, and the Consolidated Financial Statements of this report, and the accompanying Notes thereto, contained in Part II - Item 8. Financial Statements and Supplementary Data of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 27, 2026. The Company’s consolidated financial condition, results of operations, and cash flows for the three and six months ended June 30, 2026, are not necessarily indicative of future results that may be attained for the entire year or other interim periods.

Proposed Transaction with Banco Santander

On February 3, 2026, Webster entered into a Transaction Agreement with Banco Santander and Webster Virginia Corporation, a wholly owned subsidiary of Webster incorporated in the State of Virginia. The Transaction Agreement provides that, upon the terms and subject to the conditions set forth therein, Banco Santander will acquire Webster in two steps. First, Webster will merge with and into Webster Virginia Corporation, with Webster Virginia Corporation continuing as the surviving corporation in such merger. Second, immediately following the completion of such merger, Banco Santander will acquire all outstanding shares of Webster Virginia Corporation through a statutory share exchange.

Based on Banco Santander’s closing stock price on February 2, 2026, the Transaction has an aggregate value of approximately $12.3 billion. Under the terms of the Transaction Agreement, holders of Webster common stock will receive $48.75 in cash and 2.0548 ADSs for each share of Webster common stock that they own. Holders of Webster common stock will have the option to exchange ADSs received in connection with the Transaction for Ordinary Shares at no charge for a specified period following the completion of the Transaction.

The Transaction Agreement contains customary representations and warranties, covenants, and closing conditions. The Transaction was approved by Webster’s stockholders on May 26, 2026, the Office of the Comptroller of the Currency on June 12, 2026, and the European Central Bank on July 21, 2026. The Transaction remains subject to customary closing conditions, including the approval of the Board of Governors of the Federal Reserve System. The Transaction is expected to close in the second half of 2026.

Additional information regarding the proposed Transaction can be found within Note 2: Business Developments in the Notes to Condensed Consolidated Financial Statements contained in Part I - Item 1. Financial Statements.

Joint Venture with Marathon Asset Management

On July 19, 2024, the Company, through its subsidiary, MW Advisor Holding, LLC, and Marathon Asset Management formed a private credit joint venture designed to deliver direct lending solutions for sponsor-backed middle market companies across the country. Information regarding joint venture activities that occurred during the year ended December 31, 2025, can be found within Note 2: Business Developments in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

On July 1, 2026, CVC Capital Partners, a private markets investment firm, acquired 100% of Marathon Asset Management, which resulted in a change in control of Marathon Asset Management. Separately, Webster’s Transaction with Banco Santander will result in a change of control of Webster. Pursuant to the operating agreement for Webster’s joint venture with Marathon Asset Management, within 120 days after the consummation of a change in control, the non-affected member may elect to dissolve the joint venture, which would result in the wind-down of MW Advisor, LLC and Marathon Direct Lending SLP, LLC. As of the date of this Quarterly Report on Form 10-Q, Webster has not elected to dissolve the joint venture.

1

Results of Operations

The following table summarizes selected financial highlights and key performance indicators:

(1)Total revenue reflects the sum of Net interest income and Non-interest income.

(2)Non-performing assets and the related asset quality ratios exclude the impact of net unamortized (discounts)/premiums and net unamortized deferred (fees)/costs on loans and leases.

2

Non-GAAP Financial Measures

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

These non-GAAP financial measures should not be considered a substitute for GAAP-basis financial measures. Because

non-GAAP financial measures are not standardized, it may not be possible to compare these with other companies that present financial measures having the same or similar names.

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

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[Excerpt truncated for page length; source filing is linked above.]

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

The following discussion and analysis provides information that management believes is necessary to understand the Company’s consolidated financial condition, results of operations, and cash flows for the year ended December 31, 2025, as compared to the year ended December 31, 2024. This information should be read in conjunction with the Consolidated Financial Statements, and the accompanying Notes thereto, contained in Part II - Item 8. Financial Statements and Supplementary Data, as well as other information set forth throughout this report. For discussion and analysis of the Company’s consolidated financial condition, results of operations, and cash flows for the year ended December 31, 2024, as compared to the year ended December 31, 2023, please refer to Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 3, 2025. The Company’s consolidated financial condition, results of operations, and cash flows for the year ended December 31, 2025, are not necessarily indicative of results that may be attained in future periods.

Economic Outlook

Actions and announcements related to changes in trade policies and other economic policies and practices, including tariffs, have created significant economic uncertainty in the U.S., which could contribute to higher inflation, increase the risk of a recession, and introduce further uncertainty as to the pace and direction of interest rate changes. Events such as these are outside of our control, but nonetheless may alter customer behavior, including borrowing, repayment, investment, and deposit practices, which could, in turn, adversely impact our business and financial results in future periods. While we cannot predict the potential impact that these changes and economic developments may have on us or our customers, we believe that our diverse businesses, strong capital position, unique deposit profile, and solid risk management framework allow us to operate in a range of economic environments.

Proposed Transaction with Banco Santander

On February 3, 2026, Webster entered into a Transaction Agreement with Banco Santander and Webster Virginia Corporation, a wholly owned subsidiary of Webster incorporated in the State of Virginia. The Transaction Agreement provides that, upon the terms and subject to the conditions set forth therein, Banco Santander will acquire Webster in two steps. First, Webster will merge with and into Webster Virginia Corporation, with Webster Virginia Corporation continuing as the surviving corporation in such merger. Second, immediately following the completion of such merger, Banco Santander will acquire all outstanding shares of Webster Virginia Corporation through a statutory share exchange. Based on Banco Santander’s closing stock price on February 2, 2026, the Transaction has an aggregate value of approximately $12.3 billion.

