Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Schedule of Components of Income Tax Expense (Benefit)

The current and deferred components of the income tax provision for each of the three years ended December 31 are as follows:



(in thousands)	2017		2016			2015
Current tax provision
Federal	$	5,379	$	9,710		$	7,097
State	2,623		3,794			2,931
Total current	8,002		13,504			10,028
Deferred tax provision (benefit)
Federal	4,444		(206		)	382
State	416		48			80
Total deferred	4,860		(158		)	462
Total income tax provision	$	12,862	$	13,346		$	10,490

Schedule of Deferred Tax Assets and Liabilities

The following table shows the tax effect of our cumulative temporary differences as of December 31:



(in thousands)	2017			2016
Deferred tax assets:
Allowance for loan losses and off-balance sheet credit commitments	$	4,945		$	6,871
Net operating loss carryforwards	2,629			3,582
Net unrealized loss on securities available-for-sale	1,405			2,543
Deferred compensation plan and salary continuation plan	1,744			1,773
State franchise tax	557			1,300
Accrued but unpaid expenses	212			1,251
Fair value adjustment on acquired loans	570			799
Deferred rent and other lease incentives	328			547
Depreciation and disposals on premises and equipment	632			528
Other real estate owned	—			448
Stock-based compensation	463			398
Interest received on non-accrual loans	130			185
Other	266			196
Total gross deferred tax assets	13,881			20,421
Deferred tax liabilities:
Deferred loan origination costs and fees	(2,153		)	(2,784		)
Unaccreted discount on subordinated debentures	(742		)	(1,119		)
Core deposit intangible asset	(1,919		)	(1,085		)
Accretion on investment securities	(56		)	(54		)
Other	(221		)	(42		)
Total gross deferred tax liabilities	(5,091		)	(5,084		)
Net deferred tax assets	$	8,790		$	15,337

Schedule of Effective Income Tax Rate Reconciliation

The effective tax rate for 2017, 2016 and 2015 differs from the current federal statutory income tax rate as follows:



	2017		2016		2015
Federal statutory income tax rate	35.0	%	35.0	%	35.0	%
Increase (decrease) due to:
California franchise tax, net of federal tax benefit	6.9	%	6.8	%	6.8	%
Write down of federal deferred tax assets, net ¹	10.5	%	—	%	—	%
Tax exempt interest on municipal securities and loans	(6.1	)%	(4.0	)%	(4.2	)%
Tax exempt earnings on bank owned life insurance	(1.0	)%	(0.8	)%	(1.0	)%
Non-deductible acquisition related expenses	0.8	%	—	%	—	%
Low income housing and qualified zone academy bond tax credits	(0.4	)%	(0.3	)%	(0.2	)%
Stock-based compensation excess tax benefit ²	(0.3	)%	—	%	—	%
Other	(0.8	)%	(0.1	)%	(0.1	)%
Effective Tax Rate	44.6	%	36.6	%	36.3	%

¹ Due to the enactment of the Tax Cuts and Jobs Act of 2017, which reduces the federal corporate income tax rate to 21% for tax years beginning on or after January 1, 2018, we wrote down net deferred tax assets as of December 22, 2017 by $3.0 million and has been recorded in income tax expense in 2017.

² Due to the adoption of ASU 2016-09 in 2017, all excess (or deficient) tax benefits associated with stock-based compensation awards are recognized as income tax benefit (expense).