Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

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)	2017			2016
Deferred tax assets:
Allowance for loan losses	$	10,498		$	17,719
Accumulated other comprehensive loss – Pension plan	7,098			7,937
Accumulated other comprehensive loss – Unrealized losses on securities	946			1,618
Deferred compensation	2,744			4,140
OREO valuation adjustments	1,327			2,322
Net deferred loan fees	1,115			1,397
Deferred contract bonus	645			1,074
Nonvested equity-based compensation	1,069			1,115
Fixed assets	877			781
Accrued litigation	4			793
Other	1,226			2,525
Total deferred tax assets	$	27,549		$	41,421
Deferred tax liabilities:
Deferred investment income	6,120			10,199
Pension plan	19,076			26,344
Mortgage servicing rights	2,034			3,243
Partnership adjustments	460			549
Other	364			596
Total deferred tax liabilities	$	28,054		$	40,931
Net deferred tax (liability) asset	$	(505	)	$	490

Federal and state income taxes

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



December 31, (In thousands)	2017		2016		2015
Currently payable
Federal	$	20,660	$	28,879	$	26,153
Amortization of qualified affordable housing projects	10,278		7,300		6,664

Deferred
Federal	3,289		581		(250		)

Total	$	34,227	$	36,760	$	32,567

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, 2017, 2016 and 2015.



	2017		2016		2015
Statutory federal corporate tax rate	35.0	%	35.0	%	35.0	%
Changes in rates resulting from:
Tax exempt interest income, net of disallowed interest	(2.8	)%	(1.3	)%	(0.5	)%
Bank owned life insurance	(1.4	)%	(1.2	)%	(1.8	)%
Investments in qualified affordable housing projects, net of tax benefits	(1.9	)%	(1.7	)%	(1.9	)%
Other tax credits	—	%	—	%	(0.9	)%
KSOP dividend deduction	(1.0	)%	(1.0	)%	(1.0	)%
Impact of the Tax Cuts and Jobs Act ⁽¹⁾	1.0	%	—	%	—	%
Other	—	%	0.1	%	(0.2	)%
Effective tax rate	28.9	%	29.9	%	28.7	%

Reconciliation of unrecognized tax benefits

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



(In thousands)	2017			2016			2015
January 1 Balance	$	633		$	558		$	532
Additions based on tax positions related to the current year	117			117			80
Additions for tax positions of prior years	—			38			16
Reductions for tax positions of prior years	(9		)	—			—
Reductions due to statute of limitations	(77		)	(80		)	(70		)
December 31 Balance	$	664		$	633		$	558