Note 14 – Income Taxes

The income tax provision included in the consolidated statements of income was as follows for the periods presented ($ in thousands):

	Years Ended December 31,
Current	2015		2014		2013
Federal	$	18,448	$	17,761	$	14,537
State		2,166		2,068		1,237
Deferred
Federal		12,865		16,256		18,394
State		1,935		2,444		2,769
Income tax provision	$	35,414	$	38,529	$	36,937

For the periods presented, the income tax provision differs from the amount computed by applying the statutory federal income tax rate of 35% to income before income taxes as a result of the following ($ in thousands):

	Years Ended December 31,
	2015			2014			2013
Income tax computed at statutory tax rate	$	53,008		$	56,732		$	53,899
Tax exempt interest		(5,908	)		(5,612	)		(5,222	)
Nondeductible interest expense		119			107			121
State income taxes, net		1,408			2,933			2,604
Income tax credits		(15,283	)		(15,212	)		(15,755	)
Other		2,070			(419	)		1,290
Income tax provision	$	35,414		$	38,529		$	36,937

Temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities gave rise to the following net deferred tax assets at December 31, 2015 and 2014, which are included in other assets ($ in thousands):

	December 31,
	2015			2014
Deferred tax assets:
Loan purchase accounting	$	26,049		$	38,471
Other real estate		32,664			36,086
Allowance for loan losses		30,451			31,241
Deferred compensation		21,102			20,825
Realized built in losses		16,215			15,907
Securities		13,016			15,443
Pension and other postretirement benefit plans		14,433			14,904
Nonaccrual loans		3,137			3,372
Stock-based compensation		3,137			3,077
Other		15,820			17,833
Gross deferred tax asset		176,024			197,159
Valuation allowance		(8,650	)		(8,650	)
Deferred tax asset net of valuation allowance		167,374			188,509

Deferred tax liabilities:
Goodwill and other identifiable intangibles		26,651			28,010
Premises and equipment		21,257			20,813
Unrealized gains on securities available for sale		2,241			8,627
Mortgage servicing rights		9,924			7,747
Securities		1,474			1,353
Leases		106			625
Other		4,764			3,900
Gross deferred tax liability		66,417			71,075
Net deferred tax asset	$	100,957		$	117,434

Trustmark has evaluated the need for a valuation allowance and, based on the weight of the available evidence, has determined that it is more likely than not that a portion of deferred tax assets will not be realized due to limitations on the deductibility of built in losses in future years. A valuation allowance, which was created as a result of the BancTrust merger in 2013 and reduced in 2014 as a result of measurement period adjustments, has been established to reduce deferred tax assets to the amount that will more likely than not be realized in future years. For additional information regarding the merger with BancTrust and the measurement period adjustments recorded, see Note 2 – Business Combinations.

The following table provides a summary of the changes during the 2015 calendar year in the amount of unrecognized tax benefits that are included in other liabilities in the consolidated balance sheet ($ in thousands):

Balance at January 1, 2015	$	2,160
Increases due to tax positions taken during the current year		760
Decreases due to tax positions taken during a prior year		(495	)
Decreases due to the lapse of applicable statute of limitations during the current year		(613	)
Decreases due to settlements with taxing authorities during the current year		(92	)
Balance at December 31, 2015	$	1,720

Accrued interest, net of federal benefit, at December 31, 2015	$	380

Unrecognized tax benefits that would impact the effective tax rate, if recognized, at December 31, 2015	$	1,321

Interest and penalties related to unrecognized tax benefits, if any, are recorded in income tax expense. With limited exception, Trustmark is no longer subject to U.S. federal, state and local audits by tax authorities for 2009 and earlier tax years. Trustmark does not anticipate a significant change to the total amount of unrecognized tax benefits within the next twelve months.