NOTE 14—INCOME TAXES

Income Tax Expense

The Company calculates its provision for federal and state income taxes based on current tax law. The reported tax provision differs from the amounts currently receivable or payable because some income and expense items are recognized in different time periods for financial reporting purposes than for income tax purposes. The following is a summary of the provision for income taxes:


	For the year ended December 31,
(in thousands)	2015		2014		2013
Current
Federal	$	29,117	$	19,309	$	5,144
State		5,325		2,959		645
Total	$	34,442	$	22,268	$	5,789

Deferred
Federal	$	14,571	$	8,862	$	15,868
State		2,348		1,398		2,343
Total	$	16,919	$	10,260	$	18,211

Items charged or credited directly to stockholders' equity
Federal	$	1,218	$	(33)	$	1,091
State		192		(5)		166
Total	$	1,410	$	(38)	$	1,257
Income tax expense	$	52,771	$	32,490	$	25,257

A reconciliation of the statutory federal tax expense to the income tax expense in the accompanying statements of income follows:


	For the year ended December 31,
(in thousands)	2015		2014		2013
Statutory federal expense (35%)	$	47,378	$	29,369	$	23,376
Statutory state income tax expense, net of federal tax benefit		4,611		2,805		2,195
Other		782		316		(314)
Income tax expense	$	52,771	$	32,490	$	25,257

Deferred Tax Assets/Liabilities

The tax effects of temporary differences between reported earnings and taxable earnings consisted of the following:


	As of December 31,
(in thousands)	2015		2014
Deferred Tax Assets:
Compensation related	$	12,273	$	9,009
Credit losses		1,994		1,670
Acquisition related (1)		1,929		4,347
Other		1,270		1,083
Total deferred tax assets	$	17,466	$	16,109

Deferred Tax Liabilities:
Mark-to-market of derivatives and loans held for sale	$	(9,745)	$	(8,059)
Mortgage servicing rights related		(107,166)		(90,359)
Depreciation		(1,980)		(2,197)
Total deferred tax liabilities	$	(118,891)	$	(100,615)
Deferred tax liabilities, net	$	(101,425)	$	(84,506)

(1)

Acquisition-related deferred tax assets consist of book-to-tax differences associated with basis step ups related to the amortization of goodwill recorded from acquisitions, acquisition-related costs capitalized for tax purposes, and book-to-tax differences in intangible asset amortization.

The Company believes it is more likely than not that it will generate sufficient taxable income in future periods to realize the deferred tax assets.

Tax Uncertainties

The Company periodically assesses its liabilities and contingencies for all periods open to examination by tax authorities based on the latest available information. Where the Company believes it is more likely than not that a tax position will not be sustained, management records its best estimate of the resulting tax liability, including interest, in the consolidated financial statements. As of December 31, 2015, based on all known facts and circumstances and current tax law, management believes that there are no tax positions for which it is reasonably possible that the unrecognized tax benefits will significantly increase or decrease over the next 12 months, producing, individually or in the aggregate, a material effect on the Company’s results of operations, financial condition, or cash flows.