Note (8)—Income taxes:

In connection with the initial public offering, as discussed in Note 1, the Company terminated its S-Corporation status and became a taxable entity (C Corporation) on September 16, 2016. During the third quarter of 2016, the net deferred tax liability increased $13,181 from the conversion in taxable status. The net deferred tax liability is the result of timing differences in the recognition of income/deductions for generally accepted accounting principles (GAAP) and tax purposes. The consolidated statements of income present pro forma statements of income for the three and nine months ended September 30, 2016.

Allocation of federal and state income taxes between current and deferred portions is as follows:

	For the three months ended
	September 30,
	2017		2016
Current	$	4,328	$	1,579
Deferred		274		13,193
Total	$	4,602	$	14,772

	For the nine months ended
			September 30,
	2017		2016
Current	$	8,375	$	2,707
Deferred		8,226		14,239
Total	$	16,601	$	16,946

Federal income tax expense for the three and nine months ended September 30, 2017 and 2016 differs from the statutory federal rate of 35% due to the following:

	For the three months ended
	September 30,
	2017			2016
Federal taxes calculated at statutory rate	$	4,547		$	3,338
Increase (decrease) resulting from:
State taxes, net of federal benefit		528			524
Conversion as of September 16, 2016 to C Corporation		—			13,181
Benefit of equity based compensation		(384	)		—
Other		(89	)		(2,271	)
Income tax expense, as reported	$	4,602		$	14,772

	For the nine months ended
				September 30,
	2017			2016
Federal taxes calculated at statutory rate	$	16,086		$	3,338
Increase (decrease) resulting from:
State taxes, net of federal benefit		1,879			2,607
Conversion as of September 16, 2016 to C Corporation		—			13,181
Benefit of equity based compensation		(883	)		—
Other		(481	)		(2,180	)
Income tax expense, as reported	$	16,601		$	16,946

The components of the net deferred tax liability at September 30, 2017 and December 31, 2016, are as follows:

	September 30,			December 31,
	2017			2016
Deferred tax assets:
Allowance for loan losses	$	9,196		$	8,516
Amortization of core deposit intangible		1,023			996
Compensation related		7,306			7,552
Unrealized loss on securities		884			2,462
Other		6,248			2,430
Subtotal		24,657			21,956
Deferred tax liabilities:
FHLB stock dividends		(827	)		(827	)
Depreciation		(6,417	)		(6,548	)
Mortgage servicing rights		(24,689	)		(12,558	)
Other		(7,106	)		(6,203	)
Subtotal		(39,039	)		(26,136	)
Net deferred tax liability	$	(14,382	)	$	(4,180	)

In recording the impact of the conversion to a C Corporation during the third quarter of 2016, the Company recorded a deferred income tax expense of $2,955 related to the unrealized gain on available for sale securities through the income statement in accordance with ASC 740-20-45-8; therefore, the amount shown in other comprehensive income has not been reduced by the above expense. This difference will remain in OCI until the underlying securities are sold or mature in accordance with the portfolio approach allowed under ASC 740.

Tax periods for all fiscal years after 2013 remain open to examination by the federal and state taxing jurisdictions to which the Company is subject.