(15)	Income Taxes

The significant components of income tax expense attributable to operations are:

	Years ended December 31,
	2011			2010			2009
Current
Federal	$	29,274		$	34,124		$	21,046
State		1,477			1,743			1,086
		30,751			35,867			22,132

Deferred
Federal		(8,129	)		(12,121	)		(1,669	)
State		(1,349	)		(2,834	)		168
		(9,478	)		(14,955	)		(1,501	)
Total income tax expense	$	21,273		$	20,912		$	20,631

Not included in the above table are items that were recorded to stockholders' equity of approximately ($0.5 million), ($4.3 million), and $6.1 million for 2011, 2010, and 2009, respectively, relating to deferred taxes on the unrealized (gain) loss on available for sale securities, tax benefits recognized with respect to stock options exercised, and deferred taxes related to pension plans.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:

	December 31,
(In thousands)	2011			2010
Deferred tax assets
Allowance for loan and lease losses	$	27,487		$	27,463
Deferred compensation		4,911			4,653
Postretirement benefit obligation		1,036			1,024
Fair value adjustments from acquisitions		2,227			-
Accrued liabilities		1,482			1,649
Stock-based compensation expense		4,440			3,943
Other		1,214			1,012
Total deferred tax assets		42,797			39,744
Deferred tax liabilities
Pension and executive retirement		6,916			11,922
Unrealized gains on securities available for sale		12,156			7,162
Premises and equipment, primarily due to accelerated depreciation		2,340			1,384
Equipment leasing		3,090			11,456
Deferred loan costs		767			1,395
Intangible amortization		11,081			10,270
Other		494			178
Total deferred tax liabilities		36,844			43,767
Net deferred tax asset (liability) at year-end		5,953			(4,023	)
Net deferred tax liability at beginning of year		(4,023	)		(23,245	)
Decrease in net deferred tax liability	$	(9,976	)	$	(19,222	)

Realization of deferred tax assets is dependent upon the generation of future taxable income or the existence of sufficient taxable income within the available carryback period. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. Based on available evidence, gross deferred tax assets will ultimately be realized and a valuation allowance was not deemed necessary at December 31, 2011 and 2010.

A reconciliation of the beginning and ending balance of gross unrecognized tax benefits is as follows:

(In thousands)	2011			2010			2009
Balance at January 1	$	3,081		$	2,287		$	2,212
Additions for tax positions of prior years		-			1,714			132
Reduction for tax positions of prior years		(2,193	)		(920	)		(57	)
Balance at December 31	$	888		$	3,081		$	2,287

The $0.9 million, $3.1 million, and $2.3 million of unrecognized tax benefits at December 31, 2011, 2010, and 2009 respectively, would impact the annual effective tax rate, if recognized. During 2011, the Company reached settlement with New York State on franchise tax examinations for the years 2003 through 2007. Also during 2011, there was a reduction of reserves for Federal tax benefits for years in which the statute of limitations has expired. As a result, unrecognized tax benefits were reduced by $1.4 million and $0.8 million related to the examination and the expiration of the statute of limitations, respectively, which resulted in a reduction of tax expense for 2011 of $1.5 million.

The Company is no longer subject to U.S. Federal and New York State examination by tax authorities for years prior to 2008.

The Company recognizes interest accrued and penalties related to unrecognized tax benefits in income tax expense. The total amount of accrued interest at December 31, 2011 and 2010 was approximately $0.1 million and $0.7 million, respectively. Net interest impacting the Company's 2011, 2010 and 2009 tax expense was $0.3 million, $0.1 million and $0.2 million, respectively.

The following is a reconciliation of the provision for income taxes to the amount computed by applying the applicable Federal statutory rate of 35% to income before taxes:

	Years ended December 31
(In thousands)	2011			2010			2009
Federal income tax at statutory rate	$	27,711		$	27,410		$	25,424
Tax exempt income		(2,925	)		(3,448	)		(3,811	)
Net increase in CSV of life insurance		(919	)		(939	)		(871	)
Low income housing tax credits		(782	)		(296	)		(132	)
State taxes, net of federal tax benefit		764			756			816
State audit settlements		(681	)		(1,465	)		-
Other, net		(1,895	)		(1,106	)		(795	)
Income tax expense	$	21,273		$	20,912		$	20,631