Loans and Leases

12 Months Ended

Dec. 31, 2014

Loans and Leases Receivable Disclosure [Abstract]

Loans and Leases

Loans and Leases

Recorded Investment in Loans and Leases. The following tables summarize the recorded investment in loans and leases by portfolio segment:

	At December 31, 2014
(In thousands)	Residential		Consumer		Commercial		Commercial Real Estate (1)		Equipment Financing		Total (2)
Recorded Investment:
Individually evaluated for impairment	$	142,435	$	50,374	$	36,454	$	103,045	$	632	$	332,940
Collectively evaluated for impairment	3,377,196		2,507,060		3,723,991		3,460,116		537,119		13,605,482
Recorded investment in loans and leases	3,519,631		2,557,434		3,760,445		3,563,161		537,751		13,938,422
Less: Accrued interest	10,456		8,033		11,175		8,733		—		38,397
Loans and leases	$	3,509,175	$	2,549,401	$	3,749,270	$	3,554,428	$	537,751	$	13,900,025

	At December 31, 2013
(In thousands)	Residential		Consumer		Commercial		Commercial Real Estate (1)		Equipment Financing		Total (2)
Recorded Investment:
Individually evaluated for impairment	$	142,871	$	52,179	$	52,199	$	105,046	$	210	$	352,505
Collectively evaluated for impairment	3,228,688		2,492,353		3,241,045		2,961,378		460,240		12,383,704
Recorded investment in loans and leases	3,371,559		2,544,532		3,293,244		3,066,424		460,450		12,736,209
Less: Accrued interest	10,134		7,844		10,393		8,062		—		36,433
Loans and leases	$	3,361,425	$	2,536,688	$	3,282,851	$	3,058,362	$	460,450	$	12,699,776

(1) Includes certain loans individually evaluated for impairment under the Company's loan policy that were deemed not to be impaired at both December 31, 2014 and December 31, 2013.

(2) Loans and leases include net deferred fees and unamortized premiums of $10.6 million and $13.3 million at December 31, 2014 and December 31, 2013, respectively.

At December 31, 2014, the Company had pledged $5.7 billion of eligible loan collateral to support available borrowing capacity at the Federal Home Loan Bank of Boston ("FHLB") and the Federal Reserve Bank of Boston.

Loans and Leases Portfolio Aging. The following tables summarize the aging of the recorded investment in loans and leases by portfolio class:

	At December 31, 2014
(In thousands)	30-59 Days Past Due and Accruing		60-89 Days Past Due and Accruing		> 90 Days Past Due and Accruing		Non-accrual		Total Past Due and Non-accrual		Current		Total Loans and Leases
Residential (1)	$	11,521	$	5,931	$	—	$	66,156	$	83,608	$	3,436,023	$	3,519,631
Consumer:
Home equity (1)	11,516		5,161		—		40,025		56,702		2,424,584		2,481,286
Other consumer	720		425		—		281		1,426		74,722		76,148
Commercial:
Commercial non-mortgage	1,971		156		50		6,449		8,626		3,088,656		3,097,282
Asset-based	—		—		—		—		—		663,163		663,163
Commercial real estate:
Commercial real estate	2,348		397		—		15,038		17,783		3,310,765		3,328,548
Commercial construction	—		—		—		3,659		3,659		230,954		234,613
Equipment financing	551		150		—		578		1,279		536,472		537,751
Total	$	28,627	$	12,220	$	50	$	132,186	$	173,083	$	13,765,339	$	13,938,422

(1) A total of $17.6 million residential and consumer loans was reclassified from non-accrual to accrual status as a result of updated regulatory guidance issued in the first quarter of 2014.

