Income Taxes

3 Months Ended

Jun. 30, 2012

Income Taxes [Abstract]

INCOME TAXES

NOTE 13—INCOME TAXES

At June 30, 2012 and December 31, 2011, the Group's net deferred tax asset amounted to $35.9 million and $32.0 million, respectively. Income tax for the quarters ended June 30, 2012 and 2011 totaled an expense of $1.1 million and a benefit of $1.4 million, respectively.Income tax expense for the six-month periods ended June 30, 2012 and 2011 totaled $3.0 million and $5.1 million, respectively.

At December 31, 2011, OIB had $2.9 million in the income tax effect of unrecognized gain on available-for-sale securities included in other comprehensive income. Following the change in OIB'sapplicable tax rate from 5% to 0% as a result of new legislation adopted in 2011, this remaining tax balance will flow through income as these securities are repaid or sold in future periods, due to OIBbecoming tax exempt under Puerto Rico law. During the quarter and six-month period ended June 30, 2012, the income tax provision included $166 thousand and $724 thousand, respectively, related to this residual tax effect from OIB.

The Group classifies unrecognized tax benefits in income taxes payable. These gross unrecognized tax benefits would affect the effective tax rate if realized. The balance of unrecognized tax benefits at June 30, 2012 was $1.3million (December 31, 2011 - $1.4 million). The Group had accrued $739 thousand at June 30, 2012 (December 31, 2011 - $342thousand) for the payment of interest and penalties relating to unrecognized tax benefits.