Good morning. Welcome to the Webster Financial Corporation Q2 2022 earnings call. Please note this event is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, please press star one again. Comments made by Webster Financial's management team may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to the safe harbor rules. Please review the forward-looking disclaimer and safe harbor language in today's press release and presentation for more information about the risks and uncertainties which may affect us. The presentation accompanying management's remarks can be found on the company's investor relations site at investors dot websterbank.com. I will now turn the call over to Webster Financial's Chief Executive Officer, John Ciulla. Mr. Ciulla, please go ahead. Thank you, Chantelle. Good morning, and thank you for joining us for our Q2 earnings call. I'm excited to be speaking with you this morning on our quarterly results as I think they are a great illustration of the potential of our company, the quality of our execution, the team we've put together, and our colleagues' focus and dedication as we progress through the integration. I'm going to start with a high-level overview of our financial performance in the quarter, review the progress of our integration and other strategic initiatives, and then I'll turn it over to Glenn for a review of the quarter's results and the outlook. I'll wrap it up at the end with a few additional comments, including some perspectives on the uncertain macroeconomic environment. I'm on slide two. As I mentioned just a moment ago, the Q2 is a great reflection of Webster's potential. The earnings power of our new company is materializing in the full Q1 following the close of our merger with Sterling. We exhibited strong and diverse loan growth. The quality of our core deposit franchise led by HSA Bank and our consumer banking team with a rising rate environment, and we maintained an advantageous capital position. On an adjusted basis, eliminating one-time merger-related costs, we generated EPS of $1.29 with a return on assets of 1.41% and a return on tangible common equity of 18.5%. Our efficiency ratio was 45% as we continue to execute on the synergies our merger provides and leverage the diverse competencies of our company. Our loans and total assets grew 4.8% and 3.8% respectively in the quarter. Loan growth was generated across broad industry sectors, business lines, geographies, and asset classes, and our asset quality metrics remained favorable. With an expanded geography and a growing number of industry verticals, our talented colleagues can continue to safely and prudently grow loans. The rationale behind this merger of equals was and is relatively straightforward, as I've stated several times. We have created a company with an incredibly diverse funding profile, including our HSA Bank franchise. We have a proven track record of growing loans across a broad set of asset classes and geographies at or above market growth rates. With a bigger balance sheet to deepen our relationships with existing sponsors and businesses, we materially improve our ability to drive Net Interest Income, capital markets revenue, and swap and cash management fees. In 2Q, we saw early proof points validating the power of combining the two companies. On slide three, while we continue to achieve key milestones in the integration, our colleagues also remain laser-focused on our clients and maintaining the day-to-day operations of the bank and revenue momentum. Our ability to do both was evident in this quarter. We remain confident in our ability to achieve or exceed the key merger financial metrics we set forth at deal announcement over a year ago, including 8%-10% annual loan growth, $120 million in expense saves over the first two years, and completion of our technology conversion by mid-2023. While we continue to manage expenses and look for synergistic opportunities, we remain focused on profitable growth and will not shy away from investments in our differentiated high return businesses that will add franchise value and economic profit over time. We continue to see opportunities to attract key talent and launch initiatives across all of our high-performing business lines. In the Q2, we began to consolidate several back-office systems, including mortgage servicing, treasury management, and payroll. We finalized the structure of our executive management team, and we're making great progress on the corporate office consolidations we outlined last quarter. Finally, given our increased scale, we have been able to formally establish an Office of Corporate Responsibility to oversee the company's community investment, philanthropy efforts, and sustainability work. Collectively, we have the ability to provide more for our communities. In the quarter, we announced a $6.5 billion three-year community investment program that includes investment in affordable housing and community development, small business lending, and other philanthropic and community engagement efforts. With that, I'm going to turn it over to Glenn to review our financial performance for the quarter. Thanks, John, and good morning, everyone. I will start with the reconciliation to core earnings on slide four. We've reported GAAP net income to common