NOTE 13 INCOME TAXES:

The current and deferred amounts of income tax expense (benefit) were as follows.



	Years Ended December 31,
	2015			2014			2013
	($ in Thousands)
Current:
Federal	$	82,449		$	74,646		$	50,628
State	2,560			1,000			2,653
Total current	85,009			75,646			53,281
Deferred:
Federal	(10,606		)	(805		)	16,409
State	7,084			10,695			9,511
Total deferred	(3,522		)	9,890			25,920
Total income tax expense	$	81,487		$	85,536		$	79,201

Temporary differences between the amounts reported in the financial statements and the tax bases of assets and liabilities resulted in deferred taxes. Deferred tax assets and liabilities at December 31 were as follows.



	2015		2014
	($ in Thousands)
Deferred tax assets:
Allowance for loan losses	$	106,258	$	99,219
Allowance for other losses	10,906		11,609
Accrued liabilities	6,802		5,773
Deferred compensation	31,677		31,392
State net operating losses	14,154		22,640
Nonaccrual interest	1,901		2,383
Other	5,811		7,929
Total deferred tax assets	177,509		180,945
Deferred tax liabilities:
FHLB stock dividends	2,165		6,367
Prepaid expenses	69,396		68,955
Goodwill	25,770		24,049
Mortgage banking activities	15,704		13,147
Deferred loan fee income	17,770		21,199
State deferred taxes	6,366		9,011
Lease financing	3,042		2,313
Bank premises and equipment	7,491		9,532
Other	9,062		5,501
Total deferred tax liabilities	156,766		160,074
Net deferred tax assets	20,743		20,871
Tax effect of unrealized (gain) loss related to available for sale securities	219		(10,902		)
Tax effect of unrealized loss related to pension and postretirement benefits	20,404		14,468
	20,623		3,566
Net deferred tax assets including items with tax effect recorded directly to OCI	$	41,366	$	24,437

At December 31, 2015 and 2014, there was no valuation allowance for deferred tax assets. Management has determined that it is more likely than not that these assets could be realized through carry back to taxable income in prior years, future reversals of existing taxable temporary differences and future taxable income. This conclusion is based on the Corporation's historical earnings, its current level of earnings and prospects for continued growth and profitability.

At December 31, 2015, the Corporation had state net operating loss carryforwards of $179 million (of which, $32 million was acquired from various acquisitions) that will begin expiring in 2030.

The effective income tax rate differs from the statutory federal tax rate. The major reasons for this difference were as follows.



	2015		2014		2013
Federal income tax rate at statutory rate	35.0	%	35.0	%	35.0	%
Increases (decreases) resulting from:
Tax-exempt interest and dividends	(5.0	)%	(4.6	)%	(4.5	)%
State income taxes (net of federal benefit)	2.3	%	2.8	%	2.9	%
Bank owned life insurance	(1.2	)%	(1.7	)%	(1.5	)%
Federal tax credits	(0.5	)%	(1.4	)%	(1.0	)%
Tax reserve adjustments	(0.6	)%	0.7	%	(1.9	)%
Other	0.2	%	0.2	%	0.6	%
Effective income tax rate	30.2	%	31.0	%	29.6	%

Savings banks acquired by the Corporation in 1997 and 2004 qualified under provisions of the Internal Revenue Code that permitted them to deduct from taxable income an allowance for bad debts that differed from the provision for such losses charged to income for financial reporting purposes. Accordingly, no provision for income taxes has been made for $100 million of retained income at December 31, 2015. If income taxes had been provided, the deferred tax liability would have been approximately $40 million. Management does not expect this amount to become taxable in the future, therefore, no provision for income taxes has been made.

The Corporation and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Corporation’s federal income tax returns are open and subject to examination from the 2012 tax return year and forward. The years open to examination by state and local government authorities varies by jurisdiction.

A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows.



	2015			2014
	($ in Millions)
Balance at beginning of year	$	9		$	6
Additions (subtractions) for tax positions related to prior years	(2		)	1
Additions for tax positions related to current year	2			2
Balance at end of year	$	9		$	9

At both December 31, 2015 and 2014, the total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $6 million.

The Corporation recognizes interest and penalties accrued related to unrecognized tax benefits in the income tax expense line of the consolidated statements of income. Interest and penalty expense (benefit) was $(1) million and $1 million, as of December 31, 2015 and 2014, respectively. Accrued interest and penalties were $2 million and $3 million as of December 31, 2015 and 2014, respectively. Management does not anticipate significant adjustments to the total amount of unrecognized tax benefits within the next twelve months.