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INCOME TAXES (Tables)

12 Months Ended

Sep. 30, 2018

Income Tax Disclosure [Abstract]

Provision for Income Taxes

The Company and its subsidiaries file a consolidated federal income tax return on a fiscal year basis. The provision for income taxes for the years presented below consisted of the following:

Years ended September 30,	2018				2017				2016
	(Dollars in Thousands)
Federal:
Current	$	(4,023	)		$	12,153			$	4,410
Deferred	5,895				(5,040		)		(440		)
	1,872				7,113				3,970
State:
Current	2,611				4,366				1,422
Deferred	634				(1,246		)		210
	3,245				3,120				1,632
Income tax expense	$	5,117			$	10,233			$	5,602

Reconciliation of Total Income Tax Expense

The Company's effective tax rate is calculated by dividing income tax expense by income before income tax expense.

Years ended September 30,	2018							2017						2016
(Dollars in Thousands)	Amount				Rate			Amount				Rate		Amount				Rate
Statutory federal income tax expense and rate	$	14,082			24.5	%		$	19,303			35.0	%	$	13,588			35.0	%
Change in tax rate resulting from:
State income taxes net of federal benefits	2,461				4.3	%		2,014				3.7	%	933				2.4	%
Tax exempt income	(6,968		)		(12.1	)%		(9,991		)		(18.1	)%	(8,257		)		(21.3	)%
Nondeductible acquisition costs	1,295				2.3	%		—				—	%	—				—	%
General business credits	(3,948		)		(6.9	)%		—				—	%	—				—	%
Tax Reform	3,849				6.7	%		—				—	%	—				—	%
Amended Crestmark Bancorp historical tax return	(4,644		)		(8.1	)%		—				—	%	—				—	%
Other, net	(1,010		)		(1.7	)%		(1,093		)		(2.0	)%	(662		)		(1.7	)%
Total income tax expense	$	5,117			9.0	%		$	10,233			18.6	%	$	5,602			14.4	%

Components of Net Deferred Tax Asset (Liability)

The tax effects of the Company's temporary differences that give rise to significant portions of its deferred tax assets and liabilities at September 30, 2018 and 2017 were:

September 30,	2018				2017
	(Dollars in Thousands)
Deferred tax assets:
Bad debts	$	3,224			$	2,832
Deferred compensation	3,495				1,548
Stock based compensation	3,758				3,436
AMT Credit	—				1,869
Intangibles	—				5,235
Net unrealized losses on securities available for sale	10,663				—
Valuation adjustments	6,991				—
General business credits (1)	12,243				—
Accrued expenses	3,144				1,188
Other assets	1,629				1,579
	45,147				17,687
Deferred tax liabilities:
Premises and equipment	(347		)		(1,713		)
Intangibles	(4,231		)		—
Net unrealized gains on securities available for sale	—				(4,934		)
Deferred income	(2,070		)		—
Leased assets	(17,985		)		—
Other liabilities	(1,777		)		(1,939		)
	(26,410		)		(8,586		)
Net deferred tax assets	$	18,737			$	9,101

⁽¹⁾ The general business credits are investment tax credits generated from qualified solar energy property placed in service during the year ended September 30, 2018 or in previous periods by Crestmark prior to acquisition. These credits expire on September 30, 2037.

Reconciliation of Liabilities Associated with Unrecognized Tax Benefits

A reconciliation of the beginning and ending balances for liabilities associated with unrecognized tax benefits for the years ended September 30, 2018, and 2017 follows:

September 30,	2018				2017
	(Dollars in Thousands)
Balance at beginning of year	$	645			$	525
Additions for tax positions related to the current year	—				192
Additions for tax positions related to the prior years	—				31
Reductions for tax positions related to prior years	(211		)		(103		)
Balance at end of year	$	434			$	645

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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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Tabular disclosure of the change in unrecognized tax benefits.

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