shareholders of $178 million with EPS of $1. As John noted, on an adjusted basis, we reported net income to common shareholders of $229 million and EPS of $1.29, which excluded one-time after-tax expenses of $50 million. The one-time charges were related to real estate consolidation, severance, and other merger and integration charges. Next, I'll review the balance sheet trends before moving on to the income statement. On slide five, our total assets were $67.6 billion, with total loans of $45.6 billion and total deposits of $53.1 billion. As you see, we delivered strong loan growth on a quarter-over-quarter basis in commercial and consumer categories. The linked-quarter decline in deposits was primarily due to a seasonal effects of public funds, which I'll cover in more detail on a later slide. On slide six, we highlight the diversity of our loan growth, which is an illustration of the potential of Webster's post-merger business mix. In total, we grew loans $2.1 billion or 4.8% on a linked-quarter basis. By category, the largest contributors to the increase were C&I with $603 million, Commercial Real Estate with $557 million, and Residential Mortgage s with $426 million. Switching to the deposits on slide seven, total deposit balances declined by $1.3 billion or 2.4% relative to prior quarter. The primary driver was a seasonal decline in public funds, with balances down $1.2 billion. We expect to see a reversal in the Q3 as tax collections drive higher liquidity at public entities. Short-term borrowings were leveraged to fund growth in the quarter. A portion of the borrowings will be paid down as public funds rebuild and we continue to gather new deposits. HSA deposits were effectively flat on a quarter and up 6.2% year-over-year. Excluding third-party administered accounts, deposits increased 8.4% year-over-year. The impact of TPA runoff on overall growth is becoming much less significant as that book nears an end state. Additional detail for the HSA Bank is on slide 19 in the appendix. Beginning on slide eight, I'll review the details of our income statement. We provided our reported-to-adjusted income statement by line item and compared our adjusted earnings to pro forma Q1 earnings. Notably, on an adjusted basis, each of the major line items of our income statement exhibited improvement on a quarter-over-quarter basis when compared to the aggregated results of Sterling and Webster last quarter. I'll cover the individual line items in more detail on subsequent slides. Our pre-provision net revenue on an adjusted basis was $316 million, up $39 million when compared to the combined Q1 results. Net Interest Margin was 3.28% on a reported basis, and our combined efficiency ratio is now 45%. On slide nine, Net Interest Income grew by $22.8 million relative to the pro forma Q1. Adjusting for accretion in both periods, Net Interest Income was up $29.9 million quarter-over-quarter. Net Interest Margin, excluding accretion income, increased 11 basis points to 3.09%. Given the current forward curve, we expect further expansion to our core Net Interest Margin throughout the year. As illustrated on an earlier slide, the cost of deposits increased 2 basis points quarter-over-quarter. We expect deposit pricing in certain categories will start to move more materially in the future quarters with subsequent Fed actions. On a year-over-year basis, deposit costs were flat. On slide 10, we show our fee income for the quarter and on a year-over-year basis. Fees were up $6 million linked quarter and $18 million year-over-year. The improvement in fee income was driven primarily by customer interest rate hedging activity in the commercial bank. Year-over-year improvement was also driven by increased deposit-related fees as transaction activity increased relative to pandemic impacted periods. Slide 11 summarizes non-interest expense. We reported adjusted expense of $292 million relative to $302 million on adjusted pro forma expense last quarter. The decline is driven by the initiatives John outlined in his integration update, including the finalization of the org structure, corporate real estate consolidation, and the elimination of duplicate systems and vendors. Slide 12 highlights our Allowance for Credit Losse s, where we recorded provision expense of $12 million and a $2 million increase in our allowance driven by loan growth. The provision expense also reflects an improvement in individual credit performance and loan mix, which was partially offset by a modestly lower outlook on macroeconomic variables. As a result, the allowance coverage ratio fell as a percent of loans to 1.25%. As highlighted on slide 13, you can see the underlying credit metrics remain strong. We reported linked-quarter declines in both Non-Performing assets and Classified Loans, down $1 million and $41 million respectively. I would also note our delinquencies declined to $52 million from $71 million last quarter. Net Charge-offs of 9 basis points declined 1 basis point from last quarter and remain at low levels. Slide 14 highlights our strong capital levels. All capital ratios remain well in excess of regulatory and internal targets. Consistent with our previously stated capital targets, we repurchased over two million shares in the quarter and will continue to be opportunistic