Income Tax

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Tax

Income Tax

The components of income tax expense are as follows:

	Years Ended December 31,
	2019		2018			2017
	(in thousands)
Current expense
Federal	$	40,471	$	33,400		$	39,708
State	6,359		5,446			3,016
Total current tax expense	$	46,830	$	38,846		$	42,724
Deferred tax expense (benefit)
Federal	$	60	$	(291	)	$	21,524
State	270		399			907
Total deferred tax expense	330		108			22,431
Total	$	47,160	$	38,954		$	65,155

Significant components of the Company’s deferred tax assets and liabilities are as follows:

	December 31,
	2019			2018
	(in thousands)
Deferred tax assets:
ALLL	$	20,489		$	20,578
Lease liability	14,776			—
Deferred compensation	11,079			9,501
Stock options and restricted stock	2,016			1,850
OREO	—			288
Nonaccrual interest	112			446
Unrealized loss on investment securities	—			10,129
Net operating losses and credit carryforwards	4,136			5,356
Other	245			733
Total deferred tax assets	52,853			48,881
Deferred tax liabilities:
Asset purchase tax basis difference	(7,888		)	(7,229		)
Right of use asset	(13,415		)	—
FHLB stock dividends	(789		)	(790		)
Deferred loan fees	(4,097		)	(4,399		)
Unrealized gain on investment securities	(10,091		)	—
Purchase accounting	(8,946		)	(9,245		)
Depreciation	(3,152		)	(2,609		)
Cash flow hedge	(3,452		)	—
Other	(100		)	(195		)
Total deferred tax liabilities	(51,930		)	(24,467		)
Net deferred tax asset	$	923		$	24,414

A reconciliation of the Company’s effective income tax rate with the federal statutory tax rate is as follows:

	Years Ended December 31,
	2019					2018					2017
	Amount			Percent		Amount			Percent		Amount			Percent
	(dollars in thousands)
Income tax based on statutory rate	$	50,738		21	%	$	44,485		21	%	$	62,262		35	%
Increase (decrease) resulting from:
Tax exempt instruments	(6,771		)	(3	)%	(6,423		)	(3	)%	(8,485		)	(5	)%
Bank owned life insurance	(1,963		)	(1	)%	(1,261		)	(1	)%	(3,351		)	(2	)%
Acquisition costs	—			—	%	—			—	%	825			1	%
Deferred tax asset revaluation	—			—	%	—			—	%	12,210			7	%
State income tax, net of federal benefit	5,134			2	%	4,931			2	%	2,550			1	%
Other, net	22			1	%	(2,778		)	(1	)%	(856		)	—	%
Income tax provision	$	47,160		20	%	$	38,954		18	%	$	65,155		37	%

As of December 31, 2019 and 2018, we had no unrecognized tax benefits. Our policy is to recognize interest and penalties on unrecognized tax benefits in “Provision for income taxes” in the Consolidated Statements of Income. There were no amounts related to interest and penalties recognized for the years ended December 31, 2019 and 2018. As a result of recent acquisitions, the Company has net operating loss carryforwards in the federal, Idaho and Oregon jurisdictions of $15.8 million, $14.3 million and $121 thousand, respectively, which begin to expire in 2024.

The Tax Cuts and Jobs Act was signed into law on December 22, 2017. The law included significant changes to the U.S. corporate tax system, including a Federal corporate rate reduction from 35% to 21%. In 2017, the Company applied the newly enacted corporate federal income tax rate of 21% resulting in a $12.2 million increase in tax expense from the re-measurement of its net deferred tax assets.