	At December 31, 2013
(In thousands)	30-59 Days Past Due and Accruing		60-89 Days Past Due and Accruing		> 90 Days Past Due and Accruing		Non-accrual		Total Past Due and Non-accrual		Current		Total Loans and Leases
Residential	$	11,721	$	6,839	$	—	$	81,520	$	100,080	$	3,271,479	$	3,371,559
Consumer:
Home equity	15,332		5,120		—		51,788		$	72,240	2,410,953		$	2,483,193
Other consumer	462		193		—		140		795		60,543		61,338
Commercial:
Commercial non-mortgage	3,208		984		4,305		10,946		19,443		2,712,870		2,732,313
Asset-based	—		—		—		—		—		560,931		560,931
Commercial real estate:
Commercial real estate	4,387		587		235		13,456		18,665		2,842,637		2,861,302
Commercial construction	—		—		—		4,237		4,237		200,886		205,123
Equipment financing	299		63		—		1,141		1,503		458,947		460,450
Total	$	35,409	$	13,786	$	4,540	$	163,228	$	216,963	$	12,519,246	$	12,736,209

Interest on non-accrual loans and leases that would have been recorded as additional interest income for the years ended December 31,2014, 2013, and 2012, had the loans and leases been current in accordance with their original terms, totaled $9.3 million, $11.4 million, and $12.2 million, respectively.

Allowance for Loan and Lease Losses. The following tables summarize the ALLL by portfolio segment:

	At or for the twelve months ended December 31, 2014
(In thousands)	Residential			Consumer			Commercial			Commercial Real Estate			Equipment Financing			Unallocated		Total
Allowance for loan and lease losses:
Balance, beginning of period	$	20,580		$	39,551		$	47,706		$	29,883		$	3,912		$	10,941	$	152,573
Provision charged to expense	7,906			16,112			9,926			1,709			69			1,528		37,250
Losses charged off	(6,214		)	(20,712		)	(13,668		)	(3,237		)	(595		)	—		(44,426		)
Recoveries	1,324			5,055			4,369			885			2,234			—		13,867
Balance, end of period	$	23,596		$	40,006		$	48,333		$	29,240		$	5,620		$	12,469	$	159,264
Individually evaluated for impairment	$	12,094		$	4,237		$	2,710		$	6,232		$	28		$	—	$	25,301
Collectively evaluated for impairment	$	11,502		$	35,769		$	45,623		$	23,008		$	5,592		$	12,469	$	133,963

	At or for the twelve months ended December 31, 2013
(In thousands)	Residential			Consumer			Commercial			Commercial Real Estate			Equipment Financing			Unallocated			Total
Allowance for loan and lease losses:
Balance, beginning of period	$	29,474		$	54,254		$	46,566		$	30,834		$	4,001		$	12,000		$	177,129
Provision (benefit) charged to expense	1,296			8,149			15,143			12,826			(2,855		)	(1,059		)	33,500
Losses charged off	(11,592		)	(29,037		)	(19,126		)	(15,425		)	(279		)	—			(75,459		)
Recoveries	1,402			6,185			5,123			1,648			3,045			—			17,403
Balance, end of period	$	20,580		$	39,551		$	47,706		$	29,883		$	3,912		$	10,941		$	152,573
Individually evaluated for impairment	$	10,535		$	4,595		$	1,878		$	3,445		$	—		$	—		$	20,453
Collectively evaluated for impairment	$	10,045		$	34,956		$	45,828		$	26,438		$	3,912		$	10,941		$	132,120

	At or for the year ended December 31, 2012
(In thousands)	Residential			Consumer			Commercial			Commercial Real Estate			Equipment Financing			Unallocated			Total
Allowance for loan and lease losses:
Balance, beginning of period	$	34,565		$	67,785		$	60,681		$	45,013		$	8,943		$	16,500		$	233,487
Provision (benefit) charged to expense	7,033			23,349			14,861			(6,495		)	(12,748		)	(4,500		)	21,500
Losses charged off	(12,927		)	(43,920		)	(35,793		)	(9,894		)	(1,668		)	—			(104,202		)
Recoveries	803			7,040			6,817			2,210			9,474			—			26,344
Balance, end of period	$	29,474		$	54,254		$	46,566		$	30,834		$	4,001		$	12,000		$	177,129
Individually evaluated for impairment	$	14,731		$	3,611		$	6,423		$	2,683		$	1		$	—		$	27,449
Collectively evaluated for impairment	$	14,743		$	50,643		$	40,143		$	28,151		$	4,000		$	12,000		$	149,680

