Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

Provision for Federal Income Taxes Components

The current and deferred components of the provision for income taxes were as follows:

	Years Ended December 31,
(Dollars in thousands)	2017			2016			2015
Current income tax expense (benefit)
Federal	$	14,665		$	19,144		$	31,300
State	20			(423		)	—
Total current income tax expense	14,685			18,721			31,300
Deferred expense (benefit)
Federal	92,636			23,649			5,700
State	548			442			—
Total deferred income tax expense (benefit)	93,184			24,091			5,700
Change in valuation allowance	(1,089		)	(706		)	—
Income tax provision	$	106,780		$	42,106		$	37,000

Schedule of Federal Effective Income Tax Rate Reconciliation

A reconciliation of expected income tax expense at the federal statutory income tax rate and the amounts recorded in the Consolidated Financial Statements were as follows:

	Years Ended December 31,
	2017					2016					2015
(Dollars in thousands)	Amount			Rate		Amount			Rate		Amount			Rate
Tax at statutory rate	$	89,706		35.0	%	$	52,548		35.0	%	$	43,341		35.0	%
Changes resulting from:
Tax-exempt interest income	(9,001		)	(3.5	)	(5,320		)	(3.5	)	(3,943		)	(3.2	)
State taxes, net of federal benefit	369			0.1		13			—		—			—
Change in valuation allowance	(1,089		)	(0.4	)	(706		)	(0.5	)	—			—
Bank-owned life insurance adjustments	(1,696		)	(0.7	)	(832		)	(0.6	)	(124		)	(0.1	)
Director plan change in control	—			—		(508		)	(0.3	)	—			—
Income tax credits, net	(11,449		)	(4.4	)	(2,454		)	(1.6	)	(2,557		)	(2.1	)
Nondeductible transaction expenses	156			0.1		2,100			1.4		411			0.3
Tax benefits in excess of compensation costs on share-based payments(1)	(5,886		)	(2.3	)	(2,240		)	(1.5	)	—			—
Impact of the Tax Cuts and Jobs Act(2)	46,660			18.2		—			—		—			—
Other, net	(990		)	(0.4	)	(495		)	(0.4	)	(128		)	—
Income tax expense	$	106,780		41.7	%	$	42,106		28.0	%	$	37,000		29.9	%

⁽¹⁾  The years ended December 31, 2017 and 2016 reflect the adoption of ASU 2016-09, as of January 1, 2016, which results in excess tax benefits recognized within "Income tax expense" rather than previously recognized directly into equity with "Additional paid-in-capital." Refer to Note 1, Summary of Significant Accounting Policies, for further details.

⁽²⁾  The year ended December 31, 2017 included the impact of the enactment of H.R.1 (the "Tax Cuts and Jobs Act"), which required a revaluation of net deferred tax assets and liabilities, see below for further details.

Schedule of Deferred Tax Assets and Liabilities

The significant components of the deferred tax assets and liabilities at December 31, 2017 and 2016 were as follows:

	December 31,
(Dollars in thousands)	2017			2016
Deferred tax assets:
Allowance for loan losses	$	20,446		$	45,763
Acquisition-related fair value adjustments	27,607			54,704
Accrued stock-based compensation	4,082			18,891
Loss and tax credit carry forwards	57,969			76,446
Depreciation	2,954			11,270
Nonaccrual loan interest	6,155			9,465
Accrued expense	9,200			20,858
Other	9,127			15,751
Total deferred tax assets	137,540			253,148
Deferred tax liabilities:
Loan servicing rights	13,446			20,450
Core deposit intangible assets	6,022			11,844
Goodwill	4,076			6,373
Prepaid expenses	7,390			4,873
Other	7,735			2,762
Total deferred tax liabilities	38,669			46,302
Net deferred tax asset before valuation allowance	98,871			206,846
Valuation allowance	(1,150		)	(2,239		)
Net deferred tax asset	$	97,721		$	204,607

Summary of the loss attributes, Section 382 limitations, and tax expiration periods

The following table is a summary of the loss attributes, Section 382 limitations, and tax expiration periods as of December 31, 2017.

	From the Acquisition of:
						Talmer's Prior Ownership Changes
(Dollars in thousands)	Talmer		Monarch			First Place Holdings/First Place Bank			Talmer West Bank			First of Huron Corp./Signature Bank		From 2009 Ownership change			Not Limited by Section 382			Total
Tax Loss and Credit Carryforwards as of 12/31/17:
Years Expiring (except AMT Credits)	2032-2034		2026-2034			2027-2031			2028-2032			2029-2032		2027-2029			2036
Annual Section 382 limitation-base(1)	$	34,668	$	673		$	6,650		$	3,028		$	365	$	145		$	—		$ N/A
Gross Federal Net Operating Losses	—		15,047			—			47,284			649		1,740			—			64,720
Gross Capital Losses	—		—			—			—			—		—			—			—
Realized Built-in Losses	—		—			68,356			8,936			—		—			—			77,292
Business Tax Credits	170		1,651			781			—			—		—			912			3,514
Less amounts not recorded due to Sec 382 Limitation	—		(1,738		)	(65		)	(3,218		)	—		(145		)	—			(5,166	)
Alternative Minimum Tax Credits - no expiration	12,473		106			2,115			—			303		—			10,832			25,829
Valuation Allowance	—		—			—			(585		)	—		—			(565		)	(1,150	)

⁽¹⁾  In respect to the Monarch and Talmer acquisitions, in addition to the statutory "base" Section 382 limitation, recognized built in gain increases the Section 382 limitation during the five year period beginning on the acquisition date. The Corporation estimates that the recognized built in gain will total $2.8 million and $253.2 million for the Monarch and Talmer acquisitions, respectively.