Under the terms of the Transaction Agreement, holders of Webster common stock will receive $48.75 in cash and 2.0548 ADSs (or Ordinary Shares in certain circumstances) for each share of Webster common stock that they own. The Transaction Agreement contains customary representations and warranties, covenants, and closing conditions. Completion of the Transaction remains subject to approval by the Federal Reserve and the European Central Bank, approval by the stockholders of each company, and other customary closing conditions. The Transaction is expected to close in the second half of 2026.

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Results of Operations

The following table summarizes selected financial highlights and key performance indicators:

(1)Non-performing asset balances and related asset quality ratios exclude the impact of net unamortized (discounts)/premiums and net unamortized deferred (fees)/costs on loans and leases.

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Non-GAAP Financial Measures

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

These non-GAAP financial measures should not be considered a substitute for GAAP-basis financial measures. Because

non-GAAP financial measures are not standardized, it may not be possible to compare these with other companies that present financial measures having the same or similar names.

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

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(1)Acquisition and merger-related expenses includes SecureSave acquisition expenses for the year ended December 31, 2025, Ametros acquisition expenses for the year ended December 31, 2024, and primarily Sterling merger expenses for the year ended December 31, 2023. Additional information regarding the acquisition of SecureSave and Ametros can be found within Note 2: Business Developments in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data.

(2)Strategic restructuring costs primarily comprises severance expense.

(3)Other income (non-GAAP) includes the taxable equivalent of net income generated from LIHTC investments.

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Net Interest Income Analysis

The following table summarizes daily average balances, interest, and average yield/rate by major category, and net interest margin on an FTE basis:

(1)Non-accrual loans have been included in the computation of average balances.

(2)Interest-bearing deposits are a component of Cash and cash equivalents on the Consolidated Statements of Cash Flows included in Part II - Item 8. Financial Statements and Supplementary Data.

(3)FTE adjustments on loans and leases and investment securities are determined assuming a statutory federal income tax rate of 21%. Items computed on an FTE basis are considered non-GAAP financial measures, and are used by management to evaluate the comparability of the Company’s revenue arising from both taxable and non-taxable sources.

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The following table summarizes the change in net interest income attributable to changes in rate and volume, and reflects net interest income on an FTE basis:

(1)The change attributable to mix, a combined impact of rate and volume, and other is included with the change due to rate.

Net interest income increased $0.2 billion, or 6.8%, from $2.3 billion for the year ended December 31, 2024, to $2.5 billion for the year ended December 31, 2025, reflecting increases of $4.6 billion, or 6.6%, in average total interest-earning assets and $4.5 billion, or 6.8%, in average total deposits and interest-bearing liabilities. Net interest margin remained flat at 3.42% for the years ended December 31, 2025, and 2024. The lower interest rate environment during the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily caused the average yield on average total interest-earning assets to decrease by 22 basis points and the average rate on average total deposits and interest-bearing liabilities to decrease by 24 basis points.

The change in average total interest-earnings assets was primarily attributed to the following items:

•Average loans and leases increased $2.4 billion, or 4.7%, primarily due to increases in commercial non-mortgage, residential mortgages, commercial real estate, and other consumer loans, partially offset by decreases in multi-family mortgages and asset-based lending.

•Average total investment securities increased $0.9 billion, or 5.2%, primarily due to the timing and volume of purchases, paydowns, and sales activities, particularly within the available-for-sale portfolio.

•Average interest-bearing deposits held at the FRB of New York increased $1.3 billion, or 180.8%, primarily due to management’s strategic decision to hold higher levels of on-balance sheet liquidity.

The change in average total deposits and interest-bearing liabilities was primarily attributed to the following items:

•Average total deposits increased $4.3 billion, or 6.8%, primarily due to an increase in money market deposits, which contributed to $2.8 billion of the change. The Company also experienced increases across all other deposit products, except for demand deposits and brokered certificates of deposit.

•Average FHLB advances increased $0.2 billion, or 9.2%, primarily due to a change in short-term funding mix.

Provision for Credit Losses

The provision for credit losses decreased $12.0 million, or 5.4% from $222.0 million for the year ended December 31, 2024 to $210.0 million for the year ended December 31, 2025, primarily due to improvements in risk rating migration and changes in commercial portfolio mix, partially offset by higher net charge-offs, changes in the macroeconomic forecast, economic uncertainty, and loan growth.

Additional information regarding the Company’s provision for credit losses and ACL can be found under the sections captioned “Loans and Leases” through “Allowance for Credit Losses on Loans and Leases” contained elsewhere in this Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

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Non-Interest Income

Total non-interest income increased $149.6 million, or 59.4%, from $251.9 million for the year ended December 31, 2024, to $401.5 million for the year ended December 31, 2025, primarily due to the change in Net gains (losses) on sale of investment securities and increases in Other income and the Cash surrender value of life insurance policies, partially offset by decreases in Loan and lease related fees and Wealth and investment services.

Loan and lease related fees decreased $5.7 million, or 7.5%, from $76.4 million for the year ended December 31, 2024, to $70.7 million for the year ended December 31, 2025, primarily due to lower loan servicing fees, factoring fees, and amendment fees, partially offset by lower mortgage servicing rights amortization and an increase in line usage fees.

Wealth and investment services decreased $2.2 million, or 6.8%, from $33.2 million for the year ended December 31, 2024, to $31.0 million for the year ended December 31, 2025, primarily due to a decrease in investment services, partially offset by an increase in personal trust fees.

The Cash surrender value of life insurance policies increased $5.5 million, or 19.9%, from $27.7 million for the year ended December 31, 2024, to $33.2 million for the year ended December 31, 2025, primarily due to bank-owned life insurance events in 2024, which resulted in a lower increase to the cash surrender value in the prior year.

