Federal and State Income Taxes

12 Months Ended

Dec. 31, 2016

Federal and State Income Taxes [Text Block]

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,
	2016		2015
Deferred tax assets:
Available for sale securities mark to market	$	5,779	$	—
Share-based compensation	9,360		10,522
Credit loss allowances	99,191		88,906
Valuation adjustments	12,222		6,957
Deferred compensation	30,262		25,950
Unearned fees	11,877		11,124
Other	42,541		34,169
Total deferred tax assets	211,232		177,628

Deferred tax liabilities:
Available for sale securities mark to market	—		14,828
Depreciation	25,877		22,080
Mortgage servicing rights	92,748		77,900
Lease financing	17,923		22,301
Other	45,363		41,904
Total deferred tax liabilities	181,911		179,013
Net deferred tax assets (liabilities)	$	29,321	$	(1,385	)

The Company determined that no valuation allowance was necessary on deferred tax assets as of December 31, 2016 and 2015.

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,
	2016			2015		2014
Current income tax expense:
Federal	$	107,379		$	117,566	$	95,289
State	11,028			12,397		9,392
Total current income tax expense	118,407			129,963		104,681

Deferred income tax expense:
Federal	(11,340		)	8,397		36,521
State	(690		)	1,024		2,949
Total deferred income tax expense	(12,030		)	9,421		39,470
Total income tax expense	$	106,377		$	139,384	$	144,151

The reconciliations of income 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,
	2016			2015			2014
Amount:
Federal statutory tax	$	118,530		$	151,075		$	153,870
Tax exempt revenue	(10,544		)	(9,553		)	(8,446		)
Effect of state income taxes, net of federal benefit	6,478			9,082			9,054
Utilization of tax credits:
Low-income housing tax credits, net of amortization	(4,171		)	(3,874		)	(2,953		)
Other tax credits	(2,085		)	(2,085		)	(2,109		)
Bank-owned life insurance	(2,911		)	(3,264		)	(3,183		)
Other, net	1,080			(1,997		)	(2,082		)
Total income tax expense	$	106,377		$	139,384		$	144,151



	Year Ended December 31,
	2016		2015		2014
Percent of pretax income:
Federal statutory tax	35.0	%	35.0	%	35.0	%
Tax exempt revenue	(3.1	)	(2.2	)	(1.9	)
Effect of state income taxes, net of federal benefit	1.9		2.1		2.1
Utilization of tax credits:
Low-income housing tax credits, net of amortization	(1.2	)	(0.9	)	(0.7	)
Other tax credits	(0.6	)	(0.5	)	(0.5	)
Bank-owned life insurance	(0.9	)	(0.7	)	(0.7	)
Other, net	0.3		(0.5	)	(0.5	)
Total	31.4	%	32.3	%	32.8	%

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



	2016			2015			2014
Balance as of January 1	$	13,232		$	13,374		$	12,058
Additions for tax for current year positions	5,640			2,226			3,813
Settlements during the period	—			—			—
Lapses of applicable statute of limitations	(3,031		)	(2,368		)	(2,497		)
Balance as of December 31	$	15,841		$	13,232		$	13,374

Of the above unrecognized tax benefits, $10.3 million, if recognized, would have affected the effective tax rate.

BOK Financial recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. The Company recognized $1.0 million for 2016, $1.0 million for 2015 and $1.5 million for 2014 in interest and penalties. The Company had approximately $3.5 million and $3.3 million accrued for the payment of interest and penalties at December 31, 2016 and 2015, 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.