Federal and State Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Summary of consolidated income tax expense

The following table is a summary of consolidated income tax expense:


	Years ended
(Dollars in thousands)	December 31, 2019		December 31, 2018	December 31, 2017
Current
Federal	$	34,461	21,510	29,555
State	14,545		11,960	9,183
Total current income tax expense	49,006		33,470	38,738
Deferred ¹
Federal	(279)		5,372	22,246
State	(77)		1,489	3,641
Total deferred income tax (benefit) expense	(356)		6,861	25,887
Total income tax expense	$	48,650	40,331	64,625

______________________________

1 Includes tax benefit of operating loss carryforwards of $317,000, $443,000 and $644,000 for the years ended December 31, 2019, 2018, and 2017, respectively.

Summary of effective tax rate

Combined federal and state income tax expense differs from that computed at the federal statutory corporate income tax rate as follows:


	Years ended
	December 31, 2019		December 31, 2018		December 31, 2017
Federal statutory rate	21.0	%	21.0	%	35.0	%
State taxes, net of federal income tax benefit	4.4	%	4.8	%	4.6	%
Tax rate change	—	%	—	%	10.9	%
Tax-exempt interest income	(3.7	%)	(5.0	%)	(10.5	%)
Tax credits	(4.5	%)	(4.2	%)	(3.2	%)
Other, net	1.6	%	1.6	%	(1.1	%)
Effective income tax rate	18.8	%	18.2	%	35.7	%

Summary of net deferred tax asset

The tax effect of temporary differences which give rise to a significant portion of deferred tax assets and deferred tax liabilities are as follows:


(Dollars in thousands)	December 31, 2019		December 31, 2018
Deferred tax assets
Allowance for loan and lease losses	$	31,698	33,313
Operating lease liabilities	11,127		—
Deferred compensation	7,447		6,251
Employee benefits	6,646		5,652
Acquisition fair market value adjustments	5,480		6,380
Net operating loss carryforwards	2,209		2,525


Available-for-sale debt securities	—		2,244
Other	3,891		3,841
Total gross deferred tax assets	68,498		60,206
Deferred tax liabilities
Intangibles	(16,469)		(12,667)
Depreciation of premises and equipment	(13,987)		(10,776)
Available-for-sale debt securities	(13,652)		—
Operating lease ROU assets	(10,506)		—

Deferred loan costs	(7,311)		(6,436)

FHLB stock dividends	(1,486)		(2,722)
Other	(3,050)		(4,041)
Total gross deferred tax liabilities	(66,461)		(36,642)
Net deferred tax asset	$	2,037	23,564

Income tax return jurisdictions and years subject to examination

The following schedule summarizes the years that remain subject to examination as of December 31, 2019:


			Years ended December 31,
Federal			2005, 2008, 2010, 2011, 2012, 2013, 2016, 2017 and 2018
Montana			2016, 2017 and 2018
Idaho			2016, 2017 and 2018
Utah			2016, 2017 and 2018
Colorado			2010, 2011, 2012, 2015, 2016, 2017 and 2018
Arizona			2015, 2016, 2017 and 2018