Net gains (losses) on sale of investment securities changed $136.4 million, or 100.2%, from net (losses) of $136.2 million for the year ended December 31, 2024, to net gains $0.2 million for the year ended December 31, 2025. During the year ended December 31, 2025, the Company sold $14.7 million of Corporate debt securities classified as available-for-sale for proceeds of $14.9 million. During the year ended December 31, 2024, the Company sold $2.3 billion of Municipal bonds and notes, Agency MBS, Corporate debt securities, Agency CMBS, Government agency debentures, and Agency CMOs classified as available-for-sale for proceeds of $2.1 billion. The amounts presented in non-interest income include the portion of any losses that were not due to credit related factors.

Other income increased $18.9 million, or 21.0%, from $89.6 million for the year ended December 31, 2024, to $108.5 million for the year ended December 31, 2025, primarily due to a $16.0 million net loss on sale of the factored receivables portfolio in 2024, a $9.8 gain on extinguishment of long-term debt in 2025, a $4.0 million beneficial legal settlement in 2025, increased client hedging activities in 2025, and the decrease in the credit valuation adjustment on derivatives in 2025, partially offset by an $11.7 million net gain on sale of mortgage servicing rights in 2024, bank owned life insurance events in 2024, and a

$4.4 million net gain on sale of multi-family loans (securitization) in 2024.

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Non-Interest Expense

Total non-interest expense increased $0.1 billion, or 5.8%, from $1.3 billion for the year ended December 31, 2024, to $1.4 billion for the year ended December 31, 2025, primarily due to increases in Compensation and benefits, Professional and outside services, Other expense, and Occupancy, partially offset by a decrease in Deposit insurance.

Compensation and benefits increased $58.9 million, or 7.7%, from $762.8 million for the year ended December 31, 2024, to $821.7 million for the year ended December 31, 2025, primarily due to higher performance-based incentives and increased compensation and employee benefits resulting from investments in human capital and risk management infrastructure, partially offset by a decrease in severance.

Occupancy increased $5.2 million, or 7.3%, from $72.2 million for the year ended December 31, 2024, to $77.4 million for the year ended December 31, 2025, primarily due to a one-time lease termination benefit in 2024.

Professional and outside services increased $16.9 million, or 29.1%, from $58.3 million for the year ended December 31, 2024, to $75.2 million for the year ended December 31, 2025, primarily due to an increase in technology consulting fees.

Deposit insurance decreased $17.9 million, or 26.0%, from $68.9 million for the year ended December 31, 2024, to $51.0 million for the year ended December 31, 2025, primarily due to the change in the FDIC special assessment liability, partially offset by the impact from an increase in the Company’s deposit insurance assessment base.

Other expense increased $16.7 million, or 12.0%, from $139.3 million for the year ended December 31, 2024, to $156.0 million for the year ended December 31, 2025, primarily due to a $20.0 million charitable contribution to the Webster Charitable Foundation, partially offset by individually immaterial net decreases in various other expense items.

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Income Taxes

The Company recognized income tax expense of $257.3 million and $248.3 million for the years ended December 31, 2025, and 2024, respectively, reflecting effective tax rates of 20.4% and 24.4%, respectively. The increase in income tax expense is primarily due to the higher level of pre-tax income recognized in 2025, as compared to 2024. The higher effective tax rate in 2024 primarily reflects the recognition in 2024 of $42.3 million in net discrete tax expense during that period, which included a

$29.4 million DTA valuation adjustment resulting from a change in management’s estimate about the realizability of its SALT DTAs applicable to net operating loss carryforwards due to an estimated decrease in future taxable income for SALT purposes.

On July 4, 2025, the One Big Beautiful Bill Act was signed into law, which includes a broad range of tax reform provisions with varying effective dates. The Company has evaluated the changes in tax law and determined that the impact on its consolidated financial statements is not material.

At December 31, 2025, and 2024, the Company’s valuation allowance on its DTAs was $56.8 million and $64.4 million, respectively, of which $56.8 million and $62.7 million, respectively, were related to the portion of SALT net operating loss and credit carryforwards that, in management’s judgment, are not more likely than not to be realized. The $5.9 million decrease in the valuation allowance for SALT net operating loss and credit carryforwards from 2024 to 2025 is primarily attributed to the expiration of net operating loss carryforwards for which a valuation allowance existed at December 31, 2024. At

December 31, 2025, and 2024, the Company’s gross DTAs included $66.1 million and $67.7 million, respectively, applicable to SALT net operating loss and credit carryforwards that are available to offset future taxable income.

The ultimate realization of DTAs is dependent on the generation of future taxable income during the periods in which the net operating loss and credit carryforwards are available. In making its assessment, management considers the Company’s forecasted future results of operations, estimates the content and apportionment of its income by legal entity over the near term for SALT purposes, and also applies longer-term growth rate assumptions. Based on its estimates, management believes it is more likely than not that the Company will realize its DTAs, net of the valuation allowance, at December 31, 2025. However, it is possible that some or all of the Company’s net operating loss and credit carryforwards could expire unused, or that more net operating loss and credit carryforwards could be utilized than estimated, either as a result of changes in future forecasted levels of taxable income or if future economic or market conditions or interest rates were to vary significantly from the Company’s forecasts and, in turn, impact its future results of operations.

Additional information regarding the Company’s income taxes, including its DTAs, can be found within Note 8: Income Taxes in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data.

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Segment Reporting

The Company’s operations are organized into three reportable segments that represent its differentiated lines of business: Commercial Banking, Healthcare Financial Services, and Consumer Banking. Additional information regarding the Company’s reportable segments and its segment reporting methodology can be found within Note 20: Segment Reporting in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data.

