Note 15.

Income Taxes

Income tax expense is comprised of current and deferred, federal and state income taxes on the Company’s pre-tax earnings. The following table presents the components of the income tax provision for the periods indicated:


	Year Ended December 31,
(Amounts in thousands)	2016			2015			2014
Current tax expense (benefit):
Federal	$	13,634		$	(254	)	$	7,234
State		675			581			1,325

Total current tax expense		14,309			327			8,559
Deferred tax expense (benefit):
Federal		(1,480	)		10,034			2,971
State		(10	)		1,020			794

Total deferred tax expense (benefit)		(1,490	)		11,054			3,765

Total income tax expense	$	12,819		$	11,381		$	12,324

The Company’s effective tax rate, income tax as a percent of pre-tax income, may vary significantly from the statutory rate due to permanent differences and available tax credits. Permanent differences are income and expense items excluded by law in the calculation of taxable income. The Company’s most significant permanent differences generally include interest income on municipal securities and increases in the cash surrender value of life insurance policies. The following table reconciles the Company’s income tax expense to the amount computed by applying the federal statutory tax rate to pre-tax income for the periods indicated:


	Year Ended December 31,
	2016						2015						2014
(Amounts in thousands)	Amount			Percent			Amount			Percent			Amount			Percent
Income tax at the federal statutory rate	$	13,281			35.00	%	$	12,572			35.00	%	$	13,235			35.00	%
State income taxes, net of federal benefit		598			1.58	%		639			1.78	%		1,006			2.66	%

		13,878			36.58	%		13,212			36.78	%		14,241			37.66	%
Increase (decrease) resulting from:
Tax-exempt interest income		(1,336	)		-3.52	%		(1,463	)		-4.07	%		(1,645	)		-4.35	%
Nondeductible goodwill		340			0.89	%		—			—			—			—
Bank owned life insurance		(335	)		-0.88	%		(690	)		-1.92	%		(555	)		-1.47	%
Other items, net		271			0.71	%		322			0.89	%		283			0.75	%

Income tax at the effective tax rate	$	12,819			33.78	%	$	11,381			31.68	%	$	12,324			32.59	%

Deferred taxes derived from continuing operations reflect the net effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for tax purposes. The following table presents the significant components of the net deferred tax asset as of the dates indicated:


	December 31,
(Amounts in thousands)	2016		2015
Deferred tax assets
Allowance for loan losses	$	6,644	$	7,741
Unrealized losses on available-for-sale securities		326		2,331
Unrealized asset losses		913		1,506
Purchase accounting		5,384		5,014
FDIC assisted transactions		6,540		6,551
Intangible assets		4,062		4,082
Deferred compensation assets		4,669		4,529
Deferred loan fees		1,979		1,402
Other deferred tax assets		825		1,181

Total deferred tax assets		31,342		34,337
Deferred tax liabilities
FDIC indemnification asset		11,927		13,162
Fixed assets		2,042		2,658
Odd days interest deferral		1,283		1,975
Other		347		347

Total deferred tax liabilities		15,599		18,142

Net deferred tax asset	$	15,743	$	16,195

The Company had no unrecognized tax benefits or accrued interest and penalties as of December 31, 2016 or 2015.