13. INCOME TAXES

The components of the provision for income taxes for the years ended December 31, 2015, 2014 and 2013 are as follows:


	December 31,
	2015		2014		2013
	(Dollars in thousands)

Current income tax provision	$	13,723	$	7,970	$	7,446
Deferred income tax expense (benefit)		(3,409)		395		(540)
Total income tax provision	$	10,314	$	8,365	$	6,906

The provision for income taxes differs from the amount computed by applying the federal income tax statutory rates of 35% to income from continuing operations for the year ended December 31, 2015, 35% for the year ended December 31, 2014 and 35% for the year ended December 31, 2013, as follows:


	December 31,
	2015		2014		2013
	(Dollars in thousands)

Taxes calculated at statutory rate	$	9,014	$	8,087	$	6,831
Increase (decrease) resulting from:
State tax expense, net of federal effect		196		209		174
Non-deductible expenses		45		35		65
Incentive stock compensation expense		31		34		5
Bank-owned life insurance income		(141)		-		-
Change in applicable statutory rate		-		-		(211)
Non-deductible acquisition related expenses		857		-		-
Other, net		312		-		42
Income tax provision—as reported	$	10,314	$	8,365	$	6,906

Significant deferred tax assets and liabilities at the dates indicated were as follows:


	December 31,
	2015		2014
	(Dollars in thousands)

Deferred tax assets:
Allowance for credit losses	$	11,531	$	5,462
Acquired loan valuation allowance		8,883		1,415
Real estate acquired by foreclosure write-downs		2,695		609
Net operating loss carryforward		1,755		1,862
Acquired deposit valuation allowance		1,631		392
Nonqualified stock options		1,464		1,229
Pre-opening expenses		144		167
Other		1,031		437
Total deferred tax assets		29,134		11,573
Deferred tax liabilities:
Goodwill and core deposit intangibles		4,532		1,630
Acquired subordinated debentures valuation allowance		3,143		-
Acquired investments valuation allowance		688		-
Deferred loan costs		603		658
Depreciable assets		381		239
Unrealized gain on available-for-sale securities		225		572
Other		52		6
Total deferred tax liabilities		9,624		3,105
Net deferred tax asset	$	19,510	$	8,468

Realization of the net deferred tax asset is dependent on generating sufficient future taxable income. Although realization is not assured, management believes it is more likely than not that all of the net deferred tax asset will be realized. The deferred tax asset is evaluated by management on an ongoing basis to determine if a valuation allowance is required. Assessing the need for a valuation allowance requires that management evaluate all evidence, both negative and positive, to determine whether a valuation allowance is needed. Based on management’s analysis of the evidence, no valuation allowance was required to be recorded against the net deferred tax asset of $19.5 million at December 31, 2015. The deferred tax assets are primarily supported by future reversals of existing timing differences and the generation of future taxable income.

Net operating loss carryforwards for federal income tax purposes were $5.0 million and $5.3 million at December 31, 2015 and 2014, respectively. The carryforwards expire beginning in 2032.

In connection with the Patriot acquisition completed in October 2015, the Company recognized a $1.6 million liability for an uncertain tax position for the current year. The full $1.6 million would, if recognized, affect the effective tax rate. The uncertain tax position as of the dates indicated were as follows:


	2015		2014		2013
	(Dollars in thousands)

Unrecognized tax benefits - January 1	$	-	$	-	$	-
Gross increases - tax positions in current period		1,625		-		-
Unrecognized tax benefits - December 31	$	1,625	$	-	$	-

The Company files income tax returns in the U.S. federal jurisdiction and the Texas, Kentucky and California state jurisdictions. Other than described above, as of December 31, 2015 and 2014, the Company had identified no unrecognized tax benefits related to returns with open periods subject to examination. The Company is subject to examination from 2003 forward for federal income tax returns and from 2010 forward for state income tax returns. The Company’s policy is that it recognizes interest and penalties as a component of income tax expense. As of December 31, 2015 and 2014, the Company had no accrued interest or penalties.