Commercial Banking

Operating Results:

Commercial Banking’s PPNR decreased $80.4 million, or 7.5%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024, due to decreases in net interest income and non-interest income and an increase in non-interest expense. The $51.8 million decrease in net interest income is primarily due to a lower net spread on loans and leases, partially offset by higher average loan and deposit balances. The $13.4 million decrease in non-interest income is primarily due to lower factoring and deposit service fees, and a non-recurring gain from a multi-family securitization event in 2024, partially offset by an increase in client hedging activities and syndication fees. The $15.2 million increase in non-interest expense is primarily due to increased investments in human capital, operational process improvements, technology, and higher foreclosed property and loan workout expenses.

Selected Balance Sheet and Off-Balance Sheet Information:

Loans and leases increased $3.1 billion, or 7.7%, at December 31, 2025, as compared to at December 31, 2024, primarily due to growth across Commercial Real Estate, Sponsor and Specialty Finance, and Verticals and Regional Banking, partially offset by net principal paydowns in Asset-Based Lending and the transfer of loans from portfolio to held for sale, particularly as it relates to joint venture activities. Total portfolio originations for the years ended December 31, 2025, and 2024, were $12.9 billion and $9.7 billion, respectively. The $3.2 billion increase was primarily due to increased Commercial Real Estate, Middle Market, and Sponsor and Specialty Finance origination activities.

Deposits increased $1.0 billion, or 6.3%, at December 31, 2025, as compared to at December 31, 2024, primarily due to an increase in interest-bearing deposits and money market deposits, partially offset by a decrease in non-interest-bearing deposits.

Assets under administration and assets under management, in aggregate, decreased $144.7 million, or 4.9%, at December 31, 2025, as compared to at December 31, 2024, primarily due to customer investment outflows and investment performance.

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Healthcare Financial Services

Operating Results:

Healthcare Financial Services’ PPNR increased $17.7 million, or 6.7%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024, due to increases in net interest income and non-interest income, partially offset by an increase in non-interest expense. The $26.0 million increase in net interest income is primarily due to higher deposit balances, partially offset by lower deposit spreads. The $2.2 million increase in non-interest income is primarily due to higher interchange fees and medical fees. The $10.5 million increase in non-interest expense is primarily due to higher compensation and benefits, technology costs, marketing costs, and a one-time lease termination benefit in 2024, partially offset by lower service contract expenses.

Selected Balance Sheet and Off-Balance Sheet Information:

Deposits increased $0.5 billion, or 4.5%, at December 31, 2025, as compared to at December 31, 2024, primarily due to additional HSA Bank and Ametros account holders.

Assets under administration, through linked investment accounts, increased $1.2 billion, or 22.3%, at December 31, 2025, as compared to at December 31, 2024, primarily due to additional HSA Bank account holders and increased investment account balances as a result of higher equity market valuations in 2025.

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Consumer Banking

Operating Results:

Consumer Banking’s PPNR decreased $15.2 million, or 3.3%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024, due to a decrease in non-interest income and an increase in non-interest expense, partially offset by an increase in net interest income. The $26.7 million increase in net interest income is primarily due to higher average loan and deposit balances coupled with a higher interest rate spread on loans, partially offset by lower interest spreads on deposits. The $13.4 million decrease in non-interest income is primarily due to the net gain on sale of mortgage servicing rights in 2024, a gain on an investment portfolio sale in 2024, lower investment services income, and decreased deposit service fees, partially offset by increased loan servicing fees. The $28.5 million increase in non-interest expense is primarily due to increased investments in technology, human capital, and outside professional services, partially offset by lower operational support expenses and costs related to debit card processing.

Selected Balance Sheet Information:

Loans increased $0.9 billion, or 7.9%, at December 31, 2025, as compared to at December 31, 2024, primarily due to growth in residential mortgages and other consumer loans, partially offset by net principal paydowns in home equity loans/lines of credit and business banking commercial loans. Total portfolio originations for the years ended December 31, 2025, and 2024, were $2.2 billion and $1.9 billion, respectively. The $0.3 billion increase was primarily due to increased residential mortgage and home equity loan/line originations, partially offset by decreased business banking commercial loan originations.

Deposits increased $0.3 billion, or 1.2%, at December 31, 2025, as compared to at December 31, 2024, primarily due to growth in online savings, money markets, certificates of deposit, and interest-bearing checking, partially offset by outflows in non-interest-bearing demand.

Assets under administration remained relatively flat at approximately $8.0 billion at December 31, 2025, and 2024, primarily due to increased investment account balances as a result of higher equity market valuations in 2025, partially offset by the sale of two investment portfolios.

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Financial Condition

Total assets increased $5.1 billion, or 6.4%, from $79.0 billion at December 31, 2024, to $84.1 billion at December 31, 2025. The change in total assets was primarily attributed to the following items, which experienced changes greater than $100 million:

•Cash and cash equivalents increased $0.4 billion, primarily due to an increase in interest-bearing deposits held at the FRB of New York as a result of management’s strategic decision to hold higher levels of on-balance sheet liquidity;

•Total investment securities, net increased $0.5 billion, reflecting a $1.0 billion increase in the available-for-sale portfolio, partially offset by a $0.5 billion decrease in the held-to-maturity portfolio. The net increase in total investment securities was primarily due to purchases exceeding paydown activities, particularly across the Agency CMBS, Agency MBS, and CMBS categories;

•Loans and leases increased $4.1 billion, primarily due to $15.1 billion of originations during the year ended December 31, 2025, particularly across the commercial non-mortgage, commercial real estate, and residential mortgages categories, partially offset by net principal paydowns and the transfer of loans from portfolio to held for sale, particularly as it relates to joint venture activities;

•DTAs decreased $0.1 billion, primarily due to the deferred tax effect on the change in other comprehensive income and an increase in deferred tax expense for the year ended December 31, 2025;

•Accrued interest receivable and other assets increased $0.1 billion. Notable drivers of the change included increases in treasury derivative assets, LIHTC investments, other alternative investments, and accrued interest receivable, partially offset by decreases in prepaid expenses and other assets.