with repurchases going forward. The net of all capital effects this quarter resulted in a slight decline in our tangible book value per share, which decreased to $28.31. Primarily driven by AOCI losses, the share repurchases, partially offset by our strong earnings. Our Common Equity Tier 1 ratio remains strong at 11.04%, is still well above our minimum firm operating target of 10.5%. We anticipate we will prudently and opportunistically return capital to shareholders given the strong internal capital generation from improving profitability, sound underwriting credit metrics, and the ample reserve on our marked and well-diligenced loan portfolio. I'll wrap up my comments with a refresh on our outlook for full year 2022. We are increasing our guidance on Net Interest Income to $1.9 billion, driven by our projections for the rate environment and strong loan growth. This full year outlook excludes $90 million of realized and scheduled purchase accounting accretion. The details of which can be found on slide 28 in the appendix. Our projections assume the Fed funds rate ends the year at 3.25%, implying another 150 basis points of rate increases. As a reminder, our interest income outlook is on a non-FTE basis. We now expect loan growth to be near the top end of our 8%-10% range. Fees should be in the range of $430 million-$450 million. We continue to feel confident in achieving our full year adjusted expense target of $1.1 billion -$1.12 billion. That being said, we will continue to monitor inflationary headwinds and of course, continue to invest in our businesses. We are forecasting an effective tax rate of 23%-24%. With that, I'll turn things back over to John for closing remarks. Thanks, Glenn. Five months after closing our merger, we've made material progress. While we've a ton of work in front of us bringing systems, products, and processes together, we are operating as one organization, and the strategic merits of bringing the two companies together is reflected in our accomplishments so far this year. We've created a bank with growth capabilities and unique asset classes. Our commercial loan portfolio has grown 12% year to date on an annualized basis. We have a bank with a unique funding engine. Our deposit costs increased 2 basis points this quarter at the same time the Fed is increasing short-term rates at a fast pace. We've created a bank with superior capital generation capability. The adjusted return on tangible common equity of over 18% this quarter illustrates the potential we have to deliver outsized returns. We have repurchased over $200 million in Webster shares since the transaction closed, all while maintaining capital levels that provide us with significant flexibility as we move forward. Finally, I do want to address the operating environment and our preparedness. As many of our peers have remarked, things feel good on the ground today, despite tangible macro headwinds and an increased risk of recession. We have maintained a consistent and prudent risk management framework that will serve us well in any economic environment. Specifically, as it relates to credit, our loan portfolio is diverse, with the merger actually serving to eliminate concentrations in asset classes, businesses, and geographies. I'm very pleased with how quickly we have been able to consolidate and harmonize portfolio management practices across the new organization. In fact, we plan to consolidate our credit risk management tech platform in the Q3. We have a robust allowance for loan losses with coverage in the top quartile of our peer proxy peer group. We have benefited from internal and third-party diligence on our loan portfolio associated with merger work last year. We incurred purchase accounting marks on the loan book. We have significant buffers in our capital ratios well above regulatory minimums, and our company should continue to generate substantial excess capital moving forward. We believe that this provides us significant flexibility to adapt to the constantly changing operating environment. In short, we believe our strengths position the company to operate through macro cycles and generate solid returns to shareholders in both the near and long term. We believe this was a very strong quarter for Webster, and it's a direct result of the hard work and great execution of our colleagues, all during the challenging process of integrating an MOE. I want to give a big thanks to all of our colleagues and their tremendous efforts. Operator, Glenn and I will now take questions. At this time, I would like to remind everyone, in order to ask a question, press star one. We'll pause for just a moment to compile the Q&A roster. Our first question comes from Chris McGratty with Keefe, Bruyette & Woods. Your line is open. Oh, hey, good morning. Hey, Chris. Hey. Hey. Glenn, maybe just start with you on just the balance sheet. Yeah, I appreciate the comments on the public funds. I guess a trend that we've noticed, that we've all noticed this quarter is just the challenge of growing deposits. I'm interested in kind of outlook commentary about retention of deposits, what you might see in the portfolio that could be at risk, and how we should be thinking about funding this improved growth. Thanks. Yeah. Great. Good question, Chris. Here's how we're