INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2012

Total income taxes for the years ended December 31, 2012, 2011 and 2010 were allocated as follows:

	2012			2011			2010
	(In thousands)
Income tax expense (benefit)	$	33,252		$	4,475		$	(8,705	)
Shareholders' equity for other comprehensive income		(3,943	)		7,600			(3,763	)
Shareholders' equity for stock option plans		32			(7	)		(44	)
Total	$	29,341		$	12,068		$	(12,512	)

Components of Income Tax (Benefit) Expense

The components of income tax expense (benefit) attributable to operations were as follows for the years ended December 31, 2012, 2011 and 2010:

	2012			2011			2010
Current:	(In thousands)
Federal	$	34,316		$	5,643		$	8,865
State		3,389			5,400			(1,520	)
Deferred:
Federal		(4,964	)		(1,626	)		(13,848	)
State		511			(4,942	)		(2,202	)
Total	$	33,252		$	4,475		$	(8,705	)

Income Tax Reconciliation

Income tax expense (benefit) differed from the amount computed by applying the U.S. federal income tax rate of 35% to income before income taxes resulting from the following:

	2012			2011			2010
	(In thousands)
Tax expense at statutory rates	$	41,141		$	14,715		$	4,983
Increase (decrease) in taxes resulting from:
State income taxes, net of federal tax benefit		2,453			266			(2,419	)
Tax-exempt interest revenue		(7,789	)		(7,881	)		(6,605	)
Tax-exempt earnings on life insurance		(2,790	)		(2,647	)		(2,659	)
Deductible dividends paid on 401(k) plan		(100	)		(331	)		(1,972	)
Other, net		337			353			(33	)
Total	$	33,252		$	4,475		$	(8,705	)

Deferred Tax Assets and Deferred Tax Liabilities

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2012 and 2011 were as follows:

	2012			2011
Deferred tax assets:	(In thousands)
Loans, principally due to allowance for credit losses	$	62,206		$	73,911
Other real estate owned		13,027			10,429
Mark to market - securities		4,160			4,165
Accrued liabilities, principally due to compensation arrangements and vacation accruals		19,564			10,681
Other		217			312
Investments, principally due to interest income recognition		516			-
State tax credits (net of federal benefit)		428			1,040
Unrecognized pension expense		31,374			26,428
Total gross deferred tax assets		131,492			126,966
Less: valuation allowance		-			-
Deferred tax assets	$	131,492		$	126,966
Deferred tax liabilities:
Lease transactions	$	34,532		$	37,509
Employment benefits		22,392			26,991
Premises and equipment, principally due to differences in depreciation		26,824			27,221
Mortgage servicing rights		14,313			11,405
Intangible assets		10,439			10,336
Investments, principally due to interest income recognition		-			147
Deferred loan points		2,650			2,656
Other assets, principally due to expense recognition		767			525
Unrealized net losses on available-for-sale securities		26,066			25,064
Total gross deferred tax liabilities		137,983			141,854
Net deferred tax liabilities	$	(6,491	)	$	(14,888	)

Activity in Unrecognized Tax Benefits

The following table presents the activity in unrecognized tax benefits for 2012, 2011 and 2010:

	2012		2011			2010
	(In thousands)
Unrecognized tax benefit, January 1	$	1,102	$	355		$	355
Gross increases - tax positions in prior period		199		873			-
Gross decreases - tax positions in prior period		-		(355	)		-
Gross increases - tax positions in current period		270		229			-
Settlements		-		-			-
Lapse of statute of limitations		-		-			-
Unrecognized tax benefit, December 31	$	1,571	$	1,102		$	355

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

+ References+ Details