Income Taxes

Income taxes for the years ended December 31 consisted of the following:



	2016		2015			2014
	(dollars in thousands)
Current income tax provision:
Federal	$	16,928	$	12,460		$	9,628
State	4,655		4,144			3,466
Total current income tax provision	21,583		16,604			13,094
Deferred income tax provision (benefit):
Federal	2,379		(887		)	(1,789		)
State	1,253		(508		)	(586		)
Total deferred income tax provision (benefit)	3,632		(1,395		)	(2,375		)
Total income tax provision	$	25,215	$	15,209		$	10,719

A reconciliation from statutory federal income taxes to the Company's effective income taxes for the years ended December 31 is as follows:



	2016			2015			2014
	(dollars in thousands)
Statutory federal income tax provision	$	22,863		$	14,253		$	9,459
State taxes, net of federal income tax effect	4,135			2,886			1,926
Cash surrender life insurance	(407		)	(483		)	(324		)
Tax exempt interest	(764		)	(742		)	(614		)
Merger costs	533			447			410
LIHTC investments	(909		)	(871		)	(728		)
Other	(236		)	(281		)	590
Total income tax provision	$	25,215		$	15,209		$	10,719

Deferred tax assets (liabilities) were comprised of the following temporary differences between the financial statement carrying amounts and the tax basis of assets at December 31:



	2016			2015			2014
	(dollars in thousands)
Deferred tax assets:
Accrued expenses	$	2,839		$	1,717		$	1,802
Net operating loss	3,977			5,192			2,703
Allowance for loan losses, net of bad debt charge-offs	8,061			6,252			5,158
Deferred compensation	2,348			2,547			1,750
State taxes	1,879			1,451			1,238
Depreciation	1,090			651			321
Loan discount	3,477			—			—
Stock based compensation	1,108			639			313
Unrealized loss on available-for-sale securities	1,939			—			—
Total deferred tax assets	26,718			18,449			13,285
Deferred tax liabilities:
Deferred FDIC gain	(1,675		)	(1,656		)	(1,731		)
Core deposit intangibles	(3,331		)	(2,266		)	(1,518		)
Unrealized loss on available for sale securities	—			(231		)	(362		)
Loan origination costs	(4,208		)	—			—
Other	(697		)	(2,785		)	(291		)
Total deferred tax liabilities	(9,911		)	(6,938		)	(3,902		)
Net deferred tax asset	$	16,807		$	11,511		$	9,383

The Company accounts for income taxes by recognizing deferred tax assets and liabilities based upon temporary differences between the amounts for financial reporting purposes and tax basis of its assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax asset will not be realized. In assessing the realization of deferred tax assets, management evaluates both positive and negative evidence, including the existence of any cumulative losses in the current year and the prior two years, the amount of taxes paid in available carry-back years, the forecasts of future income, applicable tax planning strategies, and assessments of current and future economic and business conditions. This analysis is updated quarterly and adjusted as necessary. Based on the analysis, the Company has determined that a valuation allowance for deferred tax assets was not required as of December 31, 2016, 2015, or 2014.

Section 382 of the Internal Revenue Code imposes limitations on a corporation’s ability to use any net unrealized built in losses and other tax attributes, such as net operating loss and tax credit carryforwards, when it undergoes a 50% ownership change over a designated testing period. The Company has a Section 382 limited net operating loss carry forward of approximately $10.1 million for federal income tax purposes, which is scheduled to expire in 2034. In addition, the Company has a Section 382 limited net operating loss carry forward of approximately $7.2 million for California franchise tax purposes, which is scheduled to expire in 2034. The Company is expected to fully utilize the federal and California net operating loss carryforward before it expires with the application of the Section 382 annual limitation.

The Company did not have unrecognized tax benefits that related to uncertainties associated with federal and state income tax matters as of December 31, 2016 and December 31, 2015. The Company does not believe that the unrecognized tax benefits will change within the next twelve months.

The Company and its subsidiaries are subject to U.S. Federal income tax as well as income tax in multiple state jurisdictions. The statute of limitations related to the consolidated Federal income tax returns is closed for all tax years up to and including 2012. The expiration of the statute of limitations related to the various state income and franchise tax returns varies by state. Independence Bank, an acquired entity, is currently under examination by the California Franchise Tax Board (FTB) for the 2010 and 2011 tax years. While the outcome of the examinations is unknown, the Company expects no material adjustments.