Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

Components of Consolidated Income Tax Expense

The components of consolidated income tax expense are as follows:


	2016		2015		2014
			(in thousands)
Current tax expense
Federal	$	17,401	$	21,076	$	14,485
State		7,121		7,139		5,016

	$	24,522		28,215		19,501

Deferred tax expense (benefit)
Federal		2,735		408		(794	)
State		455		273		(199	)

		3,190		681		(993	)

Total tax expense	$	27,712	$	28,896	$	18,508

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 followers for the periods indicated:


Year ended December 31,	2016			2015			2014
				(in thousands)
Tax credits and other tax benefits – decrease in tax expense	$	(954	)	$	(354	)		—
Depreciation – increase in tax expense	$	757		$	277			—

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:


	Years Ended December 31,
	2016			2015			2014
Federal statutory income tax rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal tax benefit		6.8			6.6			7.0
Tax-exempt interest on municipal obligations		(1.8	)		(0.7	)		(0.4	)
Tax-exempt life insurance related income		(1.3	)		(1.3	)		(1.5	)
Low income housing tax credit benefits		(1.3	)		(0.4	)		—
Low income housing tax credit amortization		0.8			—			—
Non-deductible joint beneficiary agreement expense		0.1			0.1			0.2
Non-deductible merger expense		—			—			1.0
Other		(0.1	)		0.4			0.2

Effective Tax Rate		38.2	%		39.7	%		41.5	%

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:


	2016			2015
	(in thousands)
Deferred tax assets:
Allowance for losses and reserve for unfunded commitments	$	14,809		$	16,182
Deferred compensation		2,743			2,827
Accrued pension liability		9,220			8,597
Accrued bonus		1,727			1,326
Other accrued expenses		781			143
Unfunded status of the supplemental retirement plans		1,982			2,411
State taxes		2,257			2,297
Share based compensation		2,063			2,701
Nonaccrual interest		408			1,979
OREO write downs		132			241
Indemnification asset		313			219
Acquisition cost basis		3,996			5,118
Unrealized loss on securities		3,730			—
Tax credits		491			491
Net operating loss carryforwards		3,354			5,252
Other		981			889

Total deferred tax assets		48,987			50,673

Deferred tax liabilities:
Securities income		(1,362	)		(1,362	)
Unrealized gain on securities		—			(902	)
Depreciation		(3,032	)		(2,654	)
Merger related fixed asset valuations		(54	)		(54	)
Securities accretion		(478	)		(485	)
Mortgage servicing rights valuation		(2,710	)		(3,118	)
Core deposit intangible		(1,813	)		(2,331	)
Junior subordinated debt		(2,616	)		(2,699	)
Prepaid expenses and other		(723	)		(628	)

Total deferred tax liability		(12,788	)		(14,233	)

Net deferred tax asset	$	36,199		$	36,440

Summary of Changes in Unrecognized Tax Benefit (Including Interest and Penalties)

A summary of changes in the Company’s unrecognized tax benefit (including interest and penalties) in 2016 is as follows:


(in thousands)	UTB			Interest/Penalties			Total
As of December 31, 2015	$	168		$	14		$	182
Lapse of the applicable statute of limitations		(54	)		(7	)		(61	)

As of December 31, 2016	$	114			7			121