Income Taxes

12 Months Ended

Dec. 31, 2014

Income Taxes [Abstract]

Income Taxes

NOTE 12  INCOME TAXES:

The current and deferred amounts of income tax expense (benefit) were as follows.

		Years Ended December 31,
		2014		2013		2012
		($ in Thousands)
Current:
	Federal	$	74,646	$	50,628	$	19,724
	State		1,000		2,653		1,468
Total current			75,646		53,281		21,192
Deferred:
	Federal		(805)		16,409		41,908
	State		10,695		9,511		12,386
Total deferred			9,890		25,920		54,294
Total income tax expense		$	85,536	$	79,201	$	75,486

Temporary differences between the amounts reported in the financial statements and the tax bases of assets and liabilities resulted in deferred taxes. Deferred tax assets and liabilities at December 31 were as follows.

		2014		2013
		($ in Thousands)
Deferred tax assets:
	Allowance for loan losses	$	99,219	$	102,632
	Allowance for other losses		11,609		16,102
	Accrued liabilities		5,773		6,248
	Deferred compensation		31,392		28,911
	Securities valuation adjustment		-		1,724
	State net operating losses		22,640		32,552
	Nonaccrual interest		2,383		4,431
	Other		7,929		9,286
Total deferred tax assets			180,945		201,886
Deferred tax liabilities:
	FHLB stock dividends		6,367		6,425
	Prepaid expenses		68,955		61,225
	Goodwill		24,049		22,472
	Mortgage banking activities		13,147		14,497
	Deferred loan fee income		21,199		25,480
	State deferred taxes		9,011		12,754
	Lease financing		2,313		2,525
	Bank premises and equipment		9,532		18,423
	Other		5,501		7,324
Total deferred tax liabilities			160,074		171,125
Net deferred tax assets			20,871		30,761
Tax effect of unrealized (gain) loss related to available for sale securities			(10,902)		7,685
Tax effect of unrealized loss related to pension and postretirement benefits			14,468		8,024
			3,566		15,709
Net deferred tax assets including items with tax effect recorded directly to OCI		$	24,437	$	46,470

At December 31, 2014 and 2013, there was no valuation allowance for deferred tax assets.

At December 31, 2014, the Corporation had state net operating loss carryforwards of $287 million (of which, $32 million was acquired from various acquisitions) that will expire in the years 2024 through 2031. $169 million of these state net operating loss carryforwards do not expire until after 2031.

The effective income tax rate differs from the statutory federal tax rate. The major reasons for this difference were as follows.

		2014		2013		2012
Federal income tax rate at statutory rate		35.0	%	35.0	%	35.0	%
Increases (decreases) resulting from:
	Tax-exempt interest and dividends	(4.6)		(4.5)		(4.9)
	State income taxes (net of federal benefit)	2.8		2.9		3.6
	Bank owned life insurance	(1.7)		(1.5)		(1.9)
	Federal tax credits	(1.4)		(1.0)		(1.2)
	Tax reserve adjustments	0.7		(1.9)		(1.8)
	Other	0.2		0.6		0.9
Effective income tax rate		31.0	%	29.6	%	29.7	%

Savings banks acquired by the Corporation in 1997 and 2004 qualified under provisions of the Internal Revenue Code that permitted them to deduct from taxable income an allowance for bad debts that differed from the provision for such losses charged to income for financial reporting purposes. Accordingly, no provision for income taxes has been made for $100 million of retained income at December 31, 2014. If income taxes had been provided, the deferred tax liability would have been approximately $40 million. Management does not expect this amount to become taxable in the future, therefore, no provision for income taxes has been made.

The Corporation and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Corporation's federal income tax returns are open and subject to examination from the 2011 tax return year and forward. The years open to examination by state and local government authorities varies by jurisdiction.

A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows.

	2014		2013
	($ in Millions)
Balance at beginning of year	$	6	$	13
Additions for tax positions related to prior years		1		-
Additions for tax positions related to current year		2		1
Statute expiration		-		(8)
Balance at end of year	$	9	$	6

At December 31, 2014 and 2013, the total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $6 million and $4 million, respectively.

The Corporation recognizes interest and penalties accrued related to unrecognized tax benefits in the income tax expense line of the consolidated statements of income. Interest and penalty expense (benefit) was $1 million and ($3) million, as of December 31, 2014 and December 31, 2013, respectively. Accrued interest and penalties were $3 million and $2 million as of December 31, 2014 and December 31, 2013, respectively. Management does not anticipate significant adjustments to the total amount of unrecognized tax benefits within the next twelve months.