INCOME TAXES (Notes)

6 Months Ended

Jun. 30, 2016

INCOME TAXES

The Company's effective income tax rate for the three and six months ended June 30, 2016 and 2015 was as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Income tax expense	$	4,258		$	3,341		$	7,700		$	6,064
Income before income taxes	$	13,874		$	10,534		$	25,962		$	18,868
Effective tax rate	30.7		%	31.7		%	29.7		%	32.1		%

For the three and six months ended June 30, 2016, the Company had the following discrete period items impacting its effective tax rate:

•

In the second quarter of 2016, the Company adopted ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 was adopted effective as of January 1, 2016. Prior to the adoption of ASU 2016-09, the Company accounted for its windfall tax benefits or shortfalls generated upon exercise of a non-qualified stock option or a disqualifying incentive stock option, or upon vesting of its restricted shares through shareholders' equity (or as income tax expense to the extent the Company did not have a windfall tax benefit surplus). Upon adoption, the Company has accounted for its windfall tax benefits and shortfalls generated within income tax expense on the consolidated statements of income as a discrete period item in the quarter generated. For the three and six months ended June 30, 2016, the Company recorded net windfall tax benefits of $65,000 and $364,000, respectively, reducing the Company's effective tax rate and increasing net income for the respective periods.


•	For the three and six months ended June 30, 2016, the Company received death benefits from its BOLI policy from one of its insureds totaling $578,000, of which $394,000 was recognized as income on the consolidated statements of income within bank-owned life insurance. The income recognized was non-taxable reducing the Company's effective tax rate for the three and six months ended June 30, 2016.