Loans and Leases

6 Months Ended

Jun. 30, 2017

Loans and Leases Receivable Disclosure [Abstract]

Loans and Leases

Loans and Leases

The following table summarizes loans and leases:

(In thousands)	At June 30, 2017		At December 31, 2016
Residential	$	4,388,308	$	4,254,682
Consumer	2,599,318		2,684,500
Commercial	5,144,171		4,940,931
Commercial Real Estate	4,556,208		4,510,846
Equipment Financing	585,673		635,629
Loans and leases (1) (2)	$	17,273,678	$	17,026,588

(1) Loans and leases include net deferred fees and net premiums/discounts of $18.8 million and $17.3 million at June 30, 2017 and December 31, 2016, respectively.

(2) At June 30, 2017, the Company had pledged $6.2 billion of eligible residential, consumer and commercial loans as collateral to support borrowing capacity at the FHLB Boston and the FRB of Boston.

Loans and Leases Aging

The following tables summarize the aging of loans and leases:

	At June 30, 2017
(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		Current		Total Loans and Leases
Residential	$	6,157	$	3,697	$	—	$	46,090	$	55,944	$	4,332,364	$	4,388,308
Consumer:
Home equity	7,961		3,307		—		38,974		50,242		2,293,538		2,343,780
Other consumer	1,788		1,337		—		1,272		4,397		251,141		255,538
Commercial:
Commercial non-mortgage	1,269		648		1,185		68,181		71,283		4,211,685		4,282,968
Asset-based	—		—		—		—		—		861,203		861,203
Commercial real estate:
Commercial real estate	832		184		—		10,637		11,653		4,182,700		4,194,353
Commercial construction	—		—		—		543		543		361,312		361,855
Equipment financing	883		—		—		547		1,430		584,243		585,673
Total	$	18,890	$	9,173	$	1,185	$	166,244	$	195,492	$	17,078,186	$	17,273,678

	At December 31, 2016
(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		Current		Total Loans and Leases
Residential	$	8,631	$	2,609	$	—	$	47,279	$	58,519	$	4,196,163	$	4,254,682
Consumer:
Home equity	8,831		5,782		—		35,926		50,539		2,359,354		2,409,893
Other consumer	2,233		1,485		—		1,663		5,381		269,226		274,607
Commercial:
Commercial non-mortgage	1,382		577		749		38,190		40,898		4,094,727		4,135,625
Asset-based	—		—		—		—		—		805,306		805,306
Commercial real estate:
Commercial real estate	6,357		1,816		—		9,871		18,044		4,117,742		4,135,786
Commercial construction	—		—		—		662		662		374,398		375,060
Equipment financing	903		693		—		225		1,821		633,808		635,629
Total	$	28,337	$	12,962	$	749	$	133,816	$	175,864	$	16,850,724	$	17,026,588

Interest on non-accrual loans and leases that would have been recorded as additional interest income for the three and six months ended June 30, 2017 and 2016, had the loans and leases been current in accordance with their original terms, totaled $2.6 million and $4.5 million, and $3.0 million and $5.4 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 three months ended June 30, 2017
	Residential			Consumer			Commercial			Commercial Real Estate			Equipment Financing			Total
ALLL:
Balance, beginning of period	$	20,264		$	45,408		$	76,354		$	50,727		$	6,354		$	199,107
(Benefit) provision charged to expense	(1,621		)	1,562			5,489			1,771			49			7,250
Charge-offs	(623		)	(5,602		)	(2,196		)	(100		)	(119		)	(8,640		)
Recoveries	407			1,120			317			4			13			1,861
Balance, end of period	$	18,427		$	42,488		$	79,964		$	52,402		$	6,297		$	199,578

	At or for the three months ended June 30, 2016
(In thousands)	Residential			Consumer			Commercial			Commercial Real Estate			Equipment Financing			Total
ALLL:
Balance, beginning of period	$	27,330		$	41,636		$	66,471		$	33,318		$	5,446		$	174,201
(Benefit) provision charged to expense	(2,412		)	4,682			10,560			1,087			83			14,000
Charge-offs	(638		)	(4,556		)	(3,525		)	(995		)	(70		)	(9,784		)
Recoveries	133			1,194			316			212			156			2,011
Balance, end of period	$	24,413		$	42,956		$	73,822		$	33,622		$	5,615		$	180,428

