Revenue from Contracts with Customers

9 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Revenue from Contracts with Customers

The following tables summarize revenues recognized in accordance with ASC Topic 606, Revenue from Contracts with Customers. These disaggregated amounts, together with sources of other non-interest income that are subject to other GAAP topics, have been reconciled to non-interest income by reportable segment as presented within Note 16: Segment Reporting.

	Three months ended September 30, 2022
(In thousands)	Commercial Banking		HSA Bank		Consumer Banking		Corporate and Reconciling		Consolidated Total
Non-interest Income:
Deposit service fees	$	7,573	$	24,008	$	18,728	$	498	$	50,807
Loan and lease related fees (1)	5,623		—		—		—		5,623
Wealth and investment services	2,672		—		8,756		(9)		11,419
Other income	—		1,834		413		—		2,247
Revenue from contracts with customers	15,868		25,842		27,897		489		70,096
Other sources of non-interest income	24,629		—		5,945		12,966		43,540
Total non-interest income	$	40,497	$	25,842	$	33,842	$	13,455	$	113,636

	Three months ended September 30, 2021
(In thousands)	Commercial Banking		HSA Bank		Consumer Banking		Corporate and Reconciling		Consolidated Total
Non-interest Income:
Deposit service fees	$	4,206	$	22,886	$	13,079	$	87	$	40,258
Wealth and investment services	3,067		—		6,926		(8)		9,985
Other income	—		1,870		626		—		2,496
Revenue from contracts with customers	7,273		24,756		20,631		79		52,739
Other sources of non-interest income	15,509		—		3,661		11,866		31,036
Total non-interest income	$	22,782	$	24,756	$	24,292	$	11,945	$	83,775

	Nine months ended September 30, 2022
(In thousands)	Commercial Banking		HSA Bank		Consumer Banking		Corporate and Reconciling		Consolidated Total
Non-interest Income:
Deposit service fees	$	21,905	$	74,091	$	53,057	$	966	$	150,019
Loan and lease related fees (1)	16,198		—		—		—		16,198
Wealth and investment services	8,576		—		24,706		(22)		33,260
Other income	—		5,261		1,083		—		6,344
Revenue from contracts with customers	46,679		79,352		78,846		944		205,821
Other sources of non-interest income	81,991		—		13,695		37,097		132,783
Total non-interest income	$	128,670	$	79,352	$	92,541	$	38,041	$	338,604

	Nine months ended September 30, 2021
(In thousands)	Commercial Banking		HSA Bank		Consumer Banking		Corporate and Reconciling		Consolidated Total
Non-interest Income:
Deposit service fees	$	12,400	$	72,382	$	37,127	$	257	$	122,166
Wealth and investment services	9,029		—		20,472		(26)		29,475
Other income	—		5,933		1,753		—		7,686
Revenue from contracts with customers	21,429		78,315		59,352		231		159,327
Other sources of non-interest income	38,107		—		11,910		23,890		73,907
Total non-interest income	$	59,536	$	78,315	$	71,262	$	24,121	$	233,234

(1)A portion of loan and lease related fees comprises income generated from factored receivables and payroll financing activities that is within the scope of ASC Topic 606. These revenue streams were new to Webster as of the first quarter of 2022 due to the businesses acquired in connection with the Sterling merger.

Contracts with customers did not generate significant contract assets and liabilities at September 30, 2022 and
December 31, 2021.

Revenue Streams

Deposit service fees consist of fees earned from customer deposit accounts, such as account maintenance fees, insufficient funds, and other transactional service charges. Performance obligations for account maintenance services are satisfied on a monthly basis at a fixed transaction price, whereas performance obligations for other deposit service charges resulting from various customer-initiated transactions are satisfied at a point-in-time when the service is rendered. Payment for deposit service fees is generally received immediately or in the following month through a direct charge to the customers' accounts. On occasion, Webster may waive certain fees for its customers. Fee waivers are recognized as a reduction to revenue in the period the waiver is granted to the customer. Due to the insignificance of the amounts waived, Webster does not reduce its transaction price to reflect any variable consideration.

The deposit service fees revenue stream also includes interchange fees earned from debit and credit card transactions. The transaction price for interchange services is based on the transaction value and the interchange rate set by the card network. Performance obligations for interchange fees are satisfied at a point-in-time when the cardholders' transaction is authorized and settled. Payment for interchange fees is generally received immediately or in the following month.

Factored receivables non-interest income consists of fees earned from accounts receivable management services. Webster factors accounts receivable, with and without recourse, for customers whereby the Company purchases their accounts receivable at a discount and assumes the risk, as applicable, and ownership of the assets through direct cash receipt from the end consumer. Factoring services are performed in exchange for a non-refundable fee at a transaction price based on a percentage of the gross invoice amount of each receivable purchased, subject to a minimum required amount. The performance obligation for factoring services is generally satisfied at a point-in-time when the receivable is assigned to Webster. However, should the commission earned not meet or exceed the minimum required annual amount, the difference between that and the actual amount is recognized at the end of the contract term. Other fees associated with factoring receivables may include wire transfer and technology fees, field examination fees, and Uniform Commercial Code fees, where the performance obligations are satisfied at a point-in-time when the services are rendered. Payment from the customer for factoring services is generally received immediately or within the following month.

Payroll finance non-interest income consists of fees earned from performing payroll financing and business process outsourcing services, including full back-office technology and tax accounting services, along with payroll preparation, making payroll tax payments, invoice billings, and collections for independently-owned temporary staffing companies nationwide. Performance obligations for payroll finance and business processing activities are either satisfied upon completion of the support services or as payroll remittances are made on behalf of customers to fund their employee payroll, which generally occurs on a weekly basis. The agreed-upon transaction price is based on a fixed-percentage per the terms of the contract, which could be subject to a hold-back reserve to provide for any balances that are assessed to be at risk of collection. When Webster collects on amounts due from end consumers on behalf of its customers and at the time of financing payroll, the Company retains the agreed-upon transaction price payable for the performance of its services and remits an amount to the customer net of any advances and payroll tax withholdings, as applicable.

Wealth and investment services consist of fees earned from asset management, trust administration, and investment advisory services, and through facilitating securities transactions. Performance obligations for asset management and trust administration services are satisfied on a monthly or quarterly basis at a transaction price based on a percentage of the period-end market value of the assets under administration. Payment for asset management and trust administration services is generally received a few days after period-end through a direct charge to the customers' accounts. Performance obligations for investment advisory services are satisfied over the period in which the services are provided through a time-based measurement of progress, and the agreed-upon transaction price with the customer varies depending on the nature of the services performed. Performance obligations for facilitating securities transactions are satisfied at a point-in-time when the securities are sold at a transaction price that is based on a percentage of the contract value. Payment for both investment advisory services and facilitating securities transactions may be received in advance of the service, but generally is received immediately or in the following period, in arrears.