Note 8 - Income Taxes

6 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

8. INCOME TAXES

Income Tax Expense

(Dollar amounts in thousands)

	Quarters Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Income before income tax expense	$	24,131		$	7,126		$	45,066		$	16,174
Income tax expense:
Federal income tax expense	$	5,553		$	126		$	9,913		$	971
State income tax expense		2,402			635			4,335			946
Total income tax expense	$	7,955		$	761		$	14,248		$	1,917
Effective income tax rate		33.0	%		10.7	%		31.6	%		11.9	%

Federal income tax expense and the related effective income tax rate are influenced primarily by the amount of tax-exempt income derived from investment securities and bank-owned life insurance in relation to pre-tax income and state income taxes. State income tax expense and the related effective income tax rate are driven by the amount of state tax-exempt income in relation to pre-tax income and state tax rules related to consolidated/combined reporting and sourcing of income and expense.

Income tax expense was $8.0 million and $14.2 million for the second quarter and six months ended June 30, 2013, respectively, compared to $761,000 and $1.9 million for the same periods in 2012. The rise in income tax expense, and related increases in effective tax rates, resulted primarily from higher levels of income during 2013, which are subject to tax at statutory rates and an increase in taxable income in relation to pre-tax income. In addition, changes in Indiana tax law during the second quarter of 2013 resulted in a rise in state income tax expense.

The Company’s accounting policies underlying the recognition of income taxes in the Consolidated Statements of Financial Condition and Income are included in Note 1, “Summary of Significant Accounting Policies,” and Note 14, “Income Taxes,” in the Company’s 2012 10-K.