Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Components of Consolidated Income Tax Expense

The components of consolidated income tax expense are as follows (in thousands):


	Year Ended December 31,
	2019		2018		2017
Current tax expense
Federal	$	20,403	$	13,109	$	17,835
State	12,655		9,323		6,650
	$	33,058	22,432		24,485
Deferred tax expense
Federal	695		1,842		11,418
State	997		758		1,055
	1,692		2,600		12,473
Total tax expense	$	34,750	$	25,032	$	36,958

Schedule of Components of Investments in Qualified Affordable Housing Projects

The Company recognized, as components of tax expense, tax credits and other tax benefits, and amortization expense relating to our investments in Qualified Affordable Housing Projects as follows for the periods indicated (in thousands):


	Year Ended December 31,
	2019		2018		2017
Tax credits and other tax benefits – decrease in tax expense	$	(2,546)	$	(1,993)	$	(1,753)
Amortization – increase in tax expense	$	2,705	$	1,814	$	1,611

Reconciliation of Effective Tax Rate and Statutory Federal Income Tax Rate

The effective tax rate and the statutory federal income tax rate are reconciled as follows:


	Year Ended December 31,
	2019		2018		2017
Federal statutory income tax rate	21.0	%	21.0	%	35.0	%
State income taxes, net of federal tax benefit	7.9		8.6		6.9
Tax Cuts and Jobs Act impact of federal rate change	—		—		9.6
Tax-exempt interest on municipal obligations	(0.7)		(1.0)		(1.9)
Tax-exempt life insurance related income	(0.6)		(0.6)		(1.3)
Low income housing tax credits	(2.3)		(2.2)		(2.3)
Low income housing tax credit amortization	2.1		2.0		2.1
Equity compensation	(0.4)		(0.4)		(1.1)
Non-deductible merger expenses	—		0.2		0.2
Other	0.4		(0.8)		0.5
Effective Tax Rate	27.4	%	26.8	%	47.7	%

Company's Net Deferred Tax Asset Recorded in Other Assets

The temporary differences, tax effected, which give rise to the Company’s net deferred tax asset recorded in other assets are as follows as of December 31 for the years indicated (in thousands):


	December 31,
	2019		2018
Deferred tax assets:
Allowance for losses and reserve for unfunded commitments	$	9,871	$	10,394
Deferred compensation	2,342		2,780
Accrued pension liability	3,309		9,734
Other accrued expenses	1,678		1,175
Additional unfunded status of the supplemental retirement plans	9,868		1,420
Operating lease liability	8,142		—
State taxes	2,441		1,864
Share based compensation	803		1,132
Nonaccrual interest	649		814
Acquisition cost basis	4,556		6,714
Unrealized loss on securities	—		6,201
Tax credits	576		623
Net operating loss carryforwards	1,578		2,442
Other	348		423
Total deferred tax assets	46,161		45,716
Deferred tax liabilities:
Securities income	(762)		(1,020)
Depreciation	(6,109)		(5,572)
Right of use asset	(8,242)		—
Merger related fixed asset valuations	(30)		(26)
Securities accretion	(560)		(426)
Mortgage servicing rights valuation	(1,813)		(2,073)
Unrealized gain on securities	(1,001)		—
Core deposit intangible	(6,453)		(8,234)
Junior subordinated debt	(1,672)		(1,729)
Prepaid expenses and other	(469)		(582)
Total deferred tax liability	(27,111)		(19,662)
Net deferred tax asset	$	19,050	$	26,054