Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Schedule of Components of Income Tax Expense (Benefit)

Income tax expense is comprised of the following:



	Years ended December 31,
(In thousands)	2014			2013		2012
Current:
Federal	$	89,977		$	61,666	$	52,391
State and local	6,582			3,577		1,282
	96,559			65,243		53,673
Deferred:
Federal	(3,780		)	10,693		20,012
State and local	(1,370		)	734		980
	(5,150		)	11,427		20,992
Total:
Federal	86,197			72,359		72,403
State and local	5,212			4,311		2,262
	$	91,409		$	76,670	$	74,665

Schedule of Effective Income Tax Rate Reconciliation

The following is a reconciliation of Webster’s reported income tax expense to the amount that would result from applying the federal statutory rate of 35.0%:



	Years ended December 31,
	2014					2013					2012
(Dollars in thousands)	Amount			Percent		Amount			Percent		Amount			Percent
Income tax expense at federal statutory rate	$	101,906		35.0	%	$	89,677		35.0	%	$	86,927		35.0	%
Reconciliation to reported income tax expense:
State and local taxes, net of federal benefit	3,388			1.2		2,802			1.1		1,470			0.6
Tax-exempt interest income, net	(7,335		)	(2.5	)	(8,517		)	(3.3	)	(9,577		)	(3.8	)
Increase in cash surrender value of life insurance	(4,612		)	(1.6	)	(4,819		)	(1.9	)	(3,939		)	(1.6	)
Other, net	(1,938		)	(0.7	)	(2,473		)	(1.0	)	(216		)	(0.1	)
Reported income tax expense	$	91,409				$	76,670				$	74,665
Effective tax rate				31.4	%				29.9	%				30.1	%

Schedule of 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)	2014			2013
Deferred tax assets:
Allowance for loan and lease losses	$	65,288		$	62,080
Net operating loss and credit carry forwards	64,561			66,709
Compensation and employee benefit plans	47,748			34,562
Net losses on derivative instruments	12,637			12,804
Net unrealized loss on securities available for sale	—			1,532
Other	27,300			20,993
Gross deferred tax assets	217,534			198,680
Valuation allowance	(80,722		)	(82,747		)
Total deferred tax assets, net of valuation allowance	$	136,812		$	115,933
Deferred tax liabilities:
Net unrealized gain on securities available for sale	$	10,288		$	—
Equipment-financing leases	21,930			13,751
Deferred income on repurchase of debt	8,502			10,627
Intangible assets	9,242			8,239
Mortgage servicing assets	7,230			7,765
Other	5,543			10,442
Gross deferred tax liabilities	62,735			50,824
Deferred tax asset, net	$	74,077		$	65,109

Summary of Positions for which Significant Change in Unrecognized Tax Benefits is Reasonably Possible

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



	Years ended December 31,
(In thousands)	2014			2013			2012
Balance at beginning of year	$	3,109		$	3,119		$	4,436
Additions as a result of tax positions taken during the current year	956			528			858
Additions as a result of tax positions taken during prior years	1,031			442			283
Reductions as a result of tax positions taken during prior years	—			(460		)	(575		)
Reductions relating to settlements with taxing authorities	—			—			(1,342		)
Reductions as a result of lapse of statute of limitations	(503		)	(520		)	(541		)
Balance at end of year	$	4,593		$	3,109		$	3,119