Loans and Leases

The following table summarizes loans and leases:



	At December 31,
(In thousands)	2015		2014
Residential	$	4,061,001	$	3,509,175
Consumer	2,702,560		2,549,401
Commercial	4,315,999		3,749,270
Commercial Real Estate	3,991,649		3,554,428
Equipment Financing	600,526		537,751
Loans and leases ⁽¹⁾⁽²⁾	$	15,671,735	$	13,900,025

(1) Loan and lease balances include net deferred fees and unamortized premiums of $18.0 million and $10.6 million at December 31, 2015 and December 31, 2014, respectively.

(2) Accrued interest of $43.1 million and $38.4 million at December 31, 2015 and December 31, 2014, respectively, are not included in the loan and lease balances.

At December 31, 2015, the Company had pledged $6.1 billion of eligible loans as collateral to support available borrowing capacity at the Federal Home Loan Bank of Boston and the Federal Reserve Bank of Boston.

Loans and Leases Portfolio Aging

The following tables summarize the aging of loans and leases:



	At December 31, 2015
(In thousands)	30-59 Days Past Due and Accruing		60-89 Days Past Due and Accruing		90 or More Days Past Due and Accruing		Non-accrual		Total Past Due and Non-accrual⁽¹⁾		Current		Total Loans and Leases
Residential	$	10,365	$	4,703	$	2,029	$	54,201	$	71,298	$	3,989,703	$	4,061,001
Consumer:
Home equity	9,061		4,242		—		37,337		50,640		2,402,758		2,453,398
Other consumer	1,390		615		—		560		2,565		246,597		249,162
Commercial:
Commercial non-mortgage	768		3,288		22		27,037		31,115		3,531,669		3,562,784
Asset-based	—		—		—		—		—		753,215		753,215
Commercial real estate:
Commercial real estate	1,624		625		—		16,767		19,016		3,673,408		3,692,424
Commercial construction	—		—		—		3,461		3,461		295,764		299,225
Equipment financing	543		59		—		706		1,308		599,218		600,526
Total	$	23,751	$	13,532	$	2,051	$	140,069	$	179,403	$	15,492,332	$	15,671,735



	At December 31, 2014
(In thousands)	30-59 Days Past Due and Accruing		60-89 Days Past Due and Accruing		90 or More Days Past Due and Accruing		Non-accrual		Total Past Due and Non-accrual ⁽¹⁾		Current		Total Loans and Leases
Residential ⁽²⁾	$	11,410	$	5,840	$	2,039	$	64,117	$	83,406	$	3,425,769	$	3,509,175
Consumer:
Home equity	11,393		5,076		—		40,026		56,495		2,417,275		2,473,770
Other consumer	704		410		—		281		$	1,395	74,236		75,631
Commercial:
Commercial non-mortgage	1,948		153		48		6,449		8,598		3,079,342		3,087,940
Asset-based	—		—		—		—		—		661,330		661,330
Commercial real estate:
Commercial real estate	2,325		392		—		15,038		17,755		3,302,652		3,320,407
Commercial construction	—		—		—		3,659		3,659		230,362		234,021
Equipment financing	551		150		—		578		1,279		536,472		537,751
Total	$	28,331	$	12,021	$	2,087	$	130,148	$	172,587	$	13,727,438	$	13,900,025

(1) Loans and leases 30 days or more days past due and accruing exclude $0.6 million and $0.5 million of accrued interest receivable at December 31, 2015 and December 31, 2014, respectively.

(2) U.S. Government guaranteed loans of approximately $2.0 million were reclassified from non-accrual to over 90 days past due and accruing reflective of a policy change effective in the first quarter of 2015.

Interest on non-accrual loans and leases that would have been recorded as additional interest income for the years ended December 31, 2015, 2014, and 2013, had the loans and leases been current in accordance with their original terms, totaled $8.2 million, $9.3 million, and $11.4 million, respectively.

