Income Taxes (Notes)

12 Months Ended

Dec. 31, 2015

Income Taxes

The Company files income tax returns in the U.S. federal and various state jurisdictions. Income tax returns for the years 2012 through 2015 remain open to examination by federal and state taxing authorities.

During the years ended December 31, 2015, 2014 and 2013, the Company recognized no material income tax related interest or penalties. No accrued interest or penalties are included in accrued tax expense in the balance sheets as of December 31, 2015 and 2014.

The following table shows the components of income taxes for the years ended December 31, 2015, 2014 and 2013.



	2015			2014			2013
Current:
Federal	$	8,057		$	4,838		$	5,097
State	1,558			1,276			1,076
Deferred:
Federal	112			608			1,044
State	(30		)	(73		)	103
Income taxes	$	9,697		$	6,649		$	7,320

Total income taxes for the years ended December 31, 2015, 2014 and 2013, differed from the amounts computed by applying the U.S. federal income tax rate of 35 percent to income before income taxes as shown in the following table.



	2015					2014					2013
	Amount			Percent of Pretax Income		Amount			Percent of Pretax Income		Amount			Percent of Pretax Income
Computed expected tax expense	$	11,004		35.0	%	$	9,341		35.0	%	$	8,474		35.0	%
State income tax expense, net of
federal income tax benefit	957			3.0		596			2.2		687			2.8
Tax-exempt interest income	(1,786		)	(5.7	)	(1,525		)	(5.7	)	(1,331		)	(5.5	)
Nondeductible interest expense to
own tax-exempt securities	43			0.1		42			0.2		46			0.2
Tax-exempt increase in cash value of
life insurance	(254		)	(0.8	)	(256		)	(1.0	)	(226		)	(1.0	)
Utilization of capital loss carryforwards	(130		)	(0.4	)	(1,318		)	(4.9	)	—			—
Low income housing tax credits	(275		)	(0.9	)	(160		)	(0.6	)	(79		)	(0.3	)
New markets tax credit	—			—		—			—		(273		)	(1.1	)
Other, net	138			0.5		(71		)	(0.3	)	22			0.1
Income taxes	$	9,697		30.8	%	$	6,649		24.9	%	$	7,320		30.2	%

Net deferred tax assets consisted of the following components as of December 31, 2015 and 2014.



	2015			2014
Deferred tax assets:
Allowance for loan losses	$	5,687		$	5,171
Net unrealized losses on interest rate swaps	473			99
Intangibles	771			1,079
Other real estate owned	—			367
Accrued expenses	898			891
Restricted stock unit compensation	358			184
State net operating loss carryforward	1,183			1,100
Capital loss carryforward	355			797
Other	34			46
	9,759			9,734
Deferred tax liabilities:
Net deferred loan fees and costs	350			334
Net unrealized gains on securities available for sale	210			255
Premises and equipment	674			565
Other	317			350
	1,551			1,504
Net deferred tax assets before valuation allowance	8,208			8,230
Valuation allowance for deferred tax assets	(1,538		)	(1,897		)
Net deferred tax assets	$	6,670		$	6,333

The Company has approximately $19,723 of state net operating loss carryforwards available to offset future state taxable income. The Company has approximately $866 of federal and state capital loss carryforwards available to offset future capital gains. The Company has recorded a valuation allowance against the tax effect of the state net operating loss carryforwards and federal and state capital loss carryforwards, as management believes it is more likely than not that such carryforwards will expire without being utilized. The state net operating loss carryforwards expire in 2019 and thereafter. Federal and state capital loss carryforwards of $372 were utilized in 2015, and federal and state capital loss carryforwards of $705 expired in 2015. The remaining federal and state capital loss carryforwards expire in 2016. The valuation allowance for deferred tax assets declined by $359 from December 31, 2014 to December 31, 2015. Of this change, $153 was related to the utilization of federal and state capital loss carryforwards, which had been fully reserved, $289 related to the expiration of the same carryforwards and $(83) related to state net operating loss carryforwards generated in 2015.