Segment Reporting

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

Webster’s operations are divided into three reportable segments that represent its core businesses – Commercial Banking, Community Banking, and Other. Community Banking includes the operating segments of Webster's Personal Bank and Business Banking, and Other includes HSA Bank and Private Banking. 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.

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, 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.” This process is executed by the Company’s Financial Planning and Analysis division, and is overseen by the Company’s Asset/Liability Committee ("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 a business segment, such as environmental factors, and provision for the consumer liquidating portfolio, is shown as part of the Corporate and Reconciling category. For the three and nine months ending September 30, 2014 and 2013, 100.3%, 110.0%, 125.0% and 111.6% respectively, of the provision for loan and lease losses 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 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 presented:

	Three months ended September 30, 2014
(In thousands)	Commercial Banking		Community Banking		Other		Segment Totals		Corporate and Reconciling			Consolidated Total
Net interest income (loss)	$	61,249	$	88,602	$	12,117	$	161,968	$	(4,598	)	$	157,370
Provision (benefit) for loan and lease losses	3,340		6,159		26		9,525		(25		)	9,500
Net interest income (loss) after provision for loan and lease losses	57,909		82,443		12,091		152,443		(4,573		)	147,870
Non-interest income	8,861		27,307		9,471		45,639		5,270			50,909
Non-interest expense	25,445		79,735		14,807		119,987		4,655			124,642
Income (loss) before income tax expense	41,325		30,015		6,755		78,095		(3,958		)	74,137
Income tax expense (benefit)	13,148		9,588		2,162		24,898		(1,219		)	23,679
Net income (loss)	$	28,177	$	20,427	$	4,593	$	53,197	$	(2,739	)	$	50,458

	Three months ended September 30, 2013
(In thousands)	Commercial Banking		Community Banking		Other		Segment Totals		Corporate and Reconciling			Consolidated Total
Net interest income (loss)	$	56,430	$	87,949	$	10,733	$	155,112	$	(5,125	)	$	149,987
Provision for loan and lease losses	7,032		3,570		22		10,624		(2,124		)	8,500
Net interest income (loss) after provision for loan and lease losses	49,398		84,379		10,711		144,488		(3,001		)	141,487
Non-interest income	8,818		25,387		8,083		42,288		3,969			46,257
Non-interest expense	24,647		82,748		11,913		119,308		2,973			122,281
Income (loss) before income tax expense	33,569		27,018		6,881		67,468		(2,005		)	65,463
Income tax expense (benefit)	9,347		7,504		1,941		18,792		(634		)	18,158
Net income (loss)	$	24,222	$	19,514	$	4,940	$	48,676	$	(1,371	)	$	47,305

	Nine months ended September 30, 2014
(In thousands)	Commercial Banking		Community Banking		Other		Segment Totals		Corporate and Reconciling			Consolidated Total
Net interest income (loss)	$	175,058	$	263,893	$	35,192	$	474,143	$	(6,350	)	$	467,793
Provision (benefit) for loan and lease losses	18,031		12,156		334		30,521		(2,771		)	27,750
Net interest income (loss) after provision for loan and lease losses	157,027		251,737		34,858		443,622		(3,579		)	440,043
Non-interest income	24,761		77,571		29,089		131,421		16,912			148,333
Non-interest expense	76,579		241,314		43,050		360,943		10,901			371,844
Income before income tax expense	105,209		87,994		20,897		214,100		2,432			216,532
Income tax expense	32,940		27,551		6,543		67,034		761			67,795
Net income	$	72,269	$	60,443	$	14,354	$	147,066	$	1,671		$	148,737

	Nine months ended September 30, 2013
(In thousands)	Commercial Banking		Community Banking		Other		Segment Totals		Corporate and Reconciling			Consolidated Total
Net interest income (loss)	$	161,008	$	259,037	$	30,008	$	450,053	$	(7,209	)	$	442,844
Provision (benefit) for loan and lease losses	11,449		15,816		72		27,337		(2,837		)	24,500
Net interest income (loss) after provision for loan and lease losses	149,559		243,221		29,936		422,716		(4,372		)	418,344
Non-interest income	20,537		87,654		24,579		132,770		14,016			146,786
Non-interest expense	74,068		251,759		37,112		362,939		8,481			371,420
Income before income tax expense	96,028		79,116		17,403		192,547		1,163			193,710
Income tax expense	28,710		23,654		5,203		57,567		348			57,915
Net income	$	67,318	$	55,462	$	12,200	$	134,980	$	815		$	135,795

	Total Assets
(In thousands)	Commercial Banking		Community Banking		Other		Segment Totals		Corporate and Reconciling		Consolidated Total
At September 30, 2014	$	6,251,726	$	8,062,212	$	391,280	$	14,705,218	$	7,121,664	$	21,826,882
At December 31, 2013	$	5,682,129	$	7,809,343	$	365,863	$	13,857,335	$	6,995,664	$	20,852,999