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Transfers and Servicing of Financial Assets
 9 Months Ended
Sep. 30, 2022
Transfers and Servicing [Abstract]  
Transfers and Servicing of Financial Assets Transfers and Servicing of Financial Assets
Webster originates and sells residential mortgage loans in the normal course of business, primarily to government-sponsored entities through established programs and securitizations. Residential mortgage origination fees, adjustments for changes in fair value, and any gain or loss recognized on residential mortgage loans sold are included in mortgage banking activities on the accompanying Condensed Consolidated Statements of Income.
The following table summarizes information related to mortgage banking activities:
 Three months ended September 30,Nine months ended September 30,
(In thousands)2022202120222021
Net gain on sale$26 $1,063 $529 $4,523 
Origination fees22 313 194 1,231 
Fair value adjustment38 149 (107)(268)
Mortgage banking activities$86 $1,525 $616 $5,486 
Proceeds from sale$1,053 $52,256 $33,886 $199,991 
Loans sold with servicing rights retained147 50,643 30,464 192,421 
Under certain circumstances, Webster may decide to sell loans that were not originated or otherwise acquired with the intent to sell. During the three months ended September 30, 2022 and 2021, Webster sold commercial loans not originated for sale for proceeds of $530.1 million and $12.2 million, respectively, which resulted in net (losses) gains on sale of $(0.1) million and $0.6 million, respectively. During the nine months ended September 30, 2022 and 2021, Webster sold commercial loans not originated for sale for proceeds of $648.6 million and $61.3 million, respectively, which resulted in net gains on sale of $3.1 million and $1.3 million, respectively.
In addition, Webster may retain servicing rights on its residential mortgage loans sold in the normal course of business. At both September 30, 2022 and December 31, 2021, the aggregate principal balance of residential mortgage loans serviced for others totaled $2.0 billion. Mortgage servicing assets are held at the lower of cost, net of accumulated amortization, or fair market value, and are included in accrued interest receivable and other assets on the accompanying Consolidated Balance Sheets. Webster assesses mortgage servicing assets for impairment each quarter and establishes or adjusts the valuation allowance to the extent that amortized cost exceeds the estimated fair market value.
The following table presents the change in the carrying amount for mortgage servicing assets:
Three months ended September 30,Nine months ended September 30,
(In thousands)2022202120222021
Beginning balance$8,592 $11,501 $9,237 $13,422 
Additions (1)
1,627 483 2,751 1,685 
Amortization (2)
(382)(1,363)(2,151)(4,295)
Adjustment to valuation allowance— (454)— (645)
Ending balance$9,837 $10,167 $9,837 $10,167 
(1)In connection with the Sterling merger, Webster acquired $0.9 million of mortgage servicing assets on January 31, 2022.
Loan servicing fees, net of mortgage servicing rights amortization, were $1.3 million and $0.4 million for the three months ended September 30, 2022 and 2021, respectively, and $2.9 million and $1.2 million for the nine months ended
September 30, 2022 and 2021, respectively, and are included in loan and lease related fees on the accompanying Condensed Consolidated Statements of Income. Information regarding the fair value of loans held for sale and mortgage servicing assets can be found within Note 14: Fair Value Measurements.