NOTE 10 – INCOME TAXES

The components of income tax expense for the periods indicated were as follows:


	Years Ended December 31,
(Dollars in thousands)	2019		2018		2017
Current tax provision:
Federal	$	11,028	$	12,210	$	15,781
State		4,034		2,102		2,506
Total current tax provision		15,062		14,312		18,287
Deferred tax provision:
Federal		793		308		(56)
Deferred tax adjustment for enacted change in Federal tax rate		—		—		(176)
State		295		47		98
Total deferred tax provision (benefit)		1,088		355		(134)
Total provision for income taxes	$	16,150	$	14,667	$	18,153

The following table presents a reconciliation of the recorded provision for income taxes to the amount of taxes computed by applying the applicable statutory Federal income tax rate for the periods indicated:


	Years Ended December 31,
	2019				2018				2017
(Dollars in thousands)	Amount		%		Amount		%		Amount		%
Federal statutory tax rate	$	12,782	21.0	%	$	11,775	21.0	%	$	17,517	35.0	%
Differences resulting from:
State income taxes, net of federal benefit		3,420	5.6			1,660	3.0			1,139	2.3
Permanent book to tax differences		(135)	(0.2)			—	—			—	—
Deferred tax writedown for enacted tax rate changes		—	—			—	—			(176)	(0.3)
Other items, net		83	0.1			1,232	2.2			(327)	(0.7)
Provision for income taxes	$	16,150	26.5	%	$	14,667	26.2	%	$	18,153	36.3	%

At December 31, 2019 and 2018, the Company’s deferred tax assets and liabilities consisted of the following:


	December 31,
(Dollars in thousands)	2019		2018
Deferred tax assets:
Allowance for loan losses	$	1,919	$	1,692
Nonaccrual interest		221		175
Deferred loan fees		119		—
Lease liabilities under operating leases		3,501		—
Unrealized losses on securities available for sale		1		46
Other		277		—
Total gross deferred tax assets		6,038		1,913
Deferred tax liabilities:
Deferred mortgage servicing fees		(2,535)		(1,389)
Deferred SBA servicing fees		(2,206)		(2,069)
Premises and equipment		(599)		(368)
Right-of-use assets under operating leases		(3,355)		—
Other		(254)		(16)
Total gross deferred tax liabilities		(8,949)		(3,842)
Net deferred tax liabilities	$	(2,911)	$	(1,929)

On December 22, 2017, new federal tax reform legislation was enacted in the United States (the “2017 Tax Act”), resulting in significant changes from previous tax law. The 2017 Tax Act reduces the federal corporate income tax rate to 21% from 35% effective January 1, 2018. The rate change, along with certain immaterial changes in tax basis resulting from the 2017 Tax Act, resulted in a reduction of our net deferred tax liabilities of $176,000 and a corresponding deferred income tax benefit in 2017. Our federal income tax expense for periods beginning in 2018 is based on the new rate.

The adjustments to deferred tax assets and liabilities and the liability related to the transition tax are amounts estimated based on information available at December 31, 2017. We recognized any changes to the amounts as we refined our estimates of our cumulative temporary differences, including those related to the immediate deduction for qualified property, and our interpretations of the application of the 2017 Tax Act. The effects of other provisions of the 2017 Tax Act did not have a material impact on our consolidated financial statements.

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. Management believes no valuation allowance is necessary against deferred tax assets as of December 31, 2019.

For the years ended December 31, 2019 and 2018, management believes there are no material amounts of uncertain tax position. Additionally, there were no amounts of interest and penalties recognized in the consolidated balance sheets as of December 31, 2019 or 2018 or on the consolidated statements of income for the years ended December 31, 2019, 2018 or 2017. The Company and its subsidiary are subject to U.S. federal income tax as well as various other state income taxes. The Company is no longer subject to examination by taxing authorities for years before 2016.