Impaired Loans and Leases. The following tables summarize impaired loans and leases by portfolio class:

	At December 31, 2014
(In thousands)	Unpaid Principal Balance		Total Recorded Investment		Recorded Investment No Allowance		Recorded Investment With Allowance		Related Valuation Allowance
Residential:
1-4 family	$	157,152	$	142,435	$	24,388	$	118,047	$	12,094
Consumer:
Home equity	60,424		50,374		26,464		23,910		4,237
Commercial:
Commercial non-mortgage	41,019		36,454		16,064		20,390		2,710
Commercial real estate:
Commercial real estate	99,687		96,160		40,575		55,585		6,222
Commercial construction	7,218		6,177		5,956		221		10
Equipment financing	629		632		—		632		28
Totals:
Residential	157,152		142,435		24,388		118,047		12,094
Consumer	60,424		50,374		26,464		23,910		4,237
Commercial	41,019		36,454		16,064		20,390		2,710
Commercial real estate	106,905		102,337		46,531		55,806		6,232
Equipment financing	629		632		—		632		28
Total	$	366,129	$	332,232	$	113,447	$	218,785	$	25,301

	At December 31, 2013
(In thousands)	Unpaid Principal Balance		Total Recorded Investment		Recorded Investment No Allowance		Recorded Investment With Allowance		Related Valuation Allowance
Residential:
1-4 family	$	158,361	$	142,871	$	23,988	$	118,883	$	10,534
Consumer:
Home equity	63,886		52,179		27,323		24,856		4,595
Commercial:
Commercial non-mortgage	59,279		52,199		23,138		29,061		1,878
Commercial real estate:
Commercial real estate	95,013		90,976		42,774		48,202		3,444
Commercial construction	11,725		10,625		10,625		—		—
Equipment financing	249		210		210		—		—
Totals:
Residential	158,361		142,871		23,988		118,883		10,534
Consumer	63,886		52,179		27,323		24,856		4,595
Commercial	59,279		52,199		23,138		29,061		1,878
Commercial real estate	106,738		101,601		53,399		48,202		3,444
Equipment financing	249		210		210		—		—
Total	$	388,513	$	349,060	$	128,058	$	221,002	$	20,451

The following table summarizes the average recorded investment and interest income recognized for impaired loans and leases by portfolio class:

	Years ended December 31,
	2014						2013						2012
(In thousands)	Average Recorded Investment		Accrued Interest Income		Cash Basis Interest Income		Average Recorded Investment		Accrued Interest Income		Cash Basis Interest Income		Average Recorded Investment		Accrued Interest Income		Cash Basis Interest Income
Residential:
1-4 family	$	142,653	$	4,644	$	1,221	$	144,908	$	4,119	$	1,954	$	141,128	$	4,494	$	1,150
Consumer:
Home equity	51,277		1,484		1,203		53,486		1,003		1,724		45,707		1,621		547
Other consumer	—		—		—		—		—		—		4		—		—
Commercial:
Commercial non-mortgage	44,327		2,326		—		60,813		2,889		—		87,393		3,852		—
Asset-based	—		—		—		—		—		—		929		—		—
Commercial real estate:
Commercial real estate	93,568		3,429		—		106,085		4,476		—		155,384		4,847		—
Commercial construction	8,401		269		—		15,291		620		—		21,615		630		—
Equipment financing	421		28		—		1,095		22		—		2,624		45		—
Totals:
Residential	142,653		4,644		1,221		144,908		4,119		1,954		141,128		4,494		1,150
Consumer	51,277		1,484		1,203		53,486		1,003		1,724		45,711		1,621		547
Commercial	44,327		2,326		—		60,813		2,889		—		88,322		3,852		—
Commercial real estate	101,969		3,698		—		121,376		5,096		—		176,999		5,477		—
Equipment financing	421		28		—		1,095		22		—		2,624		45		—
Total	$	340,647	$	12,180	$	2,424	$	381,678	$	13,129	$	3,678	$	454,784	$	15,489	$	1,697

