XML 31 R17.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Federal, State & Local Taxes | 12 Months Ended
--- | ---
Dec. 31, 2017
Federal, State & Local Taxes | NOTE 9: FEDERAL, STATE, AND LOCAL TAXES The following table summarizes the components of the Company’s net deferred tax asset (liability) at December 31, 2017 and 2016:
|  | December 31, |
(in thousands) |  | 2017 |  |  | 2016 |
Deferred Tax Assets: |  |  |  |  |  |  |  |
Allowance for loan losses |  | $ | 46,239 |  |  | $ | 75,605 |
Compensation and related benefit obligations |  |  | 13,010 |  |  |  | 27,877 |
Acquisition accounting and fair value adjustments on securities (including OTTI) |  |  | — |  |  |  | 14,455 |
Acquisition accounting and fair value adjustments on loans (including the FDIC loss share receivable) |  |  | — |  |  |  | 7,496 |
Non-accrual interest |  |  | 818 |  |  |  | 4,791 |
Restructuring and retirement of borrowed funds |  |  | 1,105 |  |  |  | 6,957 |
Net operating loss carryforwards |  |  | 2,967 |  |  |  | 5,664 |
Other |  |  | 15,953 |  |  |  | 18,351 |
Gross deferred tax assets |  |  | 80,092 |  |  |  | 161,196 |
Valuation allowance |  |  | — |  |  |  | — |
Deferred tax asset after valuation allowance |  | $ | 80,092 |  |  | $ | 161,196 |
Deferred Tax Liabilities: |  |  |  |  |  |  |  |
Amortizable intangibles |  | $ | (1,704 | ) |  | $ | (1,655 | )
Acquisition accounting and fair value adjustments on securities (including OTTI) |  |  | (17,090 | ) |  |  | — |
Undistributed earnings of subsidiaries |  |  | (19,003 | ) |  |  | — |
Mortgage servicing rights |  |  | (1,794 | ) |  |  | (65,975 | )
Premises and equipment |  |  | (12,907 | ) |  |  | (19,310 | )
Prepaid pension cost |  |  | (24,324 | ) |  |  | (30,962 | )
Leases |  |  | (78,682 | ) |  |  | (65,214 | )
Other |  |  | (9,385 | ) |  |  | (10,691 | )
Gross deferred tax liabilities |  | $ | (164,889 | ) |  | $ | (193,807 | )
Net deferred tax asset (liability) |  | $ | (84,797 | ) |  | $ | (32,611 | )
The deferred tax liability represents the anticipated federal, state, and local tax expenses or benefits that are expected to be realized in future years upon the utilization of the underlying tax attributes comprising said balances. At December 31, 2017, the net deferred tax liability is included in “Other liabilities” in the Consolidated Statements of Condition. At December 31, 2016, the net federal deferred tax liability is included in “Other liabilities,” and the net state and local deferred tax asset is included in “Other assets” in the Consolidated Statements of Condition. At December 31, 2017, the Company had a New York City net operating loss carryforward in the amount of $44.9 million available through 2035. The net operating loss carryforward is available to offset future taxable income. The Company has determined that all deductible temporary differences and net operating loss carryforwards are more likely than not to provide a benefit in reducing future federal, state, and local tax liabilities, as applicable. The Company has reached this determination based on its history of reporting positive taxable income in all relevant tax jurisdictions, the length of time available to utilize the net operating loss carryforwards, and the recognition of taxable income in future periods from taxable temporary differences. The following table summarizes the Company’s income tax expense (benefit) for the years ended December 31, 2017, 2016, and 2015:
|  | December 31, |
(in thousands) |  | 2017 |  |  | 2016 |  |  | 2015 |
Federal – current |  | $ | 153,587 |  |  | $ | 216,182 |  |  | $ | (53,273 | )
State and local – current |  |  | 26,983 |  |  |  | 20,799 |  |  |  | (295 | )
Total current |  |  | 180,570 |  |  |  | 236,981 |  |  |  | (53,568 | )
Federal – deferred |  |  | 3,498 |  |  |  | 18,203 |  |  |  | 468 |
State and local – deferred |  |  | 17,946 |  |  |  | 26,543 |  |  |  | (31,757 | )
Total deferred |  |  | 21,444 |  |  |  | 44,746 |  |  |  | (31,289 | )
Income tax expense (benefit) reported in net income |  |  | 202,014 |  |  |  | 281,727 |  |  | $ | (84,857 | )
Income tax expense (benefit) reported in stockholders’ equity related to: |  |  |  |  |  |  |  |  |  |  |  |
Employee stock plans |  |  | — |  |  |  | — |  |  |  | (2,486 | )
Securities available-for-sale |  |  | 28,495 |  |  |  | (2,687 | ) |  |  | 131 |
Pension liability adjustments |  |  | 2,234 |  |  |  | 2,924 |  |  |  | (1,161 | )
Non-credit portion of OTTI losses |  |  | 13 |  |  |  | 49 |  |  |  | 44 |
Total income taxes |  | $ | 232,756 |  |  | $ | 282,013 |  |  | $ | (88,329 | )
The following table presents a reconciliation of statutory federal income tax expense (benefit) to combined actual income tax expense (benefit) reported in net income for the years ended December 31, 2017, 2016, and 2015:
