Loans and Leases

12 Months Ended

Dec. 31, 2021

Loans and Leases Receivable Disclosure [Abstract]

Loans and Leases

Loans and Leases

The following table summarizes loans and leases by portfolio segment and class:

	At December 31,
(In thousands)	2021		2020
Commercial non-mortgage	$	6,882,480	$	7,085,076
Asset-based	1,067,248		890,598
Commercial real estate	6,603,180		6,322,637
Equipment financing	627,058		602,224
Commercial portfolio	15,179,966		14,900,535
Residential	5,412,905		4,782,016
Home equity	1,593,559		1,802,865
Other consumer	85,299		155,799
Consumer portfolio	7,091,763		6,740,680
Loans and leases	$	22,271,729	$	21,641,215

The carrying amount of loans and leases includes net unamortized deferred costs/(fees) and net unamortized discounts/(premiums) of $12.3 million and $(10.5) million at December 31, 2021 and 2020, respectively. The net change from 2020 to 2021 is primarily attributed to increased deferred fees in 2020 due to PPP loans. Accrued interest receivable of $50.7 million and $57.8 million at December 31, 2021 and 2020, respectively, is excluded from the carrying amount of loans and leases and is reported within accrued interest receivable and other assets on the accompanying Consolidated Balance Sheets. At December 31, 2021, Webster had pledged $7.8 billion of eligible loans as collateral to support its borrowing capacity at both the FHLB of Boston and the FRB of Boston.

Non-Accrual and Past Due Loans and Leases

The following tables summarize the aging of accrual and non-accrual loans and leases by class:

	At December 31, 2021
(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
Commercial non-mortgage	$	3,729	$	4,524	$	1,977	$	59,607	$	69,837	$	6,812,643	$	6,882,480
Asset-based	—		—		—		2,086		2,086		1,065,162		1,067,248
Commercial real estate	508		417		519		5,046		6,490		6,596,690		6,603,180
Equipment financing	1,034		—		—		3,728		4,762		622,296		627,058
Commercial portfolio	5,271		4,941		2,496		70,467		83,175		15,096,791		15,179,966
Residential	3,212		368		—		15,747		19,327		5,393,578		5,412,905
Home equity	3,467		1,600		—		23,489		28,556		1,565,003		1,593,559
Other consumer	379		181		—		224		784		84,515		85,299
Consumer portfolio	7,058		2,149		—		39,460		48,667		7,043,096		7,091,763
Total	$	12,329	$	7,090	$	2,496	$	109,927	$	131,842	$	22,139,887	$	22,271,729

	At December 31, 2020
(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
Commercial non-mortgage	$	612	$	903	$	445	$	64,073	$	66,033	$	7,019,043	$	7,085,076
Asset-based	1,174		—		—		2,594		3,768		886,830		890,598
Commercial real estate	2,400		619		—		21,231		24,250		6,298,387		6,322,637
Equipment financing	5,107		2,308		—		7,299		14,714		587,510		602,224
Commercial portfolio	9,293		3,830		445		95,197		108,765		14,791,770		14,900,535
Residential	4,334		6,330		—		41,081		51,745		4,730,271		4,782,016
Home equity	5,500		1,771		—		31,030		38,301		1,764,564		1,802,865
Other consumer	878		601		—		652		2,131		153,668		155,799
Consumer portfolio	10,712		8,702		—		72,763		92,177		6,648,503		6,740,680
Total	$	20,005	$	12,532	$	445	$	167,960	$	200,942	$	21,440,273	$	21,641,215

The following table provides additional information on non-accrual loans and leases:

	At December 31,
	2021				2020
(In thousands)	Non-accrual		Non-accrual With No Allowance		Non-accrual		Non-accrual With No Allowance
Commercial non-mortgage	$	59,607	$	4,802	$	64,073	$	16,985
Asset-based	2,086		2,086		2,594		—
Commercial real estate	5,046		4,310		21,231		15,529
Equipment financing	3,728		—		7,299		2,983
Commercial portfolio	70,467		11,198		95,197		35,497
Residential	15,747		10,584		41,081		29,843
Home equity	23,489		18,920		31,030		24,091
Other consumer	224		2		652		2
Consumer portfolio	39,460		29,506		72,763		53,936
Total	$	109,927	$	40,704	$	167,960	$	89,433

Interest on non-accrual loans that would have been recognized as additional interest income had the loans been current in accordance with their original terms totaled $11.0 million, $9.7 million, and $11.3 million for the years ended December 31, 2021, 2020, and 2019, respectively.

