Loans and Leases | Loans and Leases Recorded Investment in Loans and Leases The following tables summarize the recorded investment in loans and leases: At June 30, 2015 (In thousands) Residential Consumer Commercial Commercial Real Estate (1) Equipment Financing Total (2) Recorded Investment: Individually evaluated for impairment $ 139,232 $ 49,239 $ 55,028 $ 59,861 $ 120 $ 303,480 Collectively evaluated for impairment 3,705,458 2,565,530 3,979,149 3,718,593 545,321 14,514,051 Recorded investment in loans and leases 3,844,690 2,614,769 4,034,177 3,778,454 545,441 14,817,531 Less: Accrued interest 11,201 8,330 12,272 8,202 — 40,005 Loans and leases $ 3,833,489 $ 2,606,439 $ 4,021,905 $ 3,770,252 $ 545,441 $ 14,777,526 At December 31, 2014 (In thousands) Residential Consumer Commercial Commercial Real Estate (1) Equipment Financing Total (2) Recorded Investment: Individually evaluated for impairment $ 142,435 $ 50,374 $ 36,454 $ 103,045 $ 632 $ 332,940 Collectively evaluated for impairment 3,377,196 2,507,060 3,723,991 3,460,116 537,119 13,605,482 Recorded investment in loans and leases 3,519,631 2,557,434 3,760,445 3,563,161 537,751 13,938,422 Less: Accrued interest 10,456 8,033 11,175 8,733 — 38,397 Loans and leases $ 3,509,175 $ 2,549,401 $ 3,749,270 $ 3,554,428 $ 537,751 $ 13,900,025 (1) Includes certain loans individually evaluated for impairment under the Company's loan policy that were deemed not to be impaired at both June 30, 2015 and December 31, 2014 . (2) Loans and leases include net deferred fees and net premiums and discounts of $15.6 million and $10.6 million at June 30, 2015 and December 31, 2014 , respectively. At June 30, 2015 , the Company had pledged $5.6 billion of eligible loan collateral to support available borrowing capacity at the Federal Home Loan Bank of Boston and the Federal Reserve Bank of Boston. Loans and Leases Portfolio Aging The following tables summarize the aging of the recorded investment in loans and leases: At June 30, 2015 (In thousands) 30-59 Days Past Due and Accruing 60-89 Days 90 or More Days Past Due and Accruing Non-accrual Total Past Due and Non-accrual Current Recorded Investment in Loans and Leases Residential $ 7,651 $ 4,830 $ 2,000 $ 58,721 $ 73,202 $ 3,771,488 $ 3,844,690 Consumer Home equity 8,433 5,061 — 38,691 52,185 2,402,664 2,454,849 Other consumer 744 344 — 297 1,385 158,535 159,920 Commercial Commercial non-mortgage 1,229 572 32 42,957 44,790 3,276,497 3,321,287 Asset-based — — — — — 712,890 712,890 Commercial real estate Commercial real estate 1,399 169 — 23,272 24,840 3,485,468 3,510,308 Commercial construction — — — 3,642 3,642 264,504 268,146 Equipment financing 403 113 — 301 817 544,624 545,441 Total $ 19,859 $ 11,089 $ 2,032 $ 167,881 $ 200,861 $ 14,616,670 $ 14,817,531 At December 31, 2014 (In thousands) 30-59 Days 60-89 Days Past Due and Accruing 90 or More Days Past Due Non-accrual Total Past Due and Non-accrual Current Recorded Investment in Loans and Leases Residential (1) $ 11,521 $ 5,931 $ 2,039 $ 64,117 $ 83,608 $ 3,436,023 $ 3,519,631 Consumer Home equity 11,516 5,161 — 40,025 56,702 2,424,584 2,481,286 Other consumer 720 425 — 281 1,426 74,722 76,148 Commercial Commercial non-mortgage 1,971 156 50 6,449 8,626 3,088,656 3,097,282 Asset-based — — — — — 663,163 663,163 Commercial real estate Commercial real estate 2,348 397 — 15,038 17,783 3,310,765 3,328,548 Commercial construction — — — 3,659 3,659 230,954 234,613 Equipment financing 551 150 — 578 1,279 536,472 537,751 Total $ 28,627 $ 12,220 $ 2,089 $ 130,147 $ 173,083 $ 13,765,339 $ 13,938,422 (1) At December 31, 2014 , U.S. Government secured loans of approximately $2.0 million were reclassified from non-accrual to over 90 days past due and accruing to reflect a policy change effective in the first quarter of 2015 . See Note 1: Summary of Significant Accounting Policies . Interest on non-accrual loans and leases that would have been recorded as additional interest income for the three and six months ended June 30, 2015 and 2014 , had the loans and leases been current in accordance with their original terms, totaled $2.8 million , $5.0 million , $3.0 million , and $6.3 million , respectively. Allowance for Loan and Lease Losses The following tables summarize the allowance for loan and lease losses: At or for the three months ended June 30, 2015 (In thousands) Residential Consumer Commercial Commercial Real Estate Equipment Financing Total Allowance for loan and lease losses: Balance, beginning of period $ 27,749 $ 42,616 $ 55,628 $ 30,549 $ 5,428 $ 161,970 Provision (benefit) charged to expense (2,194 ) 995 12,625 1,258 66 12,750 Charge offs (1,461 ) (3,853 ) (2,541 ) (1,091 ) (15 ) (8,961 ) Recoveries 369 1,049 529 52 102 2,101 Balance, end of period $ 24,463 $ 40,807 $ 66,241 $ 30,768 $ 5,581 $ 167,860 Individually evaluated for impairment $ 10,592 $ 3,564 $ 11,073 4,824 $ 6 $ 30,059 Collectively evaluated for impairment $ 13,871 $ 37,243 $ 55,168 $ 25,944 $ 5,575 $ 137,801 At or for the three months ended June 30, 2014 (In thousands) Residential Consumer Commercial Commercial Real Estate Equipment Financing Total Allowance for loan and lease losses: Balance, beginning of period $ 21,587 $ 37,275 $ 56,801 $ 33,769 $ 4,168 $ 153,600 Provision (benefit) charged to expense 924 2,711 837 3,399 1,379 9,250 Charge offs (1,840 ) (5,286 ) (3,685 ) (447 ) (20 ) (11,278 ) Recoveries 507 1,202 1,121 69 397 3,296 Balance, end of period $ 21,178 $ 35,902 $ 55,074 $ 36,790 $ 5,924 $ 154,868 Individually evaluated for impairment $ 11,258 $ 4,065 $ 1,947 $ 3,084 $ 7 $ 20,361 Collectively evaluated for impairment $ 9,920 $ 31,837 $ 53,127 $ 33,706 $ 5,917 $ 134,507 At or for the six months ended June 30, 2015 (In thousands) Residential Consumer Commercial Commercial Real Estate Equipment Financing Total Allowance for loan and lease losses: Balance, beginning of period $ 25,452 $ 43,518 $ 52,114 $ 32,102 $ 6,078 $ 159,264 Provision (benefit) charged to expense 1,950 3,227 15,379 2,656 (712 ) 22,500 Charge offs (3,416 ) (8,149 ) (2,796 ) (4,244 ) (30 ) (18,635 ) Recoveries 477 2,211 1,544 254 245 4,731 Balance, end of period $ 24,463 $ 40,807 $ 66,241 $ 30,768 $ 5,581 $ 167,860 Individually evaluated for impairment $ 10,592 $ 3,564 $ 11,073 $ 4,824 $ 6 $ 30,059 Collectively evaluated for impairment $ 13,871 $ 37,243 $ 55,168 $ 25,944 $ 5,575 $ 137,801 At or for the six months ended June 30, 2014 (In thousands) Residential Consumer Commercial Commercial Real Estate Equipment Financing Total Allowance for loan and lease losses: Balance, beginning of period $ 23,027 $ 41,951 $ 51,001 $ 32,408 $ 4,186 $ 152,573 Provision (benefit) charged to expense 382 1,808 8,812 6,686 562 18,250 Charge offs (2,998 ) (10,172 ) (6,833 ) (2,852 ) (20 ) (22,875 ) Recoveries 767 2,315 2,094 548 1,196 6,920 Balance, end of period $ 21,178 $ 35,902 $ 55,074 $ 36,790 $ 5,924 $ 154,868 Individually evaluated for impairment $ 11,258 $ 4,065 $ 1,947 $ 3,084 $ 7 $ 20,361 Collectively evaluated for impairment $ 9,920 $ 31,837 $ 53,127 $ 33,706 $ 5,917 $ 134,507 Impaired Loans and Leases The following tables summarize impaired loans and leases: At June 30, 2015 (In thousands) Unpaid Principal Balance Total Recorded Investment Recorded Investment No Allowance Recorded Investment With Allowance Related Valuation Allowance Residential $ 152,909 $ 139,232 $ 23,443 $ 115,789 $ 10,592 Consumer 56,524 49,239 25,832 23,407 3,564 Commercial 60,585 55,028 20,508 34,520 11,073 Commercial real estate Commercial real estate 58,064 53,027 14,572 38,455 4,815 Commercial construction 7,172 6,155 5,950 205 9 Equipment financing 120 120 — 120 6 Total $ 335,374 $ 302,801 $ 90,305 $ 212,496 $ 30,059 At December 31, 2014 (In thousands) Unpaid Principal Balance Total Recorded Investment Recorded Investment No Allowance Recorded Investment With Allowance Related Valuation Allowance Residential $ 157,152 $ 142,435 $ 24,388 $ 118,047 $ 12,094 Consumer 60,424 50,374 26,464 23,910 4,237 Commercial 41,019 36,454 16,064 20,390 2,710 Commercial real estate Commercial real estate 99,687 96,160 40,575 55,585 6,222 Commercial construction 7,218 6,177 5,956 221 10 Equipment financing 629 632 — 632 28 Total $ 366,129 $ 332,232 $ 