Income Taxes (Tables)

12 Months Ended

Dec. 31, 2011

Components of Provision for Income Taxes

The components of our provision for income taxes for 2011, 2010 and 2009, consisted of the following:

	Year ended December 31,
(Dollars in thousands)	2011		2010			2009
Current provision:
Federal	$	86,220	$	47,794		$	25,300
State		25,505		15,042			7,813
Deferred expense (benefit):
Federal		5,756		(1,157	)		1,445
State		1,606		(277	)		649
Income tax expense	$	119,087	$	61,402		$	35,207

Reconciliation between Federal Statutory Income Tax Rate and Effective Income Tax Rate

The reconciliation between the federal statutory income tax rate and our effective income tax rate for 2011, 2010 and 2009, is as follows:

	Year ended December 31,
	2011		2010		2009
Federal statutory income tax rate		35.0%		35.0%		35.0%
State income taxes, net of the federal tax effect		6.0		6.2		6.6
Meals and entertainment		0.5		0.7		0.9
Share-based compensation expense on incentive stock options and ESPP		0.3		1.2		2.8
Disallowed officer’s compensation		0.1		0.3		1.2
Goodwill impairment—eProsper		—		—		1.7
Tax-exempt interest income		(0.4)		(0.9)		(1.7)
Low-income housing tax credit		(1.1)		(2.4)		(5.2)
Other, net		0.5		(0.8)		1.0
Effective income tax rate		40.9%		39.3%		42.3%

Deferred Tax (Liabilities) Assets

Deferred tax (liabilities) assets at December 31, 2011 and 2010, consisted of the following:

	December 31,
(Dollars in thousands)	2011			2010
Deferred tax assets:
Allowance for loan losses	$	45,521		$	40,633
Share-based compensation expense		9,786			8,062
Loan fee income		8,969			7,533
State income taxes		6,576			3,636
Net operating loss		6,089			3,992
Other accruals not currently deductible		6,010			2,601
Research and development credit		364			237
Premises and equipment and other intangibles		—			2,096
Derivative equity warrant assets		—			1,270
Original issuance discount on 2008 convertible notes		—			1,212
Other		16			18
Deferred tax assets		83,331			71,290
Valuation allowance		(6,453)			(4,229)
Net deferred tax assets after valuation allowance		76,878			67,061
Deferred tax liabilities:
Net unrealized gains on available-for-sale securities		(59,180	)		(16,696	)
Nonmarketable securities		(14,478	)		(6,965	)
Derivative equity warrant assets		(5,428	)		—
Premises and equipment and other intangibles		(4,515	)		—
FHLB stock dividend		(1,252	)		(1,251	)
Other		—			(278	)
Deferred tax liabilities		(84,853	)		(25,190	)
Net deferred tax (liabilities) assets		$(7,975)			$41,871

Changes in Unrecognized Tax Benefit (Including Interest and Penalties)

A summary of changes in our unrecognized tax benefit (including interest and penalties) in 2011 is as follows:

(Dollars in thousands)	Reconciliation of Unrecognized Tax Benefit			Interest & Penalties			Total
Balance at December 31, 2010	$	296		$	134		$	430
Additions based on tax positions related to current year		272			—			272
Additions for tax positions for prior years		136			40			176
Reduction for tax positions for prior years		(6	)		(2	)		(8	)
Reduction as a result of a lapse of the applicable statute of limitations		(58	)		(32	)		(90	)
Balance at December 31, 2011	$	640		$	140		$	780