Federal and State Income Taxes

12 Months Ended

Dec. 31, 2014

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,
	2014			2013
Deferred tax assets:
Available for sale securities mark to market	$	—		$	14,751
Share-based compensation	9,414			8,064
Credit loss allowances	74,362			75,657
Valuation adjustments	36,870			35,292
Deferred compensation	23,333			60,068
Unearned fees	11,820			10,683
Other	26,633			22,348
Total deferred tax assets	182,432			226,863
Deferred tax liabilities:
Available for sale securities mark to market	37,719			—
Depreciation	18,601			17,333
Mortgage servicing rights	86,752			72,235
Lease financing	24,429			23,202
Other	22,160			18,494
Total deferred tax liabilities	189,661			131,264
Net deferred tax assets (liabilities)	$	(7,229	)	$	95,599

The company determined that no valuation allowance was necessary on deferred tax assets as of December 31, 2014 and 2013.

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,
	2014		2013		2012
Current income tax expense:
Federal	$	85,990	$	125,412	$	159,706
State	9,392		14,381		19,103
Total current income tax expense	95,382		139,793		178,809
Deferred income tax expense:
Federal	36,521		15,915		8,664
State	2,949		1,590		1,267
Total deferred income tax expense	39,470		17,505		9,931
Total income tax expense	$	134,852	$	157,298	$	188,740

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,
	2014			2013			2012
Amount:
Federal statutory tax	$	150,616		$	166,680		$	190,003
Tax exempt revenue	(8,446		)	(7,361		)	(5,558		)
Effect of state income taxes, net of federal benefit	9,054			10,937			13,684
Utilization of tax credits	(11,107		)	(8,145		)	(5,126		)
Bank-owned life insurance	(3,183		)	(3,596		)	(3,850		)
Reduction of tax accrual	(2,281		)	(1,400		)	(950		)
Other, net	199			183			537
Total income tax expense	$	134,852		$	157,298		$	188,740

Due to the favorable resolution of certain tax issues for the periods ended December 31, 2010 and 2009, BOK Financial reduced its tax accrual by $2.3 million and $1.4 million in 2014 and 2013, respectively, which was credited against current income tax expense.

	Year Ended December 31,
	2014		2013		2012
Percent of pretax income:
Federal statutory tax	35.0	%	35.0	%	35.0	%
Tax exempt revenue	(2.0	)	(1.5	)	(1.0	)
Effect of state income taxes, net of federal benefit	2.1		2.3		2.5
Utilization of tax credits	(2.6	)	(1.7	)	(0.9	)
Bank-owned life insurance	(0.7	)	(0.8	)	(0.7	)
Reduction of tax accrual	(0.5	)	(0.3	)	(0.1	)
Other, net	—		—		—
Total	31.3	%	33.0	%	34.8	%

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

	2014			2013			2012
Balance as of January 1	$	12,058		$	12,275		$	12,230
Additions for tax for current year positions	3,813			2,730			3,976
Settlements during the period	—			—			(1,000		)
Lapses of applicable statute of limitations	(2,497		)	(2,947		)	(2,931		)
Balance as of December 31	$	13,374		$	12,058		$	12,275

Of the above unrecognized tax benefits, $8.7 million, 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 $1.5 million for 2014, $1.2 million for 2013 and $1.2 million for 2012 in interest and penalties. The Company had approximately $3.6 million and $2.9 million accrued for the payment of interest and penalties at December 31, 2014 and 2013, 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 also completed its audit of the Company’s 2008 refund claim during the first quarter of 2013 with no adjustments.