thinking about it. We're at $52 billion-$53.2 billion in deposits. We mentioned the public funds, which are about $1.2 billion. We think that's seasonality, so that'll come back to us. As we talked about in the past, I mean, we have multiple levers to pull on the funding side, whether it's digital or commercial. We think that we'll begin to attract new funds in those two channels. Some of that will be partially offset. If you look at things like our DDA balances as a% of total deposits are elevated because of all the liquidity. We're factoring some of that coming down. At the end of the day, we think, you know, if you put it all together, we're still targeting a loan-to-deposit ratio somewhere around 85%. In terms of the investment portfolio, fair to assume that kind of gradually works lower as you kind of find more profitable ways to? At $15 billion, it's about 25% of our earning assets. Over time, over the course of time, primarily through you know, prepayments and cash flow, we think that'll probably drift down to like a 20% level. But that's probably gonna take you know, some time to get there. Okay. Maybe just the last one, and I'll hop back. The betas, can you just remind me what you're assuming for through the cycle betas on the combined company? Look, I think over the next Q4, we would think our effective beta on a full deposit base would be closer to 30%. You know that takes into effect the fact that we're capturing new deposits from the various channels that we have. You know, that's how we're thinking of it. You know, you recall last quarter we were about 21%. We now have another quarter underneath us. We're thinking that over a Q4 process, you know, it'd probably be closer to 30%. Okay. Thank you. Thanks, Chris. Our next question comes from Mark Fitzgibbon with Piper Sandler. Your line is open. Hey, guys. Good morning. Hey, Mark. How you doing? Good, thanks. I wonder if you could first share with us your commercial line utilization rates, what those look like right now. Yeah. They're improving marginally. Up in March, they were up about 2%. In June, they were up about 8%. We're seeing from last June, they're up about 8%. From the prior quarter, they're up about 3%. We're seeing that across the board. I think that's kind of consistent with industry. We're seeing it in ABL, where we kind of see the best sign of working capital changes. Okay. Secondly, John, we saw a small HSA book get sold to a competitor recently. I'm curious if, you know, these kinds of deals continue to be a priority for Webster and, you know, whether you think it's likely in the quarters ahead we'll see some more of these kinds of transactions. Yeah, Mark, I think that's a great question, and we've been pretty transparent about it. Obviously, as a top five player, and you know the top five own 65% of the market, we obviously see all the transactions. The pricing and the value on many of these transactions are pretty steep. I would say yes, it's a priority to us. You saw us do the Bend acquisition, which was a combination of a portfolio and technology that we can lever. We're also trying to be disciplined with respect to tangible book value dilution, and balancing it against the cost of acquiring other deposits. The answer is yes, it is a significant priority. You've seen deals go off in the market and price has generally been, you know, the reason we haven't won some of those transactions. Okay. Lastly, I wonder if you could talk a little bit about your franchise footprint and maybe which geographies you see as having the best growth potential, and maybe, you know, areas where you might look to prune? Yeah. Sure, Mark. This always sounds like a punt answer, but the truth is, I felt this quarter was really evident of all levers kind of working at the same time. You know, you think about the concentrations, legacy Sterling in New York City, sponsor and specialty at Webster, Commercial Real Estate in some areas. This was a broad quarter of loan growth, and we're seeing strength and activity in all areas. What I would say is geographically, both in our, you know, core retail footprint, core middle market footprint, in more of our regional businesses like Commercial Real Estate or even national businesses like public sector finance or sponsor and specialty, we see real opportunity. We don't see any geographic areas where we're concerned or looking to pull back. I would say it's more in the asset classes where we're being a little bit more careful. Cyclical businesses that are potentially at risk to higher energy prices, cyclicality, supply chain disruption. Office, right? We're obviously looking keenly as to whether or not there's a real paradigm shift going on there with the way people work. I would say it's more industry sector, more borrower specific than any geography. Right now, besides a couple of those areas where we're keeping an eye on and probably reducing new origination, in office in some of the more cyclical businesses, all of our geographies are still robust and healthy. Thank you. Thanks, Mark. Our next question comes from Steven Alexopoulos with JPMorgan. Your line is open. Hey, good morning, everyone. Morning, Steve. I wanted to first, follow up on Chris's question on the deposit side. Mm-hmm. Glenn, you pointed to 85% loan to deposit ratio