Income Taxes
 12 Months Ended
Dec. 31, 2014
Income Taxes  
Income Taxes

 

Note 14.  Income Taxes

 

The components of income taxes consist of:

 

 

 

Years Ended December 31,

 

 

 

2014

 

2013

 

2012

 

 

 

(dollars in thousands)

 

Current

 

$
4,830 

 

$
4,020 

 

$
1,926 

 

Deferred

 
12,704 

 
10,091 

 
8,571 

 

 

 

 

 

 

 

 

 

Total income tax expense

 

$
17,534 

 

$
14,111 

 

$
10,497 

 

 

A reconciliation of federal and state income taxes at statutory rates to the income taxes included in the statements of income is as follows:

 

 

 

Years Ended December 31,

 

 

 

2014

 

2013

 

2012

 

 

 

% of

 

% of

 

% of

 

 

 

Pretax

 

Pretax

 

Pretax

 

 

 

Income

 

Income

 

Loss

 

 

 

 

 

 

 

 

 

Income tax at statutory rate

 
35.0 

%
35.0 

%
35.0 

%

Effect of:

 

 

 

 

 

 

 

Tax-exempt interest, net

 
(2.6 

)%
(3.5 

)%
(4.5 

)%

State income taxes, net

 
5.7 

%
4.5 

%
3.5 

%

Income on bank owned life insurance

 
(1.0 

)%
(0.9 

)%
(1.8 

)%

Other, net

 
(2.2 

)%
(2.2 

)%
(0.3 

)%

 

 

 

 

 

 

 

 

 

 
34.9 

%
32.9 

%
31.9 

%

 

Net deferred taxes at December 31, 2014 and 2013 in the accompanying Consolidated Balance Sheets, include the following amounts of deferred tax assets and liabilities:

 

 

 

2014

 

2013

 

 

 

(dollars in thousands)

 

Deferred tax assets:

 

 

 

 

 

Allowance for loan losses

 

$
18,904

 

$
19,416

 

Stock-based compensation

 
1,472

 
1,319

 

Loan adjustments

 
94

 
108

 

Deferred compensation

 
2,057

 
2,015

 

Accrued vacation

 
527

 
545

 

Employee costs

 
656

 
1,264

 

Other

 
2,498

 
1,780

 

 

 

$
26,208

 

$
26,447

 

 

 

 

 

 

 

Deferred tax liabilities:

 

 

 

 

 

Investment securities:

 

 

 

 

 

Unrealized gains on securities available for sale

 

$
(3,884

)

$
(3,119

)

Other

 
(1,997

)
(2,450

)

Basis in premises and equipment

 
(2,012

)
(2,590

)

Mortgage servicing assets

 
(1,549

)
(2,097

)

Basis in core deposit and customer intangible assets

 
(2,669

)
(3,908

)

Deferred loan origination costs

 
(257

)
(20

)

 

 

$
(12,368

)

$
(14,184

)

Net operating loss carryforward, net of valuation allowance

 
8,333

 
23,379

 

Net deferred tax assets

 

$
22,173

 

$
35,642

 

 

At December 31, 2014, the Company had Illinois net operating loss carryforwards of $8.3 million, or approximately $114.0 million pre-tax.  At December 31, 2013, the Company had federal and Illinois net operating loss carryforwards of $23.4 million, or approximately $33.0 million in federal pre-tax and $171.0 million in Illinois pre-tax.  These net operating loss carryforwards will expire in 2030.

 

At December 31, 2014, the Company also had Indiana and Florida net operating loss carryforwards of $1.0 million, which will begin to expire in 2030. Due to the uncertainty as to whether the Company will be able to realize the Indiana and Florida carryforwards, the Company has a full valuation allowance of $1.0 million related to these net operating loss carryforwards.  At December 31, 2013, the Company had Indiana and Florida net operating loss carryforwards of $1.5 million with a full valuation allowance.

 

Management believes that it is more likely than not that the other deferred tax assets included in the accompanying Consolidated Balance Sheets will be fully realized. The Company has determined that no valuation allowance is required for any other deferred tax assets as of December 31, 2014 and 2013, although there is no guarantee that those assets will be recognizable in future periods.