XML 35 R25.htm IDEA: XBRL DOCUMENT v3.22.1
Segment Reporting
 3 Months Ended
Mar. 31, 2022
Segment Reporting [Abstract]  
Segment Reporting Segment Reporting
Webster's operations are organized into three reportable segments that represent its primary businesses: Commercial Banking, HSA Bank, and Consumer Banking. These segments reflect how executive management responsibilities are assigned, how discrete financial information is evaluated, the type of customer served, and how products and services are provided. Certain Treasury activities, along with the amounts required to reconcile profitability metrics to those reported in accordance with GAAP, are included in the Corporate and Reconciling category.
Effective January 1, 2022, Webster realigned its investment services operations from Commercial Banking to Consumer Banking to better serve its customers and deliver operational efficiencies. Under this realignment, $125.4 million of deposits and $4.3 billion of assets under administration (off-balance sheet) were reassigned from Commercial Banking to Consumer Banking. There was no goodwill reallocation nor goodwill impairment as a result of the reorganization. In addition, the non-interest expense allocation methodology was modified to exclude certain overhead and merger-related costs that are not directly related to segment performance. Prior period results of operations have been recasted accordingly to reflect the realignment.
As discussed in Note 2: Mergers and Acquisitions, Webster acquired Sterling on January 31, 2022, and the allocation of the purchase price is considered preliminary. Accordingly, of the total $1.9 billion in preliminary goodwill recorded, $1.7 billion and $0.2 million was preliminarily allocated to Commercial Banking and Consumer Banking, respectively. The $36.0 million of goodwill recorded in connection with the Bend acquisition was allocated entirely to HSA Bank.
Segment Reporting Methodology
Webster uses an internal profitability reporting system to generate information by reportable segment, which is based on a series of management estimates for funds transfer pricing and allocations for non-interest expense, provision for credit losses, 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 results of any one reportable 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 reportable 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 through an internal matched maturity Funds Transfer Pricing (FTP) process. The goal of the FTP allocation is to encourage loan and deposit growth consistent with the Webster’s overall profitability objectives. The FTP process considers the specific interest rate risk and liquidity risk of financial instruments and other assets and liabilities in each line of business. Loans and leases are assigned an FTP rate for funds used and deposits are assigned an FTP rate for funds provided. The allocation 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 leases and deposits originated each day. The FTP process transfers the corporate interest rate risk exposure to the treasury function included within the Corporate and Reconciling category, where such exposures are centrally managed.
Webster allocates a majority of non-interest expense to each reportable segment using an activity and driver-based costing process. Costs, including shared services and back-office support areas, are analyzed, pooled by process, and assigned to the appropriate reportable segment. The combination of direct revenue, direct expenses, funds transfer pricing, and allocations of non-interest expense, produces PPNR, which is the basis the segments are reviewed by executive management.
Webster also allocates the provision for credit losses to each reportable segment based on management's estimate of the inherent loss content in each of the specific loan and lease portfolios. The ACL on loans and leases is included in total assets within the Corporate and Reconciling category. Merger-related expenses and strategic initiatives charges are also generally included in the Corporate and Reconciling category.
The following table presents balance sheet information, including the appropriate allocations, for Webster's reportable segments and the Corporate and Reconciling category:
At March 31, 2022
(In thousands)Commercial BankingHSA BankConsumer BankingCorporate and ReconcilingConsolidated Total
Goodwill$1,865,887 $57,779 $590,105 $— $2,513,771 
Total assets39,028,843 132,266 9,587,880 16,382,495 65,131,484 
At December 31, 2021
(In thousands)Commercial BankingHSA BankConsumer BankingCorporate and ReconcilingConsolidated Total
Goodwill$131,000 $21,813 $385,560 $— $538,373 
Total assets15,398,159 73,564 7,663,921 11,779,955 34,915,599 
The following tables present results of operations, including the appropriate allocations, for Webster’s reportable segments and the Corporate and Reconciling category:
 Three months ended March 31, 2022
(In thousands)Commercial BankingHSA BankConsumer BankingCorporate and ReconcilingConsolidated Total
Net interest income$287,069 $44,577 $136,580 $(73,978)$394,248 
Non-interest income38,743 26,958 27,892 10,442 104,035 
Non-interest expense89,240 36,409 95,747 138,389 359,785 
Pre-tax, pre-provision net revenue236,572 35,126 68,725 (201,925)138,498 
Provision (benefit) for credit losses181,931 — 7,136 (222)188,845 
Income (loss) before income taxes54,641 35,126 61,589 (201,703)(50,347)
Income tax expense (benefit)10,055 9,414 15,964 (69,033)(33,600)
Net income (loss)$44,586 $25,712 $45,625 $(132,670)$(16,747)
 Three months ended March 31, 2021
(In thousands)Commercial BankingHSA BankConsumer BankingCorporate and ReconcilingConsolidated Total
Net interest income$141,486 $42,109 $89,365 $(49,196)$223,764 
Non-interest income18,376 27,005 22,872 8,504 76,757 
Non-interest expense46,284 36,005 75,311 30,382 187,982 
Pre-tax, pre-provision net revenue113,578 33,109 36,926 (71,074)112,539 
(Benefit) provision for credit losses(19,373)— (6,386)9 (25,750)
Income (loss) before income taxes132,951 33,109 43,312 (71,083)138,289 
Income tax expense (benefit)34,035 8,840 10,308 (22,972)30,211 
Net income (loss)$98,916 $24,269 $33,004 $(48,111)$108,078