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INCOME TAXES | 12 Months Ended
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Dec. 31, 2017
INCOME TAXES [Abstract] |
INCOME TAXES |
NOTE I: | INCOME TAXES
The provision for income taxes for the years ended December 31 is as follows:
(000's omitted) |  | 2017 |  |  | 2016 |  |  | 2015 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 31,152 |  |  | $ | 32,829 |  |  | $ | 27,663 |
State and other |  |  | 6,788 |  |  |  | 4,890 |  |  |  | 2,608 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (28,146 | ) |  |  | 11,444 |  |  |  | 9,604 |
State and other |  |  | (546 | ) |  |  | 1,622 |  |  |  | 1,112 |
Provision for income taxes |  | $ | 9,248 |  |  | $ | 50,785 |  |  | $ | 40,987 |
Components of the net deferred tax liability, included in other liabilities, as of December 31 are as follows:
(000's omitted) |  | 2017 |  |  | 2016 |
Allowance for loan losses |  | $ | 11,675 |  |  | $ | 18,366 |
Employee benefits |  |  | 4,216 |  |  |  | 6,311 |
Debt extinguishment |  |  | 0 |  |  |  | 299 |
Other, net |  |  | 0 |  |  |  | 5,202 |
Deferred tax asset |  |  | 15,891 |  |  |  | 30,178 |
Investment securities |  |  | 22,690 |  |  |  | 32,839 |
Tax-deductible goodwill |  |  | 39,154 |  |  |  | 43,504 |
Loan origination costs |  |  | 6,109 |  |  |  | 8,228 |
Depreciation |  |  | 2,372 |  |  |  | 71 |
Mortgage servicing rights |  |  | 330 |  |  |  | 548 |
Pension |  |  | 13,228 |  |  |  | 18,194 |
Other, net |  |  | 542 |  |  |  | 0 |
Deferred tax liability |  |  | 84,425 |  |  |  | 103,384 |
Net deferred tax liability |  | $ | (68,534 | ) |  | $ | (73,206 | )
The Company has determined that no valuation allowance is necessary as it is more likely than not that the gross deferred tax assets will be realized through carryback of future deductions to taxable income in prior years, future reversals of existing temporary differences, and through future taxable income. A reconciliation of the differences between the federal statutory income tax rate and the effective tax rate for the years ended December 31 is shown in the following table:
|  | 2017 |  |  | 2016 |  |  | 2015 |
Federal statutory income tax rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
Increase (reduction) in taxes resulting from: |  |  |  |  |  |  |  |  |  |  |  |
Tax-exempt interest |  |  | (3.8 | ) |  |  | (4.0 | ) |  |  | (5.0 | )
State income taxes, net of federal benefit |  |  | 2.5 |  |  |  | 2.7 |  |  |  | 1.8 |
Stock-based compensation |  |  | (2.0 | ) |  |  | 0 |  |  |  | 0 |
Federal deferred tax revaluation adjustment |  |  | (23.7 | ) |  |  | 0 |  |  |  | 0 |
Other, net |  |  | (2.2 | ) |  |  | (0.9 | ) |  |  | (0.8 | )
Effective income tax rate |  |  | 5.8 | % |  |  | 32.8 | % |  |  | 31.0 | %
A reconciliation of the unrecognized tax benefits for the years ended December 31 is shown in the following table:
(000’s omitted) |  | 2017 |  |  | 2016 |  |  | 2015 |
Unrecognized tax benefits at beginning of year |  | $ | 92 |  |  | $ | 127 |  |  | $ | 162 |
Changes related to: |  |  |  |  |  |  |  |  |  |  |  |
Lapse of statutes of limitations |  |  | (68 | ) |  |  | (35 | ) |  |  | (35 | )
Unrecognized tax benefits at end of year |  | $ | 24 |  |  | $ | 92 |  |  | $ | 127 |
As of December 31, 2017, the total amount of unrecognized tax benefits that would impact the Company’s effective tax rate if recognized is $0.02 million. It is reasonably possible that the amount of unrecognized tax benefits could change in the next twelve months as a result of various examinations and expiration of statutes of limitations on prior tax returns. The Company’s policy is to recognize interest and penalties related to unrecognized tax benefits as part of income taxes in the consolidated statement of income. The accrued interest related to tax positions was immaterial. The Company’s federal and state income tax returns are routinely subject to examination from various governmental taxing authorities. Such examinations may result in challenges to the tax return treatment applied by the Company to specific transactions. Management believes that the assumptions and judgment used to record tax-related assets or liabilities have been appropriate. Future examinations by taxing authorities of the Company’s federal or state tax returns could have a material impact on the Company’s results of operations. The Company’s federal income tax returns for years after 2013 may still be examined by the Internal Revenue Service. New York State income tax returns for years after 2012 may still be examined by the New York Department of Taxation and Finance. It is not possible to estimate, if and when those examinations may be completed. On December 22, 2017, H.R.1, referred to as the “Tax Cuts and Jobs Act,” was signed into law. Among other things, the Tax Cuts and Jobs Act permanently lowers the corporate tax rate to 21% from the existing maximum rate of 35%, effective for tax years including or commencing January 1, 2018. ASC 740, Income Taxes, requires existing deferred tax assets and liabilities to be measured at the enacted tax rate expected to be applied when the temporary differences are to be realized or settled. Thus, as of the date of enactment, deferred taxes were re-measured based upon the new 21% tax rate. Prior to the change in tax rate, the Company had recorded net deferred tax liabilities based on a marginal tax rate of 37.70%. The change in tax rate resulted in a decrease in the marginal tax rate to 24.29% and a deferred tax benefit of $38.0 million from the write-down of the net deferred tax liabilities. The effect of this change in tax law was recorded as a component of the income tax provision including those deferred assets and liabilities that were established through a financial statement component other than continuing operations. On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provided guidance on reporting accounting impacts of the recently enacted tax reform legislation. In SAB 118, it is noted that reporting companies may be unable to complete the accounting for certain income tax effects of the Tax Cuts and Jobs Act by the time financial statements are issued for the reporting period in which the Tax Cuts and Jobs Act was enacted (the “Enactment Period”). SAB 118 provides guidance for the scenarios in which a company does not have the necessary information available, prepared or analyzed to complete the accounting for certain income tax effects when it issues financial statements covering the Enactment Period. In those cases, SAB 118 would permit the company to provide “reasonable estimates” for the income tax effects of the Tax Cuts and Jobs Act and to report those effects as “provisional amounts” in its financial statements during a limited “measurement period.” Based on the review of its deferred tax assets and liabilities, the Company notes that the accounting for the enactment of the Tax Cuts and Jobs Act is complete and the effects have been appropriately reflected in the consolidated statement of condition as of December 31, 2017 and the consolidated statement of income for the year ended December 31, 2017.

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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 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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