113,447 $ 218,785 $ 25,301 The following table summarizes the average recorded investment and interest income recognized for impaired loans and leases: Three months ended June 30, Six months ended June 30, 2015 2014 2015 2014 (In thousands) Average Recorded Investment Accrued Interest Income Cash Basis Interest Income Average Accrued Cash Basis Interest Income Average Recorded Investment Accrued Cash Basis Interest Income Average Recorded Investment Accrued Cash Basis Interest Income Residential $ 140,024 $ 1,149 $ 301 $ 141,912 $ 1,146 $ 283 $ 140,834 $ 2,208 $ 557 $ 142,015 $ 2,338 $ 607 Consumer 50,037 362 274 51,919 358 299 49,807 723 556 51,830 728 623 Commercial 52,324 247 — 46,113 542 — 45,741 674 — 48,133 1,170 — Commercial real estate Commercial real estate 60,071 357 — 92,068 851 — 74,594 887 — 91,314 1,652 — Commercial construction 6,160 33 — 9,197 59 — 6,166 66 — 9,429 141 — Equipment financing 376 2 — 175 3 — 376 13 — 188 6 — Total $ 308,992 $ 2,150 $ 575 $ 341,384 $ 2,959 $ 582 $ 317,518 $ 4,571 $ 1,113 $ 342,909 $ 6,035 $ 1,230 Credit Quality Indicators. To measure credit risk for the commercial, commercial real estate, and equipment financing portfolios, the Company employs a dual grade credit risk grading system for estimating the probability of borrower default and the loss given default. The credit risk grade system assigns a rating to each borrower and to the facility, which together form a Composite Credit Risk Profile (“CCRP”). The credit risk grade system categorizes borrowers by common financial profiles that measure the credit strength of borrowers and facilities by common structural characteristics. The CCRP has 10 grades, with each grade corresponding to a progressively greater risk of default. Grades 1 through 6 are considered pass ratings, and 7 through 10 are criticized as defined by the regulatory agencies. Risk ratings, assigned to differentiate risk within the portfolio, are reviewed on an ongoing basis and revised to reflect changes in the borrowers’ current financial positions and outlooks, risk profiles, and the related collateral and structural positions. Loan officers review updated financial information at least annually for all pass rated loans to assess the accuracy of the risk grade. All criticized loans undergo frequent review and enhanced monitoring of the underlying borrower. A “Special Mention” (7) credit has the potential weakness that, if left uncorrected, may result in deterioration of the repayment prospects for the asset. “Substandard” (8) assets have a well-defined weakness that jeopardizes the full repayment of the debt. An asset rated “Doubtful” (9) has all of the same weaknesses as a substandard credit with the added characteristic that the weakness makes collection or liquidation in full, given current facts, conditions, and values, improbable. Assets classified as “Loss” (10) in accordance with regulatory guidelines are considered uncollectible and charged off. The recorded investment in commercial loans, commercial real estate loans, and equipment financing leases segregated by risk rating exposure is as follows: Commercial Commercial Real Estate Equipment Financing (In thousands) At June 30, At December 31, At June 30, At December 31, At June 30, At December 31, (1) - (6) Pass $ 3,741,717 $ 3,555,559 $ 3,659,613 $ 3,416,214 $ 529,584 $ 516,115 (7) Special Mention 111,480 89,064 26,734 33,580 1,998 4,364 (8) Substandard 177,607 115,653 91,303 112,874 13,859 17,272 (9) Doubtful 3,373 169 804 493 — — (10) Loss — — — — — — Total $ 4,034,177 $ 3,760,445 $ 3,778,454 $ 3,563,161 $ 545,441 $ 537,751 For residential and consumer loans, the Company considers factors such as updated FICO scores, employment status, home prices, loan to value, geography, loans discharged in bankruptcy, and the status of first lien position loans on second lien position loans as credit quality indicators. On an ongoing basis for portfolio monitoring purposes, the Company estimates the current value of property secured as collateral for both home equity and residential first mortgage lending products. The estimate