target. You're basically there. Can you give more color on your ability to generate low cost deposits, right? You're saying you have a more diverse deposit base, which is fine. Which category should we expect going forward to support and Fund Loan Growth? Yeah. I think it's a mix, Steven. You know, you get some of the texture. We've gone from like a loan to deposit ratio of 80%-86% this quarter. You know, about 4% of that was driven by the loan growth, 2% from the decline in municipal deposits and public funds. We do expect that to come back in pretty strong for the back part of the year. I think the key channels for us are going to be on digital and are going to be in the commercial business, whether it's treasury management or whether it's transactional type of accounts. We will have over the course of the Q4, we'll have HSA coming in too as we get into the enrollment season. I have a lot of pluses coming in from the multiple channels, but I also have an offset in DDA because I think it's sort of elevated right now. The combination of all those, I think will is what's going to bring us to that 85% loan to deposit ratio. That being said, as you can see from the Q1, I mean, we did raise or increase what we think our forecasted deposit base is going to be over Q4. Now where we thought last quarter was going to be 21%, we're starting to see things heat up a little bit more. But that doesn't mean that this is an expensive source of funding on the deposit side. We've moved that 21 Closer to 30 over a Q4 cycle. That's how we're thinking about it right now. It, you know, it's all to fund the loan growth, which we feel, you know, as you saw in this quarter, we feel really confident about where we are in operating at the top end of our stated range. Steve, I'll just put context from a business perspective as well. As Glenn mentioned, the vast majority of the reduction in deposits was seasonal outflows from public sector and government deposits. We're adding, as you can see, 4.8% loan growth, also a lot of new logos, a lot of new companies, a lot of new relationships in business banking and commercial. You know, we really require our teams out there to make sure those are full relationships with deposits and cash management. You'll see more deposits roll in and have a natural growth in commercial because of the number of relationships. Maybe not because of what's going on in the macro environment from a liquidity perspective, but you know, Christopher Motl's out there right now making sure that his folks are focused on deposits, and we can refine our pricing a bit to make sure that we're able to continue to raise deposits. Yeah. The last thing I would add, Steven, is that our investment portfolio, as you know, is elevated right now, 25%. We think the more natural level for our investment portfolio is probably closer to 20%. As we get the cash flow out of the investment portfolio, which is running about $350 a quarter, you know, that's going to go to fund the loan growth as well. That'll take some time to come off, but we're basically picking up 140-150 basis points on that trade as it flows more into the loan book. Okay. That's helpful. I want to shift direction and talk about HSA Bank for a minute. If I look at the year-over-year growth metrics, this basically went from one of your fastest-growing segments, if not the fastest-growing segment, to one of the slowest, even after I adjust for the third-party administration stuff. How much of the downshift do you see as structural versus cyclical? And what's the environment we need to transform as this again into a growth engine for the company? I think that's a great question, Steve. You know that we're focused on it because we think it's a terrific asset. I think if you cut through, we're really pleased with the performance in terms of on-the-ground execution in winning RFPs and going after direct-to-employer relationships. The data that we show says that we do a really good job there, kind of at market. Some of our bigger relationships with healthcare providers have grown a little bit slower than market. The net result of all of that is the whole market, the HSA industry has slowed obviously from kind of that 20% growth rate, you know, more towards high single digits, low teens. We've been trailing that by a couple of percentage points given the mix of our business. You know, it has slowed. I think the drivers are much more industry-wide. We're obviously growing deposits at 8% year-over-year is still a wonderful thing, particularly with the characteristics of the long duration and low-cost nature of those deposits. What are the things we're doing, Steve? The Bend Financial acquisition, we are right now integrating that technology with our own customer portal, and we're rolling that out to clients as we speak over the next six months. In beta testing, our customers and our employers have really liked that. We think that will increase participation and increase funding amounts. It's, you know, providing a great digital experience and education to our existing three million-plus account holders about why they should be savers and not spenders. We think that there'll be a material uplift in average deposits. We're kind of working everything. We're working transparency tools, products. We're