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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Taxes [Abstract] |
Income Taxes |
12. | Income Taxes
The significant components of income tax expense attributable to operations are as follows:
|  | Years ended December 31, |
(In thousands) |  | 2017 |  |  | 2016 |  |  | 2015 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 35,839 |  |  | $ | 30,492 |  |  | $ | 32,871 |
State |  |  | 6,599 |  |  |  | 5,628 |  |  |  | 4,329 |
Total Current |  | $ | 42,438 |  |  | $ | 36,120 |  |  | $ | 37,200 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 3,850 |  |  | $ | 3,994 |  |  | $ | 2,521 |
State |  |  | (278 | ) |  |  | 278 |  |  |  | 482 |
Total Deferred |  | $ | 3,572 |  |  | $ | 4,272 |  |  | $ | 3,003 |
Total income tax expense |  | $ | 46,010 |  |  | $ | 40,392 |  |  | $ | 40,203 |
On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act includes significant changes to the U.S. corporate income tax system including: a federal corporate rate reduction from 35% to 21%. The Tax Act also establishes new tax laws that will affect years subsequent to 2017. ASC 740, Income Taxes, requires a company to record the effects of a tax law change in the period of enactment, however shortly after the enactment of the Tax Act, the SEC staff issued Staff Accounting Bulletin 118 ("SAB 118"), which allows a company to record a provisional amount when it does not have the necessary information available, prepared, or analyzed in reasonable detail to complete its accounting for the change in the tax law. The measurement period ends when the company has obtained, prepared and analyzed the information necessary to finalize its accounting, but cannot extend beyond one year. In connection with our initial analysis of the impact of the Tax Act, the Company recorded a $4.4 million adjustment in the year ended December 31, 2017 for remeasurement of deferred tax assets and liabilities for the corporate rate reduction. A certain amount of this adjustment is provisional, related to consideration of depreciation, compensation matters and different interpretations by various regulatory authorities. In the first quarter of 2017, the Company adopted the provision of Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, requiring that all excess tax benefits and tax deficiencies associated with equity-based compensation be recognized as an income tax benefit or expense in the income statement. Previously, tax effects resulting from changes in the Company's share price subsequent to the grant date were recorded through stockholders' equity at the time of vesting or exercise. The adoption of ASU 2016-09 resulted in income tax benefits of $1.8 million in the year ended December 31, 2017. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:
|  | December 31, |
(In thousands) |  | 2017 |  |  | 2016 |
Deferred tax assets: |  |  |  |  |  |
Allowance for loan losses |  | $ | 17,390 |  |  | $ | 24,925 |
Deferred compensation |  |  | 7,230 |  |  |  | 11,578 |
Postretirement benefit obligation |  |  | 2,159 |  |  |  | 2,929 |
Fair value adjustments from acquisitions |  |  | 919 |  |  |  | 1,883 |
Unrealized losses on securities |  |  | 3,715 |  |  |  | 3,259 |
Accrued liabilities |  |  | 769 |  |  |  | 1,775 |
Stock-based compensation expense |  |  | 2,642 |  |  |  | 4,817 |
Other |  |  | 711 |  |  |  | 1,148 |
Total deferred tax assets |  | $ | 35,535 |  |  | $ | 52,314 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Pension benefits |  | $ | 12,439 |  |  | $ | 17,303 |
Amortization of intangible assets |  |  | 11,110 |  |  |  | 17,557 |
Premises and equipment, primarily due to accelerated depreciation |  |  | 2,792 |  |  |  | 4,375 |
Deferred loan costs |  |  | 634 |  |  |  | 1,759 |
Cash flow hedges |  |  | 877 |  |  |  | 1,129 |
Other |  |  | 390 |  |  |  | 501 |
Total deferred tax liabilities |  | $ | 28,242 |  |  | $ | 42,624 |
Net deferred tax asset at year-end |  | $ | 7,293 |  |  | $ | 9,690 |
Net deferred tax asset at beginning of year |  |  | 9,690 |  |  |  | 14,940 |
(Decrease) in net deferred tax asset |  | $ | (2,397 | ) |  | $ | (5,250 | )
Realization of deferred tax assets is dependent upon the generation of future taxable income or the existence of sufficient taxable income within the available carryback period. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. Based on available evidence, gross deferred tax assets will ultimately be realized and a valuation allowance was not deemed necessary at December 31, 2017 and 2016. The following is a reconciliation of the provision for income taxes to the amount computed by applying the applicable Federal statutory rate of 35% to income before taxes:
|  | Years ended December 31, |
(In thousands) |  | 2017 |  |  | 2016 |  |  | 2015 |
Federal income tax at statutory rate |  | $ | 44,857 |  |  | $ | 41,581 |  |  | $ | 40,820 |
Tax exempt income |  |  | (2,303 | ) |  |  | (2,205 | ) |  |  | (2,037 | )
Net increase in cash surrender value of life insurance |  |  | (1,780 | ) |  |  | (1,712 | ) |  |  | (1,373 | )
Federal tax credit |  |  | (1,343 | ) |  |  | (1,323 | ) |  |  | (939 | )
State taxes, net of federal tax benefit |  |  | 4,107 |  |  |  | 3,838 |  |  |  | 3,127 |
Federal tax reform (Tax Act) |  |  | 4,407 |  |  |  | - |  |  |  | - |
Stock-based compensation, excess tax benefit |  |  | (1,619 | ) |  |  | - |  |  |  | - |
Other, net |  |  | (316 | ) |  |  | 213 |  |  |  | 605 |
Income tax expense |  | $ | 46,010 |  |  | $ | 40,392 |  |  | $ | 40,203 |
A reconciliation of the beginning and ending balance of Federal and State gross unrecognized tax benefits ("UTBs") is as follows:
(In thousands) |  | 2017 |  |  | 2016 |
Balance at January 1 |  | $ | 559 |  |  | $ | - |
Additions for tax positions of prior years |  |  | - |  |  |  | 425 |
Reduction for tax positions of prior years |  |  | (31 | ) |  |  | - |
Current period tax positions |  |  | 137 |  |  |  | 134 |
Balance at December 31 |  | $ | 665 |  |  | $ | 559 |
Amount that would affect the effective tax rate if recognized, gross of tax |  | $ | 525 |  |  | $ | 363 |
At December 31, 2015 the Company had no UTBs. We recognize interest and penalties on the income tax expense line in the accompanying consolidated statements of income. We monitor changes in tax statutes and regulations to determine if significant changes will occur over the next 12 months. As of December 31, 2017, no significant changes to UTBs are projected; however, tax audit examinations are possible. The Company recognized an insignificant amount of interest expense related to UTBs in the consolidated statement of income for the year ended December 31, 2017. During the year ended December 31, 2017, the Company settled the tax audit by the state of New York for tax years, 2011, 2012 and 2013 without any material audit assessments. The Company is no longer subject to U.S. Federal tax examination by tax authorities for years prior to 2014 and New York State for years prior to 2013. The 2013 tax year related to New York examinations, while previously audited by the state, remains open by statute.

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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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