is based on home price indices compiled by the S&P/Case-Shiller Home Price Indices. The Case-Shiller data indicates trends for Metropolitan Statistical Areas. The trend data is applied to the loan portfolios taking into account the age of the most recent valuation and geographic area. Troubled Debt Restructurings ("TDRs") The following table summarizes information for TDRs: (Dollars in thousands) At June 30, At December 31, 2014 Recorded investment of TDRs: Accrual status $ 172,636 $ 243,231 Non-accrual status 100,125 76,939 Total recorded investment of TDRs $ 272,761 $ 320,170 Accruing TDRs performing under modified terms more than one year 61.5 % 67.6 % Specific reserves for TDRs included in the balance of allowance for loan and lease losses $ 19,627 $ 23,785 Additional funds committed to borrowers in TDR status 1,135 552 In the three and six months ended June 30, 2015 and 2014 , Webster charged off $2.0 million , $5.9 million , $2.0 million , and $8.1 million , respectively, for the portion of TDRs deemed to be uncollectible. TDRs may be modified by means of extended maturity, below market adjusted interest rates, a combination of rate and maturity, or other means, including covenant modifications, forbearance, loans discharged under Chapter 7 bankruptcy, or other concessions. The following table provides information on the type of concession for loans and leases modified as TDRs: Three months ended June 30, Six months ended June 30, 2015 2014 2015 2014 Number of Loans and Leases Post- Modification Recorded Investment (1) Number of Loans and Leases Post- Modification Recorded Investment (1) Number of Loans and Leases Post- Modification Recorded Investment (1) Number of Loans and Leases Post- Modification Recorded Investment (1) (Dollars in thousands) Residential: Extended Maturity 6 $ 958 8 $ 1,102 15 $ 2,303 14 $ 1,808 Adjusted Interest Rate 1 304 1 118 1 304 2 345 Maturity/Rate Combined 4 464 6 658 14 2,132 14 3,247 Other 11 1,257 4 756 14 1,793 15 2,833 Consumer: Extended Maturity 1 140 5 298 5 639 14 768 Adjusted Interest Rate — — — — — — 1 51 Maturity/Rate Combined — — 1 47 8 444 5 302 Other 9 398 12 523 30 1,730 39 1,967 Commercial: Extended Maturity 2 223 2 302 3 256 4 356 Adjusted Interest Rate 1 24 1 25 1 24 1 25 Maturity/Rate Combined 2 165 7 391 4 297 13 632 Other 4 6,290 2 6,396 4 6,290 3 6,546 Commercial real estate: Maturity/Rate Combined 1 43 — — 1 43 — — Total TDRs 42 $ 10,266 49 $ 10,616 100 $ 16,255 125 $ 18,880 (1) Post-modification balances approximate pre-modification balances. The aggregate amount of charge-offs as a result of the restructurings was not significant. The Company's loan and lease portfolio, for the periods presented, includes loans with A-Note/B-Note ("A/B Notes") structures that were restructured into A/B Notes as a result of evaluating the cash flow of the borrowers to support repayment. Webster immediately charged off the balances of the B-Notes. The restructuring agreements specify a market interest rate equal to that which would be provided to a borrower with similar credit at the time of restructuring. The following table provides information on loans and leases modified as TDRs within the previous 12 months and for which there was a payment default during the periods presented: Three months ended June 30, Six months ended June 30, 2015 2014 2015 2014 (Dollars in thousands) Number of Loans and Leases Recorded Investment Number of Loans and Leases Recorded Investment Number of Loans and Leases Recorded Investment Number of Loans and Leases Recorded Investment Residential — $ — 2 $ 977 — $ — 6 $ 1,204 Consumer 1 327 — — 2 356 4 218 Commercial — — 1 46 — — 2 91 Commercial real estate 1 10,889 — — 1 10,889 — — Total 2 $ 11,216 3 $ 1,023 3 $ 11,245 12 $ 1,513 The recorded investment of TDRs in commercial, commercial real estate, and equipment financing segregated by risk rating exposure is as follows: (In thousands) At June 30, At December 31, (1) - (6) Pass $ 22,459 $ 40,943 (7) Special Mention 15 8,304 (8) Substandard 58,244 77,771 (9) Doubtful 3,572 343 (10) Loss — — Total $ 84,290 $ 127,361 |