Total liabilities increased $4.7 billion, or 6.7%, from $69.9 billion at December 31, 2024, to $74.6 billion at December 31, 2025. The change in total liabilities was primarily attributed to the following items:

•Total deposits increased $4.0 billion, reflecting a $4.2 billion increase in interest-bearing deposits, partially offset by a $0.2 billion decrease in non-interest-bearing deposits. The net increase in interest-bearing deposits was primarily due to an increase in money market deposits, particularly from interSYNC, which contributed to $2.0 billion of the change. The Company also experienced increases across all other interest-bearing deposit categories except for savings deposits;

•Securities sold under agreements to repurchase increased $0.3 billion, primarily due to a change in short-term funding mix;

•FHLB advances increased $0.9 billion, also primarily due to a change in short-term funding mix;

•Long-term debt decreased $0.2 billion, primarily due to the repayment during the fourth quarter of 2025 of the subordinated notes due on November 1, 2030, and the subordinated notes due on December 30, 2029, partially offset by the issuance in the third quarter of 2025 of the subordinated notes due on September 11, 2035; and

•Accrued expenses and other liabilities decreased $0.3 billion. Notable drivers of the change included decreases in treasury derivative liabilities, unfunded commitments for LIHTC investments, accrued FDIC deposit insurance, and accrued interest payable, partially offset by increases in accrued compensation and other liabilities.

Total stockholders’ equity increased $0.4 billion, or 3.9%, from $9.1 billion at December 31, 2024, to $9.5 billion at December 31, 2025. The change in stockholders’ equity was attributed to the following items:

•Net income of $1.0 billion;

•Other comprehensive income, net of tax, of $205.5 million;

•Dividends paid to common and preferred stockholders of $267.6 million and $16.7 million, respectively;

•Stock-based compensation expense of $56.8 million;

•Stock options exercised of $0.1 million; and

•Repurchases of common stock under the Company’s common stock repurchase program of $599.2 million, which includes the 1% excise tax on net stock repurchases, and $22.8 million related to employee stock-based compensation plan activity.

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Investment Securities

Through its Corporate Treasury function, the Company maintains and invests in debt securities that are primarily used to provide a source of liquidity for operating needs, as a means to manage the Company’s interest-rate risk, and to generate interest income. The Company’s investment securities are classified into two major categories: available-for-sale and

held-to-maturity.

The ALCO manages the Company’s investment securities in accordance with regulatory guidelines and corporate policies, which include limitations on aspects such as concentrations in and types of investments, as well as minimum risk ratings per type of security. In addition, the OCC may further establish individual limits on certain types of investments if the concentration in such security presents a safety and soundness concern. Although the Bank held the entirety of the Company’s investment securities portfolio at both December 31, 2025, and 2024, the Company may also directly hold investments.

The following table summarizes the carrying amount and percentage composition of the Company’s investment securities:

(1)The balances at December 31, 2025, and 2024, exclude the ACL recorded on held-to-maturity securities of $0.1 million and $0.2 million, respectively.

Available-for-sale securities increased $1.0 billion, or 11.1%, from $9.0 billion at December 31, 2024, to $10.0 billion at December 31, 2025, primarily due to purchases exceeding paydown activities, particularly across the Agency CMBS, Agency MBS, and CMBS categories. The average FTE yield on the available-for-sale portfolio was 4.74% for the year ended December 31, 2025, as compared to 4.17% for the year ended December 31, 2024. The 57 basis point increase is primarily due to higher yields on securities that were purchased in 2024 and 2025, as compared to the yields on securities with paydown activities or that were sold.

At December 31, 2025, and 2024, gross unrealized losses on available-for-sale securities were $0.5 billion and $0.7 billion, respectively. The $0.2 billion decrease is primarily due to lower market interest rates and lower securities’ spreads. On a quarterly basis, each available-for-sale security that is in an unrealized loss position is evaluated to determine whether the decline in fair value below the amortized cost basis is a result of any credit related factors. There was no ACL recorded on available-for-sale securities at December 31, 2025. At December 31, 2024, the ACL on available-for-sale securities was

$0.9 million, which related to a single Corporate debt security. Each of the Company’s available-for-sale securities in an unrealized loss position at December 31, 2025, is investment grade, current as to principal and interest, and their price changes are consistent with interest and credit spreads when adjusting for duration, convexity, rating, and industry differences. Based on current market conditions and the Company’s targeted balance sheet composition strategy, the Company intends to hold its available-for-sale securities in unrealized loss positions through the anticipated recovery period.

Held-to-maturity securities decreased $0.4 billion, or 5.6%, from $8.4 billion at December 31, 2024, to $8.0 billion at December 31, 2025, primarily due to paydown activities across the Agency MBS, Agency CMBS, and Municipal bonds and notes categories. There were no purchases of held-to-maturity securities during the year ended December 31, 2025. The average FTE yield on the held-to-maturity portfolio was 3.98% for the year ended December 31, 2025, as compared to 3.75% for the year ended December 31, 2024. The 23 basis point increase is primarily due to paydowns of lower yielding securities.

