Federal and State Income Taxes

12 Months Ended

Dec. 31, 2013

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,
	2013		2012
Deferred tax assets:
Available for sale securities mark to market	$	14,700	$	—
Stock-based compensation	8,100		9,100
Credit loss allowances	75,600		86,100
Valuation adjustments	35,300		45,100
Deferred book income	3,500		7,200
Deferred compensation	60,100		45,100
Other	29,500		31,300
Total deferred tax assets	226,800		223,900
Deferred tax liabilities:
Available for sale securities mark to market	—		99,000
Depreciation	17,300		19,600
Mortgage servicing rights	72,200		59,500
Lease financing	23,200		21,100
Other	18,500		21,700
Total deferred tax liabilities	131,200		220,900
Deferred tax assets in excess of deferred tax liabilities	$	95,600	$	3,000

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,
	2013		2012		2011
Current income tax expense:
Federal	$	125,412	$	159,706	$	137,802
State	14,381		19,103		16,085
Total current income tax expense	139,793		178,809		153,887
Deferred income tax expense:
Federal	15,915		8,664		3,882
State	1,590		1,267		742
Total deferred income tax expense	17,505		9,931		4,624
Total income tax expense	$	157,298	$	188,740	$	158,511

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,
	2013			2012			2011
Amount:
Federal statutory tax	$	166,680		$	190,003		$	156,917
Tax exempt revenue	(7,361		)	(5,558		)	(5,357		)
Effect of state income taxes, net of federal benefit	10,937			13,684			11,198
Utilization of tax credits	(8,145		)	(5,126		)	(2,972		)
Bank-owned life insurance	(3,596		)	(3,850		)	(3,879		)
Reduction of tax accrual	(1,400		)	(950		)	(1,764		)
Other, net	183			537			4,368
Total	$	157,298		$	188,740		$	158,511

Due to the favorable resolution of certain tax issues for the periods ended December 31, 2009 and 2008, BOK Financial reduced its tax accrual by $1.4 million and $1.0 million in 2013 and 2012, respectively, which was credited against current income tax expense.

	Year Ended December 31,
	2013		2012		2011
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	2		3		2
Utilization of tax credits	(2	)	(1	)	(1	)
Bank-owned life insurance	(1	)	(1	)	(1	)
Reduction of tax accrual	—		—		—
Other, net	—		—		1
Total	33	%	35	%	35	%

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

	2013			2012			2011
Balance as of January 1	$	12,275		$	12,230		$	11,900
Additions for tax for current year positions	2,730			3,976			6,390
Settlements during the period	—			(1,000		)	(2,510		)
Lapses of applicable statute of limitations	(2,947		)	(2,931		)	(3,550		)
Balance as of December 31	$	12,058		$	12,275		$	12,230

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 2013, $1.2 million for 2012 and $1.9 million for 2011 in interest and penalties. The Company had approximately $2.9 million accrued for the payment of interest and penalties at December 31, 2013 and 2012. 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 also completed its audit of the Company’s 2008 refund claim during the first quarter of 2013 with no adjustments.