Guaranty Bancorp

(12)Income Taxes

The components of the income tax expense (benefit) are as follows:



		Year Ended December 31,
		2017		2016		2015

		(In thousands)
Current tax expense:
Federal	$	15,894	$	11,921	$	7,165
State		2,215		427		-
Total current tax expense		18,109		12,348		7,165
Deferred tax expense
Federal		626		(1,026)		3,132
Re-measurement of net deferred tax asset		976		-		-
State		121		666		973
Total deferred tax expense (benefit)		1,723		(360)		4,105

Total tax expense	$	19,832	$	11,988	$	11,270

Income tax expense attributable to income from continuing operations differed from the amounts computed by applying the U.S. federal statutory tax rate to pretax income from operations as a result of the following:



	Year Ended December 31,
	2017		2016		2015

Tax expense at statutory federal rate	35.0	%	35.0	%	35.0	%
State tax, net of federal benefit	2.7	%	2.7	%	2.8	%
Tax exempt income	(4.8)	%	(5.1)	%	(4.4)	%
Re-measurement of net deferred tax asset	1.7	%	-	%	-	%
related to 2017 Tax Cuts and Jobs Act
Other	(0.7)	%	0.1	%	-	%
Effective tax rate	33.9	%	32.7	%	33.4	%

As of December 31, 2017, the Company maintained a current tax receivable of approximately $100,000 compared to current taxes receivable at December 31, 2016 of $2,090,000. The Company’s net deferred tax asset is included in other assets at December 31, 2017 and December 31, 2016.

On December 22, 2017 President Donald Trump signed into law H.R. 1, commonly referred to as the 2017 Tax Cuts and Jobs Act. Under GAAP, the Company was required to account for the effects of this change in the period of enactment, or 2017. The direct impact to the 2017 financial statements was the re-measurement of the Company’s net deferred tax asset, which resulted in $976,000 in additional income tax expense being recognized in 2017. The impact of this re-measurement is included in the statutory rate reconciliation included above.

Deferred tax assets and liabilities result from the tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes at December 31, 2017 and December 31, 2016 are as follows:



		2017		2016

		(In thousands)
Deferred tax assets:
Allowance for loan losses	$	5,733	$	8,837
Other real estate owned		61		93
Other assets and accruals		1,061		1,522
Unrealized loss on available for sale securities		1,094		2,399
Unrealized loss on securities transferred to held to maturity		548		1,029
Unrealized loss on cash flow hedges		225		696
Intangible assets		515		848
Fair value adjustments on loans and other assets		3,313		5,816
Stock compensation and other		910		1,281
Total deferred tax assets:		13,460		22,521

Deferred tax liabilities:
Premises and equipment		5,211		8,321
Unrealized gain on acquired securities		1,141		1,726
Core deposit intangibles		2,774		4,394
Deferred loan costs		1,301		1,724
FHLB stock, prepaid assets, equity
investments and other liabilities		1,231		1,510
Total deferred tax liabilities		11,658		17,675
Deferred tax asset, net	$	1,802	$	4,846

Realization of deferred tax assets is dependent upon the generation of sufficient future taxable income during the periods in which existing deferred tax assets are expected to become deductible for income tax purposes. Based on projections of future taxable income in periods in which existing deferred tax assets are expected to become deductible, in addition to the support provided by available tax planning strategies, management determined that the realization of the Company’s net deferred tax asset was more likely than not. As a result, the Company did not recognize a valuation allowance on its net deferred tax asset as of December 31, 2017 or December 31, 2016.

As of December 31, 2017, the Company had no Federal NOL loss carryforward, Alternative Minimum Tax (“AMT”) Credit carryforward or State of Colorado net operating loss carryforward.

As of December 31, 2017 the Company does not have any known unrecognized tax benefits and does not expect the total amount of unrecognized tax benefits to change significantly in the next twelve months.