Allowance for Credit Losses on Loans and Leases

The following tables summarize the change in the ACL on loans and leases by portfolio segment:

	At or for the Years ended December 31,
	2021						2020						2019
(In thousands)	Commercial Portfolio		Consumer Portfolio		Total		Commercial Portfolio		Consumer Portfolio		Total		Commercial Portfolio		Consumer Portfolio		Total
ACL on loans and leases:
Beginning balance	$	312,244	$	47,187	$	359,431	$	161,669	$	47,427	$	209,096	$	164,073	$	48,280	$	212,353
Adoption of CECL	—		—		—		34,024		23,544		57,568		—		—		—
(Benefit) provision	(48,651)		(5,764)		(54,415)		156,336		(18,488)		137,848		29,174		8,626		37,800
Charge-offs	(9,437)		(9,217)		(18,654)		(42,925)		(12,408)		(55,333)		(33,327)		(19,153)		(52,480)
Recoveries	3,721		11,104		14,825		3,140		7,112		10,252		1,749		9,674		11,423
Ending balance	$	257,877	$	43,310	$	301,187	$	312,244	$	47,187	$	359,431	$	161,669	$	47,427	$	209,096
Individually assessed ACL	16,965		4,108		21,073		11,687		4,450		16,137		9,428		4,821		14,249
Collectively assessed ACL	$	240,912	$	39,202	$	280,114	$	300,557	$	42,737	$	343,294	$	152,241	$	42,606	$	194,847

The $58.2 million decrease in the ACL on loans and leases from 2020 to 2021 is primarily due to improvements in the forecasted economic outlook and favorable credit trends, which were negatively affected by the emergence of the COVID-19 pandemic in 2020 and resulted in a release of reserves in 2021, partially offset by reserves on newly originated loans and leases.

Credit Quality Indicators

To measure credit risk for the commercial portfolio, the Company employs a dual grade credit risk grading system for estimating the PD and LGD. 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 loss. Grades (1) to (6) are considered pass ratings, and grades (7) to (10) are considered criticized, as defined by the regulatory agencies. A (7) "Special Mention" rating has a potential weakness that, if left uncorrected, may result in deterioration of the repayment prospects for the asset. A (8) "Substandard" rating has a well-defined weakness that jeopardizes the full repayment of the debt. A (9) "Doubtful" rating has all of the same weaknesses as a substandard asset with the added characteristic that the weakness makes collection or liquidation in full given current facts, conditions, and values improbable. Assets classified as a (10) "Loss" rating are considered uncollectible and are charged-off. Risk ratings, which are 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 or other loan factors 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.

The following tables summarize the amortized cost basis of commercial loans and leases by Composite Credit Risk Profile grade and origination year:

	At December 31, 2021
(In thousands)	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
Commercial non-mortgage:
Pass	$	2,270,320	$	1,179,620	$	757,343	$	581,633	$	292,637	$	275,789	$	1,182,562	$	6,539,904
Special mention	14,216		22,892		37,877		15,575		9,721		15,399		27,808		143,488
Substandard	3,660		46,887		30,437		69,963		5,255		19,483		23,403		199,088
Commercial non-mortgage	2,288,196		1,249,399		825,657		667,171		307,613		310,671		1,233,773		6,882,480
Asset-based:
Pass	7,609		19,141		12,810		13,456		6,113		25,850		920,496		1,005,475
Special mention	—		—		—		675		—		—		59,012		59,687
Substandard	—		—		2,086		—		—		—		—		2,086
Asset-based	7,609		19,141		14,896		14,131		6,113		25,850		979,508		1,067,248
Commercial real estate:
Pass	1,375,306		869,144		1,331,236		916,868		401,718		1,339,942		55,610		6,289,824
Special mention	95		3,084		—		119,676		51,536		79,096		—		253,487
Substandard	—		482		227		7,306		13,874		37,980		—		59,869
Commercial real estate	1,375,401		872,710		1,331,463		1,043,850		467,128		1,457,018		55,610		6,603,180
Equipment financing:
Pass	231,762		188,031		93,547		41,276		14,864		32,588		—		602,068
Special mention	—		108		2,229		3,341		—		600		—		6,278
Substandard	—		8,388		4,756		2,612		332		2,624		—		18,712
Equipment financing	231,762		196,527		100,532		47,229		15,196		35,812		—		627,058
Total commercial portfolio	$	3,902,968	$	2,337,777	$	2,272,548	$	1,772,381	$	796,050	$	1,829,351	$	2,268,891	$	15,179,966

