Note 10 - Income Taxes

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Note 10: Income Taxes

Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the amounts reported in the financial statements of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Amounts for the current year are based upon estimates and assumptions as of the date of these financial statements and could vary significantly from amounts shown on the tax returns as filed.

The components of the net deferred tax asset are as follows:

	At December 31,
	2013		2012
	(In thousands)
Deferred tax asset
Allowance for credit losses	$	14,309	$	13,700
State franchise taxes		3,249		4,162
Deferred compensation		7,991		8,278
Real estate owned		2,095		2,211
Purchased assets and assumed liabilities		5,294		4,732
Post-retirement benefits		1,059		1,210
Employee benefit accruals		5,321		5,648
VISA Class B shares		1,554		1,479
Limited partnership investments		1,299		1,037
Impaired capital assets		20,793		20,819
Capital loss carryforward		—		47
Leases		123		—
Premises and equipment		690		444
Other		654		64
Subtotal deferred tax asset		64,431		63,831
Valuation allowance		—		—
Total deferred tax asset		64,431		63,831
Deferred tax liability
Net deferred loan fees		383		429
Intangible assets		7,408		9,219
Securities available for sale		3,233		10,741
Leases		—		752
Other		126		241
Total deferred tax liability		11,150		21,382
Net deferred tax asset	$	53,281	$	42,449

Based on Management’s judgment, a valuation allowance is not needed to reduce the gross deferred tax asset because it is more likely than not that the gross deferred tax asset will be realized through recoverable taxes or future taxable income. Net deferred tax assets are included with interest receivable and other assets in the Consolidated Balance Sheets.

The provision for federal and state income taxes consists of amounts currently payable and amounts deferred are as follows:

	For the Years Ended December 31,
	2013			2012			2011
	(In thousands)
Current income tax expense:
Federal	$	13,975		$	22,368		$	18,393
State		8,597			11,456			13,322
Total current		22,572			33,824			31,715
Deferred income tax (benefit) expense:
Federal		(2,518	)		(7,280	)		1,839
State		(1,109	)		(1,114	)		(626	)
Total deferred		(3,627	)		(8,394	)		1,213
Provision for income taxes	$	18,945		$	25,430		$	32,928

The provision for income taxes differs from the provision computed by applying the statutory federal income tax rate to income before taxes, as follows:

	For the Years Ended December 31,
	2013			2012			2011
	(In thousands)
Federal income taxes due at statutory rate	$	30,142		$	37,295		$	42,285
Reductions in income taxes resulting from:
Interest on state and municipal securities and loans not taxable for federal income tax purposes		(11,565	)		(12,494	)		(12,423	)
State franchise taxes, net of federal income tax benefit		4,712			6,722			8,252
Tax credits		(3,190	)		(3,684	)		(3,560	)
Dividend received deduction		(32	)		(28	)		(25	)
Cash value life insurance		(747	)		(953	)		(728	)
Other		(375	)		(1,428	)		(873	)
Provision for income taxes	$	18,945		$	25,430		$	32,928

At December 31, 2013, the company had no net operating loss and general tax credit carryforwards for tax return purposes.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits follow:

	2013			2012
	(In thousands)
Balance at January 1,	$	747		$	496
Additions for tax positions taken in the current period		483			238
Reductions for tax positions taken in the current period		—			—
Additions for tax positions taken in prior years		212			13
Reductions for tax positions taken in prior years		—			—
Decreases related to settlements with taxing authorities		—			—
Decreases as a result of a lapse in statute of limitations		(5	)		—
Balance at December 31,	$	1,437		$	747

The Company does not anticipate any significant increase or decrease in unrecognized tax benefits during 2014. Unrecognized tax benefits at December 31, 2013 and 2012 include accrued interest and penalties of $85 thousand and $65 thousand, respectively. If recognized, the entire amount of the unrecognized tax benefits would affect the effective tax rate.

The Company classifies interest and penalties as a component of the provision for income taxes. The tax years ended December 31, 2013, 2012, 2011 and 2010 remain subject to examination by the Internal Revenue Service. The tax years ended December 31, 2013, 2012, 2011, 2010 and 2009 remain subject to examination by the California Franchise Tax Board. Additionally, the Company has agreed to extend the statute of limitations on its 2008 and 2007 California franchise tax returns in respect of ongoing examinations by the California Franchise Tax Board. The deductibility of these tax positions will be determined through examination by the appropriate tax jurisdictions or the expiration of the tax statute of limitations.