working better technology experience. We're focused on sales. You know, our goal is to be able to come to the market and say, "We're growing at market rates." As it relates to the market, you know, we do think coming out of the pandemic that we'll see a strengthening of that kind of market industry growth rate as well. We want to make sure when that happens that we can be a strong participant. Okay. That's helpful. If I could ask one final one, John. Big picture question. Talk to us about how the integration of the two cultures is going. What's gone well? What needs more attention? I know you haven't done the system conversion yet, but how has the customer experience been thus far? Thanks. Sure. I'll start with your last question. The customer experience has been really, really good because we haven't disrupted anything really from an operational perspective. Because this deal was so complementary, all of our frontline folks are here. All of our customers are dealing with the same people they were dealing with. I think that's one of the reasons we were able to to kind of beat market growth on loans. Customer experience so far, good. One of the reasons why we are having our technology conversion in mid-2023 is because we are determined not to disrupt our customers. I think that's why we're taking a slower and more deliberate approach. As it relates to culture, if I sat here right now, five months after closing of the transaction, you know, I give us kind of an A-minus, and I'm really happy. I can't believe we would be better off with respect to alignment at the top with the management team, the way we're cascading messaging down. All that being said, an MOE is hard. The idea of making sure that every last one of our 4,000 colleagues feels as if they're part of one singular team takes a lot of hard work, a lot of purposeful training, but it also takes time. I'd be lying to you if I told you that if you walked around our entire organization, everyone would feel like this was the place they've worked in for the last 20 years. We're working really hard at that, and so far it's worked really well. We've got great alignment. People are executing. Our risk framework is great. Our relationships with the regulators are great. We have not seen attrition in key areas. You know, I couldn't be more pleased, but I'm also, you know, I don't have my head in the sand, and I know that it's a long road to get to the perfect spot. Mm-hmm. Great. Thanks for taking all my questions. Thanks, Steve. Our next question comes from Matthew Breese with Stephens. Your line is open. Good morning. Hey, Matt. Just thinking about the loan growth guide versus what you've already accomplished year to date. Is the 8%-10% growth range a safe annualized rate from here, or should we incorporate, you know, the tremendous amount of growth you've already seen? I mean, we're looking at it incorporating the growth. I'm not sure we can put up another 4.8% organic growth rate. You know, look, Glenn guided to the high end of that range. There's a chance we could outperform it if the environment stays strong. You know, the reason we always talk about that 8%-10%, and, you know, we go back and forth on people telling us we'll never make it, and then telling us it's too much, and then figuring out whether or not we're gonna go above that is I think we've been able to sustainably grow our loans, particularly on the commercial side, and now we're getting good traction on the consumer side as well in that 8%-10% range. I think what you can do, Matt, is, you know, push that out into 2023 as well. I think, you know, we're looking every quarter to try and post an 8%-10% annualized growth rate. Some quarters will be higher and lower depending on prepayments and certain origination characteristics. We're not saying we're gonna grow loans another 10% in the next six months. We're saying that we're sticking to our 8%-10% loan growth range for the year. Obviously we have an opportunity to be at the high end of the range or outperform. Understood. The way the pipeline looks, does it seem like growth can be as diverse as it was this quarter? You know, it does right now. I kind of say that with a smile. Yeah. I'm thrilled because it appears that the teams across this franchise and the different asset classes have a lot of energy, and their pipelines are healthy. I think we're being really disciplined, Matt, on, you know, risk selection as well. I think we're understanding pockets of asset classes that could be vulnerable to a downturn. I think we're being disciplined in making sure we're not reaching too far or throwing the bomb in any one area. We still see broad growth. You know, we had broad growth in Commercial Real Estate, middle market, sponsor and specialty, public sector finance, ABL, and all of our mortgage and consumer lending all really kind of in that, you know, +4% area. It was really nice to see the granular growth. Great. I was hoping you could talk a little bit about the Banking as a Service effort at Webster and what was brought over from legacy Sterling, what that entails. Curious the amount of deposits, it's important to the overall funding effort in the outlook for growth. I guess I didn't fully appreciate how important that was towards the end days of Sterling, and I'm curious