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At December 31, 2025, and 2024, gross unrealized losses on held-to-maturity securities were $0.8 billion and $1.0 billion, respectively. The $0.2 billion decrease is primarily due to lower market interest rates and lower securities’ spreads. Held-to-maturity securities are evaluated for credit losses on a quarterly basis under the CECL methodology. At December 31, 2025, and 2024, the ACL on held-to-maturity securities was $0.1 million and $0.2 million respectively.

The following table summarizes the maturity distribution of investment securities by the earlier of either contractual maturity or call date, as applicable, along with their respective weighted-average yields:

(1)Weighted-average yields exclude FTE adjustments and hedge adjustments, and are calculated on a pre-tax basis using the current yield inclusive of premium amortization and discount accretion for each security, major type, and maturity bucket.

(2)Available-for-sale securities and held-to-maturity securities are presented at amortized cost before any allowance for credit losses.

Additional information regarding the Company’s investment securities’ portfolios can be found within Note 3: Investment Securities in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data.

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Loans and Leases

The following table summarizes the amortized cost and percentage composition of the Company’s loans and leases:

(1)The amortized cost balances at December 31, 2025, and 2024, exclude the ACL recorded on loans and leases of $719.4 million and $689.6 million, respectively.

The following table summarizes loans and leases by contractual maturity, along with the indication of whether interest rates are fixed or variable:

(1)The Company has a back-to-back swap program, whereby it enters into an interest rate swap with a qualified customer and simultaneously enters into an equal and opposite interest-rate swap with a swap counterparty, to hedge interest rate risk. At December 31, 2025, there were 927 customer interest rate swap arrangements with a total notional amount of $8.8 billion to convert variable-rate loan payments to fixed-rate loan payments, and 46 customer interest rate cap arrangements with a total notional amount of $1.2 billion limiting how high interest rates can rise on variable-rate loans in a rising interest rate environment.

(2)Amounts due exclude total accrued interest receivable of $282.5 million.

Portfolio Concentrations

The Company actively monitors and manages concentrations of credit risk pertaining to specific industries, geographies, property types, and other characteristics that may exist in its loan and lease portfolio. At both December 31, 2025, and 2024, commercial non-mortgage, commercial real estate, and multi-family loans comprised approximately 75% of the Company’s loan and lease portfolio, with a large portion of the borrowers or properties associated with these loans geographically concentrated in New York City and the proximate areas.

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The following table summarizes the percentage composition of commercial non-mortgage loans by industry, as determined using NAICS codes, which are used by the Company to categorize loans based on the borrower’s type of business:

As illustrated above, concentrations generally remain consistent from period to period. Any change in composition is consistent with the Company’s portfolio growth strategy.

The following tables summarize the percentage composition of commercial real estate and multi-family loans by both geography and property type, and whether the properties are owner occupied or non-owner occupied:

The weighted-average LTV ratio for non-owner occupied commercial real estate and multi-family loans at both December 31, 2025, and 2024, was 57%. The Company calculates its LTV ratios primarily using appraisals at origination unless a full appraisal is subsequently required based on deal-specific events.

Given the ongoing change in office demand driven by the acceptance of remote work options, the commercial real estate market has continued to experience an increase in office property vacancies. As such, commercial real estate performance across the U.S. related to the traditional office sector continues to be an area of uncertainty. At December 31, 2025, the outstanding principal balance of traditional office commercial real estate loans was approximately $733.8 million, which had corresponding reserves of $36.3 million. While the Company does anticipate ongoing change in the traditional office sector, management believes that its reserve levels reflect the expected credit losses in the portfolio.

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Credit Policies and Procedures

The Bank has credit policies and procedures in place designed to support its lending activities within an acceptable level of risk, which are reviewed and approved by management and the Board on a regular basis. To assist with this process, management reviews reports generated by the Company’s loan reporting systems related to loan production, loan quality, concentrations of credit, loan delinquencies, non-performing loans, and potential problem loans.

Commercial non-mortgage, asset-based, and equipment finance loans are underwritten after evaluating and understanding the borrower’s ability to operate and service its debt. Assessment of the borrower’s management is a critical element of the underwriting process and credit decision. Once it has been determined that the borrower’s management possesses sound ethics and a solid business acumen, current and projected cash flows are examined to determine the ability of the borrower to repay obligations, as contracted. Commercial non-mortgage, asset-based, and equipment finance loans are primarily made based on the identified cash flows of the borrower, and secondarily on the underlying collateral provided by the borrower. However, the cash flows of borrowers may not be as expected, and the collateral securing these loans, as applicable, may fluctuate in value. Most commercial non-mortgage, asset-based, and equipment finance loans are secured by the assets being financed and may incorporate personal guarantees of the principal balance.

Commercial real estate loans, including multi-family, are subject to underwriting standards and processes similar to those for commercial non-mortgage, asset-based, and equipment finance loans. These loans are primarily viewed as cash flow loans, and secondarily as loans secured by real estate. Repayment of commercial real estate loans is largely dependent on the successful operation of the property securing the loan, the market in which the property is located, and the tenants of the property securing the loan. Management monitors and evaluates commercial real estate loans based on collateral, geography, and risk grade criteria. All transactions are appraised to determine market value. Commercial real estate loans may be adversely affected by conditions in the real estate markets or in the general economy. Management periodically utilizes third-party experts to provide insight and guidance about economic conditions and trends affecting its commercial real estate loan portfolio.

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

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

Allowance for Credit Losses on Loans and Leases

The ACL on loans and leases increased $29.8 million, or 4.3%, from $689.6 million at December 31, 2024, to $719.4 million at December 31, 2025, primarily due to additional reserves resulting from changes in the macroeconomic forecast, economic uncertainty, and loan growth, partially offset by net charge-offs, improvements in risk rating migration, and changes in commercial portfolio mix.

