v3.8.0.1

Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | NOTE 16: INCOME TAXES Taxes on income for 2017, and net deferred tax assets as of December 31, 2017, reflect a $5.4 million adjustment recorded as a result of the enactment of H.R.1, the Tax Cuts and Jobs Act which reduced Company’s applicable Federal tax rate from 35% to 21% effective January 1, 2018. The adjustment resulted in lower net deferred tax assets and higher taxes on income. The Company is subject to federal income tax and California franchise tax. Income tax expense (benefit) was as follows for the years ended December 31:
(dollars in thousands) |  | 2017 |  |  | 2016 |  |  | 2015 |
Current expense: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 14,122 |  |  | $ | 10,235 |  |  | $ | 8,620 |
State |  |  | 4,384 |  |  |  | 3,459 |  |  |  | 2,700 |
Deferred expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 4,677 |  |  |  | 1,263 |  |  |  | (1,525 | )
State |  |  | (166 | ) |  |  | 74 |  |  |  | (341 | )
Total |  | $ | 23,017 |  |  | $ | 15,031 |  |  | $ | 9,454 |
The following is a comparison of the federal statutory income tax rates to the Company’s effective income tax rate for the years ended December 31:
|  | 2017 |  |  | 2016 |  |  | 2015 |
(dollars in thousands) |  | Amount |  |  | Rate |  |  | Amount |  |  | Rate |  |  | Amount |  |  | Rate |
Income before taxes |  | $ | 50,599 |  |  |  |  |  |  | $ | 38,334 |  |  |  |  |  |  | $ | 22,832 |  |  |  |  |
Federal tax statutory rate |  | $ | 17,710 |  |  |  | 35.00 | % |  | $ | 13,417 |  |  |  | 35.00 | % |  | $ | 7,991 |  |  |  | 35.00 | %
State tax, net of Federal benefit |  |  | 3,313 |  |  |  | 6.55 | % |  |  | 2,510 |  |  |  | 6.55 | % |  |  | 1,536 |  |  |  | 6.73 | %
Windfall benefit – exercise of stock options |  |  | (3,762 | ) |  |  | (7.43 | )% |  |  | (1,025) |  |  |  | (2.67) | % |  |  | — |  |  |  | — | %
Change in federal rate |  |  | 5,414 |  |  |  | 10.70 | % |  |  | — |  |  |  | — | % |  |  | — |  |  |  | — | %
Other items, net |  |  | 342 |  |  |  | 0.68 | % |  |  | 129 |  |  |  | 0.34 | % |  |  | (73 | ) |  |  | (0.32) | %
Effective tax rate |  | $ | 23,017 |  |  |  | 45.49 | % |  | $ | 15,031 |  |  |  | 39.22 | % |  | $ | 9,454 |  |  |  | 41.41 | %
Deferred taxes are a result of differences between income tax accounting and generally accepted accounting principles with respect to income tax recognition. The following is a summary of the components of the net deferred tax assets recognized in the accompanying consolidated balance sheets at December 31:
(dollars in thousands) |  | 2017 |  |  | 2016 |
Deferred tax assets (liabilities) |  |  |  |  |  |  |  |
Allowance for loan and REO losses |  | $ | 4,741 |  |  | $ | 6,258 |
Operating loss carryforwards |  |  | 3,157 |  |  |  | 3,896 |
Market valuation: Acquired loans and REO |  |  | 2,505 |  |  |  | 988 |
Stock-based compensation |  |  | 678 |  |  |  | 1,171 |
State taxes |  |  | 921 |  |  |  | 1,265 |
Accumulated other comprehensive income |  |  | 2,105 |  |  |  | 3,668 |
Organizational expenses |  |  | 179 |  |  |  | 238 |
Depreciation |  |  | (833 | ) |  |  | (1,017 | )
Core deposit intangible |  |  | (1,817 | ) |  |  | (364 | )
Prepaid expenses |  |  | (586 | ) |  |  | (827 | )
Accrued vacation |  |  | 418 |  |  |  | 478 |
Other |  |  | 675 |  |  |  | 1,057 |
Net deferred tax assets |  | $ | 12,143 |  |  | $ | 16,811 |
As part of the merger with DCB, the Company acquired operating loss carryforwards of $13.4 million. These operating loss carryforwards are subject to limitation under Section 382 of the Internal Revenue Service Code and expire in 2032. As a result, the Company will only be able to utilize operating loss carryforwards of $8.2 million, ratably over a period of 20 years. As part of the merger with PRB, the Company acquired operating loss carryforwards of $3.9 million. These operating loss carryforwards are subject to limitation under Section 382 of the Internal Revenue Service Code and expire in 2035. As part of the merger with C1B, the Company acquired operating loss carryforwards of $2.4 million. These operating loss carryforwards are subject to limitation under Section 382 of the Internal Revenue Service Code and expire in 2037. As of December 31, 2017, the remaining operating loss carryforwards from DCB, PRB and C1B available to be utilized by the Company were $11.2 million. The Company has no other operating loss carryforwards. The Company is subject to federal income tax and franchise tax of the state of California. Income tax returns for the periods 2016 through 2017 are open to audit by federal authorities, for the periods 2014 through 2017 by California state authorities, and for 2015 through 2017 by Hawaii state authorities.

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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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