20.	INCOME AND FRANCHISE TAXES

Components of income tax benefit for the years ended December 31, 2011, 2010 and 2009 were as follows:

	Current			Deferred		Total
	(Dollars in thousands)
2011:
Federal	$	-		$	-	$	-
State		-			-		-
Total	$	-		$	-	$	-

2010:
Federal	$	-		$	-	$	-
State		-			-		-
Total	$	-		$	-	$	-

2009:
Federal	$	(38,309	)	$	12,915	$	(25,394	)
State		(3,586	)		8,985		5,399
Total	$	(41,895	)	$	21,900	$	(19,995	)

Income tax benefit for the periods presented differed from the “expected” tax benefit (computed by applying the U.S. Federal corporate tax rate of 35% to income (loss) before income taxes) for the following reasons:

	Year Ended December 31,
	2011			2010			2009
	(Dollars in thousands)

Computed "expected" tax expense (benefit)	$	12,802		$	(87,834	)	$	(116,810	)
Increase (decrease) in taxes resulting from:
Goodwill impairment (not deductible for tax purposes)		-			35,941			17,500
Tax-exempt interest		(273	)		(420	)		(1,539	)
Other tax-exempt income		(1,441	)		(1,669	)		(1,827	)
Low-income housing and energy tax credits		(1,678	)		(8,023	)		(1,272	)
State income taxes, net of Federal income tax effect,
excluding impact of deferred tax valuation allowance		546			(8,724	)		(17,907	)
Change in the beginning-of-the-year balance of the
valuation allowance for deferred tax assets
allocated to income tax expense		(9,870	)		70,506			101,836
Other		(86	)		223			24
Total	$	-		$	-		$	(19,995	)

At December 31, 2011, current Federal income taxes receivable was $46 thousand. At December 31, 2010, current Federal income taxes payable was $0.3 million. Current state income taxes receivable was $2.3 million and $2.2 million at December 31, 2011 and 2010, respectively.

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:

	December 31,
	2011		2010
	(Dollars in thousands)
Deferred tax assets
Allowance for loan and lease losses	$	42,589	$	67,406
Accrued expenses		5,417		5,151
Employee retirement benefits		8,439		8,015
Federal and state tax credit carryforwards		34,616		31,851
Investment write-downs and write-offs		3,021		3,429
Interest on nonaccrual loans		5,703		7,471
Federal and state net operating loss carryforwards		98,409		96,777
Other		25,213		15,441
Total deferred tax assets	$	223,407	$	235,541

Deferred tax liabilities
Intangible assets	$	16,308	$	17,232
FHLB stock dividends received		12,345		12,345
Net unrealized gain on derivatives recognized through AOCI		1,959		3,249
Leases		4,494		5,528
Deferred gain on curtailed retirement plan		3,339		3,339
Liability on utilization of state tax credits		7,851		6,860
Other		14,851		8,156
Total deferred tax liabilities	$	61,147	$	56,709

Deferred tax valuation allowance	$	162,260	$	178,832

Net deferred tax assets	$	-	$	-

The valuation allowance for deferred tax assets as of December 31, 2011 and 2010 was $162.3 million and $178.8 million, respectively. The net change in the total valuation allowance was a decrease of $16.6 million and increase of $74.2 million in 2011 and 2010, respectively. Of the total decrease in the valuation allowance in 2011, $9.9 million was recognized as income tax benefit while the remaining $6.7 million was a benefit for AOCI, compared to $70.5 million recognized as income tax expense and $3.7 million charged against AOCI in 2010.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion 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 during the periods in which those temporary differences become deductible. Management considers the reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income and tax-planning strategies in making this assessment. Based upon the Company's cumulative three year loss position 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 Company will be unable to realize the benefits of these deductible differences. The amount of the deferred tax asset considered realizable, however, could change in the near term if estimates of future taxable income during the carryforward period change.

At December 31, 2011, the Company had net operating loss carryforwards for Federal income tax purposes of $225.6 million, which are available to offset future Federal taxable income, if any, through 2031. At December 31, 2011, the Company had net operating loss carryforwards for Hawaii and California state income tax purposes of $239.0 million and $41.4 million, respectively, which are available to offset future state taxable income through 2030 for Hawaii and 2031 for California. In addition, we have state tax credit carryforwards of $23.6 million that do not expire, and federal tax credit carryforwards of $11.0 million, of which $9.3 million expire in 20 years, and $1.7 million do not expire.

As further described in Note 15, to help protect the Company's tax benefits, the Company implemented the Tax Benefits Preservation Plan on November 23, 2011 and the Protective Charter Amendment on January 26, 2011.

At December 31, 2011, we have no unrecognized tax benefits that, if recognized would favorably affect the effective income tax rate in future periods. We do not expect our unrecognized tax benefits to change significantly over the next 12 months.

We are subject to U.S. Federal income tax as well as income tax of multiple state jurisdictions. We have concluded all U.S. Federal and Hawaii income tax matters for years through 2005.