Agenda - Council - 11/13/2012 - Laserfiche WebLink

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jurisdictions in which the outcome of unresolved issues or claims is likely to be material to our results of operations, financial position or cash flows. The Bank further believes that it has made adequate provision for all income tax uncertainties. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows: (dollars in thousands) 2011 2010 Balance at January 1, $18,424 $21,518 Additions based on tax positions related to the current year 3,655 2,475 Reductions for tax positions of prior years (175) (1,574) Reductions relating to settlements with tax authorities (2,179) Reductions as a result of a lapse of the applicable statute of limitations (530) (3,995) Balance at December 31, $19,195 $18,424 Included in the balance of unrecognized tax benefits are $13.1 million and $12.6 million of tax benefits as of December 31, 2011 and 2010, respectively which, if recognized, will affect the effective tax rate. During the year ended December 31, 2011, the Bank recognized approximately $0.8 million ($0.5 million, net of federal and state tax benefit) in interest and no penalties. The unrecognized tax benefit balances do not include $2.9 million and $3.7 million of the net accruals for the payment of interest and penalties for the years ended December 31, 2011 and 2010, respectively. It is reasonably possible that the total amounts of unrecognized tax benefits will decrease within twelve months of the reporting date with respect to certain state tax liabilities of acquired companies that the Bank expects to be finalized with the tax jurisdictions. We estimate the possible change could be approximately $3.5 million, which, if recognized, will affect the effective tax rate. -56- 2011 Bank of the West Annual Report