Federal and State Income Taxes

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Federal and State Income Taxes

(10) Federal and State Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred tax assets and liabilities are as follows (in thousands):

	December 31,
	2012		2011
Deferred tax assets:
Stock-based compensation	$	9,100	$	10,100
Credit loss allowances	86,100		102,700
Valuation adjustments	45,100		42,300
Deferred book income	7,200		9,200
Deferred compensation	45,100		29,500
Book expense in excess of pension contribution	400		1,900
Other	30,900		38,500
Total deferred tax assets	223,900		234,200
Deferred tax liabilities:
Available for sale securities mark to market	99,000		86,400
Depreciation	19,600		29,400
Mortgage servicing rights	59,500		48,900
Lease financing	21,100		13,200
Other	21,700		18,400
Total deferred tax liabilities	220,900		196,300
Deferred tax assets in excess of deferred tax liabilities	$	3,000	$	37,900

The significant components of the provision for income taxes attributable to continuing operations for BOK Financial are shown below (in thousands):

	Year Ended December 31,
	2012		2011		2010
Current tax expense:
Federal	$	159,706	$	137,802	$	132,165
State	19,103		16,085		17,618
Total current tax expense	178,809		153,887		149,783
Deferred tax expense (benefit):
Federal	8,664		3,882		(24,714		)
State	1,267		742		(1,712		)
Total deferred tax expense (benefit)	9,931		4,624		(26,426		)
Total income tax expense	$	188,740	$	158,511	$	123,357

The reconciliations of income (loss) attributable to continuing operations at the U.S. federal statutory tax rate to income tax expense are as follows (in thousands):

	Year Ended December 31,
	2012			2011			2010
Amount:
Federal statutory tax	$	190,003		$	156,917		$	130,078
Tax exempt revenue	(5,558		)	(5,357		)	(5,404		)
Effect of state income taxes, net of federal benefit	13,684			11,198			9,740
Utilization of tax credits	(5,126		)	(2,972		)	(6,317		)
Bank-owned life insurance	(3,850		)	(3,879		)	(4,133		)
Reduction of tax accrual	(950		)	(1,764		)	(2,245		)
Other, net	537			4,368			1,638
Total	$	188,740		$	158,511		$	123,357

Due to the favorable resolution of certain tax issues for the periods ended December 31, 2008 and 2007, BOK Financial reduced its tax accrual by $1.0 million and $1.8 million in 2012 and 2011, respectively, which was credited against current income tax expense.

	Year Ended December 31,
	2012		2011		2010
Percent of pretax income:
Federal statutory tax	35	%	35	%	35	%
Tax exempt revenue	(1	)	(1	)	(1	)
Effect of state income taxes, net of federal benefit	3		2		3
Utilization of tax credits	(1	)	(1	)	(2	)
Bank-owned life insurance	(1	)	(1	)	(1	)
Reduction of tax accrual	—		—		(1	)
Other, net	—		1		—
Total	35	%	35	%	33	%

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	2012			2011			2010
Balance as of January 1	$	12,230		$	11,900		$	12,300
Additions for tax for current year positions	3,976			6,390			3,700
Settlements during the period	(1,000		)	(2,510		)	—
Lapses of applicable statute of limitations	(2,931		)	(3,550		)	(4,100		)
Balance as of December 31	$	12,275		$	12,230		$	11,900

Any of the above unrecognized tax benefits, if recognized, would affect the effective tax rate.

BOK Financial recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. The Company recognized $1.2 million for 2012, $1.9 million for 2011 and $1.3 million for 2010 in interest and penalties. The Company had approximately $2.9 million and $3.4 million for the payment of interest and penalties accrued as of December 31, 2012 and 2011, respectively. Federal statutes remain open for federal tax returns filed in the previous three reporting periods. Various state income tax statutes remain open for the previous three to six reporting periods.

The Internal Revenue Service completed an audit of the Company's federal income tax return for the year ended December 31, 2008 during the first quarter 2012 with no adjustments. The Internal Revenue Service is currently auditing the Company's 2008 refund claim. The Company does not expect a material impact to the financial statements as a result of the audit.