Business Segments

12 Months Ended

Dec. 31, 2012

Segment Reporting [Abstract]

Business Segments

Business Segments

Webster’s operations are divided into four business segments that represent its core businesses - Commercial Banking, Retail Banking, Consumer Finance and Other. Other includes the operating segments, HSA Bank and Private Banking. These segments reflect how executive management responsibilities are assigned by the Chief Executive Officer for each of the core businesses, the products and services provided and the type of customer served, and reflect how financial information is currently evaluated by management. The Company’s Treasury unit and consumer liquidating portfolio are included in the Corporate and Reconciling category along with the results of discontinued operations and the amounts required to reconcile profitability metrics to GAAP reported amounts.

As of January 1, 2012 the Company changed the allocation of FDIC insurance expense to conform to the change in the FDIC insurance assessment system from one that is based on domestic deposits to one that is based on average consolidated total assets minus average tangible equity which took effect in 2011. The 2011 business segment results have been adjusted for comparability to the 2012 segment presentation.

Webster’s business segment results are intended to reflect each segment as if it were a stand-alone business. Webster uses an internal profitability reporting system to generate information by operating segment, which is based on a series of management estimates and allocations regarding funds transfer pricing, the provision for loan and lease losses, non-interest expense, income taxes and equity capital. These estimates and allocations, certain of which are subjective in nature, are continually being reviewed and refined. Changes in estimates and allocations that affect the reported results of any operating segment do not affect the consolidated financial position or results of operations of Webster as a whole. The full profitability measurement reports which are prepared for each operating segment reflect non-GAAP reporting methodologies. The differences between the full profitability and GAAP measures are reconciled in the Corporate and Reconciling category.

The Company uses a matched maturity funding concept, also known as coterminous funds transfer pricing (“FTP”), to allocate interest income and interest expense to each business while also transferring the primary interest rate risk exposures to the Corporate and Reconciling category. The allocation process considers the specific interest rate risk and liquidity risk of financial instruments and other assets and liabilities in each line of business. The “matched maturity funding concept” considers the origination date and the earlier of the maturity date or the repricing date of a financial instrument to assign an FTP rate for loans and deposits originated each day. Loans are assigned an FTP rate for funds “used” and deposits are assigned an FTP rate for funds “provided.” From a governance perspective, this process is executed by the Company’s Financial Planning and Analysis division, and the process is overseen by the Company’s Asset-Liability Committee.

Webster attributes the provision for loan and lease losses to each segment based on management’s estimate of the inherent loss content in each of the specific loan portfolios. Provision expense, for certain elements of risk that are not deemed specifically attributable to a business segment, such as environmental factors, and provision for the consumer liquidating portfolio, are shown as other reconciling. For the years ended December 31,2012, 2011 and 2010, 83.7%, 108.8% and 89.9% of the provision expense is specifically attributable to business segments and reported accordingly.

Webster allocates a majority of non-interest expense to each business segment using a full-absorption costing process. Costs, including corporate overhead, are analyzed, pooled by process, and assigned to the appropriate business segment. Income tax expense is allocated to each business segment based on the effective income tax rate for the period shown.

The following tables present the results for Webster’s business segments for the years ended December 31,2012, 2011 and 2010 and incorporate the allocation of the provision for loan and lease losses and income tax expense to each of Webster’s business segments for the periods then ended:

	Year ended December 31, 2012
(In thousands)	Commercial Banking			Retail Banking		Consumer Finance		Other			Total Business Segments		Corporate and Reconciling		Consolidated Total
Net interest income	$	188,666		$	235,519	$	106,902	$	33,308		$	564,395	$	14,513	$	578,908
(Benefit) provision for loan and lease losses	(7,498		)	3,796		22,371		(680		)	17,989		3,511		21,500
Net interest income after provision for loan and lease losses	196,164			231,723		84,531		33,988			546,406		11,002		557,408
Non-interest income	29,324			90,793		26,185		28,680			174,982		17,776		192,758
Non-interest expense	98,721			266,441		74,648		44,649			484,459		17,345		501,804
Income from continuing operations before income taxes	126,767			56,075		36,068		18,019			236,929		11,433		248,362
Income tax expense	38,110			16,858		10,843		5,417			71,228		3,437		74,665
Net income attributable to Webster Financial Corporation	$	88,657		$	39,217	$	25,225	$	12,602		$	165,701	$	7,996	$	173,697

