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Segment Reporting
 9 Months Ended
Sep. 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 tables present balance sheet information, including the appropriate allocations, for Webster's reportable segments and the Corporate and Reconciling category:
At September 30, 2022
(In thousands)Commercial BankingHSA BankConsumer BankingCorporate and ReconcilingConsolidated Total
Goodwill$1,865,887 $57,779 $590,105 $— $2,513,771 
Total assets40,907,410 122,112 10,120,063 17,902,981 69,052,566 
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 September 30, 2022
(In thousands)Commercial BankingHSA BankConsumer BankingCorporate and ReconcilingConsolidated Total
Net interest income$333,554 $58,567 $195,748 $(36,866)$551,003 
Non-interest income40,497 25,842 33,842 13,455 113,636 
Non-interest expense102,415 36,725 109,588 81,343 330,071 
Pre-tax, pre-provision net revenue271,636 47,684 120,002 (104,754)334,568 
Provision (benefit) for credit losses33,341 — (1,989)5,179 36,531 
Income (loss) before income taxes238,295 47,684 121,991 (109,933)298,037 
Income tax expense (benefit)59,574 12,779 31,718 (40,002)64,069 
Net income (loss)$178,721 $34,905 $90,273 $(69,931)$233,968 
 Three months ended September 30, 2021
(In thousands)Commercial BankingHSA BankConsumer BankingCorporate and ReconcilingConsolidated Total
Net interest income$152,012 $42,074 $98,572 $(62,967)$229,691 
Non-interest income22,782 24,756 24,292 11,945 83,775 
Non-interest expense50,244 32,374 73,212 24,407 180,237 
Pre-tax, pre-provision net revenue124,550 34,456 49,652 (75,429)133,229 
Provision (benefit) for credit losses5,099 — 2,799 (148)7,750 
Income (loss) before income taxes119,451 34,456 46,853 (75,281)125,479 
Income tax expense (benefit)30,579 9,199 11,151 (21,163)29,766 
Net income (loss)$88,872 $25,257 $35,702 $(54,118)$95,713 
Nine months ended September 30, 2022
(In thousands)Commercial BankingHSA BankConsumer BankingCorporate and ReconcilingConsolidated Total
Net interest income$954,044 $152,702 $511,712 $(186,547)$1,431,911 
Non-interest income128,670 79,352 92,541 38,041 338,604 
Non-interest expense294,375 110,674 312,464 330,570 $1,048,083 
Pre-tax, pre-provision net revenue788,339 $121,380 291,789 (479,076)722,432 
Provision (benefit) for credit losses238,054 — (5,906)5,471 237,619 
Income (loss) before income tax expense550,285 121,380 297,695 (484,547)484,813 
Income tax expense (benefit)133,966 32,530 77,352 (158,567)85,281 
Net income (loss)$416,319 $88,850 $220,343 $(325,980)$399,532 
Nine months ended September 30, 2021
(In thousands)Commercial BankingHSA BankConsumer BankingCorporate and ReconcilingConsolidated Total
Net interest income$434,087 $126,376 $281,012 $(167,168)$674,307 
Non-interest income59,536 78,315 71,262 24,121 233,234 
Non-interest expense142,803 100,802 222,672 88,970 555,247 
Pre-tax, pre-provision net revenue350,820 103,889 129,602 (232,017)352,294 
(Benefit) for credit losses(37,602)— (1,833)(65)(39,500)
Income (loss) before income tax expense388,422 103,889 131,435 (231,952)391,794 
Income tax expense (benefit)99,436 27,738 31,282 (64,488)93,968 
Net income (loss)$288,986 $76,151 $100,153 $(167,464)$297,826