The components of income tax expense are as follows:

 

		Year Ended December 31,
		2017				2016				2015
		(In Thousands)
Current tax expense:
Federal		$	27,952			$	29,813			$	28,517
State			2,258				1,254				1,824
Total current tax expense			30,210				31,067				30,341
Deferred tax expense (benefit):
Federal			17,073				(662	)			(3,277	)
State			(3,025	)			(1,066	)			(1,599	)
Total deferred tax (benefit)			14,048				(1,728	)			(4,876	)
Total income tax expense		$	44,258			$	29,339			$	25,465

 

The Company’s total income tax expense differs from the amounts computed by applying the Federal income tax statutory rates to income before income taxes. A reconciliation of the differences is as follows:

 

		Year Ended December 31, 2017
		Amount				% of Pre-tax Earnings
		(In Thousands)
Income tax at statutory federal rate		$	48,073				35.00	%
Effect on rate of:
State income tax, net of federal tax effect			43				0.03	%
Tax-exempt income, net of expenses			(1,356	)			(0.99	)%
Bank owned life insurance contracts			(1,096	)			(0.80	)%
Excess tax benefit from stock compensation			(4,278	)			(3.11	)%
Federal tax credits			(234	)			(0.17	)%
Enacted tax rate change			3,108				2.26	%
Other			(2	)			-	%
Effective income tax and rate		$	44,258				32.22	%

 

 

		Year Ended December 31, 2016
		Amount				% of Pre-tax Earnings
		(In Thousands)
Income tax at statutory federal rate		$	38,786				35.00	%
Effect on rate of:
State income tax, net of federal tax effect			254				0.23	%
Tax-exempt income, net of expenses			(1,322	)			(1.20	)%
Bank owned life insurance contracts			(978	)			(0.88	)%
Excess tax benefit from stock compensation			(4,788	)			(4.32	)%
Federal tax credits			(2,652	)			(2.40	)%
Other			39				0.04	%
Effective income tax and rate		$	29,339				26.47	%

 

		Year Ended December 31, 2015
		Amount				% of Pre-tax Earnings
		(In Thousands)
Income tax at statutory federal rate		$	31,152				35.00	%
Effect on rate of:
State income tax, net of federal tax effect			146				0.16	%
Tax-exempt income, net of expenses			(1,308	)			(1.47	)%
Bank owned life insurance contracts			(917	)			(1.03	)%
Incentive stock option expense			3				-	%
Federal tax credits			(3,600	)			(4.04	)%
Other			(11	)			(0.01	)%
Effective income tax and rate		$	25,465				28.61	%

 

The components of net deferred tax asset are as follows:

 

		December 31,
		2017				2016
		(In Thousands)
Deferred tax assets:
Allowance for loan losses		$	14,905			$	19,699
Other real estate owned			232				737
Nonqualified equity awards			927				1,234
Nonaccrual interest			178				501
State tax credits			5,688				3,475
Investments			1,296				2,173
Deferred loan fees			866				707
Reserve for unfunded commitments			125				190
Accrued bonus			1,521				1,817
Differences in amounts reflected in financial statements and income tax basis of assets acquired and liabilities assumed in acquisition			175				448
Acquired net operating losses			-				27
Net unrealized loss on securities available for sale			65				331
Other deferred tax assets			431				122
Total deferred tax assets			26,409				31,461
Deferred tax liabilities:
REIT dividend			9,706				-
Depreciation			3,240				3,606
Prepaid expenses			164				198
Acquired intangible assets			277				525
Total deferred tax liabilities			13,387				4,329
Net deferred tax assets		$	13,022			$	27,132

 

The Company believes its net deferred tax asset is recoverable as of based on the expectation of future taxable income and other relevant considerations.

 

Pursuant to ASC --- , deferred tax assets and liabilities are measured using enacted tax rates applicable to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.  On the President of the United States signed the “Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year (referred to as the “Tax Cuts and Jobs Act” or the Act).  The Act provides for a reduction in the corporate tax rate from a maximum tax rate of to a flat tax rate of effective for tax years beginning after As a result, the Company revalued its deferred tax assets and liabilities as of and recorded the effect of this change as a component of tax expense.  The tax expense recorded related to the change in the enacted federal tax rate as of is Notwithstanding the foregoing, management is still analyzing certain aspects of the new law and refining its calculations, which could affect the measurement of these assets and liabilities or give rise to new deferred tax amounts.

 

The Company and its subsidiaries file a consolidated U.S. Federal income tax return and various consolidated and separate company state income tax returns. The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the years ended through The Company is also currently open to audit by several state departments of revenue for the years ended through The audit periods differ depending on the date the Company began business activities in each state. Currently, there are years for which the Company filed a federal or state income tax return that are under examination by the IRS or any state department of revenue.

 

Accrued interest and penalties on unrecognized income tax benefits totaled and as of and respectively. Unrecognized income tax benefits as of and that, if recognized, would impact the effective income tax rate totaled and (net of the federal benefit on state income tax issues), respectively. The Company does expect any of the uncertain tax positions to be settled or resolved during the next months.

 

The following table presents a summary of the changes during and in the amount of unrecognized tax benefits that are included in the consolidated balance sheets.

 

		2017				2016				2015
		(In Thousands)
Balance, beginning of year		$	1,375			$	1,173			$	804
Increases related to prior year tax positions			365				364				369
Decreases related to prior year tax positions			-				-				-
Increases related to current year tax positions			-				-				-
Settlements			-				-				-
Enacted tax rate change			315				-				-
Lapse of statute			(276	)			(162	)			-
Balance, end of year		$	1,779			$	1,375			$	1,173