Credit Quality Indicators. To measure credit risk for the commercial, commercial real estate, and equipment financing portfolios, the Company employs a dual grade credit risk grading system for estimating the probability of borrower default and the loss given default. The credit risk grade system assigns a rating to each borrower and to the facility, which together form a Composite Credit Risk Profile (“CCRP”). The credit risk grade system categorizes borrowers by common financial characteristics that measure the credit strength of borrowers and facilities by common structural characteristics. The CCRP has 10 grades, with each grade corresponding to a progressively greater risk of default. Grades 1 through 6 are considered pass ratings, and 7 through 10 are criticized as defined by the regulatory agencies. Risk ratings, assigned to differentiate risk within the portfolio, are reviewed on an ongoing basis and revised to reflect changes in the borrowers’ current financial positions and outlooks, risk profiles, and the related collateral and structural positions. Loan officers review updated financial information on at least an annual basis for all pass rated loans to assess the accuracy of the risk grade. Criticized loans undergo more frequent reviews and enhanced monitoring.

A “Special Mention” (7) credit has the potential weakness that, if left uncorrected, may result in deterioration of the repayment prospects for the asset. “Substandard” (8) assets have a well defined weakness that jeopardizes the full repayment of the debt. An asset rated “Doubtful” (9) has all of the same weaknesses as a substandard credit with the added characteristic that the weakness makes collection or liquidation in full, given current facts, conditions, and values, improbable. Assets classified as “Loss” (10) in accordance with regulatory guidelines are considered uncollectible and charged off.

The recorded investment in commercial and commercial real estate loans and equipment financing leases segregated by risk rating exposure is as follows:

	Commercial				Commercial Real Estate				Equipment Financing
(In thousands)	At December 31, 2014		At December 31, 2013		At December 31, 2014		At December 31, 2013		At December 31, 2014		At December 31, 2013
(1) - (6) Pass	$	3,555,559	$	3,091,154	$	3,416,214	$	2,947,116	$	516,115	$	437,033
(7) Special Mention	89,064		87,451		33,580		20,901		4,364		7,979
(8) Substandard	115,653		114,199		112,874		97,822		17,272		15,438
(9) Doubtful	169		440		493		585		—		—
(10) Loss	—		—		—		—		—		—
Total	$	3,760,445	$	3,293,244	$	3,563,161	$	3,066,424	$	537,751	$	460,450

For residential and consumer loans, the Company considers factors such as updated FICO scores, employment status, home prices, loan to value, geography, loans discharged in bankruptcy, and the status of first lien position loans on second lien position loans as credit quality indicators. On an ongoing basis for portfolio monitoring purposes, the Company estimates the current value of property secured as collateral for both home equity and residential first mortgage lending products. The estimate is based on home price indices compiled by the S&P/Case-Shiller Home Price Indices. The Case-Shiller data indicates trends for Metropolitan Statistical Areas. The trend data is applied to the loan portfolios taking into account the age of the most recent valuation and geographic area.

Troubled Debt Restructurings. The following table summarizes information for TDRs:

	At December 31,
(Dollars in thousands)	2014			2013
Recorded investment of TDRs:
Accrual status (1)	$	243,231		$	238,926
Non-accrual status (1)	76,939			102,972
Total recorded investment of TDRs	$	320,170		$	341,898
Accruing TDRs performing under modified terms more than one year	67.6		%	58.2		%
Specific reserves for TDRs included in the balance of allowance for loan and lease losses	$	23,785		$	20,360
Additional funds committed to borrowers in TDR status	552			1,262

(1) A total of $17.6 million in residential and consumer loans was reclassified from non-accrual to accrual status in the twelve months ended December 31, 2014 as a result of updated regulatory guidance issued in the first quarter of 2014.