	Year ended December 31, 2011
(In thousands)	Commercial Banking			Retail Banking		Consumer Finance			Other		Total Business Segments			Corporate and Reconciling			Consolidated Total
Net interest income	$	168,560		$	233,441	$	107,271		$	25,437	$	534,709		$	29,059		$	563,768
(Benefit) provision for loan and lease losses	(21,213		)	14,189		31,104			398		24,478			(1,978		)	22,500
Net interest income after provision for loan and lease losses	189,773			219,252		76,167			25,039		510,231			31,037			541,268
Non-interest income	25,869			98,763		9,449			24,199		158,280			18,762			177,042
Non-interest expense	105,356			277,832		78,821			40,387		502,396			8,580			510,976
Income from continuing operations before income taxes	110,286			40,183		6,795			8,851		166,115			41,219			207,334
Income tax expense	30,826			11,231		1,899			2,474		46,430			11,521			57,951
Income from continuing operations	79,460			28,952		4,896			6,377		119,685			29,698			149,383
Income from discontinued operations	—			—		—			—		—			1,995			1,995
Income before noncontrolling interests	79,460			28,952		4,896			6,377		119,685			31,693			151,378
Less: Net loss attributable to noncontrolling interests	—			—		(1		)	—		(1		)	—			(1		)
Net income attributable to Webster Financial Corporation	$	79,460		$	28,952	$	4,897		$	6,377	$	119,686		$	31,693		$	151,379

	Year ended December 31, 2010
(In thousands)	Commercial Banking		Retail Banking		Consumer Finance			Other			Total Business Segments		Corporate and Reconciling		Consolidated Total
Net interest income	$	147,162	$	211,818	$	101,958		$	18,545		$	479,483	$	57,788	$	537,271
(Benefit) provision for loan and lease losses	25,618		10,463		68,214			(902		)	103,393		11,607		115,000
Net interest income after provision for loan and lease losses	121,544		201,355		33,744			19,447			376,090		46,181		422,271
Non-interest income	24,174		107,761		11,218			20,862			164,015		37,210		201,225
Non-interest expense	100,253		292,845		71,332			37,446			501,876		37,098		538,974
Income (loss) from continuing operations before income taxes	45,465		16,271		(26,370		)	2,863			38,229		46,293		84,522
Income tax expense (benefit)	6,647		2,379		(3,856		)	419			5,589		6,769		12,358
Income (loss) from continuing operations	38,818		13,892		(22,514		)	2,444			32,640		39,524		72,164
Income from discontinued operations	—		—		—			—			—		94		94
Income (loss) before noncontrolling interests	38,818		13,892		(22,514		)	2,444			32,640		39,618		72,258
Less: Net income attributable to noncontrolling interests	—		—		3			—			3		—		3
Net income (loss) attributable to Webster Financial Corporation	$	38,818	$	13,892	$	(22,517	)	$	2,444		$	32,637	$	39,618	$	72,255

	Total Assets
(In thousands)	Commercial Banking		Retail Banking		Consumer Finance		Other		Total Business Segments		Corporate and Reconciling		Consolidated Total
At December 31, 2012	$	5,113,898	$	1,651,397	$	6,056,762	$	282,414	$	13,104,471	$	7,042,294	$	20,146,765
At December 31, 2011	$	4,359,403	$	1,546,455	$	5,869,025	$	245,554	$	12,020,437	$	6,693,903	$	18,714,340
At December 31, 2010	$	4,118,178	$	1,516,193	$	5,911,798	$	203,707	$	11,749,876	$	6,284,005	$	18,033,881