Note 8 - Income Taxes

9 Months Ended

Sep. 30, 2013

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Income Tax Expense

(Dollar amounts in thousands)

	Quarters Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Income (loss) before income tax expense (benefit)	$	54,282		$	(85,520	)	$	99,348		$	(69,346	)
Income tax expense (benefit):
Federal income tax expense (benefit)	$	19,145		$	(29,391	)	$	29,058		$	(28,420	)
State income tax expense (benefit)	5,814			(7,602		)	10,149			(6,656		)
Total income tax expense (benefit)	$	24,959		$	(36,993	)	$	39,207		$	(35,076	)
Effective income tax rate	46.0		%	43.3		%	39.5		%	50.6		%

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 $25.0 million and $39.2 million for the third quarter and nine months ended September 30, 2013, respectively, compared to an income tax benefit of $37.0 million and $35.1 million for the same periods in 2012. The rise in income tax expense in 2013 was driven primarily by higher levels of income during 2013, which are subject to tax at statutory rates, and to a non-deductible BOLI modification loss recorded during the third quarter of 2013. Excluding the BOLI modification loss, the effective tax rate would have been 36.9% and 34.8% for the third quarter and nine months ended September 30, 2013, respectively.

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