Income Taxes Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Schedule of Income Tax Expense (Benefit)

Income tax expense applicable to income from continuing operations is comprised of the following:



	Years ended December 31,
(In thousands)	2013		2012		2011
Current:
Federal	$	61,666	$	52,391	$	27,674
State and local	3,577		1,282		1,302
	65,243		53,673		28,976
Deferred:
Federal	10,693		20,012		28,497
State and local	734		980		478
	11,427		20,992		28,975
Total:
Federal	72,359		72,403		56,171
State and local	4,311		2,262		1,780
	$	76,670	$	74,665	$	57,951

Reconciliation of Income Tax Expense (Benefit)

The following is a reconciliation of Webster’s reported income tax expense applicable to income from continuing operations to the amount that would result from applying the federal statutory rate of 35%:



	Years ended December 31,
	2013					2012					2011
(Dollars in thousands)	Amount			Percent		Amount			Percent		Amount			Percent
Income tax expense at federal statutory rate	$	89,677		35.0	%	$	86,927		35.0	%	$	72,567		35.0	%
Reconciliation to reported income tax expense:
State and local income taxes, net of federal benefit	2,802			1.1		1,470			0.6		1,157			0.6
Tax-exempt interest income, net	(8,517		)	(3.3	)	(9,577		)	(3.8	)	(10,052		)	(4.8	)
Increase in cash surrender value of life insurance	(4,819		)	(1.9	)	(3,939		)	(1.6	)	(3,626		)	(1.7	)
Decrease in valuation allowance applicable to capital losses	(377		)	(0.2	)	(494		)	(0.2	)	(1,163		)	(0.6	)
Other, net	(2,096		)	(0.8	)	278			0.1		(932		)	(0.5	)
Reported income tax expense	$	76,670				$	74,665				$	57,951
Effective tax rate				29.9	%				30.1	%				28.0	%

Deferred Tax Assets and Liabilities

The significant components of the Company’s deferred tax asset, net (“DTA”) are reflected below:



	At December 31,
(In thousands)	2013			2012
Deferred tax assets:
Allowance for loan and lease losses	$	62,080		$	73,344
Net operating loss and credit carry forwards	66,709			66,308
Compensation and employee benefit plans	34,562			42,497
Net losses on derivative instruments	12,804			16,522
Impairment losses on securities available for sale	8,274			8,622
Non-accrual interest	4,105			8,247
Net unrealized loss on securities available for sale	1,532			—
Other	8,614			9,909
Gross deferred tax assets	198,680			225,449
Valuation allowance	(82,747		)	(82,502		)
Total deferred tax assets, net of valuation allowance	$	115,933		$	142,947
Deferred tax liabilities:
Net unrealized gain on securities available for sale	$	—		$	26,143
Equipment financing leases	13,751			10,784
Deferred income on repurchase of debt	10,627			10,627
Intangible assets	8,239			7,388
Premises and equipment	3,353			6,163
Mortgage servicing assets	7,765			5,461
Deferred loan costs, net	3,423			3,236
Other	3,666			4,464
Gross deferred tax liabilities	50,824			74,266
Deferred tax asset, net	$	65,109		$	68,681

Reconciliation of Unrecognized Tax Benefits

The following is a reconciliation of the beginning and ending balances of Webster’s unrecognized tax benefits (“UTBs”):



	Years ended December 31,
(In thousands)	2013			2012			2011
Balance at beginning of year	$	3,119		$	4,436		$	4,816
Additions as a result of tax positions taken during the current year	528			858			462
Additions as a result of tax positions taken during prior years	442			283			518
Reductions as a result of tax positions taken during prior years	(460		)	(575		)	(791		)
Reductions relating to settlements with taxing authorities	—			(1,342		)	—
Reductions as a result of lapse of statute of limitations	(520		)	(541		)	(569		)
Balance at end of year	$	3,109		$	3,119		$	4,436