Allowance for Loan and Lease Losses

The following tables summarize the activity in, as well as the loan and lease balances that were evaluated for, the ALLL:



	At or for the Year ended December 31, 2015
(In thousands)	Residential			Consumer			Commercial			Commercial Real Estate			Equipment Financing			Total
Allowance for loan and lease losses:
Balance at January 1, 2015	$	25,452		$	43,518		$	52,114		$	32,102		$	6,078		$	159,264
Provision (benefit) charged to expense	6,057			11,847			23,356			9,718			(1,678		)	49,300
Losses charged off	(6,508		)	(17,679		)	(11,522		)	(7,578		)	(273		)	(43,560		)
Recoveries	875			4,366			2,738			647			1,360			9,986
Balance at December 31, 2015	$	25,876		$	42,052		$	66,686		$	34,889		$	5,487		$	174,990
Individually evaluated for impairment	$	10,364		$	3,477		$	5,197		$	3,163		$	3		$	22,204
Collectively evaluated for impairment	$	15,512		$	38,575		$	61,489		$	31,726		$	5,484		$	152,786

Loan and lease balances:
Individually evaluated for impairment	$	134,448		$	48,425		$	56,581		$	39,295		$	422		$	279,171
Collectively evaluated for impairment	3,926,553			2,654,135			4,259,418			3,952,354			600,104			15,392,564
Loans and leases	$	4,061,001		$	2,702,560		$	4,315,999		$	3,991,649		$	600,526		$	15,671,735



	At or for the Year ended December 31, 2014
(In thousands)	Residential			Consumer			Commercial			Commercial Real Estate			Equipment Financing			Total
Allowance for loan and lease losses:
Balance at January 1, 2014	$	23,027		$	41,951		$	51,001		$	32,408		$	4,186		$	152,573
Provision (benefit) charged to expense	7,315			17,224			10,412			2,046			253			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 at December 31, 2014	$	25,452		$	43,518		$	52,114		$	32,102		$	6,078		$	159,264
Individually evaluated for impairment	$	12,094		$	4,237		$	2,710		$	6,232		$	28		$	25,301
Collectively evaluated for impairment	$	13,358		$	39,281		$	49,404		$	25,870		$	6,050		$	133,963

Loan and lease balances:
Individually evaluated for impairment	$	141,982		$	50,249		$	36,176		$	101,817		$	632		$	330,856
Collectively evaluated for impairment	3,367,193			2,499,152			3,713,094			3,452,611			537,119			13,569,169
Loans and leases	$	3,509,175		$	2,549,401		$	3,749,270		$	3,554,428		$	537,751		$	13,900,025



	At or for the Year ended December 31, 2013
(In thousands)	Residential			Consumer			Commercial			Commercial Real Estate			Equipment Financing			Total
Allowance for loan and lease losses:
Balance at January 1, 2013	$	32,030		$	56,995		$	50,562		$	33,210		$	4,332		$	177,129
Provision (benefit) charged to expense	1,187			7,808			14,442			12,975			(2,912		)	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 at December 31, 2013	$	23,027		$	41,951		$	51,001		$	32,408		$	4,186		$	152,573
Individually evaluated for impairment	$	10,535		$	4,595		$	1,878		$	3,445		$	—		$	20,453
Collectively evaluated for impairment	$	12,492		$	37,356		$	49,123		$	28,963		$	4,186		$	132,120

Loan and lease balances:
Individually evaluated for impairment	$	142,413		$	52,092		$	52,018		$	104,808		$	210		$	351,541
Collectively evaluated for impairment	3,219,012			2,484,596			3,230,833			2,953,554			460,240			12,348,235
Loans and leases	$	3,361,425		$	2,536,688		$	3,282,851		$	3,058,362		$	460,450		$	12,699,776

Impaired Loans and Leases

The following tables summarize impaired loans and leases:



	At December 31, 2015
(In thousands)	Unpaid Principal Balance		Total Recorded Investment ⁽¹⁾		Recorded Investment No Allowance		Recorded Investment With Allowance		Related Valuation Allowance
Residential:
1-4 family	$	148,144	$	134,448	$	23,024	$	111,424	$	10,364
Consumer:
Home equity	56,680		48,425		25,130		23,295		3,477
Commercial:
Commercial non-mortgage	67,116		56,581		31,600		24,981		5,197
Commercial real estate:
Commercial real estate	36,980		33,333		9,204		24,129		3,160
Commercial construction	7,010		5,962		5,939		23		3
Equipment financing	612		422		328		94		3
Total	$	316,542	$	279,171	$	95,225	$	183,946	$	22,204



	At December 31, 2014
(In thousands)	Unpaid Principal Balance		Total Recorded Investment ⁽¹⁾		Recorded Investment No Allowance		Recorded Investment With Allowance		Related Valuation Allowance
Residential:
1-4 family	$	157,152	$	141,982	$	24,335	$	117,647	$	12,094
Consumer:
Home equity	60,424		50,249		26,432		23,817		4,237
Commercial:
Commercial non-mortgage	41,019		36,176		15,998		20,178		2,710
Commercial real estate:
Commercial real estate	99,687		95,656		40,306		55,350		6,222
Commercial construction	7,218		6,161		5,940		221		10
Equipment financing	629		632		—		632		28
Total	$	366,129	$	330,856	$	113,011	$	217,845	$	25,301

(1) Total recorded investment of impaired loans and leases exclude $1.7 million and $1.4 million of accrued interest receivable at December 31, 2015 and December 31, 2014, respectively.