	At December 31, 2020
(In thousands)	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Total
Commercial non-mortgage:
Pass	$	2,771,373	$	1,052,080	$	907,110	$	481,321	$	231,280	$	218,001	$	936,592	$	6,597,757
Special mention	32,535		33,969		62,034		435		8,357		13,757		38,496		189,583
Substandard	54,716		51,798		66,324		36,159		15,535		23,957		49,084		297,573
Doubtful	—		—		—		163		—		—		—		163
Commercial non-mortgage	2,858,624		1,137,847		1,035,468		518,078		255,172		255,715		1,024,172		7,085,076
Asset-based:
Pass	26,344		15,960		23,123		11,333		10,963		16,484		741,336		845,543
Special mention	—		—		775		—		—		—		41,687		42,462
Substandard	—		2,504		—		—		—		—		89		2,593
Asset-based	26,344		18,464		23,898		11,333		10,963		16,484		783,112		890,598
Commercial real estate:
Pass	965,582		1,461,201		1,242,322		527,931		554,630		1,165,331		28,113		5,945,110
Special mention	27		10,385		70,704		37,539		35,617		69,832		—		224,104
Substandard	817		1,132		21,923		73,621		2,962		52,968		—		153,423
Commercial real estate	966,426		1,472,718		1,334,949		639,091		593,209		1,288,131		28,113		6,322,637
Equipment financing:
Pass	249,370		135,263		68,092		26,433		43,469		22,879		—		545,506
Special mention	7,934		11,043		6,981		1,220		1,577		788		—		29,543
Substandard	7,483		6,169		5,749		2,460		4,743		571		—		27,175
Equipment financing	264,787		152,475		80,822		30,113		49,789		24,238		—		602,224
Total commercial portfolio	$	4,116,181	$	2,781,504	$	2,475,137	$	1,198,615	$	909,133	$	1,584,568	$	1,835,397	$	14,900,535

To measure credit risk for the consumer portfolio, the most relevant credit characteristic is the FICO score, which is a widely used credit scoring system that ranges from 300 to 850. A lower FICO score is indicative of higher credit risk and a higher FICO score is indicative of lower credit risk. FICO scores are updated at least on a quarterly basis.

The following tables summarize the amortized cost basis of consumer loans by FICO score and origination year:

	At December 31, 2021
(In thousands)	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
Residential:
800+	$	590,238	$	428,118	$	161,664	$	35,502	$	105,198	$	735,517	$	—	$	2,056,237
740-799	1,083,608		421,380		154,960		32,172		95,662		456,722		—		2,244,504
670-739	374,460		135,146		73,499		25,099		34,550		227,863		—		870,617
580-669	38,644		13,782		9,348		3,056		9,000		71,811		—		145,641
579 and below	9,478		1,051		49,252		390		2,519		33,216		—		95,906
Residential	2,096,428		999,477		448,723		96,219		246,929		1,525,129		—		5,412,905
Home equity:
800+	35,678		30,157		9,591		16,347		11,068		58,189		463,334		624,364
740-799	42,430		22,030		9,413		13,317		7,711		33,777		409,518		538,196
670-739	17,493		9,162		5,889		8,220		5,802		31,160		233,744		311,470
580-669	1,773		1,397		1,298		1,066		1,329		15,042		66,361		88,266
579 and below	380		446		725		1,060		434		5,666		22,552		31,263
Home equity	97,754		63,192		26,916		40,010		26,344		143,834		1,195,509		1,593,559
Other consumer:
800+	463		1,343		2,398		916		231		118		10,160		15,629
740-799	2,588		5,408		8,303		2,985		379		77		9,528		29,268
670-739	1,061		7,034		13,602		3,859		607		412		5,644		32,219
580-669	256		1,083		2,550		735		216		211		1,267		6,318
579 and below	147		87		215		159		40		21		1,196		1,865
Other consumer	4,515		14,955		27,068		8,654		1,473		839		27,795		85,299
Total consumer portfolio	2,198,697		1,077,624		502,707		144,883		274,746		1,669,802		1,223,304		7,091,763