The following table summarizes the percentage allocation of the ACL across the loans and leases categories:

(1)The ACL allocated to a single loan and lease category does not preclude its availability to absorb losses in other categories.

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Methodology

The Company’s ACL on loans and leases is considered to be a critical accounting policy. The ACL on loans and leases is a contra-asset account that offsets the amortized cost basis of loans and leases for the credit losses that are expected to occur over the life of the asset. Executive management reviews and advises on the adequacy of the allowance on a quarterly basis, which is maintained at a level that management deems to be sufficient to cover expected losses within the loan and lease portfolios.

The ACL on loans and leases is determined using the CECL model, whereby an expected lifetime credit loss is recognized at the origination or purchase of an asset, including those acquired through a business combination, which is then reassessed at each reporting date over the contractual life of the asset. The calculation of expected credit losses includes consideration of past events, current conditions, and reasonable and supportable economic forecasts that affect the collectability of the reported amounts. Generally, expected credit losses are determined through a pooled, collective assessment of loans and leases with similar risk characteristics. However, if the risk characteristics of a loan or lease change such that it no longer aligns to that of the collectively assessed pool, it is removed from the population and individually assessed for credit losses. The total ACL on loans and leases recorded by management represents the aggregated estimated credit loss determined through both the collective and individual assessments.

Collectively Assessed Loans and Leases. Collectively assessed loans and leases are segmented based on product type and credit quality, and expected losses are determined using models that follow a PD, LGD, or EAD framework. Under these frameworks, expected credit losses are calculated as the product of the probability of a loan defaulting, expected loss rate given the occurrence of a default, and the expected exposure of a loan at default. Summing the product across loans over their lives yields the lifetime expected credit losses for a given portfolio. The Company’s PD and LGD calculations are predictive models that measure the current risk profile of the loan pools using forecasts of future macroeconomic conditions, historical loss information, loan-level risk attributes, and credit quality indicators. The calculation of EAD follows an iterative process to determine the expected remaining principal balance of a loan based on historical paydown rates for loans of a similar segment within the same portfolio. The calculation of portfolio exposure in future quarters incorporates expected losses, the loan’s amortization schedule, and prepayment rates.

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

The Company’s models incorporate a baseline and a downside macroeconomic forecast scenario, and management weights the scenarios based on reviews of variable forecasts and comparisons to expectations using readily available data to arrive at a macroeconomic scenario for each quarter end over a reasonable and supportable forecast period. The development of the reasonable and supportable forecast assumes that each portfolio will revert to its long-term loss rate expectation. The reasonable and supportable forecast period is two years, after which the reversion period is one year. Models use output reversion and revert to mean historical portfolio and risk rating specific loss rates on a straight-line basis in the third year of the forecast.

A portion of the collective ACL is comprised of qualitative adjustments for risk characteristics that are not reflected or captured in the quantitative models, but are likely to impact the measurement of estimated credit losses. Qualitative adjustments are based on management’s judgment of the Company, market, industry, or business specific data, and may be applied in relation to economic forecasts when relevant facts and circumstances are expected to impact credit losses, particularly in times of significant volatility in economic activity. Qualitative factors that are generally used in the Company’s models for all loan and lease portfolios include, but are not limited to, nature and volume of portfolio growth, credit quality trends, underwriting exception levels, quality of internal loan review, credit concentrations, and staffing trends.

During the third quarter of 2025, the Company completed a refresh of its CECL models, incorporating additional loss history and enhancements to modeling methodologies used in the estimation process, which resulted in an increase in the quantitative portion of the collective ACL relative to the total ACL on loans and leases. The refreshed CECL models reflect the estimated impact of economic conditions including tariffs, the risk of recession/inflation, and the general economic uncertainty associated with these evolving risks. The change in probability-weighting of macroeconomic forecast scenarios resulted in an increase to the collective ACL of $30.4 million from December 31, 2024, to December 31, 2025. The qualitative portion of the collective ACL accounted for approximately 22% and 39% of the total ACL on loans and leases at December 31, 2025, and 2024, respectively. The composition of qualitative reserves primarily relates to credit quality trends and credit concentrations, which decreased from the prior year as a result of the effects of the CECL model refresh and improvements in overall commercial risk rating migration trends.

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Individually Assessed Loans and Leases. If the risk characteristics of a loan or lease change such that it no longer matches the risk characteristics of the collectively assessed pool, it is removed from the population and individually assessed for credit losses. Generally, all non-accrual loans and loans with a charge-off are individually assessed. The measurement method used to calculate the expected credit loss on an individually assessed loan or lease depends on the type and whether the loan or lease is considered to be collateral dependent. Methods for collateral dependent commercial loans are either based on the fair value of the collateral less estimated costs to sell when the basis of repayment is the sale of collateral, or the present value of the expected cash flows from the operation of the collateral. For non-collateral dependent loans, either a discounted cash flow method or other loss factor method is used. Any individually assessed loan or lease for which no specific allowance is deemed necessary is either the result of sufficient cash flows or sufficient collateral coverage relative to the amortized cost of the asset.

Additional information regarding the Company’s ACL methodology can be found within Note 1: Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data.

Asset Quality Ratios

The Company manages asset quality using risk tolerance levels established through the Company’s underwriting standards, servicing, and management of its loan and lease portfolio. Loans and leases for which a heightened risk of loss has been identified are regularly monitored to mitigate further deterioration and preserve asset quality in future periods. Non-performing assets, credit losses, and net charge-offs are considered by management to be key measures of asset quality.

