Business Segments

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Business Segments

Segment Reporting

Webster’s operations are organized into three reportable segments that represent its core businesses: Commercial Banking, Community Banking, and Other. The Community Banking reportable segment is the aggregation of the Personal Banking and Business Banking operating segments. The Other reportable segment is the aggregation of HSA Bank and the Private Banking operating segments. The factors considered in determining whether individual operating segments could be aggregated include that the operating segments: (i) offer the same products and services, (ii) offer services to the same types of clients, (iii) provide services in the same manner and (iv) operate in the same regulatory environments. These segments reflect how executive management responsibilities are assigned by the chief operating decision maker for each of the core businesses, the products and services provided and the type of customer served, and reflect how discrete financial information is currently evaluated. The Company’s Treasury unit and consumer liquidating portfolio are included in the Corporate and Reconciling category along with the amounts required to reconcile profitability metrics to GAAP reported amounts.

At December 31, 2012, Webster's operations were organized into four reportable segments that represented its core businesses: Commercial Banking, Retail Banking, Consumer Finance, and Other. In the first quarter of 2013, Webster reconfigured its organization to better serve its customers as one of its key strategic priorities, resulting in the operating and reportable segments discussed above. One of the action steps taken was to consolidate all mass market consumer related activities into a Personal Bank. This action combined the previous Retail and Consumer Finance segments to better meet our objectives and emphasis on relationship development across units. The 2012 and 2011 segment results have been adjusted for comparability to the 2013 segment presentation.

Webster’s 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 called 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 ALCO.

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 and lease portfolios. Provision expense, for certain elements of risk that are not deemed specifically attributable to an operating segment, such as environmental factors, and provision for the consumer liquidating portfolio are shown as other reconciling. For the years ended December 31,2013, 2012 and 2011, 115.4%, 83.7% and 108.8% of the provision expense is specifically attributable to operating segments and reported accordingly.

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

The following tables present the results for Webster’s reportable segments for the years ended December 31,2013, 2012 and 2011 and incorporate the allocation of the provision for loan and lease losses and income tax expense to each of Webster’s reportable segments for the periods then ended:

	Year ended December 31, 2013
(In thousands)	Commercial Banking		Community Banking		Other		Segment Totals		Corporate and Reconciling			Consolidated Total
Net interest income (loss)	$	217,582	$	347,395	$	40,992	$	605,969	$	(9,241	)	$	596,728
Provision (benefit) for loan and lease losses	18,581		19,973		93		38,647		(5,147		)	33,500
Net interest income (loss) after provision for loan and lease losses	199,001		327,422		40,899		567,322		(4,094		)	563,228
Non-interest income	30,797		116,182		32,926		179,905		11,145			191,050
Non-interest expense	99,801		337,795		49,745		487,341		10,718			498,059
Income (loss) before income tax expense	129,997		105,809		24,080		259,886		(3,667		)	256,219
Income tax expense (benefit)	38,900		31,662		7,205		77,767		(1,097		)	76,670
Net income (loss) attributable to Webster Financial Corporation	$	91,097	$	74,147	$	16,875	$	182,119	$	(2,570	)	$	179,549

	Year ended December 31, 2012
(In thousands)	Commercial Banking			Community Banking		Other			Segment Totals		Corporate and Reconciling		Consolidated Total
Net interest income	$	188,666		$	342,268	$	33,308		$	564,242	$	14,666	$	578,908
Provision (benefit) for loan and lease losses	(7,498		)	26,167		(680		)	17,989		3,511		21,500
Net interest income after provision for loan and lease losses	196,164			316,101		33,988			546,253		11,155		557,408
Non-interest income	29,324			116,978		28,680			174,982		17,776		192,758
Non-interest expense	98,718			340,907		44,649			484,274		17,530		501,804
Income before income tax expense	126,770			92,172		18,019			236,961		11,401		248,362
Income tax expense	38,111			27,710		5,417			71,238		3,427		74,665
Net income attributable to Webster Financial Corporation	$	88,659		$	64,462	$	12,602		$	165,723	$	7,974	$	173,697

	Year ended December 31, 2011
(In thousands)	Commercial Banking			Community Banking			Other		Segment Totals			Corporate and Reconciling			Consolidated Total
Net interest income	$	168,560		$	340,519		$	25,437	$	534,516		$	29,252		$	563,768
Provision (benefit) for loan and lease losses	(21,213		)	45,293			398		24,478			(1,978		)	22,500
Net interest income after provision for loan and lease losses	189,773			295,226			25,039		510,038			31,230			541,268
Non-interest income	25,869			108,212			24,199		158,280			18,762			177,042
Non-interest expense	105,356			356,443			40,387		502,186			8,790			510,976
Income from continuing operations before income taxes	110,286			46,995			8,851		166,132			41,202			207,334
Income tax expense	30,826			13,135			2,474		46,435			11,516			57,951
Income from continuing operations	79,460			33,860			6,377		119,697			29,686			149,383
Income from discontinued operations	—			—			—		—			1,995			1,995
Income before noncontrolling interests	79,460			33,860			6,377		119,697			31,681			151,378
Less: Net loss attributable to noncontrolling interests	—			(1		)	—		(1		)	—			(1		)
Net income attributable to Webster Financial Corporation	$	79,460		$	33,861		$	6,377	$	119,698		$	31,681		$	151,379

	Total Assets
(In thousands)	Commercial Banking		Community Banking		Other		Segment Totals		Corporate and Reconciling		Consolidated Total
At December 31, 2013	$	5,682,129	$	7,809,343	$	365,863	$	13,857,335	$	6,995,664	$	20,852,999
At December 31, 2012	$	5,113,898	$	7,708,159	$	282,414	$	13,104,471	$	7,042,294	$	20,146,765
At December 31, 2011	$	4,359,403	$	7,415,480	$	245,554	$	12,020,437	$	6,693,903	$	18,714,340