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Income Taxes | 12 Months Ended
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Dec. 31, 2014
Income Tax Disclosure [Abstract] |
Income Taxes |
NOTE L – INCOME TAXES
The components of the provision for income taxes are as follows:
| 2014 |  | 2013 |  | 2012
| (in thousands)
Current tax expense (benefit): |  |  |  |  |
Federal | $ | 32,957 |  |  | $ | 38,573 |  |  | $ | 41,151 |
State | 1,126 |  |  | 687 |  |  | (557 | )
| 34,083 |  |  | 39,260 |  |  | 40,594 |
Deferred tax expense (benefit): |  |  |  |  |  |  |  |
Federal | 18,523 |  |  | 15,357 |  |  | 17,007 |
State | — |  |  | (3,532 | ) |  | — |
| 18,523 |  |  | 11,825 |  |  | 17,007 |
Income tax expense | $ | 52,606 |  |  | $ | 51,085 |  |  | $ | 57,601 |
The differences between the effective income tax rate and the federal statutory income tax rate are as follows:
| 2014 |  | 2013 |  | 2012
Statutory tax rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
Tax-exempt income | (5.4 | ) |  | (5.2 | ) |  | (5.0 | )
Low income housing investments | (4.9 | ) |  | (4.9 | ) |  | (4.4 | )
Change in valuation allowance | (0.8 | ) |  | (2.0 | ) |  | (0.6 | )
Bank owned life insurance | (0.5 | ) |  | (0.5 | ) |  | (0.8 | )
State income taxes, net of federal benefit | 1.2 |  |  | 1.1 |  |  | 0.6 |
Executive compensation | 0.1 |  |  | 0.1 |  |  | 0.5 |
Non-deductible goodwill | — |  |  | — |  |  | 0.9 |
Other, net | 0.3 |  |  | 0.4 |  |  | 0.3 |
Effective income tax rate | 25.0 | % |  | 24.0 | % |  | 26.5 | %
The net deferred tax asset recorded by the Corporation is included in other assets and consists of the following tax effects of temporary differences as of December 31:
| 2014 |  | 2013
| (in thousands)
Deferred tax assets: |  |  |
Allowance for credit losses | $ | 68,407 |  |  | $ | 75,525 |
Postretirement and defined benefit plans | 16,017 |  |  | 9,561 |
State loss carryforwards | 12,960 |  |  | 13,724 |
Deferred compensation | 12,486 |  |  | 12,099 |
Other-than-temporary impairment of investments | 8,126 |  |  | 10,378 |
Other accrued expenses | 7,335 |  |  | 9,987 |
Unrealized holding losses on securities available for sale | — |  |  | 13,922 |
Other | 8,433 |  |  | 10,850 |
Total gross deferred tax assets | 133,764 |  |  | 156,046 |
Deferred tax liabilities: |  |  |
Mortgage servicing rights | 15,004 |  |  | 15,118 |
Direct leasing | 12,399 |  |  | 7,948 |
Acquisition premiums/discounts | 8,200 |  |  | 7,631 |
Premises and equipment | 7,897 |  |  | 9,864 |
Unrealized holding gains on securities available for sale | 3,949 |  |  | — |
Intangible assets | 1,382 |  |  | 1,498 |
Other | 7,960 |  |  | 4,112 |
Total gross deferred tax liabilities | 56,791 |  |  | 46,171 |
Net deferred tax asset, before valuation allowance | 76,973 |  |  | 109,875 |
Valuation allowance | (10,187 | ) |  | (11,880 | )
Net deferred tax asset | $ | 66,786 |  |  | $ | 97,995 |
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and/or capital gain income during periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies, such as those that may be implemented to generate capital gains, in making this assessment. The valuation allowance relates to state deferred tax assets and net operating loss carryforwards for which realizability is uncertain. As of December 31, 2014 and 2013, the Corporation had state net operating loss carryforwards of approximately $451 million and $475 million, respectively, which are available to offset future state taxable income, and expire at various dates through 2034. The Corporation has $8.2 million of deferred tax assets resulting from unrealized other-than-temporary impairment losses on investment securities, which would be characterized as capital losses for tax purposes. If realized, the income tax benefits of these potential capital losses can only be recognized for tax purposes to the extent of capital gains generated during carryback and carryforward periods. Other deferred tax assets include $3.1 million related to realized capital losses on sales of investment securities that have not been deducted on tax returns as there were no capital gains available for offset in the current or carryback periods. These losses will begin to expire in 2016. If sufficient capital gains are not realized during this period, some or all of this deferred tax asset may need to be written off through a charge to income tax expense. The Corporation has the ability to generate sufficient offsetting capital gains in future periods through the execution of certain tax planning strategies, which may include the sale and leaseback of some or all of its branch and office properties. As such, no valuation allowance for the deferred tax assets related to the realized or unrealized capital losses is considered necessary as of December 31, 2014. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Corporation will realize the benefits of its deferred tax assets, net of the valuation allowance, as of December 31, 2014. Uncertain Tax Positions The following summarizes the changes in unrecognized tax benefits for the years ended December 31:
| 2014 |  | 2013 |  | 2012
| (in thousands)
Balance at beginning of year | $ | 1,651 |  |  | $ | 1,453 |  |  | $ | 9,438 |
Prior period tax positions | 188 |  |  | — |  |  | (378 | )
Current period tax positions | 269 |  |  | 318 |  |  | 203 |
Settlement with taxing authority | — |  |  | — |  |  | (7,171 | )
Lapse of statute of limitations | (164 | ) |  | (120 | ) |  | (639 | )
Balance at end of year | $ | 1,944 |  |  | $ | 1,651 |  |  | $ | 1,453 |
Virtually all of the Corporation’s unrecognized tax benefits are for positions that are taken on an annual basis on state tax returns. Increases to unrecognized tax benefits will generally occur as a result of accruing for the nonrecognition of the position for the current year. Decreases will occur as a result of the lapsing of the statute of limitations for the oldest outstanding year which includes the position. These offsetting increases and decreases are likely to continue in the future, including over the next twelve months. While the net effect on future total unrecognized tax benefits cannot be reasonably estimated, approximately $64,000 is expected to reverse in 2015 due to lapsing of the statute of limitations. Decreases can also occur through the settlement of a position with the taxing authority. The $188,000 increase for prior period tax positions in 2014 resulted from changes in state case law, which impacted the estimated amount of positions taken in prior years that will ultimately be recognized. As of December 31, 2014, if recognized, all of the Corporation’s unrecognized tax benefits would impact the effective tax rate. Not included in the table above is $640,000 of federal tax expense on unrecognized state tax benefits which, if recognized, would also impact the effective tax rate. Interest accrued related to unrecognized tax benefits is recorded as a component of income tax expense. Penalties, if incurred, would also be recognized in income tax expense. The Corporation recognized approximately $47,000 of interest and penalty expense, net of reversals, in income tax expense related to unrecognized tax positions in 2014. The Corporation recognized as a benefit approximately $3,000 and $84,000 of interest and penalties in income tax expense related to unrecognized tax positions in 2013 and 2012, respectively, as a result of reversals exceeding current period expenses. As of December 31, 2014 and 2013, total accrued interest and penalties related to unrecognized tax positions were approximately $485,000 and $439,000, respectively. The Corporation and its subsidiaries file income tax returns in the federal and various state jurisdictions. In most cases, unrecognized tax benefits are related to tax years that remain subject to examination by the relevant taxing authorities. With few exceptions, the Corporation is no longer subject to federal, state and local examinations by tax authorities for years before 2011.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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