Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

A summary of income tax expense included in the Consolidated Statements of Income follows:

(dollars in thousands)	For the year ended December 31,
	2016		2015		2014
Current tax expense:
Federal	$	20,904		19,864		22,046
State		1,524		1,647		2,386
Total current tax expense		22,428		21,511		24,432
Deferred tax expense		3,261		3,011		2,964
Total income tax expense	$	25,689		24,522		27,396

Tax effects of temporary differences

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2016 and 2015, are as follows:

	December 31,
(dollars in thousands)	2016			2015
	Deductible temporary differences			Deductible temporary differences
Benefits and deferred remuneration	$	(5,474	)	$	(4,992	)
Difference in reporting the allowance for loan losses, net		18,117			18,576
Other income or expense not yet reported for tax purposes		129			2,607
Depreciable assets		(638	)		(796	)
Net deferred tax asset at end of year		12,134			15,395
Net deferred tax asset at beginning of year		15,395			18,406

Deferred tax expense	$	3,261		$	3,011

Effective income tax rate

The effective tax rates differ from the statutory federal income tax rate. The reasons for these differences are as follows:

	For the years ended December 31,
	2016			2015			2014
Statutory federal income tax rate		35.0	%		35.0			35.0

Increase/(decrease) in taxes resulting from:
Tax exempt income		(0.1	)		(0.1	)		(0.1	)
State income tax (including alternative minimum tax), net of federal tax benefit		1.8			1.8			2.7
Other items		0.9			-			0.7
Effective income tax rate		37.6	%		36.7			38.3

Reconciliation of unrecognized tax benefits

For the years ended December 31, 2016 and 2015 the unrecognized tax benefits and change in those unrecognized tax benefits from the beginning of the year are as follows:

(dollars in thousands)


Balance as of January 1, 2015	$	213

Change in unrecognized tax reserve		-

Balance as of December 31, 2015	$	213

Decrease due to lapse in statute of limitations		(213	)

Balance as of December 31, 2016	$	-