Entity information:
Income Taxes

The Company files income tax returns in the U.S. federal and various state jurisdictions.  Income tax returns for the years 2014 through 2017 remain open to examination by federal and state taxing authorities.  

During the years ended December 31, 2017, 2016 and 2015, the Company recognized no material income tax related interest or penalties.  No accrued interest or penalties are included in accrued tax expense in the balance sheets as of December 31, 2017 and 2016.

The following table shows the components of income taxes for the years ended December 31, 2017, 2016 and 2015.
 
2017
 
2016
 
2015
Current:
 
 
 
 
 
Federal
$
8,822

 
$
8,220

 
$
8,057

State
1,713

 
1,627

 
1,558

Deferred:
 
 
 

 
 

Federal
2,527

 
115

 
112

State
306

 
(26
)
 
(30
)
Income taxes
$
13,368

 
$
9,936

 
$
9,697


Total income taxes for the years ended December 31, 2017, 2016 and 2015, differed from the amounts computed by applying the U.S. federal income tax rate of 35 percent to income before income taxes as shown in the following table.
 
2017
 
2016
 
2015
 
Amount
 
Percent
of Pretax
Income
 
Amount
 
Percent
of Pretax
Income
 
Amount
 
Percent
of Pretax
Income
Computed expected tax expense
$
12,753

 
35.0
 %
 
$
11,533

 
35.0
 %
 
$
11,004

 
35.0
 %
State income tax expense, net of
 
 
 
 
 
 
 
 
 
 
 
federal income tax benefit
1,146

 
3.2
 %
 
1,004

 
3.0
 %
 
957

 
3.0
 %
Tax-exempt interest income
(2,023
)
 
(5.6
)%
 
(1,823
)
 
(5.5
)%
 
(1,786
)
 
(5.7
)%
Nondeductible interest expense to
 
 
 
 
 
 
 
 
 
 
 
own tax-exempt securities
152

 
0.4
 %
 
58

 
0.2
 %
 
43

 
0.1
 %
Tax-exempt increase in cash value of
 
 
 
 
 
 
 
 
 
 
 
life insurance and gains
(336
)
 
(0.9
)%
 
(381
)
 
(1.2
)%
 
(254
)
 
(0.8
)%
Stock compensation
(261
)
 
(0.7
)%
 
—

 
—

 
—

 
—

Effect of change in federal
 
 
 
 
 
 
 
 
 
 
 
income tax rate
2,340

 
6.4
 %
 
—

 
—

 
—

 
—

Utilization of capital loss carryforwards
—

 
—

 
—

 
—

 
(130
)
 
(0.4
)%
Federal income tax credits
(410
)
 
(1.1
)%
 
(405
)
 
(1.2
)%
 
(275
)
 
(0.9
)%
Other, net
7

 
—

 
(50
)
 
(0.1
)%
 
138

 
0.5
 %
Income taxes
$
13,368

 
36.7
 %
 
$
9,936

 
30.2
 %
 
$
9,697

 
30.8
 %

On December 22, 2017, the Tax Cuts and Jobs Act (the Tax Act) was signed into law. The Tax Act reduced the federal corporate income tax rate from the previous maximum rate of 35 percent to 21 percent effective for 2018 and future years. The enactment of the legislation and the reduction in the federal income tax rate required a one-time reduction in net deferred tax assets and an increase in tax expense of $2,340 as shown in the table above.
Net deferred tax assets consisted of the following components as of December 31, 2017 and 2016.
 
2017
 
2016
Deferred tax assets:
 
 
 
Allowance for loan losses
$
4,108

 
$
6,123

Net unrealized losses on securities available for sale
902

 
719

Intangibles
101

 
462

Accrued expenses
176

 
706

Restricted stock unit compensation
544

 
446

State net operating loss carryforward
1,379

 
1,271

Other
86

 
190

 
7,296

 
9,917

Deferred tax liabilities:
 

 
 

Deferred loan costs
193

 
321

Net unrealized gains on interest rate swaps
139

 
80

Premises and equipment
792

 
1,027

Other
148

 
261

 
1,272

 
1,689

Net deferred tax assets before valuation allowance
6,024

 
8,228

Valuation allowance for deferred tax assets
(1,379
)
 
(1,271
)
Net deferred tax assets
$
4,645

 
$
6,957


As of December 31, 2017, the parent Company had approximately $22,989 of Iowa net operating loss carryforwards available to offset future Iowa taxable income.  The Company has recorded a valuation allowance against the tax effect of the Iowa net operating loss carryforwards, as management believes it is more likely than not that such carryforwards will expire without being utilized. The Iowa net operating loss carryforwards expire in 2019 and thereafter.