	At December 31, 2020
(In thousands)	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Total
Residential:
800+	$	360,336	$	283,755	$	61,048	$	178,849	$	268,044	$	805,537	$	—	$	1,957,569
740-799	654,973		288,173		58,249		133,416		176,286		492,720		—		1,803,817
670-739	199,329		118,620		39,125		75,375		76,666		248,268		—		757,383
580-669	17,151		19,389		8,884		11,843		12,225		96,333		—		165,825
579 and below	—		36,498		673		3,278		3,179		53,794		—		97,422
Residential	1,231,789		746,435		167,979		402,761		536,400		1,696,652		—		4,782,016
Home equity:
800+	30,604		16,567		25,205		14,439		17,192		59,956		542,600		706,563
740-799	34,797		13,565		19,715		11,073		12,839		43,802		434,271		570,062
670-739	13,753		8,855		10,761		10,206		7,318		44,025		275,691		370,609
580-669	1,708		2,172		2,660		2,234		2,316		16,680		86,126		113,896
579 and below	129		919		880		1,070		1,073		7,163		30,501		41,735
Home equity	80,991		42,078		59,221		39,022		40,738		171,626		1,369,189		1,802,865
Other consumer:
800+	2,827		5,725		2,610		658		115		190		7,171		19,296
740-799	12,317		21,036		8,925		1,493		457		263		5,119		49,610
670-739	14,761		31,952		11,843		2,284		665		228		8,403		70,136
580-669	2,344		5,419		2,360		793		194		124		1,570		12,804
579 and below	608		982		500		183		37		215		1,428		3,953
Other consumer	32,857		65,114		26,238		5,411		1,468		1,020		23,691		155,799
Total consumer portfolio	1,345,637		853,627		253,438		447,194		578,606		1,869,298		1,392,880		6,740,680

Collateral Dependent Loans and Leases

A loan or lease is considered collateral dependent when the borrower is experiencing financial difficulty and repayment is substantially expected to be provided through the operation or sale of collateral. At December 31, 2021 and 2020, the carrying amount of collateral dependent commercial loans and leases totaled $16.6 million and $42.1 million, respectively, and the carrying amount of collateral dependent consumer loans totaled $34.9 million and $60.8 million, respectively. Commercial non-mortgage, asset-based, and equipment financing loans and leases are generally secured by machinery and equipment, inventories, receivables, or other non-real estate assets, whereas commercial real estate, residential, home equity, and other consumer loans are secured by real estate. The ACL for collateral dependent loans and leases is individually assessed based on the fair value of the collateral less costs to sell at the reporting date. At December 31, 2021 and 2020, the collateral value on collateral dependent loans and leases totaled $86.0 million and $150.3 million, respectively.

Troubled Debt Restructurings

The following table summarizes information related to TDRs:

	At December 31,
(Dollars in thousands)	2021		2020
Accrual status	$	110,625	$	140,089
Non-accrual status	52,719		95,338
Total TDRs	$	163,344	$	235,427
Additional funds committed to borrowers in TDR status	$	5,975	$	12,895
Specific reserves for TDRs included in the ACL on loans and leases:
Commercial portfolio	$	9,017	$	8,657
Consumer portfolio	3,745		4,071

The respective portions of commercial and consumer TDRs deemed to be uncollectible and charged-off were $3.0 million and $0.4 million during the year ended December 31, 2021, $17.6 million and $0.8 million during the year ended December 31, 2020, and $20.3 million and $1.5 million during the year ended December 31, 2019.

The following table summarizes loans and leases modified as TDRs by class and modification type:

	Years ended December 31,
	2021			2020			2019
	Number of Contracts	Recorded Investment (1)		Number of Contracts	Recorded Investment (1)		Number of Contracts	Recorded Investment (1)
(Dollars in thousands)
Commercial non-mortgage
Extended maturity	8	$	605	11	$	1,070	15	$	2,413
Adjusted interest rate	—	—		1	96		2	112
Maturity/rate combined	9	352		7	607		11	673
Other (2)	12	14,160		24	40,128		28	65,186
Commercial real estate
Extended maturity	1	183		1	72		3	8,356
Maturity/rate combined	—	—		2	377		—	—
Other (2)	1	1,582		3	306		3	4,816
Residential
Extended maturity	1	99		3	485		7	1,327
Maturity/rate combined	2	401		10	1,133		15	2,241
Other (2)	3	280		26	4,215		8	1,001
Home equity
Extended maturity	85	1,809		3	188		6	599
Maturity/rate combined	6	1,025		5	334		4	140
Other (2)	22	1,481		96	6,680		34	1,907
Total TDRs	150	$	21,977	192	$	55,691	136	$	88,771

(1)Post-modification balances approximate pre-modification balances. The aggregate amount of charge-offs due to restructurings was not significant.

(2)Other includes covenant modifications, forbearance, discharges under Chapter 7 bankruptcy, or other concessions.

For the years ended December 31, 2021 and 2019, there were no significant loans and leases modified as TDRs within the previous 12 months and for which there was a payment default. For the year ended December 31, 2020, there were 4 commercial non-mortgage loans and leases that were modified as TDRs within the previous 12 months and for which there was a payment default with an aggregated amortized cost of $12.4 million