Income Tax
 12 Months Ended
Dec. 31, 2014
Income Tax Disclosure [Abstract]  
Income Tax
Income Tax
The components of income tax expense for the years ended December 31, 2014, 2013, and 2012 were as follows.
 
 
For the Years Ended December 31,
(in thousands)
 
2014
 
2013
 
2012
Current:
 
 
 
 
 
 
Federal
 
$
231

 
$
11,150

 
$
18,506

State
 
273

 
587

 
754

Total current taxes
 
504

 
11,737

 
19,260

Deferred:
 
 
 
 
 
 
Federal
 
15,136

 
3,088

 
(5,351
)
State
 
800

 
252

 
400

Total deferred taxes
 
15,936

 
3,340

 
(4,951
)
Total income tax expense
 
$
16,440

 
$
15,077

 
$
14,309


A reconciliation of income tax expense computed at the statutory federal income tax rate to actual income tax expense is presented in the following table for the years ended December 31, 2014, 2013, and 2012.
 
 
For the Years Ended December 31,
 
 
2014
 
2013
 
2012
($ in thousands)
 
Amount
 
%
 
Amount
 
%
 
Amount
 
%
Taxes at statutory rate
 
$
16,267

 
35.0
 %
 
$
14,950

 
35.0
 %
 
$
13,872

 
35.0
 %
Increase (reduction) in income taxes resulting from:
 
 
 
 
 
 
 
 
 
 
 
 
State income tax, net of credits and Federal income tax
 
697

 
1.5

 
545

 
1.3

 
750

 
1.9

Cash surrender value of life insurance
 
(300
)
 
(0.7
)
 
(254
)
 
(0.6
)
 
(250
)
 
(0.6
)
Tax exempt interest income
 
(250
)
 
(0.5
)
 
(244
)
 
(0.6
)
 
(232
)
 
(0.6
)
Other, net
 
26

 
0.3

 
80

 
0.3

 
169

 
0.4

Income tax expense
 
$
16,440

 
35.6
 %
 
$
15,077

 
35.4
 %
 
$
14,309

 
36.1
 %

Net deferred income tax assets are recorded on the Company’s Consolidated Balance Sheets as a component of Other Assets. The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities at December 31, 2014 and 2013, are presented in the table below.
 
 
December 31,
 
 
2014
 
2013
(in thousands)
 
Assets
 
Liabilities
 
Assets
 
Liabilities
Allowance for loan losses
 
$
9,893

 
$
—

 
$
13,041

 
$
—

Mortgage servicing rights
 
—

 
16,537

 
—

 
—

Accelerated depreciation
 
—

 
2,011

 
—

 
1,806

Deferred loan fees, net
 
1,568

 
—

 
1,849

 
—

Deferred compensation
 
2,513

 
—

 
2,240

 
—

ORE
 
1,969

 
—

 
4,484

 
—

Deductible prepaids
 
—

 
334

 
—

 
467

State tax carryforward
 
2,126

 
—

 
1,058

 
—

Unrealized gains on investment securities available-for-sale
 
—

 
1,725

 
—

 
593

Reserve for SBA/mortgage loans
 
3,914

 
—

 
1,928

 
—

Stock benefits/compensation
 
694

 
—

 
509

 
—

FDIC acquired assets
 
—

 
1,194

 
—

 
3,230

Loan mark-to-market adjustment
 
757

 
—

 
—

 
182

Other
 
1,034

 
431

 
966

 
412

Total
 
$
24,468

 
$
22,232

 
$
26,075

 
$
6,690

 
 
 
 
 
 
 
 
 
Net deferred tax asset
 
$
2,236

 
 
 
$
19,385

 
 

Based on management’s belief that it is more likely than not that all net deferred tax asset benefits will be realized, there was no valuation allowance at December 31, 2014 and 2013. At December 31, 2014, the Company had $2.9 million in gross state tax credit carryforwards which expire between 2017 and 2024. There are also state net operating losses of approximately $7.8 million that begin expiring in 2029.
Uncertain Tax Positions
The Company is subject to the possibility of a tax audit in numerous jurisdictions in the U.S. until the applicable expiration of the statutes of limitations. For Federal and state purposes, the Company is no longer subject to tax examinations by tax authorities for tax years before 2011.
The reconciliation of gross unrecognized tax benefits at December 31, 2014, 2013 and 2012 were as follows:
 
 
For the Years Ended December 31,
(in thousands)
 
2014
 
2013
 
2012
Beginning balance
 
$
—

 
$
266

 
$
336

Gross decreases due to tax positions in prior periods
 
—

 
(266
)
 
(70
)
Gross increases due to current period tax positions
 
—

 
—

 
—

Reductions due to expiration of statute of limitations
 
—

 
—

 
—

Ending Balance
 
$
—

 
$
—

 
$
266


For financial accounting purposes, interest and penalties accrued, if any, are classified as other expense in the Consolidated Statements of Comprehensive Income. There are no unrecognized tax benefits at December 31, 2014 or December 31, 2013, that, if recognized, would affect the Company’s effective tax rate.