Flushing Financial Corporation files consolidated Federal and combined New York State and New York City income tax returns with its subsidiaries, with the exception of the trusts, which file separate Federal income tax returns as trusts, and FPFC, which files a separate Federal income tax return as a real estate investment trust. Additionally, the Bank files New Jersey State tax returns. The Company remains subject to examination for its Federal, New York State and New Jersey income tax returns for the years ending on or after The Company is undergoing examinations of its Federal income tax return for and its New York City income tax returns for and The Company believes it has accrued for all potential amounts that be due to all taxing authorities.

 

Income tax provisions are summarized as follows for the years ended

 

		2017				2016				2015
		(In thousands)
Federal:
Current		$	14,859			$	34,996			$	25,319
Deferred			7,985				(1,416	)			(3,476	)
Total federal tax provision			22,844				33,580				21,843
State and Local:
Current			1,419				7,647				7,059
Deferred			750				(124	)			(1,735	)
Total state and local tax provision			2,169				7,523				5,324
Total income tax provision		$	25,013			$	41,103			$	27,167

 

On the Tax Cuts and Jobs Act (the “TCJA”) was enacted, which among other things, reduced the federal income tax rate for corporations from to effective We recorded million in additional tax expense during from the revaluation of our net deferred tax assets, resulting from the TCJA. The Company has recorded a deferred tax asset of million, which reflects the tax impact from the TCJA. Additionally, on Staff Accounting Bulletin (“SAB ) was released by the Securities and Exchange Commission (“SEC”) to address any concerns related to the accounting for income tax effects as a result of the TCJA in situations where a registrant have the necessary information available, prepared, or analyzed in reasonable detail to complete the required accounting in the reporting period including the enactment date. SAB allows for a measurement period to extend beyond year from the TCJA enactment date to complete the necessary accounting.

 

The income tax provision in the Consolidated Statements of Income has been provided at effective rates of and for the years ended and respectively. The effective rates differ from the statutory federal income tax rate as follows for the years ended

 

		2017								2016								2015
		(Dollars in thousands)
Taxes at federal statutory rate		$	23,147				35.0	%		$	37,106				35.0	%		$	25,681				35.0	%
Increase (reduction) in taxes resulting from:
State and local income tax, net of Federal income tax benefit			1,410				2.1				4,890				4.6				3,461				4.7
TCJA			3,770				5.7				-				-				-				-
Other			(3,314	)			(5.0	)			(893	)			(0.8	)			(1,975	)			(2.7	)
Taxes at effective rate		$	25,013				37.8	%		$	41,103				38.8	%		$	27,167				37.0	%

  

The components of the net deferred tax assets are as follows at

 

		2017				2016
		(In thousands)
Deferred tax assets:
Postretirement benefits		$	6,047			$	7,800
Allowance for loan losses			6,414				9,518
Stock based compensation			2,808				3,525
Depreciation			1,057				2,135
Unrealized loss on securities available for sale			3,150				2,770
Fair value adjustment on financial assets carried at fair value			168				-
Fair value hedges			939				1,027
Adjustment required to recognize funded status of postretirement pension plans			2,068				3,246
Gain on sale of buildings			1,434				2,211
Other			299				2,434
Deferred tax assets			24,384				34,666
Deferred tax liabilities:
FPFC deferred income			1,916				-
Cashflow hedges			129				-
Fair value adjustment on financial assets carried at fair value			-				150
Fair value adjustment on financial liabilities carried at fair value			7,800				11,943
Other			4,239				4,684
Deferred tax liabilities			14,084				16,777
Net deferred tax asset included in other assets		$	10,300			$	17,889

 

The Company has recorded a deferred tax asset of million. This represents the anticipated net federal, state and local tax benefits expected to be realized in future years upon the utilization of the underlying tax attributes comprising this balance. The Company has reported taxable income for federal, state, and local tax purposes in each of the past years. In management’s opinion, in view of the Company’s previous, current and projected future earnings trend, the probability that some of the Company’s million deferred tax liability can be used to offset a portion of the deferred tax asset, as well as certain tax planning strategies, it is more likely than that the deferred tax asset will be fully realized. Accordingly, valuation allowance was deemed necessary for the deferred tax asset at and

 

The Company does have uncertain tax positions that are deemed material. The Company’s policy is to recognize interest and penalties on income taxes in operating expenses. During the years ended the Company did recognize any material amounts of interest or penalties on income taxes.