	At or for the six months ended June 30, 2017
(In thousands)	Residential			Consumer			Commercial			Commercial Real Estate			Equipment Financing			Total
ALLL:
Balance, beginning of period	$	23,226		$	45,233		$	71,905		$	47,477		$	6,479		$	194,320
(Benefit) provision charged to expense	(4,088		)	6,888			9,739			5,116			95			17,750
Charge-offs	(1,355		)	(12,076		)	(2,319		)	(202		)	(304		)	(16,256		)
Recoveries	644			2,443			639			11			27			3,764
Balance, end of period	$	18,427		$	42,488		$	79,964		$	52,402		$	6,297		$	199,578
Individually evaluated for impairment	$	5,105		$	1,829		$	10,951		$	324		$	27		$	18,236
Collectively evaluated for impairment	$	13,322		$	40,659		$	69,013		$	52,078		$	6,270		$	181,342
Loan and lease balances:
Individually evaluated for impairment	$	117,820		$	47,310		$	83,206		$	18,677		$	6,332		$	273,345
Collectively evaluated for impairment	4,270,488			2,552,008			5,060,965			4,537,531			579,341			17,000,333
Loans and leases	$	4,388,308		$	2,599,318		$	5,144,171		$	4,556,208		$	585,673		$	17,273,678

	At or for the six months ended June 30, 2016
(In thousands)	Residential			Consumer			Commercial			Commercial Real Estate			Equipment Financing			Total
ALLL:
Balance, beginning of period	$	25,876		$	42,052		$	66,686		$	34,889		$	5,487		$	174,990
(Benefit) provision charged to expense	(85		)	7,473			21,096			968			148			29,600
Charge-offs	(2,232		)	(8,977		)	(14,733		)	(2,521		)	(221		)	(28,684		)
Recoveries	854			2,408			773			286			201			4,522
Balance, end of period	$	24,413		$	42,956		$	73,822		$	33,622		$	5,615		$	180,428
Individually evaluated for impairment	$	10,018		$	3,027		$	6,422		$	1,649		$	17		$	21,133
Collectively evaluated for impairment	$	14,395		$	39,929		$	67,400		$	31,973		$	5,598		$	159,295
Loan and lease balances:
Individually evaluated for impairment	$	127,965		$	47,576		$	59,550		$	32,208		$	421		$	267,720
Collectively evaluated for impairment	4,028,700			2,680,876			4,517,932			4,158,879			617,922			16,004,309
Loans and leases	$	4,156,665		$	2,728,452		$	4,577,482		$	4,191,087		$	618,343		$	16,272,029

Impaired Loans and Leases

The following tables summarize impaired loans and leases:

	At June 30, 2017
(In thousands)	Unpaid Principal Balance		Total Recorded Investment		Recorded Investment No Allowance		Recorded Investment With Allowance		Related Valuation Allowance
Residential	$	129,421	$	117,820	$	27,130	$	90,690	$	5,105
Consumer	52,666		47,310		22,923		24,387		1,829
Commercial	90,351		83,206		25,250		57,956		10,951
Commercial real estate:
Commercial real estate	19,273		18,135		13,086		5,049		239
Commercial construction	645		542		—		542		85
Equipment financing	6,332		6,332		5,736		596		27
Total	$	298,688	$	273,345	$	94,125	$	179,220	$	18,236

	At December 31, 2016
(In thousands)	Unpaid Principal Balance		Total Recorded Investment		Recorded Investment No Allowance		Recorded Investment With Allowance		Related Valuation Allowance
Residential	$	131,468	$	119,424	$	21,068	$	98,356	$	8,090
Consumer	52,432		45,719		22,746		22,973		2,903
Commercial	57,732		53,037		26,006		27,031		7,422
Commercial real estate:
Commercial real estate	24,146		23,568		19,591		3,977		169
Commercial construction	1,188		1,187		1,187		—		—
Equipment financing	6,398		6,420		6,197		223		9
Total	$	273,364	$	249,355	$	96,795	$	152,560	$	18,593

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

	Three months ended June 30,												Six months ended June 30,
	2017						2016						2017						2016
(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		Average Recorded Investment		Accrued Interest Income		Cash Basis Interest Income
Residential	$	119,398	$	1,036	$	286	$	129,049	$	1,124	$	297	$	118,622	$	2,106	$	701	$	131,207	$	2,239	$	614
Consumer	47,296		335		249		47,836		344		257		46,514		657		562		48,001		693		516
Commercial	85,006		233		—		62,199		475		—		68,122		455		—		58,066		947		—
Commercial real estate:
Commercial real estate	20,454		98		—		28,737		149		—		20,851		233		—		30,575		297		—
Commercial construction	862		—		—		5,177		34		—		865		12		—		5,177		69		—
Equipment financing	6,240		67		—		717		1		—		6,376		138		—		422		2		—
Total	$	279,256	$	1,769	$	535	$	273,715	$	2,127	$	554	$	261,350	$	3,601	$	1,263	$	273,448	$	4,247	$	1,130

