INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Components of Income Tax Expense (Benefit)

The following table presents the components of the provision for income tax (benefit) expense included in the Consolidated Statement of Operations for the years ended December 31, 2012, 2011 and 2010 (in thousands):



	Years Ended December 31
	2012			2011			2010
Current	$	10,759		$	—		$	3,025
Deferred	841			(3,322		)	(21,183		)
Increase (decrease) in valuation allowance	(36,385		)	3,322			36,171
Provision for (benefit from) income taxes	$	(24,785	)	$	—		$	18,013

Schedule of Effective Income Tax Rate Reconciliation

The following tables present the reconciliation of the provision for income taxes computed at the federal statutory rate to the actual effective rate for the years ended December 31, 2012, 2011 and 2010 (dollars in thousands):



	Years Ended December 31
	2012			2011			2010
Provision for (benefit from) income taxes computed at federal statutory rate	$	14,034		$	1,910		$	(15,359	)
Increase (decrease) in taxes due to:
Tax-exempt interest	(1,710		)	(1,616		)	(1,471		)
Investment in life insurance	(894		)	(663		)	(683		)
State income taxes (benefit), net of federal tax offset	539			(2,260		)	(495		)
Tax credits	(788		)	(840		)	(816		)
Valuation allowance	(36,385		)	3,322			36,171
Other	419			147			666
Provision for (benefit from) income taxes	$	(24,785	)	$	—		$	18,013



	Years Ended December 31
	2012		2011		2010
Federal income tax statutory rate	35.0	%	35.0	%	35.0	%
Increase (decrease) in tax rate due to:
Tax-exempt interest	(4.3	)	(29.6	)	3.4
Investment in life insurance	(2.2	)	(12.1	)	1.6
State income taxes (benefit), net of federal tax offset	1.3		(41.5	)	1.1
Tax credits	(2.0	)	(15.4	)	1.9
Valuation allowance	(90.7	)	60.9		(82.4	)
Other	1.1		2.7		(1.6	)
Effective income tax rate	(61.8	)%	—	%	(41.0	)%

Schedule of Net Deferred Tax Asset

The following table reflects the effect of temporary differences that gave rise to the components of the net deferred tax asset as of December 31, 2012 and 2011 (in thousands):



	December 31
	2012			2011
Deferred tax assets:
REO and loan loss reserves	$	24,615		$	31,156
Deferred compensation	6,122			6,032
Net operating loss carryforward	26,959			27,992
Low income housing tax credits	4,767			7,202
State net operating losses	1,081			—
Other	689			309
Total deferred tax assets	64,233			72,691
Deferred tax liabilities:
FHLB stock dividends	(6,187		)	(6,137		)
Depreciation	(4,061		)	(3,570		)
Deferred loan fees, servicing rights and loan origination costs	(5,608		)	(4,863		)
Intangibles	(1,544		)	(2,243		)
Financial instruments accounted for under fair value accounting	(10,632		)	(16,499		)
Total deferred tax liabilities	(28,032		)	(33,312		)
Deferred income tax asset	36,201			39,379
Unrealized gain on securities available-for-sale	(1,194		)	(1,151		)
Valuation allowance	—			(38,228		)
Deferred tax asset, net	$	35,007		$	—