|  | December 31, |
(in thousands) |  | 2017 |  |  | 2016 |  |  | 2015 |
Statutory federal income tax at 35% |  | $ | 233,875 |  |  | $ | 271,995 |  |  | $ | (46,204 | )
State and local income taxes, net of federal income tax effect (1) |  |  | 29,204 |  |  |  | 30,772 |  |  |  | (20,835 | )
Effect of tax law changes |  |  | (41,943 | ) |  |  | — |  |  |  | — |
Effect of tax deductibility of ESOP |  |  | (5,083 | ) |  |  | (6,452 | ) |  |  | (7,321 | )
Non-taxable income and expense of BOLI |  |  | (9,529 | ) |  |  | (10,808 | ) |  |  | (9,575 | )
Federal tax credits |  |  | (1,386 | ) |  |  | (1,607 | ) |  |  | (1,554 | )
Adjustments relating to prior tax years |  |  | 144 |  |  |  | (668 | ) |  |  | (248 | )
Merger-related expenses |  |  | — |  |  |  | (850 | ) |  |  | 850 |
Other, net |  |  | (3,268 | ) |  |  | (655 | ) |  |  | 30 |
Total income tax expense (benefit) |  | $ | 202,014 |  |  | $ | 281,727 |  |  | $ | (84,857 | )
(1) | Includes income tax (benefit) expense for the years ended December 31, 2015 of $(1.4) million for adjustments to deferred taxes necessitated by changes in tax laws of New York City that were enacted in April 2015.
On December 22, 2017 H.R. 1, originally known as the Tax Cuts and Jobs Act, (the “Tax Reform Act”) was enacted. The Tax Reform Act significantly revised the U.S. corporate income tax regime by, among other things:
| • |  | Lowering of the U.S. corporate tax rate from 35% to 21% effective January 1, 2018.
| • |  | Repeal of corporate alternative minimum tax (AMT) for tax years beginning after December 31, 2017.
| • |  | Reduction of the corporate dividends received deduction of 80% and 70% to 65% and 50%, respectively, for tax years beginning after December 31, 2017.
| • |  | Disallowance of the deduction for FDIC premiums for banks with total consolidated assets over $50 billion effective tax years beginning after December 31, 2017.
| • |  | Allows for full expensing of qualified property acquired or placed in service between September 27, 2017 and January 1, 2023.
| • |  | Limitation of net operating loss (NOL) carryforwards to 80% of taxable income for losses arising in tax years beginning after December 31, 2017 and prohibiting NOL carrybacks for losses arising in tax years beginning after December 31, 2017 and providing an unlimited life for NOL carryforwards.
U.S. GAAP requires that the impact of tax legislation be recognized in the period in which the law was enacted. As a result of the Tax Reform Act, the Company recorded a tax benefit of $42 million due to the net impact of remeasurement of tax attributes affected by the enactment of the Tax Reform Act. In March 2014, tax legislation was enacted that changed the manner in which financial institutions and their affiliates are taxed in New York State. In April 2015, similar legislation was enacted for New York City. Most of the provisions were effective for fiscal years beginning in 2015. The most significant changes affecting the Company were as follows:
| • |  | The tax rate applied to apportioned New York State taxable income was reduced from 7.1% to 6.5%, effective for fiscal years beginning in 2016. For financial institutions with total assets below $100 billion, the New York City statutory tax rate dropped from 9% to 8.85%.
| • |  | Tax is now determined by measuring the apportioned income of the combined group of all domestic affiliates that participate in a unitary business relationship.
| • |  | Taxable income is apportioned based on the location of the taxpayer’s customers, with special rules for income from certain financial transactions.
| • |  | Thrift institutions that maintain a qualified residential loan portfolio are entitled to a specially computed modification that reduces taxable income.
| • |  | New York City taxable income is reduced by net interest income earned on residential portfolio loans that are secured by rent-regulated units or situated in low-income communities in New York City. This benefit is gradually phased out for financial institutions with total assets between $100 billion and $150 billion.
| • |  | An alternative tax of 0.15% on apportioned capital is imposed to the extent that it exceeds the tax on apportioned income. The New York State alternative tax is capped at $5 million for a tax year and is gradually phased out over six years. The New York City alternative tax is capped at $10 million for a tax year and is not phased out.
| • |  | A reduction to taxable income from the utilization of a net operating loss carryforward is determined without reference to, nor limitation based on, a federal tax deduction of such carryforward.
