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INCOME AND FRANCHISE TAXES
 3 Months Ended
Mar. 31, 2013
INCOME AND FRANCHISE TAXES  
INCOME AND FRANCHISE TAXES

15.  INCOME AND FRANCHISE TAXES

 

In assessing the realizability of deferred tax assets (“DTA”), management considers whether it is more likely than not that some portion or all of the DTA will not be realized. The ultimate realization of DTA 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.

 

In the first quarter of 2013, the Company reversed a significant portion of the valuation allowance that was established against our net DTA during the third quarter of 2009. The valuation allowance was established during 2009 due to uncertainty at the time regarding our ability to generate sufficient future taxable income to fully realize the benefit of our net DTA. The quarter ended March 31, 2013 marked our ninth consecutive quarter of profitability. Based on this earnings performance trend, improvements in our financial condition, asset quality and capital ratios, and the expectation of continued profitability, the Company determined that it was more likely than not that a significant portion of our net DTA would be realized.

 

The Company does not expect to recognize any income tax expense until the first quarter of 2014 as a portion of the remaining deferred tax asset valuation allowance is expected to offset income tax expense for the remainder of 2013. The net impact of reversing the valuation allowance and recording the provision for income tax expense was a net income tax benefit of $119.8 million. The Company did not recognize any income tax expense in the comparable prior period. As of March 31, 2013, the remaining valuation allowance on our net DTA totaled $14.3 million. Net of this valuation allowance, as of March 31, 2013, the Company’s net DTA totaled $130.0 million, compared to a fully reserved net DTA of $147.5 million as of December 31, 2012, and is included in other assets on our consolidated balance sheets.