XML 34 R24.htm IDEA: XBRL DOCUMENT v3.22.2
Segment Reporting
 6 Months Ended
Jun. 30, 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 June 30, 2022
(In thousands)Commercial BankingHSA BankConsumer BankingCorporate and ReconcilingConsolidated Total
Goodwill$1,865,887 $57,779 $590,105 $— $2,513,771 
Total assets39,019,968 124,819 9,766,337 18,683,897 67,595,021 
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 June 30, 2022
(In thousands)Commercial BankingHSA BankConsumer BankingCorporate and ReconcilingConsolidated Total
Net interest income$333,421 $49,558 $179,067 $(75,386)$486,660 
Non-interest income49,430 26,552 30,784 14,167 120,933 
Non-interest expense102,720 37,540 107,312 110,655 358,227 
Pre-tax, pre-provision net revenue280,131 38,570 102,539 (171,874)249,366 
Provision (benefit) for credit losses22,782 — (11,053)514 12,243 
Income (loss) before income taxes257,349 38,570 113,592 (172,388)237,123 
Income tax expense (benefit)64,337 10,337 29,534 (49,396)54,812 
Net income (loss)$193,012 $28,233 $84,058 $(122,992)$182,311 
 Three months ended June 30, 2021
(In thousands)Commercial BankingHSA BankConsumer BankingCorporate and ReconcilingConsolidated Total
Net interest income$140,589 $42,193 $93,075 $(55,005)$220,852 
Non-interest income18,378 26,554 24,098 3,672 72,702 
Non-interest expense46,275 32,423 74,149 34,181 187,028 
Pre-tax, pre-provision net revenue112,692 36,324 43,024 (85,514)106,526 
(Benefit) provision for credit losses(23,328)— 1,754 74 (21,500)
Income (loss) before income taxes136,020 36,324 41,270 (85,588)128,026 
Income tax expense (benefit)34,822 9,699 9,823 (20,353)33,991 
Net income (loss)$101,198 $26,625 $31,447 $(65,235)$94,035 
Six months ended June 30, 2022
(In thousands)Commercial BankingHSA BankConsumer BankingCorporate and ReconcilingConsolidated Total
Net interest income$620,490 $94,135 $315,647 $(149,364)$880,908 
Non-interest income88,173 53,510 58,676 24,609 224,968 
Non-interest expense191,960 73,949 203,059 249,044 $718,012 
Pre-tax, pre-provision net revenue516,703 $73,696 171,264 (373,799)387,864 
Provision (benefit) for credit losses204,713 — (3,917)292 201,088 
Income (loss) before income tax expense311,990 73,696 175,181 (374,091)186,776 
Income tax expense (benefit)74,392 19,751 45,498 (118,429)21,212 
Net income (loss)$237,598 $53,945 $129,683 $(255,662)$165,564 
Six months ended June 30, 2021
(In thousands)Commercial BankingHSA BankConsumer BankingCorporate and ReconcilingConsolidated Total
Net interest income$282,075 $84,302 $182,440 $(104,201)$444,616 
Non-interest income36,754 53,559 46,970 12,176 149,459 
Non-interest expense92,559 68,428 149,460 64,563 375,010 
Pre-tax, pre-provision net revenue226,270 69,433 79,950 (156,588)219,065 
(Benefit) provision for credit losses(42,701)— (4,632)83 (47,250)
Income (loss) before income tax expense268,971 69,433 84,582 (156,671)266,315 
Income tax expense (benefit)68,857 18,539 20,131 (43,325)64,202 
Net income (loss)$200,114 $50,894 $64,451 $(113,346)$202,113