The Company invests in affordable housing projects through limited partnerships that generate federal Low Income Housing Tax Credits. The balances of these investments, which are included in “Other assets” in the Consolidated Statements of Condition, were $46.2 million and $42.4 million, respectively, at December 31, 2017 and 2016, and included commitments of $23.9 million and $21.9 million that are expected to be funded over the next four years. The Company elected to apply the proportional amortization method to these investments. Recognized in the determination of income tax (benefit) expense from operations for the years ended December 31, 2017, 2016, and 2015 were $4.5 million, $4.0 million, and $3.2 million, respectively, of affordable housing tax credits and other tax benefits, and an offsetting $3.1 million, $3.0 million, and $2.4 million, respectively, for the amortization of the related investments. No impairment losses were recognized in relation to these investments for the years ended December 31, 2017, 2016, and 2015. GAAP prescribes a recognition threshold and measurement attribute for use in connection with the obligation of a company to recognize, measure, present, and disclose in its financial statements uncertain tax positions that the Company has taken or expects to take on a tax return. As of December 31, 2017, the Company had $33.7 million of unrecognized gross tax benefits. Gross tax benefits do not reflect the federal tax effect associated with state tax amounts. The total amount of net unrecognized tax benefits at December 31, 2017 that would have affected the effective tax rate, if recognized, was $26.6 million. Interest and penalties (if any) related to the underpayment of income taxes are classified as a component of income tax expense in the Consolidated Statements of Operations and Comprehensive Income (Loss). During the years ended December 31, 2017, 2016, and 2015, the Company recognized income tax expense attributed to interest and penalties of $1.8 million, $1.2 million, and $1.1 million, respectively. Accrued interest and penalties on tax liabilities were $8.9 million and $6.9 million, respectively, at December 31, 2017 and 2016. The following table summarizes changes in the liability for unrecognized gross tax benefits for the years ended December 31, 2017, 2016, and 2015:
|  | December 31, |
(in thousands) |  | 2017 |  |  | 2016 |  |  | 2015 |
Uncertain tax positions at beginning of year |  | $ | 33,487 |  |  | $ | 30,456 |  |  | $ | 24,779 |
Additions for tax positions relating to current-year operations |  |  | 4,332 |  |  |  | 1,304 |  |  |  | 3,827 |
Additions for tax positions relating to prior tax years |  |  | 1,398 |  |  |  | 1,997 |  |  |  | 2,935 |
Subtractions for tax positions relating to prior tax years |  |  | (5,101 | ) |  |  | (270 | ) |  |  | (963 | )
Reductions in balance due to settlements |  |  | (435 | ) |  |  | — |  |  |  | (122 | )
Uncertain tax positions at end of year |  | $ | 33,681 |  |  | $ | 33,487 |  |  | $ | 30,456 |
The Company and its subsidiaries have filed tax returns in many states. The following are the more significant tax filings that are open for examination:
| • |  | Federal tax filings for tax years 2014 through the present;
| • |  | New York State tax filings for tax years 2010 through the present;
| • |  | New York City tax filings for tax years 2011 through the present; and
| • |  | New Jersey tax filings for tax years 2013 through the present.
In addition to other state audits, the Company is currently under examination by the following taxing jurisdictions of significance to the Company:
| • |  | New York State for the tax years 2010 through 2014; and
| • |  | New York City for the tax years 2011 and 2012.
It is reasonably possible that there will be developments within the next twelve months that would necessitate an adjustment to the balance of unrecognized tax benefits, including decreases of up to $20 million due to completion of tax authorities’ exams and the expiration of statutes of limitations. As a savings institution, the Community Bank is subject to a special federal tax provision regarding its frozen tax bad debt reserve. At December 31, 2017, the Community Bank’s federal tax bad debt base-year reserve was $61.5 million, with a related federal deferred tax liability of $12.9 million, which has not been recognized since the Community Bank does not expect that this reserve will become taxable in the foreseeable future. Events that would result in taxation of this reserve include redemptions of the Community Bank’s stock or certain excess distributions by the Community Bank to the Company.

X
- 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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration