Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Schedule of Components of Income Tax Expense (Benefit)

Income tax expense is comprised of the following:



	Year Ended December 31,
	2013		2012		2011
Taxes currently payable
Federal	$	20,266	$	45,683	$	45,026
State	3,496		2,655		1,823
Deferred expense (benefit)	52,664		4,679		(756		)
	$	76,426	$	53,017	$	46,093

Schedule of Effective Income Tax Rate Reconciliation

The actual income tax rate differs from the statutory tax rate as shown in the following table:



		Year Ended December 31,
		2013		2012		2011
Statutory rate		35.00	%	35.00	%	35.00	%
Increase (decrease) in rate due to:
	Interest on tax-exempt securities and tax-free loans, net	(3.16	)	(3.23	)	(3.04	)
	Merger expenses at acquisition	0.54		—		—
	Reduction in excess tax reserves	0.11		—		—
	Bank owned life insurance	(2.53	)	(3.10	)	(3.26	)
	State income tax (net)	0.87		0.94		0.72
	Tax credits	(1.89	)	(2.15	)	(2.12	)
	ESOP Dividends	(0.14	)	(0.21	)	(0.24	)
	Nondeductible meals and entertainment	0.27		0.25		0.29
	Other	0.31		0.83		0.48
Effective tax rates		29.38	%	28.33	%	27.83	%

Schedule of Deferred Tax Assets and Liabilities

Principal components of the Corporation's net deferred tax asset are summarized as follows:



		Year Ended
		December 31,
		2013			2012
Deferred tax assets:
	Allowance for credit losses	$	37,857		$	37,341
	Employee benefits	33,615			42,934
	Real Estate Mortgage Investment Credit	5,645			6,201
	Acquired liabilities	13,734			5,041
	Acquired loans	62,993			—
	Available for sale securities	16,819			—
	Loan fees and expenses	2,777			—
	Goodwill	—			2,838
	Core deposit intangible	—			1,275
	Federal NOL carryforwards	190,350			—
	Tax credit carryforwards	47,597			—
	State income tax (net of federal benefit)	4,682			—
		416,069			95,630
Deferred tax liabilities:
	Leased assets and depreciation	(25,818		)	(6,962		)
	Acquired loans	—			(18,765		)
	Available for sale securities	—			(29,841		)
	FHLB stock	(24,401		)	(25,577		)
	Loan fees and expenses	—			(5,709		)
	Goodwill	(7,129		)	—
	Core deposit intangibles	(25,302		)	—
	Other	(3,510		)	(1,665		)
		(86,160		)	(88,519		)
Total net deferred tax asset		$	329,909		$	7,111

Change in Deferred Taxes

At December 31, 2013, the Corporation had gross federal loss carryforwards of $543.9 million that expire in 2028 through 2032, general business credits of $5.7 million that expire in 2028 and $41.9 million of federal alternative minimum tax credits with an indefinite life. In addition, future state income taxes are expected to be reduced by $1.5 million resulting from state NOLs at various levels in various states. This benefit is expected to be fully used during the expiration period of 2014 through 2027.

The period change in deferred taxes recorded both directly to shareholders' equity and as a part of the income tax expense can be summarized as follows:



		Year Ended December 31,
		2013			2012
Deferred tax changes reflected in other comprehensive income		$	(27,224	)	$	4,137
Deferred tax changes reflected in Federal income tax expense		52,665			4,679
Deferred tax changes reflected in acquired net assets		(348,239		)	—
	Net change in deferred taxes	$	(322,798	)	$	8,816

Summary of Income Tax Contingencies

A reconciliation of the change in the reserve for uncertain tax positions is as follows:



	Federal and State Tax			Accrued Interest and Penalties			Gross Unrecognized Income Tax Benefits
Balance as of January 1, 2013	$	953		$	854		$	1,807
Additions for tax provisions related to prior year	77			72			149
Reduction for tax positions related to prior tax years	(27		)	(664		)	(691		)
Balance at December 31, 2013	$	1,003		$	262		$	1,265
Components of Reserve:
Potential adjustment to nondeductible interest expense	$	30		$	5		$	35
State income tax exposure	973			257			1,230
Balance at December 31, 2013	$	1,003		$	262		$	1,265

Balance as of January 1, 2012	$	946		$	1,491		$	2,437
Additions for tax provisions related to prior year	74			621			695
Reduction for tax positions related to prior year due closed tax years	(28		)	(44		)	(72		)
Reduction for tax positions related to prior tax years	(39		)	(1,214		)	(1,253		)
Balance at December 31, 2012	$	953		$	854		$	1,807
Components of Reserve:
Potential adjustment to nondeductible interest expense	$	30		$	4		$	34
Timing of the accrual for interest on nonperforming assets	—			631			631
State income tax exposure	923			219			1,142
Balance at December 31, 2012	$	953		$	854		$	1,807

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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