if that's going to be one of the primary drivers of deposit growth as we head deeper into this rate hiking cycle. You know, it's a great question. As you can tell probably from Glenn's earlier response on deposits, we are not sort of factoring that in as a major driver in the next couple of quarters. Although we do see a clear path to a billion-dollar pipeline in that area of relatively low-cost deposits with existing relationships that we're working with. What I'd say is that's kind of gravy on our plate. It is what we believe to be another strategic lever that hopefully we'll kind of have operational for a period of time. I think that what we're saying is it's not a major driver of deposit growth over the next quarter or two, but it could be significant. Okay. My last one. You know, I noticed that ABL NPAs increased a bit quarter-over-quarter. It looks like some of it transitioned from 30 to 89 day. Obviously, not a huge number, but I am focused on equipment lending near term as an area that could see some stress across the industry. I was just curious, could you give us some background on the combined equipment book, the exposures, the types of equipment you underwrite, historical losses, and then just an overall sense for how that book is shaping up from, you know, from a stress perspective in this environment? Yeah. I think we're not too concerned right now because we've got pretty good collateral coverage. Bringing these two equipment finance businesses together, there's almost everything there, Matt. So there's granular low ticket stuff that's volume-based. There's also participations in larger banks, larger transactions in equipment finance. You know, I think some more cyclical businesses, as you can imagine. There's nothing in there from a kind of a systemic perspective that scares us with respect to kind of credit performance right now. And as you can see, we really haven't grown the business. We're kind of putting over a new framework on how we're going to attack the market, and we've kind of been slowly trying to build back up originations in profitable and granular areas. All I can say right now, it hasn't been a big driver of growth. We're not particularly concerned given the collateralized nature of the business and kind of outsized losses in the portfolio. More to come on kind of strategically how we move forward with that combined business. Understood. Great. I appreciate you taking my questions. Thank you. Great. Thank you. Again, if you would like to ask a question, press star one. Our next question comes from Laurie Hunsicker with Compass Point. Your line is open. Great. Hi. Thanks, Glenn. John, good morning. Question Good morning. This is sort of a bigger question if we could stay on loan and credit here. Can you give us a refresh on your leveraged loan book and then, you know, how much of that is in the sponsor and specialty areas just with respect to balances, credit charge-offs, and more importantly with the warning signal starting to flash, how you're thinking about that and just remind us how it's different versus where you sat during the GFC? How much time do we have, Laurie? No, I'm only kidding. Good, good question. I'll give you the kind of the fun facts. Our leverage loans end of period balances were around $3 billion representing 6.5% of total loans and about 8% of commercial loans as of June 30th. Which is roughly in line from a percentage perspective with what it's historically been. And as you know, when we talked about the merger, one of the wonderful things is it reduced the overall you know concentration in the numbers with a bigger balance sheet and bigger loans. I will tell you that the portfolio of leverage loans is about 85%-90% in the sponsor and specialty world, which is good news because it's in industries and sectors that have repeatable, protectable, sustainable cash flows. Those are tech and infrastructure, healthcare services, stuff that we've been doing for a long time with sponsors we've known for 15 to 20 years. The portfolio continues to perform at or around the overall performance level of the rest of the commercial bank, which has been the case through both the Great Recession and the Pandemic. There is a little bit more volatility in the risk ratings in the leverage book because obviously those risk ratings start a little bit lower, and with leverage there can be a little more variability in risk ratings. However, the strength of the financial sponsors behind the deals have continued to have that not result in higher levels of non-accruals, or losses. The other thing I'll say about the book is it's more granular. If you think about the leverage loans making up 8% of the commercial loan book, they only make up about 3.5% of our aggregate exposure in top 100 exposures and names. If you think about that, our leverage loans tend not to be the highest commitments and single point exposures in the organization, and that's obviously intentional. We'll keep you posted, but you know, so far our premise has worked really well, and we've also been disciplined about where we do that activity, about the people who we allow to do that activity, and how much of that activity is in the organization as a percentage of Tier 1 capital plus reserves or the overall portfolio. Great. Thanks. Do