Entity information:
INCOME TAXES

The income tax provision reconciled to taxes computed at the statutory federal rate was as follows:
 
Years Ended December 31,
(Dollars in thousands)
2017
2016
2015
Tax provision at statutory rate
$
16,615

$
14,591

$
11,683

Meals and entertainment
152

147

103

Dues and subscriptions
142

132

116

Bank owned life insurance
(622
)
(629
)
(593
)
Stock option exercises and cancellations
(674
)
(484
)
52

State tax expense, net of federal benefit
1,024

1,184

951

Impact of change in tax rates
(2,351
)
—

—

Adjustments to prior year tax
215

46

(60
)
Tax exempt income, net of disallowed interest
(151
)
(162
)
(160
)
Renewable energy tax credits
(4,629
)
(1,778
)
(1,198
)
Low income housing tax credits
(260
)
(17
)
—

Other
21

18

(2
)
Income tax provision
$
9,482

$
13,048

$
10,892



In December 2017, the Tax Cuts and Jobs Act was signed into law which lowers the maximum corporate tax rate from 35% to 21%. Due to this enactment, income tax provision for the year ended December 31, 2017, was impacted by a $2.4 million one-time benefit on the re-measurement of the Company’s deferred tax liability. The adjustment was largely related to the acceleration of an incentive compensation deduction for tax purposes and favorable depreciation treatment associated with renewable energy credits.

The tax credits in the table above relate to transactions for the financing of renewable solar energy facilities as well as low income housing tax credits. These transactions provided federal tax credits and state tax credits (where applicable) during the 2017, 2016 and 2015 tax years. The financing of the solar energy facilities are accounted for as direct financing leases included within the C&I loan portfolio. The amortization of the Company’s low income housing tax credit investments has been reflected as income tax expense. The net amount of low income housing tax credits, amortization and tax benefits recorded as income tax expenses during the years ended December 31, 2017 and 2016, was $260,000 and $17,000, respectively. The carrying amount of the investment in low income housing tax credits was $23.8 million of which $18.1 million was unfunded as of December 31, 2017.

The income tax provision consisted of:
 
Years Ended December 31,
(Dollars in thousands)
2017
2016
2015
Current income tax provision (benefit) - federal
$
(2,324
)
$
7,781

$
9,917

Current income tax provision - state
696

1,592

803

Deferred tax provision - federal
10,050

3,322

225

Deferred tax provision (benefit) - state
1,060

353

(53
)
Income tax provision
$
9,482

$
13,048

$
10,892



The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2017 and 2016, were as follows:
 
December 31,
(Dollars in thousands)
2017
2016
Deferred tax assets:
 
 
Net operating loss - state
$
200

$
—

Start-up expenses
65

134

Stock compensation
2,150

1,659

Compensation related accruals
779

6,599

Leasehold improvement
251

464

Allowance for loan loss
3,376

6,970

Long-term lease
205

361

Reserve for unfunded commitments
118

241

Supplemental executive retirement plan
824

1,116

Transaction costs
288

480

Intangibles
—

125

Earn out liability non-purchase accounting
374

606

Other
180

247

Gross deferred tax assets
8,810

19,002

 
 
 
Deferred tax liabilities:
 
 
Office properties and equipment
(6,947
)
(4,631
)
Deferred loan costs
(2,447
)
(2,934
)
Intangibles
(9
)
—

Goodwill
(3,003
)
(3,531
)
State capital shares tax liability
(101
)
(219
)
Unrealized gain on investments and derivatives
(455
)
(483
)
Gross deferred tax liability
(12,962
)
(11,798
)
Net deferred tax asset (liability)
$
(4,152
)
$
7,204



Management believes that, as of December 31, 2017, it is more likely than not that the deferred tax assets will be fully realized upon the generation of future taxable income. The Company has certain pre-tax state net operating loss carryforwards of $2.6 million which will expire in 2037.

The change in the net deferred tax asset or liability for the years ended December 31, 2017 and 2016, was detailed as follows:
 
December 31,
(Dollars in thousands)
2017
2016
Deferred tax provision
$
(11,110
)
$
(3,675
)
Deferred tax impact from other comprehensive income
(246
)
(1,329
)
Deferred tax asset established related to acquisitions
—

22

Change in net deferred tax asset or liability
$
(11,356
)
$
(4,982
)


The Company considers uncertain tax positions that it has taken or expects to take on a tax return. The Company recognizes interest accrued and penalties (if any) related to unrecognized tax benefits in income tax expense. Tax years 2014 through 2017 remain subject to federal and state tax examinations, as of December 31, 2017. A federal tax examination of the 2015 tax year is currently in progress.

A reconciliation of the beginning and ending gross amounts of unrecognized tax benefits was as follows:
 
December 31,
(Dollars in thousands)
2017
2016
2015
Beginning of year balance
$
599

$
353

$
—

Increases in prior period tax positions
18

26

142

Decreases in prior period tax positions
—

—

—

Increases in current period tax positions
127

220

211

Settlements
—

—

—

End of year balance
$
744

$
599

$
353



The total estimated unrecognized tax benefit that, if recognized, would affect the Company’s effective tax rate was approximately $620,000, $390,000 and $230,000 as of December 31, 2017, 2016 and 2015, respectively. The impact of interest and penalties was immaterial to the Company’s financial statements for the years ended December 31, 2017, 2016 and 2015. The Company does not expect changes in its unrecognized tax benefits in the next twelve months to have a material impact on its financial statements.