Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of deferred tax assets and liabilities

Significant components of the Corporation’s deferred tax assets and liabilities are as follows:



December 31 (In thousands)	2012		2011
Deferred tax assets:
Allowance for loan losses	$	19,438	$	23,956
Accumulated other comprehensive loss – Interest rate swap	—		296
Accumulated other comprehensive loss – pension plan	14,611		11,283
Intangible assets	697		1,523
Deferred compensation	3,750		3,733
OREO devaluations	4,855		6,364
Partnership adjustments	3,329		2,016
Other	2,973		2,515
Loans held for sale fair value adjustment	—		4,585
Tax credit carry-forwards	—		1,269
Total deferred tax assets	$	49,653	$	57,540
Deferred tax liabilities:
Accumulated other comprehensive income – Unrealized gains on securities	5,178		6,824
Deferred investment income	10,199		10,199
Pension plan	25,517		21,567
Mortgage servicing rights	2,717		3,255
Other	646		2,260
Total deferred tax liabilities	$	44,257	$	44,105
Net deferred tax assets	$	5,396	$	13,435

Federal and state income taxes

The components of the provision for federal and state income taxes are shown below:



December 31, (In thousands)	2012		2011			2010
Currently payable
Federal	$	12,984	$	5,949		$	26,130
State	—		—			109

Deferred
Federal	12,717		22,378			(8,333		)
State	—		8,382			(3,564		)

Valuation allowance
Federal	—		—			—
State	—		(2,294		)	2,294
Total	$	25,701	$	34,415		$	16,636

Schedule of income tax rate reconciliation

The following is a reconciliation of income tax expense to the amount computed at the statutory rate of 35% for the years ended December 31, 2012, 2011 and 2010.



December 31	2012		2011		2,011	2010

Statutory federal corporate tax rate	35.0	%	35.0	%		35.0	%
Changes in rates resulting from:
Tax exempt interest income, net of disallowed interest	(0.9	)%	(1.0	)%		(1.7	)%
Bank owned life insurance	(1.6	)%	(1.5	)%		(2.3	)%
Tax credits (low income housing)	(6.1	)%	(5.2	)%		(6.7	)%
State income tax expense, net of federal benefit	—	%	4.7	%		(3.0	)%
Valuation allowance, net of federal benefit	—	%	(1.3	)%		2.0	%
Other	(1.8	)%	(1.2	)%		(1.0	)%
Effective tax rate	24.6	%	29.5	%		22.3	%

Reconciliation of unrecognized tax benefits

The following is a reconciliation of the beginning and ending amount of unrecognized tax benefits.



(In thousands)	2012			2011			2010
January 1 Balance	$	485		$	477		$	595
Additions based on tax positions related to the current year	74			70			69
Additions for tax positions of prior years	25			1			7
Reductions for tax positions of prior years	—			(3		)	(131		)
Reductions due to statute of limitations	(67		)	(60		)	(63		)
December 31 Balance	$	517		$	485		$	477