The following table summarizes key asset quality ratios and their underlying components:

(1)Non-performing asset balances and related asset quality ratios exclude the impact of net unamortized (discounts)/premiums and net unamortized deferred (fees)/costs on loans and leases.

(2)The change from December 31, 2024, to December 31, 2025, is primarily due to increases in non-performing commercial real estate, asset-based, and multi-family, partially offset by decreases in non-performing commercial non-mortgage and equipment financing.

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The following table summarizes net charge-offs (recoveries) as a percentage of average loans and leases for each category:

Net charge-offs increased $12.3 million, or 7.4%, to $179.2 million for the year ended December 31, 2025, as compared to $166.9 million for the year ended December 31, 2024, primarily due to increases in asset-based and commercial real estate, partially offset by decreases in multi-family and commercial non-mortgage.

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Liquidity and Capital Resources

The Company manages its cash flow requirements through proactive liquidity measures at both the Company and the Bank. In order to maintain stable, cost-effective funding, and to promote overall balance sheet strength, the liquidity position of the Company is continuously monitored, and adjustments are made to balance sources and uses of funds, as appropriate.

Cash inflows are provided through a variety of sources, including principal and interest payments on loans and investments, unpledged securities that can be sold or utilized to secure funding, and new deposits. The Company is committed to maintaining a strong base of core deposits, which consists of demand, health savings, interest-bearing checking, money market, and savings accounts, to support growth in its loan portfolios. Management actively monitors the interest rate environment and makes adjustments to its deposit strategy in response to evolving market conditions, funding needs, and client relationship dynamics.

Company Liquidity. The primary source of liquidity at the Company is dividends from the Bank. To a lesser extent, investment income, net proceeds from investment sales, borrowings, and public offerings may provide additional liquidity. The Company generally uses its funds for principal and interest payments on senior notes, subordinated notes, and junior subordinated debt, dividend payments to preferred and common stockholders, repurchases of its common stock, and purchases of debt and equity securities, as applicable.

There are certain restrictions on the Bank’s payment of dividends to the Company, which can be found within the section captioned “Supervision and Regulation” in Part I - Item 1. Business, and within Note 13: Regulatory Capital and Restrictions in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data. During the year ended December 31, 2025, the Bank paid $900.0 million in dividends to the Company. At December 31, 2025, there was $634.6 million of retained earnings available for the payment of dividends by the Bank to the Company. On January 28, 2026, the Bank was approved to pay the Company $300.0 million in dividends in the first quarter of 2026.

The quarterly cash dividend to common stockholders remained at $0.40 per common share throughout 2025. On January 28, 2026, it was announced that the Company’s Board had declared a quarterly cash dividend of $0.40 per share on Webster common stock. For the Series F Preferred Stock and Series G Preferred Stock, quarterly cash dividends of $328.125 per share and $16.25 per share, respectively, were declared. The Company continues to monitor economic forecasts, anticipated earnings, and its capital position in the determination of its dividend payments. In accordance with the Transaction Agreement with Banco Santander, quarterly cash dividends on Webster common stock, the Series F Preferred Stock, and the Series G Preferred Stock may not exceed $0.40 per share, $328.125 per share, and $16.25 per share, respectively, without prior written consent from Banco Santander.

The Company maintains a common stock repurchase program, which was approved by the Board, that permits management to repurchase shares of its common stock in open market or private transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the SEC, subject to the availability and trading price of stock, general market conditions, alternative uses for capital, regulatory considerations, and the Company’s financial performance. On April 30, 2025, the Board increased management’s authority to repurchase shares of Webster common stock under the repurchase program by $700.0 million. During the year ended December 31, 2025, the Company repurchased 10,933,584 shares under the repurchase program at a weighted-average price of $54.30 per share, totaling $593.7 million. At December 31, 2025, the Company’s remaining purchase authority was $334.3 million. In accordance with the Transaction Agreement with Banco Santander, the Company paused repurchases under its stock repurchase program through the completion of the Transaction.

In addition, the Company will periodically acquire common shares outside of the repurchase program related to employee stock compensation plan activity. During the year ended December 31, 2025, the Company repurchased 402,502 shares at a weighted-average price of $56.55 per share, totaling $22.8 million, for this purpose.

Webster Bank Liquidity. The Bank’s primary source of funding is its core deposits. Including time deposits, the Bank had a loan to total deposit ratio of 82.3% and 81.1% at December 31, 2025, and 2024, respectively.

The Bank is required by OCC regulations to maintain a sufficient level of liquidity to ensure safe and sound operations. The adequacy of liquidity, as assessed by the OCC, depends on factors such as overall asset and liability structure, market conditions, competition, and the nature of the institution’s deposit and loan customers. At December 31, 2025, the Bank exceeded all regulatory liquidity requirements. The Company has designed a detailed contingency plan in order to respond to any liquidity concerns in a prompt and comprehensive manner, including early detection of potential problems and corrective action to address liquidity stress scenarios.

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Capital Requirements. The Company and the Bank are subject to various regulatory capital requirements administered by the federal bank regulatory agencies. Failure to meet minimum capital requirements can initiate certain mandatory actions by regulators that could have a direct material effect on the Company’s Consolidated Financial Statements. Under capital adequacy guidelines and/or the regulatory framework for prompt corrective action (applies to the Bank only), both the Company and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated pursuant to regulatory directives. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by the Basel III Capital Rules to ensure capital adequacy require the Company and the Bank to maintain minimum ratios of CET1 Risk-Based Capital, Tier 1 Risk-Based Capital, Total Risk-Based Capital, and Tier 1 Leverage Capital, as defined in the regulations.

The following table presents the minimum ratios required as of December 31, 2025, and 2024: