Income Taxes

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Income Tax Disclosure

Note 12 - Income Taxes

The current and deferred amounts of income tax expense for 2016, 2015 and 2014 are as follows (dollars in thousands):

	2016		2015		2014
Current:
Federal	$	10,173	$	22,512	$	7,715
State		(366)		907		946
Subtotal		9,807		23,419		8,661
Deferred:
Federal		2,682		(3,835)		223
State		(713)		342		(39)
Subtotal		1,969		(3,493)		184
Income tax expense	$	11,776	$	19,926	$	8,845

Actual income tax expense differs from the tax computed based on pre-tax income and the applicable statutory federal tax rate for the following reasons (dollars in thousands):

	2016			2015			2014
Income before income tax expense	$	42,858		$	61,237		$	27,410
Federal statutory rate		35	%		35	%		35	%
Computed “expected” Federal income tax     expense		15,000			21,433			9,593
State tax, net of Federal tax benefit		(701)			812			589
Bank owned life insurance		(896)			(624)			(456)
Tax-exempt interest and dividends		(1,714)			(1,584)			(1,511)
Other, net		87			(111)			630
Income tax	$	11,776		$	19,926		$	8,845

The tax effects of temporary differences that give rise to significant portions of the deferred tax asset and deferred tax liability at December 31, 2016 and 2015 are presented in the following table: 

	2016		2015
	(dollars in thousands)
Deferred tax assets:
Nonaccrual interest	$	470	$	349
Allowance for loan and lease losses		10,374		10,798
Pension actuarial losses		2,439		2,605
Purchase accounting		4,881		7,195
Deferred compensation		2,277		1,479
Unrealized losses on securities and SWAPs		-		445
Deferred loan costs, net of fees		613		460
Accrued rent		617		530
Other		14		25
New Jersey net operating loss		1,004		-
Capital lease		139		427
Total deferred tax assets	$	22,828	$	24,313
Deferred tax liabilities:
Employee benefit plans	$	(2,275)	$	(1,370)
Depreciation		(1,039)		(1,001)
Market discount accretion		(235)		(41)
Prepaid expenses		(345)		(341)
Unrealized gains on securities and SWAPs		(449)		-
Other		(33)		(27)
Total deferred tax liabilities		(4,376)		(2,780)
Net deferred tax assets	$	18,452	$	21,533

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets for state purposes is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible, while for Federal purposes the deferred tax assets can also be realized through tax carrybacks. Management considers the scheduled reversal of deferred tax liabilities, the projected future taxable income, and tax planning strategies in making this assessment. During 2016 and 2015, based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, the Company believes the net deferred tax assets are more likely than not to be realized. 

The Company’s federal income tax returns are open and subject to examination from the 2013 tax return year and forward. The Company’s state income tax returns are generally open from the 2012 and later tax return years based on individual state statutes of limitations.