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Income Taxes
12 Months Ended
Dec. 31, 2011
Income Taxes  
Income Taxes

Note 16 Income Taxes

The income tax (benefit) expense attributable to income from operations is summarized as follows:

(in thousands)
 
Current
   
Deferred
   
Total
 
2011 
 
 
   
 
   
 
 
Federal
  $ 16,506     $ (1,730 )   $ 14,776  
State
    1,967       (370 )     1,597  
Total
  $ 18,473     $ (2,100 )   $ 16,373  
2010 
                       
Federal
  $ 12,521     $ 2,052     $ 14,573  
State
    1,648       199       1,847  
Total
  $ 14,169     $ 2,251     $ 16,420  
2009 
                       
Federal
  $ 15,896     $ (1,362 )   $ 14,534  
State
    1,341       (492 )     849  
Total
  $ 17,237     $ (1,854 )   $ 15,383  
 
The primary reasons for the differences between income tax expense and the amount computed by applying the statutory federal income tax rate to earnings are as follows:

 
 
2011
 
2010
 
2009
Statutory federal income tax rate
    35.0 %     35.0 %     35.0 %
State income taxes, net of federal benefit
    2.0       2.4       1.8  
Tax exempt income
    (2.6 )     (2.7 )     (3.3 )
All other
    (2.8 )     (2.0 )     (0.9 )
Total
    31.6 %     32.7 %     32.6 %

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  Significant components of the Company’s deferred tax assets and liabilities as of December 31 were as follows:

(in thousands)
 
2011
   
2010
   
2009
 
Deferred tax assets:
 
 
   
 
   
 
 
Allowance for loan and lease losses
  $ 11,066     $ 11,117     $ 9,544  
Compensation and benefits
    9,441       8,830       8,218  
Liabilities held at fair value
    829       645       727  
Other
    2,047       932       2,050  
Total
  $ 23,383     $ 21,524     $ 20,539  
Deferred tax liabilities:
                       
Pension
  $ 7,394     $ 8,475     $ 6,017  
Depreciation
    2,442       1,114       748  
Intangibles
    1,999       1,984       2,306  
Other
    1,060       1,563       829  
Total deferred tax liabilities
  $ 12,895     $ 13,136     $ 9,900  
Net deferred tax asset at year-end
  $ 10,488     $ 8,388     $ 10,639  
Net deferred tax asset at beginning of year
  $ 8,388     $ 10,639     $ 8,785  
Increase (decrease) in net deferred tax asset
    2,100       (2,251 )     1,854  
Deferred tax (benefit) expense
  $ (2,100 )   $ 2,251     $ (1,854 )

This analysis does not include recorded deferred tax liabilities of $15.5 million and $9.0 million as of December 31, 2011 and 2010, respectively, related to net unrealized holding gains in the available-for-sale securities portfolio.  In addition, the analysis excludes the recorded deferred tax assets of $17.9 million and $9.8 million, as of December 31, 2011 and 2010, respectively, related to employee benefit plans.
 
Realization of deferred tax assets is dependent upon the generation of future taxable income or the existence of sufficient taxable income within the carry-back period. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized. In assessing the need for a valuation allowance, management considers the scheduled reversal of the deferred tax liabilities, the level of historical taxable income, and the projected future taxable income over the periods in which the temporary differences comprising the deferred tax assets will be deductible. Based on its assessment, management determined that no valuation allowance is necessary at December 31, 2011 and 2010.
 
At December 31, 2011 and December 31, 2010, the Company had no ASC 740-10 unrecognized tax benefits.  The Company does not expect the total amount of unrecognized tax benefits to significantly increase within the next twelve months.  The Company recognizes interest and penalties on unrecognized tax benefits in income tax expense in its Consolidated Statements of Income.
 
The Company is subject to U.S. federal income tax and income tax in various state jurisdictions.  All tax years ending after December 31, 2008 are open to examination by the taxing authorities.