INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Components of Income Tax Expense (Benefit)

The (benefit) provision for income taxes from continuing operations for the years ended December 31, 2012, 2011 and 2010 consists of the following:



	2012			2011		2010
	(dollars expressed in thousands)
Current (benefit) provision for income taxes:
Federal	$	—		902		(366	)
State	(32		)	(721	)	(71	)
	(32		)	181		(437	)
Deferred benefit for income taxes:
Federal	5,615			(16,129	)	(56,871	)
State	1,023			(7,392	)	(13,974	)
	6,638			(23,521	)	(70,845	)
(Decrease) increase in deferred tax asset valuation allowance	(6,745		)	12,686		75,396
Total	$	(139	)	(10,654	)	4,114

Schedule of Effective Income Tax Rate Reconciliation

The effective rates of federal income taxes for the years ended December 31, 2012, 2011 and 2010 differ from the federal statutory rates of taxation as follows:



	Years Ended December 31,
	2012					2011					2010
	Amount			Percent		Amount			Percent		Amount			Percent
	(dollars expressed in thousands)
Income (loss) from continuing operations before benefit (provision) for income taxes and noncontrolling interest in loss of subsidiaries	$	31,365				$	(48,295	)			$	(197,699	)
Provision (benefit) for income taxes calculated at federal statutory income tax rates	$	10,978		35.0	%	$	(16,904	)	35.0	%	$	(69,195	)	35.0	%
Effects of differences in tax reporting:
Tax-exempt interest income, net of tax preference adjustment	(135		)	(0.4	)	(203		)	0.4		(308		)	0.2
State income taxes	645			2.1		(4,800		)	9.9		(9,125		)	4.6
Bank owned life insurance, net of premium	11			—		10			—		3,144			(1.6	)
Noncontrolling investment in flow-through entity	104			0.3		1,033			(2.1	)	2,280			(1.2	)
Amortization of intangibles	—			—		175			(0.3	)	350			(0.2	)
(Decrease) increase in deferred tax asset valuation allowance, net of federal benefit	(11,811		)	(37.7	)	20,614			(42.7	)	70,668			(35.8	)
Reclassification of deferred tax asset valuation allowance from accumulated other comprehensive income to provision for income taxes	—			—		(10,466		)	21.7		6,816			(3.4	)
Expiration of net operating loss carryforwards	643			2.1		34			—		5			—
Other, net	(574		)	(1.8	)	(147		)	0.2		(521		)	0.3
(Benefit) provision for income taxes	$	(139	)	(0.4	)%	$	(10,654	)	22.1	%	$	4,114		(2.1	)%

Schedule of Deferred Tax Assets and Liabilities

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



	December 31,
	2012			2011
	(dollars expressed in thousands)
Deferred tax assets:
Federal net operating loss carryforwards	$	209,190		188,726
State net operating loss carryforwards	65,882			58,326
Allowance for loan losses	37,825			56,649
Loans held for sale	2,032			1,745
Alternative minimum and general business tax credits	19,146			17,326
Interest on nonaccrual loans	12,551			15,359
Deferred compensation	3,573			3,593
Core deposit intangibles	2,706			3,111
Partnership and corporate investments	7,908			12,052
Deferred loan charge-offs and other fraud losses	4,341			13,875
Other real estate and repossessed assets	22,666			22,665
Accrued contingent liabilities	2,870			3,632
Depreciation on bank premises and equipment	1,202			486
State taxes	682			—
Other	12,692			13,205
Gross deferred tax assets	405,266			410,750
Valuation allowance	(376,224		)	(391,629	)
Deferred tax assets, net of valuation allowance	29,042			19,121
Deferred tax liabilities:
Servicing rights	2,632			2,418
Net fair value adjustment for available-for-sale investment securities	21,214			10,466
Deferred gain on reclassification of investment securities from available for sale to held to maturity	4,265			—
Equity investments	5,364			5,366
State taxes	—			4,577
Net deferred loan fees	1,903			2,779
Other	804			655
Deferred tax liabilities	36,182			26,261
Net deferred tax liabilities	$	(7,140	)	(7,140	)

Deferred Tax Asset Valuation Allowance Rollforward

Changes in the deferred tax asset valuation allowance for the years ended December 31, 2012, 2011 and 2010 were as follows:



	2012			2011		2010
	(dollars expressed in thousands)
Balance, beginning of year	$	391,629		370,125		295,067
Reversal of deferred tax asset valuation allowance to provision for income taxes	(643		)	(115	)	(1,189	)
(Decrease) increase in deferred tax asset valuation allowance to provision for income taxes	(468		)	31,621		73,928
(Decrease) increase in deferred tax asset valuation allowance to accumulated other comprehensive income (loss)	(14,294		)	(10,002	)	2,319
Balance, end of year	$	376,224		391,629		370,125

Schedule of Unrecognized Tax Benefits Roll Forward

A reconciliation of the beginning and ending balance of these unrecognized tax benefits for the years ended December 31, 2012 and 2011 is as follows:



	2012			2011
	(dollars expressed in thousands)
Balance, beginning of year	$	1,194		1,276
Additions:
Tax positions taken during the current year	217			232
Tax positions taken during the prior year	—			—
Reductions:
Tax positions taken during the prior year	(14		)	(8	)
Allocated to discontinued operations	—			—
Lapse of statute of limitations	(271		)	(306	)
Balance, end of year	$	1,126		1,194

Federal Net Operating Loss Carryforwards, Expiration Years

At December 31, 2012, the Company’s federal net operating loss carryforwards expire as follows:



	(dollars expressed in thousands)
Year ending December 31:
2013 – 2016	$	—
2017 – 2020	5,256
2021 – 2026	43,105
2028 – 2032	549,325
Total	$	597,686