you have what your balance of non-performers is relative to that $3 billion book and what charge-offs are? I just have one more quick follow-up. Thanks. Yeah. I don't have those numbers off banks, but little to no loss in that book I know over the last five years. We can reach back out to Laurie with that. Great. Thanks. Just one last question. Office, can you remind us what is the balance that you have in office and how much of that is in New York City? Sure. Thanks for taking my question. Sure. We have about $2.2 billion in office exposure all around. If you take five hundred and fifty thousand, six hundred thousand of office medical related office, which has a completely different characteristic, you're about down to $1.6 billion or so. Split half between class A and class B and C. You know, underwritten at 50% LTVs. Obviously, those are at underwriting, so those LTVs have probably moved up a bit depending on what your view of value is there with a 1.7x average debt service coverage. About $522 million of that exposure is in New York City in the five boroughs. If you take out medical office again, it's about $400 million in traditional office in the five boroughs. It is performing from a classified watch and worse to non-performing, similar to the office exposure across the rest of our footprint, which I would say is slightly worse than the overall commercial weighted average risk rating and levels of classified and criticized. That's where we are. It's a relatively small portion. We spend a lot of time on it, as you can imagine. The other good news there is we have less than 10% of rent rolls rolling off in each of the next two years, which means that there's probably some time before real issues, if there really is a permanent paradigm shift arise, and it gives us some time to work with the borrowers on those properties. Great. Thank you. Thank you. Our next question comes from Bernard Horn with Polaris Capital Management. Your line is open. Hi. Good morning. I had a quick question on just general tone of the portfolio or the behavior of borrowers. We've heard from some you know sectors companies that we're speaking to and even some borrowers in the PE space that some of their borrowers are getting very cautious about the future of the economy to the point where they're actually trying to sell off some assets to pay down debt. I guess the question is, are you seeing it? It it? It seems like you're going kind of very heavy into the growth mode potentially before a big economic crisis. I'm not saying it's gonna be huge, but I guess the point is that some borrowers are out there getting more conservative. Are you seeing any of that kind of behavior in your borrowers? Yeah, Bernard, I think in some sectors we are. Absolutely. As portfolio managers, we're doing the same thing. If we have opportunities, because there's still a lot of private liquidity out there to lower areas in our loan book that we think might be vulnerable in the long term, we're taking actions as well. I don't want you to get the sense that we're not in full preparedness mode. You know, the potential number of outcomes here is wide. Our base case is still if there is a recession, it's relatively mild in terms of impact on broad credit. You know, we obviously know that there could be a worse downturn. As I said earlier, all of our origination, we're not pedal down, meaning that it's loan growth at all costs. We're taking care of our borrowers in the geographies and sectors in our existing relationships and opportunities we should, but we're trying to avoid, you know, like in real estate, we're cautious in hotel, we're cautious and really not doing anything in office right now. There are property types we're focused on where our growth is multifamily, industrial, distribution, which is still pretty healthy. In C&I had say, you know, we're really careful about cyclical contractors. We're careful about folks that are exposed to energy costs, transportation costs, who've been significantly impacted by supply chain disruption. You know, who've been impacted actually by labor shortages and the tight labor market. You know, what we do is we don't put a blanket on everything and put up the red light or the yellow light. Our credit folks who are just terrific, Jason Soto, our chief credit risk officer, and his team, you know, they're well aware of where there is more vulnerability, and it's coming through, I think, in our risk selection. Which is why a little bit we're not projecting the same level of loan growth for the balance of the year. We still think there will be decent loan demand, but we think as we move closer to whatever this cycle is, that there'll be less demand because our borrowers will be more cautious and so will we. Oh, that's terrific detail. Thanks for that additional commentary because that obviously anticipated my follow-up as to where you're being cautious. Thanks so much. Appreciate it. Thanks, Bernard. We have reached the end of the question and answer session. I will turn the call back over to John Ciulla for closing remarks. Thank you, Chantelle. I really appreciate it. I wanna thank everyone for joining us this morning, and thank you for your interest in Webster. Have a great day. This concludes today's conference call. You may now disconnect.