Webster’s operations are organized into three reportable segments that represent its primary businesses - Commercial Banking, Community Banking and HSA Bank. These three segments reflect how executive management responsibilities are assigned, the primary businesses, the products and services provided, the type of customer served, and how discrete financial information is currently evaluated. The Corporate Treasury Unit of the Company is included in the Corporate and Reconciling category along with the amounts required to reconcile profitability metrics to amounts reported in accordance with GAAP.

Webster’s reportable 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, 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 periodically 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 full profitability and GAAP results are reconciled in the Corporate and Reconciling category.

Webster allocates interest income and interest expense to each business, while also transferring the primary interest rate risk exposures to the Corporate and Reconciling category, using a matched maturity funding concept called Funds Transfer Pricing. 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 ALCO.

Webster allocates 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 reportable segment, such as the provision for the consumer liquidating portfolio, is shown as part of the Corporate and Reconciling category.

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

To further strengthen Webster's ability to deliver the totality of its products and services to the owners and executives of commercial clients and other high net worth individuals, an organizational change was made during the second quarter of 2017. Effective April 1, 2017, the head of Private Banking reports directly to the head of Commercial Banking. The current organizational structure reflects how executive management responsibilities are assigned and reviewed. As a result of this change, the Private Banking and Commercial Banking operating segments are aggregated into one reportable segment, Commercial Banking.

In late 2007 Webster discontinued its indirect residential construction lending and its indirect home equity lending outside of its primary New England market area referred to as National Wholesale Lending. Webster placed these two portfolios into a liquidating loan portfolio included within the Corporate and Reconciling category. The balance of the home equity liquidating loan portfolio was $65.0 million at December 31, 2016. As the remainder of this portfolio has been performing in the same manner as the continuing home equity portfolio, management has decided to combine the liquidating loan portfolio with the continuing home equity loan portfolio. The combined portfolio is included in the Community Banking reportable segment.



	Total Assets
(In thousands)	Commercial Banking		Community Banking		HSA Bank		Corporate and Reconciling		Consolidated Total
At June 30, 2017	$	9,433,770	$	8,802,060	$	78,569	$	7,860,531	$	26,174,930
At December 31, 2016	9,069,445		8,721,046		83,987		8,198,051		26,072,529



	Three months ended June 30, 2017
(In thousands)	Commercial Banking		Community Banking			HSA Bank		Corporate and Reconciling			Consolidated Total
Net interest income (expense)	$	78,946	$	95,902		$	25,574	$	(2,635	)	$	197,787
Provision (benefit) for loan and lease losses	10,692		(3,442		)	—		—			7,250
Net interest income (expense) after provision for loan and lease losses	68,254		99,344			25,574		(2,635		)	190,537
Non-interest income	12,532		28,058			19,750		4,211			64,551
Non-interest expense	37,304		94,322			28,750		4,043			164,419
Income (loss) before income tax expense	43,482		33,080			16,574		(2,467		)	90,669
Income tax expense (benefit)	14,158		10,353			5,323		(744		)	29,090
Net income (loss)	$	29,324	$	22,727		$	11,251	$	(1,723	)	$	61,579



	Three months ended June 30, 2016
(In thousands)	Commercial Banking		Community Banking		HSA Bank		Corporate and Reconciling			Consolidated Total
Net interest income (expense)	$	68,862	$	91,620	$	20,005	$	(3,582	)	$	176,905
Provision for loan and lease losses	11,612		2,388		—		—			14,000
Net interest income (expense) after provision for loan and lease losses	57,250		89,232		20,005		(3,582		)	162,905
Non-interest income	14,755		27,468		18,114		4,738			65,075
Non-interest expense	33,483		91,526		24,688		3,081			152,778
Income (loss) before income tax expense	38,522		25,174		13,431		(1,925		)	75,202
Income tax expense (benefit)	12,603		8,617		4,384		(1,005		)	24,599
Net income (loss)	$	25,919	$	16,557	$	9,047	$	(920	)	$	50,603



	Six months ended June 30, 2017
(In thousands)	Commercial Banking		Community Banking		HSA Bank		Corporate and Reconciling			Consolidated Total
Net interest income (expense)	$	157,193	$	189,492	$	49,626	$	(5,860	)	$	390,451
Provision for loan and lease losses	17,489		261		—		—			17,750
Net interest income (expense) after provision for loan and lease losses	139,704		189,231		49,626		(5,860		)	372,701
Non-interest income	25,956		53,437		39,021		9,179			127,593
Non-interest expense	75,428		189,501		56,989		6,285			328,203
Income (loss) before income tax expense	90,232		53,167		31,658		(2,966		)	172,091
Income tax expense (benefit)	26,762		15,769		9,389		(879		)	51,041
Net income (loss)	$	63,470	$	37,398	$	22,269	$	(2,087	)	$	121,050



	Six months ended June 30, 2016
(In thousands)	Commercial Banking		Community Banking		HSA Bank		Corporate and Reconciling			Consolidated Total
Net interest income (expense)	$	137,157	$	182,191	$	39,924	$	(6,215	)	$	353,057
Provision for loan and lease losses	21,889		7,711		—		—			29,600
Net interest income (expense) after provision for loan and lease losses	115,268		174,480		39,924		(6,215		)	323,457
Non-interest income	25,903		54,118		38,069		9,359			127,449
Non-interest expense	67,543		183,537		48,945		5,198			305,223
Income (loss) before income tax expense	73,628		45,061		29,048		(2,054		)	145,683
Income tax expense (benefit)	24,276		14,857		9,577		(677		)	48,033
Net income (loss)	$	49,352	$	30,204	$	19,471	$	(1,377	)	$	97,650