INCOME TAXES

12 Months Ended

Dec. 31, 2011

INCOME TAXES [Abstract]

INCOME TAXES

14.   INCOME TAXES

The Company's consolidated Federal, State and City income tax provisions were comprised of the following:

	Year Ended December 31,									Year Ended December 31,									Year Ended December 31,
				2011									2010									2009
	Federal			State and City			Total			Federal			State and City			Total			Federal			State and City			Total
Current	$	25,580		$	7,231		$	32,811		$	22,129		$	7,469		$	29,598		$	18,384		$	4,368		$	22,752
Deferred		(1,145	)		(78	)		(1,223	)		(522	)		(215	)		(737	)		(5,786	)		(2,879	)		(8,665	)
TOTAL	$	24,434		$	7,153		$	31,588		$	21,607		$	7,254		$	28,861		$	12,598		$	1,489		$	14,087

The preceding table excludes tax effects recorded directly to stockholders' equity in connection with unrealized gains and losses on securities available-for-sale (including losses on such securities upon their transfer to held-to-maturity), stock-based compensation plans, and adjustments to other comprehensive income relating to the minimum pension liability, unrecognized gains of pension and other postretirement obligations and changes in the non-credit component of OTTI.  These tax effects are disclosed as part of the presentation of the consolidated Statements of Changes in Stockholders' Equity and Comprehensive Income.

The provision for income taxes differed from that computed at the Federal statutory rate as follows:

	Year Ended December 31,
	2011			2010			2009
Tax at Federal statutory rate	$	27,614		$	24,587		$	14,096
State and local taxes, net of Federal income tax benefit		4,319			4,549			1,300
Benefit plan differences		25			(286	)		(314	)
Adjustments for prior period tax returns		185			-			(4	)
Investment in BOLI		(615	)		(679	)		(708	)
Adjustment for unrecognized tax benefits		(1,026	)		79			48
Other, net		1,086			611			(331	)
	$	31,588		$	28,861		$	14,087
Effective tax rate		40.04	%		41.08	%		34.98	%

Deferred tax assets and liabilities are recorded for temporary differences between the book and tax bases of assets and liabilities.  The components of Federal and State and City deferred income tax assets and liabilities were as follows:

	At December 31,
Deferred tax assets:	2011		2010
Excess book bad debt over tax bad debt reserve	$	10,003	$	9,791
Employee benefit plans		17,523		13,553
Credit component of OTTI		4,705		4,294
Other		1,275		923
Total deferred tax assets		33,506		28,561
Deferred tax liabilities:
Tax effect of other components of income on investment securities and MBS		1,467		1,279
Difference in book and tax carrying value of fixed assets		519		465
Tax effect of purchase accounting fair value adjustments		161		166
Other		811		88
Total deferred tax liabilities		2,958		1,998
Net deferred tax asset (recorded in other assets)	$	30,548	$	26,563

No valuation allowances were recognized on deferred tax assets during the years ended December 31, 2011 and 2010, since, at each period end, it was more likely than not that the deferred tax assets would be fully realized.

At December 31, 2011 and 2010, the Bank had bad debt reserves for New York State and New York City income tax purposes for which no provision for income tax was required to be recorded. These bad debt reserves could be subject to recapture into taxable income under certain circumstances. The Bank's previously accumulated bad debt deductions were similarly subject to potential recapture for federal income tax purposes at December 31, 2011 and 2010.  These recapture liabilities could be triggered by certain actions, including a distribution of these bad debt benefits to the Holding Company or the failure of the Bank to qualify as a bank for federal or New York State and New York City tax purposes.   A summary of these balances as of both December 31, 2011 and 2010 is as follows:

Federal	$	15,158
New York State		69,164
New York City		73,597

In order for the Bank to permissibly maintain a New York State and New York City tax bad debt reserve for thrifts, certain thrift definitional tests must be satisfied on an ongoing basis.  These include maintaining at least 60% of assets in thrift qualifying assets, as defined for tax purposes, and maintaining a thrift charter. If the Bank fails to satisfy these definitional tests, it would be required to transition to the reserve method permitted to commercial banks under New York State and New York City income tax law, which would result in an increase in the New York State and New York City income tax provision, and a deferred tax liability would be established to reflect the eventual recapture of some or all of the New York State and New York City bad debt reserve.  Should the amounts in the above table as of December 31, 2011 be fully recaptured, the Bank would recognize $12,529 in additional income tax expense.

The Company expects to take no action in the foreseeable future that would require the establishment of a tax liability associated with these bad debt reserves.

The Company is subject to regular examination by various tax authorities in jurisdictions in which the Company conducts significant business operations.  The Company regularly assesses the likelihood of additional assessments in each of the tax jurisdictions resulting from ongoing assessments.

Under current accounting rules, all tax positions adopted are subjected to two levels of evaluation.  Initially, a determination is made, based on the technical merits of the position, as to whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes. In conducting this evaluation, management is required to presume that the position will be examined by the appropriate taxing authority possessing full knowledge of all relevant information. The second level of evaluation is the measurement of a tax position that satisfies the more-likely-than-not recognition threshold.  This measurement is performed in order to determine the amount of benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely to be realized upon ultimate settlement.  The Company had no material uncertain tax positions as of December 31, 2011.  As of December 31, 2010, unrecognized tax benefits totaled $1,408, which decreased during the year ended December 31, 2011.

The following table reconciles the Company's gross unrecognized tax benefits:

	Year Ended December 31,
	2011			2010		2009
Gross unrecognized tax benefits at the beginning of the period	$	1,408		$	1,408	$	1,408
Lapse of statue of limitations		-			-		-
Settlement with taxing jurisdictions		-			-		-
Gross increases - current period tax positions		-			-		-
Gross decreases - current period tax positions		-			-		-
Gross increases - prior period tax positions		-			-		-
Gross decreases - prior period tax positions		(1,408	)		-		-
Gross unrecognized tax benefits at the end of the period	$	-		$	1,408	$	1,408

If recognized, the net unrecognized tax benefits as of December 31, 2010 and 2009 would have reduced the Company's aggregate consolidated income tax expense for the years presented above by $915 (excluding interest of $440 at December 31, 2010 and $361 at December 31, 2009), all of which would have favorably impacted the Company's consolidated effective tax rates for the years presented above.

Interest associated with unrecognized tax benefits approximated $677 at December 31, 2010.  The Company recognized interest accrued related to unrecognized tax benefits and penalties as income tax expense.  Related to the unrecognized tax benefits noted above, the Company, at December 31, 2010, had an unrecognized tax liability for interest of $440, and no unrecognized tax liability for penalties.  The liability totaling $440 for interest was eliminated during the year ended December 31, 2011.

As of December 31, 2011, the tax years ended December 31, 2008, 2009, 2010 and 2011 remained subject to examination by all of the Company's relevant tax jurisdictions, except for New York City, which has completed an examination through the tax year ended December 31, 2008.  The Company is currently under audit by taxing jurisdictions.