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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The components of income tax expense for the years ended December 31 are as follows:
| Years ended December 31,
(in thousands) | 2017 |  | 2016 |  | 2015
Current: |  |  |  |  |
Federal | $ | 15,845 |  |  | $ | 17,005 |  |  | $ | 22,916 |
State and local | 1,377 |  |  | 1,734 |  |  | 2,798 |
Total current | 17,222 |  |  | 18,739 |  |  | 25,714 |
Deferred: |  |  |  |  |
Federal | 20,989 |  |  | 5,959 |  |  | (5,266 | )
State and local | 116 |  |  | 1,304 |  |  | (497 | )
Total deferred | 21,105 |  |  | 7,263 |  |  | (5,763 | )
Total income tax expense | $ | 38,327 |  |  | $ | 26,002 |  |  | $ | 19,951 |
A reconciliation of expected income tax expense, computed by applying the statutory federal income tax rate in 2017, 2016, and 2015 to income before income taxes and the amounts reflected in the consolidated statements of operations is as follows:
| Years ended December 31,
(in thousands) | 2017 |  | 2016 |  | 2015
Income tax expense at statutory rate | $ | 30,281 |  |  | $ | 26,194 |  |  | $ | 20,440 |
Increase (reduction) in income tax resulting from: |  |  |  |  |
Tax-exempt income, net | (961 | ) |  | (945 | ) |  | (931 | )
State and local income taxes, net | 1,676 |  |  | 1,673 |  |  | 1,414 |
Bank-owned life insurance, net | (715 | ) |  | (544 | ) |  | (462 | )
Non-deductible expenses | 407 |  |  | 263 |  |  | 259 |
Change in estimated rate for deferred taxes | 12,117 |  |  | 302 |  |  | — |
Tax benefits of LIHTC investments, net | (257 | ) |  | (181 | ) |  | (179 | )
Excess tax benefits | (2,141 | ) |  | — |  |  | — |
Other federal tax benefits | (1,701 | ) |  | — |  |  | — |
Other, net | (379 | ) |  | (760 | ) |  | (590 | )
Total income tax expense | $ | 38,327 |  |  | $ | 26,002 |  |  | $ | 19,951 |
The net amount recognized as a component of tax expense for tax credits, other tax benefits, and amortization from low-income housing tax credit ("LIHTC") investments recognized per the table above was $0.3 million for the year ended December 31, 2017. The net amount recognized as a component of income tax expense per the table above was $0.2 million for the years ended December 31, 2016, and 2015. As of December 31, 2017 and 2016, the carrying value of the investments related to low-income housing tax credits was $1.3 million and $1.4 million, respectively. No impairment losses have been recognized from forfeiture or ineligibility of tax credits or other circumstances during the life of any of the investments. As of December 31, 2017, the Company has future capital commitments of $4.8 million related to low-income housing tax credit investments. The capital commitments are expected to be called between the years 2018 - 2020. A net deferred income tax asset of $22.5 million and $33.8 million is included in other assets in the consolidated balance sheets at December 31, 2017 and 2016, respectively. The tax effect of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities is as follows:
| Years ended December 31,
(in thousands) | 2017 |  | 2016
Deferred tax assets: |  |  |
Allowance for loan losses | $ | 10,516 |  |  | $ | 16,496 |
Basis difference on PCI assets, net | 5,748 |  |  | 5,551 |
Basis difference on Other real estate | 694 |  |  | 317 |
Deferred compensation | 2,719 |  |  | 4,217 |
Goodwill and other intangible assets | 2,151 |  |  | 5,520 |
Accrued compensation | 646 |  |  | 899 |
Unrealized losses on securities available for sale | 1,490 |  |  | 1,019 |
Other, net | 2,150 |  |  | 925 |
Total deferred tax assets | 26,114 |  |  | 34,944 |
Deferred tax liabilities: |  |  |
State tax credits held for sale, net of economic hedge | 26 |  |  | 376 |
Core deposit intangibles | 2,731 |  |  | 817 |
Other, net | 855 |  |  | — |
Total deferred tax liabilities | 3,612 |  |  | 1,193 |
Net deferred tax asset | $ | 22,502 |  |  | $ | 33,751 |
Deferred tax rate | 24.7 | % |  | 38.0 | %
Net deferred tax assets for the year ended December 31, 2017, experienced an increase of $8.6 million from the acquisition of JCB, offset by a revaluation adjustment of $12.1 million due to our initial analysis of the impact of the Tax Act. A valuation allowance is provided on deferred tax assets when it is more likely than not that some portion of the assets will not be realized. The Company did not have any valuation allowances for federal or state income taxes as of December 31, 2017 or 2016. The Company and its subsidiaries file income tax returns in the federal jurisdiction and in nine states. The Company is no longer subject to federal, state or local income tax audits by tax authorities for years before 2014, with the exception of 2013 being an open year by one state taxing authority. The Company is not currently under audit by any taxing jurisdiction. As of December 31, 2017, the gross amount of unrecognized tax benefits was $1.2 million and the total amount of net unrecognized tax benefits that would impact the effective tax rate, if recognized, was $0.8 million. As of December 31, 2016 and 2015, the total amount of the net unrecognized tax benefits that would impact the effective tax rate, if recognized, was $0.8 million and $0.9 million, respectively. The Company believes it is reasonably possible that the gross amount of unrecognized benefits will be reduced by approximately $0.3 million as a result of a lapse of statute of limitations in the next 12 months. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense and classifies such interest and penalties in the liability for unrecognized tax benefits. The amounts accrued for interest and penalties as of December 31, 2017, 2016, and 2015 were not significant. The activity in the gross liability for unrecognized tax benefits was as follows:
(in thousands) | 2017 |  | 2016 |  | 2015
Balance at beginning of year | $ | 1,180 |  |  | $ | 1,359 |  |  | $ | 1,884 |
Additions based on tax positions related to the current year | 331 |  |  | 239 |  |  | 230 |
Additions for tax positions of prior years | 41 |  |  | 39 |  |  | 46 |
Reductions for tax positions of prior years | — |  |  | — |  |  | (437 | )
Settlements or lapse of statute of limitations | (308 | ) |  | (457 | ) |  | (364 | )
Balance at end of year | $ | 1,244 |  |  | $ | 1,180 |  |  | $ | 1,359 |

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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