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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES At December 31, 2018, 2017 and 2016 income tax expense consisted of the following:
(Dollars in thousands) | 2018 |  | 2017 |  | 2016
Current tax expense |  |  |  |  |
Federal | $ | 95,151 |  |  | $ | 87,992 |  |  | $ | 84,946 |
State | 21,523 |  |  | 6,116 |  |  | 7,493 |
Total current tax expense | 116,674 |  |  | 94,108 |  |  | 92,439 |
Deferred tax expense (benefit) |  |  |  |  |
Federal | (10,944 | ) |  | 115,392 |  |  | 23,144 |
State | (2,433 | ) |  | 10,446 |  |  | 10,002 |
Total deferred tax expense (benefit) | (13,377 | ) |  | 125,838 |  |  | 33,146 |
Total income tax expense | $ | 103,297 |  |  | $ | 219,946 |  |  | $ | 125,585 |
Income tax expense differed from the amounts computed by applying the statutory federal income tax rate of 21 percent for 2018 and 35 percent for 2017 and 2016 to pretax income as a result of the following:
(Dollars in thousands) | 2018 |  | 2017 |  | 2016
Income taxes at federal statutory rates | $ | 105,758 |  |  | $ | 190,294 |  |  | $ | 122,874 |
(Reduction) increase in income taxes resulting from: |  |  |  |  |
Nontaxable income on loans, leases and investments, net of nondeductible expenses | (1,796 | ) |  | (2,525 | ) |  | (2,901 | )
Nondeductible FDIC insurance expense | 2,348 |  |  | — |  |  | — |
State and local income taxes, including change in valuation allowance, net of federal income tax benefit | 15,081 |  |  | 10,765 |  |  | 11,372 |
Effect of federal rate change | (15,736 | ) |  | 25,762 |  |  | — |
Tax credits net of amortization | (2,891 | ) |  | (4,840 | ) |  | (4,138 | )
Other, net | 533 |  |  | 490 |  |  | (1,622 | )
Total income tax expense | $ | 103,297 |  |  | $ | 219,946 |  |  | $ | 125,585 |
The net deferred tax asset included the following components at December 31, 2018 and 2017:
(Dollars in thousands) | 2018 |  | 2017
Allowance for loan and lease losses | $ | 53,391 |  |  | $ | 50,853 |
Pension liability | — |  |  | 704 |
Executive separation from service agreements | 7,927 |  |  | 8,548 |
Net operating loss carryforwards | 6,862 |  |  | 2,685 |
Net unrealized loss included in comprehensive income | 32,663 |  |  | 10,849 |
Employee compensation | 11,145 |  |  | 4,192 |
FDIC assisted transactions timing differences | 7,622 |  |  | — |
Other reserves | 5,574 |  |  | 5,570 |
Other | 9,555 |  |  | 5,924 |
Deferred tax asset | 134,739 |  |  | 89,325 |
Accelerated depreciation | 4,987 |  |  | 7,562 |
Lease financing activities | 12,674 |  |  | 9,131 |
Net deferred loan fees and costs | 10,651 |  |  | 8,708 |
Intangible assets | 11,713 |  |  | 12,252 |
Security, loan and debt valuations | 4,557 |  |  | 7,018 |
FDIC assisted transactions timing differences | — |  |  | 1,113 |
Pension liability | 6,287 |  |  | — |
Other | 1,722 |  |  | 4,565 |
Deferred tax liability | 52,591 |  |  | 50,349 |
Net deferred tax asset | $ | 82,148 |  |  | $ | 38,976 |
At December 31, 2018, $28.6 million of existing gross deferred tax assets relate to federal net operating loss carryforwards and $15.4 million to state net operating loss carryforwards that expire in years beginning in 2024. The net operating losses were acquired through various acquisitions and are subject to the annual limitations set forth by Internal Revenue Code Section 382. No valuation allowance was necessary as of December 31, 2018, to reduce BancShares’ gross deferred tax asset to the amount that is more likely than not to be realized. The Tax Act was enacted on December 22, 2017 which made broad changes to the U.S. tax code including a reduction in the federal corporate tax rate from 35 percent to 21 percent. The Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 118 to address uncertainty in applying ASC Topic 740 in the reporting period in which the Tax Act was enacted. Tax expense increased in the fourth quarter of 2017 by a provisional $25.8 million primarily attributable to the revaluation of our deferred tax assets to reflect the Tax Act changes. This was a provisional estimate made based upon the information available at the time of enactment. After receiving additional information during the third quarter of 2018, BancShares recorded a tax benefit of $15.7 million updating the provisional amount initially recorded in 2017. The nature of the additional information primarily related to a decision made by BancShares to accelerate deductions in its 2017 tax return which were effectuated by making an additional contribution to its pension plan and requesting an automatic change in its tax accounting method related to depreciation. Accounting for the Tax Act was completed during the fourth quarter of 2018 with no material changes. During the first quarter of 2018, second quarter of 2017 and third quarter of 2016, BancShares adjusted its net deferred tax asset as a result of reductions in the North Carolina corporate income tax rate that were enacted June 28, 2017 and July 23, 2013, respectively. The lower corporate income tax rate resulted in a reduction in the deferred tax asset and an increase in income tax expense in 2018, 2017 and 2016. The lower state corporate income tax rate did not have a material impact on income tax expense. BancShares' and its subsidiaries’ federal income tax returns for 2015 through 2017 remain open for examination. Generally, BancShares is no longer subject to examination by state and local taxing authorities for taxable years prior to 2012. The following table provides a rollforward of BancShares’ gross unrecognized tax benefits, excluding interest and penalties, during the years ended December 31, 2018, 2017 and 2016:
(Dollars in thousands) | 2018 |  | 2017 |  | 2016
Unrecognized tax benefits at the beginning of the year | $ | 29,004 |  |  | $ | 28,879 |  |  | $ | 5,975 |
Reductions related to tax positions taken in prior year | (1,054 | ) |  | (44 | ) |  | (327 | )
Additions related to tax positions taken in current year | 1,433 |  |  | 169 |  |  | 23,231 |
Reductions related to lapse of statute of limitations | (1,128 | ) |  | — |  |  | — |
Unrecognized tax benefits at the end of the year | $ | 28,255 |  |  | $ | 29,004 |  |  | $ | 28,879 |
All of the unrecognized tax benefits, if recognized, would affect BancShares’ effective tax rate. BancShares has unrecognized tax benefits relating to uncertain state tax positions in North Carolina and other state jurisdictions resulting from tax filings submitted to the states. No tax benefit has been recorded for these uncertain tax positions in the Consolidated Financial Statements. BancShares does not expect the unrecognized tax benefits to change significantly during 2019. BancShares recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. For the years ended December 31, 2018, 2017 and 2016, BancShares recorded $564 thousand, $450 thousand and $357 thousand, respectively which primarily represent accrued interest.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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