For years ended December 31,2014, 2013, and 2012, Webster charged off $13.5 million, $24.4 million, and $45.2 million, respectively, for the portion of TDRs deemed to be uncollectible.

TDRs may be modified by means of extended maturity, below market adjusted interest rates, a combination of rate and maturity, or other means, including covenant modifications, forbearance, loans discharged under Chapter 7 bankruptcy, or other concessions.

The following table provides information on the type of concession for loans and leases modified as TDRs:

	Years ended December 31,
	2014			2013			2012
	Number of Loans and Leases	Post- Modification Recorded Investment(1)		Number of Loans and Leases	Post- Modification Recorded Investment(1)		Number of Loans and Leases	Post- Modification Recorded Investment(1)
(Dollars in thousands)
Residential:
Extended Maturity	27	$	3,547	27	$	5,238	12	$	2,067
Adjusted Interest rates	3	448		8	2,776		7	2,707
Combination Rate and Maturity	22	4,239		45	8,302		42	7,913
Other (2)	55	11,792		44	9,517		138	20,550
Consumer:
Extended Maturity	19	944		24	1,163		15	1,113
Adjusted Interest rates	1	51		4	154		2	224
Combination Rate and Maturity	6	412		14	1,507		21	1,380
Other (2)	90	4,934		100	4,249		611	29,545
Commercial:
Extended Maturity	7	423		3	7,527		4	816
Adjusted Interest rates	1	25		—	—		—	—
Combination Rate and Maturity	22	1,217		22	1,122		5	1,162
Other (2)	6	7,457		4	4,616		28	20,721
Commercial real estate:
Extended Maturity	—	—		3	227		5	2,431
Combination Rate and Maturity	2	11,146		6	15,588		5	2,369
Other (2)	—	—		1	68		6	21,951
Equipment Financing
Extended Maturity	1	492		—	—		4	142
Combination Rate and Maturity	—	—		—	—		2	288
Other (2)	—	—		—	—		2	160
TOTAL TDRs	262	$	47,127	305	$	62,054	909	$	115,539

(1) Post-modification balances approximate pre-modification balances. The aggregate amount of charge-offs as a result of the restructurings was not significant.

(2) Other includes covenant modifications, forbearance, loans discharged under Chapter 7 bankruptcy, and/or other concessions.

The Company’s loan and lease portfolio at December 31, 2014 included loans with A-Note/B-Note structures. The loans were restructured into A-Note/B-Note structures as a result of evaluating the cash flow of the borrowers to support repayment. Webster immediately charged off the balances of the B-Notes. The restructuring agreements specify a market interest rate equal to that which would be provided to a borrower with similar credit at the time of restructuring.

The following table provides information on loans and leases modified as TDRs within the previous 12 months and for which there was a payment default during the periods presented:

	Years ended December 31,
	2014			2013			2012
(Dollars in thousands)	Number of Loans and Leases	Recorded Investment		Number of Loans and Leases	Recorded Investment		Number of Loans and Leases	Recorded Investment
Residential:
1-4 family	7	$	1,497	9	$	1,202	2	$	847
Consumer:
Home equity	2	24		4	339		—	—
Commercial:
Commercial non-mortgage	—	—		1	47		—	—
Total	9	$	1,521	14	$	1,588	2	$	847

The recorded investment in commercial, commercial real estate, and equipment financing TDRs segregated by risk rating exposure is as follows:

	At December 31,
(In thousands)	2014		2013
(1) - (6) Pass	$	40,943	$	55,973
(7) Special Mention	8,304		—
(8) Substandard	77,771		90,461
(9) Doubtful	343		414
(10) Loss	—		—
Total	$	127,361	$	146,848