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. 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 Composite Credit Risk Profile has ten grades, with each grade corresponding to a progressively greater risk of default. Grades (1) - (6) are considered pass ratings, and (7) - (10) are considered 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 a borrower's current financial position and outlook, risk profile, and the related collateral and structural position. 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 (7) "Special Mention" credit has the potential weakness that, if left uncorrected, may result in deterioration of the repayment prospects for the asset. An (8) "Substandard" asset has a well defined weakness that jeopardizes the full repayment of the debt. An asset rated (9) "Doubtful" 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 (10) "Loss" in accordance with regulatory guidelines are considered uncollectible and charged off.

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

	Commercial				Commercial Real Estate				Equipment Financing
(In thousands)	At June 30, 2017		At December 31, 2016		At June 30, 2017		At December 31, 2016		At June 30, 2017		At December 31, 2016
(1) - (6) Pass	$	4,828,252	$	4,655,007	$	4,358,273	$	4,357,458	$	567,168	$	618,084
(7) Special Mention	86,109		56,240		92,245		69,023		3,802		1,324
(8) Substandard	207,831		226,603		105,690		84,365		14,703		16,221
(9) Doubtful	21,979		3,081		—		—		—		—
Total	$	5,144,171	$	4,940,931	$	4,556,208	$	4,510,846	$	585,673	$	635,629

For residential and consumer loans, the Company considers factors such as past due status, updated FICO scores, employment status, collateral, 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 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:

(Dollars in thousands)	At June 30, 2017		At December 31, 2016
Accrual status	$	136,047	$	147,809
Non-accrual status	87,052		75,719
Total recorded investment of TDRs	$	223,099	$	223,528
Specific reserves for TDRs included in the balance of ALLL	$	12,101	$	14,583
Additional funds committed to borrowers in TDR status	4,819		459

For the three and six months ended June 30, 2017, and 2016, Webster charged off $0.6 million and $2.6 million, and $3.3 million and $14.9 million, respectively, for the portion of TDRs deemed to be uncollectible.

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

	Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016
	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)		Number of Loans and Leases	Post- Modification Recorded Investment(1)
(Dollars in thousands)
Residential:
Extended Maturity	4	$	420	2	$	338	9	$	1,390	7	$	1,002
Adjusted Interest Rate	2	335		—	—		2	335		1	236
Maturity/Rate Combined	2	354		7	895		5	846		7	895
Other (2)	7	1,176		8	1,476		26	4,114		15	2,891
Consumer:
Extended Maturity	4	625		6	193		6	664		7	292
Maturity/Rate Combined	4	830		4	359		11	2,813		8	659
Other (2)	10	701		22	839		43	2,894		29	1,177
Commercial:
Extended Maturity	6	778		—	—		8	813		9	14,649
Maturity/Rate Combined	5	8,854		1	644		5	8,854		2	648
Other (2)	—	—		3	64		1	4		7	374
Commercial real estate:
Maturity/Rate Combined	—	—		—	—		—	—		1	444
Other (2)	—	—		—	—		—	—		1	509
Equipment Financing
Extended Maturity	—	—		—	—		—	—		1	4
Total TDRs	44	$	14,073	53	$	4,808	116	$	22,727	95	$	23,780

(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, 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:

	Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016
(Dollars in thousands)	Number of Loans and Leases	Recorded Investment		Number of Loans and Leases	Recorded Investment		Number of Loans and Leases	Recorded Investment		Number of Loans and Leases	Recorded Investment
Residential	—	$	—	1	$	54	—	$	—	1	$	54
Consumer	—	—		1	18		—	—		1	18
Commercial	1	23		1	1,363		1	23		1	1,363
Total	1	$	23	3	$	1,435	1	$	23	3	$	1,435

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

(In thousands)	At June 30, 2017		At December 31, 2016
(1) - (6) Pass	$	8,241	$	10,210
(7) Special Mention	367		7
(8) Substandard	46,705		45,509
(9) Doubtful	2,656		2,738
Total	$	57,969	$	58,464