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



	Years ended December 31,
	2015						2014						2013
(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	$	138,215	$	4,473	$	1,139	$	142,198	$	4,644	$	1,221	$	144,325	$	4,119	$	1,954
Consumer	49,337		1,451		1,099		51,171		1,484		1,203		53,318		1,003		1,724
Commercial	46,379		1,319		—		44,097		2,326		—		60,558		2,889		—
Commercial real estate:
Commercial real estate	64,495		1,165		—		93,209		3,429		—		105,676		4,476		—
Commercial construction	6,062		133		—		8,381		269		—		15,254		620		—
Equipment financing	527		16		—		421		28		—		1,284		22		—
Total	$	305,015	$	8,557	$	2,238	$	339,477	$	12,180	$	2,424	$	380,415	$	13,129	$	3,678

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 following table summarize commercial, commercial real estate and equipment financing loans and leases segregated by risk rating exposure:



	Commercial				Commercial Real Estate				Equipment Financing
(In thousands)	At December 31, 2015		At December 31, 2014		At December 31, 2015		At December 31, 2014		At December 31, 2015		At December 31, 2014
(1) - (6) Pass	$	4,023,255	$	3,545,218	$	3,857,019	$	3,408,128	$	586,445	$	516,116
(7) Special Mention	70,904		88,777		55,030		33,453		1,628		4,364
(8) Substandard	220,389		115,106		79,289		112,354		12,453		17,271
(9) Doubtful	1,451		169		311		493		—		—
Total	$	4,315,999	$	3,749,270	$	3,991,649	$	3,554,428	$	600,526	$	537,751

For residential and consumer loans, the Company considers factors such as past due status, 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)	2015			2014
Accrual status	$	171,784		$	241,855
Non-accrual status	100,906			76,939
Total recorded investment of TDRs ⁽¹⁾	$	272,690		$	318,794
Accruing TDRs performing under modified terms more than one year	55.0		%	67.5		%
Specific reserves for TDRs included in the balance of allowance for loan and lease losses	$	21,405		$	23,785
Additional funds committed to borrowers in TDR status	1,133			552

(1) Total recorded investment of TDRs exclude $1.1 million and $1.4 million at December 31, 2015 and December 31, 2014, respectively, of accrued interest receivable.

For years ended December 31, 2015, 2014 and 2013, Webster charged off $11.8 million, $13.5 million, and $24.4 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,
	2015			2014			2013
	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)	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⁾
Residential:
Extended Maturity	27	$	4,909	27	$	3,547	27	$	5,219
Adjusted Interest rates	3	573		3	448		8	2,759
Combination Rate and Maturity	26	5,315		22	4,220		45	8,264
Other ⁽²⁾	30	4,366		55	11,791		44	9,497
Consumer:
Extended Maturity	12	1,012		19	944		24	1,159
Adjusted Interest rates	—	—		1	51		4	154
Combination Rate and Maturity	12	945		6	411		14	1,504
Other ⁽²⁾	68	3,646		90	4,931		100	4,247
Commercial:
Extended Maturity	3	254		7	422		3	7,525
Adjusted Interest rates	1	24		1	25		—	—
Combination Rate and Maturity	7	5,361		22	1,212		22	1,083
Other ⁽²⁾	20	22,048		6	7,431		4	4,603
Commercial real estate:
Extended Maturity	1	315		—	—		3	226
Combination Rate and Maturity	1	42		2	11,106		6	15,520
Other ⁽²⁾	1	405		—	—		1	68
Equipment Financing
Extended Maturity	—	—		1	492		—	—
Total	212	$	49,215	262	$	47,031	305	$	61,828

(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 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,
	2015			2014			2013
(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	$	55	7	$	1,494	9	$	1,201
Consumer	1	3		2	24		4	339
Commercial	—	—		—	—		1	47
Commercial real estate	—	—		—	—		—	—
Total	2	$	58	9	$	1,518	14	$	1,587

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



	At December 31,
(In thousands)	2015		2014
(1) - (6) Pass	$	12,970	$	40,734
(7) Special Mention	2,999		8,275
(8) Substandard	72,132		77,211
(9) Doubtful	1,717		343
Total	$	89,818	$	126,563